Many people are touting the "Small Practice" or "Country Doctor" exemption as a way for providers to escape HIPAA compliance. Please note – THERE IS NO SUCH EXEMPTION.

If you are not a "Covered Entity," HIPAA does not apply to you. If you are a covered entity, you must comply will all HIPAA provisions regardless of the size of your practice.

If you can, without reservation, answer "no" to all of the questions below, you are not and do not have to be a Covered Entity and you need not concern yourself with HIPAA privacy or transactions requirements. If you answer "yes" to any one of them, you should already be compliant or be working hard to become compliant by October 16, 2003.

The first question limits the flexibility you have in choosing whether you will use electronic transactions – it applies only if you provide services under Medicare.* For this exercise, if you do not see Medicare patients, mark "no" to question 1, regardless of your practice size. The HIPAA provision that exempts small practices from being required to bill Medicare electronically is often erroneously thought to exempt small providers from the entire provisions of the statute. Even if you can answer "no" to question 1, questions 2a through 2e still apply. In short, if you conduct any covered transactions electronically, you are a covered entity, no matter the size of your practice.

1.	Are there 10 or more full time staff in your practice, counting yourself?	Yes No
2.	Do you electronically transmit (or does a third party biller or clearinghouse electronically transmit on your behalf) any of the transactions listed below? (Electronically includes via computer, computer modem, computer fax, swipe card, direct data entry, diskette, CD-ROM, via Internet, etc.)
a.	Claims or equivalent encounter information	Yes No
b.	Payment and remittance advice	Yes No
c.	Claim status inquiry and response	Yes No
d.	Eligibility inquiry and response	Yes No
e.	Referral certification and authorization inquiry and response	Yes No

*CMS released its interim final rule 8/15/03. Physician practices with fewer than 10 employees are not required to submit claims electronically and do not have to apply for a waiver from Medicare to continue to submit paper claims after 10/16/03. However, CMS may audit those sending paper claims to assure they are not in violation of this rule. Those who are may be subject to "claim denials, overpayment recoveries, and applicable interest on overpayments." Those practices that have to (or want to) bill Medicare electronically, but do not have the systems capability to do so, can bill Medicare using the free electronic software Medicare provides, downloadable at www.medicarenhic.com/edi/EDIhome.htm.