Health Care Sector Worried About Short Term HIPAA Costs

California public agencies, providers and insurers are concerned that the short term costs of meeting the standards of the 1996 Health Insurance Portability and Accountability Act will prove burdensome at a time when the state's health care sector is already struggling financially, the
Sacramento Bee reports. The final HIPAA regulations, which "will establish national medical data standards for administration, security and privacy," are still pending as the federal government reviews them, but the state estimates that implementing the standards will cost at least $100 million, while hospitals have said they will spend upwards of $2.5 billion. Most health care players agree that in the long run, HIPAA will create a more efficient and productive health system, but they have "grave concerns" about the immediate costs. Stan Rosenstein of the state Department of Health Services said, "We agree entirely with the concepts of HIPAA, and we can see how it will make many things easier after the one-time cost to implement it, but the law's costs come while the health care system is under huge financial stress." For instance, while the state currently uses several billing codes for Medi-Cal, HIPAA "will require the state to conform to a system with far fewer codes," which, according to Rosenstein, could result in "doctors [finding] it harder to accurately bill Medi-Cal and state researchers [losing] precision in gathering public health data." Still, the state will receive federal funds to help Medi-Cal come into compliance, while other "public and private" health entities will not. Last week, a report from the state Legislative Analyst's Office concluded that the state "has been remiss in failing to establish a lead agency or allocate sufficient funds for HIPAA compliance." Grantland Johnson, director of the state Department of Health and Human Services, said the agency was working with providers and insurers to help with implementation, but was reserving "judgment" on the guidelines until the federal government issues final regulations (Rapaport, Sacramento Bee, 4/2).