Why is HIPAA important?

Key Points of HIPAA Compliance for Pharmacies

Many people will be acquainted with HIPAA, but why is it important? Since it was introduced in 1996, HIPAA has redefined the responsibilities that healthcare providers, healthcare clearinghouses, and health plans have to their patients. Here, we will overview why HIPAA was, and continues to be, relevant. 

The original purpose of HIPAA was to reform the health insurance industry. Before HIPAA, it was difficult for employees who were moving jobs to bring their health plans with them. Additionally, it was difficult for those with pre-existing conditions to get health coverage. HIPAA granted more rights to workers, and expanded access to health insurance to more people. 

However, most people will be familiar with HIPAA as it relates to the protections it grants to patient data. HIPAA defined “Protected Health Information” as any patient data that contains one of 18 identifiers that can be used to trace the originator of the data. Any HIPAA covered entity (CE, that is, health plans, healthcare providers, or healthcare clearinghouses) that uses PHI in a HIPAA-covered transaction must abide by HIPAA and ensure the necessary safeguards are in place to preserve patient privacy.

HIPAA, therefore, is of huge importance to patients, even though they may know relatively little about the Act. However, without HIPAA, there would be little legal incentive for healthcare organizations to ensure that sensitive patient data is protected.

There are a number of HIPAA Rules that are important in granting patients rights. The HIPAA Privacy Rule outlines how PHI can be used, and to whom it can be disclosed. Any use of PHI outside of what is outlined by the Privacy Rule requires express patient authorization. It also grants patients the right to access their medical records, and request amendments if they believe part of the information is incomplete or inaccurate. This gives patients more autonomy over how their health data is used and maintained. 

The HIPAA Security Rule establishes the minimum administrative, technical, and physical safeguards required to ensure that PHI is safe and not accessed by unauthorized individuals. The Breach Notification Rule also ensures that, should their data be accessed by an unauthorized third party, the patients are notified. Without this Rule, there would be no requirement for healthcare organizations to notify clients of their privacy breaches. 


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Though it may seem like a hinderance, or an “extra” factor to consider when providing healthcare, HIPAA does offer some benefits to CEs. The HITECH Act, related to HIPAA, incentivized CEs to convert to electronic health records, which greatly streamlined administrative duties. Additionally, by enacting minimum standards to ensure the safety and integrity of healthcare information, this means that patient data can be more easily – and securely – transferred between healthcare organizations. 

It is important, therefore, that both patients and CEs understand why HIPAA is important. Knowing how HIPAA protects them ensures that patients can act within their rights by limiting who can access their PHI, or amending it if they believe that it does not reflect their medical record. As well as protecting patient data, if CEs do not abide by HIPAA, they can face severe financial or criminal penalties. It is therefore important for both parties to understand the importance of HIPAA and how it applies to them.

About Liam Johnson
Liam Johnson has produced articles about HIPAA for several years. He has extensive experience in healthcare privacy and security. With a deep understanding of the complex legal and regulatory landscape surrounding patient data protection, Liam has dedicated his career to helping organizations navigate the intricacies of HIPAA compliance. Liam focusses on the challenges faced by healthcare providers, insurance companies, and business associates in complying with HIPAA regulations. Liam has been published in leading healthcare publications, including The HIPAA Journal. Liam was appointed Editor-in-Chief of The HIPAA Guide in 2023. Contact Liam via LinkedIn: https://www.linkedin.com/in/liamhipaa/