HIPAA Transaction and Code Set rules became effective October 16, 2003. For the most part these are not yet being enforced (February, 2004) because carriers have not become HIPAA compliant. The carriers are rapidly becoming compliant and we expect full compliance shortly. Physicians are required to make a good faith effort to become compliant (discussed below).

The Transaction and Code Sets component of the HIPAA rules refers to the use of standard formats for the transmission of information between two parties to carry out financial or administrative functions. Code Sets refers to the diagnosis and procedure codes we use to describe our services. The new HIPAA rules require that we all use the same code sets and there will be no additional codes so you will not have to deal with insurance carriers specific codes in the future. When diagnosis and procedures codes match, the payors will understand the care provided and, according to their policies, will compensate for the payor approved care.

The reason for the standardized transaction form is to simplify the transmission of data to and from the payors. In the past, many payors used different formats for submission of data. This resulted in some confusion. Absence of standardized formats leads to misunderstandings between providers, payors, and patients leading to payment delays and sometimes payment denials even though the service was appropriate. The standardized format now required by HIPAA should simplify communication leading to more rapid and fair payment. Your job is to make sure that your software vendor can supply software that will allow you to send and receive information using standard data formats and content.

Because the ultimate responsibility for compliance lies with you as the physician you must make a good faith effort to ensure that your carrier has complied. This will require you to record in your HIPAA binder any interactions with your payor or vendor to get or test upgraded software. You should check with your Medicare intermediary and other carriers to ascertain their status in compliance with HIPAA requirements. This kind of checking should be included in a statement in your HIPAA binder.

1. Economic
   1. Elimination of multiple claim formats
   2. You will be able to submit claims to any health plan in the United States
   3. Fewer denied claims
   4. More rapid payment
2. Economic/administrative
   1. Decreased chance for submission of fraudulent claims
   2. Rapid determination of patient coverage and decreased time to check eligibility

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