An enormous amount of effort is put into ensuring that businesses and organizations are acting in compliance with the Health Insurance Portability and Accountability Act, better known as HIPAA; but what is HIPAA’s importance, why does it matter, and why does it merit such close attention by so many?

First brought into law in 1996, HIPAA’s primary goal was to legislate for a continuance of health insurance coverage for people who were between jobs. Without the protection offered by HIPAA, it was possible for former employees to find themselves without adequate, or even any, health in some situations where they had lost or left one job and had not found or started the next.

In addition to this, HIPAA introduced provisions with the aim of reducing fraud in the health care space. One step in this was to bring in measures that called for certain sensitive patient data, commonly referred to as Protected Health Information or PHI, to be safeguarded with appropriate security procedures and tools which would prohibit unauthorized parties from accessing the data.

Why is HIPAA Important for Actors in the Healthcare Sector?

While HIPAA did raise the bar by imposing tougher security standards on healthcare organizations, it also offered useful guidance and direction at a time when many were transferring documentation systems from paper based to digital. HIPAA allowed administrative processes to be refined and improved, which increased efficiency and helped guarantee the privacy of patients’ information.

By creating better ways of recording data and of transferring information across a large part of the healthcare industry, HIPAA allowed stakeholders to reach a more mutually beneficial understanding. Common code sets and national identifiers were introduced and made mandatory. The result is that health information can now be transferred or shared between entities without the need to review and update each item in terms of how they are referred to. Previously, it was possible for each organization to use completely different codes when dealing with the exact same procedure or event, which would necessitate a knowledge of all of their competitors codes in order to be able to correctly enter information in their own systems.

Why is HIPAA important for Patients?

While the healthcare sector certainly saw efficiency gains thanks to HIPAA, it could easily be said that patients gained even more. HIPAA requires covered entities and their business associates, which means organizations such as healthcare providers, health plans, and healthcare clearinghouses, to put systems and procedures in place that will reduce the risk to patients’ data and help to protect their sensitive health information.

Obviously, organizations were mindful of the potential damage that could arise if this data was stolen or lost even before HIPAA arrived, but there were no legal obligations or direction in relation to these areas – and no legal punishments or oversight if information was recklessly managed.

By requiring access control, activity logs, and other elements, HIPAA increased the security of PHI. It also gave patients greater control over their data by allowing them access to copies of records which concern them.