Input: HIPAA offers $3 billion opportunity

Information technology firms could rake in $3 billion helping state governments comply with the Health Insurance Portability and Accountability Act, according to the market research firm Input Inc. of Chantilly Va.

State governments are expected to issue solicitations this year for a wide range of IT services, including analysis, planning, system design, implementation, policy oversight and maintenance, said Meredith Luttner, Input's manager of state and local databases.

"Most states are coming to realize they cannot complete all the work internally, especially considering the approaching compliance deadline ... and are looking to outsource the work," Luttner said, referring to the Oct. 16 deadline for the electronic data interchange rules.

HIPAA legislation is designed to protect personal health information. The regulations apply to any organization that deals with health data and requires governments and private health care providers to comply with new processes for storing and transmitting that information.

The law is being implemented in three stages. States must comply with EDI rules by Oct. 16, and with privacy rules by April 14, 2003. A deadline for security rules is expected to be issued later this year.

States can apply for and receive a one-year extension on the EDI rules if they file a compliance plan with the Department of Health and Human Services before the deadline.

Input's analysis focuses on Title II of the HIPAA legislation, which is a portion specifically related to IT.

While some states are effectively addressing the issue, others are falling behind, Input said. States ahead of or on schedule to meet compliance include Florida, New Jersey and North Carolina. Several other states, particularly those that assigned responsibility to each individual state agency, are lagging in the process.

Integrators that "are educated about the requirements, issues and where each state stands in the process are better able to position themselves to win business, and there is a lot of business to win," Luttner said.