HIPAA introduced administrative simplification to move the healthcare industry from paper-based administrative processes to streamlined electronic communication between providers and health plans. Ultimately, the effort seeks to support collaboration and information sharing for improved efficiency, reduced cost and increased price transparency for patients.

A recent report from the American Hospital Association (AHA) outlines the industry's progress toward the electronic data exchange called for under HIPAA's provisions.

"Converting these types of interactions with health plans from paper to electronic methods streamlines the eligibility verification process and enables rapid communication of benefit information to ensure providers and patients have the right data at, or prior to, the point of care," the report states.

This step is critical as providers seek real-time answers to questions about patient benefits and claims status. Full use of electronic transaction standards will simplify the process of moving accurate information from its source to its destination, allowing providers to make fully informed decisions based on patient coverage, financial liability and medical necessity criteria, among other factors.

Currently, up to 32 cents of every healthcare dollar is spent on administrative costs surrounding patient care. AHA's report states that full implementation of HIPAA's transaction standards and operating rules will reduce these administrative costs, potentially saving the industry an additional $8 billion annually. Approximately $7.2 billion of this savings will go primarily to providers, according to the Council of Affordable Quality Healthcare (CAQH).

CAQH has worked to further adoption of HIPAA standards through its Committee on Operating Rules for Information Exchange (CORE). Formed in 2005, this group created a process for providers, health plans and others to obtain a voluntary certification of compliance with HIPAA standards and operating rules. Although some progress has been made toward adoption, AHA's report reveals the need for a renewed focus to standardize operating rules and ensure standards are feasible for all involved.

The adoption of HIPAA's administrative standards will normalize the collection and reporting of information surrounding specific electronic exchanges of data, such as patient eligibility and benefit information. Specifying key information needed in each transaction will improve the accuracy and efficiency of the exchange, giving hospitals timely access to price and coverage information for patients.

Continued progress with administrative simplification will require significant cultural, operational and policy changes across the industry. Collaboration is needed among all stakeholders — providers, health plans, vendors and patients — to achieve mutual benefits throughout the spectrum of care.

AHA's report offers specific steps for hospital executives and policymakers to further the adoption of administrative simplification and standards. Among them are consolidating administrative processes and recognizing the interrelation of clinical and financial data. This step requires shared trust between providers and health plans, including agreement on what data is needed and how it will be collected, shared and used.

Operationally, AHA recommends that hospitals convert to a completely electronic approach to health plan exchanges, replacing redundant manual, paper and phone-based activities with automated processes. Providers should collaborate with vendors to be sure they stay on top of changes and upgrade systems to accommodate HIPAA standards and operating rules.

All parties must be vigilant about data protection as cyberattacks continue to escalate across the industry. In February, a malware attack locked a Los Angeles hospital's access to patient medical records and prevented staff from sharing records electronically. To restore its systems and administrative functions, hospital officials opted to pay hackers a $17,000 ransom in exchange for a decryption key to unlock the records.

"Any time you are offering any type of information you consider personal, private or sensitive, you have to be aware that the minute you provide it to a third party, you're reliant on them to protect it," Mark Burnette, a security and risk attorney, said following a similar attack on a Tennessee hospital that compromised the personal information of 4.5 million people in 2014.

Bearing this critical burden of protection, providers and health plans must adopt reliable methods to exchange patient information electronically while safeguarding its security at each point of access. One area of such progress is in medical claims documentation, where health information exchange is facilitating two-way, secure communication between providers and health plans.

Providers using electronic claim attachments have replaced manual, paper-based processes with a secure, cloud-based approach to delivering medical records documentation. Documentation required by payers to adjudicate claims is captured, indexed to the patient and securely transmitted to the requesting party. Providers capture documents and images from any source — paper, EHR, images or file uploads — and transfer them through an encrypted connection to ensure that PHI is exchanged securely in compliance with industry standards.

Cloud-based storage allows hospitals to remotely store patient health data, eliminating the need for paper files and on-site storage. Secure, encrypted connections ensure that PHI is protected while facilitating data access and exchange through any approved device. Methods are also available to safely transmit sensitive documents through secure links, providing options for passcodes and expiration time frames to limit data accessibility.

Using health information exchange, hospitals are able to quickly respond to time-sensitive documentation requests, such as prior authorization reviews and pre- and post-payment claims audits. Delivery tracking ensures records are received within specified time frames.

The results of this effort are significant. At Boca Raton Regional Hospital, for example, electronic claim attachments have improved the turnaround time of Medicare reimbursements from up to four weeks to as few as six days and resulted in a total savings of more than $4 million for the hospital.

Electronic claim attachments show the potential for reducing administrative costs by increasing adoption of transaction standards between hospitals and health plans. Ongoing efforts will require significant adjustments to hospital workflows, increased data sharing and collaboration between all systems and entities.

The payoff will be recognized in reduced administrative costs, greater efficiency and increased transparency among providers, patients and health plans.