Why is HIPAA Important?

by | Mar 8, 2022

The question why is HIPAA important can have multiple answers depending on whether you are a healthcare organization, a healthcare professional, or a patient. The answers to the question why is HIPAA important can also help explain why HIPAA compliance is important.

When the Health Insurance Portability and Accountability Act (HIPAA) was originally introduced in 1996, its original intention was to protect health insurance coverage for employees and their families when they changed or lost their jobs and limit the restrictions group health plans could place on employees with pre-existing conditions.

By the time the Act was passed, it had grown to five Titles. The important Title in terms of the impact on the healthcare industry was Title II – more specifically, the Administration Simplification provisions of Title II, which led to the publication of the Privacy and Security Rules in 2002 and 2003 respectively. But why is HIPAA important?

The quick answer to the question why is HIPAA important is that it gave the Department of Health & Human Services (HHS) the authority to develop national standards for allowable uses and disclosures of Protected Health Information (PHI). However, the implementation of these standards has affected different parties in different ways.

The Impact of HIPAA on Healthcare Organizations

The Privacy and Security Rules – together with the subsequent Breach Notification Rule and Final Omnibus Rule – placed a significant administrative burden on healthcare organizations, who not only had to develop policies and procedures for their own operations, but who also had to ensure their Business Associates were HIPAA compliant.

However, by complying with the HIPAA requirements, evidence suggests healthcare organizations benefit from streamlined administrative functions and improved efficiency. Operating more efficiently saves time and money; and, for this reason, HIPAA compliance is important for healthcare organizations and their Business Associates.

It should also be considered that, without the HIPAA Security Rule and Final Omnibus Rule, it would not have been possible to introduce the Meaningful Use incentive program and subsequent Merit Based Incentive Payment System (MIPS). These programs further improved efficiency while financially encouraging healthcare organizations to comply with HIPAA.

Why is HIPAA Important for Healthcare Professionals?

Many articles discussing why is HIPAA important tend to focus on the requirement to comply with HIPAA rather than the benefits of HIPAA compliance for healthcare professionals. These mostly relate to the trust a patient has in a healthcare professional that enables them to reveal confidential information about themselves that in turn leads to more accurate diagnoses and better care.

One of the reasons patients are willing to reveal confidential information is because they trust it will remain confidential. However, trust can be a fragile commodity. If a patient´s trust is damaged due to an unauthorized disclosure of confidential information, they may withhold information crucial to the delivery of care which impacts the healthcare professional´s ability to do their job.

Compliance with HIPAA mitigates the risk of a patient´s trust being damaged – enabling healthcare professionals to deliver the best possible care with better patient outcomes. Better patient outcomes raise morale in the workplace and result in a more rewarding work experience. This is the real reason HIPAA compliance should be important for healthcare professionals.

How Patients Benefit from HIPAA Compliance

Considering the previous answers to why is HIPAA important, one might assume the benefit to patients of HIPAA compliance is better healthcare delivery. But it´s more than that. Due to patient rights of access, patients now have more involvement in decisions about their healthcare than ever before, and evidence suggests this helps improve their knowledge and healthcare experience.

Being able to obtain copies of their PHI also enables patients choose where they obtain treatment. Entire medical histories can be sent from one healthcare organization to another (with the patient´s permission) for the continuation of treatment without the need for repeat tests. Before HIPAA, there was no requirement for healthcare organizations to release PHI.

Beyond the healthcare experience, HIPAA compliance mitigates the risk of data breaches, which mitigates the likelihood of individually identifiable information being used to commit identity theft and health insurance fraud. Additionally, when a breach of unsecured PHI does happen, patients should be notified at the earliest possible opportunity so they can take precautionary measures.

The Consequences of HIPAA Noncompliance

From the healthcare organization´s perspective, the consequences of HIPAA noncompliance are well-chronicled. Healthcare organizations can be issued with substantial financial penalties for HIPAA violations – even those that do not result in a data breach. Indeed, in 2021, the most common financial settlements were in respect of right of access failures.

For healthcare professionals, the consequences of noncompliance usually depend on their employer´s sanctions policy and can range from refresher training for minor violations to loss of professional accreditation and criminal prosecution in the most serious cases. Naturally, these consequences can have a serious impact on a healthcare professional´s personal life as well.

For patients, the failure of healthcare organizations and healthcare professionals to comply with HIPAA can affect the standard of care they receive, their choice of providers, and their financial wellbeing if an organization neglects to notify the patient of a data breach in a reasonable timeframe. For all these reasons – and more – compliance with HIPAA is important.

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