What Happens to a Dream Deferred? The Folly of Delaying HIPAA - Health Insurance Portability and Accountability Act transactioons and code sets standards - Brief Article

Healthcare Financial Management, August, 2001 by Jeanne Schulte Scott

"The industry has voluntary standards today. Because the standards are merely voluntary, a number of payers have continued to require others to use their individual formats, which has effectively prevented the industry as a whole from moving to a single, efficient, electronic transaction environment. The splintered state of the current electronic interchange world is one key reason for the enactment of the administrative simplification provisions."

--Remarks by David L. Hobson (ROhio) clarifying the Health Information Portability and Accountability Act before the U.S. House of Representatives, October 22, 1997.

"No good deed goes unpunished in the [health care system]... The system does not reward quality. The system does not insist on safety That's one of the things that has to change."

--Dr. Mark Leavitt, founder and chair of Medscape, describing the many barriers to the effective use of e-health in the United States healthcare system.

It seems that the worthwhile objectives of HIPAA are being frustrated by the recalcitrance of segments of the healthcare industry Many in the industry could be key players in achieving improvements in care delivery if they would embrace the goals of HIPAA. Instead, they are a major part of the problem.

The recent efforts by some in the provider community to delay implementation of the HIPAA Transactions and Code Sets standard by three years or more are a case in point. In complaints to Congress, these organizations appear to believe that HIPAA and administrative simplification are new developments that healthcare entities cannot digest without extra time. The Health Insurance Portability and Accountability Act was signed into law on August 21, 1996- almost five years ago. Forward-thinking players in the industry had been working to develop and implement standards now called for by HIPAA, such as certain administrative simplification requirements, for 10 to 15 years before that.

HIPAA regulations are a commonsense guide to solving growing concerns about healthcare overhead costs, quality, and effectiveness. If HIPAA is delayed, the healthcare improvements it would foster will be delayed as well. Perhaps it is time to revisit the introduction to the HIPAA legislation, in which Congress stated its intent to, among other actions, "combat waste, fraud, and abuse in health insurance and healthcare delivery," and "simplify the administration of health insurance." [a]

Payers' and providers' calls for further delays of the HIPAA transactions standard are self-defeating. The overarching purpose of HIPAA was to improve the quality, efficiency, and effectiveness of health care. If it is delayed further, the public demand for healthcare reform will be magnified. Cries for the adoption of a Canadian-style, single-payer system are being heard again in the halls of Congress and in policy circles both inside and outside the Beltway Rising healthcare costs and the slowing U.S. economy may prompt the nation to seek dramatic, even draconian, solutions to the growing healthcare crisis. This "reform" could result in more government regulations and a smaller role for the private sector.

Payment for Quality

Information technology has enormous potential to improve the American healthcare system, but providers and payers have been slow to embrace technological advances envisioned by HIPAA. Indeed, the U.S. healthcare industry barely has seen the potential of e-health to boost quality, productivity and efficiency.

After the Institute of Medicine (IOM) 2000 report on medical errors [b] was released, the public focused its attention--and litigation--on the issue of errors in health care. The current debate over patients' rights hinges on whether patients have the right to sue their health plan. Broader uses of information technology could lessen, if not eliminate altogether, the errors and inappropriate decisions that may cause patients to turn to the courts for satisfaction.

In addition, computerized order entry systems, which some hospitals have provided for physician use to help eliminate medication errors, could reduce adverse drug events by 50 percent or more. [c] Yet the healthcare industry has been slow to adopt these systems.

The healthcare industry spends only 3.9 percent of its budget on information technology. [d] Compared with other industries, this is a minuscule amount. The third-party payment system, led by Medicare and Medicaid, fails to reward technological innovation in information systems. Although new MRI and PET-scan technology and other expensive clinical devices routinely are covered by these programs, providers are not compensated for improving their information systems.

In its follow-up 2001 report on medical errors and quality, the IOM calls for new incentives in the healthcare payment system to encourage improved quality and efficiency The report calls on both private and public payers to "examine their current payment methods to remove barriers that currently impede quality improvement, and to build incentives for quality enhancement."e