[Federal Register: August 14, 2002 (Volume 67, Number 157)]
[Rules and Regulations]
[Page 53181-53273]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14au02-32]
[[Page 53181]]
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Part V
Department of Health and Human Services
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Office of the Secretary
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45 CFR Parts 160 and 164
Standards for Privacy of Individually Identifiable Health Information;
Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Secretary
45 CFR Parts 160 and 164
RIN 0991-AB14
Standards for Privacy of Individually Identifiable Health
Information
AGENCY: Office for Civil Rights, HHS.
ACTION: Final rule.
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SUMMARY: The Department of Health and Human Services (``HHS'' or
``Department'') modifies certain standards in the Rule entitled
``Standards for Privacy of Individually Identifiable Health
Information'' (``Privacy Rule''). The Privacy Rule implements the
privacy requirements of the Administrative Simplification subtitle of
the Health Insurance Portability and Accountability Act of 1996.
The purpose of these modifications is to maintain strong
protections for the privacy of individually identifiable health
information while clarifying certain of the Privacy Rule's provisions,
addressing the unintended negative effects of the Privacy Rule on
health care quality or access to health care, and relieving unintended
administrative burdens created by the Privacy Rule.
DATES: This final rule is effective on October 15, 2002.
FOR FURTHER INFORMATION CONTACT: Felicia Farmer, 1-866-OCR-PRIV (1-866-
627-7748) or TTY 1-866-788-4989.
SUPPLEMENTARY INFORMATION: Availability of copies, and electronic
access.
Copies: To order copies of the Federal Register containing this
document, send your request to: New Orders, Superintendent of
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date
of the issue requested and enclose a check or money order payable to
the Superintendent of Documents, or enclose your Visa or Master Card
number and expiration date. Credit card orders can also be placed by
calling the order desk at (202) 512-1800 (or toll-free at 1-866-512-
1800) or by fax to (202) 512-2250. The cost for each copy is $10.00.
Alternatively, you may view and photocopy the Federal Register document
at most libraries designated as Federal Depository Libraries and at
many other public and academic libraries throughout the country that
receive the Federal Register.
Electronic Access: This document is available electronically at the
HHS Office for Civil Rights (OCR) Privacy Web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=li
nklog&to=http://www.hhs.gov/ocr/hipaa/ , as well as at the web site of the Government
Printing Office at http://www.access.gpo.gov/su_docs/aces/aces140.html .
I. Background
A. Statutory Background
Congress recognized the importance of protecting the privacy of
health information given the rapid evolution of health information
systems in the Health Insurance Portability and Accountability Act of
1996 (HIPAA), Public Law 104-191, which became law on August 21, 1996.
HIPAA's Administrative Simplification provisions, sections 261 through
264 of the statute, were designed to improve the efficiency and
effectiveness of the health care system by facilitating the electronic
exchange of information with respect to certain financial and
administrative transactions carried out by health plans, health care
clearinghouses, and health care providers who transmit information
electronically in connection with such transactions. To implement these
provisions, the statute directed HHS to adopt a suite of uniform,
national standards for transactions, unique health identifiers, code
sets for the data elements of the transactions, security of health
information, and electronic signature.
At the same time, Congress recognized the challenges to the
confidentiality of health information presented by the increasing
complexity of the health care industry, and by advances in the health
information systems technology and communications. Thus, the
Administrative Simplification provisions of HIPAA authorized the
Secretary to promulgate standards for the privacy of individually
identifiable health information if Congress did not enact health care
privacy legislation by August 21, 1999. HIPAA also required the
Secretary of HHS to provide Congress with recommendations for
legislating to protect the confidentiality of health care information.
The Secretary submitted such recommendations to Congress on September
11, 1997, but Congress did not pass such legislation within its self-
imposed deadline.
With respect to these regulations, HIPAA provided that the
standards, implementation specifications, and requirements established
by the Secretary not supersede any contrary State law that imposes more
stringent privacy protections. Additionally, Congress required that HHS
consult with the National Committee on Vital and Health Statistics, a
Federal advisory committee established pursuant to section 306(k) of
the Public Health Service Act (42 U.S.C. 242k(k)), and the Attorney
General in the development of HIPAA privacy standards.
After a set of HIPAA Administrative Simplification standards is
adopted by the Department, HIPAA provides HHS with authority to modify
the standards as deemed appropriate, but not more frequently than once
every 12 months. However, modifications are permitted during the first
year after adoption of the standards if the changes are necessary to
permit compliance with the standards. HIPAA also provides that
compliance with modifications to standards or implementation
specifications must be accomplished by a date designated by the
Secretary, which may not be earlier than 180 days after the adoption of
the modification.
B. Regulatory and Other Actions to Date
HHS published a proposed Rule setting forth privacy standards for
individually identifiable health information on November 3, 1999 (64 FR
59918). The Department received more than 52,000 public comments in
response to the proposal. After reviewing and considering the public
comments, HHS issued a final Rule (65 FR 82462) on December 28, 2000,
establishing ``Standards for Privacy of Individually Identifiable
Health Information'' (``Privacy Rule'').
In an era where consumers are increasingly concerned about the
privacy of their personal information, the Privacy Rule creates, for
the first time, a floor of national protections for the privacy of
their most sensitive information--health information. Congress has
passed other laws to protect consumers' personal information contained
in bank, credit card, other financial records, and even video rentals.
These health privacy protections are intended to provide consumers with
similar assurances that their health information, including genetic
information, will be properly protected. Under the Privacy Rule, health
plans, health care clearinghouses, and certain health care providers
must guard against misuse of individuals' identifiable health
information and limit the sharing of such information, and consumers
are afforded significant new rights to enable them to understand and
control how their health information is used and disclosed.
After publication of the Privacy Rule, HHS received many inquiries
and unsolicited comments through
[[Page 53183]]
telephone calls, e-mails, letters, and other contacts about the impact
and operation of the Privacy Rule on numerous sectors of the health
care industry. Many of these commenters exhibited substantial confusion
and misunderstanding about how the Privacy Rule will operate; others
expressed great concern over the complexity of the Privacy Rule. In
response to these communications and to ensure that the provisions of
the Privacy Rule would protect patients' privacy without creating
unanticipated consequences that might harm patients' access to health
care or quality of health care, the Secretary of HHS opened the Privacy
Rule for additional public comment in March 2001 (66 FR 12738).
After an expedited review of the comments by the Department, the
Secretary decided that it was appropriate for the Privacy Rule to
become effective on April 14, 2001, as scheduled (65 FR 12433). At the
same time, the Secretary directed the Department immediately to begin
the process of developing guidelines on how the Privacy Rule should be
implemented and to clarify the impact of the Privacy Rule on health
care activities. In addition, the Secretary charged the Department with
proposing appropriate changes to the Privacy Rule during the next year
to clarify the requirements and correct potential problems that could
threaten access to, or quality of, health care. The comments received
during the comment period, as well as other communications from the
public and all sectors of the health care industry, including letters,
testimony at public hearings, and meetings requested by these parties,
have helped to inform the Department's efforts to develop proposed
modifications and guidance on the Privacy Rule.
On July 6, 2001, the Department issued its first guidance to answer
common questions and clarify certain of the Privacy Rule's provisions.
In the guidance, the Department also committed to proposing
modifications to the Privacy Rule to address problems arising from
unintended effects of the Privacy Rule on health care delivery and
access. The guidance will soon be updated to reflect the modifications
adopted in this final Rule. The revised guidance will be available on
the HHS Office for Civil Rights (OCR) Privacy Web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=li
nklog&to=http://www.hhs.gov/ocr/hipaa/ .
In addition, the National Committee for Vital and Health Statistics
(NCVHS), Subcommittee on Privacy and Confidentiality, held public
hearings on the implementation of the Privacy Rule on August 21-23,
2001, and January 24-25, 2002, and provided recommendations to the
Department based on these hearings. The NCVHS serves as the statutory
advisory body to the Secretary of HHS with respect to the development
and implementation of the Rules required by the Administrative
Simplification provisions of HIPAA, including the privacy standards.
Through the hearings, the NCVHS specifically solicited public input on
issues related to certain key standards in the Privacy Rule: consent,
minimum necessary, marketing, fundraising, and research. The resultant
public testimony and subsequent recommendations submitted to the
Department by the NCVHS also served to inform the development of these
proposed modifications.
II. Overview of the March 2002 Notice of Proposed Rulemaking (NPRM)
As described above, through public comments, testimony at public
hearings, meetings at the request of industry and other stakeholders,
as well as other communications, the Department learned of a number of
concerns about the potential unintended effects certain provisions
would have on health care quality and access. On March 27, 2002, in
response to these concerns, and pursuant to HIPAA's provisions for
modifications to the standards, the Department proposed modifications
to the Privacy Rule (67 FR 14776). ]
The Department proposed to modify the following areas or provisions
of the Privacy Rule: consent; uses and disclosures for treatment,
payment, and health care operations; notice of privacy practices;
minimum necessary uses and disclosures, and oral communications;
business associates; uses and disclosures for marketing; parents as the
personal representatives of unemancipated minors; uses and disclosures
for research purposes; uses and disclosures for which authorizations
are required; and de-identification. In addition to these key areas,
the proposal included changes to other provisions where necessary to
clarify the Privacy Rule. The Department also included in the proposed
Rule a list of technical corrections intended as editorial or
typographical corrections to the Privacy Rule.
The proposed modifications collectively were designed to ensure
that protections for patient privacy are implemented in a manner that
maximizes the effectiveness of such protections while not compromising
either the availability or the quality of medical care. They reflected
a continuing commitment on the part of the Department to strong privacy
protections for medical records and the belief that privacy is most
effectively protected by requirements that are not exceptionally
difficult to implement. The Department welcomed comments and
suggestions for alternative ways effectively to protect patient privacy
without adversely affecting access to, or the quality of, health care.
Given that the compliance date of the Privacy Rule for most covered
entities is April 14, 2003, and the Department's interest in having the
compliance date for these revisions also be no later than April 14,
2003, the Department solicited public comment on the proposed
modifications for only 30 days. As stated above, the proposed
modifications addressed public concerns already communicated to the
Department through a wide variety of sources since publication of the
Privacy Rule in December 2000. For these reasons, the Department
believed that 30 days should be sufficient for the public to state its
views fully to the Department on the proposed modifications to the
Privacy Rule. During the 30-day comment period, the Department received
in excess of 11,400 comments.
III. Section-by-Section Description of Final Modifications and
Response to Comments
A. Section 164.501--Definitions
1. Marketing
December 2000 Privacy Rule
The Privacy Rule defined ``marketing'' at Sec. 164.501 as a
communication about a product or service, a purpose of which is to
encourage recipients of the communication to purchase or use the
product or service, subject to certain limited exceptions. To avoid
interfering with, or unnecessarily burdening communications about,
treatment or about the benefits and services of health plans and health
care providers, the Privacy Rule explicitly excluded two types of
communications from the definition of ``marketing:'' (1) communications
made by a covered entity for the purpose of describing the
participating providers and health plans in a network, or describing
the services offered by a provider or the benefits covered by a health
plan; and (2) communications made by a health care provider as part of
the treatment of a patient and for the purpose of furthering that
treatment, or made by a provider or health plan in the course of
managing an individual's treatment or recommending an alternative
treatment. Thus, a health plan could send its
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enrollees a listing of network providers, and a health care provider
could refer a patient to a specialist without either an authorization
under Sec. 164.508 or having to meet the other special requirements in
Sec. 164.514(e) that attach to marketing communications. However, these
communications qualified for the exception to the definition of
``marketing'' only if they were made orally or, if in writing, were
made without remuneration from a third party. For example, it would not
have been marketing for a pharmacy to call a patient about the need to
refill a prescription, even if that refill reminder was subsidized by a
third party; but it would have been marketing for that same, subsidized
refill reminder to be sent to the patient in the mail.
Generally, if a communication was marketing, the Privacy Rule
required the covered entity to obtain the individual's authorization to
use or disclose protected health information to make the communication.
However, the Privacy Rule, at Sec. 164.514(e), permitted the covered
entity to make health-related marketing communications without such
authorization, provided it complied with certain conditions on the
manner in which the communications were made. Specifically, the Privacy
Rule permitted a covered entity to use or disclose protected health
information to communicate to individuals about the health-related
products or services of the covered entity or of a third party, without
first obtaining an authorization for that use or disclosure of
protected health information, if the communication: (1) Identified the
covered entity as the party making the communication; (2) identified,
if applicable, that the covered entity received direct or indirect
remuneration from a third party for making the communication; (3) with
the exception of general circulation materials, contained instructions
describing how the individual could opt-out of receiving future
marketing communications; and (4) where protected health information
was used to target the communication about a product or service to
individuals based on their health status or health condition, explained
why the individual had been targeted and how the product or service
related to the health of the individual.
For certain permissible marketing communications, however, the
Department did not believe these conditions to be practicable.
Therefore, Sec. 164.514(e) also permitted a covered entity to make a
marketing communication that occurred in a face-to-face encounter with
the individual, or that involved products or services of only nominal
value, without meeting the above conditions or requiring an
authorization. These provisions, for example, permitted a covered
entity to provide sample products during a face-to-face communication,
or to distribute calendars, pens, and the like, that displayed the name
of a product or provider.
March 2002 NPRM
The Department received many complaints concerning the complexity
and unworkability of the Privacy Rule's marketing requirements. Many
entities expressed confusion over the Privacy Rule's distinction
between health care communications that are excepted from the
definition of ``marketing'' versus those that are marketing but
permitted subject to the special conditions in Sec. 164.514(e). For
example, questions were raised as to whether disease management
communications or refill reminders were ``marketing'' communications
subject to the special disclosure and opt-out conditions in
Sec. 164.514(e). Others stated that it was unclear whether various
health care operations activities, such as general health-related
educational and wellness promotional activities, were to be treated as
marketing under the Privacy Rule.
The Department also learned that consumers were generally
dissatisfied with the conditions required by Sec. 164.514(e). Many
questioned the general effectiveness of the conditions and whether the
conditions would properly protect consumers from unwanted disclosure of
protected health information to commercial entities, and from the
intrusion of unwanted solicitations. They expressed specific
dissatisfaction with the provision at Sec. 164.514(e)(3)(iii) for
individuals to opt-out of future marketing communications. Many argued
for the opportunity to opt-out of marketing communications before any
marketing occurred. Others requested that the Department limit
marketing communications to only those consumers who affirmatively
chose to receive such communications.
In response to these concerns, the Department proposed to modify
the Privacy Rule to make the marketing provisions clearer and simpler.
First, the Department proposed to simplify the Privacy Rule by
eliminating the special provisions for marketing health-related
products and services at Sec. 164.514(e). Instead, any use or
disclosure of protected health information for a communication defined
as ``marketing'' in Sec. 164.501 would require an authorization by the
individual. Thus, covered entities would no longer be able to make any
type of marketing communications that involved the use or disclosure of
protected health information without authorization simply by meeting
the disclosure and opt-out conditions in the Privacy Rule. The
Department intended to effectuate greater consumer privacy protection
by requiring authorization for all uses or disclosures of protected
health information for marketing communications, as compared to the
disclosure and opt-out conditions of Sec. 164.514(e).
Second, the Department proposed minor clarifications to the Privacy
Rule's definition of ``marketing'' at Sec. 164.501. Specifically, the
Department proposed to define ``marketing'' as ``to make a
communication about a product or service to encourage recipients of the
communication to purchase or use the product or service.'' The proposed
modification retained the substance of the ``marketing'' definition,
but changed the language slightly to avoid the implication that in
order for a communication to be marketing, the purpose or intent of the
covered entity in making such a communication would have to be
determined. The simplified language permits the Department to make the
determination based on the communication itself.
Third, with respect to the exclusions from the definition of
``marketing'' in Sec. 164.501, the Department proposed to simplify the
language to avoid confusion and better conform to other sections of the
regulation, particularly in the area of treatment communications. The
proposal retained the exclusions for communications about a covered
entity's own products and services and about the treatment of the
individual. With respect to the exclusion for a communication made ``in
the course of managing the treatment of that individual,'' the
Department proposed to modify the language to use the terms ``case
management'' and ``care coordination'' for that individual. These terms
are more consistent with the terms used in the definition of ``health
care operations,'' and were intended to clarify the Department's
intent.
One substantive change to the definition proposed by the Department
was to eliminate the condition on the above exclusions from the
definition of ``marketing'' that the covered entity could not receive
remuneration from a third party for any written communication. This
limitation was not well understood and treated similar communications
differently. For
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example, a prescription refill reminder was marketing if it was in
writing and paid for by a third party, while a refill reminder that was
not subsidized, or was made orally, was not marketing. With the
proposed elimination of the health-related marketing requirements in
Sec. 164.514(e) and the proposed requirement that any marketing
communication require an individual's prior written authorization,
retention of this condition would have adversely affected a health care
provider's ability to make many common health-related communications.
Therefore, the Department proposed to eliminate the remuneration
prohibition to the exceptions to the definition so as not to interfere
with necessary and important treatment and health-related
communications between a health care provider and patient.
To reinforce the policy requiring an authorization for most
marketing communications, the Department proposed to add a new
marketing provision at Sec. 164.508(a)(3) explicitly requiring an
authorization for a use or disclosure of protected health information
for marketing purposes. Additionally, if the marketing was expected to
result in direct or indirect remuneration to the covered entity from a
third party, the Department proposed that the authorization state this
fact. As noted above, because a use or disclosure of protected health
information for marketing communications required an authorization, the
disclosure and opt-out provisions in Sec. 164.514(e) no longer would be
necessary and the Department proposed to eliminate them. As in the
December 2000 Privacy Rule at Sec. 164.514(e)(2), the proposed
modifications at Sec. 164.508(a)(3) excluded from the marketing
authorization requirements face-to-face communications made by a
covered entity to an individual. The Department proposed to retain this
exception so that the marketing provisions would not interfere with the
relationship and dialogue between health care providers and
individuals. Similarly, the Department proposed to retain the exception
to the authorization requirement for a marketing communication that
involved products or services of nominal value, but proposed to replace
the language with the common business term ``promotional gift of
nominal value.''
As noted above, because some of the proposed simplifications were a
substitute for Sec. 164.514(e), the Department proposed to eliminate
that section, and to make conforming changes to remove references to
Sec. 164.514(e) at Sec. 164.502(a)(1)(vi) and in paragraph (6)(v) of
the definition of ``health care operations'' in Sec. 164.501.
Overview of Public Comments
The following discussion provides an overview of the public comment
received on this proposal. Additional comments received on this issue
are discussed below in the section entitled, ``Response to Other Public
Comments.''
The Department received generally favorable comment on its proposal
to simplify the marketing provisions by requiring authorizations for
uses or disclosures of protected health information for marketing
communications, instead of the special provisions for health-related
products and services at Sec. 164.514(e). Many also supported the
requirement that authorizations notify the individual of marketing that
results in direct or indirect remuneration to the covered entity from a
third party. They argued that for patients to make informed decisions,
they must be notified of potential financial conflicts of interest.
However, some commenters opposed the authorization requirement for
marketing, arguing instead for the disclosure and opt-out requirements
at Sec. 164.514(e) or for a one-time, blanket authorization from an
individual for their marketing activities.
Commenters were sharply divided on whether the Department had
properly defined what is and what is not marketing. Most of those
opposed to the Department's proposed definitions objected to the
elimination of health-related communications for which the covered
entity received remuneration from the definition of ``marketing.'' They
argued that these communications would have been subject to the
consumer protections in Sec. 164.514(e) but, under the proposal, could
be made without any protections at all. The mere presence of
remuneration raised conflict of interest concerns for these commenters,
who feared patients would be misled into thinking the covered entity
was acting solely in the patients' best interest when recommending an
alternative medication or treatment. Of particular concern to these
commenters was the possibility of a third party, such as a
pharmaceutical company, obtaining a health care provider's patient list
to market its own products or services directly to the patients under
the guise of recommending an ``alternative treatment'' on behalf of the
provider. Commenters argued that, even if the parties attempted to
cloak the transaction in the trappings of a business associate
relationship, when the remuneration flowed from the third party to the
covered entity, the transaction was tantamount to selling the patient
lists and ought to be considered marketing.
On the other hand, many commenters urged the Department to broaden
the categories of communications that are not marketing. Several
expressed concern that, under the proposal, they would be unable to
send newsletters and other general circulation materials with
information about health-promoting activities (e.g., screenings for
certain diseases) to their patients or members without an
authorization. Health plans were concerned that they would be unable to
send information regarding enhancements to health insurance coverage to
their members and beneficiaries. They argued, among other things, that
they should be excluded from the definition of ``marketing'' because
these communications would be based on limited, non-clinical protected
health information, and because policyholders benefit and use such
information to fully evaluate the mix of coverage most appropriate to
their needs. They stated that providing such information is especially
important given that individual and market-wide needs, as well as
benefit offerings, change over time and by statute. For example,
commenters informed the Department that some States now require long-
term care insurers to offer new products to existing policyholders as
they are brought to market and to allow policyholders to purchase the
new benefits through a formal upgrade process. These health plans were
concerned that an authorization requirement for routine communications
about options and enhancements would take significant time and expense.
Some insurers also urged that they be allowed to market other lines of
insurance to their health plan enrollees.
A number of commenters urged the Department to exclude any activity
that met the definitions of ``treatment,'' ``payment,'' or ``health
care operations'' from the definition of ``marketing'' so that they
could freely inform customers about prescription discount card and
price subsidy programs. Still others wanted the Department to broaden
the treatment exception to include all health-related communications
between providers and patients.
Final Modifications. The Department adopts the modifications to
marketing substantially as proposed in the NPRM, but makes changes to
the proposed definition of ``marketing'' and further clarifies one of
the exclusions from the definition of ``marketing'' in response to
comments on the proposal. The
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definition of ``marketing'' is modified to close what commenters
characterized as a loophole, that is, the possibility that covered
entities, for remuneration, could disclose protected health information
to a third party that would then be able to market its own products and
services directly to individuals. Also, in response to comments, the
Department clarifies the language in the marketing exclusion for
communications about a covered entity's own products and services.
As it proposed to do, the Department eliminates the special
provisions for marketing health-related products and services at
Sec. 164.514(e). Except as provided for at Sec. 164.508(a)(3), a
covered entity must have the individual's prior written authorization
to use or disclose protected health information for marketing
communications and will no longer be able to do so simply by meeting
the disclosure and opt-out provisions, previously set forth in
Sec. 164.514(e). The Department agrees with commenters that the
authorization provides individuals with more control over whether they
receive marketing communications and better privacy protections for
such uses and disclosures of their health information. In response to
commenters who opposed this proposal, the Department does not believe
that an opt-out requirement for marketing communications would provide
a sufficient level of control for patients regarding their health
information. Nor does the Department believe that a blanket
authorization provides sufficient privacy protections for individuals.
Section 164.508(c) sets forth the core elements of an authorization
necessary to give individuals control of their protected health
information. Those requirements give individuals sufficient information
and notice regarding the type of use or disclosure of their protected
health information that they are authorizing. Without such specificity,
an authorization would not have meaning. Indeed, blanket marketing
authorizations would be considered defective under Sec. 164.508(b)(2).
The Department adopts the general definition of ``marketing'' with
one clarification. Thus, ``marketing'' means ``to make a communication
about a product or service that encourages the recipients of the
communication to purchase or use the product or service.'' In removing
the language referencing the purpose of the communication and
substituting the term ``that encourages'' for the term ``to
encourage'', the Department intends to simplify the determination of
whether a communication is marketing. If, on its face, the
communication encourages recipients of the communication to purchase or
use the product or service, the communication is marketing. A few
commenters argued for retaining the purpose of the communication as
part of the definition of ``marketing'' based on their belief that the
intent of the communication was a clearer and more definitive standard
than the effect of the communication. The Department disagrees with
these commenters. Tying the definition of ``marketing'' to the purpose
of the communication creates a subjective standard that would be
difficult to enforce because the intent of the communicator rarely
would be documented in advance. The definition adopted by the Secretary
allows the communication to speak for itself.
The Department further adopts the three categories of
communications that were proposed as exclusions from the definition of
``marketing.'' Thus, the covered entity is not engaged in marketing
when it communicates to individuals about: (1) The participating
providers and health plans in a network, the services offered by a
provider, or the benefits covered by a health plan; (2) the
individual's treatment; or (3) case management or care coordination for
that individual, or directions or recommendations for alternative
treatments, therapies, health care providers, or settings of care to
that individual. For example, a doctor that writes a prescription or
refers an individual to a specialist for follow-up tests is engaging in
a treatment communication and is not marketing a product or service.
The Department continues to exempt from the ``marketing'' definition
the same types of communications that were not marketing under the
Privacy Rule as published in December 2000, but has modified some of
the language to better track the terminology used in the definition of
``health care operations.'' The commenters generally supported this
clarification of the language.
The Department, however, does not agree with commenters that sought
to expand the exceptions from marketing for all communications that
fall within the definitions of ``treatment,'' ``payment,'' or ``health
care operations.'' The purpose of the exclusions from the definition of
marketing is to facilitate those communications that enhance the
individual's access to quality health care. Beyond these important
communications, the public strongly objected to any commercial use of
protected health information to attempt to sell products or services,
even when the product or service is arguably health related. In light
of these strong public objections, ease of administration is an
insufficient justification to categorically exempt all communications
about payment and health care operations from the definition of
``marketing.''
However, in response to comments, the Department is clarifying the
language that excludes from the definition of ``marketing'' those
communications that describe network participants and the services or
benefits of the covered entity. Several commenters, particularly
insurers, were concerned that the reference to a ``plan of benefits''
was too limiting and would prevent them from sending information to
their enrollees regarding enhancements or upgrades to their health
insurance coverage. They inquired whether the following types of
communications would be permissible: enhancements to existing products;
changes in deductibles/copays and types of coverage (e.g., prescription
drug); continuation products for students reaching the age of majority
on parental policies; special programs such as guaranteed issue
products and other conversion policies; and prescription drug card
programs. Some health plans also inquired if they could communicate
with beneficiaries about ``one-stop shopping'' with their companies to
obtain long-term care, property, casualty, and life insurance products.
The Department understands the need for covered health care
providers and health plans to be able to communicate freely to their
patients or enrollees about their own products, services, or benefits.
The Department also understands that some of these communications are
required by State or other law. To ensure that such communications may
continue, the Department is broadening its policy, both of the December
2000 Privacy Rule as well as proposed in the March 2002 NPRM, to allow
covered entities to use protected health information to convey
information to beneficiaries and members about health insurance
products offered by the covered entity that could enhance or substitute
for existing health plan coverage. Specifically, the Department
modifies the relevant exemption from the definition of ``marketing'' to
include communications that describe ``a health-related product or
service (or payment for such product or service) that is provided by,
or included in a plan of benefits of, the covered entity making the
communication, including communications about: the entities
participating in a health care provider network or health plan network;
replacement of, or enhancements to, a
[[Page 53187]]
health plan; and health-related products or services available only to
a health plan enrollee that add value to, but are not part of, a plan
of benefits.'' Thus, under this exemption, a health plan is not
engaging in marketing when it advises its enrollees about other
available health plan coverages that could enhance or substitute for
existing health plan coverage. For example, if a child is about to age
out of coverage under a family's policy, this provision will allow the
plan to send the family information about continuation coverage for the
child. This exception, however, does not extend to excepted benefits
(described in section 2791(c)(1) of the Public Health Service Act, 42
U.S.C. 300gg-91(c)(1)), such as accident-only policies), nor to other
lines of insurance (e.g., it is marketing for a multi-line insurer to
promote its life insurance policies using protected health
information).
Moreover, the expanded language makes clear that it is not
marketing when a health plan communicates about health-related products
and services available only to plan enrollees or members that add value
to, but are not part of, a plan of benefits. The provision of value-
added items or services (VAIS) is a common practice, particularly for
managed care organizations. Communications about VAIS may qualify as a
communication that is about a health plan's own products or services,
even if VAIS are not considered plan benefits for the Adjusted
Community Rate purposes. To qualify for this exclusion, however, the
VAIS must meet two conditions. First, they must be health-related.
Therefore, discounts offered by Medicare+Choice or other managed care
organizations for eyeglasses may be considered part of the plan's
benefits, whereas discounts to attend movie theaters will not. Second,
such items and services must demonstrably ``add value'' to the plan's
membership and not merely be a pass-through of a discount or item
available to the public at large. Therefore, a Medicare+Choice or other
managed care organization could, for example, offer its members a
special discount opportunity for a health/fitness club without
obtaining authorizations, but could not pass along to its members
discounts to a health fitness club that the members would be able to
obtain directly from the health/fitness clubs.
In further response to comments, the Department has added new
language to the definition of ``marketing'' to close what commenters
perceived as a loophole that a covered entity could sell protected
health information to another company for the marketing of that
company's products or services. For example, many were concerned that a
pharmaceutical company could pay a provider for a list of patients with
a particular condition or taking a particular medication and then use
that list to market its own drug products directly to those patients.
The commenters believed the proposal would permit this to happen under
the guise of the pharmaceutical company acting as a business associate
of the covered entity for the purpose of recommending an alternative
treatment or therapy to the individual. The Department agrees with
commenters that the potential for manipulating the business associate
relationship in this fashion should be expressly prohibited. Therefore,
the Department is adding language that would make clear that business
associate transactions of this nature are marketing. Marketing is
defined expressly to include ``an arrangement between a covered entity
and any other entity whereby the covered entity discloses protected
health information to the other entity, in exchange for direct or
indirect remuneration, for the other entity or its affiliate to make a
communication about its own product or service that encourages
recipients of the communication to purchase or use that product or
service.'' These communications are marketing and can only occur if the
covered entity obtains the individual's authorization pursuant to
Sec. 164.508. The Department believes that this provision will make
express the fundamental prohibition against covered entities selling
lists of patients or enrollees to third parties, or from disclosing
protected health information to a third party for the marketing
activities of the third party, without the written authorization of the
individual. The Department further notes that manufacturers that
receive identifiable health information and misuse it may be subject to
action taken under other consumer protection statutes by other Federal
agencies, such as the Federal Trade Commission.
The Department does not, however, agree with commenters who argued
for retention of the provisions that would condition the exclusions
from the ``marketing'' definition on the absence of remuneration.
Except for the arrangements that are now expressly defined as
``marketing,'' the Department eliminates the conditions that
communications are excluded from the definition of ``marketing'' only
if they are made orally, or, if in writing, are made without any direct
or indirect remuneration. The Department does not agree that the simple
receipt of remuneration should transform a treatment communication into
a commercial promotion of a product or service. For example, health
care providers should be able to, and can, send patients prescription
refill reminders regardless of whether a third party pays or subsidizes
the communication. The covered entity also is able to engage a
legitimate business associate to assist it in making these permissible
communications. It is only in situations where, in the guise of a
business associate, an entity other than the covered entity is
promoting its own products using protected health information it has
received from, and for which it has paid, the covered entity, that the
remuneration will place the activity within the definition of
``marketing.''
In addition, the Department adopts the proposed marketing
authorization provision at Sec. 164.508(a)(3), with minor language
changes to conform to the revised ``marketing'' definition. The Rule
expressly requires an authorization for uses or disclosures of
protected health information for marketing communications, except in
two circumstances: (1) When the communication occurs in a face-to-face
encounter between the covered entity and the individual; or (2) the
communication involves a promotional gift of nominal value. A marketing
authorization must include a statement about remuneration, if any. For
ease of administration, the Department has changed the regulatory
provision to require a statement on the authorization whenever the
marketing ``involves'' direct or indirect remuneration to the covered
entity from a third party, rather than requiring the covered entity to
identify those situations where ``the marketing is expected to result
in'' remuneration.
Finally, the Department clarifies that nothing in the marketing
provisions of the Privacy Rule are to be construed as amending,
modifying, or changing any rule or requirement related to any other
Federal or State statutes or regulations, including specifically anti-
kickback, fraud and abuse, or self-referral statutes or regulations, or
to authorize or permit any activity or transaction currently proscribed
by such statutes and regulations. Examples of such laws include the
anti-kickback statute (section 1128B(b) of the Social Security Act),
safe harbor regulations (42 CFR part 1001), Stark law (section 1877 of
the Social Security Act) and regulations (42 CFR parts 411 and 424),
and HIPAA statute on self-referral (section 1128C of the Social
Security Act). The definition
[[Page 53188]]
of ``marketing'' is solely applicable to the Privacy Rule and the
permissions granted by the Rule are only for a covered entity's use or
disclosure of protected health information. In particular, although
this regulation defines the term ``marketing'' to exclude
communications to an individual to recommend, purchase, or use a
product or service as part of the treatment of the individual or for
case management or care coordination of that individual, such
communication by a ``white coat'' health care professional may violate
the anti-kickback statute. Similar examples for pharmacist
communications with patients relating to the marketing of products on
behalf of pharmaceutical companies were identified by the OIG as
problematic in a 1994 Special Fraud Alert (December 19, 1994, 59 FR
65372). Other violations have involved home health nurses and physical
therapists acting as marketers for durable medical equipment companies.
Although a particular communication under the Privacy Rule may not
require patient authorization because it is not marketing, or may
require patient authorization because it is ``marketing'' as the Rule
defines it, the arrangement may nevertheless violate other statutes and
regulations administered by HHS, the Department of Justice, or other
Federal or State agency.
Response to Other Public Comments
Comment: Some commenters recommended that the definition of
``marketing'' be broadened to read as follows: ``any communication
about a product or service to encourage recipients of the communication
to purchase or use the product or service or that will make the
recipient aware of the product or service available for purchase or use
by the recipient.'' According to these commenters, the additional
language would capture marketing campaign activities to establish
``brand recognition.''
Response: The Department believes that marketing campaigns to
establish brand name recognition of products is already encompassed
within the general definition of ``marketing'' and that it is not
necessary to add language to accomplish this purpose.
Comment: Some commenters opposed the proposed deletion of
references to the covered entity as the source of the communications,
in the definition of those communications that were excluded from the
``marketing'' definition. They objected to these non-marketing
communications being made by unrelated third parties based on protected
health information disclosed to these third parties by the covered
entity, without the individual's knowledge or authorization.
Response: These commenters appear to have misinterpreted the
proposal as allowing third parties to obtain protected health
information from covered entities for marketing or other purposes for
which the Rule requires an individual's authorization. The deletion of
the specific reference to the covered entity does not permit
disclosures to a third party beyond the disclosures already permitted
by the Rule. The change is intended to be purely editorial: since the
Rule applies only to covered entities, the only entities whose
communications can be governed by the Rule are covered entities, and
thus the reference to covered entities there was redundant. Covered
entities may not disclose protected health information to third parties
for marketing purposes without authorization from the individual, even
if the third party is acting as the business associate of the
disclosing covered entity. Covered entities may, however, use protected
health information to communicate with individuals about the covered
entity's own health-related products or services, the individual's
treatment, or case management or care coordination for the individual.
The covered entity does not need an authorization for these types of
communications and may make the communication itself or use a business
associate to do so.
Comment: Some commenters advocated for reversion to the provision
in Sec. 164.514(e) that the marketing communication identify the
covered entity responsible for the communication, and argued that the
covered entity should be required to identify itself as the source of
the protected health information.
Response: As modified, the Privacy Rule requires the individual's
written authorization for the covered entity to use or disclose
protected health information for marketing purposes, with limited
exceptions. The Department believes that the authorization process
itself will put the individual sufficiently on notice that the covered
entity is the source of the protected health information. To the extent
that the commenter suggests that these disclosures are necessary for
communications that are not ``marketing'as defined by the Rule, the
Department disagrees because such a requirement would place an undue
burden on necessary health-related communications.
Comment: Many commenters opposed the proposed elimination of the
provision that would have transformed a communication exempted from
marketing into a marketing communication if it was in writing and paid
for by a third party. They argued that marketing should include any
activity in which a covered entity receives compensation, directly or
indirectly, through such things as discounts from another provider,
manufacturer, or service provider in exchange for providing information
about the manufacturer or service provider's products to consumers, and
that consumers should be advised whenever such remuneration is involved
and allowed to opt-out of future communications.
Response: The Department considered whether remuneration should
determine whether a given activity is marketing, but ultimately
concluded that remuneration should not define whether a given activity
is marketing or falls under an exception to marketing. In fact, the
Department believes that the provision in the December 2000 Rule that
transformed a treatment communication into a marketing communication if
it was in writing and paid for by a third party blurred the line
between treatment and marketing in ways that would have made the
Privacy Rule difficult to implement. The Department believes that
certain health care communications, such as refill reminders or
informing patients about existing or new health care products or
services, are appropriate, whether or not the covered entity receives
remuneration from third parties to pay for them. The fact that
remuneration is received for a marketing communication does not mean
the communication is biased or inaccurate. For the same reasons, the
Department does not believe that the communications that are exempt
from the definition of ``marketing'' require any special conditions,
based solely on direct or indirect remuneration received by the covered
entity. Requiring disclosure and opt-out conditions on these
communications, as Sec. 164.514(e) had formerly imposed on health-
related marketing communications, would add a layer of complexity to
the Privacy Rule that the Department intended to eliminate.
Individuals, of course, are free to negotiate with covered entities for
limitations on such uses and disclosures, to which the entity may, but
is not required to, agree.
The Department does agree with commenters that, in limited
circumstances, abuses can occur. The Privacy Rule, both as published in
December 2000 and as proposed to be modified in March 2002, has always
prohibited covered entities from selling protected health information
to a third
[[Page 53189]]
party for the marketing activities of the third party, without
authorization. Nonetheless, in response to continued public concern,
the Department has added a new provision to the definition of
``marketing'' to prevent situations in which a covered entity could
take advantage of the business associate relationship to sell protected
health information to another entity for that entity's commercial
marketing purposes. The Department intends this prohibition to address
the potential financial conflict of interest that would lead a covered
entity to disclose protected health information to another entity under
the guise of a treatment exemption.
Comment: Commenters argued that written authorizations (opt-ins)
should be required for the use of clinical information in marketing.
They stated that many consumers do not want covered entities to use
information about specific clinical conditions that an individual has,
such as AIDS or diabetes, to target them for marketing of services for
such conditions.
Response: The Department does not intend to interfere with the
ability of health care providers or health plans to deliver quality
health care to individuals. The ``marketing'' definition excludes
communications for the individual's treatment and for case management,
care coordination or the recommendation of alternative therapies.
Clinical information is critical for these communications and, hence,
cannot be used to distinguish between communications that are or are
not marketing. The covered entity needs the individual's authorization
to use or disclose protected health information for marketing
communications, regardless of whether clinical information is to be
used.
Comment: The proposed modification eliminated the Sec. 164.514
requirements that permitted the use of protected health information to
market health-related products and services without an authorization.
In response to that proposed modification, many commenters asked
whether covered entities would be allowed to make communications about
``health education'' or ``health promoting'' materials or services
without an authorization under the modified Rule. Examples included
communications about health improvement or disease prevention, new
developments in the diagnosis or treatment of disease, health fairs,
health/wellness-oriented classes or support groups.
Response: The Department clarifies that a communication that merely
promotes health in a general manner and does not promote a specific
product or service from a particular provider does not meet the general
definition of ``marketing.'' Such communications may include
population-based activities to improve health or reduce health care
costs as set forth in the definition of ``health care operations'' at
Sec. 164.501. Therefore, communications, such as mailings reminding
women to get an annual mammogram, and mailings providing information
about how to lower cholesterol, about new developments in health care
(e.g., new diagnostic tools), about health or ``wellness'' classes,
about support groups, and about health fairs are permitted, and are not
considered marketing.
Comment: Some commenters asked whether they could communicate with
beneficiaries about government programs or government-sponsored
programs such as information about SCHIP; eligibility for Medicare/
Medigap (e.g., eligibility for limited, six-month open enrollment
period for Medicare supplemental benefits).
Response: The Department clarifies that communications about
government and government-sponsored programs do not fall within the
definition of ``marketing.'' There is no commercial component to
communications about benefits available through public programs.
Therefore, a covered entity is permitted to use and disclose protected
health information to communicate about eligibility for Medicare
supplemental benefits, or SCHIP. As in our response above, these
communications may reflect population-based activities to improve
health or reduce health care costs as set forth in the definition of
``health care operations'' at Sec. 164.501.
Comment: The proposed modification eliminated the Sec. 164.514
requirements that allowed protected health information to be used and
disclosed without authorization or the opportunity to opt-out, for
communications contained in newsletters or similar general
communication devices widely distributed to patients, enrollees, or
other broad groups of individuals. Many commenters requested
clarification as to whether various types of general circulation
materials would be permitted under the proposed modification.
Commenters argued that newsletters or similar general communication
devices widely distributed to patients, enrollees, or other broad
groups of individuals should be permitted without authorizations
because they are ``common'' and ``serve appropriate information
distribution purposes'' and, based on their general circulation, are
less intrusive than other forms of communication.
Response: Covered entities may make communications in newsletter
format without authorization so long as the content of such
communications is not ``marketing,'' as defined by the Rule. The
Department is not creating any special exemption for newsletters.
Comment: One commenter suggested that, even when authorizations are
granted to disclose protected health information for a particular
marketing purpose to a non-covered entity, there should also be an
agreement by the third party not to re-disclose the protected health
information. This same commenter also recommended that the Privacy Rule
place restrictions on non-secure modes of making communications
pursuant to an authorization. This commenter argued that protected
health information should not be disclosed on the outside of mailings
or through voice mail, unattended FAX, or other modes of communication
that are not secure.
Response: Under the final Rule, a covered entity must obtain an
individual's authorization to use or disclose protected health
information for a marketing communication, with some exceptions. If an
individual wanted an authorization to limit the use of the information
by the covered entity, the individual could negotiate with the covered
entity to make that clear in the authorization. Similarly, individuals
can request confidential forms of communication, even with respect to
authorized disclosures. See Sec. 164.522(b).
Comment: Commenters requested that HHS provide clear guidance on
what types of activities constitute a use or disclosure for marketing,
and, therefore, require an authorization.
Response: The Department has modified the ``marketing'' definition
to clarify the types of uses or disclosures of protected health
information that are marketing, and, therefore, require prior
authorization and those that are not marketing. The Department intends
to update its guidance on this topic and address specific examples
raised by commenters at that time.
Comment: A number of commenters wanted the Department to amend the
face-to-face authorization exception. Some urged that it be broadened
to include telephone, mail and other common carriers, fax machines, or
the Internet so that the exception would cover communications between
providers and patients that are not in person. For example, it was
pointed out that some providers, such as home
[[Page 53190]]
delivery pharmacies, may have a direct treatment relationship, but
communicate with patients through other channels. Some raised specific
concerns about communicating with ``shut-ins'' and ``persons living in
rural areas.'' Other commenters asked the Department to make the
exception more narrow to cover only those marketing communications made
by a health care provider, as opposed to by a business associate, or to
cover only those marketing communications of a provider that arise from
a treatment or other essential health care communication.
Response: The Department believes that expanding the face-to-face
authorization exception to include telephone, mail, and other common
carriers, fax machines or the Internet would create an exception
essentially for all types of marketing communications. All providers
potentially use a variety of means to communicate with their patients.
The authorization exclusion, however, is narrowly crafted to permit
only face-to-face encounters between the covered entity and the
individual.
The Department believes that further narrowing the exception to
place conditions on such communications, other than that it be face-to-
face, would neither be practical nor better serve the privacy interests
of the individual. The Department does not intend to police
communications between doctors and patients that take place in the
doctor's office. Further limiting the exception would add a layer of
complexity to the Rule, encumbering physicians and potentially causing
them to second-guess themselves when making treatment or other
essential health care communications. In this context, the individual
can readily stop any unwanted communications, including any
communications that may otherwise meet the definition of ``marketing.''
2. Health Care Operations: Changes of Legal Ownership
December 2000 Privacy Rule. The Rule's definition of ``health care
operations'' included the disclosure of protected health information
for the purposes of due diligence with respect to the contemplated sale
or transfer of all or part of a covered entity's assets to a potential
successor in interest who is a covered entity, or would become a
covered entity as a result of the transaction.
The Department indicated in the December 2000 preamble of the
Privacy Rule its intent to include in the definition of health care
operations the actual transfer of protected health information to a
successor in interest upon a sale or transfer of its assets. (65 FR
82609.) However, the regulation itself did not expressly provide for
the transfer of protected health information upon the sale or transfer
of assets to a successor in interest. Instead, the definition of
``health care operations'' included uses or disclosures of protected
health information only for due diligence purposes when a sale or
transfer to a successor in interest is contemplated.
March 2002 NPRM. A number of entities expressed concern about the
discrepancy between the intent as expressed in the preamble to the
December 2000 Privacy Rule and the actual regulatory language. To
address these concerns, the Department proposed to add language to
paragraph (6) of the definition of ``health care operations'' to
clarify its intent to permit the transfer of records to a covered
entity upon a sale, transfer, merger, or consolidation. This proposed
change would prevent the Privacy Rule from interfering with necessary
treatment or payment activities upon the sale of a covered entity or
its assets.
The Department also proposed to use the terms ``sale, transfer,
consolidation or merger'' and to eliminate the term ``successor in
interest'' from this paragraph. The Department intended this provision
to apply to any sale, transfer, merger or consolidation and believed
the current language may not accomplish this goal.
The Department proposed to retain the limitation that such
disclosures are health care operations only to the extent the entity
receiving the protected health information is a covered entity or would
become a covered entity as a result of the transaction. The Department
clarified that the proposed modification would not affect a covered
entity's other legal or ethical obligation to notify individuals of a
sale, transfer, merger, or consolidation.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
Numerous commenters supported the proposed modifications.
Generally, these commenters claimed the modifications would prevent
inconvenience to consumers, and facilitate timely access to health
care. Specifically, these commenters indicated that health care would
be delayed and consumers would be inconvenienced if covered entities
were required to obtain individual consent or authorization before they
could access health records that are newly acquired assets resulting
from the sale, transfer, merger, or consolidation of all or part of a
covered entity. Commenters further claimed that the administrative
burden of acquiring individual permission and culling records of
consumers who do not give consent would be too great, and would cause
some entities to simply store or destroy the records instead.
Consequently, health information would be inaccessible, causing
consumers to be inconvenienced and health care to be delayed. Some
commenters noted that the proposed modifications recognize the
realities of business without compromising the availability or quality
of health care or diminishing privacy protections one would expect in
the handling of protected health information during the course of such
business transactions.
Opposition to the proposed modifications was limited, with
commenters generally asserting that the transfer of records in such
circumstances would not be in the best interests of individuals.
Final Modifications. The Department agrees with the commenters that
supported the proposed modifications and, therefore, adopts the
modifications to the definition of health care operations. Thus,
``health care operations'' includes the sale, transfer, merger, or
consolidation of all or part of the covered entity to or with another
covered entity, or an entity that will become a covered entity as a
result of the transaction, as well as the due diligence activities in
connection with such transaction. In response to a comment, the final
Rule modifies the phrase ``all or part of a covered entity'' to read
``all or part of the covered entity'' to clarify that any disclosure
for such activity must be by the covered entity that is a party to the
transaction.
Under the final definition of ``health care operations,'' a covered
entity may use or disclose protected health information in connection
with a sale or transfer of assets to, or a consolidation or merger
with, an entity that is or will be a covered entity upon completion of
the transaction; and to conduct due diligence in connection with such
transaction. The modification makes clear it is also a health care
operation to transfer records containing protected health information
as part of the transaction. For example, if a pharmacy which is a
covered entity buys another pharmacy which is also a covered entity,
protected health information can be exchanged between the two entities
for purposes of conducting due diligence, and the selling entity may
[[Page 53191]]
transfer any records containing protected health information to the new
owner upon completion of the transaction. The new owner may then
immediately use and disclose those records to provide health care
services to the individuals, as well as for payment and health care
operations purposes. Since the information would continue to be
protected by the Privacy Rule, any other use or disclosure of the
information would require an authorization unless otherwise permitted
without authorization by the Rule, and the new owner would be obligated
to observe the individual's rights of access, amendment, and
accounting. The Privacy Rule would not interfere with other legal or
ethical obligations of an entity that may arise out of the nature of
its business or relationship with its customers or patients to provide
such persons with notice of the transaction or an opportunity to agree
to the transfer of records containing personal information to the new
owner.
Response to Other Public Comments
Comment: One commenter was concerned about what obligations the
parties to a transaction have regarding protected health information
that was exchanged as part of a transaction if the transaction does not
go through.
Response: The Department believes that other laws and standard
business practices are adequate to address these situations and
accordingly does not impose additional requirements of this type. It is
standard practice for parties contemplating such transactions to enter
into confidentiality agreements. In addition to exchanging protected
health information, the parties to such transactions commonly exchange
confidential proprietary information. It is a standard practice for the
parties to these transaction to agree that the handling of all
confidential information, such as proprietary information, will include
ensuring that, in the event that the proposed transaction is not
consummated, the information is either returned to its original owner
or destroyed as appropriate. They may include protected health
information in any such agreement, as they determine appropriate to the
circumstances and applicable law. ]
3. Protected Health Information: Exclusion for Employment Records
December 2000 Privacy Rule. The Privacy Rule broadly defines
``protected health information'' as individually identifiable health
information maintained or transmitted by a covered entity in any form
or medium. The December 2000 Privacy Rule expressly excluded from the
definition of ``protected health information'' only educational and
other records that are covered by the Family Education Rights and
Privacy Act of 1974, as amended, 20 U.S.C. 1232g. In addition,
throughout the December 2000 preamble to the Privacy Rule, the
Department repeatedly stated that the Privacy Rule does not apply to
employers, nor does it apply to the employment functions of covered
entities, that is, when they are acting in their role as employers. For
example, the Department stated:
Covered entities must comply with this regulation in their
health care capacity, not in their capacity as employers. For
example, information in hospital personnel files about a nurses'
(sic) sick leave is not protected health information under this
rule.
65 FR 82612. However, the definition of protected health information
did not expressly exclude personnel or employment records of covered
entities.
March 2002 NPRM. The Department understands that covered entities
are also employers, and that this creates two potential sources of
confusion about the status of health information. First, some employers
are required or elect to obtain health information about their
employees, as part of their routine employment activities [e.g.,
hiring, compliance with the Occupational Safety and Health
Administration (OSHA) requirements]. Second, employees of covered
health care providers or health plans sometimes seek treatment or
reimbursement from that provider or health plan, unrelated to the
employment relationship.
To avoid any confusion on the part of covered entities as to
application of the Privacy Rule to the records they maintain as
employers, the Department proposed to modify the definition of
``protected health information'' in Sec. 164.501 to expressly exclude
employment records held by a covered entity in its role as employer.
The proposed modification also would alleviate the situation where a
covered entity would feel compelled to elect to designate itself as a
hybrid entity solely to carve out its employment functions.
Individually identifiable health information maintained or transmitted
by a covered entity in its health care capacity would, under the
proposed modification, continue to be treated as protected health
information.
The Department specifically solicited comments on whether the term
``employment records'' is clear and what types of records would be
covered by the term.
In addition, as discussed in section III.C.1. below, the Department
proposed to modify the definition of a hybrid entity to permit any
covered entity that engaged in both covered and non-covered functions
to elect to operate as a hybrid entity. Under the proposed
modification, a covered entity that primarily engaged in covered
functions, such as a hospital, would be allowed to elect hybrid entity
status even if its only non-covered functions were those related to its
capacity as an employer. Indeed, because of the absence of an express
exclusion for employment records in the definition of protected health
information, some covered entities may have elected hybrid entity
status under the misconception that this was the only way to prevent
their personnel information from being treated as protected health
information under the Rule.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The Department received comments both supporting and opposing the
proposal to add an exemption for employment records to the definition
of protected health information. Support for the proposal was based
primarily on the need for clarity and certainty in this important area.
Moreover, commenters supported the proposed exemption for employment
records because it reinforced and clarified that the Privacy Rule does
not conflict with an employer's obligation under numerous other laws,
including OSHA, Family and Medical Leave Act (FMLA), workers'
compensation, and alcohol and drug free workplace laws.
Those opposed to the modification were concerned that a covered
entity may abuse its access to the individually identifiable health
information in its employment records by using that information for
discriminatory purposes. Many commenters expressed concern that an
employee's health information created, maintained, or transmitted by
the covered entity in its health care capacity would be considered an
employment record and, therefore, would not be considered protected
health information. Some of these commenters argued for the inclusion
of special provisions, similar to the ``adequate separation''
requirements for disclosure of protected health information from group
health plan to plan sponsor functions (Sec. 164.504(f)), to heighten
the protection for an employee's individually identifiable health
information when moving between a covered entity's
[[Page 53192]]
health care functions and its employer functions.
A number of commenters also suggested types of records that the
Department should consider to be ``employment records'' and, therefore,
excluded from the definition of ``protected health information.'' The
suggested records included records maintained under the FMLA or the
Americans with Disabilities Act (ADA), as well as records relating to
occupational injury, disability insurance eligibility, sick leave
requests and justifications, drug screening results, workplace medical
surveillance, and fitness-for-duty test results. One commenter
suggested that health information related to professional athletes
should qualify as an employment record.
Final Modifications. The Department adopts as final the proposed
language excluding employment records maintained by a covered entity in
its capacity as an employer from the definition of ``protected health
information.'' The Department agrees with commenters that the
regulation should be explicit that it does not apply to a covered
entity's employer functions and that the most effective means of
accomplishing this is through the definition of ``protected health
information.''
The Department is sensitive to the concerns of commenters that a
covered entity not abuse its access to an employee's individually
identifiable health information which it has created or maintains in
its health care, not its employer, capacity. In responding to these
concerns, the Department must remain within the boundaries set by the
statute, which does not include employers per se as covered entities.
Thus, we cannot regulate employers, even when it is a covered entity
acting as an employer.
To address these concerns, the Department clarifies that a covered
entity must remain cognizant of its dual roles as an employer and as a
health care provider, health plan, or health care clearinghouse.
Individually identifiable health information created, received, or
maintained by a covered entity in its health care capacity is protected
health information. It does not matter if the individual is a member of
the covered entity's workforce or not. Thus, the medical record of a
hospital employee who is receiving treatment at the hospital is
protected health information and is covered by the Rule, just as the
medical record of any other patient of that hospital is protected
health information and covered by the Rule. The hospital may use that
information only as permitted by the Privacy Rule, and in most cases
will need the employee's authorization to access or use the medical
information for employment purposes. When the individual gives his or
her medical information to the covered entity as the employer, such as
when submitting a doctor's statement to document sick leave, or when
the covered entity as employer obtains the employee's written
authorization for disclosure of protected health information, such as
an authorization to disclose the results of a fitness for duty
examination, that medical information becomes part of the employment
record, and, as such, is no longer protected health information. The
covered entity as employer, however, may be subject to other laws and
regulations applicable to the use or disclosure of information in an
employee's employment record.
The Department has decided not to add a definition of the term
``employment records'' to the Rule. The comments indicate that the same
individually identifiable health information about an individual may be
maintained by the covered entity in both its employment records and the
medical records it maintains as a health care provider or enrollment or
claims records it maintains as a health plan. The Department therefore
is concerned that a definition of ``employment record'' may lead to the
misconception that certain types of information are never protected
health information, and will put the focus incorrectly on the nature of
the information rather than the reasons for which the covered entity
obtained the information. For example, drug screening test results will
be protected health information when the provider administers the test
to the employee, but will not be protected health information when,
pursuant to the employee's authorization, the test results are provided
to the provider acting as employer and placed in the employee's
employment record. Similarly, the results of a fitness for duty exam
will be protected health information when the provider administers the
test to one of its employees, but will not be protected health
information when the results of the fitness for duty exam are turned
over to the provider as employer pursuant to the employee's
authorization.
Furthermore, while the examples provided by commenters represent
typical files or records that may be maintained by employers, the
Department does not believe that it has sufficient information to
provide a complete definition of employment record. Therefore, the
Department does not adopt as part of this rulemaking a definition of
employment record, but does clarify that medical information needed for
an employer to carry out its obligations under FMLA, ADA, and similar
laws, as well as files or records related to occupational injury,
disability insurance eligibility, sick leave requests and
justifications, drug screening results, workplace medical surveillance,
and fitness-for-duty tests of employees, may be part of the employment
records maintained by the covered entity in its role as an employer.
Response to Other Public Comments
Comment: One commenter requested clarification as to whether the
term ``employment record'' included the following information that is
either maintained or transmitted by a fully insured group health plan
to an insurer or HMO for enrollment and/or disenrollment purposes: (a)
the identity of an individual including name, address, birth date,
marital status, dependent information and SSN; (b) the individual's
choice of plan; (c) the amount of premiums/contributions for coverage
of the individual; (d) whether the individual is an active employee or
retired; (e) whether the individual is enrolled in Medicare.
