P.O. BOX 2120



October 4, 2002



Division Superintendents



Jo Lynne DeMary

Superintendent of Public Instruction



Meeting the Compliance Deadlines of the Health Insurance Portability and Accountability Act (HIPAA)


The Health Insurance Portability and Accountability Act (HIPAA) includes requirements for assuring the confidentiality of health care information that is transmitted electronically. As the health care industry is moving toward increased used of electronic billing, most third-party insurers, including Medicaid, will be using electronic billing. As a result, any local educational agency that is or may be billing Medicaid or other third party insurer must comply with the HIPAA requirements. The original HIPAA legislation required all providers to be compliant by October 15, 2002. The federal Centers for Medicaid and Medicare (CMS) have allowed for a one-year extension of the requirements for electronic standard transactions, until October 15, 2003. However, to receive that extension every party billing electronically must submit a compliance extension no later than October 15, 2002.


The Office of Special Education Programs at the United States Department of Education recently requested state education agencies to assist the CMS in informing local educational agencies of the need to comply with HIPAA. The attached letter also includes information on filing for an extension and includes important information on the CMS website.


Any local educational agency that is currently billing Medicaid (or any other third party insurer) for direct services (e.g., occupational therapy, physical therapy, speech, psychology, nursing, or special transportation) must file for an extension. This applies regardless of whether the local educational agency is billing directly or using a billing agent or rehabilitation agency to complete the electronic billing.


Any local educational agency that may begin administrative claiming (reimbursement for administrative expenses associated with serving children receiving Medicaid) before October 15, 2003, must also file for the extension. Those local educational agencies that do not file for the extension will not be able to submit claims electronically to Medicaid for these services between the dates of October 16, 2002, through October 16, 2003.

The Department of Medical Assistance Services (the agency administering Medicaid in Virginia) has information about HIPAA and the requirements for compliance on its website ( If you have questions, please contact Amy Edwards (, Medicaid Specialist, at (804) 692-0150.