The Health Insurance Portability and Accountability Act of 1996 (HIPAA) became law on August 21, 1996. HIPAA is also known as:

• Public Law 104-191 (H.R. 3103)
• The Kennedy Kassebaum bill

The U.S. Congress passed HIPAA to:

• improve portability and continuity of health insurance coverage in the group and individual markets;
• combat waste, fraud, and abuse in health insurance and health care delivery;
• promote the use of medical care savings accounts; and
• simplify the administration of health insurance.

HIPAA is not only about ensuring the continuation of health insurance for individuals changing employment, but it is about protecting the privacy of patient records and any other patient identifiable information in any form.

Today, health plans, hospitals, pharmacies, laboratories, doctors and other health care entities use a wide array of systems to process and track health care bills and other information. Providers treat patients with many different types of health insurance and must spend time and money ensuring that each claim contains the format, codes, and other details required by each insurer.

Congress included provisions in HIPAA to require the Department of Health and Human Services (HHS) to adopt national standards for certain electronic health care transactions, codes, identities, and security. Additionally, HIPAA will result in e-business initiatives that will substantially reduce the costs of processing medical claims and transactions. One of the HIPAA goals is to provide national standards for consistent data format for health care transactions.

HIPAA also set a three year deadline for Congress to enact comprehensive policy legislation to protect medical records and other personal health information. Security and Privacy standards can promote higher quality care by assuring consumers that their personal health information will be protected from inappropriate uses and disclosures.

HIPAA is a defining standard for how the health care industry will handle patient medical records and payment information in an efficient, private, and secure manner.