Response: All of this information is protected health information
when held by a fully insured group health plan and transmitted to an
issuer or HMO, and the Privacy Rule applies when the group health plan
discloses such information to any entity, including the plan sponsor.
There are special rules in Sec. 164.504(f) which describe the
conditions for disclosure of protected health information to the plan
sponsor. If the group health plan received the information from the
plan sponsor, it becomes protected health information when received by
the group health plan. The plan sponsor is not the covered entity, so
this information will not be protected when held by a plan sponsor,
whether or not it is part of the plan sponsor's ``employment record.''
Comment: One commenter asked for clarification as to how the
Department would characterize the following items that a covered entity
may have: (1) medical file kept separate from the rest of an employment
record containing (a) doctor's notes; (b) leave requests; (c) physician
certifications; and (d) positive hepatitis test results; (2) FMLA
documentation including: (a) physician certification form; and (b)
leave requests; (3) occupational injury files containing (a) drug
screening; (b) exposure test results; (c) doctor's notes; and (d)
medical director's notes.
[[Page 53193]]
Response: As explained above, the nature of the information does
not determine whether it is an employment record. Rather, it depends on
whether the covered entity obtains or creates the information in its
capacity as employer or in its capacity as covered entity. An
employment record may well contain some or all of the items mentioned
by the commenter; but so too might a treatment record. The Department
also recognizes that the employer may be required by law or sound
business practice to treat such medical information as confidential and
maintain it separate from other employment records. It is the function
being performed by the covered entity and the purpose for which the
covered entity has the medical information, not its record keeping
practices, that determines whether the health information is part of an
employment record or whether it is protected health information.
Comment: One commenter suggested that the health records of
professional athletes should qualify as ``employment records.'' As
such, the records would not be subject to the protections of the
Privacy Rule.
Response: Professional sports teams are unlikely to be covered
entities. Even if a sports team were to be a covered entity, employment
records of a covered entity are not covered by this Rule. If this
comment is suggesting that the records of professional athletes should
be deemed ``employment records'' even when created or maintained by
health care providers and health plans, the Department disagrees. No
class of individuals should be singled out for reduced privacy
protections. As noted in the preamble to the December 2000 Rule,
nothing in this Rule prevents an employer, such as a professional
sports team, from making an employee's agreement to disclose health
records a condition of employment. A covered entity, therefore, could
disclose this information to an employer pursuant to an authorization.
B. Section 164.502--Uses and Disclosures of Protected Health
Information: General Rules
1. Incidental Uses and Disclosures
December 2000 Privacy Rule. The December 2000 Rule did not
explicitly address incidental uses and disclosures of protected health
information. Rather, the Privacy Rule generally requires covered
entities to make reasonable efforts to limit the use or disclosure of,
and requests for, protected health information to the minimum necessary
to accomplish the intended purpose. See Sec. 164.502(b). Additionally,
Sec. 164.530(c) of the Privacy Rule requires covered entities to
implement appropriate administrative, technical, and physical
safeguards to reasonably safeguard protected health information from
any intentional or unintentional use or disclosure that violates the
Rule.
Protected health information includes individually identifiable
health information (with limited exceptions) in any form, including
information transmitted orally, or in written or electronic form. See
the definition of ``protected health information'' at Sec. 164.501.
March 2002 NPRM. After publication of the Privacy Rule, the
Department received a number of concerns and questions as to whether
the Privacy Rule's restrictions on uses and disclosures will prohibit
covered entities from engaging in certain common and essential health
care communications and practices in use today. In particular, concern
was expressed that the Privacy Rule establishes absolute, strict
standards that would not allow for the incidental or unintentional
disclosures that could occur as a by-product of engaging in these
health care communications and practices. It was argued that the
Privacy Rule would, in effect, prohibit such practices and, therefore,
impede many activities and communications essential to effective and
timely treatment of patients.
For example, some expressed concern that health care providers
could no longer engage in confidential conversations with other
providers or with patients, if there is a possibility that they could
be overheard. Similarly, others questioned whether they would be
prohibited from using sign-in sheets in waiting rooms or maintaining
patient charts at bedside, or whether they would need to isolate X-ray
lightboards or destroy empty prescription vials. These concerns seemed
to stem from a perception that covered entities are required to prevent
any incidental disclosure such as those that may occur when a visiting
family member or other person not authorized to access protected health
information happens to walk by medical equipment or other material
containing individually identifiable health information, or when
individuals in a waiting room sign their name on a log sheet and
glimpse the names of other patients.
The Department, in its July 6 guidance, clarified that the Privacy
Rule is not intended to impede customary and necessary health care
communications or practices, nor to require that all risk of incidental
use or disclosure be eliminated to satisfy its standards. The guidance
promised that the Department would propose modifications to the Privacy
Rule to clarify that such communications and practices may continue, if
reasonable safeguards are taken to minimize the chance of incidental
disclosure to others.
Accordingly, the Department proposed to modify the Privacy Rule to
add a new provision at Sec. 164.502(a)(1)(iii) which would explicitly
permit certain incidental uses and disclosures that occur as a result
of a use or disclosure otherwise permitted by the Privacy Rule. The
proposal described an incidental use or disclosure as a secondary use
or disclosure that cannot reasonably be prevented, is limited in
nature, and that occurs as a by-product of an otherwise permitted use
or disclosure. The Department proposed that an incidental use or
disclosure be permissible only to the extent that the covered entity
had applied reasonable safeguards as required by Sec. 164.530(c), and
implemented the minimum necessary standard, where applicable, as
required by Secs. 164.502(b) and 164.514(d).
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The Department received many comments on its proposal to permit
certain incidental uses and disclosures, the majority of which
expressed strong support for the proposal. Many of these commenters
indicated that such a policy would help to ensure that essential health
care communications and practices are not chilled by the Privacy Rule.
A few commenters opposed the Department's proposal to permit certain
incidental uses and disclosures, one of whom asserted that the burden
on medical staff to take precautions not to be overheard is minimal
compared to the potential harm to patients if incidental disclosures
were to be considered permissible.
Final Modifications. In response to the overwhelming support of
commenters on this proposal, the Department adopts the proposed
provision at Sec. 164.502(a)(1)(iii), explicitly permitting certain
incidental uses and disclosures that occur as a by-product of a use or
disclosure otherwise permitted under the Privacy Rule. As in the
proposal, an incidental use or disclosure is permissible only to the
extent that the covered entity has applied reasonable safeguards as
[[Page 53194]]
required by Sec. 164.530(c), and implemented the minimum necessary
standard, where applicable, as required by Secs. 164.502(b) and
164.514(d). The Department continues to believe, as was stated in the
proposed Rule, that so long as reasonable safeguards are employed, the
burden of impeding such communications is not outweighed by any
benefits that may accrue to individuals' privacy interests.
However, an incidental use or disclosure that occurs as a result of
a failure to apply reasonable safeguards or the minimum necessary
standard, where required, is not a permissible use or disclosure and,
therefore, is a violation of the Privacy Rule. For example, a hospital
that permits an employee to have unimpeded access to patients' medical
records, where such access is not necessary for the employee to do her
job, is not applying the minimum necessary standard and, therefore, any
incidental use or disclosure that results from this practice would be
an unlawful use or disclosure under the Privacy Rule.
In response to the few comments that opposed the proposal to permit
certain incidental uses and disclosures, the Department reiterates that
the Privacy Rule must not impede essential health care communications
and practices. Prohibiting all incidental uses and disclosures would
have a chilling effect on normal and important communications among
providers, and between providers and their patients, and, therefore,
would negatively affect individuals' access to quality health care. The
Department does not intend with this provision to obviate the need for
medical staff to take precautions to avoid being overheard, but rather,
will only allow incidental uses and disclosures where appropriate
precautions have been taken.
The Department clarifies, in response to a comment, that this
provision applies, subject to reasonable safeguards and the minimum
necessary standard, to an incidental use or disclosure that occurs as a
result of any permissible use or disclosure under the Privacy Rule made
to any person, and not just to incidental uses and disclosures
resulting from treatment communications or only to communications among
health care providers or other medical staff. For example, a provider
may instruct an administrative staff member to bill a patient for a
particular procedure, and may be overheard by one or more persons in
the waiting room. Assuming that the provider made reasonable efforts to
avoid being overheard and reasonably limited the information shared, an
incidental disclosure resulting from such conversation is permissible
under the Rule.
In the proposal, the Department did not address whether or not
incidental disclosures would need to be included in the accounting of
disclosures required by Sec. 164.528. However, one commenter urged the
Department to exclude incidental disclosures from the accounting. The
Department agrees with this commenter and clarifies that covered
entities are not required to include incidental disclosures in an
accounting of disclosures provided to the individual pursuant to
Sec. 164.528. The Department does not believe such a requirement would
be practicable; in many instances, the covered entity may not know that
an incidental disclosure occurred. To make this policy clear, the
Department includes an explicit exception for such disclosures to the
accounting standard at Sec. 164.528(a)(1).
Response to Other Public Comments
Comment: One commenter expressed concern that the requirement
reasonably to safeguard protected health information would be
problematic because any unintended use or disclosure could arguably
demonstrate a failure to ``reasonably safeguard.'' This commenter
requested that the Department either delete the language in
Sec. 164.530(c)(2)(ii) or modify the language to make clear that the
fact that an incidental use or disclosure occurs does not imply that
safeguards were not reasonable.
Response: The Department clarifies that the fact that an incidental
use or disclosure occurs does not by itself imply that safeguards were
not reasonable. However, the Department does not believe that a
modification to the proposed language is necessary to express this
intent. The language proposed and now adopted at Sec. 164.530(c)(2)(ii)
requires only that the covered entity reasonably safeguard protected
health information to limit incidental uses or disclosures, not that
the covered entity prevent all incidental uses and disclosures. Thus,
the Department expects that incidental uses and disclosures will occur
and permits such uses and disclosures to the extent the covered entity
has in place reasonable safeguards and has applied the minimum
necessary standard, where applicable.
Comment: Another commenter requested that the Department clarify
its proposal to assure that unintended disclosures will not result in
civil penalties.
Response: The Department's authority to impose civil monetary
penalties on violations of the Privacy Rule is defined in HIPAA.
Specifically, HIPAA added section 1176 to the Social Security Act,
which prescribes the Secretary's authority to impose civil monetary
penalties. Therefore, in the case of a violation of a disclosure
provision in the Privacy Rule, a penalty may not be imposed, among
other things, if the person liable for the penalty did not know and, by
exercising reasonable diligence would not have known, that such person
violated the provision. HIPAA also provides for criminal penalties
under certain circumstances, but the Department of Justice, not this
Department, has authority for criminal penalties.
Comment: One commenter requested that the Department clarify how
covered entities should implement technical and physical safeguards
when they do not yet know what safeguards the final Security Rule will
require.
Response: Each covered entity should assess the nature of the
protected health information it holds, and the nature and scope of its
business, and implement safeguards that are reasonable for its
particular circumstances. There should be no potential for conflict
between the safeguards required by the Privacy Rule and the final
Security Rule standards, for several reasons. First, while the Privacy
Rule applies to protected health information in all forms, the Security
Rule will apply only to electronic health information systems that
maintain or transmit individually identifiable health information.
Thus, all safeguards for protected health information in oral, written,
or other non-electronic forms will be unaffected by the Security Rule.
Second, in preparing the final Security Rule, the Department is working
to ensure the Security Rule requirements for electronic information
systems work ``hand in glove'' with any relevant requirements in the
Privacy Rule, including Sec. 164.530.
Comment: One commenter argued that while this new provision is
helpful, it does not alleviate covered entities' concerns that routine
practices, often beneficial for treatment, will be prohibited by the
Privacy Rule. This commenter stated that, for example, specialists
provide certain types of therapy to patients in a group setting, and,
in some cases, where family members are also present.
Response: The Department reiterates that the Privacy Rule is not
intended to impede common health care communications and practices that
are essential in providing health care to the individual. Further, the
Privacy Rule's new provision permitting certain incidental uses and
disclosures is
[[Page 53195]]
intended to increase covered entities' confidence that such practices
can continue even where an incidental use or disclosure may occur,
provided that the covered entity has taken reasonable precautions to
safeguard and limit the protected health information disclosed. For
example, this provision should alleviate concerns that common
practices, such as the use of sign-in sheets and calling out names in
waiting rooms will not violate the Rule, so long as the information
disclosed is appropriately limited. With regard to the commenters'
specific example, disclosure of protected health information in a group
therapy setting would be a treatment disclosure, and thus permissible
without individual authorization. Further, Sec. 164.510(b) generally
permits a covered entity to disclose protected health information to a
family member or other person involved in the individual's care. In
fact, this section specifically provides that, where the individual is
present during a disclosure, the covered entity may disclose protected
health information if it is reasonable to infer from the circumstances
that the individual does not object to the disclosure. Absent
countervailing circumstances, the individual's agreement to participate
in group therapy or family discussions is a good basis for such a
reasonable inference. As such disclosures are permissible disclosures
in and of themselves, they would not be incidental disclosures.
Comment: Some commenters, while in support of permitting incidental
uses and disclosures, requested that the Department provide additional
guidance in this area by providing additional examples of permitted
incidental uses and disclosures and/or clarifying what would constitute
``reasonable safeguards.''
Response: The reasonable safeguards and minimum necessary standards
are flexible and adaptable to the specific business needs and
circumstances of the covered entity. Given the discretion covered
entities have in implementing these standards, it is difficult for the
Department to provide specific guidance in this area that is generally
applicable to many covered entities. However, the Department intends to
provide future guidance through frequently asked questions or other
materials in response to specific scenarios that are raised by
industry.
2. Minimum Necessary Standard
December 2000 Privacy Rule. The Privacy Rule generally requires
covered entities to make reasonable efforts to limit the use or
disclosure of, and requests for, protected health information to the
minimum necessary to accomplish the intended purpose. See
Sec. 164.502(b). Protected health information includes individually
identifiable health information (with limited exceptions) in any form,
including information transmitted orally, or in written or electronic
form. See the definition of ``protected health information'' at
Sec. 164.501. The minimum necessary standard is intended to make
covered entities evaluate their practices and enhance protections as
needed to limit unnecessary or inappropriate access to, and disclosures
of, protected health information.
The Privacy Rule contains some exceptions to the minimum necessary
standard. The minimum necessary requirements do not apply to uses or
disclosures that are required by law, disclosures made to the
individual or pursuant to an authorization initiated by the individual,
disclosures to or requests by a health care provider for treatment
purposes, uses or disclosures that are required for compliance with the
regulations implementing the other administrative simplification
provisions of HIPAA, or disclosures to the Secretary of HHS for
purposes of enforcing this Rule. See Sec. 164.502(b)(2).
The Privacy Rule sets forth requirements for implementing the
minimum necessary standard with regard to a covered entity's uses,
disclosures, and requests at Sec. 164.514(d). A covered entity is
required to develop and implement policies and procedures appropriate
to the entity's business practices and workforce that reasonably
minimize the amount of protected health information used, disclosed,
and requested. For uses of protected health information, the policies
and procedures must identify the persons or classes of persons within
the covered entity who need access to the information to carry out
their job duties, the categories or types of protected health
information needed, and the conditions appropriate to such access. For
routine or recurring requests and disclosures, the policies and
procedures may be standard protocols. Non-routine requests for, and
disclosures of, protected health information must be reviewed
individually.
With regard to disclosures, the Privacy Rule permits a covered
entity to rely on the judgment of certain parties requesting the
disclosure as to the minimum amount of information that is needed. For
example, a covered entity is permitted reasonably to rely on
representations from a public official, such as a State workers'
compensation official, that the information requested is the minimum
necessary for the intended purpose. Similarly, a covered entity is
permitted reasonably to rely on the judgment of another covered entity
that the information requested is the minimum amount of information
reasonably necessary to fulfill the purpose for which the request has
been made. See Sec. 164.514(d)(3)(iii).
March 2002 NPRM. The Department proposed a number of minor
modifications to the minimum necessary standard to clarify the
Department's intent or otherwise conform these provisions to other
proposed modifications. First, the Department proposed to separate
Sec. 164.502(b)(2)(ii) into two subparagraphs (Sec. 164.502(b)(2)(ii)
and (iii)) to eliminate confusion regarding the exception to the
minimum necessary standard for uses or disclosures made pursuant to an
authorization under Sec. 164.508, and the separate exception for
disclosures made to the individual. Second, to conform to the proposal
to eliminate the special authorizations required by the Privacy Rule at
Sec. 164.508(d), (e), and (f), the Department proposed to exempt from
the minimum necessary standard any uses or disclosures for which the
covered entity had received an authorization that meets the
requirements of Sec. 164.508, rather than just those authorizations
initiated by the individual.
Third, the Department proposed to modify Sec. 164.514(d)(1) to
delete the term ``reasonably ensure'' in response to concerns that the
term connotes an absolute, strict standard and, therefore, is
inconsistent with the Department's intent that the minimum necessary
requirements be reasonable and flexible to the unique circumstances of
the covered entity. In addition, the Department proposed to generally
revise the language in Sec. 164.514(d)(1) to be more consistent with
the description of standards elsewhere in the Privacy Rule.
Fourth, so that the minimum necessary standard would be applied
consistently to requests for, and disclosures of, protected health
information, the Department proposed to add a provision to
Sec. 164.514(d)(4) to make the implementation specifications for
applying the minimum necessary standard to requests for protected
health information by a covered entity more consistent with the
corresponding implementation specifications for disclosures.
Specifically, for requests not made on a routine and recurring basis,
the Department proposed to add the requirement that a covered entity
must implement the minimum
[[Page 53196]]
necessary standard by developing and implementing criteria designed to
limit its request for protected health information to the minimum
necessary to accomplish the intended purpose.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The Department received a number of comments on its proposal to
exempt from the minimum necessary standard any use or disclosure of
protected health information for which the covered entity has received
an authorization that meets the requirements of Sec. 164.508. Many
commenters supported this proposal. A few commenters generally urged
that the minimum necessary standard be applied to uses and disclosures
pursuant to an authorization. A few other commenters appeared to
misinterpret the policy in the December 2000 Rule and urged that the
Department retain the minimum necessary standard for disclosures
``pursuant to an authorization other than disclosures to an
individual.'' Some commenters raised specific concerns about
authorizations for psychotherapy notes and the particular need for
minimum necessary to be applied in these cases.
A number of commenters expressed support for the Department's
statements in the preamble to the proposed Rule reinforcing that the
minimum necessary standard is intended to be flexible to account for
the characteristics of the entity's business and workforce, and not
intended to override the professional judgment of the covered entity.
Similarly, some commenters expressed support for the Department's
proposal to remove the term ``reasonably ensure'' from
Sec. 164.514(d)(1). However, a few commenters expressed concerns that
the proposed alternative language actually would implement a stricter
standard than that included in the December 2000 Privacy Rule.
Final Modifications. In this final Rule, the Department adopts the
proposed policy to exempt from the minimum necessary standard any uses
or disclosures for which the covered entity has received an
authorization that meets the requirements of Sec. 164.508. The final
modification adopts the proposal to eliminate the special
authorizations that were required by the December 2000 Privacy Rule at
Sec. 164.508(d), (e), and (f). (See section III.E.1. of the preamble
for a detailed discussion of the modifications to the authorization
requirements of the Privacy Rule.) Since the only authorizations to
which the minimum necessary standard applied are being eliminated in
favor of a single consolidated authorization, the final Rule
correspondingly eliminates the minimum necessary provisions that
applied to the now-eliminated special authorizations. All uses and
disclosures made pursuant to any authorization are exempt from the
minimum necessary standard.
In response to commenters who opposed this proposal as a potential
weakening of privacy protections or who wanted the minimum necessary
requirements to apply to authorizations other than disclosures to the
individual, the Department notes that nothing in the final Rule
eliminates an individual's control over his or her protected health
information with respect to an authorization. All authorizations must
include a description of the information to be used and disclosed that
identifies the information in a specific and meaningful fashion as
required by Sec. 164.508(c)(1)(i). If the individual does not wish to
release the information requested, the individual has the right to not
sign the authorization or to negotiate a narrower authorization with
the requestor.
Additionally, in response to those commenters who raised specific
concerns with respect to authorizations which request release of
psychotherapy notes, the Department clarifies that the final Rule does
not require a covered entity to use and disclose protected health
information pursuant to an authorization. Rather, as with most other
uses and disclosures under the Privacy Rule, this is only a permissible
use or disclosure. If a covered health care provider is concerned that
a request for an individual's psychotherapy notes is not warranted or
is excessive, the provider may consult with the individual to determine
whether or not the authorization is consistent with the individual's
wishes.
Further, the Privacy Rule does not permit a health plan to
condition enrollment, eligibility for benefits, or payment of a claim
on obtaining the individual's authorization to use or disclose
psychotherapy notes. Nor may a health care provider condition treatment
on an authorization for the use or disclosure of psychotherapy notes.
Thus, the Department believes that these additional protections
appropriately and effectively protect an individual's privacy with
respect to psychotherapy notes.
The final Rule also retains for clarity the proposal to separate
Sec. 164.502(b)(2)(ii) into two subparagraphs (Sec. 164.502(b)(2)(ii)
and (iii)); commenters did not explicitly address or raise issues with
this proposed clarification.
In response to concerns that the proposed language at
Sec. 164.514(d)(1) would implement a stricter standard, the Department
disagrees and, therefore, adopts the proposed language. The language in
Sec. 164.514(d)(1) describes the standard: covered entities are
required to meet the requirements in the implementation specifications
of Sec. 164.514(d)(2) through (d)(5). The implementation specifications
describe what covered entities must do reasonably to limit uses,
disclosures, and requests to the minimum necessary. Thus, the
Department believes that the language in the implementation
specifications is adequate to reflect the Department's intent that the
minimum necessary standard is reasonable and flexible to accommodate
the unique circumstances of the covered entity.
Commenters also generally did not address the Department's proposed
clarification to make the implementation specifications for requests of
protected health information consistent with those for disclosures of
protected health information. Consequently, as commenters did not raise
concerns with the proposal, this final Rule adopts the proposed
provision at Sec. 164.514(d)(4). For requests of protected health
information not made on a routine and recurring basis, a covered entity
must implement the minimum necessary standard by developing and
implementing criteria designed to limit its request for protected
health information to the minimum necessary to accomplish the intended
purpose.
Response to Other Public Comments
Comment: Many commenters recommended changes to the minimum
necessary standard unrelated to the proposed modifications. For
example, some commenters urged that the Department exempt from the
minimum necessary standard all uses of protected health information, or
at least uses of protected health information for treatment purposes.
Alternatively, one commenter urged that the minimum necessary standard
be applied to disclosures for treatment purposes. Others requested that
the Department exempt uses and disclosures for payment and health care
operations from the standard, or exempt disclosures to another covered
entity for such purposes. A few commenters argued that the minimum
necessary standard should not apply to disclosures to another covered
entity. Some urged that the minimum
[[Page 53197]]
necessary standard be eliminated entirely.
Response: The Department did not propose modifications relevant to
these comments, nor did it seek comment on these issues. The proposed
modifications generally were intended to address those problems or
issues that presented workability problems for covered entities or
otherwise had the potential to impede an individual's timely access to
quality health care. Moreover, the proposed modifications to the
minimum necessary standard were either minor clarifications of the
Department's intent with respect to the standard or would conform the
standard to other proposed modifications. The Department has, in
previous guidance as well as in the preamble to the December 2000
Privacy Rule, explained its position with respect to the above
concerns. The minimum necessary standard is derived from
confidentiality codes and practices in common use today. We continue to
believe that it is sound practice not to use or disclose private
medical information that is not necessary to satisfy a request or
effectively carry out a function. The privacy benefits of retaining the
minimum necessary standard outweigh the burden involved with
implementing the standard. The Department reiterates that position
here.
Further, the Department designed the minimum necessary standard to
be sufficiently flexible to accommodate the various circumstances of
any covered entity. Covered entities will develop their own policies
and procedures to meet this standard. A covered entity's policies and
procedures may and should allow the appropriate individuals within an
entity to have access to protected health information as necessary to
perform their jobs with respect to the entity's covered functions. The
Department is not aware of any workability issues with this standard.
With respect to disclosures to another covered entity, the Privacy
Rule permits a covered entity reasonably to rely on another covered
entity's request for protected health information as the minimum
necessary for the intended disclosure. See Sec. 164.514(d)(3)(iii). The
Department does not believe, therefore, that a blanket exception for
such disclosures is justified. The covered entity who holds the
information always retains discretion to make its own minimum necessary
determination.
Lastly, the Department continues to believe that the exception for
disclosures to or requests by health care providers for treatment
purposes is appropriate to ensure that access to timely and quality
treatment is not impeded.
As the Privacy Rule is implemented, the Department will monitor the
workability of the minimum necessary standard and consider proposing
revisions, where appropriate, to ensure that the Privacy Rule does not
hinder timely access to quality health care.
Comment: One commenter requested that the Department state in the
preamble that the minimum necessary standard may not be used to
interfere with or obstruct essential health plan payment and health
care operations activities, including quality assurance, disease
management, and other activities. Another commenter asked that the
final Rule's preamble acknowledge that, in some cases, the minimum
protected health information necessary for payment or health care
operations will be the entire record. One commenter urged that the Rule
be modified to presume that disclosure of a patient's entire record is
justified, and that such disclosure does not require individual review,
when requested for disease management purposes.
Response: The minimum necessary standard is not intended to impede
essential treatment, payment, or health care operations activities of
covered entities. Nor is the Rule intended to change the way covered
entities handle their differences with respect to disclosures of
protected health information. The Department recognizes that, in some
cases, an individual's entire medical record may be necessary for
payment or health care operations purposes, including disease
management purposes. However, the Department does not believe that
disclosure of a patient's entire medical record is always justified for
such purposes. The Privacy Rule does not prohibit the request for, or
release of, entire medical records in such circumstances, provided that
the covered entity has documented the specific justification for the
request or disclosure of the entire record.
Comment: A few commenters requested that the Department add to the
regulatory text some of the statements included in the preamble to the
proposed modifications. For example, commenters asked that the final
Rule state that the minimum necessary standard is ``intended to be
consistent with, and not override, professional judgement and
standards.'' Similarly, others requested that the regulation specify
that ``covered entities must implement policies and procedures based on
their own assessment of what protected health information is reasonably
necessary for a particular purpose, given the characteristics of their
business and their workforce, and using their own professional
judgment.''
Response: It is the Department's policy that the minimum necessary
standard is intended to be consistent with, and not override,
professional judgment and standards, and that covered entities must
implement policies and procedures based on their own assessment of what
protected health information is reasonably necessary for a particular
purpose, given the characteristics of their business and their
workforce. However, the Department does not believe a regulatory
modification is necessary because the Department has made its policy
clear not only in the preamble to the proposed modifications but also
in previous guidance and in this preamble.
Comment: A commenter argued that the Department should exempt
disclosures for any of the standard transactions as required by the
Transactions Rule, when information is requested by a health plan or
its business associate.
Response: The Department disagrees. The Privacy Rule already
exempts from the minimum necessary standard data elements that are
required or situationally required in any of the standard transactions
(Sec. 164.502(b)(2)(v)). If, however, a standard transaction permits
the use of optional data elements, the minimum necessary standard
applies. For example, the standard transactions adopted for the
outpatient pharmacy sector use optional data elements. The payer
currently specifies which of the optional data elements are needed for
payment of its particular pharmacy claims. The minimum necessary
standard applies to the payer's request for such information. A
pharmacist is permitted to rely on the payer's request for information,
if reasonable to do so, as the minimum necessary for the intended
disclosure.
Comment: A few commenters expressed concerns with respect to a
covered entity's disclosures for research purposes. Specifically, one
commenter was concerned that a covered entity will not accept
documentation of an external IRB's waiver of authorization for purposes
of reasonably relying on the request as the minimum necessary. It was
suggested that the Department deem that a disclosure to a researcher
based on appropriate documentation from an IRB or Privacy Board meets
the minimum necessary standard.
Response: The Department understands commenters' concerns that
covered entities may decline to
[[Page 53198]]
participate in research studies, but believes that the Rule already
addresses this concern. The Privacy Rule explicitly permits a covered
entity reasonably to rely on a researcher's documentation or the
representations of an IRB or Privacy Board pursuant to Sec. 164.512(i)
that the information requested is the minimum necessary for the
research purpose. This is true regardless of whether the documentation
is obtained from an external IRB or Privacy Board or one that is
associated with the covered entity. The preamble to the March 2002 NPRM
further reinforced this policy by stating that reasonable reliance on
an IRB's documentation of approval of the waiver criteria and a
description of the data needed for the research as required by
Sec. 164.512(i) would satisfy a covered entity's obligations with
respect to limiting the disclosure to the minimum necessary. The
Department reiterates this policy here and believes that this should
give covered entities sufficient confidence in accepting IRB waivers of
authorization.
Comment: A number of commenters requested that the Department limit
the amount of information that pharmacy benefits managers (PBM) may
demand from pharmacies as part of their claims payment activities.
Response: The health plan, as a covered entity, is obligated to
instruct the PBM, as its business associate acting through the business
associate contract, to request only the minimum amount of information
necessary to pay a claim. The pharmacist may rely on this determination
if reasonable to do so, and then does not need to engage in a separate
minimum necessary assessment. If a pharmacist does not agree that the
amount of information requested is reasonably necessary for the PBM to
fulfill its obligations, it is up to the pharmacist and PBM to
negotiate a resolution of the dispute as to the amount of information
needed by the PBM to carry out its obligations and that the pharmacist
is willing to provide, recognizing that the PBM is not required to pay
claims if it has not received the information it believes is necessary
to process the claim in accordance with its procedures, including fraud
prevention procedures.
The standard for electronic pharmacy claims, adopted by the
Secretary in the Transactions Rule, includes optional data elements and
relies on each payer to specify the data elements required for payment
of its claims. Understandably, the majority of health plans require
some patient identification elements in order to adjudicate claims. As
the National Council for Prescription Drug Programs (NCPDP) moves from
optional to required and situational data elements, the question of
whether the specific element of ``patient name'' should be required or
situational will be debated by the NCPDP, by the Designated Standards
Maintenance Organizations, by the National Committee on Vital and
Health Statistics, and ultimately will be decided in rulemaking by the
Secretary.
Comment: One commenter requested that the minimum necessary
standard be made an administrative requirement rather than a standard
for uses and disclosures, to ease liability concerns with implementing
the standard. The commenter stated that this change would mean that
covered entities would be required to implement reasonable minimum
necessary policies and procedures and would be liable if: (1) They fail
to implement minimum necessary policies and procedures; (2) their
policies and procedures are not reasonable; or (3) they fail to enforce
their policies and procedures. The commenter further explained that
health plans would be liable if their policies and procedures for
requesting health information were unreasonable, but the burden of
liability for the request shifts largely to the entity best suited to
determine whether the amount of information requested is the minimum
necessary.
Response: The Privacy Rule already requires covered entities to
implement reasonable minimum necessary policies and procedures and to
limit any use, disclosure, or request for protected health information
in a manner consistent with its policies and procedures. The minimum
necessary standard is an appropriate standard for uses and disclosures,
and is not merely an administrative requirement. The Privacy Rule
provides adequate flexibility to adopt minimum necessary policies and
procedures that are workable for the covered entity, thereby minimizing
a covered entity's liability concerns.
Comment: A number of commenters expressed concerns about
application of the minimum necessary standard to disclosures for
workers' compensation purposes. Commenters argued that the standard
will prevent workers' compensation insurers and State administrators,
as well as employers, from obtaining the information needed to pay
injured workers the benefits guaranteed under the State workers'
compensation system. They also argued that the minimum necessary
standard could lead to fraudulent claims and unnecessary legal action
in order to obtain information needed for workers' compensation
purposes.
Response: The Privacy Rule is not intended to disrupt existing
workers' compensation systems as established by State law. In
particular, the Rule is not intended to impede the flow of health
information that is needed by employers, workers' compensation
carriers, or State officials in order to process or adjudicate claims
and/or coordinate care under the workers' compensation system. To this
end, the Privacy Rule at Sec. 164.512(l) explicitly permits a covered
entity to disclose protected health information as authorized by, and
to the extent necessary to comply with, workers' compensation or other
similar programs established by law that provide benefits for work-
related injuries or illnesses without regard to fault. The minimum
necessary standard permits covered entities to disclose any protected
health information under Sec. 164.512(l) that is reasonably necessary
for workers' compensation purposes and is intended to operate so as to
permit information to be shared for such purposes to the full extent
permitted by State or other law.
Additionally, where a State or other law requires a disclosure of
protected health information for workers' compensation purposes, such
disclosure is permitted under Sec. 164.512(a). A covered entity also is
permitted to disclose protected health information to a workers'
compensation insurer where the insurer has obtained the individual's
authorization pursuant to Sec. 164.508 for the release of such
information. The minimum necessary provisions do not apply to
disclosures required by law or made pursuant to authorizations. See
Sec. 164.502(b), as modified herein.
Further, the Department notes that a covered entity is permitted to
disclose information to any person or entity as necessary to obtain
payment for health care services. The minimum necessary provisions
apply to such disclosures but permit the covered entity to disclose the
amount and types of information that are necessary to obtain payment.
The Department also notes that because the disclosures described
above are permitted by the Privacy Rule, there is no potential for
conflict with State workers' compensation laws, and, thus, no
possibility of preemption of such laws by the Privacy Rule.
The Department's review of certain States workers' compensation
laws demonstrates that many of these laws address the issue of the
scope of information that is available to carriers and employers. The
Privacy Rule's minimum necessary standard will not create an obstacle
to the type and
[[Page 53199]]
amount of information that currently is provided to employers, workers'
compensation carriers, and State administrative agencies under these
State laws. In many cases, the minimum necessary standard will not
apply to disclosures made pursuant to such laws. In other cases, the
minimum necessary standard applies, but permits disclosures to the full
extent authorized by the workers' compensation laws. For example, Texas
workers' compensation law requires a health care provider, upon the
request of the injured employee or insurance carrier, to furnish
records relating to the treatment or hospitalization for which
compensation is being sought. Since such disclosure is required by law,
it also is permissible under the Privacy Rule at Sec. 164.512(a) and
exempt from the minimum necessary standard. The Texas law further
provides that a health care provider is permitted to disclose to the
insurance carrier records relating to the diagnosis or treatment of the
injured employee without the authorization of the injured employee to
determine the amount of payment or the entitlement to payment. Since
the disclosure only is permitted and not required by Texas law, the
provisions at Sec. 164.512(l) would govern to permit such disclosure.
In this case, the minimum necessary standard would apply to the
disclosure but would allow for information to be disclosed as
authorized by the statute, that is, as necessary to ``determine the
amount of payment or the entitlement to payment.''
As another example, under Louisiana workers' compensation law, a
health care provider who has treated an employee related to a workers'
compensation claim is required to release any requested medical
information and records relative to the employee's injury to the
employer or the workers' compensation insurer. Again, since such
disclosure is required by law, it is permissible under the Privacy Rule
at Sec. 164.512(a) and exempt from the minimum necessary standard. The
Louisiana law further provides that any information relative to any
other treatment or condition shall be available to the employer or
workers' compensation insurer through a written release by the
claimant. Such disclosure also would be permissible and exempt from the
minimum necessary standard under the Privacy Rule if the individual's
written authorization is obtained consistent with the requirements of
Sec. 164.508.
The Department understands concerns about the potential chilling
effect of the Privacy Rule on the workers' compensation system.
Therefore, as the Privacy Rule is implemented, the Department will
actively monitor the effects of the Rule on this industry to assure
that the Privacy Rule does not have any unintended negative effects
that disturb the existing workers' compensation systems. If the
Department finds that, despite the above clarification of intent, the
Privacy Rule is being misused and misapplied to interfere with the
smooth operation of the workers' compensation systems, it will consider
proposing modifications to the Rule to clarify the application of the
minimum necessary standard to disclosures for workers' compensation
purposes.
Comment: Another commenter urged the Department to clarify that a
covered entity can reasonably rely on a determination made by a
financial institution or credit card payment system regarding the
minimum necessary information needed by that financial institution or
payment system to complete a contemplated payment transaction.
Response: Except to the extent information is required or
situationally required for a standard payment transaction (see 45 CFR
162.1601, 162.1602), the minimum necessary standard applies to a
covered entity's disclosure of protected health information to a
financial institution in order to process a payment transaction. With
limited exceptions, the Privacy Rule does not allow a covered entity to
substitute the judgment of a private, third party for its own
assessment of the minimum necessary information for a disclosure. Under
the exceptions in Sec. 164.514(d)(3)(iii), a covered entity is
permitted reasonably to rely on the request of another covered entity
because, in this case, the requesting covered entity is itself subject
to the minimum necessary standard and, therefore, required to limit its
request to only that information that is reasonably necessary for the
purpose. Thus, the Department does not agree that a covered entity
should generally be permitted reasonably to rely on the request of a
financial institution as the minimum necessary. However, the Department
notes that where, for example, a financial institution is acting as a
business associate of a covered entity, the disclosing covered entity
may reasonably rely on a request from such financial institution,
because in this situation, both the requesting and disclosing entity
are subject to the minimum necessary standard.
Comment: A number of commenters continued to request additional
guidance with respect to implementing this discretionary standard. Many
expressed support for the statement in the NPRM that HHS intends to
issue further guidance to clarify issues causing confusion and concern
in industry, as well as provide additional technical assistance
materials to help covered entities implement the provisions.
Response: The Department is aware of the need for additional
guidance in this area and intends to provide technical assistance and
further clarifications as necessary to address these concerns and
questions.
3. Parents as Personal Representatives of Unemancipated Minors \1\
---------------------------------------------------------------------------
\1\ Throughout this section of the preamble, ``minor'' refers to
an unemancipated minor and ``parent'' refers to a parent, guardian,
or other person acting in loco parentis.
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December 2000 Privacy Rule. The Privacy Rule is intended to assure
that parents have appropriate access to health information about their
children. By creating new Federal protections and individual rights
with respect to individually identifiable health information, parents
will generally have new rights with respect to the health information
about their minor children. In addition, the Department intended that
the disclosure of health information about a minor child to a parent
should be governed by State or other applicable law.
Under the Privacy Rule, parents are granted new rights as the
personal representatives of their minor children. (See
Sec. 164.502(g).) Generally, parents will be able to access and control
the health information about their minor children. (See
Sec. 164.502(g)(3).)
The Privacy Rule recognizes a limited number of exceptions to this
general rule. These exceptions generally track the ability under State
or other applicable laws of certain minors to obtain specified health
care without parental consent. For example, every State has a law that
permits adolescents to be tested for HIV without the consent of a
parent. These laws are created to assure that adolescents will seek
health care that is essential to their own health, as well as the
public health. In these exceptional cases, where a minor can obtain a
particular health care service without the consent of a parent under
State or other applicable law, it is the minor, and not the parent, who
may exercise the privacy rights afforded to individuals under the
December 2000 Privacy Rule. (See Sec. 164.502(g)(3)(i) and (ii),
redesignated as Sec. 164.502(g)(3)(i)(A) and (B)).
The December 2000 Privacy Rule also allows the minor to exercise
control of
[[Page 53200]]
protected health information when the parent has agreed to the minor
obtaining confidential treatment (see Sec. 164.502(g)(3)(iii),
redesignated as Sec. 164.502(g)(3)(i)(C) in this final Rule), and
allows a covered health care provider to choose not to treat a parent
as a personal representative of the minor when the provider is
concerned about abuse or harm to the child. (See Sec. 164.502(g)(5).)
Of course, a covered provider may disclose health information about
a minor to a parent in the most critical situations, even if one of the
limited exceptions discussed above apply. Disclosure of such
information is always permitted as necessary to avert a serious and
imminent threat to the health or safety of the minor. (See
Sec. 164.512(j).) The Privacy Rule adopted in December 2000 also states
that disclosure of health information about a minor to a parent is
permitted if State law authorizes disclosure to a parent, thereby
allowing such disclosure where State law determines it is appropriate.
(See Sec. 160.202, definition of ``more stringent.'') Finally, health
information about the minor may be disclosed to the parent if the minor
involves the parent in his or her health care and does not object to
such disclosure. (See Sec. 164.502(g)(3)(i), redesignated as
Sec. 164.502(g)(3)(i)(A), and Sec. 164.510(b)). The parent will retain
all rights concerning any other health information about his or her
minor child that does not meet one of the few exceptions listed above.
March 2002 NPRM. After reassessing the parents and minors
provisions in the Privacy Rule, the Department identified two areas in
which there were unintended consequences of the Rule. First, the
language regarding deference to State law, which authorizes or
prohibits disclosure of health information about a minor to a parent,
fails to assure that State or other law governs when the law grants a
provider discretion in certain circumstances to disclose protected
health information to a parent. Second, the Privacy Rule may have
prohibited parental access in certain situations in which State or
other law may have permitted such access.
The Department proposed changes to these standards where they did
not operate as intended and did not adequately defer to State or other
applicable law with respect to parents and minors. First, in order to
assure that State and other applicable laws that address disclosure of
health information about a minor to his or her parent govern in all
cases, the Department proposed to move the relevant language about the
disclosure of health information from the definition of ``more
stringent'' (see Sec. 160.202) to the standards regarding parents and
minors (see Sec. 164.502(g)(3)). This change would make it clear that
State and other applicable law governs not only when a State explicitly
addresses disclosure of protected health information to a parent but
also when such law provides discretion to a provider. The language
itself is also changed in the proposal to adapt it to the new section.
Second, the Department proposed to add a new paragraph (iii) to
Sec. 164.502(g)(3) to establish a neutral policy regarding the right of
access of a parent to health information about his or her minor child
under Sec. 164.524, in the rare circumstance in which the parent is
technically not the personal representative of his or her minor child
under the Privacy Rule. This policy would apply particularly where
State or other law is silent or unclear.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The Department received a number of comments on the proposed
changes to the parents and minors provisions of the Privacy Rule. Many
commenters, particularly health care providers involved in provision of
health care to minors, requested that the Department return to the
approach under the Privacy Rule published in December 2000, because
they believed that the proposed approach would discourage minors from
seeking necessary health care. At a minimum, these commenters suggested
that the Department clarify that discretion to grant a parent access
under the proposal is limited to the covered health care provider that
is providing treatment to the minor.
Supporters of the proposal asserted that the Department was moving
in the right direction, but many also advocated for more parental
rights. They asserted that parents have protected rights to act for
their children and that the Privacy Rule interferes with these rights.
There were also some commenters that were confused by the new
proposal and others that requested a Federal standard that would
preempt all State laws.
Final Modifications. The Department will continue to defer to State
or other applicable law and to remain neutral to the extent possible.
However, the Department is adopting changes to the standards in the
December 2000 Privacy Rule, where they do not operate as intended and
are inconsistent with the Department's underlying goals. These
modifications are similar in approach to the NPRM and the rationale for
these changes remains the same as was stated in the NPRM. However, the
Department makes some changes from the language that was proposed, in
order to simplify the provisions and clarify the Department's intent.
There are three goals with respect to the parents and minors
provisions in the Privacy Rule. First, the Department wants to assure
that parents have appropriate access to the health information about
their minor children to make important health care decisions about
them, while also making sure that the Privacy Rule does not interfere
with a minor's ability to consent to and obtain health care under State
or other applicable law. Second, the Department does not want to
interfere with State or other applicable laws related to competency or
parental rights, in general, or the role of parents in making health
care decisions about their minor children, in particular. Third, the
Department does not want to interfere with the professional
requirements of State medical boards or other ethical codes of health
care providers with respect to confidentiality of health information or
with the health care practices of such providers with respect to
adolescent health care.
In order to honor these differing goals, the Department has and
continues to take the approach of deferring to State or other
applicable law and professional practice with respect to parents and
minors. Where State and other applicable law is silent or unclear, the
Department has attempted to create standards, implementation
specifications, and requirements that are consistent with such laws and
that permit States the discretion to continue to define the rights of
parents and minors with respect to health information without
interference from the Federal Privacy Rule.
The Department adopts two changes to the provisions regarding
parents and minors in order to address unintended consequences from the
December 2000 Privacy Rule and to defer to State and other law. The
first change is about disclosure of protected health information to a
parent and the second is about access to the health information by the
parent. Disclosure is about a covered entity providing individually
identifiable information to persons outside the entity, either the
individual or a third party. Access is a particular type of disclosure
that is the right of an individual (directly or through a personal
representative) to review or
[[Page 53201]]
obtain a copy of his or her health information under Sec. 164.524. This
modification treats both activities similarly by deferring to State or
other applicable law.
The first change, regarding disclosure of protected health
information to a parent, is the same as the change proposed in the
NPRM. In order to assure that State and other applicable laws that
address disclosure of health information about a minor to his or her
parent govern in all cases, the language in the definition of ``more
stringent'' (see Sec. 160.202) that addresses the disclosure of
protected health information about a minor to a parent has been moved
to the standards regarding parents and minors (see Sec. 164.502(g)(3)).
The addition of paragraphs (g)(3)(ii)(A) and (B) of Sec. 164.502,
clarify that State and other applicable law governs when such law
explicitly requires, permits, or prohibits disclosure of protected
health information to a parent.
In connection with moving the language, the language is changed
from the December 2000 Privacy Rule in order to adapt it to the new
section. Section 164.502(g)(3)(ii)(A) states that a covered entity may
disclose protected health information about a minor to a parent if an
applicable provision of State or other law permits or requires such
disclosure. By adopting this provision, the Department makes clear that
nothing in the regulation prohibits disclosure of health information to
a parent if, and to the extent that, State or other law permits or
requires such disclosure. The Privacy Rule defers to such State or
other law and permits covered entities to act in accordance to such
law. Section 164.502(g)(3)(ii)(B) states that a covered entity may not
disclose protected health information about a minor to a parent if an
applicable provision of State or other law prohibits such disclosure.
Again, regardless of how the Privacy Rule would operate in the absence
of explicit State or other law, if such law prohibits the disclosure of
protected health information about a minor to a parent, so does the
Privacy Rule. The revision also clarifies that deference to State or
other applicable law includes deference to established case law as well
as explicit provisions in statutes or regulations that permit, require,
or prohibit particular disclosures.
The second change, regarding access to protected health
information, also reflects the same policy as proposed in the NPRM.
There are two provisions that refer to access, in order to clarify the
Department's intent in this area. The first is where there is an
explicit State or other law regarding parental access, and the second
is where State or other law is silent or unclear, which is often the
case with access.
Like the provisions regarding disclosure of protected health
information to a parent, the final Rule defers to State or other
applicable law regarding a parent's access to health information about
a minor. The change assures that State or other applicable law governs
when the law explicitly requires, permits, or prohibits access to
protected health information about a minor to a parent. This includes
deference to established case law as well as an explicit provision in a
statute or regulation. This issue is addressed in paragraphs
(g)(3)(ii)(A) and (B) of Sec. 164.502 with the disclosure provisions
discussed above.
In addition to the provision regarding explicit State access laws,
the Department recognizes that the Privacy Rule creates a right of
access that previously did not exist in most States. Most States do not
have explicit laws in this area. In order to address the limited number
of cases in which the parent is not the personal representative of the
minor because one of the exceptions in the parents and minors
provisions are met (see Sec. 164.502(g)(3)(i)(A), (B), or (C)), the
Department adds a provision, Sec. 164.502(g)(3)(ii)(C), similar to a
provision proposed in the NPRM, that addresses those situations in
which State and other law about parental access is not explicit. Under
this provision, a covered entity may provide or deny access to a parent
provided that such discretion is permitted by State or other law. This
new paragraph would assure that the Privacy Rule would not prevent a
covered entity from providing access to a parent if the covered entity
would have been able to provide this access under State or other
applicable law. The new paragraph would also prohibit access by a
parent if providing such access would violate State or other applicable
law.
It is important to note that this provision regarding access to
health information about a minor in cases in which State and other laws
are silent or unclear will not apply in the majority of cases because,
typically, the parent will be the personal representative of his or her
minor child and will have a right of access to the medical records of
his or her minor children under the Privacy Rule. This provision only
applies in cases in which the parent is not the personal representative
under the Privacy Rule.
In response to comments by health care providers, the final
modifications also clarify that, the discretion to provide or deny
access to a parent under Sec. 164.502(g)(3)(ii)(C) only may be
exercised by a licensed health care professional, in the exercise of
professional judgment. This is consistent with the policy described in
the preamble to the NPRM, is similar to the approach in the access
provisions in Sec. 164.524(a)(3), and furthers the Department's
interest in balancing the goals of providing appropriate information to
parents and of assuring that minors obtain appropriate access to health
care. This decision should be made by a health care professional, who
is accustomed to exercising professional judgment. A health plan may
also exercise such discretion if the decision is made by a licensed
health care provider.
The Department takes no position on the ability of a minor to
consent to treatment and no position on how State or other law affects
privacy between the minor and parent. Where State or other law is
unclear, covered entities should continue to conduct the same analysis
of such law as they do now to determine if access is permissible or
not. Because the Privacy Rule defers to State and other law in the area
of parents and minors, the Department assumes that the current
practices of health care providers with respect to access by parents
and confidentiality of minor's records are consistent with State and
other applicable law, and, therefore, can continue under the Privacy
Rule.
Parental access under this section would continue to be subject to
any limitations on activities of a personal representative in
Sec. 164.502(g)(5) and Sec. 164.524(a)(2) and (3). In cases in which
the parent is not the personal representative of the minor and State or
other law does not require parental access, this provision does not
provide a parent a right to demand access and does not require a
covered entity to provide access to a parent. Furthermore, nothing in
these modifications shall affect whether or not a minor would have a
right to access his or her records. That is, a covered entity's
exercise of discretion to not grant a parent access does not affect the
right of access the minor may have under the Privacy Rule. A covered
entity may deny a parent access in accordance with State or other law
and may be required to provide access to the minor under the Privacy
Rule.
These changes also do not affect the general provisions, explained
in the section ``December 2000 Privacy Rule'' above, regarding parents
as personal representatives of their minor children or the exceptions
to this general rule, where parents would not be the
[[Page 53202]]
personal representatives of their minor children.
These changes adopted in this Rule provide States with the option
of clarifying the interaction between their laws regarding consent to
health care and the ability of parents to have access to the health
information about the care received by their minor children in
accordance with such laws. As such, this change should more accurately
reflect current State and other laws and modifications to such laws.
Response to Other Public Comments
Comment: Some commenters urged the Department to retain the
approach to parents and minors that was adopted in December 2000. They
claimed that the NPRM approach would seriously undermine minors'
willingness to seek necessary medical care. Other commenters advocated
full parental access to health information about their minor children,
claiming that the Privacy Rule interferes with parents' rights.
Response: We believe the approach adopted in the final Rule strikes
the right balance between these concerns. It defers to State law or
other applicable law and preserves the status quo to the greatest
extent possible.
Comment: Health care providers generally opposed the changes to the
parents and minors provisions claiming that they would eliminate
protection of a minor's privacy, and therefore, would decrease the
willingness of adolescents to obtain necessary health care for
sensitive types of health care services. They also argued that the NPRM
approach is inconsistent with State laws that give minors the right to
consent to certain health care because the purpose of these laws is to
provide minors with confidential health care.
Response: Issues related to parents' and minors' rights with
respect to health care are best left for the States to decide. The
standards regarding parents and minors are designed to defer to State
law in this area. While we believe that there is a correlation between
State laws that grant minors the authority to consent to treatment and
confidentiality of the information related to such treatment, our
research has not established that these laws bar parental access to
such health information under all circumstances. Therefore, to act in a
manner consistent with State law, the approach adopted in this Final
Rule is more flexible than the standards adopted in December 2000, in
order to assure that the Privacy Rule does not preclude a provider from
granting access to a parent if this is permissible under State law.
However, this new standard would not permit activity that would be
impermissible under State law.
Some State or other laws may state clearly that a covered entity
must provide a parent access to the medical records of his or her minor
child, even when the minor consents to the treatment without the
parent. In this case, the covered entity must provide a parent access,
subject to the access limitations in the Privacy Rule at
Sec. 164.524(a)(2) and (3). Other laws may state clearly that a covered
entity must not provide a parent access to their minor child's medical
records when the minor consents to the treatment without the parent. In
this case, the covered entity would be precluded from granting access
to the parent. If the State or other law clearly provides a covered
entity with discretion to grant a parent access, then the covered
entity may exercise such discretion, to the extent permitted under such
other law.
If State law is silent or unclear on its face, then a covered
entity would have to go through the same analysis as it would today to
determine if such law permitted, required, or prohibited providing a
parent with access to a minor's records. That analysis may involve
review of case law, attorney general opinions, legislative history,
etc. If such analysis showed that the State would permit an entity to
provide a parent access to health information about a minor child, and
under the Privacy Rule, the parent would not be the personal
representative of the minor because of one of the limited exceptions in
Sec. 164.502(g)(3)(i), then the covered entity may exercise such
discretion, based on the professional judgment of a licensed health
care provider, to choose whether or not to provide the parent access to
the medical records of his or her minor child. If, as the commenters
suggest, a State consent law were interpreted to prohibit such access,
then such access is prohibited under the Privacy Rule as well.
Comment: One commenter asserted that the Privacy Rule
inappropriately erects barriers between parents and children.
Specifically, the commenter stated that Sec. 164.502(g)(5) delegates to
private entities government power to decide whether a child may be
subjected to abuse or could be endangered. The commenter also stated
that the access provisions in Sec. 164.502(g)(3) would erect barriers
where State law is silent or unclear.
Response: The Department does not agree that the Privacy Rule
erects barriers between a parent and a minor child because the relevant
standards are intended to defer to State law. Health care providers
have responsibilities under other laws and professional standards to
report child abuse to the appropriate authorities and to use
professional discretion to protect the child's welfare in abuse
situations. Similarly the Privacy Rule permits (but does not require)
the provider to use professional discretion to act to protect a child
she believes is being abused. If the Privacy Rule were to mandate that
a provider grant a parent access to a medical record in abuse
situations, as the commenter suggests, this would be a change from
current law. In addition, the Privacy Rule does not allow a denial of
parental access to medical records if State or other law would require
such access.
Comment: Commenters continue to raise preemption issues. A few
commenters called for preemption of all State law in this area. Others
stated that there should be one standard, not 50 standards, controlling
disclosure of protected health information about a minor to a parent
and that the NPRM approach would burden regional and national health
care providers. Others urged preemption of State laws that are less
protective of a minor's privacy, consistent with the general preemption
provisions.
Response: The Department does not want to interfere with a State's
role in determining the appropriate rights of parents and their minor
children. The claim that the Privacy Rule introduces 50 standards is
inaccurate. These State standards exist today and are not created by
the Privacy Rule. Our approach has been, and continues to be, to defer
to State and other applicable law in this area.
Comment: One commenter requested the Privacy Rule state that good
faith compliance with the Privacy Rule is an affirmative defense to
enforcement of contrary laws ultimately determined to be more stringent
than the Rule, or that it provide specific guidance on which State laws
conflict with or are more stringent than the Privacy Rule.
Response: The Privacy Rule cannot dictate how States enforce their
own privacy laws. Furthermore, guidance on whether or not a State law
is preempted would not be binding on a State interpreting its own law.
Comment: Some commenters remain concerned that a parent will not
get information about a child who receives care in an emergency without
the consent of the parent and that the provisions in Sec. 164.510(b)
are not sufficient.
Response: As we have stated in previous guidance, a provider
generally can discuss all the health information
[[Page 53203]]
about a minor child with his parent, because the parent usually will be
the personal representative of the child. This is true, under the
Privacy Rule, even if the parent did not provide consent to the
treatment because of the emergency nature of the health care. A parent
may be unable to obtain such information in limited circumstances, such
as when the minor provided consent for the treatment in accordance with
State law or the treating physician suspects abuse or neglect or
reasonably believes that releasing the information to the parent will
endanger the child.
Comment: A couple of commenters were concerned that the provisions
regarding confidential communications conflict with the Fair Debt
Collection Practices Act (FDCPA), which allows collection agencies to
contact the party responsible for payment of the debt, be it the spouse
or parent (of a minor) of the individual that incurred the debt, and
share information that supports the incurrence and amount of the debt.
They feared that the Privacy Rule would no longer allow collection
agencies to continue this practice.
Response: Our analysis of the relevant provisions of the Privacy
Rule and the FDCPA does not indicate any conflicts between the two
laws. An entity that is subject to the FDCPA and the Privacy Rule (or
that must act consistent with the Privacy Rule as a business associate
of the covered entity) should be able to comply with both laws, because
the FDCPA permits an entity to exercise discretion to disclose
information about one individual to another.
