HIPAA was implemented to improve health insurance portability and continuity of coverage, reduce health care fraud and abuse, and establish national administrative simplification standards that support consistent electronic health care transactions and protections for health information through federal regulations. Congress enacted the Health Insurance Portability and Accountability Act of 1996 to address coverage disruptions associated with employment changes and to set baseline federal rules that apply across the health care system.
Portability and coverage provisions focused on limiting certain preexisting condition exclusions, supporting renewability and access in specific circumstances, and reducing barriers that affected individuals moving between group and individual coverage. These provisions also supported nondiscrimination requirements in group health plan coverage and created a more uniform compliance structure for employers, plans, and issuers involved in coverage administration.
Administrative Simplification provisions directed the adoption of national standards for certain electronic transactions and code sets and the use of unique identifiers for specific entities. Standardization supports consistent exchange of claims, eligibility, remittance, and related data among health plans, health care clearinghouses, and health care providers that conduct standard transactions electronically, with downstream effects on billing operations, coordination of benefits, and auditability.
HIPAA’s privacy and security requirements developed through implementing regulations issued by the Department of Health and Human Services to govern protected health information and electronic protected health information. The HIPAA Privacy Rule regulates permitted uses and disclosures and establishes individual rights related to access and certain controls over records. 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, reinforcing accountability for regulated entities and their Business Associates.