Banks Pay Attention to HIPAA, Too

By Elizabeth Ann Peer

Just as insurance companies are quickly coming up to speed on anti-money laundering requirements (previously mostly a concern of banks), the banking industry is making sure that it is ready for HIPAA.

The Banking Industry HIPAA Task Force, a joint venture between National Automated Clearing House Association (NACHA, Herndon, VA) and the American Bankers Association (ABA, Washington DC), has released a white paper to help financial executives understand the banking issues raised by the Health Insurance Portability and Accountability Act. The white paper includes specific definitions and test cases.

To help health businesses meet these requirements, banks are offering access to automated clearing house (ACH) electronic payment and remittance data processing for healthcare customers. Accordingly, the NACHA/ABA white paper was produced to explain certain HIPAA issues that affect the banking industry, specifically the distinctions between the two major regulatory categories of "healthcare clearinghouse" and "business associate," and provide examples to explain the difference. Among HIPAA's provisions are requirements for health providers and plans to adopt certain standards for electronic administrative and financial transactions.

"The purpose of the paper—because there were some poorly defined terms in the regulations and they didn't go into a lot of detail about the payments—is just to make it clear how HIPAA would work and to make sure that when people want to be a clearing house they are and when they don't want to be one they're not," explains Steve Prather, vice president of Pittsburgh-based Mellon Global Cash Management and the Banking Industry HIPAA Task Force project manager.

The task force's research indicates that most banks fall under the business associate rules of the HIPAA regulations. Research also indicates that financial institutions have a history of playing a security-related role in processing financial electronic data interchange (FEDI) related to the healthcare industry.

"The point of the paper is that there is a well-established payment system already in place through the ACH system, and banks can assist their customers in the healthcare industry adapt to this both by doing the ACH transaction and also by passing along the FEDI files," Prather says.

NACHA's role as an educator is essential for the banking industry to keep up to date regarding the latest HIPAA requirements, Prather adds. "NACHA will be helping the banking industry adapt to this HIPAA regulations, and will be educating banks on the impact of it," he says.

For a copy of the white paper, visit the NACHA Web site at https://www.NACHA.org.