The FDCPA allows debt collectors to communicate with the debtor's
spouse or parent if the debtor is a minor. The provisions of the FDCPA
are permissive rather than required.
Generally, the Privacy Rule permits covered entities to use the
services of debt collectors as the use of such services to obtain
payment for the provision of health care comes within the definition of
``payment.'' The Privacy Rule generally does not identify to whom
information can be disclosed when a covered entity is engaged in its
own payment activities. Therefore, if a covered entity or a debt
collector, as a business associate of a covered entity, needs to
disclose protected health information to a spouse or a parent, the
Privacy Rule generally would not prevent such disclosure. In these
cases where the Privacy Rule would permit disclosure to a parent or
spouse, there should be no concern with the interaction with the FDCPA.
However, there are some circumstances in which the Privacy Rule may
prohibit a disclosure to a parent or a spouse for payment purposes. For
example, under Sec. 164.522(a), an individual has the right to request
restrictions to the disclosure of health information for payment. A
provider or health plan may choose whether or not to agree to the
request. If the covered entity agreed to a restriction, the covered
entity would be bound by that restriction and would not be permitted to
disclose the individual's health information in violation of that
agreement. Also, Sec. 164.522(b) generally requires covered entities to
accommodate reasonable requests by individuals to receive
communications of protected health information by alternative means or
at alternative locations. However, the covered entity may condition the
accommodation on the individual providing information on how payment
will be handled. In both of these cases, the covered entity has means
for permitting disclosures as permitted by the FDCPA. Therefore, these
provisions of the Privacy Rule need not limit options available under
the FDCPA. However, if the agreed-to restrictions or accommodation for
confidential communications prohibit disclosure to a parent or spouse
of an individual, the covered entity, and the debt collector as a
business associate of the covered entity, would be prohibited from
disclosing such information under the Privacy Rule. In such case,
because the FDCPA would provide discretion to make a disclosure, but
the Privacy Rule would prohibit the disclosure, a covered entity or the
debt collector as a business associate of a covered entity would have
to exercise discretion granted under the FDCPA in a way that complies
with the Privacy Rule. This means not making the disclosure.
C. Section 164.504--Uses and Disclosures: Organizational Requirements
1. Hybrid Entities
December 2000 Privacy Rule. The Privacy Rule, as published in
December 2000, defined covered entities that primarily engage in
activities that are not ``covered functions,'' that is, functions that
relate to the entity's operation as a health plan, health care
provider, or health care clearinghouse, as hybrid entities. See 45 CFR
164.504(a). Examples of hybrid entities were: (1) corporations that are
not in the health care industry, but that operate on-site health
clinics that conduct the HIPAA standard transactions electronically;
and (2) insurance carriers that have multiple lines of business that
include both health insurance and other insurance lines, such as
general liability or property and casualty insurance.
Under the December 2000 Privacy Rule, a hybrid entity was required
to define and designate those parts of the entity that engage in
covered functions as one or more health care component(s). A hybrid
entity also was required to include in the health care component(s) any
other components of the entity that support the covered functions in
the same way such support may be provided by a business associate
(e.g., an auditing component). The health care component was to include
such ``business associate'' functions for two reasons: (1) It is
impracticable for the entity to contract with itself; and (2) having to
obtain an authorization for disclosures to such support components
would limit the ability of the hybrid entity to engage in necessary
health care operations functions. In order to limit the burden on
hybrid entities, most of the requirements of the Privacy Rule only
applied to the health care component(s) of the entity and not to the
parts of the entity that do not engage in covered functions.
The hybrid entity was required to create adequate separation, in
the form of firewalls, between the health care component(s) and other
components of the entity. Transfer of protected health information held
by the health care component to other components of the hybrid entity
was a disclosure under the Privacy Rule and was allowed only to the
same extent such a disclosure was permitted to a separate entity.
In the preamble to the December 2000 Privacy Rule, the Department
explained that the use of the term ``primary'' in the definition of a
``hybrid entity'' was not intended to operate with mathematical
precision. The Department further explained that it intended a common
sense evaluation of whether the covered entity mostly operates as a
health plan, health care provider, or health care clearinghouse. If an
entity's primary activity was a covered function, then the whole entity
would have been a covered entity and the hybrid entity provisions would
not have applied. However, if the covered entity primarily conducted
non-health activities, it would have qualified as a hybrid entity and
would have been required to comply with the Privacy Rule with respect
to its health care component(s). See 65 FR 82502.
March 2002 NPRM. Since the publication of the final Rule, concerns
were raised that the policy guidance in the preamble was insufficient
so long as the Privacy Rule itself limited the hybrid entity provisions
to entities that primarily conducted non-health related activities. In
particular, concerns were
[[Page 53204]]
raised about whether entities, which have the health plan line of
business as the primary business and an excepted benefits line, such as
workers' compensation insurance, as a small portion of the business,
qualified as hybrid entities. There were also concerns about how
``primary'' was to be defined, if it was not a mathematical
calculation, and how an entity would know whether or not it was a
hybrid entity based on the guidance in the preamble.
As a result of these comments, the Department proposed to delete
the term ``primary'' from the definition of ``hybrid entity'' in
Sec. 164.504(a) and permit any covered entity that is a single legal
entity and that performs both covered and non-covered functions to
choose whether or not to be a hybrid entity for purposes of the Privacy
Rule. Under the proposal, any covered entity could be a hybrid entity
regardless of whether the non-covered functions represent the entity's
primary functions, a substantial function, or even a small portion of
the entity's activities. In order to be a hybrid entity under the
proposal, a covered entity would have to designate its health care
component(s). If the covered entity did not designate any health care
component(s), the entire entity would be a covered entity and,
therefore, subject to the Privacy Rule. Since the entire entity would
be the covered entity, Sec. 164.504(c)(2) requiring firewalls between
covered and non-covered portions of hybrid entities would not apply.
The Department explained in the preamble to the proposal that there
are advantages and disadvantages to being a hybrid entity. Whether or
not the advantages outweigh the disadvantages would be a decision for
each covered entity that qualified as a hybrid entity, taking into
account factors such as how the entity was organized and the proportion
of the entity that must be included in the health care component.
The Department also proposed to simplify the definition of ``health
care component'' in Sec. 164.504(a) to make clear that a health care
component is whatever the covered entity designates as the health care
component, consistent with the provisions regarding designation in
proposed Sec. 164.504(c)(3)(iii). The Department proposed to move the
specific language regarding which components make up a health care
component to the implementation specification that addresses
designation of health care components at Sec. 164.504(c)(3)(iii). At
Sec. 164.504(c)(3)(iii), the Department proposed that a health care
component could include: (1) Components of the covered entity that
engage in covered functions, and (2) any component that engages in
activities that would make such component a business associate of a
component that performs covered functions, if the two components were
separate legal entities. In addition, the Department proposed to make
clear at Sec. 164.504(c)(3)(iii) that a hybrid entity must designate as
a health care component(s) any component that would meet the definition
of ``covered entity'' if it were a separate legal entity.
There was some ambiguity in the December 2000 Privacy Rule as to
whether a health care provider that does not conduct electronic
transactions for which the Secretary has adopted standards (i.e., a
non-covered health care provider) and which is part of a larger covered
entity was required to be included in the health care component. To
clarify this issue, the proposal also would allow a hybrid entity the
discretion to include in its health care component a non-covered health
care provider component. Including a non-covered health care provider
in the health care component would subject the non-covered provider to
the Privacy Rule. Accordingly, the Department proposed a conforming
change in Sec. 164.504(c)(1)(ii) to make clear that a reference to a
``covered health care provider'' in the Privacy Rule could include the
functions of a health care provider who does not engage in electronic
transactions, if the covered entity chooses to include such functions
in the health care component.
The proposal also would permit a hybrid entity to designate
otherwise non-covered portions of its operations that provide services
to the covered functions, such as parts of the legal or accounting
divisions of the entity, as part of the health care component, so that
protected health information could be shared with such functions of the
entity without business associate agreements or individual
authorizations. The proposal would not require that the covered entity
designate entire divisions as in or out of the covered component.
Rather, it would permit the covered entity to designate functions
within such divisions, such as the functions of the accounting division
that support health insurance activities, without including those
functions that support life insurance activities. The Department
proposed to delete as unnecessary and redundant the related language in
paragraph (2)(ii) of the definition of ``health care component'' in the
Privacy Rule that requires the ``business associate'' functions include
the use of protected health information.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The Department received relatively few comments on its proposal
regarding hybrid entities. A number of comments supported the proposal,
appreciative of the added flexibility it would afford covered entities
in their compliance efforts. For example, some drug stores stated that
the proposal would provide them with the flexibility to designate
health care components, whereas under the December 2000 Rule, these
entities would have been required to subject their entire business,
including the ``front end'' of the store which is not associated with
dispensing prescription drugs, to the Privacy Rule's requirements.
Some health plans and other insurers also expressed strong support
for the proposal. These comments, however, seemed to be based on a
misinterpretation of the uses and disclosures the proposal actually
would permit. These commenters appear to assume that the proposal would
allow information to flow freely between non-covered and covered
functions in the same entity, if that entity chose not to be a hybrid
entity. For example, commenters explained that they interpreted the
proposal to mean that a multi-line insurer which does not elect hybrid
entity status would be permitted to share protected health information
between its covered lines and its otherwise non-covered lines. It was
stated that such latitude would greatly enhance multi-line insurers'
ability to detect and prevent fraudulent activities and eliminate
barriers to sharing claims information between covered and non-covered
lines of insurance where necessary to process a claim.
Some commenters opposed the Department's hybrid entity proposal,
stating that the proposal would reduce the protections afforded under
the Privacy Rule and would be subject to abuse. Commenters expressed
concerns that the proposal would allow a covered entity with only a
small health care component to avoid the extra protections of creating
firewalls between the health care component and the rest of the
organization. Moreover, one of the commenters stated that the proposal
could allow a covered entity that is primarily performing health care
functions to circumvent the requirements of the Rule for a large part
of its operations by designating itself a hybrid and excluding from the
health
[[Page 53205]]
care component a non-covered health care provider function, such as a
free nurse advice line that does not bill electronically. In addition,
it was stated that the ambiguous language in the proposal could
potentially be construed as allowing a hybrid entity to designate only
the business associate-like functions as the health care component, and
exclude covered functions. The commenter urged the Department to
clarify that a hybrid entity must, at a minimum, designate a component
that performs covered functions as a health care component, and that a
health care provider cannot avoid having its treatment component
considered a health care component by relying on a billing department
to conduct its standard electronic transactions. These commenters urged
the Department to retain the existing policy by requiring those
organizations whose primary functions are not health care to be hybrid
entities and to institute firewall protections between their health
care and other components.
Final Modifications. After consideration of the comments, the
Department adopts in the final Rule the proposed approach to provide
covered entities that otherwise qualify the discretion to decide
whether to be a hybrid entity. To do so, the Department eliminates the
term ``primary'' from the definition of ``hybrid entity'' at
Sec. 164.504(a). Any covered entity that otherwise qualifies (i.e., is
a single legal entity that performs both covered and non-covered
functions) and that designates health care component(s) in accordance
with Sec. 164.504(c)(3)(iii) is a hybrid entity. A hybrid entity is
required to create adequate separation, in the form of firewalls,
between the health care component(s) and other components of the
entity. Transfer of protected health information held by the health
care component to other components of the hybrid entity continues to be
a disclosure under the Privacy Rule, and, thus, allowed only to the
same extent such a disclosure is permitted to a separate entity.
Most of the requirements of the Privacy Rule continue to apply only
to the health care component(s) of a hybrid entity. Covered entities
that choose not to designate health care component(s) are subject to
the Privacy Rule in their entirety.
The final Rule regarding hybrid entities is intended to provide a
covered entity with the flexibility to apply the Privacy Rule as best
suited to the structure of its organization, while maintaining privacy
protections for protected health information within the organization.
In addition, the policy in the final Rule simplifies the Privacy Rule
and makes moot any questions about what ``primary'' means for purposes
of determining whether an entity is a hybrid entity.
The final Rule adopts the proposal's simplified definition of
``health care component,'' which makes clear that a health care
component is what the covered entity designates as the health care
component. The Department makes a conforming change in
Sec. 164.504(c)(2)(ii) to reflect the changes to the definition of
``health care component.'' The final Rule at Sec. 164.504(c)(3)(iii)
requires a health care component to include a component that would meet
the definition of a ``covered entity'' if it were a separate legal
entity. The Department also modifies the language of the final Rule at
Sec. 164.504(c)(3)(iii) to clarify that only a component that performs
covered functions, and a component to the extent that it performs
covered functions or activities that would make such component a
business associate of a component that performs covered functions if
the two components were separate legal entities, may be included in the
health care component. ``Covered functions'' are defined at
Sec. 164.501 as ``those functions of a covered entity the performance
of which makes the entity a health plan, health care provider, or
health care clearinghouse.''
As in the proposal, the Department provides a hybrid entity with
some discretion as to what functions may be included in the health care
component in two ways. First, the final Rule clarifies that a hybrid
entity may include in its health care component a non-covered health
care provider component. Accordingly, the Department adopts the
proposed conforming change to Sec. 164.504(c)(1)(ii) to make clear that
a reference to a ``covered health care provider'' in the Privacy Rule
may include the functions of a health care provider who does not engage
in electronic transactions for which the Secretary has adopted
standards, if the covered entity chooses to include such functions in
the health care component. A hybrid entity that chooses to include a
non-covered health care provider in its health care component is
required to ensure that the non-covered health care provider, as well
as the rest of the health care component, is in compliance with the
Privacy Rule.
Second, the final Rule retains the proposed policy to provide
hybrid entities with discretion as to whether or not to include
business associate-like divisions within the health care component. It
is not a violation of the Privacy Rule to exclude such divisions from
the health care component. However, a disclosure of protected health
information from the health care component to such other division that
is not part of the health care component is the same as a disclosure
outside the covered entity. Because an entity cannot have a business
associate contract with itself, such a disclosure likely will require
individual authorization.
The Department clarifies, in response to comments, that a health
care provider cannot avoid being a covered entity and, therefore, part
of a health care component of a hybrid entity just by relying on a
billing department to conduct standard transactions on its behalf. A
health care provider is a covered entity if standard transactions are
conducted on his behalf, regardless of whether the provider or a
business associate (or billing department within a hybrid entity)
actually conducts the transactions. In such a situation, however,
designating relevant parts of the business associate division as part
of the health care component would facilitate the conduct of health
care operations and payment.
Also in response to comments, the Department clarifies that even if
a covered entity does not choose to be a hybrid entity, and therefore
is not required to erect firewalls around its health care functions,
the entity still only is allowed to use protected health information as
permitted by the Privacy Rule, for example, for treatment, payment, and
health care operations. Additionally, the covered entity is still
subject to minimum necessary restrictions under Secs. 164.502 and
164.514(d), and, thus, must have policies and procedures that describe
who within the entity may have access to the protected health
information. Under these provisions, workforce members may be permitted
access to protected health information only as necessary to carry out
their duties with respect to the entity's covered functions. For
example, the health insurance line of a multi-line insurer is not
permitted to share protected health information with the life insurance
line for purposes of determining eligibility for life insurance
benefits or any other life insurance purposes absent an individual's
written authorization. However, the health insurance line of a multi-
line insurer may share protected health information with another line
of business pursuant to Sec. 164.512(a), if, for example, State law
requires an insurer that receives a claim under one policy to share
that information with other lines of insurance to determine if the
event also may be payable under
[[Page 53206]]
another insurance policy. Furthermore, the health plan may share
information with another line of business if necessary for the health
plan's coordination of benefits activities, which would be a payment
activity of the health plan.
Given the above restrictions on information flows within the
covered entity, the Department disagrees with those commenters who
raised concerns that the proposed policy would weaken the Rule by
eliminating the formal requirement for ``firewalls.'' Even if a covered
entity does not designate health care component(s) and, therefore, does
not have to establish firewalls to separate its health care function(s)
from the non-covered functions, the Privacy Rule continues to restrict
how protected health information may be used and shared within the
entity and who gets access to the information.
Further, the Department does not believe that allowing a covered
entity to exclude a non-covered health care provider component from its
health care component will be subject to abuse. Excluding health care
functions from the health care component has significant implications
under the Rule. Specifically, the Privacy Rule treats the sharing of
protected health information from a health care component to a non-
covered component as a disclosure, subject to the same restrictions as
a disclosure between two legally separate entities. For example, if a
covered entity decides to exclude from its health care component a non-
covered provider, the health care component is then restricted from
disclosing protected health information to that provider for any of the
non-covered provider's health care operations, absent an individual's
authorization. See Sec. 164.506(c). If, however, the non-covered health
care provider function is not excluded, it would be part of the health
care component and that information could be used for its operations
without the individual's authorization.
Response to Other Public Comments
Comment: A number of academic medical centers expressed concern
that the Privacy Rule prevents them from organizing for compliance in a
manner that reflects the integration of operations between the medical
school and affiliated faculty practice plans and teaching hospitals.
These commenters stated that neither the proposal nor the existing Rule
would permit many academic medical centers to designate themselves as
either a hybrid or affiliated entity, since the components of each must
belong to a single legal entity or share common ownership or control.
These commenters also explained that a typical medical school would not
appear to qualify as an organized health care arrangement (OHCA)
because it does not engage in any of the requisite joint activities,
for example, quality assessment and improvement activities, on behalf
of the covered entity. It was stated that it is essential that there
not be impediments to the flow of information within an academic
medical center. These commenters, therefore, urged that the Department
add a definition of ``academic medical center'' to the Privacy Rule and
modify the definition of ``common control'' to explicitly apply to the
components of an academic medical center, so as to ensure that academic
medical centers qualify as affiliated entities for purposes of the
Rule.
Response: The Department does not believe that a modification to
include a special rule for academic medical centers is warranted. The
Privacy Rule's organizational requirements at Sec. 164.504 for hybrid
entities and affiliated entities, as well as the definition of
``organized health care arrangement'' in Sec. 164.501, provide covered
entities with much flexibility to apply the Rule's requirements as best
suited to the structure of their businesses. However, in order to
maintain privacy protections, the Privacy Rule places appropriate
conditions on who may qualify for such organizational options, as well
as how information may flow within such constructs. Additionally, if
the commenter is suggesting that information should flow freely between
the covered and non-covered functions within an academic medical
center, the Department clarifies that the Privacy Rule restricts the
sharing of protected health information between covered and non-covered
functions, regardless of whether the information is shared within a
single covered entity or a hybrid entity, or among affiliated covered
entities or covered entities participating in an OHCA. Such uses and
disclosures may only be made as permitted by the Rule.
Comment: A few commenters expressed concern with respect to
governmental hybrid entities having to include business associate-like
divisions within the health care component or else being required to
obtain an individual's authorization for disclosures to such division.
It was stated that this concept does not take into account the
organizational structures of local governments and effectively forces
such governmental hybrid entities to bring those components that
perform business associate type functions into their covered component.
Additionally, a commenter stated that this places an undue burden on
local government by essentially requiring that functions, such as
auditor/controller or county counsel, be treated as fully covered by
the Privacy Rule in order to minimize otherwise considerable risk.
Commenters, therefore, urged that the Department allow a health care
component to enter into a memorandum of understanding (MOU) or other
agreement with the business associate division within the hybrid
entity. Alternatively, it was suggested that a governmental hybrid
entity be permitted to include in its notice of privacy practices the
possibility that information may be shared with other divisions within
the same government entity for specific purposes.
Response: The Department clarifies that a covered entity which
chooses to include its business associate division within the health
care component may only do so to the extent such division performs
activities on behalf of, or provides services to, the health care
component. That same division's activities with respect to non-covered
activities may not be included. To clarify this point, the Department
modified the proposed language in Sec. 164.504(c)(3)(iii) to provide
that a health care component may only include a component to the extent
that it performs covered functions or activities that would make such
component a business associate of a component that performs covered
functions if the two components were separate legal entities. For
example, employees within an accounting division may be included within
the health care component to the extent that they provide services to
such component. However, where these same employees also provide
services to non-covered components of the entity, their activities with
respect to the health care component must be adequately separated from
their other non-covered functions.
While the Department does not believe that a MOU between
governmental divisions within a hybrid entity may be necessary given
the above clarification, the Department notes that a governmental
hybrid entity may elect to have its health care component enter into a
MOU with its business associate division, provided that such agreement
is legally binding and meets the relevant requirements of
Sec. 164.504(e)(3) and (e)(4). Such agreement would eliminate the need
for the health care component to include the business associate
division or for obtaining the
[[Page 53207]]
individual's authorization to disclose to such division.
Additionally, the Department encourages covered entities to develop
a notice of privacy practices that is as specific as possible, which
may include, for a government hybrid entity, a statement that
information may be shared with other divisions within the government
entity as permitted by the Rule. However, the notice of privacy
practices is not an adequate substitute for, as appropriate, a
memorandum of understanding; designation of business associate
functions as part of a health care component; or alternatively,
conditioning disclosures to such business associate functions on
individuals' authorizations.
Comment: One commenter requested a clarification that a pharmacy-
convenience store, where the pharmacy itself is a separate enclosure
under supervision of a licensed pharmacist, is not a hybrid entity.
Response: The Department clarifies that a pharmacy-convenience
store, if a single legal entity, is permitted, but not required, to be
a hybrid entity and designate the pharmacy as the health care
component. Alternatively, such an entity may choose to be a covered
entity in its entirety. However, if the pharmacy and the convenience
store are separate legal entities, the convenience store is not a
covered entity simply by virtue of sharing retail space with the
covered pharmacy.
Comment: Another commenter stated that the Rule implies that
individual providers, once covered, are covered for all circumstances
even if they are employed by more than one entity--one sending
transactions electronically but not the other--or if the individual
provider changes functions or employment and no longer electronically
transmits standard transactions. This commenter asked that either the
Rule permit an individual provider to be a hybrid entity (recognizing
that there are times when an individual provider may be engaging in
standard transactions, and other times when he is not), or that the
definition of a ``covered entity'' should be modified so that
individual providers are themselves classified as covered entities only
when they are working as individuals.
Response: A health care provider is not a covered entity based on
his being a workforce member of a health care provider that conducts
the standard transactions. Thus, a health care provider may maintain a
separate uncovered practice (if he does not engage in standard
transactions electronically in connection with that practice), even
though the provider may also practice at a hospital which may be a
covered entity. However, the Rule does not permit an individual
provider to use hybrid entity status to eliminate protections on
information when he is not conducting standard transactions. If a
health care provider conducts standard transactions electronically on
his own behalf, then the protected health information maintained or
transmitted by that provider is covered, regardless of whether the
information is actually used in such transactions.
Comment: One commenter requested a clarification that employers are
not hybrid entities simply because they may be the plan sponsor of a
group health plan.
Response: The Department clarifies that an employer is not a hybrid
entity simply because it is the plan sponsor of a group health plan.
The employer/plan sponsor and group health plan are separate legal
entities and, therefore, do not qualify as a hybrid entity. Further,
disclosures from the group health plan to the plan sponsor are governed
specifically by the requirements of Sec. 164.504(f).
Comment: A few commenters asked the Department to permit a covered
entity with multiple types of health care components to tailor notices
to address the specific privacy practices within a component, rather
than have just one generic notice for the entire covered entity.
Response: Covered entities are allowed to provide a separate notice
for each separate health care component, and are encouraged to provide
individuals with the most specific notice possible.
2. Group Health Plan Disclosures of Enrollment and Disenrollment
Information to Plan Sponsors
December 2000 Privacy Rule. The Department recognized the
legitimate need of plan sponsors and employers to access health
information held by group health plans in order to carry out essential
functions related to the group health plan. Therefore, the Privacy Rule
at Sec. 164.504(f) permits a group health plan, and health insurance
issuers or HMOs with respect to the group health plan, to disclose
protected health information to a plan sponsor provided that, among
other requirements, the plan documents are amended appropriately to
reflect and restrict the plan sponsor's uses and disclosures of such
information. The Department further determined that there were two
situations in which protected health information could be shared
between the group health plan and the plan sponsor without individual
authorization or an amendment to the plan documents. First,
Sec. 164.504(f) permits the group health plan to share summary health
information (as defined in Sec. 164.504(a)) with the plan sponsor.
Second, a group health plan is allowed to share enrollment or
disenrollment information with the plan sponsor without amending the
plan documents as required by Sec. 164.504(f). As explained in the
preamble to the December 2000 Privacy Rule, a plan sponsor is permitted
to perform enrollment functions on behalf of its employees without
meeting the requirements of Sec. 164.504(f), as such functions are
considered outside of the plan administration functions. However, the
second exception was not stated in the regulation text.
March 2002 NPRM. The ability of group health plans to disclose
enrollment or disenrollment information without amending the plan
documents was addressed only in the preamble to the Privacy Rule. The
absence of a specific provision in the regulation text caused many
entities to conclude that plan documents would need to be amended for
enrollment and disenrollment information to be exchanged between plans
and plan sponsors. To remedy this misunderstanding and make its policy
clear, the Department proposed to add an explicit exception at
Sec. 164.504(f)(1)(iii) to clarify that group health plans (or health
insurance issuers or HMOs with respect to group health plans, as
appropriate) are permitted to disclose enrollment or disenrollment
information to a plan sponsor without meeting the plan document
amendment and other related requirements.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
Commenters in general supported the proposed modification. Some
supported the proposal because it was limited to information about
whether an individual is participating or enrolled in a group health
plan and would not permit the disclosure of any other protected health
information. Others asserted that the modification is a reasonable
approach because enrollment and disenrollment information is needed by
plan sponsors for payroll and other employment reasons.
Final Modifications. The Department adopts the modification to
Sec. 164.504(f)(1)(iii) essentially as proposed. Thus, a group health
plan, or
[[Page 53208]]
a health insurance issuer or HMO acting for a group health plan, may
disclose to a plan sponsor information on whether the individual is
participating in the group health plan, or is enrolled in or has
disenrolled from a health insurance issuer or HMO offered by the plan.
This disclosure can be made without amending the plan documents. In
adopting the modification as a final Rule, the Department deletes the
phrase ``to the plan sponsor'' that appeared at the end of the proposed
new provision, as mere surplusage.
As a result of the modification, summary health information and
enrollment and disenrollment information are treated consistently.
Under Sec. 164.504(f), as modified, group health plans can share
summary health information and enrollment or disenrollment information
with plan sponsors without having to amend the plan documents. Section
164.520(a) provides that a fully insured group health plan does not
need to comply with the Privacy Rule's notice requirements if the only
protected health information it creates or receives is summary health
information and/or information about individuals' enrollment in, or
disenrollment from, a health insurer or HMO offered by the group health
plan. Similarly, in Sec. 164.530(k), the Department exempts fully
insured group health plans from many of the administrative requirements
in that section if the only protected health information held by the
group health plan is summary health information and/or information
about individuals' enrollment in, or disenrollment from, a health
insurer or HMO offered by the group health plan. Such consistency will
simplify compliance with the Privacy Rule.
Response to Other Public Comments
Comment: One commenter stated that there needs to be protection for
health information given to group health plans on enrollment forms. In
particular, this commenter suggested that the Department include a
definition of ``enrollment'' or ``disenrollment'' information that
specifies that medical information, such as past or present medical
conditions and doctor or hospital visits, is not enrollment
information, but rather is individually identifiable health
information, and therefore, subject to the Privacy Rule's protections.
Response: Individually identifiable health information received or
created by the group health plan for enrollment purposes is protected
health information under the Privacy Rule. The modification to
Sec. 164.504(f) being adopted in this rulemaking does not affect this
policy. The Privacy Rule does not define the information that may be
transmitted for enrollment and disenrollment purposes. Rather, the
Department in the Transactions Rule has adopted a standard transaction
for enrollment and disenrollment in a health plan. That standard (ASC
X12N 834, Benefit Enrollment and Maintenance, Version 4010, May 2000,
Washington Publishing Company) specifies the required and situationally
required data elements to be transmitted as part of such a transaction.
While the standard enrollment and disenrollment transaction does not
include any substantial clinical information, the information provided
as part of the transaction may indicate whether or not tobacco use,
substance abuse, or short, long-term, permanent, or total disability is
relevant, when such information is available. However, the Department
clarifies that, in disclosing or maintaining information about an
individual's enrollment in, or disenrollment from, a health insurer or
HMO offered by the group health plan, the group health plan may not
include medical information about the individual above and beyond that
which is required or situationally required by the standard transaction
and still qualify for the exceptions for enrollment and disenrollment
information allowed under the Rule.
Comment: Several commenters recommended that enrollment and
disenrollment information specifically be excluded from the definition
of ``protected health information.'' They argued that this change would
be warranted because enrollment and disenrollment information do not
include health information. They further argued that such a change
would help alleviate confusion surrounding the application of the
Privacy Rule to employers.
Response: We disagree that enrollment and disenrollment information
should be excluded from the definition of ``protected health
information.'' Enrollment and disenrollment information fall under the
statutory definition of ``individually identifiable health
information,'' since it is received or created by a health plan,
identifies an individual, and relates to the past, present, or future
payment for the provision of health care to an individual. As such, the
Department believes there is no statutory basis to exclude such
information from the definition of ``protected health information.''
The Department believes that the exception to the requirement for group
health plans to amend plan documents that has been added to the Privacy
Rule for enrollment and disenrollment information balances the
legitimate need that plan sponsors have for enrollment and
disenrollment information against the individual's right to have such
information kept private and confidential.
Comment: Given that, under Sec. 164.504(f)(2), plan sponsors agree
not to use or further disclose protected health information other than
as permitted or required by plan documents or ``required by law,'' one
commenter requested that the definition of ``required by law'' set
forth at Sec. 164.501 should be revised to reflect that it applies not
only to covered entities, but also to plan sponsors who are required to
report under OSHA or similar laws.
Response: The Department agrees and has made a technical correction
to the definition of ``required by law'' in Sec. 164.501 to reflect
that the definition applies to a requirement under law that compels any
entity, not just a covered entity, to make a use or disclosure of
protected health information.
D. Section 164.506--Uses and Disclosures for Treatment, Payment, and
Health Care Operations
1. Consent
December 2000 Privacy Rule. Treatment and payment for health care
are core functions of the health care industry, and uses and
disclosures of individually identifiable health information for such
purposes are critical to the effective operation of the health care
system. Health care providers and health plans must also use
individually identifiable health information for certain health care
operations, such as administrative, financial, and legal activities, to
run their businesses and to support the essential health care functions
of treatment and payment. Equally important are health care operations
designed to maintain and improve the quality of health care. In
developing the Privacy Rule, the Department balanced the privacy
implications of uses and disclosures for treatment, payment, and health
care operations and the need for these core activities to continue. The
Department considered the fact that many individuals expect that their
health information will be used and disclosed as necessary to treat
them, bill for treatment, and, to some extent, operate the covered
entity's health care business. Given public expectations with respect
to the use or disclosure of information for such activities and so as
not to interfere with an individual's
[[Page 53209]]
access to quality health care or the efficient payment for such health
care, the Department's goal is, and has always been, to permit these
activities to occur with little or no restriction.
Consistent with this goal, the Privacy Rule published in December
2000 generally provided covered entities with permission to use and
disclose protected health information as necessary for treatment,
payment, and health care operations. For certain health care providers
that have direct treatment relationships with individuals, such as many
physicians, hospitals, and pharmacies, the December 2000 Privacy Rule
required such providers to obtain an individual's written consent prior
to using or disclosing protected health information for these purposes.
The Department designed consent as a one-time, general permission from
the individual, which the individual would have had the right to
revoke. A health care provider could have conditioned treatment on the
receipt of consent. Other covered entities also could have chosen to
obtain consent but would have been required to follow the consent
standards if they opted to do so.
The consent requirement for health care providers with direct
treatment relationships was a significant change from the Department's
initial proposal published in November 1999. At that time, the
Department proposed to permit all covered entities to use and disclose
protected health information to carry out treatment, payment, and
health care operations without any requirement that the covered
entities obtain an individual's consent for such uses and disclosures,
subject to a few limited exceptions. Further, the Department proposed
to prohibit covered entities from obtaining an individual's consent for
uses and disclosures of protected health information for these
purposes, unless required by other applicable law.
The transition provisions of the Privacy Rule permit covered health
care providers that were required to obtain consent to use and disclose
protected health information they created or received prior to the
compliance date of the Privacy Rule for treatment, payment, or health
care operations if they had obtained consent, authorization, or other
express legal permission to use or disclose such information for any of
these purposes, even if such permission did not meet the consent
requirements of the Privacy Rule.
March 2002 NPRM. The Department heard concerns about significant
practical problems that resulted from the consent requirements in the
Privacy Rule. Covered entities and others provided numerous examples of
obstacles that the consent provisions would pose to timely access to
health care. These examples extended to various types of providers and
various settings. The most troubling, pervasive problem was that health
care providers would not have been able to use or disclose protected
health information for treatment, payment, or health care operations
purposes prior to their initial face-to-face contact with the patient,
something which is routinely done today to provide patients with timely
access to quality health care. A list of some of the more significant
examples and concerns are as follows:
Pharmacists would not have been able to fill a
prescription, search for potential drug interactions, determine
eligibility, or verify coverage before the individual arrived at the
pharmacy to pick up the prescription if the individual had not already
provided consent under the Privacy Rule.
Hospitals would not have been able to use information from
a referring physician to schedule and prepare for procedures before the
individual presented at the hospital for such procedure, or the patient
would have had to make a special trip to the hospital to sign the
consent form.
Providers who do not provide treatment in person may have
been unable to provide care because they would have had difficulty
obtaining prior written consent to use protected health information at
the first service delivery.
Emergency medical providers were concerned that, if a
situation was urgent, they would have had to try to obtain consent to
comply with the Privacy Rule, even if that would be inconsistent with
appropriate practice of emergency medicine.
Emergency medical providers were also concerned that the
requirement that they attempt to obtain consent as soon as reasonably
practicable after an emergency would have required significant efforts
and administrative burden which might have been viewed as harassing by
individuals, because these providers typically do not have ongoing
relationships with individuals.
Providers who did not meet one of the consent exceptions
were concerned that they could have been put in the untenable position
of having to decide whether to withhold treatment when an individual
did not provide consent or proceed to use information to treat the
individual in violation of the consent requirements.
The right to revoke a consent would have required tracking
consents, which could have hampered treatment and resulted in large
institutional providers deciding that it would be necessary to obtain
consent at each patient encounter instead.
The transition provisions would have resulted in
significant operational problems, and the inability to access health
records would have had an adverse effect on quality activities, because
many providers currently are not required to obtain consent for
treatment, payment, or health care operations.
Providers that are required by law to treat were concerned
about the mixed messages to patients and interference with the
physician-patient relationship that would have resulted because they
would have had to ask for consent to use or disclose protected health
information for treatment, payment, or health care operations, but
could have used or disclosed the information for such purposes even if
the patient said ``no.''
As a result of the large number of treatment-related obstacles
raised by various types of health care providers that would have been
required to obtain consent, the Department became concerned that
individual fixes would be too complex and could possibly overlook
important problems. Instead, the Department proposed an approach
designed to protect privacy interests by affording patients the
opportunity to engage in important discussions regarding the use and
disclosure of their health information through the strengthened notice
requirement, while allowing activities that are essential to quality
health care to occur unimpeded (see section III.H. of the preamble for
a discussion of the strengthened notice requirements).
Specifically, the Department proposed to make the obtaining of
consent to use and disclose protected health information for treatment,
payment, or health care operations more flexible for all covered
entities, including providers with direct treatment relationships.
Under this proposal, health care providers with direct treatment
relationships with individuals would no longer be required to obtain an
individual's consent prior to using and disclosing information about
him or her for treatment, payment, and health care operations. They,
like other covered entities, would have regulatory permission for such
uses and disclosures.
The NPRM included provisions to permit covered entities to obtain
consent for uses and disclosures of protected health information for
treatment, payment, or health care
[[Page 53210]]
operations, if they wished to do so. These provisions would grant
providers complete discretion in designing this process. These proposed
changes were partnered, however, by the proposal to strengthen the
notice provisions to require direct treatment providers to make good
faith efforts to obtain a written acknowledgment of receipt of the
notice. The intent was to preserve the opportunity to raise questions
about the entity's privacy policies that the consent requirements
previously provided.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The vast majority of commenters addressed the consent proposal.
Most comments fell into three basic categories: (1) Many comments
supported the NPRM approach to eliminate the consent requirement; (2)
many comments urged the Department to require consent, but make
targeted fixes to address workability issues; and (3) some comments
urged the Department to strengthen the consent requirement.
The proposed approach of eliminating required consent and making
obtaining of consent permissible, at the entity's discretion, was
supported by many covered entities that asserted that it would provide
the appropriate balance among access to quality health care,
administrative burden, and patient privacy. Many argued that the
appropriate privacy protections were preserved by strengthening the
notice requirement. This approach was also supported by the NCVHS.
The comments received in response to the NPRM continued to raise
the issues and obstacles described above, and others. For example, in
addition to providing health care services to patients, hospices often
provide psychological and emotional support to family members. These
consultations often take place long distance and would likely be
considered treatment. The consent requirement would make it difficult,
or impossible in some circumstances, for hospices to provide these
important services to grieving family members on a timely basis.
Comments explained that the consent provisions in the Rule pose
significant obstacles to oncologists as well. Cancer treatment is
referral-based. Oncologists often obtain information from other
doctors, hospital, labs, etc., speak with patients by telephone,
identify treatment options, and develop preliminary treatment plans,
all before the initial patient visit. The prior consent requirement
would prevent all of these important preliminary activities before the
first patient visit, which would delay treatment in cases in which such
delay cannot be tolerated.
Other commenters continued to strongly support a consent
requirement, consistent with their views expressed during the comment
period in March 2001. Some argued that the NPRM approach would
eliminate an important consumer protection and that such a ``radical''
approach to fixing the workability issues was not required. They
recommended a targeted approach to fixing each problem, and suggested
ways to fix each unintended consequence of the consent requirement, in
lieu of removing the requirement to obtain consent.
A few commenters argued for reinstating a consent requirement, but
making it similar to the proposal for acknowledgment of notice by
permitting flexibility and including a ``good faith'' standard. They
also urged the Department to narrow the definition of health care
operations and require that de-identified information be used where
possible for health care operations.
Finally, a few commenters continued to assert that consent should
be strengthened by applying it to more covered entities, requiring it
to be obtained more frequently, or prohibiting the conditioning of
treatment on the obtaining of consent.
Final Modifications. The Department continues to be concerned by
the multitude of comments and examples demonstrating that the consent
requirements would result in unintended consequences that would impede
the provision of health care in many critical circumstances. We are
also concerned that other such unintended consequences may exist which
have yet to be brought to our attention. The Department would not have
been able to address consent issues arising after publication of this
Rule until at least a year had passed from this Rule's publication date
due to statutory limitations on the timing of modifications. The
Department believes in strong privacy protections for individually
identifiable health information, but does not want to compromise timely
access to quality health care. The Department also understands that the
opportunity to discuss privacy practices and concerns is an important
component of privacy, and that the confidential relationship between a
patient and a health care provider includes the patient's ability to be
involved in discussions and decisions related to the use and disclosure
of protected health information about him or her.
A review of the comments showed that almost all of the commenters
that discussed consent acknowledged that there are unintended
consequences of the consent requirement that would interfere with
treatment. These comments point toward two potential approaches to
fixing these problems. The Department could address these problems by
adopting a single solution that would address most or all of the
concerns, or could address these problems by adopting changes targeted
to each specific problem that was brought to the attention of the
Department. One of the goals in making changes to the Privacy Rule is
to simplify, rather than add complexity to, the Rule. Another goal is
to assure that the Privacy Rule does not hamper necessary treatment.
For both of these reasons, the Department is concerned about adopting
different changes for different issues related to consent and
regulating to address specific examples that have been brought to its
attention. Therefore, the options that the Department most seriously
considered were those that would provide a global fix to the consent
problems. Some commenters provided global options other than the
proposed approach. However, none of these would have resolved the
operational problems created by a mandatory consent.
The Department also reviewed State laws to understand how they
approached uses and disclosures of health information for treatment,
payment, or health care operations purposes. Of note was the California
Confidentiality of Medical Information Act. Cal. Civ. Code Sec. 56.
This law permits health care providers and health plans to disclose
health information for treatment, payment, and certain types of health
care operations purposes without obtaining consent of the individual.
The California HealthCare Foundation conducted a medical privacy and
confidentiality survey in January 1999 that addressed consumer views on
confidentiality of medical records. The results showed that, despite
the California law that permitted disclosures of health information
without an individual's consent, consumers in California did not have
greater concerns about confidentiality than other health care
consumers. This is true with respect to trust of providers and health
plans to keep health information private and confidential and the level
of access to health information that providers and health plans have.
[[Page 53211]]
The Department adopts the approach that was proposed in the NPRM,
because it is the only one that resolves the operational problems that
have been identified in a simple and uniform manner. First, this Rule
strengthens the notice requirements to preserve the opportunity for
individuals to discuss privacy practices and concerns with providers.
(See section III.H. of the preamble for the related discussion of
modifications to strengthen the notice requirements.) Second, the final
Rule makes the obtaining of consent to use and disclose protected
health information for treatment, payment, or health care operations
optional on the part of all covered entities, including providers with
direct treatment relationships. A health care provider that has a
direct treatment relationship with an individual is not required by the
Privacy Rule to obtain an individual's consent prior to using and
disclosing information about him or her for treatment, payment, and
health care operations. They, like other covered entities, have
regulatory permission for such uses and disclosures. The fact that
there is a State law that has been using a similar model for years
provides us confidence that this is a workable approach.
Other rights provided by the Rule are not affected by this
modification. Although covered entities will not be required to obtain
an individual's consent, any uses or disclosures of protected health
information for treatment, payment, or health care operations must
still be consistent with the covered entity's notice of privacy
practices. Also, the removal of the consent requirement applies only to
consent for treatment, payment, and health care operations; it does not
alter the requirement to obtain an authorization under Sec. 164.508 for
uses and disclosures of protected health information not otherwise
permitted by the Privacy Rule or any other requirements for the use or
disclosure of protected health information. The Department intends to
enforce strictly the requirement for obtaining an individual's
authorization, in accordance with Sec. 164.508, for uses and disclosure
of protected health information for purposes not otherwise permitted or
required by the Privacy Rule. Furthermore, individuals retain the right
to request restrictions, in accordance with Sec. 164.522(a). This
allows individuals and covered entities to enter into agreements to
restrict uses and disclosures of protected health information for
treatment, payment, and health care operations that are enforceable
under the Privacy Rule.
Although consent for use and disclosure of protected health
information for treatment, payment, and health care operations is no
longer mandated, this Final Rule allows covered entities to have a
consent process if they wish to do so. The Department heard from many
commenters that obtaining consent was an integral part of the ethical
and other practice standards for many health care professionals. It,
therefore, does not prohibit covered entities from obtaining consent.
This final Rule allows covered entities that choose to have a
consent process complete discretion in designing that process. Prior
comments have informed the Department that one consent process and one
set of principles will likely be unworkable. Covered entities that
choose to obtain consent may rely on industry practices to design a
voluntary consent process that works best for their practice area and
consumers, but they are not required to do so.
This final Rule effectuates these changes in the same manner as
proposed by the NPRM. The consent provisions in Sec. 164.506 are
replaced with a new provision at Sec. 164.506(a) that provides
regulatory permission for covered entities to use or disclose protected
health information for treatment, payment, and health care operations.
A new provision is added at Sec. 164.506(b) that permits covered
entities to obtain consent if they choose to, and makes clear any such
consent process does not override or alter the authorization
requirements in Sec. 164.508. Section 164.506(b) includes a small
change from the proposed version to make it clearer that authorizations
are still required by referring directly to authorizations under
Sec. 164.508.
Additionally, this final Rule includes a number of conforming
modifications, identical to those proposed in the NPRM, to accommodate
the new approach. The most substantive corresponding changes are at
Secs. 164.502 and 164.532. Section 164.502(a)(1) provides a list of the
permissible uses and disclosures of protected health information, and
refers to the corresponding section of the Privacy Rule for the
detailed requirements. The provisions at Secs. 164.502(a)(1)(ii) and
(iii) that address uses and disclosures of protected health information
for treatment, payment, and health care operations are collapsed into a
single provision, and the language is modified to eliminate the consent
requirement.
The references in Sec. 164.532 to Sec. 164.506 and to consent,
authorization, or other express legal permission obtained for uses and
disclosures of protected health information for treatment, payment, and
health care operations prior to the compliance date of the Privacy Rule
are deleted. The proposal to permit a covered entity to use or disclose
protected health information for these purposes without consent or
authorization would apply to any protected health information held by a
covered entity whether created or received before or after the
compliance date. Therefore, transition provisions are not necessary.
This final Rule also includes conforming changes to the definition
of ``more stringent'' in Sec. 160.202; the text of
Sec. 164.500(b)(1)(v), Secs. 164.508(a)(2)(i) and (b)(3)(i), and
Sec. 164.520(b)(1)(ii)(B); the introductory text of Secs. 164.510 and
164.512, and the title of Sec. 164.512 to eliminate references to
required consent.
Response to Other Public Comments
Comment: There were three categories of commenters with respect to
the Rule's general approach to consent-those that supported the changes
proposed in the NPRM provisions, those that requested targeted changes
to the consent requirement, and those that requested that the consent
requirement be strengthened.
Many commenters supported the NPRM approach to consent, making
consent to use or disclose protected health information for treatment,
payment, and health care operations voluntary for all covered entities.
These commenters said that this approach provided flexibility for
covered entities to address consent in a way that is consistent with
their practices. These commenters also stated that the NPRM approach
assured that the Privacy Rule would not interfere with or delay
necessary treatment.
Those that advocated retaining a consent requirement stated that
the NPRM approach would undermine trust in the health care system and
that requiring consent before using or disclosing protected health
information shows respect for the patient's autonomy, underscores the
need to inform the patient of the risks and benefits of sharing
protected health information, and makes it possible for the patient to
make an informed decision. Many of these commenters suggested that the
consent requirement be retained and that the problems raised by consent
be addressed through targeted changes or guidance for each issue.
Some suggestions targeted to specific problems were: (1) Fix the
problems
[[Page 53212]]
related to filling prescriptions by treating pharmacists as providers
with indirect treatment relationships or by deeming a prescription to
serve as an implied consent; and (2) allow certain uses and disclosures
prior to first patient encounter. Some of these commenters argued that
certain issues could be addressed through guidance on other provisions
in the Rule, rather than a change in the regulation. For example, they
suggested that guidance could explain that physicians who take phone
calls for one another are part of an organized health care arrangement,
or could provide technical assistance about revocations on consent by
identifying when a covered entity has taken action in reliance on a
consent.
Other suggestions were more general. They included suggestions that
the Department: (1) Substitute a good faith effort requirement for the
current provisions; (2) provide regulatory permission for certain uses
and disclosures of protected heath information prior to first service
delivery; (3) permit oral consent with documentation; (4) retain a
consent requirement for disclosures, but not uses; (5) retain a consent
requirement for payment and operations, but not treatment uses and
disclosures; (6) allow individuals to opt out of the consent
requirement; (7) allow the consent to apply to activities of referred-
to providers, and (8) retain the consent requirement but add
flexibility, not exceptions.
The third group of commenters requested that the consent
requirement be strengthened. Some requested that the Privacy Rule not
permit conditioning of treatment or enrollment on consent for multiple
uses and disclosures. Others requested that the consent requirement be
extended to covered entities other than providers with direct treatment
relationships, such as health plans. Some commenters also asked that
the consent be time-limited or be required more frequently, such as at
each service delivery.
Response: The Department recognizes that there are some benefits to
the consent requirement and has considered all options to preserve the
consent requirement while fixing the problems it raises. After
examining each of these options, we do not believe that any would
address all of the issues that were brought to the Department's
attention during the comment process or would be the best approach for
regulating this area. For example, the suggestion to treat pharmacists
as indirect treatment providers would not be consistent with the
current regulatory definition of that term and would not have addressed
other referral situations. This approach was also rejected by some
pharmacists who view themselves as providing treatment directly to
individuals. The suggestion to allow certain uses and disclosures prior
to first patient encounter would not address concerns of tracking
consents, use of historical data for quality purposes, or the concerns
of emergency treatment providers.
The Department desired a global approach to resolving the problems
raised by the prior consent requirement, so as not to add additional
complexity to the Privacy Rule or apply different standards to
different types of direct treatment providers. This approach is
consistent with the basic goal of the Rule to provide flexibility as
necessary for the standards to work for all sectors of the health care
industry.
More global approaches suggested were carefully considered, but
each had some flaw or failed to address all of the treatment-related
concerns brought to our attention. For example, those who suggested
that the Rule be modified to require a good faith effort to obtain
consent at first service delivery failed to explain how that approach
would provide additional protection than the approach we proposed. The
Department also decided against eliminating the consent requirement
only for uses and disclosures for treatment, or only for uses of
protected health information but not for disclosures, because these
options fall short of addressing all of the problems raised. Scheduling
appointments and surgeries, and conducting many pre-admission
activities, are health care operations activities, not treatment.
Retaining the consent requirement for payment would be problematic
because, in cases where a provider, such as a pharmacist or hospital,
engages in a payment activity prior to face-to-face contact with the
individual, it would prohibit the provider from contacting insurance
companies to obtain pre-certification or to verify coverage.
Similarly, the suggestion to limit the prior consent requirement to
disclosures and not to uses would not have addressed all of the
problems raised by the consent requirements. Many of the basic
activities that occur before the initial face-to-face meeting between a
provider and an individual involve disclosures as well as uses. Like
the previous approach, this approach also would prohibit pharmacists
and hospitals from contacting insurance companies to obtain pre-
certification or verify coverage if they did not have the individual's
prior consent to disclose the protected health information for payment.
It also would prohibit a provider from contacting another provider to
ask questions about the medical record and discuss the patient's
condition, because this would be a disclosure and would require
consent.
There was a substantial amount of support from commenters for the
approach taken in the NPRM. The Department continues to believe that
this approach makes the most sense and meets the goals of not
interfering with access to quality health care and of providing a
single standard that works for the entire health care industry.
Therefore, the Department has adopted the approach proposed in the
NPRM.
Comment: Some commenters asserted that eliminating the consent
requirement would be a departure from current medical ethical standards
that protect patient confidentiality and common law and State law
remedies for breach of confidentiality that generally require or
support patient consent prior to disclosing patient information for any
reason. Another commenter was concerned that the removal of the consent
requirement from the Privacy Rule will become the de facto industry
standard and supplant professional ethical duties to obtain consent for
the use of protected health information.
Response: The Privacy Rule provides a floor of privacy protection.
State laws that are more stringent remain in force. In order not to
interfere with such laws and ethical standards, this Rule permits
covered entities to obtain consent. Nor is the Privacy Rule intended to
serve as a ``best practices'' standard. Thus, professional standards
that are more protective of privacy retain their vitality.
Comment: Some commenters requested that, if the Department adopts
the NPRM approach to eliminate the consent requirement for uses and
disclosures of protected health information for treatment, payment, or
health care operations, the definition of ``health care operations''
should also be narrowed to protect individual expectations of privacy.
Response: We disagree. As stated in the preamble to the December
2000 Privacy Rule, the Department believes that narrowing the
definition of ``health care operations'' will place serious burdens on
covered entities and impair their ability to conduct legitimate
business and management functions.
Comment: Some commenters requested that the regulation text state
more specifically that a voluntary consent cannot substitute for an
authorization when an authorization is otherwise required under the
Privacy Rule.
[[Page 53213]]
Response: The Department agrees and modifies the regulation text,
at Sec. 164.506(b)(2), to make this clear. As stated in the preamble to
the NPRM, the Department intends to enforce strictly the requirement
for obtaining an individual's authorization, in accordance with
Sec. 164.508, for uses and disclosures of protected health information
for purposes not otherwise permitted or required by the Privacy Rule. A
consent obtained voluntarily would not be sufficient to permit a use or
disclosure which, under the Privacy Rule, requires an authorization or
is otherwise expressly conditioned under the Rule. For example, a
consent under Sec. 164.506 could not be obtained in lieu of an
authorization required by Sec. 164.508 or a waiver of authorization by
an IRB or Privacy Board under Sec. 164.512(i) to disclose protected
health information for research purposes.
Comment: Some commenters requested that, if the Department decides
to allow consent on a voluntary basis, the Privacy Rule include
requirements for those covered entities that voluntarily choose to
obtain consents.
Response: The goal of the NPRM approach was to enhance flexibility
for covered entities by allowing them to design a consent process that
best matches their needs. The Department learned over the past year
that no single consent process works for all covered entities. In
addition, the Department wants to encourage covered entities to adopt a
consent process, and is concerned that by prescribing particular rules,
it would discourage some covered entities from doing so.
Comment: Some commenters asserted that the consent requirement
provides individuals with control because providers may not opt to
withhold treatment if a patient refuses consent only for the use or
disclosure of protected health information for health care operations.
Response: These commenters may not fully understand the consent
requirements in the December 2000 Rule. That requirement did not allow
separate consents for use of protected health information for
treatment, payment, and health care operations. The only way to allow
use of protected health information for treatment but not for health
care operations purposes would have been to invoke the right to request
restrictions (Sec. 164.522(a)); the provider could agree or not agree
to restrict use and disclosure of protected health information for
health care operations. That is also how the Rule will work with these
modifications. The Department is not modifying the right to request
restrictions.
Comment: Some commenters were confused about the relationship
between the proposed changes to the consent provisions and State law.
Some were concerned that the Privacy Rule would override State consent
laws which provide stronger protections for medical and
psychotherapeutic privacy.
Response: The Privacy Rule does not weaken the operation of State
laws that require consent to use or disclose health information. The
Privacy Rule permits a covered entity to obtain consent to use or
disclose health information, and, therefore, presents no barrier to the
entity's ability to comply with State law requirements.
Comment: One commenter suggested that the consent requirement be
retained to protect victims of domestic violence.
Response: The Department understands the concerns that the Privacy
Rule not endanger victims of domestic violence, but we do not believe
that eliminating the consent requirement will do so. The Department
believes that the provisions that provide real protections to victims
of domestic violence in how information is used or disclosed for
treatment, payment, and health care operations, are provisions that
allow an individual to object to disclosure of directory information
and of protected health information to family members or friends
involved in the individual's care (see Sec. 164.510), that provide an
individual the right to request restrictions (see Sec. 164.522(a)), and
that grant an individual the right to request confidential
communications (see Sec. 164.522(b)). These provisions are not affected
by the changes in this final Rule.
Comment: One commenter asserted that written consent represents a
signed agreement between the provider and patient regarding the manner
in which covered entities will use and disclose health information in
the future, and that the removal of this requirement would shift
``ownership'' of records from patients to doctors and corporate
entities.
Response: The Department disagrees with this position. Our research
indicates that a signed consent form is most typically treated as a
waiver of rights by a patient and not as a binding agreement between a
provider and a patient. Further, many States have laws assigning the
ownership of records, apart from any consent requirements. The Privacy
Rule does not address, and is not intended to affect, existing laws
governing the ownership of health records.
Comment: A few commenters claimed that the signed notice of a
provider's privacy policy is meaningless if the individual has no right
to withhold consent and the NPRM approach would reinforce the fact that
individuals have no say in how their health information is used or
disclosed.
Response: The Department disagrees. The individual's options under
the consent requirement established by the Privacy Rule published in
December 2000 and the voluntary consent and strengthened notice
provisions adopted by this Rule are the same. Under the previous Rule,
a patient who disagreed with the covered entity's information practices
as stated in the notice could withhold consent and not receive
treatment, or could sign the consent form and obtain treatment despite
concerns about the information practices. The patient could request
that the provider restrict the use and/or disclosure of the
information. Under the Rule as modified, a patient who disagrees with
the covered entity's information practices as stated in the notice, can
choose not to receive treatment from that provider, or can obtain
treatment despite concerns about the information practices. The patient
can request that the provider restrict the use and/or disclosure of the
information. The result, for the patient, is the same.
Comment: One commenter requested clarification with respect to the
effect of a revocation of voluntary consent and whether agreed-to
restrictions must be honored.
Response: The final Rule is silent as to how a covered entity
handles the revocation of a voluntary consent under Sec. 164.506(b)(1).
The Rule provides the covered entity that chooses to adopt a consent
process discretion to design the process that works for that entity.
The change to the consent provision in the Privacy Rule does not
affect the right of an individual under Sec. 164.522(a) to request
restrictions to a use or disclosure of protected health information.
