HIPAA Hits Radar Screen, Expected to be Expensive

Hospitals may spend up to $22.5 billion to comply with HIPAA in next five years

CEO SUMMARY: HIPAA is beginning to generate controversy as implementation dates are announced. The American Hospital Association is painting a black picture, despite protestations of certain experts. Meanwhile, managed care companies are finding it difficult to come together and form a unified lobbying effort. All the signs point to a rancorous public debate on important healthcare issues.

EXPECT LOTS OF TURMOIL and debate in the coming months to surround the implementation of HIPAA (Health Insurance Portability and Accountability Act of 1996).

On the hospital front, a study done by First Consulting Group of Long Beach, California estimates it will cost the nation’s hospitals as much as $22.5 billion to comply with HIPAA requirements during the next five years. The American Hospital Association (AHA) paid for this study.

Even as the AHA released the findings of its study and triggered a wave of criticism, two of the nation’s biggest health insurance groups disclosed that merger plans were off. The Health Insurance Association of America (HIAA) and the American Association of Health Plans (AAHP) had hoped to join forces.

The combination of the two associations would have created a powerhouse lobbying group. With a budget of $45 million and 200 people, the combined organization would have been quite influential in shaping HIPAA guidelines, as well as federal legislation dealing with prescription drugs, patients’ rights, and similar healthcare issues.

HIPAA Implementation

Pressures to implement HIPAA requirements will intensify as the months pass. Laboratory executives and pathologists will increasingly devote more time to HIPAA-related issues.

Events surrounding the AHA study and the collapse of the HIAA/AAHP merger demonstrate what little consensus exists within the healthcare industry. Critics of the AHA study, for example, believe it overstates the true cost of compliance. They believe HIPAA is an opportunity to improve the information services segment of healthcare and so should be viewed as an opportunity to enhance productivity, not as a “dead” cost of compliance.

In any event, HIPAA implementation deadlines will now place ever-growing pressure on labs and other providers.


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