The Department of Health and Human Services (HHS) defines a transaction as an electronic exchange of information between two parties, to carry out financial or administrative activities related to healthcare. For example, a health care provider will send a claim to a health plan to request payment for medical services.
Under the Health Insurance Portability and Accountability Act (HIPAA), the department adopted specific “standard transactions” for the electronic exchange of data in the healthcare industry, to facilitate those transactions among various healthcare parties.
The following formats replace any proprietary EDI format used within the health insurance industry:
Payment and remittance advice
This refers to the process where a health plan makes a payment to a financial institution for a healthcare provider. The plans are permitted to send an explanation of benefits or remittance advice directly to a healthcare provider (data only) or to send payment and an explanation of benefits or remittance advice to a healthcare provider via a financial institution (payment and data).
This standardized format should be used by healthcare providers and recipients of healthcare products or services (or their authorized agents) to request a healthcare claim status update.
This refers to a standard format for both inquiry and response regarding eligibility, coverage, or benefits, as those things relate to a health plan. They apply to employers, plan sponsors, subscribers, or dependents under the subscriber’s policy.
Coordination of benefits
The coordination of benefits transaction refers to transmission from any entity to a health plan for the purpose of determining payment responsibilities of a health plan for healthcare claims.
Claims and encounter information
This format should be used when a healthcare provider files an electronic request for a healthcare claim payment for the delivery of services and when providing data regarding the type of healthcare services performed during the encounter or equivalent encounter information.
Enrollment and disenrollment
This format applies to both enrollment and disenrollment from a health plan. It is used to establish communication between the sponsor of a health benefit and the health plan.
Referrals and authorizations
This standard applies to electronic transactions, including referral certification and authorization. A referral certification can be:
- from a healthcare provider to a health plan, to obtain authorization for care;
- from a healthcare provider to a health plan, to obtain authorization for referring an individual to another healthcare provider; or
- from a health plan to a healthcare provider about authorization and referral requests.
This standard applies to health plan premium payments for health insurance plans. This format applies to employers, employees, unions, and associations that are required to make or track premium payments to health insurers.
The Latest on HIPAA Standard Transactions
The Standards for Electronic Transactions and Code Sets were published in 2000. They were subsequently modified in 2010 to include newer standards for several transactions, claims and encounter information, payment and remittance advice, and claims status.
When combined, all these provisions are referred to as Administrative Simplification, because they were created to simplify the business of healthcare.
These transaction formats standardize the electronic exchange of patient-identifiable health information via electronic data interchange (EDI) transactions for submitting, processing and paying claims.
These HIPAA standards apply to health plans, healthcare clearinghouses, and healthcare providers that transmit healthcare information in electronic form, to complete healthcare transactions.
These national standards apply to electronic transmissions using all media, even when it is physically moved from one location to the next via magnetic tape, disk, or CD.
These standards also apply to transmissions over the internet, private networks, leased lines, dial-up lines, and other types of private networks. The standard does not, however, pertain to telephone voice response or fax-back systems.
Covered entities that complete any of these HIPAA transactions electronically are required to use an adopted standard from ASC X12N or NCPDP for certain pharmacy transactions. Failure to do so can result in penalties for HIPAA violations.
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