While a covered entity is not required to agree to such restrictions,
it must act in accordance with any restriction it does agree to.
Failure of a covered entity to act in accordance with an agreed-to
restriction is a violation of the Rule.
Comment: Commenters asked the Department to rename consent to
``consent for information use'' to reduce confusion with consent for
treatment.
Response: In order to clear up confusion between informed consent
for treatment, which is addressed by State law, and consent to use or
disclose protected health information under the
[[Page 53214]]
Privacy Rule, we changed the title of Sec. 164.506(b) from ``Consent
permitted'' to ``Consent for uses and disclosures of information
permitted.'' The Privacy Rule does not affect informed consent for
treatment.
Comment: A few commenters requested that the Department modify the
regulation to state that de-identified information should be used for
health care operations where possible.
Response: The Department continues to encourage covered entities to
use de-identified information wherever possible. As the Department has
made this position clear in the preambles to both the December 2000
Privacy Rule and the March 2002 NPRM, as well as in this preamble, we
do not believe that it is necessary to modify the regulation to include
such language. Further, the minimum necessary requirements, under
Secs. 164.502(b)(2) and 164.514(d), already require a covered entity to
make reasonable efforts to limit protected health information used for
health care operations and other purposes to the minimum necessary to
accomplish the intended purpose, which may, in some cases, be de-
identified information.
Comment: One commenter requested that the Privacy Rule state that
consent is not required for provider-to-provider communications.
Response: Prior to these final modifications, the consent
requirements of the Privacy Rule would have required a provider to
obtain written consent to disclose protected health information to
another provider for treatment purposes--which could have interfered
with an individual's ability to obtain timely access to quality care.
This is one reason the Department has eliminated the consent
requirement for treatment, payment, and health care operations.
Providers will not need a patient's consent to consult with other
providers about the treatment of a patient. However, if a provider is
disclosing protected health information to another provider for
purposes other than treatment, payment, or health care operations, an
authorization may be required under Sec. 164.508 (e.g., generally,
disclosures for clinical trials would require an authorization).
Comment: One commenter asserted that, without a consent
requirement, nothing will stop a health plan from demanding a patient's
mental health records as a condition of payment for physical therapy.
Response: The Department does not agree that the former consent
requirement is the relevant standard with respect to the activities of
the health plan that concern the commenter. Rather, the Transactions
Rule and the minimum necessary standard of the Privacy Rule prescribe
and limit the health information that may be disclosed as part of
payment transactions between health plans and health care providers.
Although a health plan may request additional information to process a
specific claim, in addition to the required and situational elements
under the Transactions Rule, the request must comply with the Privacy
Rule's minimum necessary requirements. In this example, the health plan
can only request mental health records if they are reasonably necessary
for the plan to process the physical therapy claim.
2. Disclosures for Treatment, Payment, or Health Care Operations of
Another Entity
December 2000 Privacy Rule. The Privacy Rule permits a covered
entity to use and disclose protected health information for treatment,
payment, or health care operations. For treatment purposes, the Rule
generally allows protected health information to be shared without
restriction. The definition of ``treatment'' incorporates the necessary
interaction of more than one entity. In particular, the definition of
``treatment'' includes the coordination and management of health care
among health care providers or by a health care provider with a third
party, consultations between health care providers, and referrals of a
patient for health care from one health care provider to another. As a
result, covered entities are permitted to disclose protected health
information for treatment purposes regardless of to whom the disclosure
is made, as well as to disclose protected health information for the
treatment activities of another health care provider.
However, for payment and health care operations, the Privacy Rule,
as published in December 2000, generally limited a covered entity's
uses and disclosures of protected health information to those that were
necessary for its own payment and health care operations activities.
This limitation was explicitly stated in the December 2000 preamble
discussions of the definitions of ``payment'' and ``health care
operations.'' 65 FR 82490, 82495. The Privacy Rule also provided that a
covered entity must obtain authorization to disclose protected health
information for the payment or health care operations of another
entity. The Department intended these requirements to be consistent
with individuals' privacy expectations. See 45 CFR 164.506(a)(5) and
164.508(e).
March 2002 NPRM. Since the publication of the December 2000 Rule, a
number of commenters raised specific concerns with the restriction that
a covered entity may not disclose protected health information for
another entity's payment and health care operations activities, absent
an authorization. These commenters presented a number of examples where
such a restriction would impede the ability of certain entities to
obtain reimbursement for health care, to conduct certain quality
assurance or improvement activities, such as accreditation, or to
monitor fraud and abuse.
With regard to payment, for example, the Department heard concerns
of ambulance service providers who explained that they normally receive
the information they need to obtain payment for their treatment
services from the hospital emergency departments to which they
transport their patients. They explained that it is usually not
possible for the ambulance service provider to obtain such information
directly from the individual, nor is it always practicable or feasible
for the hospital to obtain the individual's authorization to provide
payment information to the ambulance service provider. This disclosure
of protected health information from the hospital to the ambulance
service provider was not permitted under the December 2000 Privacy Rule
without an authorization from the patient, because it was a disclosure
by the hospital for the payment activities of the ambulance service
provider.
Commenters also were concerned about situations in which covered
entities outsource their billing, claims, and reimbursement functions
to accounts receivable management companies. These collectors often
attempt to recover payments from a patient on behalf of multiple health
care providers. Commenters were concerned that the Privacy Rule would
prevent these collectors, as business associates of multiple providers,
from using a patient's demographic information received from one
provider to facilitate collection for another provider's payment.
With regard to health care operations, the Department also received
comments about the difficulty that the Privacy Rule would place on
health plans trying to obtain information needed for quality assessment
activities. Health plans informed the Department that they need to
obtain individually identifiable health information from health care
providers for the plans' quality-related activities, accreditation, and
performance measures, such as Health Plan Employer Data and Information
Set
[[Page 53215]]
(HEDIS). Commenters explained that the information provided to plans
for payment purposes (e.g., claims or encounter information) may not be
sufficient for quality assessment or accreditation purposes.
The NCVHS, in response to public testimony on this issue at its
August 2001 hearing, also recommended that the Department amend the
Privacy Rule to allow for uses and disclosures for quality-related
activities among covered entities, without the individual's written
authorization.
Based on these concerns, the Department proposed to modify
Sec. 164.506 to permit a covered entity to disclose protected health
information for the payment activities of another covered entity or any
health care provider, and also for certain types of health care
operations of another covered entity. The proposal would broaden the
uses and disclosures that are permitted without authorization as part
of treatment, payment, and health care operations so as not to
interfere inappropriately with access to quality and effective health
care, while limiting this expansion in order to continue to protect the
privacy expectations of the individual.
Specifically, the Department proposed the following. First, the
Department proposed to add to Sec. 164.506(c)(1) language stating that
a covered entity may use or disclose protected health information for
its own treatment, payment, or health care operations without prior
permission.
Second, the Department proposed to include language in
Sec. 164.506(c)(2) to clarify its intent that a covered entity may
share protected health information for the treatment activities of
another health care provider. For example, a primary care provider who
is a covered entity under the Privacy Rule may send a copy of an
individual's medical record to a specialist who needs the information
to treat the same individual, whether or not that specialist is also a
covered entity. No authorization would be required.
Third, the Department proposed to include language in
Sec. 164.506(c)(3) to permit a covered entity to disclose protected
health information to another covered entity or any health care
provider for the payment activities of that entity. The Department
recognized that not all health care providers who need protected health
information to obtain payment are covered entities, and, therefore,
proposed to allow disclosures of protected health information to both
covered and non-covered health care providers. In addition, the
Department proposed a conforming change to delete the word ``covered''
in paragraph (1)(ii) of the definition of ``payment,'' to permit
disclosures to non-covered providers for their payment activities.
The Department also proposed to limit disclosures under this
provision to those health plans that are covered by the Privacy Rule.
However, the Department solicited comment on whether plans that are not
covered by the Privacy Rule would be able to obtain the protected
health information that they need for payment purposes.
Fourth, in Sec. 164.506(c)(4), the Department proposed to permit a
covered entity to disclose protected health information about an
individual to another covered entity for specified health care
operations purposes of the covered entity that receives the
information, provided that both entities have a relationship with the
individual. This proposed expansion was limited in a number of ways.
The proposal would permit such disclosures only for the activities
described in paragraphs (1) and (2) of the definition of ``health care
operations,'' as well as for health care fraud and abuse detection and
compliance programs (as provided for in paragraph (4) of the definition
of ``health care operations''). The activities that fall into
paragraphs (1) and (2) of the definition of ``health care operations''
include quality assessment and improvement activities, population-based
activities relating to improving health or reducing health care costs,
case management, conducting training programs, and accreditation,
certification, licensing, or credentialing activities. The Department
proposed this limitation because it recognized that ``health care
operations'' is a broad term and that individuals are less aware of the
business-related activities that are part of health care operations
than they are of treatment- or payment-related activities. In addition,
many commenters and the NCVHS focused their comments on covered
entities' needs to share protected health information for quality-
related health care operations activities. The proposed provision was
intended to allow information to flow from one covered entity to
another for activities important to providing quality and effective
health care.
The proposal would have applied only to disclosures of protected
health information to other covered entities. By limiting such
disclosures to those entities that are required to comply with the
Privacy Rule, the Department intended to ensure that the protected
health information remained protected. The Department believed that
this would create the appropriate balance between meeting an
individual's privacy expectations and meeting a covered entity's need
for information for quality-related health care operations.
Further, such disclosures would be permitted only to the extent
that each entity has, or had, a relationship with the individual who is
the subject of the information being disclosed. Where the relationship
between the individual and the covered entity has ended, a disclosure
of protected health information about the individual would be allowed
only if related to the past relationship. The Department believed that
this limitation would be necessary in order to further protect the
privacy expectations of the individual.
The proposal made clear that these provisions would not eliminate a
covered entity's responsibility to apply the Privacy Rule's minimum
necessary provisions to both the disclosure of and request for
protected health information for payment and health care operations
purposes. In addition, the proposal strongly encouraged the use of de-
identified information, wherever feasible.
While the Department stated that it believed it had struck the
right balance with respect to the proposed modification for disclosures
for health care operations, the Department was aware that the proposal
could pose barriers to disclosures for quality-related health care
operations to health plans and health care providers that are not
covered entities, or to entities that do not have a relationship with
the individual. Therefore, the preamble referred commenters to the
Department's request for comment on an approach that would permit for
any health care operations purposes the disclosure of protected health
information that does not contain direct identifiers, subject to a data
use or similar agreement.
In addition, related to the above modifications and in response to
comments evidencing confusion on this matter, the Department also
proposed to clarify that covered entities participating in an organized
health care arrangement (OHCA) may share protected health information
for the health care operations of the OHCA (Sec. 164.506(c)(5)). The
Department also proposed to remove the language regarding OHCAs from
the definition of ``health care operations'' as unnecessary because
such language now would appear in Sec. 164.506(c)(5).
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
[[Page 53216]]
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The Department received a number of comments on its proposal to
permit a covered entity to disclose protected health information for
the payment and health care operations activities of other entities.
Most of the commenters who addressed the Department's proposed
clarification regarding treatment expressed support for the
clarification. Also, the majority of commenters supported, either
wholly or in part, the Department's proposal to expand the payment and
health care operations disclosures that would be permitted.
Most commenters generally were supportive of the Department's
proposed approach regarding disclosures for payment. A number of
commenters stated that the proposed expansion is important to
facilitate coordination of benefits for many patients who have multiple
sources of payment for prescription drugs. One commenter, however,
requested that the Department narrow its proposed language to address
only those problems specifically described in the preamble, that is,
payment issues faced by ambulance providers and collection agencies
that are business associates of multiple health care providers. This
commenter stated that, at the very least, covered entities should be
required to obtain assurances from non-covered providers, prior to
disclosure of protected health information, that the recipient will not
use protected health information for any other purpose or disclose it
to others. Another commenter remarked that the proposal to limit
disclosures only to another covered entity or any health care provider
may impede disclosures to reinsurers that are not covered entities.
While most commenters supported expanding disclosures for health
care operations, many requested that the Department modify the proposal
in a number of ways. For example, a number of health plans and others
requested that the Department eliminate the condition that both covered
entities have a relationship with the individual. Some of these
commenters explained that such a restriction would impede some fraud
and abuse activities, credentialing investigations, and quality
assurance research and outcome studies. Some commenters asked that the
Department clarify that the condition that both covered entities have a
relationship with the individual would not be limited to a current
relationship, but also would include a past relationship with the
individual.
In addition, many commenters requested that the Department expand
the proposed provision to allow for disclosures for any type of health
care operation of another covered entity, or at least additional
activities beyond those specified in the proposal. Some health plans
commented that they may need information from a health care provider in
order for the health plan to resolve member or internal grievances,
provide customer service, arrange for legal services, or conduct
medical review or auditing activities. A number of commenters requested
that the proposal be expanded to allow for disclosures for another
covered entity's underwriting or premium rating.
Some commenters also requested that the Department expand the
provision to allow for disclosures to non-covered entities. In
particular, a number of these commenters urged that the Department
allow disclosures to non-covered insurers for fraud and abuse purposes.
Some of these commenters specifically requested that the Department
allow for disclosures to affiliated entities or non-health care
components of the covered entity for purposes of investigating fraud
and abuse. A few commenters requested that the Rule allow for
disclosures to a non-covered health care provider for that provider's
operations. For example, it was explained that an independent emergency
services provider, who is not a covered entity and who often asks for
outcome information on patients it has treated and transported to a
facility because it wants to improve care, would be unable to obtain
such information absent the individual's authorization.
Some commenters were generally opposed to the proposed expansion of
the disclosures permitted under the Rule for health care operations
purposes, viewing the proposal as a weakening of the Privacy Rule. One
of these commenters urged the Department to implement a targeted
solution allowing disclosures for only those activities specifically
identified as problematic in the preamble, instead of allowing
disclosures for all activities that fall within certain paragraphs
within the definition of ``health care operations.''
Final Modifications. In this final Rule, the Department adopts its
proposal to allow covered entities to disclose protected health
information for the treatment, payment, and certain health care
operations purposes of another entity. Specifically, the final Rule at
Sec. 164.506(c):
(1) States that a covered entity may use or disclose protected
health information for its own treatment, payment, or health care
operations.
(2) Clarifies that a covered entity may use or disclose protected
health information for the treatment activities of any health care
provider.
(3) Permits a covered entity to disclose protected health
information to another covered entity or any health care provider for
the payment activities of the entity that receives the information.
(4) Permits a covered entity to disclose protected health
information to another covered entity for the health care operations
activities of the entity that receives the information, if each entity
either has or had a relationship with the individual who is the subject
of the information, the protected health information pertains to such
relationship, and the disclosure is:
(i) For a purpose listed in paragraphs (1) or (2) of the definition
of ``health care operations,'' which includes quality assessment and
improvement activities, population-based activities relating to
improving health or reducing health care costs, case management and
care coordination, conducting training programs, and accreditation,
licensing, or credentialing activities; or
(ii) For the purpose of health care fraud and abuse detection or
compliance.
(5) Clarifies that a covered entity that participates in an
organized health care arrangement may disclose protected health
information about an individual to another covered entity that
participates in the organized health care arrangement for any health
care operations activities of the organized health care arrangement.
Based on the comments received, the Department believes that the
above provisions strike the appropriate balance between meeting an
individual's privacy expectations and meeting a covered entity's need
for information for reimbursement and quality purposes. The Department
also clarifies that disclosures pursuant to the above provisions may be
made to or by a business associate of a covered entity.
In Sec. 164.506(c)(2), in response to a comment, the Department
deletes the word ``another'' before ``health care provider'' to
eliminate any implication that the disclosing entity must also be a
health care provider.
With respect to payment, the majority of commenters were supportive
of the Department's proposal. In response to those commenters who
expressed support for the proposal because it would facilitate
coordination of benefits, the Department clarifies that the definition
of ``payment'' in the
[[Page 53217]]
Privacy Rule allows for uses and disclosures necessary for coordination
of benefits. The new language may, however, reinforce that uses and
disclosures for such purposes are permitted under the Rule.
The Department does not believe, as suggested by one commenter,
that a targeted approach, one that would address only the problems
raised by the ambulance providers and collection agencies, is a
practical solution to these problems. The Department believes that
these problems may apply in other situations. For example, an indirect
treatment provider, such as a pathologist, may need to obtain health
coverage information about an individual for billing purposes from the
hospital to which the pathologist provided services. If the Department
addressed only these discrete scenarios in this final modification,
each additional similar problem that arises would require another
rulemaking, which would, in and of itself, create a problem because the
Department can change a standard only once per year. In addition, by
creating special rules to address multiple, distinct circumstances, the
Department would have created a substantially more complicated policy
for covered entities to follow and implement.
The suggestion that the Department require a covered entity to
obtain assurances from non-covered providers, prior to disclosure of
protected health information for payment purposes, that the recipient
will not use protected health information for any other purpose or
disclose it to others, similarly would add a layer of complexity to
payment disclosures. Such a requirement would encumber these
communications and may interfere with the ability of non-covered health
care providers to be paid for treatment they have provided. Moreover,
the Privacy Rule requires a covered entity to apply the minimum
necessary standard to disclosures for a non-covered provider's payment
purposes. Thus, a non-covered provider will receive only the minimum
information reasonably necessary for such purposes. Accordingly, the
Department believes the final Rule appropriately and practically
addresses the issue.
In response to the comment that the proposal may impede disclosures
to reinsurers who are not covered entities, the Department clarifies
that disclosures to obtain payment under a contract for reinsurance
explicitly are permitted as part of the definition of ``payment,''
regardless of whether the reinsurer is a covered entity. Similarly,
disclosures for the purposes of ceding, securing, or placing a contract
for reinsurance of risk relating to claims for health care are
explicitly permitted as part of the definition of ``health care
operations,'' also without regard to whether the reinsurer is a covered
entity. See the definitions of ``payment'' and ``health care
operations'' in Sec. 164.501.
With respect to disclosures for the health care operations of
another covered entity, the Department continues to believe that the
condition that both entities have a relationship with the individual is
appropriate to balance an individual's privacy expectations with a
covered entity's need for the information. The Department clarifies
that a covered entity, prior to making a disclosure allowed under this
requirement, is permitted to communicate with another covered entity as
necessary to determine if this condition has been met. Additionally, in
response to comments, the Department adds language to
Sec. 164.506(c)(4) to make clear that the condition that both covered
entities have a relationship with the individual is not limited to a
current relationship. Where the relationship between the covered entity
and the individual has ended, a disclosure of protected health
information about the individual is permitted to the extent the
disclosure is related to the past relationship. For example, the final
Rule would permit a health care provider to disclose protected health
information to a health plan for HEDIS purposes, even if the individual
no longer was covered by the health plan, provided that the period for
which information is needed overlaps with the period for which the
individual was enrolled in the health plan.
In response to commenters who were concerned that this condition
would impede certain health care operations activities where the
covered entity may not have a relationship with the individual, the
Department notes that the new limited data set provisions in
Sec. 164.514(e) are intended to provide a mechanism for disclosures of
protected health information for quality and other health care
operations where the covered entity requesting the information does not
have a relationship with the individual. Under those provisions, the
final modifications permit a covered entity to disclose protected
health information, with direct identifiers removed, for any health
care operations activities of the entity requesting the information,
subject to a data use agreement. Additionally, as clarified by
Sec. 164.506(c)(5), covered entities that participate in an OHCA may
share protected health information for the health care operations of
the OHCA, without the condition that each covered entity have a
relationship with the individual who is the subject of the information.
The Department believes that such provisions provide adequate avenues
for covered entities to obtain the information they need for health
care operations activities, without eliminating appropriate privacy
protections and conditions on such disclosures.
The Department also was not persuaded by the comments that the
proposal should be broadened to allow disclosures for other types of
health care operations activities, such as resolution of internal
grievances, customer service, or medical review or auditing activities.
The Department believes that the provisions at Sec. 164.506(c)(5),
which permit covered entities that participate in an OHCA to share
information for any health care operations activities of the OHCA,
adequately provides for such disclosures. For example, a health plan
and the health care providers in its network that participate as part
of the same OHCA are permitted to share information for any of the
activities listed in the definition of ``health care operations.'' The
Department understands the need for entities participating in these
joint arrangements to have shared access to information for health care
operations purposes and intended the OHCA provisions to provide for
such access. Where such a joint arrangement does not exist and fully
identifiable health information is needed, one covered entity may
disclose protected health information for another covered entity's
health care operations pursuant to an individual's authorization as
required by Sec. 164.508. In addition, as described above, a covered
entity also may disclose protected health information as part of a
limited data set, with direct identifiers removed, for such purposes,
as permitted by Sec. 164.514(e).
With respect to underwriting and premium rating, a few commenters
raised similar concerns that the Department's proposal to expand the
disclosures permitted under health care operations would not allow for
the disclosures between a health insurance issuer and a group health
plan, or the agent or broker as a business associate of the plan,
needed to perform functions related to supplementing or replacing
insurance coverage, such as to solicit bids from prospective issuers.
The Department clarifies that, if more than summary health information
is needed for this purpose, paragraphs (3), (4), and (5) of the
definition of ``organized health
[[Page 53218]]
care arrangement'' may permit the disclosure. These provisions define
the arrangements between group health plans and their health insurance
issuers or HMOs as OHCAs, which are permitted to share information for
each other's health care operations. Such disclosures also may be made
to a broker or agent that is a business associate of the health plan.
The Department clarifies that the OHCA provisions also permit the
sharing of protected health information between such entities even when
they no longer have a current relationship, that is, when a group
health plan needs protected health information from a former issuer.
The Department, therefore, does not believe that a broadening of the
provisions under Sec. 164.506(c)(4), to allow disclosures of protected
health information for other types of health care operations
activities, is warranted.
The final Rule also adopts the condition proposed in the NPRM that
disclosures for these health care operations may be made only to
another covered entity. The Department continues to consider such a
condition necessary to appropriately balance an individual's privacy
interests with entities' needs for the information. The Department was
not convinced by the commenters who urged that this condition needed to
be eliminated to allow for disclosures to non-covered health care
providers or third parties. The Department believes that permitting
disclosures of protected health information to a non-covered provider
for that provider's treatment and payment purposes is warranted and
appropriate so as not to impede such core activities. However, given
that an individual's health information will no longer be protected
when it is disclosed to a non-covered provider, the Department does not
consider disclosures for a non-covered provider's health care
operations to warrant similar consideration under the Rule. Moreover,
this final Rule at Sec. 164.514(e) permits a covered entity to disclose
a limited data set, with direct identifiers removed, to a non-covered
provider for any of the provider's health care operations purposes,
without individual authorization.
Also, the Department believes that expanding the provision to allow
disclosures to a third party for any of the third party's business
operations would severely weaken the Privacy Rule and essentially
negate the need for individual authorization. With respect to those
commenters who urged the Department to permit disclosures to non-health
care components of a hybrid entity or to an affiliated entity for the
purposes of investigating fraud and abuse, the Department's position is
that disclosures to a non-health care component within a hybrid entity
or to a non-covered affiliated entity present the same privacy risks as
do disclosures to a non-covered entity. The Privacy Rule, therefore,
permits such disclosures only to the same extent the disclosures are
permitted to a separate entity. This policy is further explained in
section III.C.1. regarding hybrid entities.
Lastly, the Department believes that the final Rule does in fact
implement a targeted solution to the problems previously identified by
commenters, by allowing disclosures for only quality-related and fraud
and abuse activities. The Department does not believe further limiting
such disclosures to only certain activities within paragraphs (1) and
(2) of the definition of ``health care operations'' is practical or
appropriate. The Department is aware of the important role that these
quality-related activities play in ensuring that individuals have
access to quality health care. Covered entities have a legitimate need
for protected health information in order to conduct these quality
activities, regardless of whether such information is used for HEDIS
purposes or for training. Moreover, as described above, the final Rule
retains a number of conditions on such disclosures that serve to
protect an individual's privacy interests and expectations. In
addition, the Privacy Rule requires that the minimum necessary standard
be applied to both covered entities' requests for and disclosures of
protected health information for such purposes.
Response to Other Public Comments
Comment: One commenter urged that the Department permit disclosures
among participants in an OHCA only when their privacy notices (or any
joint notice they issue) informs individuals of this possibility.
Response: The Privacy Rule requires the joint notice of an OHCA to
reflect the fact that the notice covers more than one covered entity
and that, if applicable, the covered entities participating in the OHCA
will share protected health information with each other, as necessary
to carry out treatment, payment, or health care operations relating to
the OHCA. See Sec. 164.520(d). Where the participants of an OHCA choose
to have separate notices, such notices must reflect and describe in
sufficient detail the particular uses and disclosures that each covered
entity may make to place the individual on notice. This detail should
include disclosures to other members of an OHCA, where appropriate.
Comment: Another commenter requested clarification as to whether a
covered entity (such as an HMO) is permitted to disclose protected
health information for payment and health care operations both to the
group health plan and to the plan's third party administrator or plan
sponsor. The commenter stated that it was not clear from the proposal
whether a covered entity could share protected health information
directly with another covered entity's business associate.
Response: The Department clarifies that, if the Rule permits a
covered entity to share protected health information with another
covered entity, the covered entity is permitted to disclose protected
health information directly to a business associate acting on behalf of
that other covered entity. This is true with respect to all of the
Rule's provisions. Also, an HMO may disclose protected health
information to a group health plan, or a third party administrator that
is a business associate of the plan, because the relationship between
the HMO and the group health plan is defined as an OHCA for purposes of
the Rule. See Sec. 164.501, definition of ``organized health care
arrangement.'' The group health plan (or the HMO with respect to the
group health plan) may disclose protected health information to a plan
sponsor in accordance with Sec. 164.504(f).
Comment: Several commenters requested that the Department expand
the definition of ``payment'' to include disclosures to a responsible
party. Additionally, these commenters urged that the Department permit
covered entities (and their business associates) to use and disclose
protected health information as permitted by other law, rather than
only as required by law. These commenters were concerned that the
Privacy Rule would impede the ability of first-party billing companies,
collection agencies, and accounts receivable management companies to
continue to bill and communicate, on behalf of a health care provider,
with the responsible party on an account when that person is different
from the individual to whom health care services were provided; report
outstanding receivables owed by the responsible party on an account to
a credit reporting agency; and perform collection litigation services.
Response: The Department does not believe a modification to the
definition of ``payment'' is necessary. The Privacy Rule permits a
covered entity, or a business associate acting on behalf of a covered
entity (e.g., a collection agency),
[[Page 53219]]
to disclose protected health information as necessary to obtain payment
for health care, and does not limit to whom such a disclosure may be
made. See the definition of ``payment'' in Sec. 164.501. Therefore, a
collection agency, as a business associate of a covered entity, is
permitted to contact persons other than the individual to whom health
care is provided as necessary to obtain payment for such services.
Regarding the commenters' concerns about collection or payment
activities otherwise permitted by law, the Department clarifies that
the Privacy Rule permits covered entities to use and disclose protected
health information as required by other law, or as permitted by other
law provided that such use or disclosure does not conflict with the
Privacy Rule. For example, the Privacy Rule permits a collection
agency, as a business associate of a covered health care provider, to
use and disclose protected health information as necessary to obtain
reimbursement for health care services, which could include disclosures
of certain protected health information to a credit reporting agency,
or as part of collection litigation. See the definition of ``payment''
in Sec. 164.501.
The Department notes, however, that a covered entity, and its
business associate through its contract, is required to reasonably
limit the amount of information disclosed for such purposes to the
minimum necessary, where applicable, as well as abide by any reasonable
requests for confidential communications and any agreed-to restrictions
as required by the Privacy Rule.
Comment: One commenter asked that the Department clarify that
disclosure by an eye doctor to confirm a contact prescription received
by a mail-order contact company is treatment.
Response: The Department agrees that disclosure of protected health
information by an eye doctor to a distributor of contact lenses for the
purpose of confirming a contact lens prescription is treatment and is
permissible under Sec. 164.506. In relevant part, treatment is defined
by the Privacy Rule as ``the provision, coordination, or management of
health care and related services by one or more health care providers,
including the coordination or management of health care by a health
care provider with a third party * * *'' Health care is defined, in
part, as ``care, services, or supplies related to the health of an
individual. Health care includes * * * Sale or dispensing of a drug,
device, equipment, or other item in accordance with a prescription.''
Therefore, the dispensing of contact lenses based on a prescription is
health care and the disclosure of protected health information by a
provider to confirm a prescription falls within the provision,
coordination, or management of health care and related services and is
a treatment activity.
E. Uses and Disclosures for Which Authorization Is Required
1. Restructuring Authorization
December 2000 Privacy Rule. The Privacy Rule requires individual
authorization for uses and disclosures of protected health information
for purposes that are not otherwise permitted or required under the
Rule. To ensure that authorizations are informed and voluntary, the
Rule prohibits, with limited exceptions, covered entities from
conditioning treatment, payment, or eligibility for benefits or
enrollment in a health plan, on obtaining an authorization. The Rule
also permits, with limited exceptions, individuals to revoke an
authorization at any time. Additionally, the Rule sets out core
elements that must be included in any authorization. These elements are
intended to provide individuals with the information they need to make
an informed decision about giving their authorization. This information
includes specific details about the use or disclosure, and provides the
individual fair notice about his or her rights with respect to the
authorization and the potential for the information to be redisclosed.
Additionally, the authorization must be written in plain language so
individuals can read and understand its contents. The Privacy Rule
required that authorizations provide individuals with additional
information for specific circumstances under the following three sets
of implementation specifications: In Sec. 164.508(d), for
authorizations requested by a covered entity for its own uses and
disclosures; in Sec. 164.508(e), for authorizations requested by a
covered entity for another entity to disclose protected health
information to the covered entity requesting the authorization to carry
out treatment, payment, or health care operations; and in
Sec. 164.508(f), for authorizations requested by a covered entity for
research that includes treatment of the individual.
March 2002 NPRM. Various issues were raised regarding the
authorization requirements. Commenters claimed the authorization
provisions were too complex and confusing. They alleged that the
different sets of implementation specifications were not discrete,
creating the potential for the implementation specifications for
specific circumstances to conflict with the required core elements.
Some covered entities were confused about which authorization
requirements they should implement in any given circumstance. Also,
although the Department intended to permit insurers to obtain necessary
protected health information during contestability periods under State
law, the Rule did not provide an exception to the revocation provision
when other law provides an insurer the right to contest an insurance
policy.
To address these issues, the Department proposed to simplify the
authorization provisions by consolidating the implementation
specifications into a single set of criteria under Sec. 164.508(c),
thus eliminating paragraphs (d), (e), and (f) which contained separate
implementation specifications. Under the proposal, paragraph (c)(1)
would require all authorizations to contain the following core
elements: (1) A description of the information to be used or disclosed,
(2) the identification of the persons or class of persons authorized to
make the use or disclosure of the protected health information, (3) the
identification of the persons or class of persons to whom the covered
entity is authorized to make the use or disclosure, (4) a description
of each purpose of the use or disclosure, (5) an expiration date or
event, (6) the individual's signature and date, and (7) if signed by a
personal representative, a description of his or her authority to act
for the individual. The proposal also included new language to clarify
that when individuals initiate an authorization for their own purposes,
the purpose may be described as ``at the request of the individual.''
In the NPRM, the Department proposed that Sec. 164.508(c)(2)
require authorizations to contain the following required notifications:
(1) A statement that the individual may revoke the authorization in
writing, and either a statement regarding the right to revoke and
instructions on how to exercise such right or, to the extent this
information is included in the covered entity's notice, a reference to
the notice, (2) a statement that treatment, payment, enrollment, or
eligibility for benefits may not be conditioned on obtaining the
authorization if such conditioning is prohibited by the Privacy Rule,
or, if conditioning is permitted by the Privacy Rule a statement about
the consequences of refusing to sign the authorization, and (3) a
statement about the potential for the protected health information to
be redisclosed by the recipient.
[[Page 53220]]
Also under the proposal, covered entities would be required to
obtain an authorization to use or disclose protected health information
for marketing purposes, and to disclose in such authorizations any
direct or indirect remuneration the covered entity would receive from a
third party as a result of obtaining or disclosing the protected health
information. The other proposed changes regarding marketing are
discussed in section III.A.1. of the preamble.
The NPRM proposed a new exception to the revocation provision at
Sec. 164.508(b)(5)(ii) for authorizations obtained as a condition of
obtaining insurance coverage when other law gives the insurer the right
to contest the policy. Additionally, the Department proposed that the
exception to permit conditioning payment of a claim on obtaining an
authorization be deleted, since the proposed provision to permit the
sharing of protected health information for the payment activities of
another covered entity or a health care provider would eliminate the
need for an authorization in such situations.
Finally, the Department proposed modifications at
Sec. 164.508(a)(2)(i)(A), (B), and (C), to clarify its intent that the
proposed provisions for sharing protected health information for the
treatment, payment, or health care operations of another entity would
not apply to psychotherapy notes.
There were a number of proposed modifications concerning
authorizations for research purposes. Those modifications are discussed
in section III.E.2. of the preamble.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
There was overwhelming support for the proposed modifications.
Overall, supporters were of the opinion that the consolidation and
simplification would promote efficiency, simplify compliance, and
reduce confusion. Many commenters claimed the changes would eliminate
barriers to quality health care. Some commenters claimed the proposed
modifications would make the authorization process easier for both
providers and individuals, and one commenter said they would make
authorizations easier to read and understand. A number of commenters
stated the changes would not have adverse consequences for individuals,
and one commenter noted the proposal would preserve the opportunity for
individuals to give a meaningful authorization.
However, some of the proponents suggested the Department go further
to ease the administrative burden of obtaining authorizations. Some
urged the Department to eliminate some of the required elements which
they perceived as unnecessary to protect privacy, while others
suggested that covered entities should decide which elements were
relevant in a given situation. Some commenters urged the Department to
retain the exception to the prohibition on conditioning payment of a
claim on obtaining an authorization. These commenters expressed fear
that the voluntary consent process and/or the right to request
restrictions on uses and disclosures for treatment, payment, or health
care operations might prevent covered entities from disclosing
protected health information needed for payment purposes, or providers
may be reluctant to cooperate in disclosures for payment purposes based
on inadequately drafted notices.
Comments were divided on the proposed requirement to disclose
remuneration in marketing authorizations. Recommendations ranged from
requiring the disclosure of remuneration on all authorizations, to
eliminating the requirement altogether.
Final Modifications. In the final modifications, the Department
adopts the changes proposed in the NPRM. Since the modifications to the
authorization provision are comprehensive, the Department is publishing
this section in its entirety so that it will be easier to use and
understand. Therefore, the preamble addresses all authorization
requirements, and not just those that were modified.
In Sec. 164.508(a), covered entities are required to obtain an
authorization for uses and disclosures of protected health information,
unless the use or disclosure is required or otherwise permitted by the
Rule. Covered entities may use only authorizations that meet the
requirements of Sec. 164.508(b), and any such use or disclosure will be
lawful only to the extent it is consistent with the terms of such
authorization. Thus, a voluntary consent document will not constitute a
valid permission to use or disclose protected health information for a
purpose that requires an authorization under the Rule.
Although the requirements regarding uses and disclosures of
psychotherapy notes are not changed substantively, the Department made
minor changes to the language in paragraph (a)(2) to clarify that a
covered entity may not use or disclose psychotherapy notes for purposes
of another covered entity's treatment, payment, or health care
operations without obtaining the individual's authorization. However,
covered entities may use and disclose psychotherapy notes, without
obtaining individual authorization, to carry out its own limited
treatment, payment, or health care operations as follows: (1) Use by
the originator of the notes for treatment, (2) use or disclosure for
the covered entity's own training programs for its mental health
professionals, students, and trainees, and (3) use or disclosure by the
covered entity to defend itself in a legal action or other proceeding
brought by the individual.
Section 164.508(a)(3) requires covered entities to obtain an
authorization to use or disclose protected health information for
marketing purposes, with two exceptions. The authorization requirements
for marketing and the comments received on these provisions are
discussed in detail in section III.A.1. of the preamble.
If the marketing involves any direct or indirect remuneration to
the covered entity from a third party, the authorization must state
that fact. The comments on this requirement also are discussed in
section III.A.1. of the preamble. However, a statement concerning
remuneration is not a required notification for other authorizations.
Such a statement was never required for all authorizations and the
Department believes it would be most meaningful for consumers on
authorizations for uses and disclosures of protected health information
for marketing purposes. Some commenters urged the Department to require
remuneration statements on research authorizations. The Department has
not done so because the complexity of such arrangements would make it
difficult to define what constitutes remuneration in the research
context. Moreover, to require covered entities to disclose remuneration
by a third party on authorizations for research would go beyond the
requirements imposed in the December 2000 Rule, which did not require
such a disclosure on authorizations obtained for the research of a
third party. The Department believes that concerns regarding financial
conflicts of interest that arise in research are not limited to privacy
concerns, but also are important to the objectivity of research and to
protecting human subjects from harm. Therefore, in the near future, the
Department plans to issue guidance for the research community on this
important topic.
Pursuant to Sec. 164.508(b)(1), an authorization is not valid under
the Rule unless it contains all of the
[[Page 53221]]
required core elements and notification statements, which are discussed
below. Covered entities may include additional, non-required elements
so long as they are not inconsistent with the required elements and
statements. The language regarding defective authorizations in
Sec. 164.508(b)(2) is not changed substantively. However, some changes
are made to conform this paragraph to modifications to other parts of
the authorization provision, as well as other sections of the Rule. An
authorization is not valid if it contains any of the following defects:
(1) The expiration date has passed or the expiration event has
occurred, and the covered entity is aware of the fact, (2) any of the
required core elements or notification statements are omitted or
incomplete, (3) the authorization violates the specifications regarding
compounding or conditioning authorizations, or (4) the covered entity
knows that material information in the authorization is false.
In Sec. 164.508(b)(3) regarding compound authorizations, the
requirements for authorizations for purposes other than research are
not changed. That is, authorizations for use or disclosure of
psychotherapy notes may be combined only with another authorization for
the use or disclosure of psychotherapy notes. Other authorizations may
be combined, unless a covered entity has conditioned the provision of
treatment, payment, enrollment in a health plan, or eligibility for
benefits on one of the authorizations. A covered entity generally may
not combine an authorization with any other type of document, such as a
notice of privacy practices or a written voluntary consent. However,
there are exceptions for research authorizations, which are discussed
in section III.E.2. of the preamble.
Section 164.508(b)(4) prohibits the conditioning of treatment,
payment, enrollment in a health plan, or eligibility for benefits on
obtaining an authorization, with a few exceptions. The exceptions to
this requirement for research-related treatment, eligibility for
benefits and enrollment in a health plan, and health care solely for
creating protected health information for disclosure to a third party
are not changed. Moreover, the Department eliminates the exception to
the prohibition on conditioning payment of a claim on obtaining an
authorization. Although some insurers urged that this conditioning
authority be retained to provide them with more collection options, the
Department believes this authorization is no longer necessary because
we are adding a new provision in Sec. 164.506 that permits covered
entities to disclose protected health information for the payment
purposes of another covered entity or health care provider. Therefore,
that exception has been eliminated.
Section 164.508(b)(5) provides individuals the right to revoke an
authorization at any time in writing. The two exceptions to this right
are retained, but with some modification. An individual may not revoke
an authorization if the covered entity has acted in reliance on the
authorization, or if the authorization was obtained as a condition of
obtaining insurance coverage and other law gives the insurer the right
to contest the claim or the policy itself. The Department adopts the
proposed modification to the latter exception so that insurers can
exercise the right to contest an insurance policy under other law.
Public comment was generally supportive of this proposed modification.
Section 164.508(b)(6) requires covered entities to document and
retain authorizations as required under Sec. 164.530(j). This
requirement is not changed.
The different sets of implementation criteria are consolidated into
one set of criteria under Sec. 164.508(c), thus eliminating the
confusion and uncertainty associated with different requirements for
specific circumstances. Covered entities may use one authorization form
for all purposes. The Department adopts in paragraph (c)(1), the
following core elements for a valid authorization: (1) A description of
the information to be used or disclosed, (2) the identification of the
persons or class of persons authorized to make the use or disclosure of
the protected health information, (3) the identification of the persons
or class of persons to whom the covered entity is authorized to make
the use or disclosure, (4) a description of each purpose of the use or
disclosure, (5) an expiration date or event, (6) the individual's
signature and date, and (7) if signed by a personal representative, a
description of his or her authority to act for the individual. An
authorization that does not contain all of the core elements does not
meet the requirements for a valid authorization. The Department intends
for the authorization process to provide individuals with the
opportunity to know and understand the circumstances surrounding a
requested authorization.
To further protect the privacy interests of individuals, when
individuals initiate an authorization for their own purposes, the
purpose may be stated as ``at the request of the individual.'' Other
changes to the core elements pertain to authorizations for research,
and are discussed in section III.E.2. of the preamble.
Also, under Sec. 164.508(c)(2), an authorization is not valid
unless it contains all of the following: (1) A statement that the
individual may revoke the authorization in writing, and either a
statement regarding the right to revoke, and instructions on how to
exercise such right or, to the extent this information is included in
the covered entity's notice, a reference to the notice, (2) a statement
that treatment, payment, enrollment, or eligibility for benefits may
not be conditioned on obtaining the authorization if such conditioning
is prohibited by the Privacy Rule or, if conditioning is permitted, a
statement about the consequences of refusing to sign the authorization,
and (3) a statement about the potential for the protected health
information to be redisclosed by the recipient. Although the
notification statements are not included in the paragraph on core
elements an authorization is not valid unless it contains both the
required core elements, and all of the required statements. This is the
minimum information the Department believes is needed to ensure
individuals are fully informed of their rights with respect to an
authorization and to understand the consequences of authorizing the use
or disclosure. The required statements must be written in a manner that
is adequate to place the individual on notice of the substance of the
statements.
In response to comments, the Department clarifies that the
statement regarding the potential for redisclosure does not require an
analysis of the risk for redisclosure, but may be a general statement
that the health information may no longer be protected by the Privacy
Rule once it is disclosed by the covered entity. Others objected to
this statement because individuals might be hesitant to sign an
authorization if they knew their protected health information could be
redisclosed and no longer protected by the Rule. In response, the
Department believes that individuals need to know about the
consequences of authorizing the disclosure of their protected health
information. As the commenter recognized, the potential for
redisclosure may, indeed, be an important factor in an individual's
decision to give or deny a requested authorization.
Others suggested that the statement regarding redisclosure should
be omitted when an authorization is obtained only for a use, since such
a statement would be confusing and
[[Page 53222]]
inappropriate when the covered entity maintains the information.
Similarly, some commenters were concerned that the statement may be
misleading where the recipient of the information, although not a
covered entity, will keep the information confidential. In response,
the Department clarifies that, while a general statement would suffice,
a covered entity has the discretion to provide a more definitive
statement where appropriate. Thus, the covered entity requesting an
authorization for its own use of protected health information may
provide assurances that the information will remain subject to the
Privacy Rule. Similarly, if a third party, such as a researcher, is
seeking an authorization for research, the statement may refer to the
privacy protections that the researcher will provide for the data.
Under Sec. 164.508(c)(3), authorizations must be written in plain
language so that individuals can understand the information contained
in the form, and thus be able to make an informed decision about
whether to give the authorization. A few commenters urged the
Department to keep the plain language requirement as a core element of
a valid authorization. Under the December 2000 Rule, the plain language
requirement was not a requisite for a valid authorization.
Nevertheless, under both the December 2000 Rule and the final
modifications, authorizations must be written in plain language. The
fact that the plain language requirement is not a core element does not
diminish its importance or effect, and the failure to meet this
requirement is a violation of the Rule.
Finally, under Sec. 164.508(c)(4), covered entities who seek an
authorization are required to provide the individual with a copy of the
signed authorization form.
Response to Other Public Comments
Comment: A number of commenters specifically expressed support of
the proposed authorization requirement for marketing, and urged the
Department to adopt the requirement. However, one commenter claimed
that requiring authorizations for marketing would reduce hospitals'
ability to market their programs and services effectively in order to
compete in the marketplace, and that obtaining, storing, and
maintaining marketing authorizations would be too burdensome.
Response: In light of the support in the comments, the Department
has adopted the proposed requirement for an authorization before a
covered entity may use or disclose protected health information for
marketing. However, the commenter is mistaken that this requirement
will interfere with a hospital's ability to promote its own program and
services within the community. First, such broad-based marketing is
likely taking place without resort to protected health information,
through dissemination of information about the hospital through
community-wide mailing lists. Second, under the Privacy Rule, a
communication is not marketing if a covered entity is describing its
own products and services. Therefore, nothing in the Rule will inhibit
a hospital from competing in the marketplace by communicating about its
programs and services.
Comment: One commenter suggested that authorizations for marketing
should clearly indicate that they are comprehensive and may contain
sensitive protected health information.
Response: The Department treats all individually identifiable
health information as sensitive and equally deserving of protections
under the Privacy Rule. The Rule requires all authorizations to contain
the specified core elements to ensure individuals are given the
information they need to make an informed decision. One of the core
elements for all authorizations is a clear description of the
information that is authorized to be used or disclosed in specific and
meaningful terms. The authorization process provides the individual
with the opportunity to ask questions, negotiate how their information
will be used and disclosed, and ultimately to control whether these
uses and disclosures will be made.
Comment: Several commenters urged the Department to retain the
existing structure of the implementation specifications, whereby the
notification statements about the individual's right to revoke and the
potential for redisclosure are ``core elements.'' It was argued that
this information is essential to an informed decision. One of the
commenters claimed that moving them out of the core elements and only
requiring a statement adequate to put the person on notice of the
information would increase uncertainty, and that these two elements are
too important to risk inadequate explanation.
Response: The Department agrees that the required notification
statements are essential information that a person needs in order to
make an informed decision about authorizing the use or disclosure of
protected health information. Individuals need to know what rights they
have with respect to an authorization, and how they can exercise those
rights. However, separating the core elements and notification
statements into two different subparagraphs does not diminish the
importance or effect of the notification statements. The Department
clarifies that both the core elements and the notification statements
are required, and both must be included for an authorization to be
valid.
Comment: Several commenters urged the Department to eliminate
unnecessary authorization contents. They argued the test should be
whether the person needs the information to protect his or her privacy,
and cited the disclosure of remuneration by a third party as an example
of unnecessary content, alleging that the disclosure of remuneration is
not relevant to protecting privacy. One commenter suggested that
covered entities should be given the flexibility to decide which
contents are applicable in a given situation.
Response: The Department believes the core elements are all
essential information. Individuals need to know this information to
make an informed decision about giving the authorization to use or
disclose their protected health information. Therefore, the Department
believes all of the core elements are necessary content in all
situations. The Department does not agree that the remuneration
statement required on an authorization for uses and disclosures of an
individual's protected health information for marketing purposes is not
relevant to protecting privacy. Individuals exercise control over the
privacy of their protected health information by either giving or
denying an authorization, and remuneration from a third party to the
covered entity for obtaining an authorization for marketing is an
important factor in making that choice.
Comment: One commenter suggested that covered entities should not
be required to state on an authorization a person's authority to act on
an individual's behalf, and they should be trusted to require such
identification or proof of legal authority when the authorization is
signed. The commenter stated that this requirement only increases
administrative burden for covered entities.
Response: The Department does not agree. The authorization
requirement is intended to give individuals some control over uses and
disclosures of protected health information that are not otherwise
permitted or required by the Rule. Therefore, the Rule requires that
covered entities verify and document a person's authority to sign an
authorization on an individual's behalf, since that person is
exercising the individual's control of the information. Furthermore,
the Department understands that it is a
[[Page 53223]]
current industry standard to verify and document a person's authority
to sign any legal permission on another person's behalf. Thus, the
requirement should not result in any undue administrative burden for
covered entities.
Comment: One commenter suggested that the Department should require
authorizations to include a complete list of entities that will use and
share the information, and that the individual should be notified
periodically of any changes to the list so that the individual can
provide written authorization for the changes.
Response: It may not always be feasible or practical for covered
entities to include a comprehensive list of persons authorized to use
and share the information disclosed pursuant to an authorization.
However, individuals may discuss this option with covered entities, and
they may refuse to sign an authorization that does not meet their
expectations. Also, subject to certain limitations, individuals may
revoke an authorization at any time.
Comment: One commenter asked for clarification that a health plan
may not condition a provider's participation in the health plan on
seeking authorization for the disclosure of psychotherapy notes,
arguing that this practice would coerce providers to request, and
patients to provide, an authorization to disclose psychotherapy notes.
Response: The Privacy Rule does not permit a health plan to
condition enrollment, eligibility for benefits, or payment of a claim
on obtaining the individual's authorization to use or disclose
psychotherapy notes. Nor may a health care provider condition treatment
on an authorization for the use or disclosure of psychotherapy notes.
In a situation such as the one described by the commenter, the
Department would look closely at whether the health plan was attempting
to accomplish indirectly that which the Rule prohibits. These
prohibitions are to ensure that the individual's permission is wholly
voluntary and informed with regard to such an authorization. To meet
these standards, in the circumstances set forth in the comment, the
Department would expect the provider subject to such a requirement by
the health plan to explain to the individual in very clear terms that,
while the provider is required to ask, the individual remains free to
refuse to authorize the disclosure and that such refusal will have no
effect on either the provision of treatment or the individual's
coverage under, and payment of claims by, the health plan.
Comment: A few commenters suggested the Department should allow
covered entities to combine an authorization with other documents, such
as the notice acknowledgment, claiming it would reduce administrative
burden and paperwork, as well as reduce patient confusion and waiting
times, without compromising privacy protections.
Response: The Department disagrees that combining an authorization
with other documents, such as the notice acknowledgment, would be less
confusing for individuals. To the contrary, the Department believes
that combining unrelated documents would be more confusing. However,
the Rule does permit an authorization to be combined with other
authorizations so long as the provision of treatment, payment,
enrollment in a health plan or eligibility for benefits is not
conditioned on obtaining any of the authorizations, and the
authorization is not for the use or disclosure of psychotherapy notes.
Also, authorizations must contain the same information, whether it
is a separate document or combined with another document; and the
individual must be given the opportunity to read and discuss that
information. Combining an authorization with routine paperwork
diminishes individuals' ability to make a considered and informed
judgment to permit the use or disclosure of their medical information
for some other purpose.
Comment: One commenter stated that the requirement for covered
entities to use only authorizations that are valid under the Rule must
be an unintended result of the Rule, because covered entities would
have to use only valid authorizations when requesting information from
non-covered entities. The commenter did not believe the Department
intended this requirement to apply with respect to non-covered
entities, and gave the example of dental health plans obtaining
protected health information in connection with paper claims submitted
by dental offices. The commenter requested clarification that health
plans may continue to use authorization forms currently in use for all
claims submitted by non-covered entities.
Response: The commenter misapprehends the Rule's requirements. The
requirements apply to uses and disclosure of protected health
information by covered entities. In the example provided, where a
health plan is requesting additional information in support of a claim
for payment by a non-covered health care provider, the health plan is
not required to use an authorization. The plan does not need the
individual's authorization to use protected health information for
payment purposes, and the non-covered health care provider is not
subject to any of the Rule's requirements. Therefore, the exchange of
information may occur as it does today. The Department notes that,
based on the modifications regarding consent adopted in this
rulemaking, neither a consent nor an authorization would be required in
this example even if the health care provider was also a covered
entity.
Comment: Several commenters urged the Department to add a
transition provision to permit hospitals to use protected health
information in already existing databases for marketing and outreach to
the communities they serve. Commenters claimed that these databases are
important assets that would take many years to rebuild, and hospitals
may not have an already existing authorization or other express legal
permission for such use of the information. They contended that,
without a transition provision, these databases would become useless
under the Rule. Commenters suggested the Department should adopt an
``opt out'' provision that would allow continued use of these databases
to initially communicate with the persons listed in the database; at
that time, they could obtain authorization for future communications,
thus providing a smooth transition.
Response: Covered entities are provided a two-year period in which
to come into compliance with the Privacy Rule. One of the purposes of
the compliance period is to allow covered entities sufficient time to
undertake actions such as those described in the comment (obtaining the
legal permissions that would permit databases to continue to operate
after the compliance date). An additional transition period for these
activities has not been justified by the commenters. However, the
Department notes that a covered entity is permitted to use the
information in a database for communications that are either excepted
from or that do not meet the definition of ``marketing'' in
Sec. 164.501, without individual authorization. For example, a hospital
may use protected health information in an existing database to
distribute information about the services it provides, or to distribute
a newsletter with general health or wellness information that does not
promote a particular product or service.
[[Page 53224]]
2. Research Authorizations
December 2000 Privacy Rule. The Privacy Rule requires covered
entities to obtain an individual's voluntary and informed authorization
before using or disclosing protected health information for any purpose
that is not otherwise permitted or required under the Rule. Uses and
disclosures of protected health information for research purposes are
subject to the same authorization requirements as uses and disclosures
for other purposes. However, for research that includes treatment of
the individual, the December 2000 Privacy Rule prescribed special
authorization requirements at Sec. 164.508(f). The December 2000
Privacy Rule, at Sec. 164.508(b)(5), also permitted individuals to
revoke their authorization at any time, with limited exceptions.
Further, the December 2000 Privacy Rule prohibited the combining of the
authorization for the use or disclosure of existing protected health
information with any other legal permission related to the research
study.
March 2002 NPRM. Several of those who commented on the December
2000 Privacy Rule argued that certain authorization requirements in
Sec. 164.508 were unduly complex and burdensome as applied to research
uses and disclosures. In particular, several commenters favored
eliminating the Rule's specific provisions at Sec. 164.508(f) for
authorizations for uses and disclosures of protected health information
for research that includes treatment of the individual. The Department
also heard from several provider groups who argued in favor of
permitting covered entities to combine all of the research
authorizations required by the Privacy Rule with the informed consent
to participate in the research. Commenters also noted that the Rule's
requirement for an ``expiration date or event that relates to the
individual or the purpose of the use or disclosure'' runs counter to
the needs of research databases and repositories that are often
retained indefinitely.
In response to these concerns, the Department proposed to a number
of modifications to simplify the authorization requirements both
generally, and in certain circumstances, as they specifically applied
to uses and disclosures of protected health information for research.
In particular, the Department proposed a single set of authorization
requirements for all uses and disclosures, including those for research
purposes. This proposal would eliminate the additional authorization
requirements for the use and disclosure of protected health information
created for research that includes treatment of the individual.
Consistent with this proposed change, the Department further proposed
to modify the requirements prohibiting the conditioning of
authorizations at Sec. 164.508(b)(4)(i) to remove the reference to
Sec. 164.508(f).
In addition, the Department proposed that the Privacy Rule permit
an authorization for the use or disclosure of protected health
information to be combined with any other legal permission related to
the research study, including another authorization or consent to
participate in the research.
Finally, the Department proposed to provide explicitly that the
statement, ``end of a research study,'' or similar language be
sufficient to meet the requirement for an expiration date in
Sec. 164.508(c)(1)(v). Additionally, the Department proposed that the
statement ``none'' or similar language be sufficient to meet this
provision if the authorization was for a covered entity to use or
disclose protected health information for the creation or maintenance
of a research database or repository.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The vast majority of commenters were very supportive of the
proposed revisions to the Rule's provisions for research
authorizations. However, the Department did hear from several
commenters that the Privacy Rule's requirement for an expiration date
or event should be eliminated for all research uses and disclosures of
protected health information, not just for uses and disclosures for the
creation or maintenance of a research database or repository, as was
proposed in the NPRM. These commenters were concerned that the Privacy
Rule would prohibit important uses and disclosures of protected health
information after the termination of a research project, such as the
reporting of research results to the Food and Drug Administration (FDA)
for an FDA investigational new drug application, unless the covered
entity obtained another patient authorization. In addition, several of
these commenters cited confusion in defining repositories and
databases. Some of these commenters stated that an individual who
authorizes information to be used for an indeterminate time most likely
expects and intends for the information to be used and disclosed if
needed well into the future, regardless of whether or not the research
involves the use or disclosure of protected health information for the
creation or maintenance of a database or repository.
