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The healthcare industry recognizes the benefits of electronic data interchange (EDI), and many healthcare organizations have developed their own proprietary EDI formats. In fact, there are approximately 400 formats in use today for electronic health claims in the United States. This lack of standardization makes it difficult and expensive to develop and maintain software, and it diminishes the ability of healthcare providers and health plans to achieve efficiencies and savings.



One of the main goals of the Health Insurance Portability and Accountability Act (HIPAA) is administrative simplification. Its purpose is to improve the Medicare and Medicaid programs, and make the healthcare system more efficient and effective through standards and requirements for electronically exchanging health information consistently among covered entities.

Complying with HIPAA, however, will be a complicated, daunting task for all covered entities. As Gartner Group explains in its summary of a research note published on June 7, 2002: "Healthcare organizations will soon realize that they do not have enough resources for thorough testing of Health Insurance Portability and Accountability Act-compliant transactions."

Healthcare organizations that file for and are granted an extension for attaining HIPAA transaction and code set compliance must begin testing no later than April 16, 2003. And, before testing can begin, healthcare organizations have decisions to make and a lot of work ahead of them.

A solid HIPAA compliance strategy for transactions and code sets should encompass:

  • Transaction formats--support for XML, X12, HL7 variants and version support
  • Integration--efficient integration to legacy applications with decreased data latency
  • Security--support for secure messaging of Internet-based transactions
  • Business process automation--reengineering the business workflow
  • Monitoring and auditing--services that monitor the platform operation and audit disclosures of information
  • Professional services--assisting the healthcare organization in developing assessment plans and then designing and implementing appropriate solutions

Brief HIPAA Background

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