Budget shortfalls hinder HIPAA

With state revenues drying up and little financial help from the U.S. government, a federal mandate to implement standards for electronic health data interchange is not going to be easy, according to two experts.

To implement the transactions and privacy rules required under the Health Insurance Portability and Accountability Act (HIPAA), state agencies will have to collaborate with support from executive leadership in order to meet deadlines next year, said Cherilyn Scism, a legislative associate for health policy at the National Governors Association (www.nga.org), commenting April 8 at the National Association of State Chief Information Officers' midyear conference in Denver.

HIPAA, passed in 1996, is supposed to help reduce health care fraud and abuse — and thereby costs by creating national standards for health information, and improving the security and privacy of shared medial information. States must comply with the privacy rules by April 13, 2003, and with the transaction and code rules by Oct. 16, 2003.

Scism said the governors strongly supported HIPAA simplification but have problems with the timeline and funding.

State budget shortfalls are estimated at $40 billion, she said, and HIPAA implementation is competing with such state priorities as education, highway construction and homeland security. She said NGA policy calls for more financial help from the federal government but the policy also needs support from the nation's governors.

NGA also is working with the Department of Health and Human Services to clarify which state programs fall under HIPAA compliance, she said, adding that there is a "tremendous amount of gray area."

Greg Moody, the Ohio governor's executive assistant for health and human services, said transformation toward health electronic data interchange is inevitable and states must either look at this as a "nuisance or catalyst for e-business."

He agreed that costs are an issue and that budget shortfalls don't help matters. "We know that we're not going to be on an aggressive timeframe as envisioned because of budget constraints," Moody said.

He said policy and business process changes pose a greater challenge than technical changes. He recommended that states should look to free resources to help them comply. He said Ohio has developed a toolkit to implement HIPPA mandates (www.ohio.gov/hipaa).

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