What is a covered transaction?

A covered transaction refers to electronic transactions that involve standardized forms used for exchanging health information within the healthcare system. Specifically, this involves transactions that are governed by regulations set forth by HIPAA, which was established to ensure the privacy and security of protected health information (PHI).

The significance of electronic transactions lies in their role in streamlining the processing and sharing of health information, which reduces administrative burdens and ensures consistency in how data is handled across different entities. Covered transactions include billing, eligibility inquiries, and claim submissions, which must comply with the standards established by HIPAA.

In contrast, written agreements for treatment, verbal sharing of health information, or physical copies of health records, while they are related to patient information, do not fall under the definition of covered transactions as they do not involve the standardized electronic exchange of data that HIPAA specifically regulates.