White Paper Sheds Some Light on HIPAA Requirements

NACHA and the ABA have produced a research paper for financial institutions seeking to comply with the Health Insurance Portability and Accountability Act of 1996.

The Banking Industry HIPAA Task Force, a joint venture between National Automated Clearing House Association (NACHA) and the American Bankers Association (ABA), has released a white paper to help financial executives understand the banking issues raised by the Health Insurance Portability and Accountability Act of 1996. The white paper includes specific definitions and test cases.

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, calls for health providers and health plans to adopt certain standards for electronic administrative and financial transactions. To help health businesses meet these requirements, banks are offering access to Automated Clearing House (ACH) electronic payment and remittance data processing for health care customers. The white paper is meant to explain certain HIPAA issues that arise that impact the banking industry, specifically the distinctions between the two major regulatory categories of "healthcare clearinghouse" and "business associate," and examples to elucidate the difference.

"The purpose of the paper--because there were some poorly defined terms in the regulations and they didn't go into a lot of detail about the payments--is just to make it clear how HIPAA would work and to make sure that when people want to be a clearinghouse they are and when they don't want to be one they're not," explained Steve Prather, vice president of Mellon Global Cash Management and the HIPAA Task Force project manager.

The Banking Industry HIPAA Task Force research indicates that most banks fall under the business associate rules of the HIPAA regulations. Research also indicates that financial institutions have a history of security in processing financial electronic data interchange (FEDI) related to the healthcare industry.

"The point of the paper is that there is a well established payment system already in place through the ACH system and that banks can assist their customers in the health care industry adapt to this both by doing the ACH transaction and also by passing along the FEDI files," Prather said.

NACHA's role as an educator is essential, Prather added, for the banking industry to keep up to date regarding the latest HIPAA requirements. "NACHA will be helping the banking industry adapt to this HIPAA regulations and will be educating banks on the impact of it," he said. "NACHA will help people through this white paper and other educational efforts to make it easy to come into compliance with the regulations."