Happy Healthcare Systems of America (HHSA) is a third-party benefits administrator, providing a liaison between insurance companies and provider groups (physicians, hospitals, etc.). HHSA earns revenue by collecting from the insurance companies and then paying the provider groups for services rendered to eligible patients/members.

Since HHSA's operations are similar to that of an HMO, non-routine procedures, such as surgery or referral to a specialist, must be pre-authorized by HHSA in order for the service to be paid by HHSA. HHSA is considering acquiring an online service to expedite the authorization process. With this system, contracted providers would be allowed access to HHSA's database to initiate and review the status of a particular authorization. Providers would be able to enter data into the system such as diagnosis, requested treatment/procedure, and other data needed to determine the necessity of the procedure.

The determination of the suitability or necessity of these non-routine procedures is currently determined by HHSA case managers, who review and authorize the requested procedures or referrals. Under the proposed system, the provider would enter the data, allowing the case manager to pull up the data and start the authorization process. The new system would allow the entry of data or notes and would assign an authorization number to those procedures that are approved. Once the data is in the system, providers would be given access to check on the status of the authorization at any time.

Another aspect of the online system that should be considered is how the system will comply with federal and state laws, such as the Health Insurance Portability and Accountability Act (HIPAA), which restricts the access to and/or distribution of a patient's private health information to unauthorized persons. Therefore, some of those involved in the online system decision argue that providers should not have access to data for patients not under their direct care. You are the chairman of the committee charged with determining the feasibility/acceptability of the proposed online system, and you will oversee the implementation of this system if it is accepted.

1. What recommendations would you make to HHSA regarding cost and benefits of an online authorization system?

2. How can HHSA ensure patient information confidentiality if this service is provided