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Administrative Simplification In HIPAA

HIPAA recognizes the potential improvements in productivity and savings from greater efficiency that EDI can provide to payers and providers alike. EDI can improve the speed of processing transactions and reduce errors caused by normal human intervention. When combined with increased security protections, EDI can also help protect against fraud. Improved logging techniques can make it easier to trace the source of transactions that can help spot potential problems and identify perpetrators. Stronger authentication techniques can also help protect patients against illegal accesses of their records.


The Health Insurance Portability and Accountability Act, Public Law 104-191, was enacted on August 21, 1996. In addition to provisions concerning insurance portability, fraud and abuse, the statute also contains “administrative simplification” provisions regarding:

  • Standardization of Electronic Health Care Financial and Administrative Transactions
  • Unique Health Identifiers
  • Code Sets
  • Electronic Signature Standards
  • Health Information Security Requirements
  • Penalties for Violations of Administrative Simplification Standards
  • Health Information Privacy Provisions