HIPAA is needed to establish enforceable federal requirements for health insurance portability and continuity of coverage, standardization of certain electronic health care transactions, and the privacy, security, and breach notification obligations that govern how Covered Entities and Business Associates handle protected health information. The framework created by the Health Insurance Portability and Accountability Act of 1996 supports consistent operational rules across health plans, health care providers that conduct standard transactions electronically, health care clearinghouses, and service providers that perform functions involving protected health information.
Health insurance portability provisions address coverage disruptions associated with job changes and other coverage transitions by limiting certain preexisting condition exclusions and setting standards related to access, renewability, and nondiscrimination in coverage. These provisions support continuity of coverage and reduce barriers to maintaining insurance, which affects enrollment, verification, and eligibility administration across payers and providers.
Administrative Simplification provisions support standardized electronic exchange of common transactions such as claims, eligibility, and remittance, which reduces variation across payers and trading partners and supports operational efficiency and data consistency. Standardization creates predictable requirements for transaction formats and code sets that underpin billing, clearinghouse services, and coordination of benefits, while also supporting auditability and integrity of exchanged data.
Privacy and security requirements are needed because regulated operations routinely use and disclose protected health information across clinical care, payment, and administrative functions. The HIPAA Privacy Rule limits non-permitted uses and disclosures, requires patient rights such as access to records and the ability to request amendments, and sets conditions for authorizations and other disclosures. The HIPAA Security Rule requires administrative, physical, and technical safeguards for electronic protected health information, and the HIPAA Breach Notification Rule requires notification following breaches of unsecured protected health information, supporting transparency and organizational accountability.