Several commenters responded to the Department's request for
comments on how to appropriately limit uses and disclosures following
revocation of an authorization, while preserving the integrity of the
research. The NPRM attempted to clarify that ``even though a revocation
will prevent a covered entity from further disclosing protected health
information for research purposes, the exception to this requirement is
intended to allow for certain continued uses of information as
appropriate to preserve the integrity of the research study.'' However,
the NPRM further stated that ``if covered entities were permitted to
continue using or disclosing protected health information for the
research project even after an individual had revoked his or her
authorization, this would undermine the primary objective of the
authorization requirements to be a voluntary, informed choice of the
individual.'' Several commenters were concerned and confused by the
NPRM's statements. In particular, the Department received comments
urging that the regulation permit covered entities to use and disclose
research data already obtained, even after an individual has withdrawn
his or her authorization. These commenters suggested that once a
subject has authorized the use and disclosure of protected health
information for research and the covered entity has relied on the
authorization, the covered entity must retain the ability to use or
disclose the subject's pre-withdrawal information for purposes
consistent with the overall research. One commenter argued that it
would be inadequate for the reliance exception at Sec. 164.508(b)(5) to
be interpreted to permit continued uses of the individual's information
as appropriate only to account for an individual's withdrawal from the
study. In this commenter's opinion, most research would call for the
continued use of protected health information obtained prior to an
individual's revocation of their authorization to safeguard statistical
validity and truly to preserve the integrity of human research.
Final Modifications. The Department agrees with the commenters that
supported the NPRM's proposed simplification of authorizations for
research uses and disclosures of protected health information and,
therefore, adopts the modifications to these provisions as proposed in
the NPRM. The final Rule requires a single
[[Page 53225]]
set of authorization requirements for all uses and disclosures,
including those for research purposes, and permits an authorization for
the use or disclosure of protected health information to be combined
with any other legal permission related to the research study,
including another authorization or consent to participate in the
research.
In addition, in response to commenters' concerns that the Rule
would prohibit important uses and disclosures of protected health
information after the termination of a research project, the final Rule
eliminates the requirement for an expiration date for all uses and
disclosures of protected health information for research purposes, not
only for the creation and maintenance of a research database or
repository. The Department agrees that the line between research
repositories and databases in particular, and research data collection
in general, is sometimes arbitrary and unclear. If the authorization
for research uses and disclosures of protected health information does
not have an expiration date, the final Rule at Sec. 164.508(c)(1)(v),
requires that this fact be stated on the authorization form. Patients
continue to control whether protected health information about them may
be used or disclosed for research, since the authorization must include
an expiration date or event, or a statement that the authorization will
have no expiration date. In addition, patients will be permitted to
revoke their authorization at any time during the research project,
except as specified under Sec. 164.508(b)(5). However, the Department
notes that researchers may choose to include, and covered entities may
choose to require, an expiration date when appropriate.
Although the final Rule does not modify the revocation provision at
Sec. 164.508(b)(5), in response to commenters' concerns, the Department
clarifies that this provision permits covered entities to continue
using and disclosing protected health information that was obtained
prior to the time the individual revoked his or her authorization, as
necessary to maintain the integrity of the research study. An
individual may not revoke an authorization to the extent the covered
entity has acted in reliance on the authorization. For research uses
and disclosures, this reliance exception at Sec. 164.508(b)(5)(i)
permits the continued use and disclosure of protected health
information already obtained pursuant to a valid authorization to the
extent necessary to preserve the integrity of the research study. For
example, the reliance exception would permit the continued use and
disclosure of protected health information to account for a subject's
withdrawal from the research study, as necessary to incorporate the
information as part of a marketing application submitted to the FDA, to
conduct investigations of scientific misconduct, or to report adverse
events. However, the reliance exception would not permit a covered
entity to continue disclosing additional protected health information
to a researcher or to use for its own research purposes information not
already gathered at the time an individual withdraws his or her
authorization. The Department believes that this clarification of the
Rule will minimize the negative effects on research caused by
participant withdrawal and will allow for important continued uses and
disclosures to occur, while maintaining privacy protections for
research subjects.
Response to Other Public Comments
Comment: In opposition to the March 2002 NPRM, one commenter
suggested prohibiting the combining of authorization forms with an
informed consent when the covered entity disclosing the protected
health information is not otherwise participating in research. The
commenter argued that the NPRM would allow covered entities to receive
more information than necessary to fulfill a patient's authorization
request, such as information about the particular type or purpose of
the study itself, and could, thereby, violate the patient's privacy.
Response: The Department acknowledges the concern raised by these
commenters; however, prohibiting the combination of authorization forms
with an informed consent reduces the flexibility proposed in the March
2002 NPRM. Since the final modifications permit--but do not require--
such combining of forms, the Department has decided to leave it to the
discretion of researchers or the IRBs to determine whether the
combining of authorization forms and consent forms for research would
be appropriate for a particular research study.
Comment: Some commenters supported retaining the December 2000
Privacy Rule requirement that a description of the extent to which
protected health information will be used or disclosed for treatment,
payment, or health care operations be included in an authorization to
use or disclose protected health information for a research study that
includes treatment of individuals. These commenters argued that an
individual's ability to make informed decisions requires that he or she
know how research information will and will not be used and disclosed.
Response: The Department agrees with the majority of the commenters
who were in support of the March 2002 NPRM proposal to eliminate the
additional authorization requirements for research that includes
treatment, and has adopted these proposed modifications in the final
Rule. Retaining the distinction between research that involves
treatment and research that does not would require overly subjective
decisions without providing commensurate privacy protections for
individuals. However, the Department notes that it may sometimes be
advisable for authorization forms to include a statement regarding how
protected health information obtained for a research study will be used
and disclosed for treatment, payment, and health care operations, if
such information would assist individuals in making informed decisions
about whether or not to provide their authorization for a research
study.
Comment: One commenter argued that expiration dates should be
included on authorizations and that extensions should be required for
all research uses and disclosures made after the expiration date or
event has passed.
Response: The Department disagrees. We have determined that an
expiration date or event would not always be feasible or desirable for
some research uses and disclosures of protected health information. By
allowing for no expiration date, the final Rule permits without
separate patient authorization important disclosures even after the
``termination of the research project'' that might otherwise be
prohibited. However, the final Rule contains the requirement that the
patient authorization specify if the authorization would not have an
expiration date or event. Therefore, patients will have this
information to make an informed decision about whether to sign the
authorization.
Comment: Another commenter suggested permitting covered entities/
researchers to continue using or disclosing protected health
information even after a revocation of the initial authorization but
only if an IRB or Privacy Board approved the continuation. This
commenter argued that such review by an IRB or Privacy Board would
protect privacy, while permitting continued uses and disclosures of
protected health information for important purposes.
[[Page 53226]]
Response: As stated above, the Department agrees that it may
sometimes be necessary to continue using and disclosing protected
health information even after an individual has revoked his or her
authorization in order to preserve the integrity of a research study.
Therefore, the Department has clarified that the reliance exception at
Sec. 164.508(b)(5)(i) would permit the continued use and disclosure of
protected health information already obtained pursuant to a valid
authorization to the extent necessary to preserve the integrity of the
research study. A requirement for documentation of IRB or Privacy Board
review and approval of the continued use or disclosure of protected
health information after an individual's authorization had been revoked
could protect patient privacy. However, the Department believes that
the additional burden on the IRB or Privacy Board could be substantial,
and is not warranted at this time.
Comment: A commenter requested clarification that the ``reliance
exception'' does not permit covered entities as researchers to continue
analyzing data once an individual has revoked his or her authorization.
Response: As discussed above, the Department disagrees with this
comment. Patient privacy must be balanced against other public goods,
such as research and the risk of compromising such research projects if
researchers could not continue to use such data. The Department
determined that permitting continued uses and disclosures of protected
health information already obtained to protect the integrity of
research, even after an individual's authorization has been revoked,
would pose minimal privacy risk to individuals without compromising
research.
Comment: Several commenters suggested permitting the proposed
authorization requirement for a ``description of each purpose of the
requested use or disclosure'' at Sec. 164.508 to be sufficiently broad
to encompass future unspecified research. These commenters argued that
this option would reduce the burden for covered entities and
researchers by permitting covered entities to use or disclose protected
health information for re-analysis without having to obtain an
additional authorization from the individual. Some discussed the
possibility that burden for patients would also be reduced because they
would not have to provide additional authorizations. These commenters
also argued that such a provision would more directly align the Rule
with the Common Rule, which permits broad informed consent for
secondary studies if the IRB deems the original informed consent to be
adequate.
Response: The Department disagrees with broadening the required
``description of the purpose of the use or disclosure'' because of the
concern that patients would lack necessary information to make an
informed decision. In addition, unlike the Common Rule, the Privacy
Rule does not require IRB or Privacy Board review of research uses and
disclosures made with individual authorization. Therefore, instead of
IRBs or Privacy Boards reviewing the adequacy of existing patient
authorizations, covered entities would be left to decide whether or not
the initial authorization was broad enough to cover subsequent research
analyses. Furthermore, it should be noted that patient authorization
would not be required for such re-analysis if, with respect to the re-
analysis, the covered entity obtains IRB or Privacy Board waiver of
such authorization as required by Sec. 164.512(i). For these reasons,
the Department has decided to retain the requirement that each purpose
of the requested use or disclosure described in the authorization form
be research study specific. However, the Department understands that,
in the past, some express legal permissions and informed consents have
not been study-specific and sometimes authorize the use or disclosure
of information for future unspecified research. Furthermore, some IRB-
approved waivers of informed consent have been for future unspecified
research. Therefore, the final Rule at Sec. 164.532 permits covered
entities to rely on an express legal permission, informed consent, or
IRB-approved waiver of informed consent for future unspecified
research, provided the legal permission, informed consent or IRB-
approved waiver was obtained prior to the compliance date.
Comment: Several commenters suggested retaining the authorization
element requiring a statement regarding ``the potential for information
disclosed pursuant to the authorization to be subject to redisclosure
by the recipient and no longer protected by this Rule'' but with one
addition. This addition would state that ``researchers could only use
or disclose the protected health information for purposes approved by
the IRB or as required by law or regulation.'' These commenters argued
that this would be clearer to participants and would prevent the
misconception that their information would not be protected by any
confidentiality standards.
Response: The Department recognizes the concern of the commenters
seeking to supplement the requirement, but points out that, although
the final Rule will not require this addition, it is permissible to
include such a statement in the authorization. In addition, since the
Privacy Rule does not require IRB or Privacy Board review of research
uses and disclosures made with patient authorization, the Department
determined that adding the commenters' suggestion to the final Rule
would be inappropriate. Section III.E.1. above provides further
discussion of this provision.
F. Section 164.512--Uses and Disclosures for Which Authorization or
Opportunity To Agree or Object Is Not Required
1. Uses and Disclosures Regarding FDA-Regulated Products and Activities
December 2000 Privacy Rule. The Privacy Rule permits covered
entities to disclose protected health information without consent or
authorization for public health purposes. Generally, these disclosures
may be made to public health authorities, as well as to contractors and
agents of public health authorities. However, in recognition of the
essential role of drug and medical device manufacturers and other
private persons in carrying out the Food and Drug Administration's
(FDA) public health mission, the December 2000 Privacy Rule permitted
covered entities to make such disclosures to a person who is subject to
the jurisdiction of the FDA, but only for the following specified
purposes: (1) To report adverse events, defects or problems, or
biological product deviations with respect to products regulated by the
FDA (if the disclosure is made to the person required or directed to
report such information to the FDA); (2) to track products (if the
disclosure is made to the person required or directed to report such
information to the FDA); (3) for product recalls, repairs, or
replacement; and (4) for conducting post-marketing surveillance to
comply with FDA requirements or at the direction of the FDA.
March 2002 NPRM. The Department heard a number of concerns about
the scope of the disclosures permitted for FDA-regulated products and
activities and the failure of the Privacy Rule to reflect the breadth
of the public health activities currently conducted by private sector
entities subject to the jurisdiction of the FDA on a voluntary basis.
These commenters claimed the Rule would constrain important public
health surveillance and reporting activities by
[[Page 53227]]
impeding the flow of needed information to those subject to the
jurisdiction of the FDA. For instance, there were concerns that the
Rule would have a chilling effect on current voluntary reporting
practices. The FDA gets the vast majority of information concerning
problems with FDA-regulated products, including drugs, medical devices,
biological products, and food indirectly through voluntary reports made
by health care providers to the manufacturers. These reports are
critically important to public health and safety. The December 2000
Rule permitted such disclosures only when made to a person ``required
or directed'' to report the information to the FDA or to track the
product. The manufacturer may or may not be required to report such
problems to the FDA, and the covered entities who make these reports
are not in a position to know whether the recipient of the information
is so obligated. Consequently, many feared that this uncertainty would
cause covered entities to discontinue their practices of voluntary
reporting of adverse events related to FDA-regulated products or
entities.
Some covered entities also expressed fears of the risk of liability
should they inadvertently report the information to a person who is not
subject to the jurisdiction of the FDA or to the wrong manufacturer.
Hence, they urged the Department to provide a ``good-faith'' safe
harbor to protect covered entities from enforcement actions arising
from unintentional violations of the Privacy Rule.
A number of commenters, including some subject to the jurisdiction
of the FDA, suggested that it is not necessary to disclose identifiable
health information for some or all of these public health purposes,
that identifiable health information is not reported to the FDA, and
that information without direct identifiers (such as name, mailing
address, phone number, social security number, and email address) is
sufficient for post-marketing surveillance purposes.
The Rule is not intended to discourage or prevent adverse event
reporting or otherwise disrupt the flow of essential information that
the FDA and persons subject to the jurisdiction of the FDA need in
order to carry out their important public health activities. Therefore,
the Department proposed some modifications to the Rule to address these
issues in the NPRM. Specifically, the Department proposed to remove
from Secs. 164.512(b)(1)(iii)(A) and (B) the phrase ``if the disclosure
is made to a person required or directed to report such information to
the Food and Drug Administration'' and to remove from subparagraph (D)
the phrase ``to comply with requirements or at the direction of the
Food and Drug Administration.'' In lieu of this language, the
Department proposed to describe at the outset the public health
purposes for which disclosures may be made. The proposed language read:
``A person subject to the jurisdiction of the Food and Drug
Administration (FDA) with respect to an FDA-regulated product or
activity for which that person has responsibility, for the purpose of
activities related to the quality, safety or effectiveness of such FDA-
regulated product or activity.''
The proposal retained the specific activities identified in
paragraphs (A), (B), (C), and (D) as examples of common FDA purposes
for which disclosures would be permitted, but eliminated the language
that would have made this listing the only activities for which such
disclosures would be allowed. These activities include reporting of
adverse events and other product defects, the tracking of FDA-regulated
products, enabling product recalls, repairs, or replacement, and
conducting post-marketing surveillance. Additionally, the Department
proposed to include ``lookback'' activities in paragraph (C), which are
necessary for tracking blood and plasma products, as well as
quarantining tainted blood or plasma and notifying recipients of such
tainted products.
In addition to these specific changes, the Department solicited
comments on whether a limited data set should be required or permitted
for some or all public health purposes, or if a special rule should be
developed for public health reporting. The Department also requested
comments as to whether the proposed modifications would be sufficient,
or if additional measures, such as a good-faith safe harbor, would be
needed for covered entities to continue to report vital information
concerning FDA-regulated products or activities on a voluntary basis.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The proposed changes received wide support. The overwhelming
majority of commenters urged the Department to adopt the proposed
changes, claiming it would reduce the chilling effect that the Rule
would otherwise have on current voluntary reporting practices, which
are an important means of identifying adverse events, defects, and
other problems regarding FDA-regulated products. Several commenters
further urged the Department to provide a good-faith safe harbor to
allay providers' fears of inadvertently violating the Rule, stating
that covered entities would otherwise be reluctant to risk liability to
make these important public health disclosures.
A few commenters opposed the proposed changes, expressing concern
that the scope of the proposal was too broad. They were particularly
concerned that including activities related to ``quality'' or
``effectiveness'' would create a loophole for manufacturers to obtain
and use protected health information for purposes the average person
would consider unrelated to public health or safety, such as using
information to market products to individuals. Some of these commenters
said the Department should retain the exclusive list of purposes and
activities for which such disclosures may be made, and some urged the
Department to retain the ``required or directed'' language, as it
creates an essential nexus to a government authority or requirement. It
was also suggested that the chilling effect on reporting of adverse
events could be counteracted by a more targeted approach. Commenters
were also concerned that the proposal would permit disclosure of much
more protected health information to non-covered entities that are not
obligated by the Rule to protect the privacy of the information.
Comments regarding use of a limited data set for public health
disclosures are discussed in section III.G.1. of the preamble.
Final Modifications. In the final modifications, the Department
adopts the language proposed in the NPRM. Section 164.512(b)(1)(iii),
as modified, permits covered entities to disclose protected health
information, without authorization, to a person subject to the
jurisdiction of the FDA with respect to an FDA-regulated product or
activity for which that person has responsibility, for the purpose of
activities related to the quality, safety, or effectiveness of such
FDA-regulated product or activity. Such purposes include, but are not
limited to, the following activities and purposes listed in
subparagraphs (A) through (D): (1) To collect or report adverse events
(or similar activities regarding food or dietary supplements), product
defects or problems (including problems with the use or labeling of a
product), or biological product deviations, (2) to track FDA-regulated
products, (3) to enable product recalls, repairs, or replacement, or
for lookback (including locating and notifying persons who have
[[Page 53228]]
received products that have been withdrawn, recalled, or are the
subject of lookback), and (4) to conduct post-marketing surveillance.
The Department believes these modifications are necessary to remove
barriers that could prevent or chill the continued flow of vital
information between health care providers and manufacturers of food,
drugs, medical and other devices, and biological products. Health care
providers have been making these disclosures to manufacturers for many
years, and commenters opposed to the proposal did not cite any examples
of abuses of information disclosed for such purposes. Furthermore, both
the individuals who are the subjects of the information and the general
public benefit from these disclosures, which are an important means of
identifying and dealing with FDA-regulated products on the market that
potentially pose a health or safety threat. For example, FDA learns a
great deal about the safety of a drug after it is marketed as a result
of voluntary adverse event reports made by covered entities to the
product's manufacturer. The manufacturer is required to submit these
safety reports to FDA, which uses the information to help make the
product safer by, among other things, adding warnings or changing the
product's directions for use. The modifications provide the necessary
assurances to covered entities that such voluntary reporting may
continue.
Although the list of permissible disclosures is no longer
exclusive, the Department disagrees with commenters that asserted the
modifications permit virtually unlimited disclosures for FDA purposes.
As modified, such disclosures must still be made to a person subject to
the jurisdiction of the FDA. The disclosure also must relate to FDA-
regulated products or activities for which the person using or
receiving the information has responsibility, and be made only for
activities related to the safety, effectiveness, or quality of such
FDA-regulated product or activity. These terms are terms of art with
commonly accepted and understood meanings in the FDA context, meanings
of which providers making such reports are aware. This limits the
possibility that FDA-regulated manufacturers and entities will able to
abuse this provision to obtain information to which they would
otherwise not be entitled.
Moreover, Sec. 164.512(b)(1) specifically limits permissible
disclosures to those made for public health activities and purposes.
While a disclosure related to the safety, quality or effectiveness of
an FDA-regulated product is a permissible disclosure, the disclosure
also must be for a ``public health'' activity or purpose. For example,
it is not permissible under Sec. 164.512(b)(1)(iii) for a covered
entity to disclose protected health information to a manufacturer to
allow the manufacturer to evaluate the effectiveness of a marketing
campaign for a prescription drug. In this example, although the
disclosure may be related to the effectiveness of an FDA-regulated
activity (the advertising of a prescription drug), the disclosure is
made for the commercial purposes of the manufacturer rather than for a
public health purpose.
A disclosure related to a ``quality'' defect of an FDA-regulated
product is also permitted. For instance, the public health exception
permits a covered entity to contact the manufacturer of a product to
report drug packaging quality defects. However, this section does not
permit all possible reports from a covered entity to a person subject
to FDA jurisdiction about product quality. It would not be permissible
for a provider to furnish a manufacturer with a list of patients who
prefer a different flavored cough syrup over the flavor of the
manufacturer's product. Such a disclosure generally would not be for a
public health purpose. However, a disclosure related to the flavor of a
product would be permitted under this section if the covered entity
believed that a difference in the product's flavor indicated, for
example, a possible manufacturing problem or suggested that the product
had been tampered with in a way that could affect the product's safety.
The Department clarifies that the types of disclosures that covered
entities are permitted to make to persons subject to FDA jurisdiction
are those of the type that have been traditionally made over the years.
These reports include, but are not limited to, those made for the
purposes identified in paragraphs (A)-(D) of Sec. 164.512(b)(1)(iii) of
this final Rule.
Also, the minimum necessary standard applies to public health
disclosures, including those made to persons subject to the
jurisdiction of the FDA. There are many instances where a report about
the quality, safety, or effectiveness of an FDA-regulated product can
be made without disclosing protected health information. Such may be
the case with many adverse drug events where it is important to know
what happened but it may not be important to know to whom. However, in
other circumstances, such as device tracking or blood lookback, it is
essential for the manufacturer to have identifying patient information
in order to carry out its responsibilities under the Food, Drug, and
Cosmetic Act. Therefore, identifiable health information can be
disclosed for these purposes, consistent with the minimum necessary
standard.
As the Department stated in the preamble of the NPRM, ``a person''
subject to the jurisdiction of the FDA does not mean that the
disclosure must be made to a specific individual. The Food, Drug, and
Cosmetic Act defines ``person'' to include an individual, partnership,
corporation, and association. Therefore, covered entities may continue
to disclose protected health information to the companies subject to
FDA's jurisdiction that have responsibility for the product or
activity. Covered entities may identify responsible companies by using
information obtained from product labels or product labeling (written
material about the product that accompanies the product) including
sources of labeling, such as the Physician's Desk Reference.
The Department believes these modifications effectively balance the
privacy interests of individuals with the interests of public health
and safety. Since the vast majority of commenters were silent on the
question of the potential need for a ``good faith'' exception, the
Department believes that these modifications will be sufficient to
preserve the current public health activities of persons subject to the
jurisdiction of the FDA, without such a safe harbor. However, the
Department will continue to evaluate the effect of the Rule to
determine whether there is need for further modifications or guidance.
Response to Other Public Comments
Comment: A few commenters urged the Department to include foreign
public health authorities in the Rule's definition of ``public health
authority.'' These commenters claimed that medical products are often
distributed in multiple countries, and the associated public health
issues are experienced globally. They further claimed that requiring
covered entities to obtain the permission of a United States-based
public health authority before disclosing protected health information
to a foreign government public health authority will impede important
communications.
Response: The Department notes that covered entities are permitted
to disclose protected health information for public health purposes, at
the direction of a public health authority, to an official of a foreign
government agency that is acting in collaboration with a public health
authority. The
[[Page 53229]]
Department does not have sufficient information at this time as to any
potential impacts or workability issues that could arise from this
language and, therefore, does not modify the Rule in this regard.
Comment: Some commenters, who opposed the proposal as a weakening
of the Privacy Rule, suggested that the Department implement a more
targeted approach to address only those issues raised in the preamble
to the NPRM, such as voluntary adverse event reporting activities,
rather than broadening the provision generally.
Response: The NPRM was intended to address a number of issues in
addition to the concern that the December 2000 Privacy Rule would chill
reporting of adverse events to entities from whom the FDA receives much
of its adverse event information. For instance, the text of the
December 2000 Privacy Rule did not expressly permit disclosure of
protected health information to FDA-regulated entities for the purpose
of enabling ``lookback,'' which is an activity performed by the blood
and plasma industry to identify and quarantine blood and blood products
that may be at increased risk of transmitting certain blood-borne
diseases, and which includes the notification of individuals who
received possibly tainted products, permitting them to seek medical
attention and counseling. The NPRM also was intended to simplify the
public health reporting provision and to make it more readily
understandable. Finally, the approach proposed in the NPRM, and adopted
in this final Rule, is intended to add flexibility to the public health
reporting provision of the December 2000 Rule, whose exclusive list of
permissible disclosures was insufficiently flexible to assure that
Sec. 164.512(b)(1)(iii) will allow legitimate public health reporting
activities that might arise in the future.
In addition, the Department clarifies that the reporting of adverse
events is not restricted to the FDA or persons subject to the
jurisdiction of the FDA. A covered entity may, under Sec. 164.512(b),
disclose protected health information to a public health authority that
is authorized to receive or collect a report on an adverse event. In
addition, to the extent an adverse event is required to be reported by
law, the disclosure of protected health information for this purpose is
also permitted under Sec. 164.512(a). For example, a Federally funded
researcher who is a covered health care provider under the Privacy Rule
may disclose protected health information related to an adverse event
to the National Institutes of Health (NIH) if required to do so by NIH
regulations. Even if not required to do so, the researcher may also
disclose adverse events directly to NIH as a public health authority.
To the extent that NIH has public health matters as part of its
official mandate it qualifies as a public health authority under the
Privacy Rule, and to the extent it is authorized by law to collect or
receive reports about injury and other adverse events such collection
would qualify as a public health activity.
2. Institutional Review Board (IRB) or Privacy Board Approval of a
Waiver of Authorization
December 2000 Privacy Rule. The Privacy Rule builds upon existing
Federal regulations governing the conduct of human subjects research.
In particular, the Rule at Sec. 164.512(i) establishes conditions under
which covered entities can use and disclose protected health
information for research purposes without individual authorization if
the covered entity first obtains either of the following:
Documentation of approval of a waiver of authorization
from an Institutional Review Board (IRB) or a Privacy Board. The
Privacy Rule specifies requirements that must be documented, including
the Board's determination that eight defined waiver criteria had been
met.
Where a review of protected health information is
conducted preparatory to research or where research is conducted solely
on decedents' information, certain representations from the researcher,
including that the use or disclosure is sought solely for such a
purpose and that the protected health information is necessary for the
purpose.
March 2002 NPRM. A number of commenters informed the Department
that the eight waiver criteria in the December 2000 Privacy Rule were
confusing, redundant, and internally inconsistent. These commenters
urged the Department to simplify these provisions, noting that they
would be especially burdensome and duplicative for research that was
currently governed by the Common Rule. In response to these comments,
the Department proposed the following modifications to the waiver
criteria for all research uses and disclosures of protected health
information, regardless of whether or not the research is subject to
the Common Rule:
The Department proposed to delete the criterion that ``the
alteration or waiver will not adversely affect the privacy rights and
the welfare of the individuals,'' because it may conflict with the
criterion regarding the assessment of minimal privacy risk.
In response to commenters' concerns about the overlap and
potential inconsistency among several of the Privacy Rule's criteria,
the Department proposed to turn the following three criteria into
factors that must be considered as part of the IRB's or Privacy Board's
assessment of minimal risk to privacy:
There is an adequate plan to protect the identifiers from
improper use and disclosure;
There is an adequate plan to destroy the identifiers at
the earliest opportunity consistent with the conduct of the research,
unless there is a health or research justification for retaining the
identifiers, or such retention is otherwise required by law; and
There are adequate written assurances that the protected
health information will not be reused or disclosed to any other person
or entity, except as required by law, for authorized oversight of the
research project, or for other research for which the use or disclosure
of protected health information would be permitted by this subpart.
In response to concerns that the following waiver
criterion was unnecessarily duplicative of other provisions to protect
patients' confidentiality interests, the Department proposed to
eliminate the criterion that: ``the privacy risks to individuals whose
protected health information is to be used or disclosed are reasonable
in relation to the anticipated benefits, if any, to the individual, and
the importance of the knowledge that may reasonably be expected to
result from the research.''
In sum, the NPRM proposed that the following waiver criteria
replace the waiver criteria in the December 2000 Privacy Rule at
Sec. 164.512(i)(2)(ii):
(1) The use or disclosure of protected health information involves
no more than a minimal risk to the privacy of individuals, based on, at
least, the presence of the following elements:
(a) An adequate plan to protect the identifiers from improper use
and disclosure;
(b) An adequate plan to destroy the identifiers at the earliest
opportunity consistent with conduct of the research, unless there is a
health or research justification for retaining the identifiers or such
retention is otherwise required by law; and
(c) Adequate written assurances that the protected health
information will not be reused or disclosed to any other person or
entity, except as required by law, for authorized oversight of the
[[Page 53230]]
research project, or for other research for which the use or disclosure
of protected health information would be permitted by this subpart;
(2) The research could not practicably be conducted without the
waiver or alteration; and
(3) The research could not practicably be conducted without access
to and use of the protected health information.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The overwhelming majority of commenters were supportive of the
Department's proposed modifications to the Privacy Rule's waiver
criteria. These commenters found that the proposed revisions adequately
addressed earlier concerns that the waiver criteria in the December
2000 Rule were confusing, redundant, and internally inconsistent.
However, a few commenters argued that some of the proposed criteria
continued to be too subjective and urged that they be eliminated.
Final Modifications. The Department agrees with the majority of
commenters that supported the proposed waiver criteria, and adopts the
modifications as proposed in the NPRM. The criteria safeguard patient
privacy, require attention to issues sometimes currently overlooked by
IRBs, and are compatible with the Common Rule. Though IRBs and Privacy
Boards may initially struggle to interpret the criteria, as a few
commenters mentioned, the Department intends to issue guidance
documents to address this concern. Furthermore, the Department notes
that experience and guidance have enabled IRBs to successfully
implement the Common Rule's waiver criteria, which also require
subjective determinations.
This final Rule also contains a conforming modification in
Sec. 164.512(i)(2)(iii) to replace ``(i)(2)(ii)(D)'' with
``(i)(2)(ii)(C).''
Response to Other Public Comments
Comment: It was suggested that the Department eliminate the March
2002 NPRM waiver criterion that requires IRBs or Privacy Boards to
determine if there is an ``adequate plan to protect identifiers from
improper use and disclosure,'' in order to avoid the IRB having to make
subjective decisions.
Response: The Department disagrees with the commenter that the
waiver criterion adopted in this final Rule is too subjective for an
IRB or a Privacy Board to use. First, the consideration of whether
there is an adequate plan to protect identifiers from improper use and
disclosure is one of three factors that an IRB or Privacy Board must
weigh in determining that the use or disclosure of protected health
information for the research proposal involves no more than a minimal
risk to the privacy of the individual. The Department does not believe
that the minimal risk determination, which is based upon a similar
waiver criterion in the Common Rule, is made unduly subjective by
requiring the IRB to take into account the researcher's plans for
maintaining the confidentiality of the information.
Second, as noted in the discussion of these provisions in the
proposal, the Privacy Rule is intended to supplement and build upon the
human subject protections already afforded by the Common Rule and the
Food and Drug Administration's human subject protection regulations.
One provision already in effect under these authorities is that, to
approve a study, an IRB must determine that ``when appropriate, there
are adequate provisions to protect the privacy of subjects and to
maintain the confidentiality of data.'' (Common Rule Sec. __.111(a)(7),
21 CFR 56.111(a)(7).) The Department, therefore, believes that IRBs and
Privacy Boards are accustomed to making the type of determinations
required under the Privacy Rule.
Nonetheless, as stated above, the Department is prepared to respond
to actual issues that may arise during the implementation of these
provisions and to provide the guidance necessary to address concerns of
IRBs, Privacy Boards, and researchers in this area.
Comment: A few commenters requested elimination of the waiver
element at Sec. 164.512(i)(2)(ii)(A)(2) that would require the IRB or
Privacy Board to determine that ``there is an adequate plan to destroy
identifiers at the earliest opportunity consistent with the conduct of
the research, unless there is a health or research justification for
their retention or such retention is required by law.'' These
commenters argued that this requirement may lead to premature
destruction of the data, which may hinder investigations of defective
data analysis or research misconduct.
Response: The waiver element at Sec. 164.512(i)(2)(ii)(A)(2)
accounts for these concerns by permitting the retention of identifiers
if there is a health or research justification, or if such retention is
required by law. It is expected that IRBs and Privacy Boards will
consider the need for continued analysis of the data, research, and
possible investigations of research misconduct when considering whether
this waiver element has been met. In addition, destroying identifiers
at the earliest opportunity helps to ensure that the use or disclosure
of protected health information will indeed pose no more than ``minimal
risk to the privacy of individuals.'' Requiring the researcher to
justify the need to retain patient identifiers provides needed
flexibility for research, while maintaining the goal of protecting
individuals' privacy interests. If additional issues arise after
implementation, the Department can most appropriately address them
through guidance.
Comment: Commenters also requested clarification of the proposed
waiver element at Sec. 164.512(i)(2)(ii)(A)(3), that will require an
IRB or Privacy Board to determine that there are ``adequate written
assurances that the protected health information would not be reused or
disclosed to any other person or entity, except as required by law, for
authorized oversight of the research project, or for other research for
which the use or disclosure of protected health information would be
permitted by this subpart.'' Specifically, the commenter's concern
centered on what effect this criterion could have on retrospective
studies involving data re-analysis.
Response: The Department clarifies that the Privacy Rule permits
the use or disclosure of protected health information for retrospective
research studies involving data re-analysis only if such use or
disclosure is made either with patient authorization or a waiver of
patient authorization as permitted by Sec. 164.508 or Sec. 164.512(i),
respectively. If issues develop in the course of implementation, the
Department intends to provide the guidance necessary to address these
questions.
Comment: A few commenters suggested clarifying that recruitment for
clinical trials by a covered entity using protected health information
in the covered entity's possession is a health care operation function,
not a marketing function. These commenters argued that a partial IRB or
Privacy Board waiver of authorization for recruitment purposes would be
too burdensome for the covered entity, and would prevent covered health
care providers from communicating with their patients about the
availability of clinical trials.
Response: Research recruitment is neither a marketing nor a health
care operations activity. Under the Rule, a covered entity is permitted
to disclose protected health information to the individual who is the
subject of the information, regardless of the purpose of the
disclosure. See Sec. 164.502(a)(1)(i). Therefore, covered health care
providers and patients may continue to discuss the option of enrolling
in a clinical trial without patient authorization, and
[[Page 53231]]
without an IRB or Privacy Board waiver of patient authorization.
However, where a covered entity wants to disclose an individual's
information to a third party for purposes of recruitment in a research
study, the covered entity first must obtain either authorization from
that individual as required at Sec. 164.508, or a waiver of
authorization as permitted at Sec. 164.512(i).
Comment: It was suggested that the Rule should permit covered
health care providers to obtain an authorization allowing the use of
protected health information for recruitment into clinical trials
without specifying the person to whom the information would be
disclosed and the exact information to be disclosed, but retaining the
authorization requirements of specified duration and purpose, and
adding a requirement for the minimum necessary use or disclosure.
Response: The Department understands that the Privacy Rule will
alter some research recruitment but disagrees with the commenter's
proposal to permit broad authorizations for recruitment into clinical
trials. The Department decided not to adopt this suggestion because
such a blanket authorization would not provide individuals with
sufficient information to make an informed choice about whether to sign
the authorization. In addition, adopting this change also would be
inconsistent with Department's decision to eliminate the distinction in
the Rule between research that includes treatment and research that
does not.
Comment: It was suggested that the Department exempt from the
Privacy Rule research that is already covered by the Common Rule and/or
FDA's human subject protection regulations. Commenters stated that this
would reduce the burden of complying with the Rule for covered entities
and researchers already governed by human subject protection
regulations, while requiring those not previously subject to compliance
with human subject protection regulations to protect individuals'
privacy.
Response: Many who commented on the December 2000 Privacy Rule
argued for this option as well. The Department had previously
considered, but chose not to adopt, this approach. Since the Common
Rule and the FDA's human subject protection regulations contain only
two requirements that specifically address confidentiality protections,
the Privacy Rule will strengthen existing human subject privacy
protections for research. More importantly, the Privacy Rule creates
equal standards of privacy protection for research governed by the
existing regulations and research that is not.
Comment: It was argued that the waiver provision should be
eliminated. The commenter argued that IRBs or Privacy Boards should not
have the right to waive a person's privacy rights, and that individuals
should have the right to authorize all uses and disclosures of
protected health information about themselves.
Response: The Department disagrees that safeguarding individuals'
privacy interests requires that individuals be permitted to authorize
all uses and disclosures of protected health information about
themselves. In developing the Privacy Rule, the Department carefully
weighed individuals' privacy interests with the need for identifiable
health information for certain public policy and national priority
purposes. The Department believes that the Privacy Rule reflects an
appropriate balance. For example, the Rule appropriately allows for the
reporting of information necessary to ensure public health, such as
information about a contagious disease that may be indicative of a
bioterrorism event, without individual authorization. With respect to
research, the Department strongly believes that continued improvements
in our nation's health require that researchers be permitted access to
protected health information without individual authorization in
certain limited circumstances. However, we do believe that researchers'
ability to use protected health information without a patient's
authorization is a privilege that requires strong confidentiality
protections to ensure that the information is not misused. The
Department believes that the safeguards required by the final Rule
achieve the appropriate balance between protecting individuals' privacy
interests, while permitting researchers to access protected health
information for important, and potentially life-saving, studies.
Comment: A few commenters stated that, if the Rule permits covered
entities to release protected health information to sponsor-initiated
registries related to quality, safety, or effectiveness of FDA-
regulated products, then this permission should apply to academic
institutes and non-profit organizations as well. Otherwise, the
commenters argued, the Rule establishes a double standard for research
registries created by FDA-regulated entities versus registries created
by academic or non-profit sponsored entities.
Response: The provisions under Sec. 164.512(b)(iii) are intended to
allow the disclosure of information to FDA-regulated entities for the
limited purpose of conducting public health activities to ensure the
qualify, safety, or effectiveness of FDA-regulated products, including
drugs, medical devices, biological products, and food. Thus, the
Department does not believe a modification to the research provisions
is appropriate. The Privacy Rule permits covered entities to disclose
protected health information to a registry for research purposes,
including those sponsored by academic and non-profit organizations, if
such disclosure: is required by law under Sec. 164.512(a), is made
pursuant to an IRB or Privacy Board waiver of authorization under
Sec. 164.512(i), is made pursuant to the individual's authorization as
provided by Sec. 164.508, or consists only of a limited data set as
provided by Sec. 164.514(e).
Comment: It was suggested that the Department modify the Rule's
definition of ``research'' or the provision for preparatory research to
explicitly permit the building and maintenance of research databases
and repositories. The commenter further asserted that, under the Common
Rule, ``research'' signifies an actual research protocol, and would not
include a data or tissue compilation that is undertaken to facilitate
future protocols. Therefore, since the Privacy Rule and the Common Rule
have the same definition of ``research,'' this commenter was concerned
that the Privacy Rule would not permit a pre-research practice in which
a covered entity compiles protected health information in a systematic
way to either assist researchers in their reviews that are preparatory
to research, or to conduct future research.
Response: The Department does not believe such a modification is
necessary. Under the Common Rule, the Office for Human Research
Protections (OHRP) has interpreted the definition of ``research'' to
include the development of a repository or database for future research
purposes. In fact, OHRP has issued guidance on this issue, which can be
found at the following URL: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=li
nklog&to=http://ohrp.osophs.dhhs.gov/humansubjects/guidance/reposit.htm . The Department interprets the definition of
``research'' in the Privacy Rule to be consistent with what is
considered research under the Common Rule. Thus, the development of
research repositories and databases for future research are considered
research for the purposes of the Privacy Rule.
Comment: A commenter suggested eliminating the minimum necessary
requirement for uses and disclosures made pursuant to a waiver of
authorization by an IRB or Privacy
[[Page 53232]]
Board. The commenter argued that this proposal would lessen covered
entities' concern that they would be held responsible for an IRB or
Privacy Board's inappropriate determination and would, thus, increase
the likelihood that covered entities would rely on the requesting
researcher's IRB or Privacy Board documentation that patient
authorization could be waived as permitted at Sec. 164.512(i). This
commenter further argued that this proposal would discourage covered
entities from imposing duplicate review by the covered entities' own
IRB or Privacy Board, thereby decreasing burden for covered entities,
researchers, IRBs, and Privacy Boards.
Response: Although the Secretary acknowledges the concern of these
commenters, the Rule at Sec. 164.514(d)(3)(iii)(D) already permits
covered entities to reasonably rely on documentation from an external
IRB or Privacy Board as meeting the minimum necessary requirement,
provided the documentation complies with the applicable requirements of
Sec. 164.512(i). The Department understands that covered entities may
elect to require duplicate IRB or Privacy Board reviews before
disclosing protected health information to requesting researchers, but
has determined that eliminating the minimum necessary requirement would
pose inappropriate and unnecessary risk to individuals' privacy. For
example, if the covered entity has knowledge that the documentation of
IRB or Privacy Board approval was fraudulent with respect to the
protected health information needed for a research study, the covered
entity should not be permitted to rely on the IRB or Privacy Board's
documentation as fulfilling the minimum necessary requirement.
Therefore, in the revised Final Rule, the Department has retained the
minimum necessary requirement for research uses and disclosures made
pursuant to Sec. 164.512(i).
G. Section 164.514--Other Requirements Relating to Uses and Disclosures
of Protected Health Information
1. De-Identification of Protected Health Information
December 2000 Privacy Rule. At Sec. 164.514(a)-(c), the Privacy
Rule permits a covered entity to de-identify protected health
information so that such information may be used and disclosed freely,
without being subject to the Privacy Rule's protections. Health
information is de-identified, or not individually identifiable, under
the Privacy Rule, if it does not identify an individual and if the
covered entity has no reasonable basis to believe that the information
can be used to identify an individual. In order to meet this standard,
the Privacy Rule provides two alternative methods for covered entities
to de-identify protected health information.
First, a covered entity may demonstrate that it has met the
standard if a person with appropriate knowledge and experience applying
generally acceptable statistical and scientific principles and methods
for rendering information not individually identifiable makes and
documents a determination that there is a very small risk that the
information could be used by others to identify a subject of the
information. The preamble to the Privacy Rule refers to two government
reports that provide guidance for applying these principles and
methods, including describing types of techniques intended to reduce
the risk of disclosure that should be considered by a professional when
de-identifying health information. These techniques include removing
all direct identifiers, reducing the number of variables on which a
match might be made, and limiting the distribution of records through a
``data use agreement'' or ``restricted access agreement'' in which the
recipient agrees to limits on who can use or receive the data.
Alternatively, covered entities may choose to use the Privacy
Rule's safe harbor method for de-identification. Under the safe harbor
method, covered entities must remove all of a list of 18 enumerated
identifiers and have no actual knowledge that the information remaining
could be used, alone or in combination, to identify a subject of the
information. The identifiers that must be removed include direct
identifiers, such as name, street address, social security number, as
well as other identifiers, such as birth date, admission and discharge
dates, and five-digit zip code. The safe harbor requires removal of
geographic subdivisions smaller than a State, except for the initial
three digits of a zip code if the geographic unit formed by combining
all zip codes with the same initial three digits contains more than
20,000 people. In addition, age, if less than 90, gender, ethnicity,
and other demographic information not listed may remain in the
information. The safe harbor is intended to provide covered entities
with a simple, definitive method that does not require much judgment by
the covered entity to determine if the information is adequately de-
identified.
The Privacy Rule also allows for the covered entity to assign a
code or other means of record identification to allow de-identified
information to be re-identified by the covered entity, if the code is
not derived from, or related to, information about the subject of the
information. For example, the code cannot be a derivation of the
individual's social security number, nor can it be otherwise capable of
being translated so as to identify the individual. The covered entity
also may not use or disclose the code for any other purpose, and may
not disclose the mechanism (e.g., algorithm or other tool) for re-
identification.
The Department is cognizant of the increasing capabilities and
sophistication of electronic data matching used to link data elements
from various sources and from which, therefore, individuals may be
identified. Given this increasing risk to individuals' privacy, the
Department included in the Privacy Rule the above stringent standards
for determining when information may flow unprotected. The Department
also wanted the standards to be flexible enough so the Privacy Rule
would not be a disincentive for covered entities to use or disclose de-
identified information wherever possible. The Privacy Rule, therefore,
strives to balance the need to protect individuals' identities with the
need to allow de-identified databases to be useful.
March 2002 NPRM. The Department heard a number of concerns
regarding the de-identification standard in the Privacy Rule. These
concerns generally were raised in the context of using and disclosing
information for research, public health purposes, or for certain health
care operations. In particular, concerns were expressed that the safe
harbor method for de-identifying protected health information was so
stringent that it required removal of many of the data elements that
were essential to analyses for research and these other purposes. The
comments, however, demonstrated little consensus as to which data
elements were needed for such analyses and were largely silent
regarding the feasibility of using the Privacy Rule's alternative
statistical method to de-identify information.
Based on the comments received, the Department was not convinced of
the need to modify the safe harbor standard for de-identified
information. However, the Department was aware that a number of
entities were confused by potentially conflicting provisions within the
de-identification standard. These entities argued that, on the one
hand, the Privacy Rule treats information as de-identified if all
listed identifiers on the information are stripped, including
[[Page 53233]]
any unique, identifying number, characteristic, or code. Yet, the
Privacy Rule permits a covered entity to assign a code or other record
identification to the information so that it may be re-identified by
the covered entity at some later date.
The Department did not intend such a re-identification code to be
considered one of the unique, identifying numbers or codes that
prevented the information from being de-identified. Therefore, the
Department proposed a technical modification to the safe harbor
provisions explicitly to except the re-identification code or other
means of record identification permitted by Sec. 164.514(c) from the
listed identifiers (Sec. 164.514(b)(2)(i)(R)).
Overview of Public Comments. The following provides an overview of
the public comment received on this proposal. Additional comments
received on this issue are discussed below in the section entitled,
``Response to Other Public Comments.''
All commenters on our clarification of the safe harbor re-
identification code not being an enumerated identifier supported our
proposed regulatory clarification.
Final Modifications. Based on the Department's intent that the re-
identification code not be considered one of the enumerated identifiers
that must be excluded under the safe harbor for de-identification, and
the public comment supporting this clarification, the Department adopts
the provision as proposed. The re-identification code or other means of
record identification permitted by Sec. 164.514(c) is expressly
excepted from the listed safe harbor identifiers at
Sec. 164.514(b)(2)(i)(R).
Response to Other Public Comments
Comment: One commenter asked if data can be linked inside the
covered entity and a dummy identifier substituted for the actual
identifier when the data is disclosed to the external researcher, with
control of the dummy identifier remaining with the covered entity.
Response: The Privacy Rule does not restrict linkage of protected
health information inside a covered entity. The model that the
commenter describes for the dummy identifier is consistent with the re-
identification code allowed under the Rule's safe harbor so long as the
covered entity does not generate the dummy identifier using any
individually identifiable information. For example, the dummy
identifier cannot be derived from the individual's social security
number, birth date, or hospital record number.
Comment: Several commenters who supported the creation of de-
identified data for research based on removal of facial identifiers
asked if a keyed-hash message authentication code (HMAC) can be used as
a re-identification code even though it is derived from patient
information, because it is not intended to re-identify the patient and
it is not possible to identify the patient from the code. The
commenters stated that use of the keyed-hash message authentication
code would be valuable for research, public health and bio-terrorism
detection purposes where there is a need to link clinical events on the
same person occurring in different health care settings (e.g. to avoid
double counting of cases or to observe long-term outcomes).
These commenters referenced Federal Information Processing Standard
(FIPS) 198: ``The Keyed-Hash Message Authentication Code.'' This
standard describes a keyed-hash message authentication code (HMAC) as a
mechanism for message authentication using cryptographic hash
functions. The HMAC can be used with any iterative approved
cryptographic hash function, in combination with a shared secret key. A
hash function is an approved mathematical function that maps a string
of arbitrary length (up to a pre-determined maximum size) to a fixed
length string. It may be used to produce a checksum, called a hash
value or message digest, for a potentially long string or message.
According to the commenters, the HMAC can only be breached when the
key and the identifier from which the HMAC is derived and the de-
identified information attached to this code are known to the public.
It is common practice that the key is limited in time and scope (e.g.
only for the purpose of a single research query) and that data not be
accumulated with such codes (with the code needed for joining records
being discarded after the de-identified data has been joined).
Response: The HMAC does not meet the conditions for use as a re-
identification code for de-identified information. It is derived from
individually identified information and it appears the key is shared
with or provided by the recipient of the data in order for that
recipient to be able to link information about the individual from
multiple entities or over time. Since the HMAC allows identification of
individuals by the recipient, disclosure of the HMAC violates the Rule.
It is not solely the public's access to the key that matters for these
purposes; the covered entity may not share the key to the re-
identification code with anyone, including the recipient of the data,
regardless of whether the intent is to facilitate re-identification or
not.
The HMAC methodology, however, may be used in the context of the
limited data set, discussed below. The limited data set contains
individually identifiable health information and is not a de-identified
data set. Creation of a limited data set for research with a data use
agreement, as specified in Sec. 164.514(e), would not preclude
inclusion of the keyed-hash message authentication code in the limited
data set. The Department encourages inclusion of the additional
safeguards mentioned by the commenters as part of the data use
agreement whenever the HMAC is used.
Comment: One commenter requested that HHS update the safe harbor
de-identification standard with prohibited 3-digit zip codes based on
2000 Census data.
Response: The Department stated in the preamble to the December
2000 Privacy Rule that it would monitor such data and the associated
re-identification risks and adjust the safe harbor as necessary.
Accordingly, the Department provides such updated information in
response to the above comment. The Department notes that these three-
digit zip codes are based on the five-digit zip Code Tabulation Areas
created by the Census Bureau for the 2000 Census. This new methodology
also is briefly described below, as it will likely be of interest to
all users of data tabulated by zip code.
The Census Bureau will not be producing data files containing U.S.
Postal Service zip codes either as part of the Census 2000 product
series or as a post Census 2000 product. However, due to the public's
interest in having statistics tabulated by zip code, the Census Bureau
has created a new statistical area called the Zip Code Tabulation Area
(ZCTA) for Census 2000. The ZCTAs were designed to overcome the
operational difficulties of creating a well-defined zip code area by
using Census blocks (and the addresses found in them) as the basis for
the ZCTAs. In the past, there has been no correlation between zip codes
and Census Bureau geography. Zip codes can cross State, place, county,
census tract, block group and census block boundaries. The geographic
entities the Census Bureau uses to tabulate data are relatively stable
over time. For instance, census tracts are only defined every ten
years. In contrast, zip codes can change more frequently. Because of
the ill-defined nature of zip code boundaries, the Census Bureau has no
file (crosswalk) showing the relationship
[[Page 53234]]
between US Census Bureau geography and US Postal Service zip codes.
ZCTAs are generalized area representations of U.S. Postal Service
(USPS) zip code service areas. Simply put, each one is built by
aggregating the Census 2000 blocks, whose addresses use a given zip
code, into a ZCTA which gets that zip code assigned as its ZCTA code.
They represent the majority USPS five-digit zip code found in a given
area. For those areas where it is difficult to determine the prevailing
five-digit zip code, the higher-level three-digit zip code is used for
the ZCTA code. For further information, go to: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=li
nklog&to=http://www.census.gov/geo/www/gazetteer/places2k.html .
Utilizing 2000 Census data, the following three-digit ZCTAs have a
population of 20,000 or fewer persons. To produce a de-identified data
set utilizing the safe harbor method, all records with three-digit zip
codes corresponding to these three-digit ZCTAs must have the zip code
changed to 000. The 17 restricted zip codes are: 036, 059, 063, 102,
203, 556, 692, 790, 821, 823, 830, 831, 878, 879, 884, 890, and 893.
2. Limited Data Sets
March 2002 NPRM. As noted above, the Department heard many concerns
that the de-identification standard in the Privacy Rule could curtail
important research, public health, and health care operations
activities. Specific concerns were raised by State hospital
associations regarding their current role in using patient information
from area hospitals to conduct and disseminate analyses that are useful
for hospitals in making decisions about quality and efficiency
improvements. Similarly, researchers raised concerns that the
impracticality of using de-identified data would significantly increase
the workload of IRBs because waivers of individual authorization would
need to be sought more frequently for research studies even though no
direct identifiers were needed for the studies. Many of these
activities and studies were also being pursued for public health
purposes. Some commenters urged the Department to permit covered
entities to disclose protected health information for research if the
protected health information is facially de-identified, that is,
stripped of direct identifiers, so long as the research entity provides
assurances that it will not use or disclose the information for
purposes other than research and will not identify or contact the
individuals who are the subjects of the information.
In response to these concerns, the Department, in the NPRM,
requested comments on an alternative approach that would permit uses
and disclosures of a limited data set which would not include direct
identifiers but in which certain potentially identifying information
would remain. The Department proposed limiting the use or disclosure of
any such limited data set to research, public health, and health care
operations purposes only.
From the de-identification safe harbor list of identifiers, we
proposed the following as direct identifiers that would have to be
removed from any limited data set: name, street address, telephone and
fax numbers, e-mail address, social security number, certificate/
license number, vehicle identifiers and serial numbers, URLs and IP
addresses, and full face photos and any other comparable images. The
proposed limited data set could include the following identifiable
information: admission, discharge, and service dates; date of death;
age (including age 90 or over); and five-digit zip code.
The Department solicited comment on whether one or more other
geographic units smaller than State, such as city, county, precinct,
neighborhood or other unit, would be needed in addition to, or be
preferable to, the five-digit zip code. In addition, to address
concerns raised by commenters regarding access to birth date for
research or other studies relating to young children or infants, the
Department clarified that the Privacy Rule de-identification safe
harbor allows disclosure of the age of an individual, including age
expressed in months, days, or hours. Given that the limited data set
could include all ages, including age in months, days, or hours (if
preferable), the Department requested comment on whether date of birth
would be needed and, if so, whether the entire date would be needed, or
just the month and year.
In addition, to further protect privacy, the Department proposed to
condition the disclosure of the limited data set on covered entities
obtaining from the recipients a data use or similar agreement, in which
the recipient would agree to limit the use of the limited data set to
the purposes specified in the Privacy Rule, to limit who can use or
receive the data, and agree not to re-identify the data or contact the
individuals.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
Almost all those who commented on this issue supported the basic
premise of the limited data set for research, public health, and health
care operations. Many of these commenters used the opportunity to
reiterate their opposition to the safe harbor and statistical de-
identification methods, and some misinterpreted the limited data set
proposal as creating another safe-harbor form of de-identified data. In
general, commenters agreed with the list of direct identifiers proposed
in the preamble of the NPRM; some recommended changes. The requirement
of a data use agreement was similarly widely supported, although a few
commenters viewed it as unnecessary and others offered additional terms
which they argued would make the data use agreement more effective.
Others questioned the enforceability of the data use agreements.
A few commenters argued that the limited data set would present a
significant risk of identification of individuals because of the
increased ability to use the other demographic variables (e.g., race,
gender) in such data sets to link to other publicly available data.
Some of these commenters also argued that the development of computer-
based solutions to support the statistical method of de-identification
is advancing rapidly and can support, in some cases better than the
limited data set, many of the needs for research, public health and
health care operations. These commenters asserted that authorization of
the limited data set approach would undermine incentives to further
develop statistical techniques for de-identification that may be more
protective of privacy.
Most commenters who supported the limited data set concept favored
including the five-digit zip code, but also wanted other geographic
units smaller than a State to be included in the limited data set.
Examples of other geographic units that commenters argued are needed
for research, public health or health care operational purposes were
county, city, full zip code, census tract, and neighborhood. Various
analytical needs were cited to support these positions, such as
tracking the occurrence of a particular disease to the neighborhood
level or using county level data for a needs assessment of physician
specialties. A few commenters opposed inclusion of the 5-digit zip code
in the limited data set, recommending that the current Rule, which
requires data aggregation at the 3-digit zip code level, remain the
standard.
Similarly, the majority of commenters addressing the issue
supported inclusion of the full birth date in the
[[Page 53235]]
limited data set. These commenters asserted that the full birth date
was needed for longitudinal studies, and similar research, to assure
accuracy of data. Others stated that while they preferred access to the
full birth date, their data needs would be satisfied by inclusion of at
least the month and year of birth in the limited data set. A number of
commenters also opposed inclusion of the date of birth in the limited
data as unduly increasing the risk of identification of individuals.
Final Modifications. In view of the support in the public comments
for the concept of a limited data set, the Department determines that
adoption of standards for the use and disclosure of protected health
information for this purpose is warranted. Therefore, the Department
adds at Sec. 164.514(e) a new standard and implementation
specifications for a limited data set for research, public health, or
health care operations purposes if the covered entity (1) uses or
discloses only a ``limited data set'' as defined at Sec. 164.514(e)(2),
and (2) obtains from the recipient of the limited data set a ``data use
agreement'' as defined at Sec. 164.514(e)(4). In addition, the
Department adds to the permissible uses and disclosures in
Sec. 164.502(a) express reference to the limited data set standards.
The implementation specifications do not delineate the data that
can be released through a limited data set. Rather, the Rule specifies
the direct identifiers that must be removed for a data set to qualify
as a limited data set. As with the de-identification safe harbor
provisions, the direct identifiers listed apply to protected health
information about the individual or about relatives, employers, or
household members of the individual. The direct identifiers include all
of the facial identifiers proposed in the preamble to the NPRM: (1)
Name; (2) street address (renamed postal address information, other
than city, State and zip code); (3) telephone and fax numbers; (4) e-
mail address; (5) social security number; (6) certificate/license
numbers; (7) vehicle identifiers and serial numbers; (8) URLs and IP
addresses; and (9) full face photos and any other comparable images.
