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Administrative Simplification is special provision which was included in Health Insurance Portability and Accountability Act of 1996 (HIPAA) to make it more efficient and effective. Administrative Simplification requires HHS to handle electronic health care, health identifiers, and security through national standards. These provisions were created by US congress which promptly realized that as the technology advances, the risk of invasion of medical privacy can increase. Thus, these provisions were incorporated in HIPAA that made it mandatory to adopt Federal privacy protections to protect identifiable medical information.

Privacy Rule was finalized in December 2000 and was modified in 2002. Privacy Rule creates national standards for three kinds of covered entities:

1. Health care clearinghouses
2. Health plans
3. Health care providers

All of these covered entities perform electronic transactions of health care information, in their own way and they were required to start compliance with this rule from April 14, 2003. Smaller health care plans could start their compliance a year later.

In February 2003, a Security Rule was established to create national standards of confidentiality, access and integrity EPHI (electronic protected health information). Both Privacy rule and security rule are governed by OCR; while other Administrative Simplification Rules in HIPAA are governed by the Centers for Medicare & Medicaid Services.

These rule include:

• Employer Identifier Standard : This rule creates standard for a employer identifier and its usage by Health care providers, health plans and health care clearinghouses
• Transactions and Code Sets Standards – These consist of two rules. In first rule, HHS owns a new Medicaid subrogation standard for pharmacy claims. In the second rule, HHS has modified the standard code sets for medical data.
• National Provider Identifier Standard: The National Provider Identifier is a HIPAA Administrative Simplification Standard. This is an identification number given to help covered doctors and other health care providers.

Besides these, another rule called Enforcement Rule creates standards to enforce all Administrative Simplification Rules. 45 CFR Parts 160, 162, and 164 includes all HIPAA Administrative Simplification Rules.