Health Insurance Portability and Accountability Act

Title I of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) protects health insurance coverage for workers and their families when they change or lose their jobs.

The law regulates employer group health plans and health insurance companies. It generally protects people who change jobs, are self-employed, and have pre-existing conditions by offering greater access, portability and renewability of health insurance coverage. In essence, it allows employees to take their health insurance with them from job to job. The law also prohibits employers from excluding workers from health insurance coverage based on health status by limiting the preexisting condition exclusion to no more than 12 months.

According to the definitions of the Health Insurance Portability and Accountability Act of 1996, all of PCMI’s customers are Covered Entities who would be responsible for complying with the regulations in their entirety. Since the services that PCMI provide are on behalf of our customers, PCMI meets the definition of a Business Associate. PCMI compliance efforts are required only as part of the service agreements wit customers. Although PCMI has prepared Business Associate Agreements, the Business Associate Agreement is the responsibility of the customer as a Covered Entity. PCMI has worked closely with our customers to create appropriate Business Associate contract language, which is HIPAA compliant and appropriately reflects the business relationship between PCMI and our customers. Pinnacle has appointed a HIPAA Project Manager to review computer systems, revision of privacy, personnel and security policies and procedures and staff training. An HIPAA Action Plan has been created and implemented.

PCMI HIPAA Readiness Statement

HIPAA Jurisdictions

There are three jurisdictions under which HIPAA is administered. The Department of Labor (DOL) has jurisdiction over employee health plans in the private industry. The Department of Health and Human Services (HHS) manages HIPAA administration for government employees. The Department of Treasury handles employees who work for tax-exempt organizations such as churches, private schools, and private foundations.

HIPAA is an amendment to ERISA, the Public Health Service Act, and continuity of coverage rules. It is intended to prevent the problem of "job-lock" where employees are afraid to change jobs because they are afraid of losing their health care benefits due to pre-existing condition exclusions in the new health insurance policy. Businesses with less than 25 employees are exempt from HIPAA because of the expense of record keeping. These individuals, however, can go into a new employer-sponsored group health plan and not be subject to a pre-existing condition penalty if they had previous group coverage and no gaps in coverage for more than 62 days.

If you are a small employer, large employer, or self-funded employer, visit the Centers for Medicare & Medicaid Services (CMS) Web site for additional information on HIPAA.

Consumers should reference the online article "The HIPAA Law: Your Rights to Health Insurance Portability" (January 12, 2000).

Patient Confidentiality

HIPAA mandates that health care professionals are allowed to disclose medical health information for medical purposes only. This information cannot be released unless authorized by the patient. Patients must also be informed about their role in protecting medical records. Confidentiality of medical records is now considered a patient right.

Congress failed to pass privacy/confidentiality legislation called for in HIPAA. As a result, the Department of Health and Human Services released proposed guidelines in November 1999 for a national standard for the use and disclosure of personal medical information by providers, insurers, employers, law enforcement and others. The Final Rule for Privacy Standards was published in the Federal Register on December 28, 2000. Compliance is required by February 26, 2003. For more information regarding the Final Rule, visit the HHS Web site.

Standards for Electronic Processing of Health Care Information

The Administrative Simplification (AS) provisions of HIPAA are intended to reduce the costs and administrative burdens of health care by making possible the standardized, electronic transmission of many administrative and financial transactions that are currently carried out manually on paper.  Final standards for electronic processing of health insurance information were published in August 2000, with full compliance required in October 2002.

These provisions require health plans, providers and payers to comply with standards for electronic data transfer, record formats, privacy of health data, security of health care information and updated plan and patient identifiers. The electronic transmission of health information, including claims, will increase efficiency and reduce the amount of paperwork in the industry as a whole. As a result, both consumers and employers will benefit from reduced costs to administer health care plans.

For more information regarding the administration simplification provisions, visit the HHS Web site.