The public comment generally supported the removal of this facially
identifying information.
In addition to these direct identifiers, the Department designates
the following information as direct identifiers that must be removed
before protected health information will be considered a limited data
set: (1) Medical record numbers, health plan beneficiary numbers, and
other account numbers; (2) device identifiers and serial numbers; and
(3) biometric identifiers, including finger and voice prints. Only a
few commenters specifically stated a need for some or all of these
identifiers as part of the limited data set. For example, one commenter
wanted an (encrypted) medical record number to be included in the
limited data set to support disease management planning and program
development to meet community needs and quality management. Another
commenter wanted the health plan beneficiary number included in the
limited data set to permit researchers to ensure that results
indicating sex, gender or ethnic differences were not influenced by the
participant's health plan. And a few commenters wanted device
identifiers and serial numbers included in the limited data set, to
facilitate product recalls and patient safety initiatives. However, the
Department has not been persuaded that the need for these identifiers
outweighs the potential privacy risks to the individual by their
release as part of a limited data set, particularly when the Rule makes
other avenues available for the release of information that may
directly identify an individual.
The Department does not include in the list of direct identifiers
the ``catch-all'' category from the de-identification safe harbor of
``any other unique identifying number, characteristic or code.'' While
this requirement is essential to assure that the de-identification safe
harbor does in fact produce a de-identified data set, it is difficult
to define in advance in the context of a limited data set. Since our
goal in establishing a limited data set is not to create de-identified
information and since the data use agreement constrains further
disclosure of the information, we determined that it would only add
complexity to implementation of the limited data set with little added
protection.
In response to wide public support, the Department does not
designate as a direct identifier any dates related to the individual or
any geographic subdivision other than street address. Therefore, as
part of a limited data set, researchers and others involved in public
health studies will have access to dates of admission and discharge, as
well as dates of birth and death for the individual. We agree with
commenters who asserted that birth date is critical for certain
research, such as longitudinal studies where there is a need to track
individuals across time and for certain infant-related research. Rather
than adding complexity to the Rule by trying to carve out an exception
for these specific situations, and other justifiable uses, we rely on
the minimum necessary requirement to keep the Rule simple while
avoiding abuse. Birth date should only be disclosed where the
researcher and covered entity agree that it is needed for the purpose
of the research. Further, even though birth date may be included with a
limited data set, the Department clarifies, as it did in the preamble
to the proposed rulemaking, that the Privacy Rule allows the age of an
individual to be expressed in years or in months, days, or hours as
appropriate.
Moreover, the limited data set may include the five-digit zip code
or any other geographic subdivision, such as State, county, city,
precinct and their equivalent geocodes, except for street address. We
substitute for street address the term postal address information,
other than city, State and zip code in order to make clear that
individual elements of postal address such as street name by itself are
also direct identifiers. Commenters identified a variety of needs for
various geographical codes (county, city, neighborhood, census tract,
precinct) to support a range of essential research, public health and
health care operations activities. Some of the examples provided
included the need to analyze local geographic variations in disease
burdens or in the provision of health services, conducting research
looking at pathogens or patterns of health risks which may need to
compare areas within a single zip code, or studies to examine data by
county or neighborhood when looking for external causes of disease, as
would be the case for illnesses and diseases such as bladder cancer
that may have environmental links. The Department agrees with these
commenters that a variety of geographical designations other than five-
digit zip code are needed to permit useful and significant studies and
other research to go forward unimpeded. So long as an appropriate data
use agreement is in place, the Department does not believe that there
is any greater privacy risk in including in the limited data set such
geographic codes than in releasing the five-digit zip code.
Finally, the implementation specifications adopted at
Sec. 164.514(e) require a data use agreement between the covered entity
and the recipient of the limited data set. The need for a data use
agreement and the core elements of such an agreement were widely
supported in the public comment.
In the NPRM, we asked whether additional conditions should be added
to the data use agreement. In response, a few commenters made specific
[[Page 53236]]
suggestions. These included prohibiting further disclosure of the
limited data set except as required by law, prohibiting further
disclosure without the written consent of the covered entity, requiring
that the recipient safeguard the information received in the limited
data set, prohibiting further disclosure unless the data has been de-
identified utilizing the statistical or safe harbor methods of the
Privacy Rule, and limiting use of the data to the purpose for which it
was received.
In response to these comments, in the final Rule we specify that
the covered entity must enter into a data use agreement with the
intended recipient which establishes the permitted uses and disclosures
of such information by the recipient, consistent with the purposes of
research, public health, or health care operations, limits who can use
or receive the data, and requires the recipient to agree not to re-
identify the data or contact the individuals. In addition, the data use
agreement must contain adequate assurances that the recipient use
appropriate safeguards to prevent use or disclosure of the limited data
set other than as permitted by the Rule and the data use agreement, or
as required by law. These adequate assurances are similar to the
existing requirements for business associate agreements.
Since the data use agreement already requires the recipient to
limit who can use or receive the data, and to prevent uses and
disclosures beyond those stated in the agreement, and since we could
not anticipate all the possible scenarios under which a limited data
set with a data use agreement would be created, the Department
concluded that adding any of the other suggested restrictions would
bring only marginal additional protection while potentially impeding
some of the purposes intended for the limited data set. The Department
believes the provisions of the data use agreement provide a firm
foundation for protection of the information in the limited data set,
but encourages and expects covered entities and data recipients to
further strengthen their agreements to conform to current practices.
We do not specify the form of the data use agreement. Thus, private
parties might choose to enter into a formal contract, while two
government agencies might use a memorandum of understanding to specify
the terms of the agreement. In the case of a covered entity that wants
to create and use a limited data set for its own research purposes, the
requirements of the data use agreement could be met by having affected
workforce members sign an agreement with the covered entity, comparable
to confidentiality agreements that employees handling sensitive
information frequently sign.
A few commenters questioned the enforceability of the data use
agreements. The Department clarifies that, if the recipient breaches a
data use agreement, HHS cannot take enforcement action directly against
that recipient unless the recipient is a covered entity. Where the
recipient is a covered entity, the final modifications provide that
such covered entity is in noncompliance with the Rule if it violates a
data use agreement. See Sec. 164.514(e)(4)(iii)(B). Additionally, the
Department clarifies that the disclosing covered entity is not liable
for breaches of the data use agreement by the recipient of the limited
data set. However, similar to business associate agreements, if a
covered entity knows of a pattern of activity or practice of the data
recipient that constitutes a material breach or violation of the data
recipient's obligation under the data use agreement, then it must take
reasonable steps to cure the breach or end the violation, as
applicable, and, if unsuccessful, discontinue disclosure of protected
health information to the recipient and report the problem to the
Secretary. And the recipient is required to report to the covered
entity any improper uses or disclosures of limited data set information
of which it becomes aware. We also clarify that the data use agreement
requirements apply to disclosures of the limited data set to agents and
subcontractors of the original limited data set recipient.
In sum, we have created the limited data set option because we
believe that this mechanism provides a way to allow important research,
public health and health care operations activities to continue in a
manner consistent with the privacy protections of the Rule. We agree
with those commenters who stated that the limited data set is not de-
identified information, as retention of geographical and date
identifiers measurably increases the risk of identification of the
individual through matching of data with other public (or private) data
sets. However, we believe that the limitations on the specific uses of
the limited data set, coupled with the requirements of the data use
agreement, will provide sufficient protections for privacy and
confidentiality of the data. The December 2000 Privacy Rule preamble on
the statistical method for de-identification discussed the data use
agreement as one of the techniques identified that can be used to
reduce the risk of disclosure. A number of Federal agencies that
distribute data sets for research or other uses routinely employ data
use agreements successfully to protect and otherwise restrict further
use of the information.
We note that, while disclosures of protected health information for
certain public health purposes is already allowed under
Sec. 164.512(b), the limited data set provision may permit disclosures
for some public health activities not allowed under that section. These
might include disease registries maintained by private organizations or
universities or other types of studies undertaken by the private sector
or non-profit organizations for public health purposes.
In response to comments, the Department clarifies that, when a
covered entity discloses protected health information in a limited data
set to a researcher who has entered into an appropriate data use
agreement, the covered entity does not also need to have documentation
from an IRB or a Privacy Board that individual authorization has been
waived for the purposes of the research. However, the covered entity
may not disclose any of the direct identifiers listed in
Sec. 164.514(e) without either the individual's authorization or
documentation of an IRB or Privacy Board waiver of that authorization.
The Department further clarifies that there are other requirements
in the Privacy Rule that apply to disclosure of a limited data set,
just as they do to other disclosures. For example, any use, disclosure,
or request for a limited data set must also adhere to the minimum
necessary requirements of the Rule. The covered entity could accomplish
this by, for example, requiring the data requestor, in the data use
agreement, to specify not only the purposes of the limited data set,
but also the particular data elements, or categories of data elements,
requested. The covered entity may reasonably rely on a requested
disclosure as the minimum necessary, consistent with the provisions of
Sec. 164.514(d)(3)(iii). As an example of the use of the minimum
necessary standard, a covered entity who believes that another covered
entity's request to include date of birth in the limited data set is
not warranted is free to negotiate with the recipient about that
requirement. If the entity requesting a limited data set including date
of birth is not one on whose request a covered entity may reasonably
rely under Sec. 164.514(d)(3)(iii), and the covered entity believes
inclusion of date of birth is not warranted, the covered entity must
either negotiate a reasonably
[[Page 53237]]
necessary limited data set or not make a disclosure.
The Department amends Sec. 164.514(e)(3)(ii) to make clear that a
covered entity may engage a business associate to create a limited data
set, in the same way it can use a business associate to create de-
identified data. As with de-identified data, a business associate
relationship arises even if the limited data set is not being created
for the covered entity's own use. For instance, if a researcher needs
county data, but the covered entity's data contains only the postal
address of the individual, a business associate may be used to convert
the covered entity's geographical information into that needed by the
researcher. The covered entity may hire the intended recipient of the
limited data set as a business associate for this purpose. That is, the
covered entity may provide protected health information, including
direct identifiers, to a business associate who is also the intended
data recipient, to create a limited data set of the information
responsive to the business associate's request.
Finally, the Department amends Sec. 164.528 to make clear that the
covered entity does not need to include disclosures of protected health
information in limited data sets in any accounting of disclosures
provided to the individual. Although the Department does not consider
the limited data set to constitute de-identified information, all
direct identifiers are removed from the limited data set and the
recipient of the data agrees not to identify or contact the individual.
The burden of accounting for these disclosures in these circumstances
is not warranted, given that the data may not be used in any way to
gain knowledge about a specific individual or to take action in
relation to that individual.
Response to Other Public Comments
Comment: A small number of commenters argued that the development
of computer-based solutions to support the statistical method of de-
identification is advancing rapidly and can support, in some cases
better than the limited data set, many of the needs for research,
public health and health care operations. They also asserted that
authorization of the limited data set approach will undermine
incentives to further develop statistical techniques that will be more
protective of privacy than the limited data set. They proposed imposing
a sunset clause on the limited data set provision in order to promote
use of de-identification tools.
Response: We agree that progress is being made in the development
of electronic tools to de-identify protected health information.
However, the information presented by commenters did not convince us
that current techniques meet all the needs identified or are easy
enough to use that they can have the broad application needed to
support key research, public health and health care operations needs.
Where de-identification can provide better outcomes than a limited data
set, purveyors of such de-identification tools will have to demonstrate
to covered entities the applicability and ease of use of their
products. We do not believe a sunset provision on the limited data set
authority is appropriate. Rather, as part of its ongoing review of the
Privacy Rule in general, and the de-identification provisions in
particular, the Office for Civil Rights will periodically assess the
need for these provisions.
Comment: Some commenters said that if HHS clearly defines direct
identifiers and facially identifiable information, there is no need for
a data use agreement.
Response: We disagree. As previously noted, the resulting limited
data set is not de-identified; it still contains individually
identifiable health information. As a means to assure continued
protection of the information once it leaves the control of the covered
entity, we believe a data use agreement is essential.
Comment: Several commenters wanted to be able to have a single
coordinated data use agreement between a State hospital association and
its member hospitals where data collection is coordinated through the
hospital association. In addition, there was concern that requiring a
data use agreement and a business associate agreement in this
circumstance would create an excessive and unnecessary burden.
Response: Nothing in the requirement for a data use agreement
prevents a State hospital association and its member hospitals from
being parties to a common data use agreement. Furthermore, that data
use agreement can be combined with a business associate agreement into
a single agreement that meets the requirements of both Privacy Rule
provisions.
Comment: A few commenters argued that a data use agreement should
not be required for data users getting a limited data set and
performing data analysis as part of the Medicaid rebate validation
process under which third-party data vendors, working for
pharmaceutical companies, collect prescription claims data from State
agencies and analyze the results for errors and discrepancies. They
argued that State agencies often find entering into such contracts
difficult and time consuming. Consequently, if States have to establish
data use or similar agreements, then the Medicaid rebate validation
process could be adversely impacted.
Response: We are not persuaded that there is a compelling reason to
exempt this category of limited data set use from the requirements for
a data use agreement, as compared to other important uses. The data use
agreement is key to ensuring the integrity of the limited data set
process and avoiding inappropriate further uses and disclosures.
Comment: One commenter stated that allowing disclosure of the
limited data set without IRB or Privacy Board review would create a
loophole in the Privacy Rule, with Federally funded research continuing
to undergo IRB review while private research would not.
Response: The Rule continues to make no distinction between
disclosure of protected health information to Federally and privately
funded researchers. To obtain a limited data set from a covered entity,
both Federally-funded and privately-funded researchers must enter into
a data use agreement with the covered entity. One of the reasons for
establishing the limited data set provisions is that the concept of
``personally identifiable information'' that triggers IRB review of
research that is subject to the Common Rule does not coincide with the
definition of ``individually identifiable health information'' in the
Privacy Rule. The Department believes that the limited data set comes
closer to the type of information not requiring IRB approval under the
Common Rule than does the de-identified data set of the Privacy Rule.
However, there is no uniform definition of ``personally identifiable
information'' under the Common Rule; rather, as a matter of practice,
it is currently set by each individual IRB.
Comment: A few commenters suggested expanding the allowable
purposes for the limited data set. One commenter proposed including
payment as an allowable purpose, in order to facilitate comparison of
premiums charged to insured versus uninsured patients. A few commenters
wanted to allow disclosures to journalists if the individual's name and
social security number have been removed and if, in the context of the
record or file, the identity of the patient has not been revealed. A
few commenters suggested that there was no need to restrict the purpose
at all as long
[[Page 53238]]
as there is a data use agreement. A couple of commenters wanted to
extend the purpose to include creation or maintenance of research
databases and repositories.
Response: If the comparison of premiums charged to different
classes of patients is being performed as a health care operation of
another entity, then a limited data set could be used for this purpose.
It seems unlikely that this activity would occur in relation to a
payment activity, so a change to include payment as a permissible
purpose is not warranted. A ``payment'' activity must relate to payment
for an individual and, thus, will need direct identifiers, and uses and
disclosures of protected health information for such purposes is
permitted under Sec. 164.506.
With respect to disclosures to journalists, while recognizing the
important role performed by newspapers and other media in reporting on
public health issues and the health care system, we disagree that the
purposes of the limited data set should be expanded to include
journalists. A key element of the limited data set is that the
recipient enter into a data use agreement that would limit access to
the limited data set, prohibit any attempt to identify or contact any
individual, and limit further use or disclosure of the limited data
set. These limitations are inherently at odds with journalists'
asserted need for access to patient information.
The suggestion to allow disclosure of a limited data set for any
purpose if there is a data use agreement would undermine the purpose of
the Privacy Rule to protect individually identifiable health
information from unauthorized disclosures and would conflict with the
requirement in the data use agreement to restrict further use to
research, public health, health care operations purposes. The
Department clarifies that research encompasses the establishment of
research databases and repositories. Therefore, no change to the
proposal is necessary.
Comment: One commenter said that HHS should not create a list of
excluded direct identifiers; rather it should enunciate principles and
leave it to researchers to apply the principles.
Response: The statistical method of de-identification is based on
scientific principles and methods and leaves the application to the
researcher and the covered entity. Unfortunately, many have viewed this
approach as too complex or imprecise for broad use. To allow broad
discretion in selection of variables in the creation of a limited data
set would trigger the same concerns as the statistical method, because
some measure of reasonableness would have to be established. Commenters
have consistently asked for precision so that they would not have to
worry as to whether they were in compliance with the requirements of
the Privacy Rule. The commenter's proposal runs counter to this desire
for precision.
Comment: One commenter wanted prescription numbers allowed in a
limited data set because they do not include any ``facially
identifiable information.''
Response: Prescription numbers are medical record numbers in that
they are used to track an individual's encounter with a health care
provider and are uniquely associated with that individual. The fact
that an individual receives a new prescription number for each
prescription, even if it is randomly generated, is analogous to an
individual receiving a separate medical record number for different
hospital visits. Thus, a prescription number is an excluded direct
identifier under the medical record number exclusion for the limited
data set (and also must be excluded in the creation of de-identified
data).
Comment: One commenter wanted clarification that a sponsor of a
multi-employer group health plan could utilize the limited data set
approach for the purpose of resolving claim appeals. That commenter
also suggested that if the only information that a plan sponsor
received was the limited data set, the group health plan should be able
to give that information to the plan sponsor without amending plan
documents. In lieu of the limited data set, this commenter wanted
clarification that redacted information, as delineated in their
comment, is a reasonable way to meet the minimum necessary standard if
the plan sponsor has certified that the plan documents have been
amended pursuant to the requirements of the Privacy Rule.
Response: Uses and disclosures of a limited data set is authorized
only for public health, research, and health care operations purposes.
A claims appeal is more likely to be a payment function, rather than a
health care operation. It is also likely to require use of protected
health information that includes direct identifiers. The Department
disagrees with the commenter's suggestions that the Rule should allow
group health plans to disclose a limited data set to a plan sponsor
without amending the plan documents to describe such disclosures.
Limited data sets are not de-identified information, and thus warrant
this degree of protection. Therefore, only summary health information
and the enrollment status of the individual can be disclosed by the
group health plan to the plan sponsor without amending the plan
documents. The Privacy Rule does not specify what particular data
elements constitute the minimum necessary for any particular purpose.
H. Section 164.520--Notice of Privacy Practices for Protected Health
Information
December 2000 Privacy Rule. The Privacy Rule at Sec. 164.520
requires most covered entities to provide individuals with adequate
notice of the uses and disclosures of protected health information that
may be made by the covered entity, and of the individual's rights and
the covered entity's responsibilities with respect to protected health
information. The Rule delineates specific requirements for the content
of the notice, as well as for provision of the notice. The requirements
for providing notice to individuals vary based on type of covered
entity and method of service delivery. For example, a covered health
care provider that has a direct treatment relationship with an
individual must provide the notice no later than the date of first
service delivery and, if the provider maintains a physical service
delivery site, must post the notice in a clear and prominent location
and have it available upon request for individuals to take with them.
If the first service delivery to an individual is electronic, the
covered provider must furnish electronic notice automatically and
contemporaneously in response to the individual's first request for
service. In addition, if a covered entity maintains a website, the
notice must be available electronically through the web site.
March 2002 NPRM. The Department proposed to modify the notice
requirements at Sec. 164.520(c)(2) to require that a covered health
care provider with a direct treatment relationship make a good faith
effort to obtain an individual's written acknowledgment of receipt of
the provider's notice of privacy practices. Other covered entities,
such as health plans, would not be required to obtain this
acknowledgment from individuals, but could do so if they chose.
The Department proposed to strengthen the notice requirements in
order to preserve a valuable aspect of the consent process. The notice
acknowledgment proposal was intended to create the ``initial moment''
between a covered health care provider and an individual, formerly a
result of the consent requirement, when individuals may focus on
information practices and privacy rights and discuss with the
[[Page 53239]]
provider any concerns related to the privacy of their protected health
information. This ``initial moment'' also would provide an opportunity
for an individual to make a request for additional restrictions on the
use or disclosure of his or her protected health information or for
additional confidential treatment of communications, as permitted under
Sec. 164.522.
With one exception for emergency treatment situations, the proposal
would require that the good faith effort to obtain the written
acknowledgment be made no later than the date of first service
delivery, including service delivered electronically. To address
potential operational difficulties with implementing these notice
requirements in emergency treatment situations, the Department proposed
in Sec. 164.520(c)(2) to delay the requirement for provision of notice
until reasonably practicable after the emergency treatment situation,
and exempt health care providers with a direct treatment relationship
with the individual from having to make a good faith effort to obtain
the acknowledgment altogether in such situations.
Other than requiring that the acknowledgment be in writing, the
proposal would not prescribe other details of the form of the
acknowledgment or limit the manner in which a covered health care
provider could obtain the acknowledgment.
The proposal also provided that, if the individual's acknowledgment
of receipt of the notice could not be obtained, the covered health care
provider would be required to document its good faith efforts to obtain
the acknowledgment and the reason why the acknowledgment was not
obtained. Failure by a covered entity to obtain an individual's
acknowledgment, assuming it otherwise documented its good faith effort,
would not be considered a violation of the Privacy Rule.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
In general, many commenters expressed support for the proposal to
require that certain health care providers, as an alternative to
obtaining prior consent, make a good faith effort to obtain a written
acknowledgment from the individual of receipt of the notice. Commenters
stated that even though the requirement would place some burden on
certain health care providers, the proposed policy was a reasonable and
workable alternative to the Rule's prior consent requirement. A number
of these commenters conveyed support for the proposed flexibility of
the requirement that would allow covered entities to implement the
requirement in accordance with their own practices. Commenters urged
that the Department not prescribe (other than that the acknowledgment
be in writing) the form or content of the acknowledgment, or other
requirements that would further burden the acknowledgment process. In
addition, commenters viewed the proposed exception for emergency
treatment situations as a practical policy.
A number of other commenters, while supportive of the Department's
proposal to make the obtaining of consent optional for all covered
entities, expressed concern over the administrative burden the proposed
notice acknowledgment requirements would impose on certain health care
providers. Some of these commenters viewed the notice acknowledgment as
an unnecessary burden on providers that would not afford individuals
with any additional privacy rights or protections. Thus, some
commenters urged that the good faith acknowledgment not be adopted in
the final Rule. As an alternative, it was suggested by some that
covered entities instead be required to make a good faith effort to
make the notice available to consumers.
Several commenters expressed concerns that the notice
acknowledgment process would reestablish some of the same operational
problems associated with the prior consent requirement. For example,
commenters questioned how the requirement should be implemented when
the provider's first contact with the patient is over the phone,
electronically, or otherwise not face-to-face, such as with
telemedecine. Accordingly, it was suggested that the good faith
acknowledgment of the notice be required no later than the date of
first face-to-face encounter with the patient rather than first service
delivery to eliminate these perceived problems.
A few others urged that the proposed notice acknowledgment
requirement be modified to allow for an individual's oral
acknowledgment of the notice, so long as the provider maintained a
record that the individual's acknowledgment was obtained.
Some commenters did not support the proposal's written notice
acknowledgment as a suitable alternative to the consent requirement,
stating that such a requirement would not provide individuals with
comparable privacy protections or rights. It was stated that there are
a number of fundamental differences between a consent and an
acknowledgment of the notice. For example, one commenter argued that
asking individuals to acknowledge receipt of the notice does not
provide a comparable ``initial moment'' between the provider and the
individual, especially when the individual is only asked to acknowledge
receipt of the notice, and not whether they have read or understood it,
or have questions. Further, commenters argued that the notice
acknowledgment process would not be the same as seeking the
individual's permission through a consent process. Some of these
commenters urged that the Department retain the consent requirements
and make appropriate modifications to fix the known operational
problems associated with the requirement.
A few commenters urged that the Department strengthen the notice
acknowledgment process. Some commenters suggested that the Department
do so by eliminating the ``good faith'' aspect of the standard and
simply requiring certain health care providers to obtain the written
acknowledgment, with appropriate exceptions for emergencies and other
situations where it may not be practical to do so. It was also
suggested that the Department require providers to ensure that the
consumer has an understanding of the information provided in the
notice. One commenter suggested that this may be achieved by having
individuals not only indicate whether they have received the notice,
but also be asked on separate lines after each section of the notice
whether they have read that section. Another commenter argued that
consumers should be asked to sign something more meaningful than a
notice acknowledgment, such as a ``Summary of Consumer Rights,'' which
clearly and briefly summarizes the ways in which their information may
be used by covered entities, as well as the key rights consumers have
under the Privacy Rule.
Final Modifications. After consideration of the public comment, the
Department adopts in this final Rule at Sec. 164.520(c)(2)(ii), the
proposed requirement that a covered health care provider with a direct
treatment relationship with an individual make a good faith effort to
obtain the individual's written acknowledgment of receipt of the
notice. Other covered entities, such as health plans, are not required
to obtain this acknowledgment from individuals, but may do so if they
choose. The Department agrees with
[[Page 53240]]
those commenters who stated that the notice acknowledgment process is a
workable alternative to the prior consent process, retaining the
beneficial aspects of the consent without impeding timely access to
quality health care. The Department continues to believe strongly that
promoting individuals' understanding of privacy practices is an
essential component of providing notice to individuals. Through this
requirement, the Department facilitates achieving this goal by
retaining the opportunity for individuals to discuss privacy practices
and concerns with their health care providers. Additionally, the
requirement provides individuals with an opportunity to request any
additional restrictions on uses and disclosures of their health
information or confidential communications, as permitted by
Sec. 164.522.
As proposed in the NPRM, the final Rule requires, with one
exception, that a covered direct treatment provider make a good faith
effort to obtain the written acknowledgment no later than the date of
first service delivery, including service delivered electronically,
that is, at the time the notice is required to be provided. During
emergency treatment situations, the final Rule at
Sec. 164.520(c)(2)(i)(B) delays the requirement for provision of the
notice until reasonably practicable after the emergency situation, and
at Sec. 164.520(c)(2)(ii) exempts health care providers from having to
make a good faith effort to obtain an individual's acknowledgment in
such emergency situations. The Department agrees with commenters that
such exceptions are practical and necessary to ensure that the notice
and acknowledgment requirements do not impede an individual's timely
access to quality health care.
The Department also agrees with commenters that the notice
acknowledgment process must be flexible and provide covered entities
with discretion in order to be workable. Therefore, the final
modification adopts the flexibility proposed in the NPRM for the
acknowledgment requirement. The Rule requires only that the
acknowledgment be in writing, and does not prescribe other details such
as the form that the acknowledgment must take or the process for
obtaining the acknowledgment. For example, the final Rule does not
require an individual's signature to be on the notice. Instead, a
covered health provider is permitted, for example, to have the
individual sign a separate sheet or list, or to simply initial a cover
sheet of the notice to be retained by the provider. Alternatively, a
pharmacist is permitted to have the individual sign or initial an
acknowledgment within the log book that patients already sign when they
pick up prescriptions, so long as the individual is clearly informed on
the log book of what they are acknowledging and the acknowledgment is
not also used as a waiver or permission for something else (such as a
waiver to consult with the pharmacist). For notice that is delivered
electronically as part of first service delivery, the Department
believes the provider's system should be capable of capturing the
individual's acknowledgment of receipt electronically. In addition,
those covered health care providers that choose to obtain consent from
an individual may design one form that includes both a consent and the
acknowledgment of receipt of the notice. Covered health care providers
are provided discretion to design the acknowledgment process best
suited to their practices.
While the Department believes that the notice acknowledgment
process must remain flexible, the Department does not consider oral
acknowledgment by the individual to be either a meaningful or
appropriate manner by which a covered health care provider may
implement these provisions. The notice acknowledgment process is
intended to provide a formal opportunity for the individual to engage
in a discussion with a health care provider about privacy. At the very
least, the process is intended to draw the individual's attention to
the importance of the notice. The Department believes these goals are
better accomplished by requiring a written acknowledgment and,
therefore, adopts such provision in this final modification.
Under the final modification, if an individual refuses to sign or
otherwise fails to provide an acknowledgment, a covered health care
provider is required to document its good faith efforts to obtain the
acknowledgment and the reason why the acknowledgment was not obtained.
Failure by a covered entity to obtain an individual's acknowledgment,
assuming it otherwise documented its good faith effort, is not a
violation of this Rule. Such reason for failure simply may be, for
example, that the individual refused to sign the acknowledgment after
being requested to do so. This provision also is intended to allow
covered health care providers flexibility to deal with a variety of
circumstances in which obtaining an acknowledgment is problematic. In
response to commenters requests for examples of good faith efforts, the
Department intends to provide future guidance on this and other
modifications.
A covered entity is required by Sec. 164.530(j) to document
compliance with these provisions by retaining copies of any written
acknowledgments of receipt of the notice or, if not obtained,
documentation of its good faith efforts to obtain such written
acknowledgment.
The Department was not persuaded by those commenters who urged that
the Department eliminate the proposed notice acknowledgment
requirements because of concerns about burden. The Department believes
that the final modification is simple and flexible enough so as not to
impose a significant burden on covered health care providers. Covered
entities are provided much discretion to design the notice
acknowledgment process that works best for their business. Further, as
described above, the Department believes that the notice acknowledgment
requirements are important in that they retain the important aspects of
the prior consent process that otherwise would be lost in the final
modifications.
In response to commenters' operational concerns about the proposed
notice acknowledgment requirements, the Department clarifies that the
modification as proposed and now adopted as final is intended to be
flexible enough to address the various types of relationships that
covered health care providers may have with the individuals to whom
they provide treatment, including those treatment situations that are
not face-to-face. For example, a health care provider whose first
treatment encounter with a patient is over the phone satisfies the
notice provision requirements of the Rule by mailing the notice to the
individual no later than the day of that service delivery. To satisfy
the requirement that the provider also make a good faith effort to
obtain the individual's acknowledgment of the notice, the provider may
include a tear-off sheet or other document with the notice that
requests such acknowledgment be mailed back to the provider. The
Department would not consider the health care provider in violation of
the Rule if the individual chooses not to mail back an acknowledgment.
The Department clarifies, however, that where a health care provider's
initial contact with the patient is simply to schedule an appointment,
the notice provision and acknowledgment requirements may be satisfied
at the time the individual arrives at the provider's facility for his
or her
[[Page 53241]]
appointment. For service provided electronically, the Department
believes that, just as a notice may be delivered electronically, a
provider should be capable of capturing the individual's acknowledgment
of receipt electronically in response to that transmission.
Finally, the Department does not agree with those commenters who
argued that the proposed notice acknowledgment requirements are not an
adequate alternative to the prior consent requirements, nor with those
who argued that the proposed acknowledgment process should be
strengthened if an individual's consent is no longer required. The
Department believes that the notice acknowledgment process retains the
important aspects of the consent process, such as creating an
opportunity for a discussion between the individual and the provider of
privacy issues, including the opportunity for the individual to request
restrictions on how her information may be used and disclosed as
permitted by Sec. 164.522.
Additionally, the Department believes that requiring certain health
care providers to obtain the individual's acknowledgment of receipt of
the notice, rather than make a good faith effort to do so, would remove
the flexibility of the standard and increase the burden substantially
on covered entities. Such a modification, therefore, would have the
potential to cause workability and operational problems similar to
those caused by the prior consent requirements. Prescribing the form or
content of the acknowledgment could have the same effect. The
Department believes that the notice acknowledgment process must not
negatively impact timely access to quality health care.
Also, the Department agrees that it will not be easy for every
individual to understand fully the information in the notice, and
acknowledges that the onus of ensuring that individuals have an
understanding of the notice should not be placed solely on health care
providers. The Rule ensures that individuals are provided with a notice
in plain language but leaves it to each individual's discretion to
review the notice and to initiate a discussion with the covered entity
about the use and disclosure of his or her health information or the
individual's rights. However, the Department continues to believe
strongly that promoting individuals' understanding of privacy practices
is an essential component of providing notice to individuals. The
Department anticipates that many stakeholders, including the
Department, covered entities, consumer organizations, health educators,
the mass media and journalists, and a host of other organizations and
individuals, will be involved in educating individuals about privacy
notices and practices.
Response to Other Public Comments
Comment: Several commenters requested clarification as to whether a
health care provider is required to obtain from individuals a new
acknowledgment of receipt of the notice if the facility changes its
privacy policy.
Response: The Department clarifies that this is not required. To
minimize burden on the covered direct treatment provider, the final
modification intends the obtaining of the individual's acknowledgment
to be consistent with the timing for provision of the notice to the
individual, that is, no later than the date of first service delivery.
Upon revision of the notice, the Privacy Rule requires only that the
direct treatment provider make the notice available upon request on or
after the effective date of the revision, and, if he maintains a
physical service delivery site, to post the revised notice in a clear
and prominent location in his facility. See Sec. 164.520(c)(2)(iii). As
the Rule does not require a health care provider to provide the revised
notice directly to the individual, unless requested by the individual,
a new written acknowledgment is not required at the time of revision of
the notice.
Comment: A few commenters requested clarification as to how the
Department intended the notice acknowledgment process to be implemented
within an affiliated covered entity or an organized health care
arrangement (OHCA).
Response: The requirement for an individual's written
acknowledgment of the notice corresponds with the requirement that the
notice be provided to the individual by certain health care providers
at first service delivery, regardless of whether the notice itself is
the joint notice of an OHCA, the notice of an affiliated covered
entity, or the notice of one entity. With respect to an OHCA, the
Privacy Rule permits covered entities that participate in an OHCA to
satisfy the notice requirements through the use of a joint notice,
provided that the relevant conditions of Sec. 164.520(d) are met.
Section 164.520(d)(3) further provides that provision of a joint notice
to an individual by any one of the covered entities included in the
joint notice satisfies the notice provision requirements at
Sec. 164.520(c) with respect to all others covered by the joint notice.
Thus, a health care provider with a direct treatment relationship with
an individual that is participating in an OHCA only need make a good
faith effort to obtain the individual's acknowledgment of the joint
notice if that provider is the covered entity within the OHCA that is
providing the joint notice to the individual. Where the joint notice is
provided to the individual by a participating covered entity other than
a provider with a direct treatment relationship with the individual, no
acknowledgment need be obtained. However, covered entities that
participate in an OHCA are not required to utilize a joint notice and
may maintain separate notices. In such case, each covered health care
provider with a direct treatment relationship within the OHCA must make
a good faith effort to obtain the individual's acknowledgment of the
notice he or she provides.
Similarly, an affiliated covered entity may have one single notice
that covers all of its affiliates. Thus, if the affiliated covered
entity's notice is provided to the individual by a health care provider
with which the individual has a direct treatment relationship, the
health care provider must make a good faith effort to obtain the
individual's acknowledgment of receipt of the notice. Alternatively,
where the affiliated entity's notice is provided to the individual by a
participating entity other than a provider with a direct treatment
relationship with the individual, no acknowledgment need be obtained.
However, as with the OHCA, the Department clarifies that covered
entities that are part of an affiliated covered entity may maintain
separate notices if they choose to do so; if they do so, each provider
with a direct treatment relationship with the individual must make a
good faith effort to obtain the individual's acknowledgment of the
notice he or she provides.
Comment: It was suggested that if a provider chooses to obtain
consent, the provider should not also be required to obtain the
individual's acknowledgment of the notice.
Response: For those covered entities that choose to obtain consent,
the Rule does not prescribe any details of the form or manner in which
the consent must be obtained. Given this discretion, the Department
does not believe that all consents will provide the same benefits to
the individual as those afforded by the notice acknowledgment process.
The Rule, therefore, does not relieve a covered health care provider of
his obligations with respect to obtaining an individual's
acknowledgment of the
[[Page 53242]]
notice if that provider also obtains the individual's consent. However,
the Rule provides those covered health care providers that choose to
obtain consent from an individual the discretion to design one form
that includes both a consent and the acknowledgment of receipt of the
notice.
Comment: Some commenters asked that the Privacy Rule allow the
written acknowledgment of the notice to be obtained electronically
without regard to channel of delivery (electronically or on paper) of
the notice.
Response: Generally, the Privacy Rule allows for electronic
documents to qualify as written documents for purposes of meeting the
Rule's requirements. This also applies with respect to the notice
acknowledgment. For notice delivered electronically, the Department
intends a return receipt or other transmission from the individual to
suffice as the notice acknowledgment.
For notice delivered on paper in a face-to-face encounter with the
provider, although it is unclear to the Department how exactly the
provider may do so, the Rule does not preclude providers from obtaining
the individual's written acknowledgment electronically. The Department
cautions, however, that the notice acknowledgment process is intended
to alert individuals to the importance of the notice and provide them
the opportunity to discuss privacy issues with their providers. To
ensure that individuals are aware of the importance of the notice, the
Rule requires that the individual's acknowledgment be in writing. Thus,
the Department would not consider a receptionist's notation in a
computer system to be an individual's written acknowledgment.
Comment: One commenter expressed concern that the Rule did not
define ``emergency'' as it applies to ambulance services given the
Rule's exceptions to the notice requirements for such situations. This
commenter also urged that the Rule's notice provisions at
Sec. 164.520(c)(2) with respect to emergency treatment situations be
expanded also to apply to non-emergency trips of ambulance providers.
The commenter explained that even in non-emergency circumstances,
patients, especially the elderly, often suffer from incapacitating or
stressful conditions when they need to be transferred by ambulance, at
which time it may not be effective or appropriate to provide the notice
and obtain the individual's acknowledgment of receipt of the notice.
Response: During emergency treatment situations, the final Rule at
Sec. 164.520(c)(2)(i)(B) delays the requirement for provision of the
notice until reasonably practicable after the emergency situation, and
exempts health care providers from having to make a good faith effort
to obtain an individual's acknowledgment. As the provisions are not
intended to apply only to ambulance providers, the Department does not
believe that defining emergency with respect to such providers is
appropriate or necessary. Nor does the Department believe that
expanding these provisions to cover non-emergency trips of ambulance
providers is appropriate. The provisions are intended to provide
exceptions for those situations where providing the notice and
obtaining an individual's acknowledgment may not be feasible or
practicable. Where such extenuating circumstances do not exist, the
Department expects that covered health care providers are able to
provide individuals with a notice and make a good faith effort to
obtain their acknowledgment of receipt. Where an individual does not
provide an acknowledgment, the Rule requires only that the provider
document his good faith effort to obtain the acknowledgment.
Comment: A number of commenters requested clarification on how to
implement the ``good faith'' standard and urged the Department to
provide more specific guidance and examples. Some commenters expressed
concern over the perceived liability that would arise from such a
discretionary standard.
Response: Covered entities are provided much discretion to
implement the notice acknowledgment process as best suited to their
specific business practices. The standard is designed as a ``good faith
effort'' standard because the Department understands that obtaining an
individual's acknowledgment of the notice may not always be feasible or
practical, in spite of a covered entity's efforts. Thus, the standard
is intended to account for those difficult situations, including where
an individual simply refuses to provide the written acknowledgment.
Given the discretion covered health care providers have in implementing
these standards and the various ways such providers interact with their
patients, it is difficult for the Department to provide specific
guidance in this area that is generally applicable to many covered
health care providers. However, the Department intends to provide
future guidance through frequently asked questions or other materials
in response to specific scenarios that are raised by industry.
With respect to commenters' concerns regarding potential liability,
the Department's position is that a failure by a covered entity to
obtain an individual's acknowledgment, assuming it otherwise documented
its good faith effort (as required by Sec. 164.520(c)(2)(ii)), will not
be considered a violation of this Rule.
Comment: Many commenters generally urged that the Department modify
the Rule to allow for a simpler, shorter, and, therefore, more readable
notice. Some of the commenters explained that a shorter notice would
assure that more individuals would take the time to read and be able to
understand the information. Others suggested that a shorter notice
would help to alleviate burden on the covered entity. A number of these
commenters suggested that the Department allow for a shorter summary or
1-page notice to replace the prescriptive notice required by the
Privacy Rule. It was recommended that such a notice could refer
individuals to a more detailed notice, available on request, or to an
HHS web site, for additional information about an individual's rights
under the Privacy Rule. Others recommended that the Department allow
for a layered notice that contains: (1) A short notice that briefly
describes, for example, the entity's principal uses and disclosures of
an individual's health information, as well as the individual's rights
with respect to that information; and (2) a longer notice, layered
beneath the short notice, that contains all the elements required by
the Rule.
Certain other commenters urged that one way to make the notice
shorter, as well as to alleviate burden on the covered entity, would be
to eliminate the requirement that the notice explain the more stringent
State privacy laws. Commenters stated that companies that operate in
multiple States will have to develop and print up to 50 different
notices, and then update and reissue those notices whenever a material
change is made to the State law. These commenters recommended instead
that the notice simply state that State law may provide additional
protections.
A few commenters urged that the Department provide a model notice
that covered entities could use in their implementation efforts.
Response: The Department does not modify the notice content
provisions at Sec. 164.520(b). The Department believes that the
elements required by Sec. 164.520(b) are important to fully inform the
individual of the covered entity's privacy practices, as well as his or
her rights. However, the Department agrees that such information must
be provided in a clear, concise, and easy to
[[Page 53243]]
understand manner. Therefore, the Department clarifies that covered
entities may utilize a ``layered notice'' to implement the Rule's
provisions, so long as the elements required by Sec. 164.520(b) are
included in the document that is provided to the individual. For
example, a covered entity may satisfy the notice provisions by
providing the individual with both a short notice that briefly
summarizes the individual's rights, as well as other information; and a
longer notice, layered beneath the short notice, that contains all the
elements required by the Privacy Rule. Covered entities, however, while
encouraged to use a layered notice, are not required to do so. Nothing
in the final modifications relieve a covered entity of its duty to
provide the entire notice in plain language so the average reader can
understand it. See Sec. 164.520(b)(1).
In response to comments regarding a model notice, it would be
difficult for the Department to develop a document that would be
generally useful to many different types of covered entities. A covered
entity's notice must reflect in sufficient detail the particular uses
and disclosures that entity may make. Such uses and disclosures likely
will be very different for each type of covered entity. Thus, a
uniform, model notice could not capture the wide variation in
information practices across covered entities. The Department intends,
however, to issue further general guidance to help covered entities
implement the notice provisions of the Rule.
Comment: A number of commenters also requested that the Department
lessen the burden associated with distributing the notice. For example,
some commenters asked that covered entities be permitted to satisfy the
notice provision requirements by posting the notice at the facility or
on a web site and by providing a copy only to those consumers who
request one, or by placing copies on display where an interested
consumer may take one.
Response: The Department's position that making the notice
available to individuals, either on request, by posting it at a
facility or on a web site, or by placing copies on display, does not
substitute for physically providing the notice directly to individuals.
Adequate notice of privacy practices is a fundamental right afforded
individuals by the Rule. As such, the Department does not believe that
the burden of obtaining such information should be placed on the
individual. Covered entities are required to distribute the notice in
the manner described under Sec. 164.520(c).
Comment: A few commenters requested that the Department make clear
that no special mailings are required to provide individuals with a
covered entity's notice; rather, that the notice may be distributed as
part of other mailings or distributions by the covered entity. For
example, one commenter argued that the Rule should be flexible enough
to allow for notices to be included in a health plan's Summary Plan
Descriptions, Booklets, or an Enrollment Application. It was argued
that the notice would receive greater attention, be more carefully
reviewed and, thus, better understood if it were published in materials
known to be widely read by members.
Response: The Department clarifies that no special or separate
mailings are required to satisfy the notice distribution requirements.
The Privacy Rule provides covered entities with discretion in this
area. A health plan distributing its notice through the mail, in
accordance with Sec. 164.520(c)(1), may do so as part of another
mailing to the individual. In addition, a covered entity that provides
its notice to an individual by e-mail, in accordance with
Sec. 164.520(c)(3), may include additional materials in the e-mail. No
separate e-mail is required. However, the Privacy Rule at
Sec. 164.508(b)(3) continues to prohibit a covered entity from
combining the notice in a single document with an authorization.
Comment: Commenters also urged that the Rule permit, for group
products, a health plan to send its notice to the administrator of the
group product or the plan sponsor, who would then be responsible for
distributing the notice to each enrollee/employee. One commenter
claimed this distribution method is especially appropriate where there
is no regular communication with the covered individuals, as in an
employer-pay-all group medical or dental plan. According to the
commenter, providing the notice to the employer makes sense because the
employer picks the plan and should be aware of the plan's privacy
practices when doing so.
Response: The Privacy Rule requires a health plan to distribute its
notice to each individual covered by the plan. Health plans may arrange
to have another entity, or person, for example, a group administrator
or a plan sponsor, distribute the notice on their behalf. However, the
Department cautions that if such other entity or person fails to
distribute the notice to individuals, the health plan would be in
violation of the Rule.
Comment: Another commenter asked that the Department eliminate the
requirement that a covered entity must provide the notice to every
dependent, rather than just the head of the household. This commenter
argued that while it makes sense to provide the notice to an
emancipated minor or to a minor who pursuant to State law has consented
to treatment, it does not make sense to send the notice to a 2-year old
child.
Response: The Privacy Rule provides that a health plan may satisfy
the notice provision requirements by distributing the notice to the
named insured of a policy under which coverage is provided to the named
insured and one or more dependents. A health plan is not required to
distribute the notice to each dependent. See Sec. 164.520(c)(1)(iii).
Further, a covered health care provider with a direct treatment
relationship with the individual is required only to provide the notice
to the individual receiving treatment at first service delivery. Where
a parent brings a 2-year old child in for treatment, the provider
satisfies the notice distribution requirements by providing the notice
only to the child's parent.
I. Section 164.528--Accounting of Disclosures of Protected Health
Information
December 2000 Privacy Rule. Under the Privacy Rule at Sec. 164.528,
individuals have the right to receive an accounting of disclosures of
protected health information made by the covered entity, with certain
exceptions. These exceptions, or instances where a covered entity is
not required to account for disclosures, include disclosures made by
the covered entity to carry out treatment, payment, or health care
operations, as well as disclosures to individuals of protected health
information about them. The individual must request an accounting of
disclosures.
The accounting is required to include the following: (1)
Disclosures of protected health information that occurred during the
six years prior to the date of the request for an accounting; and (2)
for each disclosure: the date of the disclosure; the name of the entity
or person who received the protected health information, and, if known,
the address of such entity or person; a brief description of the
protected health information disclosed; and a brief statement of the
purpose of the disclosure that reasonably informs the individual of the
basis for the disclosure, or in lieu of such a statement, a copy of the
individual's written authorization pursuant to Sec. 164.508 or a copy
of a written request
[[Page 53244]]
for a disclosure under Secs. 164.502(a)(2)(ii) or 164.512. For multiple
disclosures of protected health information to the same person, the
Privacy Rule allows covered entities to provide individuals with an
accounting that contains only the following information: (1) For the
first disclosure, a full accounting, with the elements described above;
(2) the frequency, periodicity, or number of disclosures made during
the accounting period; and (3) the date of the last such disclosure
made during the accounting period.
March 2002 NPRM. In response to concerns about the high costs and
administrative burdens associated with the requirement to account to
individuals for the covered entity's disclosure of protected health
information, the Department proposed to expand the exceptions to the
standard at Sec. 164.528(a)(1) to include disclosures made pursuant to
an authorization as provided in Sec. 164.508. Covered entities would no
longer be required to account for any disclosures authorized by the
individual in accordance with Sec. 164.508. The Department proposed to
alleviate burden in this way because, like disclosures of protected
health information made directly to the individual--which are already
excluded from the accounting provisions in Sec. 164.528(a)(1)--
disclosures made pursuant to an authorization are also known by the
individual, in as much as the individual was required to sign the forms
authorizing the disclosures.
In addition to the exception language at Sec. 164.528(a)(1), the
Department proposed two conforming amendments at
Secs. 164.528(b)(2)(iv) and (b)(3) to delete references in the
accounting content requirements to disclosures made pursuant to an
authorization.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
The majority of comments on the accounting proposal supported the
elimination of the accounting for authorized disclosures. The
commenters agreed that, on balance, since the individual had elected to
authorize the disclosure in the first instance, and that election was
fully informed and voluntary, subsequently accounting for the
disclosure made pursuant to that authorization was not necessary.
Many of the commenters went on to suggest other ways in which the
accounting requirement could be made less burdensome. For example,
several commenters wanted some or all of the disclosures which are
permitted at Sec. 164.512 without individual consent or authorization
to also be exempt from the accounting requirements. Others proposed
alternative means of accounting for disclosures for research,
particularly when such disclosures involve large numbers of records.
These commenters argued that accounting for each individual record
disclosed for a large research project would be burdensome and may
deter covered entities from participating in such research. Rather than
an individual accounting, the commenters suggested that the covered
entity be required only to disclose a listing of all relevant protocols
under which an individual's information may have been released during
the accounting period, the timeframes during which disclosures were
made under a protocol, and the name of the institution and researcher
or investigator responsible for the protocol, together with contact
information for the researcher. The National Committee on Vital Health
Statistics, while not endorsing a protocol listing directly,
recommended the Department consider alternatives to minimize the burden
of the accounting requirements on research.
Finally, several commenters objected to the elimination of the
accounting requirement for authorized disclosures. Some of these
commenters expressed concern that the proposal would eliminate the
requirement to account for the authorized disclosure of psychotherapy
notes. Others were primarily concerned that the proposal would weaken
the accounting rights of individuals. According to these commenters,
informing the individual of disclosures was only part of the purpose of
an accounting. Even with regard to authorized disclosures, an
accounting could be important to verify that disclosures were in accord
with the scope and purpose as stated in the authorization and to detect
potentially fraudulent, altered, or otherwise improperly accepted
authorizations. Since authorizations had to be maintained in any event,
accounting for these disclosures represented minimal work for the
covered entity.
Final Modifications. Based on the general support in the public
comment, the Department adopts the modification to eliminate the
accounting requirement for authorized disclosures. The authorization
process itself adequately protects individual privacy by assuring that
the individual's permission is given both knowingly and voluntarily.
The Department agrees with the majority of commenters that felt
accounting for authorized disclosures did not serve to add to the
individual's knowledge about disclosures of protected health
information. The Department does recognize the role of accounting
requirements in the detection of altered or fraudulent authorizations.
However, the Department considers the incidence of these types of
abuses, and the likelihood of their detection through a request for an
accounting, to be too remote to warrant the burden on all covered
entities of including authorized disclosures in an accounting. As noted
by some commenters, the covered entity must retain a copy of the
authorization to document their disclosure of protected health
information and that documentation would be available to help resolve
an individual's complaint to either the covered entity or the
Secretary.
Specific concern about the elimination of the accounting
requirement for authorized disclosures was expressed by mental health
professionals, who believed their patients should always have the right
to monitor access to their personal information. The Department
appreciates theses commenters' concern about the need for heightened
protections and accountability with regard to psychotherapy notes. It
is because of these concerns that the Rule requires, with limited
exceptions, individual authorization for even routine uses and
disclosures of psychotherapy notes by anyone other than the originator
of the notes. The Department clarifies that nothing in modifications
adopted in this rulemaking prevents a mental health professional from
including authorized disclosures of psychotherapy notes in an
accounting requested by their patients. Indeed, any covered entity may
account to the individual for disclosures based on the individual's
authorization. The modification adopted by the Department simply no
longer requires such an accounting.
In response to comment on this proposal, as well as on the
proposals to permit incidental disclosures and disclosures of protected
health information, other than direct identifiers, as part of a limited
data set, the Department has added two additional exclusions to the
accounting requirements. Disclosures that are part of a limited data
set and disclosures that are merely incidental to another permissible
use or disclosure will not require an accounting. The limited data set
does not contain any protected health information that directly
identifies the individual and the individual is further protected from
identification by the required data use
[[Page 53245]]
agreement. The Department believes that accounting for these
disclosures would be too burdensome. Similarly, the Department believes
that it is impracticable to account for incidental disclosures, which
by their very nature, may be uncertain or unknown to the covered entity
at the time they occur. Incidental disclosures are permitted as long as
reasonable safeguards and minimum necessary standards have been
observed for the underlying communication. Moreover, incidental
disclosures may most often happen in the context of a communication
that relates to treatment or health care operations. In that case, the
underlying disclosure is not subject to an accounting and it would be
arbitrary to require an accounting for a disclosure that was merely
incidental to such a communication.
The Department however disagrees with commenters who requested that
other public purpose disclosures not be subject to the accounting
requirement. Although the Rule permits disclosure for a variety of
public purposes, they are not routine disclosures of the individual's
information. The accounting requirement was designed as a means for the
individual to find out the non-routine purposes for which his or her
protected health information was disclosed by the covered entity, so as
to increase the individual's awareness of persons or entities other
than the individual's health care provider or health plan in possession
of this information. To eliminate some or all of these public purposes
would defeat the core purpose of the accounting requirement.
The Department disagrees with commenters' proposal to exempt all
research disclosures made pursuant to a waiver of authorization from
the accounting requirement. Individuals have a right to know what
information about them has been disclosed without their authorization,
and for what purpose(s). However, the Department agrees that the Rule's
accounting requirements could have the undesired effect of causing
covered entities to halt disclosures of protected health information
for research. Therefore, the Department adopts commenters' proposal to
revise the accounting requirement at Sec. 164.528 to permit covered
entities to meet the requirement for research disclosures if they
provide individuals with a list of all protocols for which the
patient's protected health information may have been disclosed for
research pursuant to a waiver of authorization under Sec. 164.512(i),
as well as the researcher's name and contact information. The
Department agrees with commenters that this option struck the
appropriate balance between affirming individuals' right to know how
information about them is disclosed, and ensuring that important
research is not halted.
The Department considered and rejected a similar proposal by
commenters when it adopted the Privacy Rule in December 2000. While
recognizing the potential burden for research, the Department
determined that the individual was entitled to the same level of
specificity in an accounting for research disclosures as any other
disclosure. At that time, however, the Department added the summary
accounting procedures at Sec. 164.528(b)(3) to address the burden
issues of researchers and others in accounting for multiple disclosures
to the same entity. In response to the Department's most recent request
for comments, researchers and others explained that the summary
accounting procedures do not address the burden of having to account
for disclosures for research permitted by Sec. 164.512(i). These
research projects usually involve many records. It is the volume of
records for each disclosure, not the repeated nature of the
disclosures, that presents an administrative obstacle for research if
each record must be individually tracked for the accounting. Similarly,
the summary accounting procedures do not relieve the burden for covered
entities that participate in many different studies on a routine basis.
The Department, therefore, reconsidered the proposal to account for
large research projects by providing a list of protocols in light of
these comments.
Specifically, the Department adds a paragraph (4) to
Sec. 164.528(b) to provide for simplified accounting for research
disclosures as follows:
(1) The research disclosure must be pursuant to Sec. 164.512(i) and
involve at least 50 records. Thus, the simplified accounting procedures
may be used for research disclosures based on an IRB or Privacy Board
waiver of individual authorization, the provision of access to the
researcher to protected health information for purposes preparatory to
research, or for research using only records of deceased individuals.
The large number of records likely to be disclosed for these research
purposes justifies the need for the simplified accounting procedures.
The Department has determined that a research request for 50 or more
records warrants use of these special procedures.
(2) For research protocols for which the individual's protected
health information may have been disclosed during the accounting
period, the accounting must include the name of the study or protocol,
a description of the purpose of the study and the type of protected
health information sought, and the timeframe of disclosures in response
to the request.
(3) When requested by the individual, the covered entity must
provide assistance in contacting those researchers to whom it is likely
that the individual's protected health information was actually
disclosed.
Support for streamlining accounting for research disclosures came
in comments and from NCVHS. The Department wants to encourage research
and believes protections afforded information in hands of researcher,
particularly research overseen by IRB or Privacy Board, provides
assurance of continued confidentiality of information. The Department
does not agree that the individual has no need to know that his or her
information has been disclosed for a research purpose. Covered
entities, of course, may account for research disclosures in the same
manner as all other disclosures. Even when the covered entity elects to
use the alternative of a protocol listing, the Department encourages
covered entities to provide individuals with disclosure of the specific
research study or protocol for which their protected health information
was disclosed, and other specific information relating to such actual
disclosures if they so choose. If the covered entity lists all
protocols for which the individual's information may have been
disclosed, the Department would further encourage that the covered
entity list under separate headings, or on separate lists, all
protocols relating to particular health issues or conditions, so that
individuals may more readily identify the specific studies for which
their protected health information is more likely to have been
disclosed.
