According to a new study by Fitch Ratings released yesterday, HIPAA-related costs for hospitals and health systems will be less than originally anticipated, due to health providers' recent revenue cycle management initiatives that have led to system upgrades, many of which concurrently have met the federal law's compliance requirements.
The Health Insurance Portability and Accountability Act of 1996 was enacted to standardize the interchange of health care data in order to improve the industry's efficiency and effectiveness and to improve upon confidentiality of patient records. All health care organizations are required to become HIPAA-compliant, including providers, payors, physician offices, clearinghouses, and vendors, among others through the end of this year.
While costs for being HIPAA compliant have ranged from conservative estimates such as $5.8 billion from Centers for Medicare and Medicaid Services to $43 billion by Blue Cross Blue Shield, Fitch expects that standardized claims will beget operating offices that will ultimately exceed the cost of meeting compliance deadlines.
"We believe that most hospitals will be able to absorb these costs without a large negative impact," said Joseph Korleski, an associate director at Fitch. "It is important to note that the hospitals that implemented systems for compliance when the rules were announced are more likely to realize efficiencies at a faster rate."
"Costs associated with HIPAA will be more easily absorbed due to recent revenue cycle management initiatives and software upgrades that have been in line with HIPAA compliance, as well as the extension that was granted in 2002 for compliance under the Transactions and Code Sets rule."
According to Fitch, the challenges of HIPAA compliance are more immediate now than when the agency issued its original Sept. 15, 2000, report. Compliance is adding additional costs to hospital and health system budgets by requiring additional capital expenditures in order to meet federal deadlines.
However, the Fitch report states that most hospitals will be able to absorb these costs without a large negative financial impact. Additionally, a degree of leniency for meeting HIPAA guidelines will make compliance less challenging.
Nonetheless, the Fitch report says that hospitals and health systems that implemented systems for compliance when the HIPAA rules were announced are more likely to minimize costs associated with looming deadlines and will begin to realize efficiencies at a faster rate.
