What defines a Covered Entity in healthcare?

A Covered Entity in healthcare is defined primarily by its role in the healthcare system and its engagement with protected health information (PHI). One key aspect is that it consists of healthcare providers, health plans, and healthcare clearinghouses that engage in electronic transactions involving PHI. This includes physicians, hospitals, and other entities that bill for their services electronically and transmit health information, such as patient health records, electronically as well.

This definition underscores the importance of compliance with regulations such as the Health Insurance Portability and Accountability Act (HIPAA), which aims to protect the privacy and security of healthcare information. While some of the options touch upon various functions within the healthcare ecosystem, only the choice that refers specifically to healthcare providers conducting electronic transactions addresses the core characteristics that make an entity "covered." This ensures that they are subject to the same regulations regarding the treatment of sensitive health information, which is essential for safeguarding patient privacy.