A HIPAA-covered transaction is an electronic exchange of healthcare information between two covered entities. For example, submission of a claim for a medical payout would be considered a covered transaction under HIPAA.
In a research article titled What the HIPAA Transactions and Code Set Standards Will Mean for Your Practice, David C. Kibbe noted, "Congress determined that to improve the efficiency and effectiveness of the health care system and decrease administrative burdens on providers it was necessary to have national standards for the electronic exchange of health care transactions."
Read also: What does a HIPAA transaction mean to me?
Types of covered transactions
HIPAA-covered transactions include the following:
- Health claims or equivalent encounter information
- Health care payment and remittance advice
- Coordination of benefits
- Healthcare claim status
- Enrollment and disenrollment in a health plan
- Eligibility for a health plan
- Health plan premium payments
- Referral certification and authorization
- First report of injury
- Health claims attachments
Who uses covered transactions?
HIPAA defines covered entities, which handle covered transactions, as:
- Health plan: Individual or group plan that provides or pays the cost of medical care
- Healthcare clearinghouse: A public or private entity, including a billing service, repricing company, community health management information system, or community health information system
- Healthcare provider: A provider of medical or health services and any other person or organization who furnishes, bills, or is paid for health care in the normal course of business
- Business associates: Business associates perform specific functions or services that include billing, claims processing, data analysis, legal services, and managing electronic health records. They are legally required to sign business associate agreements (BAAs) that outline their responsibilities for protecting patient data
Learn more: What is a covered entity?
Requirements for HIPAA-covered transactions
HIPAA-covered transactions require ensuring patient data remains private and secure through standardized electronic healthcare information exchanges.
These transactions, using formats like ANSI X12, provide a uniform way of electronically sharing healthcare data while minimizing the risk of unauthorized access or data breaches.
Kibbe states, "Practices that submit information electronically using the HIPAA standards will have some advantages: A payer may not refuse to accept a HIPAA-standard transaction, must respond to the provider with the appropriate electronic message standard format and may not delay payment because the transactions are submitted electronically. The HIPAA rules do seem to give the advantage to medical practices that submit claims electronically, as they guarantee those practices prompt responses from payers."
Paubox aligns with these HIPAA requirements by providing HITRUST-certified email encryption that enables secure, compliant electronic communication for healthcare organizations.
Why covered transactions are important
The standardization of covered transactions also enables better interoperability between different healthcare systems and providers, creating a common language for healthcare institutions.
According to the Centers for Medicare & Medicaid Services (CMS), "When electronic health care transactions are used effectively, they: increase efficiencies in operations, improve the quality and accuracy of information and reduce the overall costs to the health care system."
The National Institute of Health (NIH) states that by clearly defining tasks and workflows, healthcare teams can work more efficiently, allowing
physicians to spend more time focusing on personalized patient care instead of getting busy with administrative processes.
The NIH further says, "Consistency across clinical sites offers advantages to an organization: it provides guidance during emerging health threats, facilitates the training and cross coverage of staff, allows for a more predictable patient experience, and can promote the wider adoption of efficient workflows."
"Being explicit about care processes and task distribution ensures that standard, predictable work happens reliably, freeing up physicians and other team members to devote more of their cognitive bandwidth and energy to the unique needs of individual patients."
FAQs
What is HIPAA?
The Health Insurance Portability and Accountability Act of 1996 (HIPAA), is a United States legislation that sets data privacy and security provisions for safeguarding medical information, such as medical records and other identifiable health information.
Learn more: How to become HIPAA compliant
What is interoperability?
Interoperability is the ability of two or more systems or components to exchange information.
What are HIPAA standardized formats?
HIPAA standardized formats ensure that doctors, hospitals, and insurance companies exchange details about patient care, claims, and payments consistently and efficiently.
Read also: What is data standardization?