The Department intends to monitor the simplified accounting
procedures for certain research disclosures to determine if they are
effective in providing meaningful information to individuals about how
their protected health information is disclosed for research purposes,
while still reducing the administrative burden on covered entities
participating in such research efforts. The Department may make
adjustments to the accounting procedures for research in the future as
necessary to ensure both goals are fully met.
Response to Other Public Comments
Comment: A few commenters opposed the proposal to eliminate the
accounting requirement for all
[[Page 53246]]
authorized disclosures arguing that, absent a full accounting, the
individual cannot meaningfully exercise the right to amend or to revoke
the authorization. Others also felt that a comprehensive right to an
accounting, with no exceptions, was better from an oversight and
enforcement standpoint as it encouraged consistent documentation of
disclosures. One commenter also pointed to an example of the potential
for fraudulent authorizations by citing press accounts of a chain drug
store that allegedly took customers signatures from a log that waived
their right to consult with the pharmacist and attached those
signatures to a form authorizing the receipt of marketing materials.
Under the proposal, the commenter asserted, the chain drug store would
not have to include such fraudulent authorizations as part of an
accounting to the individual.
Response: The Department does not agree that the individual's right
to amendment is materially affected by the accounting requirements for
authorized disclosures. The covered entity that created the protected
health information contained in a designated record set has the primary
obligation to the individual to amend any erroneous or incomplete
information. The individual does not necessarily have a right to amend
information that is maintained by other entities that the individual
has authorized to have his or her protected health information.
Furthermore, the covered entity that has amended its own designated
record set at the request of the individual is obligated to make
reasonable efforts to notify other persons, including business
associates, that are known to have the protected health information
that was the subject of the amendment and that may rely on such
information to the detriment of the individual. This obligation would
arise with regard to persons to whom protected health information was
disclosed with the individual's authorization. Therefore, the
individual's amendment rights are not adversely affected by the
modifications to the accounting requirements. Furthermore, nothing in
the modification adversely affects the individual's right to revoke the
authorization.
The Department agrees that oversight is facilitated by consistent
documentation of disclosures. However, the Department must balance its
oversight functions with the burden on entities to track all
disclosures regardless of purpose. Based on this balancing, the
Department has exempted routine disclosures, such as those for
treatment, payment, and health care operations, and others for security
reasons. The addition of authorized disclosures to the exemption from
the accounting does not materially affect the Department's oversight
function. Compliance with the Rule's authorization requirements can
still be effectively monitored because covered entities are required to
maintain signed authorizations as documentation of disclosures.
Therefore, the Department believes that effective oversight, not the
happenstance of discovery by an individual through the accounting
requirement, is the best means to detect and prevent serious misdeeds
such as those alleged in fraudulent authorizations.
Comment: A number of commenters recommended other types of
disclosures for exemption from the accounting requirement. Many
recommended elimination of the accounting requirement for public health
disclosures arguing that the burden of the requirement may deter
entities from making such disclosures and that because many are made
directly to public health authorities by doctors and nurses, rather
than from a central records component of the entity, public health
disclosures are particularly difficult to track and document. Others
suggested exempting from an accounting requirement any disclosure
required by another law on the grounds that neither the individual nor
the entity has any choice about such required disclosures. Still others
wanted all disclosures to a governmental entity exempted as many such
disclosures are required and often reports are routine or require lots
of data. Some wanted disclosures to law enforcement or to insurers for
claims investigations exempted from the accounting requirement to
prevent interference with such investigatory efforts. Finally, a few
commenters suggested that all of the disclosures permitted or required
by the Privacy Rule should be excluded from the accounting requirement.
Response: Elimination of an accounting requirement for authorized
disclosures is justified in large part by the individual's knowledge of
and voluntary agreement to such disclosures. None of the above
suggestions for exemption of other permitted disclosures can be
similarly justified. The right to an accounting of disclosures serves
an important function in informing the individual as to which
information was sent to which recipients. While it is possible that
informing individuals about the disclosures of their health information
may on occasion discourage some worthwhile activity, the Department
believes that the individual's right to know who is using their
information and for what purposes takes precedence.
Comment: One commenter sought an exemption from the accounting
requirement for disclosures to adult protective services when referrals
are made for abuse, neglect, or domestic violence victims. For the same
reasons that the Rule permits waiver of notification to the victim at
the time of the referral based on considerations of the victim's
safety, the regulation should not make such disclosures known after the
fact through the accounting requirement.
Response: The Department appreciates the concerns expressed by the
commenter for the safety and welfare of the victims of abuse, neglect,
or domestic violence. In recognition of these concerns, the Department
does give the covered entity discretion in notifying the victim and/or
the individual's personal representative at the time of the disclosure.
These concerns become more attenuated in the context of an accounting
for disclosures, which must be requested by the individual and for
which the covered entity has a longer timeframe to respond. Concern for
the safety of victims of abuse or domestic violence should not result
in stripping these individuals of the rights granted to others. If the
individual is requesting the accounting, even after being warned of the
potential dangers, the covered entity should honor that request.
However, if the request is by the individual's personal representative
and the covered entity has a reasonable belief that such person is the
abuser or that providing the accounting to such person could endanger
the individual, the covered entity continues to have the discretion in
Sec. 164.502(g)(5) to decline such a request.
Comment: One commenter suggested elimination of the accounting
requirement in its entirety. The commenter argued that HIPAA does not
require an accounting as the individual's right and the accounting does
not provide any additional privacy protections to the individual's
information.
Response: The Department disagrees with the commenter. HIPAA
authorized the Secretary to identify rights of the individual with
respect to protected health information and how those rights should be
exercised. In absence of regulation, HIPAA also authorized the
Secretary to effectuate these rights by regulation. As stated in the
preamble to the December 2000 Privacy Rule, the standard adopted by the
Secretary that provides individuals with a right to an
[[Page 53247]]
accounting of disclosures, is consistent with well-established privacy
principles in other law and with industry standards and ethical
guidelines, such as the Federal Privacy Act (5 U.S.C. 552a), the July
1977 Report of the Privacy Protection Study Commission, and NAIC Health
Information Privacy Model Act. (See 65 FR 82739.)
Comment: A few commenters requested that the accounting period be
shortened from six years to two years or three years.
Response: The Department selected six years as the time period for
an accounting to be consistent with documentation retention
requirements in the Rule. We note that the Rule exempts from the
accounting disclosures made prior to the compliance date for Rule, or
April 14, 2003. Therefore, it will not be until April 2009 that a full
six year accounting period will occur. Also, the Rule permits
individuals to request and the covered entity to provide for an
accounting for less than full six year period. For example, an
individual may be interested only in disclosures that occurred in the
prior year or in a particular month. The Department will monitor the
use of the accounting requirements after the compliance date and will
evaluate the need for changes in the future if the six year period for
the accounting proves to be unduly burdensome.
Comment: Commenters requested clarification of the need to account
for disclosures to business associates, noting that while the
regulation states that disclosures to and by a business associate are
subject to an accounting, most such disclosures are for health care
operations for which no accounting is required.
Response: The Department clarifies that the implementation
specification in Sec. 164.528(b)(1), that expressly includes in the
content of an accounting disclosures to or by a business associate,
must be read in conjunction with the basic standard for an accounting
for disclosures in Sec. 164.528(a). Indeed, the implementation
specification expressly references the standard. Read together, the
Rule does not require an accounting of any disclosure to or by a
business associate that is for any exempt purpose, including
disclosures for treatment, payment, and health care operations.
Comment: One commenter wanted health care providers to be able to
charge reasonable fees to cover the retrieval and preparation costs of
an accounting for disclosures.
Response: In granting individuals the right to an accounting, the
Department had to balance the individual's right to know how and to
whom protected health information is being disclosed and the financial
and administrative burden on covered entities in responding to such
requests. The balance struck by the Department with regard to cost was
to grant the individual a right to an accounting once a year without
charge. The covered entity may impose reasonable, cost-based fees for
any subsequent requests during the one year period. The Department
clarifies that the covered entity may recoup its reasonable retrieval
and report preparation costs, as well as any mailing costs, incurred in
responding to subsequent requests. The Rule requires that individuals
be notified in advance of these fees and provided an opportunity to
withdraw or amend its request for a subsequent accounting to avoid
incurring excessive fees.
Comment: One commenter wanted clarification of the covered entity's
responsibility to account for the disclosures of others. For example,
the commenter wanted to know if the covered entity was responsible only
for its own disclosures or did it also need to account for disclosures
by every person that may subsequently handle the information.
Response: The Department clarifies in response to this comment that
a covered entity is responsible to account to the individual for
certain disclosures that it makes and for disclosures by its business
associates. The covered entity is not responsible to account to the
individual for any subsequent disclosures of the information by others
that receive the information from the covered entity or its business
associate.
J. Section 164.532--Transition Provisions
1. Research Transition
December 2000 Privacy Rule. The December 2000 Privacy Rule at
Sec. 164.532 contained different transition requirements for research
being conducted with an individual's legal permission that included
treatment, and for research being conducted with an individual's legal
permission that did not include treatment. However, the Rule did not
explicitly address transition provisions for research studies ongoing
after the compliance date where the legal permission of the individual
had not been sought.
March 2002 NPRM. Several commenters found the transition provisions
for research to be confusing, and further noted that December 2000
Privacy Rule did not address research ongoing after the compliance date
where the legal permission of the individual had not been sought. To
address these concerns, the Department proposed several revisions to
the Privacy Rule's transition provisions. In particular, the Department
proposed that there be no distinction in the transition provisions
between research that includes treatment and research that does not,
and no distinction between the requirements for research conducted with
a patient's legal permission and research conducted with an IRB-
approved waiver of a patient's informed consent. In sum, the NPRM
proposed that covered entities be permitted to use or disclose
protected health information created or received for a specific
research study before the compliance date (if there was no agreed-to
restriction in accordance with Sec. 164.522(a)), if the covered entity
has obtained, prior to the compliance date, any one of the following:
(1) An authorization or other express legal permission from an
individual to use or disclose protected health information for the
research study; (2) the informed consent of the individual to
participate in the research study; or (3) a waiver, by an IRB of
informed consent for the research study in accordance with the Common
Rule or FDA's human subject protection regulations. However, even if
the researcher obtained, from an IRB, a waiver of informed consent, an
authorization would be required if informed consent is later obtained.
This may occur if there is a temporary waiver of informed consent for
emergency research under the Food and Drug Administration human subject
protection regulations.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
Most commenters supported the proposed revisions to the Privacy
Rule's transition provisions for research. However, a few commenters
requested that the transition provisions be broadened to permit covered
entities to rely on an express legal permission or informed consent
approved by an IRB before the compliance date, even if the permission
or consent had not been signed by the individual prior to the
compliance date. Consequently, a researcher could use the same forms
throughout their study, decreasing the chance of introducing error into
the research through the use of multiple recruitment procedures,
disruption to the research, and the burden for the IRBs and
researchers. A few other
[[Page 53248]]
commenters suggested that covered entities be permitted to use and
disclose protected health information with consent forms approved by an
IRB prior to the compliance date until the next review by the IRB, as
required by the Common Rule. They argued that this would result in all
informed consent forms being in compliance with the Privacy Rule's
authorization regulations within a one-year period, and it would avoid
disruption to ongoing research, as well as a flood of consent form
revision requests to the IRBs.
Final Modifications. The Department agrees with the majority of
comments that supported the modifications to the transition provisions,
and has therefore adopted the research transition modifications as
proposed in the NPRM. The Department disagrees with the comments that
suggest broadening the transition provisions to permit covered entities
to rely on an express legal permission or informed consent that had not
been signed by the individual before the compliance date. The
Department understands that this provision may disrupt some ongoing
research; however, the recruitment periods for some studies may
continue long after the compliance date, and it would be unreasonable
to grandfather-in existing informed consent documents indefinitely.
While the commenter's suggestion to only grandfather-in such informed
consent documents until the next review by the IRB would address this
concern, the Privacy Rule does not require initial or continuing IRB or
Privacy Board review of authorization forms or informed consent
documents. Therefore, the Department does not adopt this change to its
proposal.
However, the Department understands that some existing express
legal permissions, informed consents, or IRB-approved waivers of
informed consents are not study specific. Therefore, the final Rule
permits covered entities to rely on an express legal permission,
informed consent, or IRB-approved waiver of informed consent for future
unspecified research, provided the legal permission, informed consent
or IRB-approved waiver was obtained prior to the compliance date.
Response to Other Public Comments
Comment: A commenter requested that the transition provision be
narrowed by requiring research that received a waiver of informed
consent from an IRB prior to the compliance date but that begins after
the compliance date be re-evaluated under the Privacy Rule's waiver
criteria.
Response: The Department disagrees. Given that the Privacy Rule's
waiver criteria for an individual's authorization generally are
consistent with the same types of considerations currently applied to a
waiver of an individual's informed consent, this suggestion would
impose unnecessary burdens on researchers, IRBs, and Privacy Boards,
with respect to the few research studies that would fall in this
category.
2. Business Associates
December 2000 Privacy Rule. The Privacy Rule at Sec. 164.502(e)
permits a covered entity to disclose protected health information to a
business associate who performs a function or activity on behalf of, or
provides a service to, the covered entity that involves the creation,
use, or disclosure of, protected health information, provided that the
covered entity obtains satisfactory assurances that the business
associate will appropriately safeguard the information. The Department
recognizes that most covered entities do not perform or carry out all
of their health care activities and functions by themselves, but rather
use the services of, or receive assistance from, a variety of other
persons or entities. Given this framework, the Department intended
these provisions to allow such business relationships to continue while
ensuring that identifiable health information created or shared in the
course of the relationships was protected.
The Privacy Rule requires that the satisfactory assurances obtained
from the business associate be in the form of a written contract (or
other written arrangement, as between governmental entities) between
the covered entity and the business associate that contains the
elements specified at Sec. 164.504(e). For example, the agreement must
identify the uses and disclosures of protected health information the
business associate is permitted or required to make, as well as require
the business associate to put in place appropriate safeguards to
protect against a use or disclosure not permitted by the contract or
agreement.
The Privacy Rule also provides that, where a covered entity knows
of a material breach or violation by the business associate of the
contract or agreement, the covered entity is required to take
reasonable steps to cure the breach or end the violation, and if such
steps are unsuccessful, to terminate the contract or arrangement. If
termination of the contract or arrangement is not feasible, a covered
entity is required to report the problem to the Secretary of HHS. A
covered entity that violates the satisfactory assurances it provided as
a business associate of another covered entity is in noncompliance with
the Privacy Rule.
The Privacy Rule's definition of ``business associate'' at
Sec. 160.103 includes the types of functions or activities, and list of
services, that make a person or entity who engages in them a business
associate, if such activity or service involves protected health
information. For example, a third party administrator (TPA) is a
business associate of a health plan to the extent the TPA assists the
health plan with claims processing or another covered function.
Similarly, accounting services performed by an outside consultant give
rise to a business associate relationship when provision of the service
entails access to the protected health information held by a covered
entity.
The Privacy Rule excepts from the business associate standard
certain uses or disclosures of protected health information. That is,
in certain situations, a covered entity is not required to have a
contract or other written agreement in place before disclosing
protected health information to a business associate or allowing
protected health information to be created by the business associate on
its behalf. Specifically, the standard does not apply to: disclosures
by a covered entity to a health care provider for treatment purposes;
disclosures to the plan sponsor by a group health plan, or a health
insurance issuer or HMO with respect to a group health plan, to the
extent that the requirements of Sec. 164.504(f) apply and are met; or
to the collection and sharing of protected health information by a
health plan that is a public benefits program and an agency other than
the agency administering the health plan, where the other agency
collects protected health information for, or determines eligibility or
enrollment with respect to, the government program, and where such
activity is authorized by law. See Sec. 164.502(e)(1)(ii).
March 2002 NPRM. The Department heard concerns from many covered
entities and others about the business associate provisions of the
Privacy Rule. The majority expressed some concern over the anticipated
administrative burden and cost to implement the business associate
provisions. Some stated that many covered entities have existing
contracts that are not set to terminate or expire until after the
compliance date of the Privacy Rule. Others expressed specific concern
that the two-year compliance period does not provide enough time to
reopen and renegotiate what could be hundreds or more contracts for
large covered entities. These entities went on to urge the
[[Page 53249]]
Department to grandfather in existing contracts until such contracts
come up for renewal instead of requiring that all contracts be in
compliance with the business associate provisions by the compliance
date of the Privacy Rule.
In response to these concerns, the Department proposed to relieve
some of the burden on covered entities in complying with the business
associate provisions by both adding a transition provision to
grandfather certain existing contracts for a specified period of time,
as well as publishing sample contract language in the proposed Rule.
The following discussion addresses the issue of the business associate
transition provisions. A discussion of the business associate sample
contract language is included in Part X of the preamble.
The Department proposed new transition provisions at
Sec. 164.532(d) and (e) to allow covered entities, other than small
health plans, to continue to operate under certain existing contracts
with business associates for up to one year beyond the April 14, 2003,
compliance date of the Privacy Rule. The additional transition period
would be available to a covered entity, other than a small health plan,
if, prior to the effective date of the transition provision, the
covered entity had an existing contract or other written arrangement
with a business associate, and such contract or arrangement was not
renewed or modified between the effective date of this provision and
the Privacy Rule's compliance date of April 14, 2003. The proposed
provisions were intended to allow those covered entities with contracts
that qualified as described above to continue to disclose protected
health information to the business associate, or allow the business
associate to create or receive protected health information on its
behalf, for up to one year beyond the Privacy Rule's compliance date,
regardless of whether the contract meets the applicable contract
requirements in the Privacy Rule. The Department proposed to deem such
contracts to be compliant with the Privacy Rule until either the
covered entity had renewed or modified the contract following the
compliance date of the Privacy Rule (April 14, 2003), or April 14,
2004, whichever was sooner. In cases where a contract simply renewed
automatically without any change in terms or other action by the
parties (also known as ``evergreen contracts''), the Department
intended that such evergreen contracts would be eligible for the
extension and that deemed compliance would not terminate when these
contracts automatically rolled over.
These transition provisions would apply to covered entities only
with respect to written contracts or other written arrangements as
specified above, and not to oral contracts or other arrangements. In
addition, the proposed transition provisions would not apply to small
health plans, as defined in the Privacy Rule. Small health plans would
be required to have all business associate contracts be in compliance
with the Privacy Rule's applicable provisions, by the compliance
deadline of April 14, 2004, for such covered entities.
In proposed Sec. 164.532(e)(2), the Department provided that the
new transition provisions would not relieve a covered entity of its
responsibilities with respect to making protected health information
available to the Secretary, including information held by a business
associate, as necessary for the Secretary to determine compliance.
Similarly, these provisions would not relieve a covered entity of its
responsibilities with respect to an individual's rights to access or
amend his or her protected health information held by a business
associate, or receive an accounting of disclosures by a business
associate, as provided for by the Privacy Rule's requirements at
Secs. 164.524, 164.526, and 164.528. Covered entities still would be
required to fulfill individuals' rights with respect to their protected
health information, including information held by a business associate
of the covered entity. Covered entities would have to ensure, in
whatever manner effective, the appropriate cooperation by their
business associates in meeting these requirements.
The Department did not propose modifications to the standards and
implementation specifications that apply to business associate
relationships as set forth at Secs. 164.502(e) and 164.504(e),
respectively, of the Privacy Rule.
Overview of Public Comments. The following discussion provides an
overview of the public comment received on this proposal. Additional
comments received on this issue are discussed below in the section
entitled, ``Response to Other Public Comments.''
Most commenters on this issue expressed general support for a
transition period for business associate contracts. Of these
commenters, however, many requested that the Department modify the
proposal in a number of different ways. For example, a number of
commenters urged the Department to modify which contracts qualify for
the transition period, such as by making the transition period
available to contracts existing as of the compliance date of the
Privacy Rule, rather than as of the effective date of the transition
modification. Others requested that the Department apply the transition
period to all business associate arrangements, even those arrangements
for which there was no existing written contract.
Some commenters urged the Department to modify the end date of the
transition period. A few of these commenters requested that the
transition period apply to existing business associate contracts until
they expired or were renewed, with no specified end date in the
regulation. It was also suggested that the Department simply provide
one extra year, until April 14, 2004, for compliance with the business
associate contract provisions, without the provision that a renewal or
modification of the contract would trigger an earlier transition period
end date. A few commenters requested further guidance as to the types
of actions the Department would or would not consider to be a ``renewal
or modification'' of the contract.
Additionally, numerous commenters requested that the Department
further clarify a covered entity's responsibilities with regard to
their business associates during the transition period. Commenters
expressed concerns with the proposal's requirement that the transition
provisions would not have relieved a covered entity of its
responsibilities with respect to an individual's rights to access or
amend his or her protected health information held by business
associates, or receive an accounting of disclosures by a business
associate. Similarly, commenters raised concerns that the transition
provisions would not have relieved a covered entity of its
responsibilities to make information available to the Secretary,
including information held by a business associate, as necessary for
the Secretary to determine compliance. Commenters also expressed
concerns about the fact that it appeared that covered entities still
would have been required to obtain satisfactory assurances from a
business associate that protected health information not be used
improperly by the business associate, or that the covered entity still
would have been required to mitigate any known harmful effects of a
business associate's improper use or disclosure of protected health
information during the transition period. It was stated that
cooperation by a business associate with respect to the covered
entity's obligations under the Rule would be difficult, if not
[[Page 53250]]
impossible, to secure without a formal agreement.
A few commenters opposed the proposal, one of whom raised concerns
that the proposed transition period would encourage covered entities to
enter into ``stop gap'' contracts instead of compliant business
associate contracts. This commenter urged that the Department maintain
the original compliance date for business associate contracts.
Final Modifications. In the final Rule, the Department adopts the
transition period for certain business associate contracts as proposed
in the NPRM. The final Rule's transition provisions at Sec. 164.532(d)
and (e) permit covered entities, other than small health plans, to
continue to operate under certain existing contracts with business
associates for up to one year beyond the April 14, 2003, compliance
date of the Privacy Rule. The transition period is available to covered
entities who have an existing contract (or other written arrangement)
with a business associate prior to the effective date of this
modification, provided that the contract is not renewed or modified
prior to the April 14, 2003, compliance date of the Privacy Rule. (See
the ``Dates'' section above for the effective date of this
modification.) Covered entities with contracts that qualify are
permitted to continue to operate under those contracts with their
business associates until April 14, 2004, or until the contract is
renewed or modified, whichever is sooner. During the transition period,
such contracts are deemed to be compliant with the Privacy Rule
regardless of whether the contract meets the Rule's applicable contract
requirements at Secs. 164.502(e) and 164.504(e).
The transition provisions are intended to address the concerns of
covered entities that the two-year period between the effective date
and compliance date of the Privacy Rule is insufficient to reopen and
renegotiate all existing contracts for the purposes of bringing them
into compliance with the Rule. These provisions also provide covered
entities with added flexibility to incorporate the business associate
contract requirements at the time they would otherwise modify or renew
the existing contract.
Given the intended purpose of these provisions, the Department is
not persuaded by the comments that it is necessary to modify the
provision to make the transition period available to those contracts
existing prior to the Rule's compliance date of April 14, 2003, rather
than the effective date of the modification, or, even less so, to any
business associate arrangement regardless of whether a written contract
currently exists.
A covered entity that does not have a written contract with a
business associate prior to the effective date of this modification
does not encounter the same burdens described by other commenters
associated with having to reopen and renegotiate many existing
contracts at once. The Department believes that such a covered entity
should be able to enter into a compliant business associate contract by
the compliance date of the Rule. Further, those covered entities whose
business associate contracts come up for renewal or modification prior
to the compliance date have the opportunity to bring such contracts
into compliance by April 14, 2003. Thus, a covered entity that enters
into a business associate contract after the effective date of this
modification, or that has a contract that is renewed or modified prior
to the compliance date of the Rule, is not eligible for the transition
period and is required to have a business associate contract in place
that meets the applicable requirements of Secs. 164.502(e) and
164.504(e) by the Privacy Rule's compliance date of April 14, 2003.
Further, as in the proposed Rule, the transition provisions apply only
to written contracts or other written arrangements. Oral contracts or
other arrangements are not eligible for the transition period. The
Department clarifies, however, that nothing in these provisions
requires a covered entity to come into compliance with the business
associate contract provisions prior to April 14, 2003.
Similarly, in response to those commenters who requested that the
Department permit existing contracts to be transitioned until April 14,
2004, regardless of whether such contracts are renewed or modified
prior to that date, the Department considers a renewal or modification
of the contract to be an appropriate, less burdensome opportunity to
bring such contracts into compliance with the Privacy Rule. The
Department, therefore, does not modify the proposal in such a way.
Further, in response to commenters who requested that the Rule
grandfather in existing business associate contracts until they expire
or are renewed, with no specified end date in the regulation, the
Department believes that limiting the transition period to one year
beyond the Rule's compliance date is the proper balance between
individuals' privacy interests and alleviating burden on the covered
entity. All existing business associate contracts must be compliant
with the Rule's business associate contract provisions by April 14,
2004.
As in the proposal, evergreen or other contracts that renew
automatically without any change in terms or other action by the
parties and that exist by the effective date of this modification are
eligible for the transition period. The automatic renewal of such
contracts itself does not terminate qualification for, or deemed
compliance during, the transition period. Renewal or modification for
the purposes of these transition provisions requires action by the
parties involved. For example, the Department does not consider an
automatic inflation adjustment to the price of a contract to be a
renewal or modification for purposes of these provisions. Such an
adjustment will not trigger the end of the transition period, nor make
the contract ineligible for the transition period if the adjustment
occurs before the compliance date of the Rule.
The transition provisions do not apply to ``small health plans,''
as defined at Sec. 160.103. Small health plans are required to have
business associate contracts that are compliant with Secs. 164.502(e)
and 164.504(e) by the April 14, 2004, compliance date for such
entities. As explained in the proposal, the Department believes that
the additional year provided by the statute for these entities to
comply with the Privacy Rule provides sufficient time for compliance
with the Rule's business associate provisions. In addition, the sample
contract provisions provided in the Appendix to the preamble will
assist small health plans and other covered entities in their
implementation of the Privacy Rule's business associate provisions by
April 14, 2004.
Like the proposal, the final Rule at Sec. 164.532(e)(2) provides
that, during the transition period, covered entities are not relieved
of their responsibilities to make information available to the
Secretary, including information held by a business associate, as
necessary for the Secretary to determine compliance by the covered
entity. Similarly, the transition period does not relieve a covered
entity of its responsibilities with respect to an individual's rights
to access or amend his or her protected health information held by a
business associate, or receive an accounting of disclosures by a
business associate, as provided for by the Privacy Rule's requirements
at Secs. 164.524, 164.526, and 164.528. In addition, unlike the
proposed Rule, the final Rule at Sec. 164.532(e)(3) explicitly provides
that with respect to those business associate contracts that qualify
for the transition period as described above, a covered entity is not
relieved of its obligation
[[Page 53251]]
under Sec. 164.530(f) to mitigate, to the extent practicable, any
harmful effect that is known to the covered entity of a use or
disclosure of protected health information by its business associate in
violation of the covered entity's policies and procedures or the
requirements of this subpart, as required by Sec. 164.530(f).
The Department does not believe that a covered entity should be
relieved during the transition period of its responsibilities with
respect to cooperating with the Secretary or fulfilling an individual's
rights with respect to protected health information held by the
business associate, or mitigating any harmful effects of an
inappropriate use or disclosure by the business associate. The
transition period is intended to alleviate some of the burden on
covered entities, but not at the expense of individuals' privacy
rights. Eliminating these privacy protections and rights would severely
weaken the Rule with respect to those covered entities with contracts
that qualify for the transition period.
Further, the Rule provides covered entities some discretion in
implementing these requirements with respect to their business
associates. For example, a covered entity does not need to provide an
individual with access to protected health information held by a
business associate if the only information the business associate holds
is a duplicate of what the covered entity maintains and to which it has
provided the individual access. Covered entities are required to
ensure, in whatever manner deemed effective by the covered entity, the
appropriate cooperation by their business associates in meeting these
requirements.
In response to other concerns from commenters, the Department
clarifies that a covered entity is not required to obtain satisfactory
assurances (in any form), as required by Sec. 164.502(e)(1), from a
business associate to which the transition period applies. The
transition period effectively deems such qualified contracts to fulfill
the requirement for satisfactory assurances from the business
associate.
The Department is aware that the transition provisions may
encourage some covered entities to enter into contracts before the
effective date of the modification solely to take advantage of the
transition period, rather than encourage such entities to execute fully
compliant business associate contracts. However, the Department
believes that the provision appropriately limits the potential for such
misuse by requiring that qualified contracts exist prior to the
modification effective date rather than the Privacy Rule's compliance
date. Further, the transition provisions do not relieve the covered
entity of its obligations with respect to protected health information
held by the business associate and, therefore, ensures that an
individual's rights, as provided for by the Rule, remain intact during
the transition period.
Response to Other Public Comments
Comment: One commenter requested that the transition period also be
applied to the requirement that a group health plan amend plan
documents pursuant to Sec. 164.504(f) before protected health
information may be disclosed to the plan sponsor.
Response: The Department does not make such a modification. The
intent of the business associate transition provisions is to alleviate
burden on those covered entities with many existing contracts, where as
a result, the two-year period between the effective date and compliance
date of the Privacy Rule may be insufficient to reopen and renegotiate
all such contracts for the purposes of bringing them into compliance
with the Rule. The Privacy Rule does not require a business associate
contract for disclosure of protected health information from a group
health plan to a plan sponsor. Rather, the Rule permits a group health
plan to disclose protected health information to a plan sponsor if,
among other requirements, the plan documents are amended to
appropriately reflect and restrict the plan sponsor's uses and
disclosures of such information. As the group health plan should only
have one set of plan documents that must be amended, the same burdens
described above do not exist with respect to this activity. Thus, the
Department expects that group health plans will be able to modify plan
documents in accordance with the Rule by the Rule's compliance date.
Comment: Many commenters continued to recommend various
modifications to the business associate standard, unrelated to the
proposed modifications. For example, some commenters urged that the
Department eliminate the business associate requirements entirely.
Several commenters urged that the Department exempt covered entities
from having to enter into contracts with business associates who are
also covered entities under the Privacy Rule. Alternatively, one
commenter suggested that the Department simplify the requirements by
requiring a covered entity that is a business associate to specify in
writing the uses and disclosures the covered entity is permitted to
make as a business associate.
Other commenters requested that the Department allow business
associates to self-certify or be certified by a third party or HHS as
compliant with the Privacy Rule, as an alternative to the business
associate contract requirement.
Certain commenters urged the Department to modify the Rule to
eliminate the need for a contract with accreditation organizations.
Some commenters suggested that the Department do so by reclassifying
private accreditation organizations acting under authority from a
government agency as health oversight organizations, rather than as
business associates.
Response: The proposed modifications regarding business associates
were intended to address the concerns of commenters with respect to
having insufficient time to reopen and renegotiate what could be
thousands of contracts for some covered entities by the compliance date
of the Privacy Rule. The proposed modifications did not address changes
to the definition of, or requirements for, business associates
generally. The Department has, in previous guidance, as well as in the
preamble to the December 2000 Privacy Rule, explained its position with
respect to most of the above concerns. However, the Department
summarizes its position in response to such comments briefly below.
The Department recognizes that most covered entities acquire the
services of a variety of other persons or entities to assist in
carrying covered entities' health care activities. The business
associate provisions are necessary to ensure that individually
identifiable health information created or shared in the course of
these relationships is protected. Further, without the business
associate provisions, covered entities would be able to circumvent the
requirements of the Privacy Rule simply by contracting out certain of
its functions.
With respect to a contract between a covered entity and a business
associate who is also a covered entity, the Department restates its
position that a covered entity that is a business associate should be
restricted from using or disclosing the protected health information it
creates or receives as a business associate for any purposes other than
those explicitly provided for in its contract. Further, to modify the
provisions to require or permit a type of written assurance, other than
a contract, by a covered entity would add unnecessary complexity to the
Rule.
Additionally, the Department at this time does not believe that a
business associate certification process would
[[Page 53252]]
provide the same kind of protections and guarantees with respect to a
business associate's actions that are available to a covered entity
through a contract under State law. With respect to certification by a
third party, it is unclear whether such a process would allow for any
meaningful enforcement (such as termination of a contract) for the
actions of a business associate. Further, the Department could not
require that a business associate be certified by a third party. Thus,
the Privacy Rule still would have to allow for a contract between a
covered entity and a business associate.
The Privacy Rule explicitly defines organizations that accredit
covered entities as business associates. See the definition of
``business associate'' at Sec. 160.103. The Department defined such
organizations as business associates because, like other business
associates, they provide a service to the covered entity during which
much protected health information is shared. The Privacy Rule treats
all organizations that provide accreditation services to covered
entities alike. The Department has not been persuaded by the comments
that those accreditation organizations acting under grant of authority
from a government agency should be treated differently under the Rule
and relieved of the conditions placed on other such relationships.
However, the Department understands concerns regarding the burdens
associated with the business associate contract requirements. The
Department clarifies that the business associate provisions may be
satisfied by standard or model contract forms which could require
little or no modification for each covered entity. As an alternative to
the business associate contract, these final modifications permit a
covered entity to disclose a limited data set of protected health
information, not including direct identifiers, for accreditation and
other health care operations purposes subject to a data use agreement.
See Sec. 164.514(e).
Comment: A number of commenters continued to express concern over a
covered entity's perceived liability with respect to the actions of its
business associate. Some commenters requested further clarification
that a covered entity is not responsible for or required to monitor the
actions of its business associates. It also was suggested that such
language expressly be included in the Rule's regulatory text. One
commenter recommended that the Rule provide that business associates
are directly liable for their own failure to comply with the Privacy
Rule. Another commenter urged that the Department eliminate a covered
entity's obligation to mitigate any harmful effects caused by a
business associate's improper use or disclosure of protected health
information.
Response: The Privacy Rule does not require a covered entity to
actively monitor the actions of its business associates nor is the
covered entity responsible or liable for the actions of its business
associates. Rather, the Rule only requires that, where a covered entity
knows of a pattern of activity or practice that constitutes a material
breach or violation of the business associate's obligations under the
contract, the covered entity take steps to cure the breach or end the
violation. See Sec. 164.504(e)(1). The Department does not believe a
regulatory modification is necessary in this area. The Department does
not have the statutory authority to hold business associates, that are
not also covered entities, liable under the Privacy Rule.
With respect to mitigation, the Department does not accept the
commenter's suggestion. When protected health information is used or
disclosed inappropriately, the harm to the individual is the same,
regardless of whether the violation was caused by the covered entity or
a by business associate. Further, this provision is not an absolute
standard intended to require active monitoring of the business
associate or mitigation of all harm caused by the business associate.
Rather, the provision applies only if the covered entity has actual
knowledge of the harm, and requires mitigation only ``to the extent
practicable'' by the covered entity. See Sec. 164.530(f).
Comment: Several commenters asked the Department to provide
additional clarification as to who is and is not a business associate
for purposes of the Rule. For example, commenters questioned whether
researchers were business associates. Other commenters requested
further clarification as to when a health care provider would be the
business associate of another health care provider. One commenter asked
the Department to clarify whether covered entities that engage in joint
activities under an organized health care arrangement (OHCA) are
required to have a business associate contract. Several commenters
asked the Department to clarify that a business associate agreement is
not required with organizations or persons where contact with protected
health information would result inadvertently (if at all), for example,
janitorial services.
Response: The Department provides the following guidance in
response to commenters. Disclosures from a covered entity to a
researcher for research purposes as permitted by the Rule do not
require a business associate contract. This remains true even in those
instances where the covered entity has hired the researcher to perform
research on the covered entity's own behalf because research is not a
covered function or activity. However, the Rule does not prohibit a
covered entity from entering into a business associate contract with a
researcher if the covered entity wishes to do so. Notwithstanding the
above, a covered entity must enter into a data use agreement, as
required by Sec. 164.514(e), prior to disclosing a limited data set for
research purposes to a researcher.
With respect to business associate contracts between health care
providers, the Privacy Rule explicitly excepts from the business
associate requirements disclosures by a covered entity to a health care
provider for treatment purposes. See Sec. 164.502(e)(1). Therefore, any
covered health care provider (or other covered entity) may share
protected health information with a health care provider for treatment
purposes without a business associate contract. The Department does not
intend the Rule to interfere with the sharing of information among
health care providers for treatment. However, this exception does not
preclude one health care provider from establishing a business
associate relationship with another health care provider for some other
purpose. For example, a hospital may enlist the services of another
health care provider to assist in the hospital's training of medical
students. In this case, a business associate contract would be required
before the hospital could allow the health care provider access to
patient health information.
As to disclosures among covered entities who participate in an
organized health care arrangement, the Department clarifies that no
business associate contract is needed to the extent the disclosure
relates to the joint activities of the OHCA.
The Department also clarifies that a business associate contract is
not required with persons or organizations whose functions, activities,
or services do not involve the use or disclosure of protected health
information, and where any access to protected health information by
such persons would be de minimus, if at all. For example, a health care
provider is not required to enter into a business associate contract
with its janitorial service because the performance of such service
does not involve the use or disclosure of protected health information.
In this case, where a janitor has contact with
[[Page 53253]]
protected health information incidentally, such disclosure is
permissible under Sec. 164.502(a)(1)(iii) provided reasonable
safeguards are in place.
The Department is aware that similar questions still remain with
respect to the business associate provisions of the Privacy Rule and
intends to provide technical assistance and further clarifications as
necessary to address these questions.
Comment: A few commenters urged that the Department modify the
Privacy Rule's requirement for a covered entity to take reasonable
steps to cure a breach or end a violation of its business associate
contract by a business associate. One commenter recommended that the
requirement be modified instead to require a covered entity who has
knowledge of a breach to ask its business associate to cure the breach
or end the violation. Another commenter argued that a covered entity
only should be required to take reasonable steps to cure a breach or
end a violation if the business associate or a patient reports to the
privacy officer or other responsible employee of the covered entity
that a misuse of protected health information has occurred.
Response: It is expected that a covered entity with evidence of a
violation will ask its business associate, where appropriate, to cure
the breach or end the violation. Further, the Department intends that
whether a covered entity ``knew'' of a pattern or practice of the
business associate in breach or violation of the contract will be
consistent with common principles of law that dictate when knowledge
can be attributed to a corporate entity. Regardless, a covered entity's
training of its workforce, as required by Sec. 164.530(b), should
address the recognition and reporting of violations to the appropriate
responsible persons with the entity.
Comment: Several commenters requested clarification as to whether a
business associate is required to provide individuals with access to
their protected health information as provided by Sec. 164.524 or an
accounting of disclosures as provided by Sec. 164.528, or amend
protected health information as required by Sec. 164.526. Some
commenters wanted clarification that the access and amendment
provisions apply to the business associate only if the business
associate maintains the original designated record set of the protected
health information.
Response: Under the Rule, the covered entity is responsible for
fulfilling all of an individual's rights, including the rights of
access, amendment, and accounting, as provided for by Secs. 164.524,
164.526, and 164.528. With limited exceptions, a covered entity is
required to provide an individual access to his or her protected health
information in a designated record set. This includes information in a
designated record set of a business associate, unless the information
held by the business associate merely duplicates the information
maintained by the covered entity. However, the Privacy Rule does not
prevent the parties from agreeing through the business associate
contract that the business associate will provide access to
individuals, as may be appropriate where the business associate is the
only holder of the, or part of the, designated record set.
As governed by Sec. 164.526, a covered entity must amend protected
health information about an individual in a designated record set,
including any designated record sets (or copies thereof) held by a
business associate. Therefore, the Rule requires covered entities to
specify in the business associate contract that the business associate
will make protected health information available for amendment and will
incorporate amendments accordingly. The covered entity itself is
responsible for addressing requests from individuals for amendment and
coordinating such requests with its business associate. However, the
Privacy Rule also does not prevent the parties from agreeing through
the contract that the business associate will receive and address
requests for amendment on behalf of the covered entity.
With respect to accounting, Sec. 164.528 requires a covered entity
to provide an accounting of certain disclosures, including certain
disclosures by its business associate, to the individual upon request.
The business associate contract must provide that the business
associate will make such information available to the covered entity in
order for the covered entity to fulfill its obligation to the
individual. As with access and amendment, the parties can agree through
the business associate contract that the business associate will
provide the accounting to individuals, as may be appropriate given the
protected health information held by, and the functions of, the
business associate.
Comment: One commenter asked whether a business associate agreement
in electronic form, with an electronic signature, would satisfy the
Privacy Rule's business associate requirements.
Response: The Privacy Rule generally allows for electronic
documents to qualify as written documents for purposes of meeting the
Rule's requirements. This also applies with respect to business
associate agreements. However, currently, no standards exist under
HIPAA for electronic signatures. Thus, in the absence of specific
standards, covered entities should ensure any electronic signature used
will result in a legally binding contract under applicable State or
other law.
Comment: Certain commenters raised concerns with the Rule's
classification of attorneys as business associates. A few of these
commenters urged the Department to clarify that the Rule's requirement
at Sec. 164.504(e)(2)(ii)(H), which requires a contract to state the
business associate must make information relating to the use or
disclosure of protected health information available to the Secretary
for purposes of determining the covered entity's compliance with the
Rule, not apply to protected health information in possession of a
covered entity's lawyer. Commenters argued that such a requirement
threatens to impact attorney-client privilege. Others expressed concern
over the requirement that the attorney, as a business associate, must
return or destroy protected health information at termination of the
contract. It was argued that such a requirement is inconsistent with
many current obligations of legal counsel and is neither warranted nor
useful.
Response: The Department does not modify the Rule in this regard.
The Privacy Rule is not intended to interfere with attorney-client
privilege. Nor does the Department anticipate that it will be necessary
for the Secretary to have access to privileged material in order to
resolve a complaint or investigate a violation of the Privacy Rule.
However, the Department does not believe that it is appropriate to
exempt attorneys from the business associate requirements.
With respect to the requirement for the return or destruction of
protected health information, the Rule requires the return or
destruction of all protected health information at termination of the
contract only where feasible or permitted by law. Where such action is
not feasible, the contract must state that the information will remain
protected after the contract ends for as long as the information is
maintained by the business associate, and that further uses and
disclosures of the information will be limited to those purposes that
make the return or destruction infeasible.
Comment: One commenter was concerned that the business associate
provisions regarding the return or
[[Page 53254]]
destruction of protected health information upon termination of the
business associate agreement conflict with various provisions of the
Bank Secrecy Act, which require financial institutions to retain
certain records for up to five years. The commenter further noted that
there are many State banking regulations that require financial
institutions to retain certain records for up to ten years. The
commenter recommended that the Department clarify, in instances of
conflict with the Privacy Rule, that financial institutions comply with
Federal and State banking regulations.
Response: The Department does not believe there is a conflict
between the Privacy Rule and the Bank Secrecy Act retention
requirements or that the Privacy Rule would prevent a financial
institution that is a business associate of a covered entity from
complying with the Bank Secrecy Act. The Privacy Rule generally
requires a business associate contract to provide that the business
associate will return or destroy protected health information upon the
termination of the contract; however, it does not require this if the
return or destruction of protected health information is infeasible.
Return or destruction would be considered ``infeasible'' if other law,
such as the Bank Secrecy Act, requires the business associate to retain
protected health information for a period of time beyond the
termination of the business associate contract. The Privacy Rule would
require that the business associate contract extend the protections of
the contract and limit further uses and disclosures to those purposes
that make the return or destruction of the information infeasible. In
this case, the business associate would have to limit the use or
disclosure of the protected health information to purposes of the Bank
Secrecy Act or State banking regulations.
Comment: A commenter requested clarification concerning the
economic impact on business associates of the cost-based copying fees
allowed to be charged to individuals who request a copy of their
medical record under the right of access provided by the Privacy Rule.
See Sec. 164.524. According to the commenter, many hospitals and other
covered entities currently outsource their records reproduction
function for fees that often include administrative costs over and
above the costs of copying. In some cases, the fees may be set in
accordance with State law. The Privacy Rule, at Sec. 164.524(c)(4),
however, permits only reasonable, cost-based copying fees to be charged
to individuals seeking to obtain a copy of their medical record under
their right of access. The commenter was concerned that others seeking
copies of all or part of the medical record, such as payers, attorneys,
or entities that have the individual's authorization, would try to
claim the limited copying fees provided in Sec. 164.524(c)(4). The
commenter asserted that such a result would drastically alter the
economics of the outsourcing industry, driving outsourcing companies
out of business, and raising costs for the health industry as a whole.
A clarification that the fee structure in Sec. 164.524(c)(4) applies
only to individuals exercising their right of access was sought.
Response: The Department clarifies that the Rule, at
Sec. 164.524(c)(4), limits only the fees that may be charged to
individuals, or to their personal representatives in accordance with
Sec. 164.502(g), when the request is to obtain a copy of protected
health information about the individual in accordance with the right of
access. The fee limitations in Sec. 164.524(c)(4) do not apply to any
other permissible disclosures by the covered entity, including
disclosures that are permitted for treatment, payment or health care
operations, disclosures that are based on an individual's authorization
that is valid under Sec. 164.508, or other disclosures permitted
without the individual's authorization as specified in Sec. 164.512.
The fee limitation in Sec. 164.524(c)(4) is intended to assure that
the right of access provided by the Privacy Rule is available to all
individuals, and not just to those who can afford to do so. Based on
the clarification provided, the Department does not anticipate that
this provision will cause any significant disruption in the way that
covered entities do business today. To the extent hospitals and other
entities outsource this function because it is less expensive than
doing it themselves, the fee limitation for individuals seeking access
under Sec. 164.524 will affect only a portion of this business; and, in
these cases, hospitals should still find it economical to outsource
these activities, even if they can only pass on a portion of the costs
to the individual.
K. Technical Corrections and Other Clarifications
1. Definition of ``Individually Identifiable Health Information''
Part 160 contains the definitions that are relevant to all of the
Administrative Simplification provisions at Parts 160 through 164.
Although the term ``individually identifiable health information'' is
relevant to Parts 160 through 164, it is defined in Sec. 164.501 of the
Privacy Rule. To correct this technical error, the Department proposed
to move the definition of individually identifiable health information
from Sec. 164.501 to Sec. 160.103.
The limited comment on this proposal supported moving the
definition into Sec. 160.103, for the same reasons cited by the
Department. Therefore, the Department in this final Rule deletes the
definition of ``individually identifiable health information'' from
Sec. 164.501 of the Privacy Rule, and adds the definition to
Sec. 160.103.
2. Technical Corrections
The Privacy Rule contained some technical and typographical errors.
Therefore, the Department is making the following corrections:
a. In Sec. 160.102(b), beginning in the second line, ``section
201(a)(5) of the Health Insurance Portability Act of 1996, (Pub. L.
104-191),'' is replaced with ``42 U.S.C. 1320a-7c(a)(5).''
b. In Sec. 160.203(b), in the second line, ``health information''
is replaced with ``individually identifiable health information.''
c. In Sec. 164.102, ``implementation standards'' is corrected to
read ``implementation specifications.''
d. In Sec. 164.501, in the definition of ``protected health
information'', ``Family Educational Right and Privacy Act'' is
corrected to read ``Family Educational Rights and Privacy Act.''
e. In Sec. 164.508(b)(1)(ii), in the fifth line, the word ``be'' is
deleted.
f. In Sec. 164.508(b)(3)(iii), a comma is added after the words
``psychotherapy notes.''
g. In Sec. 164.510(b)(3), in the third line, the word ``for'' is
deleted.
h. In Sec. 164.512(b)(1)(v)(A), in the fourth line, the word ``a''
is deleted.
i. In Sec. 164.512(b)(1)(v)(C), in the eighth line, the word
``and'' is added after the semicolon.
j. In Sec. 164.512(f)(3), paragraphs (ii) and (iii) are
redesignated as (i) and (ii), respectively.
k. In Sec. 164.512(g)(2), in the seventh line, the word ``to'' is
added after the word ``directors.''
l. In Sec. 164.512(i)(1)(iii)(A), in the second line, the word
``is'' after the word ``sought'' is deleted.
m. In Sec. 164.514(d)(5), the word ``discloses'' is corrected to
read ``disclose.''
n. In Sec. 164.520(c), in the introductory text, ``(c)(4)'' is
corrected to read ``(c)(3).''
o. In Sec. 164.522(a)(1)(v), in the sixth line,
``Secs. 164.502(a)(2)(i)'' is corrected to read
``Secs. 164.502(a)(2)(ii).''
p. In Sec. 164.530(i)(4)(ii)(A), in the second line, ``the
requirements'' is
[[Page 53255]]
replaced with the word ``specifications.''
IV. Final Regulatory Impact Analysis
Federal law (5 U.S.C. 804(2), as added by section 251 of Pub. L.
No. 104-21), specifies that a ``major rule'' is any rule that the
Office of Management and Budget finds is likely to result in:
An annual effect on the economy of $100 million or more;
A major increase in costs or prices for consumers,
individual industries, Federal, State, or local government agencies, or
geographic regions; or
Significant adverse effects in competition, employment,
investment productivity, innovation, or on the ability of United States
based enterprises to compete with foreign-based enterprises in domestic
and export markets.
The impact of the modifications adopted in this rulemaking will
have an annual effect on the economy of at least $100 million.
Therefore, this Rule is a major rule as defined in 5 U.S.C. 804(2).
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, when regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects; distributive impacts; and equity). According to Executive
Order 12866, a regulatory action is ``significant'' if it meets any one
of a number of specified conditions, including having an annual effect
on the economy of $100 million or more, adversely affecting in a
material way a sector of the economy, competition, or jobs, or if it
raises novel legal or policy issues. The purpose of the regulatory
impact analysis is to assist decision-makers in understanding the
potential ramifications of a regulation as it is being developed. The
analysis is also intended to assist the public in understanding the
general economic ramifications of the regulatory changes.
The December 2000 preamble to the Privacy Rule included a
regulatory impact analysis (RIA), which estimated the cost of the
Privacy Rule at $17.6 billion over ten years. 65 FR 82462, 82758. The
modifications to the Privacy Rule adopted by this rulemaking are a
result of comment by the industry and the public at large identifying a
number of unintended consequences of the Privacy Rule that could
adversely affect access to, or the quality of, health care delivery.
These modifications should facilitate implementation and compliance
with the Privacy Rule, and lower the costs and burdens associated with
the Privacy Rule while maintaining the confidentiality of protected
health information. The Department estimates the impact of the
modifications adopted in this rulemaking will be a net reduction of
costs associated with the Privacy Rule of at least $100 million over
ten years.
The modifications affect five areas of the Privacy Rule that will
have an economic impact: (1) consent; (2) notice; (3) marketing; (4)
research; and (5) business associates. In addition, this rulemaking
contains a number of changes that, though important, can be categorized
as clarifications of intended policy. For example, the modifications
permit certain uses and disclosures of protected health information
that are incidental to an otherwise permitted use or disclosure. This
change recognizes such practices as the need for physicians to talk to
patients in semi-private hospital rooms or nurses to communicate with
others in public areas, and avoids the costs covered entities might
have incurred to reconfigure facilities as necessary to ensure absolute
privacy for these common treatment-related communications. This and
other modifications adopted in this rulemaking (other than those
described below) clarify the intent of the standards in the Privacy
Rule and, as such, do not change or alter the associated costs that
were estimated for the Privacy Rule. Public comments have indicated
that these provisions would be interpreted in a way that could
significantly increase costs. However, because that was not the intent
of the December 2000 Privacy Rule, the Department is not ascribing cost
savings to the clarification of these provisions.
A. Summary of Costs and Benefits in the December 2000 Regulatory Impact
Statement
The Privacy Rule was estimated to produce net costs of $17.6
billion, with net present value costs of $11.8 billion (2003 dollars)
over ten years (2003-2012). The Department estimates the modifications
in this proposal would lower the net cost of the Privacy Rule by
approximately $100 million over ten years.
Measuring both the economic costs and benefits of health
information privacy was recognized as a difficult task. The paucity of
data and incomplete information on current industry privacy and
information system practices made cost estimation a challenge. Benefits
were difficult to measure because they are, for the most part,
inherently intangible. Therefore, the regulatory impact analysis in the
Privacy Rule focused on the key policy areas addressed by the privacy
standards, some of which are affected by the modifications adopted in
this rulemaking.
B. Proposed Modifications To Prevent Barriers to Access to or Quality
of Health Care
The modifications adopted in this rulemaking are intended to
address the possible adverse effects of the final privacy standards on
an individual's access to, or the quality of, health care. The
modifications touch on five of the key policy areas addressed by the
final regulatory impact analysis, including consent, research,
marketing, notice, and business associates.
The Department received few comments on this section of the March
2002 proposal. Most of the comments on the cost implications of the
modifications indicated a general belief that the costs would be higher
than the Department estimated. None of commenters, however, provided
sufficient specific information concerning costs to permit the
Department to adjust its estimates. The public comment on each of the
key policy areas is summarized in the following sections. However, the
estimated cost impact of each area has not changed.
1. Consent
Under the December 2000 Privacy Rule, a covered health care
provider with a direct treatment relationship with an individual must
have obtained the individual's prior written consent for use or
disclosure of protected health information for treatment, payment, or
health care operations, subject to a limited number of exceptions.
Other covered health care providers and health plans may have obtained
such a consent if they so chose. The initial cost of the consent
requirement was estimated in December 2000 to be $42 million. Based on
assumptions for growth in the number of patients, the total costs for
ten years was estimated to be $103 million. See 65 FR 82771 (December
28, 2000).\2\
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\2\ The total cost for consent in the regulatory impact analysis
showed an initial cost of $166 million and $227 million over ten
years. Included in these total numbers is the cost of tracking
patient requests to restrict the disclosure of their health
information. This right is not changed in these modifications. The
numbers here represent the costs associated with the consent
functions that are proposed to be repealed.
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The modifications eliminate the consent requirement. The consent
requirement posed many difficulties for an individual's access to
health care, and was problematic for operations essential for the
quality of the health
[[Page 53256]]
care delivery system. However, any health care provider or health plan
may choose to obtain an individual's consent for treatment, payment,
and health care operations. The elimination of the consent requirement
reduces the initial cost of the privacy standards by $42 million in the
first year and by $103 million over ten years.
As explained in detail in section III.D.1. above, the Department
received many comments supporting the proposed elimination of the
consent requirement on the ground that it created unintended barriers
to timely provision of care, particularly with respect to use and
disclosure of health information prior to a health care provider's
first face-to-face contact with the individual. These and other
barriers discussed above would have entailed costs not anticipated in
the economic analyses in the Privacy Rule. These comments also revealed
that the consent requirements create administrative burdens, for
example, with respect to tracking the status and revocation of
consents, that were not foreseen and thus not included in that economic
analysis. Therefore, while the estimated costs of the consent
provisions over a ten-year period were $103 million, the comments
suggest that the costs would likely be much higher. If these comments
are accurate, the cost savings associated with retracting the consent
provisions would, therefore, also be significantly higher than $103
million over a ten-year period.
Response to Public Comments
Comment: As discussed in section III.H. above, many commenters
expressed support for the proposed requirement that certain health care
providers make a good faith effort to obtain a written acknowledgment
of receipt of the notice, as a workable alternative to the Rule's prior
consent requirement. Many of these commenters conveyed support for the
flexibility of the requirement, and most commenters agreed that
eliminating the consent requirement would mean considerable savings.
Response: The Department received no public comment containing
empirical, direct evidence on the estimates of financial impact that
either supported or contradicted the Department's calculations.
Therefore, our estimates remain unchanged.
Comment: Many other commenters confused the net savings associated
with the Administrative Simplification provisions with cost savings
associated with the Privacy Rule, and relied on this misinformation to
argue in favor of retaining the consent provisions for treatment,
payment, and health care operations.
Response: These commenters were essentially propounding a policy
choice and not making a comment on the validity of the estimates for
cost savings associated with the elimination of the consent
requirement. The comments did not include any reliable estimation that
would cause the Department to reevaluate its savings estimate.
2. Notice
In eliminating the consent requirement, the Department preserves
the opportunity for a covered health care provider with a direct
treatment relationship with an individual to engage in a meaningful
communication about the provider's privacy practices and the
individual's rights by strengthening the notice requirements. Under the
Privacy Rule, these health care providers are required to distribute to
individuals their notice of privacy practices no later than the date of
the first service delivery after the compliance date. The modifications
do not change this distribution requirement, but add a new
documentation requirement. A covered health care provider with a direct
treatment relationship is required to make a good faith effort to
obtain the individual's acknowledgment of receipt of the notice
provided at the first service delivery. The form of the acknowledgment
is not prescribed and can be as unintrusive as retaining a copy of the
notice initialed by the individual. If the provider's good faith effort
fails, documentation of the attempt is all that is required. Since the
modification does not require any change in the form of the notice or
its distribution, the ten-year cost estimate of $391 million for these
areas in the Privacy Rule's impact analysis remains the same. See 65 FR
82770.
