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The Transactions Rule

The Transactions Rule section of HIPAA has been mandatory since October 16, 2003. This rule helps define a standard set of transaction codes to be used for medical claims processing and billing, as well as diagnostic codes for healthcare providers.

One of the principal reasons behind the standardization of transactional codes is to streamline the Medicare and Medicaid billing and payment process. As a result, the department of Health and Human Services has delegated the enforcement of the Transactions and Codes sections of HIPAA to the Centers for Medicare & Medicaid Services (CMS), specifically to a division called the Office of HIPAA Standards (OHS). The OHS is responsible for reviewing code sets using within the healthcare industry and approving them for HIPAA compliance and use.

Because there are many competing standards for transaction codes within the healthcare industry, no single "standard" set of codes approved for HIPAA cover all possible transactions. Instead, code sets that are commonly used in the industry—such as ICD-9 diagnostic codes, Medicare DRG codes, and other code sets that are part of the ASC X12N standard—are submitted to OHS and approved for HIPAA compliance.

The purpose of the standardization on transactions and code sets is to streamline the EDI process for billing and payments; as a result, the standard incorporates many different existing code sets. If you're in doubt about the status of a code set you're currently using, your best bet is to contact the OHS to determine whether the code set is compliant with HIPAA.

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