However, the additional effort by direct treatment providers in
obtaining and documenting the individual's acknowledgment of receipt of
the notice adds costs. This new requirement attaches only to the
initial provision of notice by a direct treatment provider to an
individual after the compliance date. Under the modification, providers
have considerable flexibility on how to achieve this. Some providers
could choose to obtain the required written acknowledgment on a
separate piece of paper, while others could take different approaches,
such as an initialed check-off sheet or a signature line on the notice
itself with the provider keeping a copy.
In its December 2000 analysis, the Department estimated that the
consent cost would be $0.05 per page based on the fact that the consent
had to be a stand alone document requiring a signature. This
modification to the notice requirement provides greater flexibility
and, therefore, greater opportunity to reduce costs compared to the
consent requirement. Without knowing exactly how direct treatment
providers will decide to exercise the flexibility provided, the
Department cannot, with any precision, estimate the cost to implement
this provision. In the NPRM, the Department estimated that the
flexibility of the notice acknowledgment requirement would mean that
the cost of the notice acknowledgment would be 20 percent less than the
cost of the signed consent. The Department did not receive any comments
on this estimate and, therefore, does not change it's estimate that the
additional cost of the signature requirement, on average, is $0.03 per
notice. Based on data obtained from the Medical Expenditure Panel
Survey (MEPS), which estimate the number of patient visits in a year,
the Department estimates that in the first year there would be 816
million notices distributed to which the new good faith acknowledgment
requirement will attach. Over the next nine years, the Department
estimates, again based on MEPS data, that there would be 5.3 billion
visits to health care providers by new patients (established patients
will not need to receive another copy of the notice). At $0.03 per
document, the first year cost will be $24 million and the total cost
over ten years will be $184 million.
Response to Public Comments
Comment: As discussed in section III.H. above, a number of other
commenters expressed concern over the administrative and financial
burden the requirement to obtain a good faith acknowledgment of the
notice would impose.
Response: The Department received no public comment containing
empirical, direct evidence on the estimates of financial impact that
either supported or contradicted the Department's calculations.
Therefore, our estimates remain unchanged.
Comment: One commenter requested that model language for the notice
be developed as a means of reducing the costs associated with Privacy
Rule compliance.
Response: As stated in section III.H. above, in the final Rule, the
Department sought to retain the maximum flexibility by requiring only
that the acknowledgment be in writing and does not prescribe other
details of the form
[[Page 53257]]
that the acknowledgment must take or the process for obtaining the
acknowledgment. This permits covered health care providers the
discretion to design the acknowledgment process as best suited to their
practices, including the option of obtaining an electronic
acknowledgment regardless of whether the notice is provided
electronically or on paper. Furthermore, there is no change to the
substance of the notice and the commenter provided no empirical, direct
benefit/cost data in support of their proposal.
Comment: The Department received comments expressing opposition to
obtaining written acknowledgment of the receipt of the notice because
it is too costly. Others commented that the acknowledgment increases
the administrative burden as it would not replace a signed consent for
uses and disclosures of health information when State law requires
providers to obtain consent.
Response: The Department received no public comment containing
empirical, direct evidence on the estimates of financial impact that
either supported or contradicted the Department's calculations.
Therefore, our estimates remain unchanged.
Comment: A number of commenters expressed concern over the
perceived increase in liability that would arise from the discretionary
standard of ``good faith'' efforts (i.e., risk of tort-based litigation
for private right of action under State laws).
Response: The Department received no estimate of the impact of this
perceived risk of liability. As no empirical, direct evidence on the
estimates of financial impact that either supported or contradicted the
Department's calculations was supplied, our estimates remain unchanged.
3. Business Associates
The Privacy Rule requires a covered entity to have a written
contract, or other arrangement, that documents satisfactory assurances
that a business associates will appropriately safeguard protected
health information in order to disclose protected health information to
the business associate. The regulatory impact analysis for the Privacy
Rule provided cost estimates for two aspects of this requirement. In
the Privacy Rule, $103 million in first-year costs was estimated for
development of a standard business associate contract language. (There
were additional costs associated with these requirements related to the
technical implementation of new data transfer protocols, but these are
not affected by the modification adopted here.) In addition, $197
million in first-year costs and $697 million in total costs over ten
years were estimated in the Privacy Rule for the review and oversight
of existing business associate contracts.
The modifications do not change the standards for business
associate contracts or the implementation specifications with respect
to the covered entity's responsibilities for managing the contracts.
However, the Department includes sample business associate contract
language as part of the preamble to this rulemaking. This sample
language is only suggested language and is not a complete contract. The
sample language is designed to be adapted to the business arrangement
between the covered entity and the business associate and to be
incorporated into a contract drafted by the parties. Certain provisions
of the sample language have been revised, as described in more detail
below, based on the public comment received on the proposal. The
December 2000 regulatory impact analysis assumed the development of
such standard language by trade and professional associations. While
this has occurred to some degree, the Department received strong public
comment supporting the for sample contract language. The Department
expects that trade and professional associations will continue to
provide assistance to their members. However, the sample contract
language in this rulemaking will simplify their efforts by providing a
base from which they can develop language. The Department had estimated
$103 million in initial year costs for this activity based on the
assumption it would require one hour per non-hospital provider and two
hours for hospitals and health plans to develop contract language and
to tailor the language to the particular needs of the covered entity.
The additional time for hospitals and health plans reflected the
likelihood that these covered entities would have a more extensive
number of business associate relationships. Because there will be less
effort expended than originally estimated in the Privacy Rule, the
Department estimates a reduction in contract development time by one-
third because of the availability of the model language. Thus, the
Department now estimates that this activity will take 40 minutes for
non-hospital providers and 80 minutes for hospitals and health plans.
The Department estimates that the savings from the proposed business
associate contract language would be approximately $35 million in the
first year. The changes being adopted to the sample contract language
do not affect these cost estimates.
The Department, in this rulemaking, also gives most covered
entities additional time to conform written contracts to the privacy
standards. Under the modification, a covered entity's written business
associate contracts, existing at the time the modifications become
effective, are deemed to comply with the privacy standards until such
time as the contracts are renewed or modified, or until April 14, 2004,
whichever is earlier. The effect of this proposal is to spread first-
year costs over an additional year, with a corresponding postponement
of the costs estimated for the out years. However, the Department has
no reliable information as to the number of contracts potentially
affected by the modification or the average delay that will occur.
Therefore, the Department is uncertain about the extent of the cost
savings attributable to this modification.
Response to Public Comments
Comment: While many commenters supported the business associate
transition provisions as helpful to reducing the administrative burden
and cost of compliance, commenters argued that the business associate
provisions would still be very burdensome and costly to implement,
especially for small and solo businesses.
Response: The Department acknowledges that there are compliance
costs associated with the business associate standards. However, no
commenters supplied empirical, direct evidence in support of or
contradictory to the Department's estimates of the cost savings
associated with the business associate transition provisions.
Therefore, our estimates remain unchanged.
Comment: Some commenters disputed the estimated costs of complying
with the business associate requirements based on the quantity of
contracts (with suppliers, physicians, local agencies and national
concerns), and the number of hours necessary to individually tailor and
renegotiate all of these contracts.
Response: These comments address the underlying costs of the
business associate requirements and do not address the reduction in
costs afforded through the sample business associate agreement
language. Moreover, no empirical, direct evidence, based on
accomplished workload rather than extrapolations of singular events,
were provided to contradict the Department's calculations. Therefore,
our estimates remain unchanged.
[[Page 53258]]
4. Marketing
Under Sec. 164.514(e) of the December 2000 Privacy Rule, certain
health-related communications were subject to special conditions on
marketing communications, if they also served to promote the use or
sale of a product or service. These marketing conditions required that
particular disclosures be made as part of the marketing materials sent
to individuals. Absent these disclosures, protected health information
could only be used or disclosed in connection with such marketing
communications with the individual's authorization. The Department is
aware that the Privacy Rule's Sec. 164.514(e) conditions for health-
related communications created a potential burden on covered entities
to make difficult assessments regarding many of their communications.
The modifications to the marketing provisions relieve the burden on
covered entities by making most marketing subject to an authorization
requirement (see Sec. 164.508(a)(3)), making clear that necessary
treatment and health care operations activities were not marketing, and
eliminating the Sec. 164.514(e) conditions on marketing communications.
In developing the December 2000 impact analysis for the Privacy
Rule, the Department was unable to estimate the cost of the marketing
provisions. There was too little data and too much variation in current
practice to estimate how the Privacy Rule might affect marketing. The
same remains true today. However, the modifications relieve burden on
the covered entities in making communications for treatment and certain
health care operations relative to the requirements in the Privacy
Rule. Although the Department cannot provide a quantifiable estimate,
the effect of these modifications is to lower the costs associated with
the Privacy Rule.
Response to Public Comment
Comment: Many providers, especially mental health providers,
opposed the changes to marketing and consent as they fear increased
access to individually identifiable health information would cause
patients to refrain from seeking treatment. By not seeking timely
treatment, the medical conditions could worsen, and result in increased
or additional costs to society.
Response: The commenters did not attempt to segment out the cost
attributed to marketing alone. In fact, no empirical, direct evidence
on the estimates of financial impact that either supported or
contradicted the Department's calculations was provided. Therefore, our
estimates remain unchanged.
5. Research
In the final impact analysis of the December 2000 Privacy Rule, the
Department estimated the total cost of the provisions requiring
documentation of an Institutional Review Board (IRB) or Privacy Board
waiver of individual authorization for the use or disclosure of
protected health information for a research purpose as $40 million for
the first year and $585 million for the ten-year period. The costs were
estimated based on the time that an IRB or Privacy Board would need to
consider a request for a waiver under the criteria provided in the
Privacy Rule. See 65 FR 82770-82771 (December 28, 2000).
The modifications simplify and reduce the number of criteria
required for an IRB or Privacy Board to approve a waiver of
authorization to better conform to the Common Rule's waiver criteria
for informed consent to participate in the research study. The
Department estimates that the net effect of these modifications is to
reduce the time necessary to assemble the waivers and for an IRB or
Privacy Board to consider and act on waiver requests by one quarter.
The Department estimates these simplifications would reduce the
expected costs first year costs by $10 million and the ten year costs
by $146 million, relative to the December 2000 Privacy Rule. Although
the Department requested information to better assess this cost
savings, the public comment period failed to produce any sound data.
Therefore, the Department's estimates have not changed.
The Department adopts three other modifications to simplify the
Privacy Rule requirements to relieve the potential administrative
burden on research. First, the modifications permit a covered entity to
use and disclose protected health information in the form of a limited
data set for research, public health, and health care operations. A
limited data set does not contain any direct identifiers of
individuals, but may contain any other demographic or health
information needed for research, public health or health care
operations purposes. The covered entity must obtain a data use
agreement from the recipient of a limited data set pursuant to which
the recipient agrees to restrict use and disclosure of the limited data
set and not to identify or contact any individual. With a data use
agreement, a researcher may access a limited data set without obtaining
individual authorization or having to go through an IRB or a Privacy
Board for a waiver of the authorization. (See discussion at III.G.2.)
Second, the modifications simplify the accounting procedures for
research disclosures by the covered entity by eliminating the need to
account for disclosures which the individual has authorized or which
are part of a limited data set, and by providing a simplified basis to
account for a research disclosure involving 50 or more records. (See
discussion at III.F.2.) Third, the modifications simplify the
authorization process for research to facilitate the combining of the
informed consent for participation in the research itself with an
authorization required under the Privacy Rule. (See discussion at
III.E.2.) Any cost savings attributed to the later two modifications
would accrue primarily to the covered entity disclosing protected
health information for research purposes and, therefore, would not
affect the costs estimated here for the impact of the Privacy Rule on
IRBs.
With regard to limited data sets, the Department anticipates that
the modification will avoid IRBs having to review and approve
researchers' requests for waiver of authorization for numerous studies
that are undertaken today without IRB review and approval. For example,
a researcher may not need IRB approval or waiver of informed consent to
collect health information that is linked to the individual only by
inclusion of the individual's zip code as this may not be personally
identifying information under the Common Rule. However, this
information would not be considered de-identified information under the
Privacy Rule and it could not be disclosed to the researcher without
the individual's authorization or an IRB waiver of that authorization.
With the limited data set, research that does not require direct
identifiers can continue to go on expeditiously without adding burden
to IRBs and Privacy Boards. Similarly, limited data sets, similar to
the Hospital Discharge Abstract data, will permit much useful
information to be available for research, public health, and health
care operations purposes.
Although there was broad support for limited data sets in the
comments received by the Department, we do not have sufficient
information to estimate the amount of research that currently occurs
without IRB review or approval and which, but for the provision on
limited data sets, would have had to involved the IRB to meet the use
and disclosure requirements of the Privacy Rule. Nor did the comments
supply information upon which the Department could reasonably rely in
making a estimate of the cost savings. Therefore, the Department does
not increase its
[[Page 53259]]
estimated savings for research to reflect this modification, although
we are confident that the overall impact of the Privacy Rule on
research will be much lower based on the modifications adopted in this
rulemaking.
Response to Public Comments
Comment: The Department received a number of comments that argued
that the Privacy Rule would increase costs and workloads for
researchers and research institutions. One commenter delineated these
issues as: (1) An increased difficulty in recruiting research
participants; (2) the need for increased IRB scrutiny (and the
associated resource costs); and (3) the additional paperwork and
documentation required.
Response: The Department recognized the impact of the final Privacy
Rule on researchers and research institutions and provided a cost
estimate for this impact as part of the Final Rule. Likewise, the NPRM
offered modifications, such as more closely aligning the Privacy and
Common Rule criteria, to ease the burden and, correspondingly,
estimated cost savings of these proposed modifications. The specific
comments appear to dispute the research cost estimates in the final
Rule, as their delineated issues are not reflective of the
modifications and cost savings specified in the NPRM. In any event, no
reliable empirical, direct information on the estimates of financial
impact that either supported or contradicted the Department's
calculations was provided. Therefore, our estimates remain unchanged.
Privacy Rule Modifications--Ten-Year Cost Estimates
------------------------------------------------------------------------------
----------------------------------
Change due to
Policy Original cost Modification modification
------------------------------------------------------------------------------
----------------------------------
Consent.......................... $103 million............. Provision removed....... -$103 million.\1\
Notice........................... $391 million............. Good faith effort to +$184 million.
obtain acknowledgment
of receipt.
Marketing........................ Not scored due to lack of Fewer activities Reduction in cost but
data. constitute marketing. magnitude cannot be
estimated.
Business Associates.............. $103 million for contract Model language provided. -$35 million.
modifications.
Research......................... $585 million............. Waiver requirements -$146 million.
simplified.
Net Change....................... ......................... ........................ -$100 million.
------------------------------------------------------------------------------
----------------------------------
\1\ As noted above in the discussion on consent, while the estimated costs of the consent provisions were $103
million, comments have suggested that the costs were likely to be much higher. If these comments are accurate,
the cost savings associated with retracting the consent provisions would, therefore, also be significantly
higher than $103 million.
C. Costs to the Federal Government
The modifications adopted in this Rule will result in small savings
to the Federal government relative to the costs that would have
occurred under the Privacy Rule. Although there will be some increase
in costs for the new requirements for obtaining acknowledgment for
receipt of the notice, these costs are at least partially offset by the
savings in the elimination of the consent. As discussed above, to the
extent concerns are accurate that the costs for the consent provisions
are much higher than estimated, the cost savings associated with the
retraction of these provisions would, therefore, be significantly
higher. The Department does not believe the Federal government engages
in significant marketing as defined in the Privacy Rule. The Federal
government will have business associates under the Privacy Rule, and,
therefore, the sample language proposed in this rulemaking will be of
benefit to Federal departments and agencies. The Department has not
estimated the Federal government's portion of the $35 million savings
it estimated for this change. Similarly, the Federal government, which
conducts and sponsors a significant amount of research that is subject
to IRBs, will realize some savings as a result of the research
modifications in this rulemaking. The Department does not have
sufficient information, however, to estimate the Federal government's
portion of the total $146 million savings with respect to research
modifications.
D. Costs to State and Local Government
The modifications also may affect the costs to State and local
governments. However, these effects likely will be small. As with the
Federal government, State and local governments will have any costs of
the additional notice requirement offset by the savings realized by the
elimination of the consent requirement. As discussed above, to the
extent concerns are accurate that the costs for the consent provisions
are much higher than estimated, the cost savings associated with the
retraction of these provisions would, therefore, be significantly
higher. State and local governments could realize savings from the
sample language for business associates and the changes in research,
but the savings are likely to be small. The Department does not have
sufficient information to estimate the State and local government's
share of the net savings from the modifications.
E. Benefits
The benefits of various provisions of these modifications will be
strong privacy protections for individuals coupled with increased
access to quality health care, and ease of compliance with privacy
protections by covered entities. The changes will have the benefit of
eliminating obstacles that could interfere with patient access to
timely and high quality health care. The modifications will also
improve quality health care by removing obstacles that may have
interfered with research activities that form the basis of advancements
in medical technology and provide greater understanding of disease. It
is extremely difficult to quantify the benefits of enhanced privacy of
medical records and elimination of obstacles to research and quality
activities. This section provides examples of the qualitative benefits
of these Privacy Rule modifications.
1. Strengthened Notice, Flexible Consent
The new requirement that a covered entity make a good faith attempt
to obtain written acknowledgment of the notice of privacy practices
will increase privacy protections to patients. The strengthened notice
requirement will focus individuals on uses and disclosures of their
health information, and assure that individuals have the opportunity to
discuss privacy concerns with the health care providers with whom they
have direct treatment relationships. Awareness of privacy practices
should provide patients with a greater degree of comfort in discussing
sensitive personal information with
[[Page 53260]]
their doctors. The strengthened notice standard was adopted in tandem
with changes to make consent more flexible. The changes to the consent
requirement have the benefit of removing significant barriers to health
care. In many circumstances, the consent requirement would have
resulted in delayed treatment and, in other circumstances, would have
required patients to be greatly inconvenienced at a time when they
needed care, by forcing additional trips simply to sign consent forms.
These modifications have the benefit of removing barriers to access to
health care that would have resulted from the consent requirement while
preserving important privacy protections in the notice standard.
2. Research
Research is key to the continued availability of high quality
health care. The modifications remove potential barriers to research.
For example, the modifications streamline the criteria to be used by
IRBs or Privacy Boards in approving a waiver of individual
authorization for research that could not otherwise be done and ensure
the criteria are compatible with similar waiver determinations under
the Common Rule. Thus, administrative burdens on IRBs and Privacy
Boards are eased, without diminishing the health information privacy
and confidentiality standards for research. In addition, the research
transition provisions have been modified to ensure that the Privacy
Rule does not interfere with ongoing or future research for which an
individual has granted permission to use his information. By permitting
this research to continue, these modifications make sure that vast
research resources continue to be usable for important research that
result in development of new medical technology and increased quality
of health care.
3. Sharing Information for Quality Activities and Public Health
Health plans and health care providers play a valuable role in
assessing the quality of health care and improving health care
outcomes. The modifications ensure access to health information needed
by covered entities and others involved in quality activities. The
increased sharing of information will help to limit medical error rates
and to determine appropriate, high quality treatment for specific
conditions by encouraging these issues to be studied and allowing
benchmarking against similar entities. The modifications, in creating a
limited data set, also encourages private entities to continue studies
and research in support of public health activities. These activities
help reduce the spread and occurrence of diseases.
4. Availability of Information About Treatment Alternatives
Understanding treatment alternatives is an important factor in
increasing an individual's involvement in his or her own treatment and
making informed health care decisions. By streamlining the marketing
requirements, the modifications make it easier for a covered entity to
understand that they may share valuable information about treatment
alternatives with their patients or enrollees, and the conditions for
doing so. These modifications make sure that covered entities will be
permitted to continue to share important treatment alternative
information that gives patients knowledge about newer, less expensive,
and/or more appropriate health care options.
F. Alternatives
In July 2001, the Department clarified the Privacy Rule in
guidance, where feasible, to resolve some of the issues raised by
commenters. Issues that could not adequately be addressed through
guidance because of the need for a regulatory change are addressed in
this rulemaking. The Department examined a number of alternatives to
these modifications. One alternative was to not make any changes to the
Privacy Rule, but this option was rejected for the reasons explained
throughout the preamble. The Department also considered various
alternatives to specific provisions in the development of this final
Rule. These alternatives are generally discussed above, where
appropriate.
V. Preliminary Regulatory Flexibility Analysis
The Department also examined the impact of this proposed Rule as
required by the Small Business Regulatory Enforcement and Fairness Act
(SBREFA) (5 U.S.C. 601, et seq.). SBREFA requires agencies to determine
whether a rule will have a significant economic impact on a substantial
number of small entities.
The law does not define the thresholds to use in implementing the
law and the Small Business Administration discourages establishing
quantitative criteria. However, the Department has long used two
criteria--the number of entities affected and the impact on revenue and
costs--for assessing whether a regulatory flexibility analysis is
necessary. Department guidelines state that an impact of three to five
percent should be considered a significant economic impact. Based on
these criteria, the Department has determined that a regulatory
flexibility analysis is not required.
As described in the December 2000 Regulatory Flexibility Analysis
for the Privacy Rule, most covered entities are small businesses--
approximately 465,000. See Table A, 65 FR 82780 (December 28, 2000).
Lessening the burden for small entities, consistent with the intent of
protecting privacy, was an important consideration in developing these
modifications. However, as discussed in the Final Regulatory Impact
Analysis, above, the net affect of the modifications is an overall
savings of approximately $100 million over ten years. Even if all of
this savings were to accrue to small entities (an over estimation), the
impact per small entity would be de minimis.
VI. Collection of Information Requirements
Under the Paperwork Reduction Act (PRA) of 1995, the Department is
required to provide 30-day notice in the Federal Register and solicit
public comment before a collection of information requirement is
submitted to the Office of Management and Budget (OMB) for review and
approval. In order to fairly evaluate whether an information collection
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires
that the Department solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of the agency;
The accuracy of the estimate of the information collection
burden;
The quality, utility, and clarity of the information to be
collected; and
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Section A below summarizes the proposed information collection
requirements on which we explicitly seek, and will consider, public
comment for 30 days. Due to the complexity of this regulation, and to
avoid redundancy of effort, we are referring readers to Section V
(Final Regulatory Impact Analysis published in the Federal Register on
December 28, 2000), to review the detailed cost assumptions associated
with these PRA requirements.
Section B below references the HIPAA Privacy Rule regulation
sections published for 60-day public comment on November 3, 1999, and
for 30-day public comment on December 28, 2000,
[[Page 53261]]
in compliance with the PRA public comment process. These earlier
publications contained the information collection requirements for
these sections as required by the PRA. The portions of the Privacy
Rule, included by reference only in Section B, have not changed
subsequent to the two public comment periods. Thus, the Department has
fulfilled its statutory obligation to solicit public comment on the
information collection requirements for these provisions. The
information in Section B is pending OMB PRA approval, but is not
reopened for comment. However, for clarity purposes, we will upon this
publication submit to OMB for PRA review and approval the entire set of
information collection requirements required referenced in
Secs. 160.204, 160.306, 160.310, 164.502, 164.504, 164.506, 164.508,
164.510, 164.512, 164.514, 164.520, 164.522, 164.524, 164.526, 164.528,
and 164.530.
Section A
1. Section 164.506--Consent for Treatment, Payment, and Health Care
Operations
Under the Privacy Rule, as issued in December 2000, a covered
health care provider that has a direct treatment relationship with
individuals would have had, except in certain circumstances, to obtain
an individual's consent to use or disclose protected health information
to carry out treatment, payment, and health care operations. The
amended final Rule eliminates this requirement.
2. Section 164.520--Notice of Privacy Practices for Protected Health
Information
The amended final Privacy Rule imposes a good faith effort on
direct treatment providers to obtain an individual's acknowledgment of
receipt of the entity's notice of privacy practices for protected
health information, and to document such acknowledgment or, in the
absence of such acknowledgment, the entity's good faith efforts to
obtain it.
The underlying requirements for notice of privacy practices for
protected health information are not changed. These requirements
provide that, except in certain circumstances set forth in this section
of the Rule, individuals have a right to adequate notice of the uses
and disclosures of protected health information that may be made by the
covered entity, and of the individual's rights and the covered entity's
legal duties with respect to protected health information. To comply
with this requirement a covered entity must provide a notice, written
in plain language, that includes the elements set forth at
Sec. 164.520(b). For health plans, there will be an average of 160.2
million notices each year. We assume that the most efficient means of
distribution for health plans will be to send them out annually as part
of the materials they send to current and potential enrollees, even
though it is not required by the regulation. The number of notices per
health plan per year would be about 10,570. We further estimate that it
will require each health plan, on average, only 10 seconds to
disseminate each notice. The total annual burden associated with this
requirement is calculated to be 267,000 hours.
Health care providers with direct treatment relationships would:
Provide a copy of the notice to an individual at the time
of first service delivery to the individual;
Make the notice available at the service delivery site for
individuals to request and take with them;
Whenever the content of the notice is revised, make it
available upon request and post it, if required by this section, in a
location where it is reasonable to expect individuals seeking services
from the provider to be able to read the notice.
The annual number of notices disseminated by all providers is 613
million. We further estimate that it will require each health care
provider, on average, 10 seconds to disseminate each notice. This
estimate is based upon the assumption that the required notice will be
incorporated into and disseminated with other patient materials. The
total annual burden associated with this requirement is calculated to
be 1 million hours. However, the amended final Privacy Rule also
imposes a good faith effort on direct treatment providers to obtain an
individual's acknowledgment of receipt of the provider's notice, and to
document such acknowledgment or, in the absence of such acknowledgment,
the provider's good faith efforts to obtain it. The estimated burden
for the acknowledgment of receipt of the notice is 10 seconds for each
notice. This is based on the fact that the provider does not need to
take elaborate steps to receive acknowledgment. Initialing a box on an
existing form or some other simple means will suffice. With the annual
estimate of 613,000,000 acknowledgment forms it is estimated that the
acknowledgment burden is 1,000,000 hours.
A covered entity is also required to document compliance with the
notice requirements by retaining copies of the versions of the notice
issued by the covered entity, and a direct treatment provider is
required to retain a copy of each individual's acknowledgment or
documentation of the good faith effort as required by Sec. 164.530(j).
3. Appendix to Preamble--Sample Business Associate Contract Provisions
The Department also solicits public comments on the collection of
information requirements associated with the model business associate
contract language displayed in the Appendix to this preamble Rule. The
language displayed has been changed in response to comments on the
language that was published with the Notice of Proposed Rulemaking on
March 27, 2002. The Department provided the model business associate
contract provisions in response to numerous requests for guidance.
These provisions were designed to help covered entities more easily
comply with the business associate contract requirements of the Privacy
Rule. However, use of these model provisions is not required for
compliance with the Privacy Rule. Nor is the model language a complete
contract. Rather, the model language is designed to be adapted to the
business arrangement between the covered entity and the business
associate and to be incorporated into a contract drafted by the
parties.
Section B
As referenced above, the Department has complied with the public
comment process as it relates to the information collection
requirements contained in the sections of regulation referenced below.
The Department is referencing this information solely for the purposes
of providing an overview of the regulation sections containing
information collection requirements established by the final Privacy
Rule.
Section 160.204--Process for Requesting Exception Determinations
Section 160.306--Complaints to the Secretary
Section 160.310--Responsibilities of Covered Entities
Section 164.502--Uses and Disclosures of Protected Health
Information: General Rules
Section 164.504--Uses and Disclosures--Organizational Requirements
Section 164.508--Uses and Disclosures for Which Individual
Authorization Is Required
Section 164.510--Uses and Disclosures Requiring an Opportunity for
the Individual to Agree or to Object
Section 164.512--Uses and Disclosures for Which Consent, an
Authorization, or Opportunity to Agree or Object is Not Required
Section 164.514--Other Procedural Requirements Relating to Uses and
[[Page 53262]]
Disclosures of Protected Health Information
Section 164.522--Rights to Request Privacy Protection for Protected
Health Information
Section 164.524--Access of Individuals to Protected Health
Information
Section 164.526--Amendment of Protected Health Information
Section 164.528--Accounting for Disclosures of Protected Health
Information
Section 164.530--Administrative Requirements
C. Comments on Information Collection Requirements in Section A
The Department has submitted a copy of these modifications to the
Privacy Rule to OMB for its review and approval of the information
collection requirements summarized in Section A above. If you comment
on any of the modifications to the information collection and record
keeping requirements in Secs. 164.506, 164.520, and/or the model
business associate contract language please mail copies directly to the
following:
Center for Medicaid and Medicare Services, Information Technology
Investment Management Group, Division of CMS Enterprise Standards, Room
C2-26-17, 7500 Security Boulevard, Baltimore, MD 21244-1850, ATTN: John
Burke, HIPAA Privacy,
and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 10235, New Executive Office Building, Washington, DC
20503, ATTN: Brenda Aguilar, CMS Desk Officer.
VII. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in an expenditure by State, local, or
tribal governments, in the aggregate, or by the private sector, of $110
million in a single year. A final cost-benefit analysis was published
in the Privacy Rule of December 28, 2000 (65 FR 82462, 82794). In
developing the final Privacy Rule, the Department adopted the least
burdensome alternatives, consistent with achieving the Rule's goals.
The Department does not believe that the amendments to the Privacy Rule
would qualify as an unfunded mandate under the statute.
VIII. Environmental Impact
The Department has determined under 21 CFR 25.30(k) that this
action is of a type that does not individually or cumulatively have a
significant effect on the human environment. Therefore, neither an
environmental assessment nor an environmental impact statement is
required.
IX. Executive Order 13132: Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a rule that imposes substantial
direct requirement costs on State and local governments, preempts State
law, or otherwise has Federalism implications. The Federalism
implications of the Privacy Rule were assessed as required by Executive
Order 13132 and published in the Privacy Rule of December 28, 2000 (65
FR 82462, 82797). The amendments with the most direct effect on
Federalism principles concerns the clarifications regarding the rights
of parents and minors under State law.
The amendments make clear the intent of the Department to defer to
State law with respect to such rights. Therefore, the Department
believes that the amended Privacy Rule would not significantly affect
the rights, roles and responsibilities of States.
X. Sample Business Associate Contract Provisions--Appendix
March 2002 NPRM. In response to requests for guidance, the
Department provided sample language for business associate contracts.
The provisions were provided as an appendix to the preamble and were
intended to serve as guidance for covered entities to assist in
compliance with the business associate provisions of the Privacy Rule.
The proposal was not a model contract, but rather was sample language
that could be included in a contract.
Overview of Public Comment. The Department received a small number
of comments addressing the sample business associate contract
provisions. The comments fell into four general categories. Most
commenters were pleased with the Department's guidance for business
associate contracts and expressed appreciation for such guidance. There
were some commenters that thought the language was insufficient and
requested the Department create a complete model contract not just
sample provisions. The third category of commenters thought the
provisions went further than the requirements in the regulation and
requested specific changes to the sample language. In addition, a few
commenters requested that the Department withdraw the sample provisions
asserting that they will eliminate the potential of negotiating or
establishing a business associate contract that is tailored to the
precise requirements of the particular relationship.
Final Modifications. This Rule continues to include sample business
associate contract provisions as an appendix to the preamble, because
the majority of commenters that addressed this subject found these
provisions to be helpful guidance in their compliance efforts with the
business associate contract requirements in the Privacy Rule.
The Department has made several changes to the language originally
proposed in response to comment. Although these are only sample
provisions, the changes, which are described below, should help to
clear up some confusion.
First, the Department has changed the name from ``model language''
to ``sample language'' to clarify that the provisions are merely sample
clauses, and that none are required to be in a business associate
contract so long as the contract meets the requirements of the
regulation. The sample language continues to indicate, using square
brackets, those instances in which a provision or phrase in a provision
applies only in certain circumstances or is optional.
The Department has made three modifications in the Obligations and
Activities of the Business Associate provisions. First, there are
modifications to clarify that the parties can negotiate appropriate
terms regarding the time and manner of providing access to protected
health information in a designated record set, providing information to
account for disclosures of protected health information, and for making
amendments to protected health information in a designated record set.
Although the language clarifies that the terms are to be negotiated by
the Parties, the agreement must permit the covered entity to comply
with its obligations under the Privacy Rule.
Second, the Department has amended the sample language regarding
review of business associate practices, books, and records to clarify
that the contract must permit the Secretary, not the covered entity, to
have access to such records, including protected health information,
for purposes of determining the covered entity's compliance with the
Privacy Rule. The sample language continues to include the option that
parties additionally agree that the business associate shall disclose
this information to the covered entity for compliance purposes to
indicate that this is still an appropriate approach for this purpose.
The modifications also clarify that parties can negotiate the time and
manner of providing the covered entity with access to the business
associate's internal practices, books, and records.
[[Page 53263]]
Finally, the Department has modified the sample language to clarify
that business associates are only required to notify the covered entity
of uses and disclosures of protected health information not provided
for by the agreement of which it becomes aware in order to more closely
align the sample contract provisions with the regulation text. The
Department did not intend to imply a different standard than that
included in the regulation.
The Department has modified the General Use and Disclosure sample
language to clarify that there are two possible approaches, and that in
each approach the use or disclosure of protected health information by
a business associate shall be consistent with the minimum necessary
policies and procedures of the covered entity.
The Department has adopted one change to the sample language under
Specific Use and Disclosure that clarifies that a permitted specific
use of protected health information by the business associate includes
reporting violations of law to appropriate Federal and State
authorities. This would permit a business associate to use or disclose
protected health information in accordance with the standards in
Sec. 164.502(j)(1). We indicate that this is optional text, not
required by the Privacy Rule. Because we have included this language as
sample language, we have deleted discussion of this issue in the
statement preceding the sample business associate contract provisions.
Under Obligations of Covered Entity, the Department has clarified
that covered entities need only notify business associates of a
restriction to the use or disclosure of protected health information in
its notice of privacy practices to the extent that such restriction may
affect the business associates' use or disclosure of protected health
information. The other provisions requiring the covered entity to
notify the business associate of restrictions to the use or disclosure
of protected health information remain and have been modified to
include similar limiting language.
In the Term and Termination provisions, the Department has added
clarifying language that indicates that if neither termination nor cure
are feasible, the covered entity shall report the violation to the
Secretary. We have also clarified that the parties should negotiate how
they will determine whether the return or destruction of protected
health information is infeasible.
Finally, the Department has clarified the miscellaneous provision
regarding interpretation to clarify that ambiguities shall be resolved
to permit the covered entity's compliance with the Privacy Rule.
Each entity should carefully analyze each of the sample provisions
to ensure that it is appropriate given the specific business associate
relationship. Some of the modifications are intended to address some
commenters concerns that the sample language is weighted too heavily in
favor of the covered entity. Individual parties are reminded that all
contract provisions are subject to negotiation, provided that they are
consistent with the requirements in the Privacy Rule. The sample
language is not intended to, and cannot, substitute for responsible
legal advice.
Response to Other Public Comments
Comment: Several commenters noted that the sample language was
missing certain required contractual elements, such as an effective
date, insurance and indemnification clauses, procedures for amending
the contract, as well as other provisions that may be implicated by the
Privacy Rule, such as the Electronic Transactions Standards. Some of
these commenters requested that the guidance be a complete model
contract rather than sample contract provisions so that the covered
entity would not need legal assistance.
Response: The Department intentionally did not make this guidance a
complete model contract, but rather provided only those provisions
specifically tied to requirements of the Privacy Rule. As stated above,
this guidance does not substitute for legal advice. Other contract
provisions may be dictated by State or other law or by the relationship
between the parties. It is not feasible to provide sample contracts
that would accommodate each situation. Parties are free to negotiate
additional terms, including those that may be required by other laws or
regulations.
Comment: Some commenters requested that use of the sample business
associate contract language create a safe harbor for an entity that
adopts them.
Response: The sample business associate contract provisions are not
a safe harbor. Rather, the sample language is intended to provide
guidance and assist covered entities in the effort required to enter
into a business associate agreement. Use of the sample provisions or
similar provisions, where appropriate, would be considered strong
evidence of compliance with the business associate contract provisions
of the Privacy Rule. However, contracts will necessarily vary based on
State law and the relationship between the covered entity and the
business associate.
Comment: Some commenters were concerned that the sample provision
permitting a covered entity to have access to the practices, books, and
records of the business associate would impose an audit requirement on
the covered entity.
Response: The sample business associate contract provisions do not
impose any additional requirements on covered entities. Only the
regulation imposes requirements. Therefore, the inclusion of the
provision that the business associate shall allow the covered entity
access to the business associate practices, books, and records does not
indicate that the Privacy Rule imposes an audit requirement on the
covered entity. We have stated numerous times that the Privacy Rule
does not require covered entities to monitor the activities of their
business associates.
Comment: One commenter noted that the business associate should not
be required, under the contract, to mitigate damages resulting from a
violation.
Response: We disagree. In order for a covered entity to be able to
act as it is required to under the Privacy Rule when a business
associate is holding protected health information, the covered entity
must require the same activities of the business associate through the
contract.
Comment: One commenter noted that the Privacy Rule does not
explicitly direct that a covered entity provide its notice of privacy
practices to its business associates.
Response: We agree and have modified the language in the sample
provision accordingly. However, in order for the business associate to
act consistently with the privacy practices of the covered entity,
which is required by the Privacy Rule, the parties may find it
necessary to require disclosure of these policies. To the extent that
parties can craft an alternate approach, they are free to do so.
Comment: One commenter indicated that traditional contract terms
such as ``term'' and ``termination'' should not be included in the
sample language if the Department's intention is to address only those
terms required by the Rule.
Response: Because termination of the business associate agreement
is specifically addressed in the Privacy Rule, we have retained these
provisions in the sample language. As with all other provisions,
parties are free to negotiate alternative Term and Termination
provisions that meet their unique situations and concerns,
[[Page 53264]]
provided that they meet the requirements of the Privacy Rule.
Comment: Another commenter indicated that the sample language
should not require the return or destruction of protected health
information in the possession of subcontractors or agents of the
business associate.
Response: We have retained this language as this is consistent with
the Privacy Rule. Section 164.504(e)(2)(ii)(D) requires that the
business associate contract include a provision that the business
associate ensures that any agents, including subcontractors, agree to
the same restrictions and conditions as the business associate.
Generally, the contract must require the business associate to return
or destroy protected health information; therefore, the contract also
must require the business associate to have agents and subcontractors
to do the same. This is reflected in the sample contract language.
Comment: One commenter requested that the sample language include a
provision that the covered entity may impose monetary damages on a
business associate for violation of its privacy policies.
Response: We have not included such a provision because the Privacy
Rule does not address this issue. The Privacy Rule would not prohibit a
monetary damages provision from being included in the contract. This,
again, is a matter to be negotiated between covered entities and their
business associates.
Comment: One commenter suggested that specific references to
sections in the Rule be deleted and either replaced by a general
statement that the contract shall be interpreted in a manner consistent
with the Rule or supplemented with clarifying language with examples.
Response: We believe that using section reference is a valid and
expeditious approach as it incorporates changes as modifications are
made to the Privacy Rule. A business associate contract may take a
different approach than using section references to the Privacy Rule.
Comment: One commenter asked that the sample business associate
contract provisions be included in the Rule rather than published as an
appendix to the preamble so that it will be in the Code of Federal
Regulations.
Response: We have published the sample business associate contract
provisions as an appendix to the preamble because they are meant as
guidance. The sample language shall be available on the Office for
Civil Rights web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=li
nklog&to=http://www.hhs.gov/ocr/hipaa ; and may be updated or
revised as necessary.
Appendix to the Preamble--Sample Business Associate Contract
Provisions
Statement of Intent
The Department provides these sample business associate contract
provisions in response to numerous requests for guidance. This is only
sample language. These provisions are designed to help covered entities
more easily comply with the business associate contract requirements of
the Privacy Rule. However, use of these sample provisions is not
required for compliance with the Privacy Rule. The language may be
amended to more accurately reflect business arrangements between the
covered entity and the business associate.
These or similar provisions may be incorporated into an agreement
for the provision of services between the entities or they may be
incorporated into a separate business associate agreement. These
provisions only address concepts and requirements set forth in the
Privacy Rule and alone are not sufficient to result in a binding
contract under State law. They do not include many formalities and
substantive provisions that are required or typically included in a
valid contract. Reliance on this sample is not sufficient for
compliance with State law and does not replace consultation with a
lawyer or negotiations between the parties to the contract.
Furthermore, a covered entity may want to include other provisions
that are related to the Privacy Rule but that are not required by the
Privacy Rule. For example, a covered entity may want to add provisions
in a business associate contract in order for the covered entity to be
able to rely on the business associate to help the covered entity meet
its obligations under the Privacy Rule. In addition, there may be
permissible uses or disclosures by a business associate that are not
specifically addressed in these sample provisions, for example having a
business associate create a limited data set. These and other types of
issues will need to be worked out between the parties.
Sample Business Associate Contract Provisions \3\
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\3\ Words or phrases contained in brackets are intended as
either optional language or as instructions to the users of these
sample provisions and are not intended to be included in the
contractual provisions.
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Definitions (Alternative Approaches)
Catch-all definition:
Terms used, but not otherwise defined, in this Agreement shall have
the same meaning as those terms in the Privacy Rule.
Examples of specific definitions:
(a) Business Associate. ``Business Associate'' shall mean [Insert
Name of Business Associate].
(b) Covered Entity. ``Covered Entity'' shall mean [Insert Name of
Covered Entity].
(c) Individual. ``Individual'' shall have the same meaning as the
term ``individual'' in 45 CFR 164.501 and shall include a person who
qualifies as a personal representative in accordance with 45 CFR
164.502(g).
(d) Privacy Rule. ``Privacy Rule'' shall mean the Standards for
Privacy of Individually Identifiable Health Information at 45 CFR part
160 and part 164, subparts A and E.
(e) Protected Health Information. ``Protected Health Information''
shall have the same meaning as the term ``protected health
information'' in 45 CFR 164.501, limited to the information created or
received by Business Associate from or on behalf of Covered Entity.
(f) Required By Law. ``Required By Law'' shall have the same
meaning as the term ``required by law'' in 45 CFR 164.501.
(g) Secretary. ``Secretary'' shall mean the Secretary of the
Department of Health and Human Services or his designee.
Obligations and Activities of Business Associate
(a) Business Associate agrees to not use or disclose Protected
Health Information other than as permitted or required by the Agreement
or as Required By Law.
(b) Business Associate agrees to use appropriate safeguards to
prevent use or disclosure of the Protected Health Information other
than as provided for by this Agreement.
(c) Business Associate agrees to mitigate, to the extent
practicable, any harmful effect that is known to Business Associate of
a use or disclosure of Protected Health Information by Business
Associate in violation of the requirements of this Agreement. [This
provision may be included if it is appropriate for the Covered Entity
to pass on its duty to mitigate damages to a Business Associate.]
(d) Business Associate agrees to report to Covered Entity any use
or disclosure of the Protected Health Information not provided for by
this Agreement of which it becomes aware.
(e) Business Associate agrees to ensure that any agent, including a
[[Page 53265]]
subcontractor, to whom it provides Protected Health Information
received from, or created or received by Business Associate on behalf
of Covered Entity agrees to the same restrictions and conditions that
apply through this Agreement to Business Associate with respect to such
information.
(f) Business Associate agrees to provide access, at the request of
Covered Entity, and in the time and manner [Insert negotiated terms],
to Protected Health Information in a Designated Record Set, to Covered
Entity or, as directed by Covered Entity, to an Individual in order to
meet the requirements under 45 CFR 164.524. [Not necessary if business
associate does not have protected health information in a designated
record set.]
(g) Business Associate agrees to make any amendment(s) to Protected
Health Information in a Designated Record Set that the Covered Entity
directs or agrees to pursuant to 45 CFR 164.526 at the request of
Covered Entity or an Individual, and in the time and manner [Insert
negotiated terms]. [Not necessary if business associate does not have
protected health information in a designated record set.]
(h) Business Associate agrees to make internal practices, books,
and records, including policies and procedures and Protected Health
Information, relating to the use and disclosure of Protected Health
Information received from, or created or received by Business Associate
on behalf of, Covered Entity available [to the Covered Entity, or] to
the Secretary, in a time and manner [Insert negotiated terms] or
designated by the Secretary, for purposes of the Secretary determining
Covered Entity's compliance with the Privacy Rule.
(i) Business Associate agrees to document such disclosures of
Protected Health Information and information related to such
disclosures as would be required for Covered Entity to respond to a
request by an Individual for an accounting of disclosures of Protected
Health Information in accordance with 45 CFR 164.528.
(j) Business Associate agrees to provide to Covered Entity or an
Individual, in time and manner [Insert negotiated terms], information
collected in accordance with Section [Insert Section Number in Contract
Where Provision (i) Appears] of this Agreement, to permit Covered
Entity to respond to a request by an Individual for an accounting of
disclosures of Protected Health Information in accordance with 45 CFR
164.528.
Permitted Uses and Disclosures by Business Associate
General Use and Disclosure Provisions [(a) and (b) are alternative
approaches]
(a) Specify purposes:
Except as otherwise limited in this Agreement, Business Associate
may use or disclose Protected Health Information on behalf of, or to
provide services to, Covered Entity for the following purposes, if such
use or disclosure of Protected Health Information would not violate the
Privacy Rule if done by Covered Entity or the minimum necessary
policies and procedures of the Covered Entity: [List Purposes].
(b) Refer to underlying services agreement:
Except as otherwise limited in this Agreement, Business Associate
may use or disclose Protected Health Information to perform functions,
activities, or services for, or on behalf of, Covered Entity as
specified in [Insert Name of Services Agreement], provided that such
use or disclosure would not violate the Privacy Rule if done by Covered
Entity or the minimum necessary policies and procedures of the Covered
Entity. Specific Use and Disclosure Provisions [only necessary if
parties wish to allow Business Associate to engage in such activities]
(a) Except as otherwise limited in this Agreement, Business
Associate may use Protected Health Information for the proper
management and administration of the Business Associate or to carry out
the legal responsibilities of the Business Associate.
(b) Except as otherwise limited in this Agreement, Business
Associate may disclose Protected Health Information for the proper
management and administration of the Business Associate, provided that
disclosures are Required By Law, or Business Associate obtains
reasonable assurances from the person to whom the information is
disclosed that it will remain confidential and used or further
disclosed only as Required By Law or for the purpose for which it was
disclosed to the person, and the person notifies the Business Associate
of any instances of which it is aware in which the confidentiality of
the information has been breached.
(c) Except as otherwise limited in this Agreement, Business
Associate may use Protected Health Information to provide Data
Aggregation services to Covered Entity as permitted by 42 CFR
164.504(e)(2)(i)(B).
(d) Business Associate may use Protected Health Information to
report violations of law to appropriate Federal and State authorities,
consistent with Sec. 164.502(j)(1).
Obligations of Covered Entity
Provisions for Covered Entity To Inform Business Associate of Privacy
Practices and Restrictions [provisions dependent on business
arrangement]
(a) Covered Entity shall notify Business Associate of any
limitation(s) in its notice of privacy practices of Covered Entity in
accordance with 45 CFR 164.520, to the extent that such limitation may
affect Business Associate's use or disclosure of Protected Health
Information.
(b) Covered Entity shall notify Business Associate of any changes
in, or revocation of, permission by Individual to use or disclose
Protected Health Information, to the extent that such changes may
affect Business Associate's use or disclosure of Protected Health
Information.
(c) Covered Entity shall notify Business Associate of any
restriction to the use or disclosure of Protected Health Information
that Covered Entity has agreed to in accordance with 45 CFR 164.522, to
the extent that such restriction may affect Business Associate's use or
disclosure of Protected Health Information.
Permissible Requests by Covered Entity
Covered Entity shall not request Business Associate to use or
disclose Protected Health Information in any manner that would not be
permissible under the Privacy Rule if done by Covered Entity. [Include
an exception if the Business Associate will use or disclose protected
health information for, and the contract includes provisions for, data
aggregation or management and administrative activities of Business
Associate].
Term and Termination
(a) Term. The Term of this Agreement shall be effective as of
[Insert Effective Date], and shall terminate when all of the Protected
Health Information provided by Covered Entity to Business Associate, or
created or received by Business Associate on behalf of Covered Entity,
is destroyed or returned to Covered Entity, or, if it is infeasible to
return or destroy Protected Health Information, protections are
extended to such information, in accordance with the termination
provisions in this Section. [Term may differ.]
(b) Termination for Cause. Upon Covered Entity's knowledge of a
material breach by Business Associate, Covered Entity shall either:
(1) Provide an opportunity for Business Associate to cure the
breach or
[[Page 53266]]
end the violation and terminate this Agreement [and the ___ Agreement/
sections __ of the ___ Agreement] if Business Associate does not cure
the breach or end the violation within the time specified by Covered
Entity;
(2) Immediately terminate this Agreement [and the ___ Agreement/
sections __ of the ___ Agreement] if Business Associate has breached a
material term of this Agreement and cure is not possible; or
(3) If neither termination nor cure are feasible, Covered Entity
shall report the violation to the Secretary. [Bracketed language in
this provision may be necessary if there is an underlying services
agreement. Also, opportunity to cure is permitted, but not required by
the Privacy Rule.]
(c) Effect of Termination.
(1) Except as provided in paragraph (2) of this section, upon
termination of this Agreement, for any reason, Business Associate shall
return or destroy all Protected Health Information received from
Covered Entity, or created or received by Business Associate on behalf
of Covered Entity. This provision shall apply to Protected Health
Information that is in the possession of subcontractors or agents of
Business Associate. Business Associate shall retain no copies of the
Protected Health Information.
(2) In the event that Business Associate determines that returning
or destroying the Protected Health Information is infeasible, Business
Associate shall provide to Covered Entity notification of the
conditions that make return or destruction infeasible. Upon [Insert
negotiated terms] that return or destruction of Protected Health
Information is infeasible, Business Associate shall extend the
protections of this Agreement to such Protected Health Information and
limit further uses and disclosures of such Protected Health Information
to those purposes that make the return or destruction infeasible, for
so long as Business Associate maintains such Protected Health
Information.
Miscellaneous
(a) Regulatory References. A reference in this Agreement to a
section in the Privacy Rule means the section as in effect or as
amended.
(b) Amendment. The Parties agree to take such action as is
necessary to amend this Agreement from time to time as is necessary for
Covered Entity to comply with the requirements of the Privacy Rule and
the Health Insurance Portability and Accountability Act of 1996, Pub.
L. No. 104-191.
(c) Survival. The respective rights and obligations of Business
Associate under Section [Insert Section Number Related to ``Effect of
Termination''] of this Agreement shall survive the termination of this
Agreement.
(d) Interpretation. Any ambiguity in this Agreement shall be
resolved to permit Covered Entity to comply with the Privacy Rule.
List of Subjects
45 CFR Part 160
Electronic transactions, Employer benefit plan, Health, Health
care, Health facilities, Health insurance, Health records, Medicaid,
Medical research, Medicare, Privacy, Reporting and record keeping
requirements.
45 CFR Part 164
Electronic transactions, Employer benefit plan, Health, Health
care, Health facilities, Health insurance, Health records, Medicaid,
Medical research, Medicare, Privacy, Reporting and record keeping
requirements.
Dated: August 6, 2002.
Tommy G. Thompson,
Secretary.
For the reasons set forth in the preamble, the Department amends 45
CFR subtitle A, subchapter C, as follows:
PART 160--GENERAL ADMINISTRATIVE REQUIREMENTS
1. The authority citation for part 160 continues to read as
follows:
Authority: Sec. 1171 through 1179 of the Social Security Act (42
U.S.C. 1320d-1329d-8), as added by sec. 262 of Pub. L. No. 104-191,
110 Stat. 2021-2031 and sec. 264 of Pub. L. No. 104-191 (42 U.S.C.
1320d-2(note)).
2. Amend Sec. 160.102(b), by removing the phrase ``section
201(a)(5) of the Health Insurance Portability Act of 1996, (Pub. L. No.
104-191)'' and adding in its place the phrase ``the Social Security
Act, 42 U.S.C. 1320a-7c(a)(5)''.
3. In Sec. 160.103 add the definition of ``individually
identifiable health information'' in alphabetical order to read as
follows:
Sec. 160.103 Definitions.
* * * * *
Individually identifiable health information is information that is
a subset of health information, including demographic information
collected from an individual, and:
(1) Is created or received by a health care provider, health plan,
employer, or health care clearinghouse; and
(2) Relates to the past, present, or future physical or mental
health or condition of an individual; the provision of health care to
an individual; or the past, present, or future payment for the
provision of health care to an individual; and
(i) That identifies the individual; or
(ii) With respect to which there is a reasonable basis to believe
the information can be used to identify the individual.
* * * * *
4. In Sec. 160.202 revise paragraphs (2) and (4) of the definition
of ``more stringent'' to read as follows:
Sec. 160.202 Definitions.
* * * * *
More stringent means * * *
(2) With respect to the rights of an individual, who is the subject
of the individually identifiable health information, regarding access
to or amendment of individually identifiable health information,
permits greater rights of access or amendment, as applicable.
* * * * *
(4) With respect to the form, substance, or the need for express
legal permission from an individual, who is the subject of the
individually identifiable health information, for use or disclosure of
individually identifiable health information, provides requirements
that narrow the scope or duration, increase the privacy protections
afforded (such as by expanding the criteria for), or reduce the
coercive effect of the circumstances surrounding the express legal
permission, as applicable.
* * * * *
5. Amend Sec. 160.203(b) by adding the words ``individually
identifiable'' before the word ``health''.
PART 164--SECURITY AND PRIVACY
Subpart E--Privacy of Individually Identifiable Health Information
1. The authority citation for part 164 continues to read as
follows:
Authority: 42 U.S.C. 1320d-2 and 1320d-4, sec. 264 of Pub. L.
No. 104-191, 110 Stat. 2033-2034 (42 U.S.C. 1320d-2(note)).
2. Amend Sec. 164.102 by removing the words ``implementation
standards'' and adding in its place the words ``implementation
specifications.''
3. In Sec. 164.500, remove ``consent,'' from paragraph (b)(1)(v).
4. Amend Sec. 164.501 as follows:
a. In the definition of ``health care operations'' remove from the
introductory text of the definition ``, and any of the following
activities of an
[[Page 53267]]
organized health care arrangement in which the covered entity
participates'' and revise paragraphs (6)(iv) and (v).
b. Remove the definition of ``individually identifiable health
information''.
c. Revise the definition of ``marketing''.
d. In paragraph (1)(ii) of the definition of ``payment,'' remove
the word ``covered''.
e. Revise paragraph (2) of the definition of ``protected health
information''.
f. Remove the words ``a covered'' and replace them with ``an'' in
the definition of ``required by law''.
The revisions read as follows:
Sec. 164.501 Definitions.
* * * * *
Health care operations means * * *
(6) * * *
(iv) The sale, transfer, merger, or consolidation of all or part of
the covered entity with another covered entity, or an entity that
following such activity will become a covered entity and due diligence
related to such activity; and
(v) Consistent with the applicable requirements of Sec. 164.514,
creating de-identified health information or a limited data set, and
fundraising for the benefit of the covered entity.
* * * * *
Marketing means:
(1) To make a communication about a product or service that
encourages recipients of the communication to purchase or use the
product or service, unless the communication is made:
(i) To describe a health-related product or service (or payment for
such product or service) that is provided by, or included in a plan of
benefits of, the covered entity making the communication, including
communications about: the entities participating in a health care
provider network or health plan network; replacement of, or
enhancements to, a health plan; and health-related products or services
available only to a health plan enrollee that add value to, but are not
part of, a plan of benefits.
(ii) For treatment of the individual; or
(iii) For case management or care coordination for the individual,
or to direct or recommend alternative treatments, therapies, health
care providers, or settings of care to the individual.
(2) An arrangement between a covered entity and any other entity
whereby the covered entity discloses protected health information to
the other entity, in exchange for direct or indirect remuneration, for
the other entity or its affiliate to make a communication about its own
product or service that encourages recipients of the communication to
purchase or use that product or service.
* * * * *
Protected health information means * * *
(2) Protected health information excludes individually identifiable
health information in:
(i) Education records covered by the Family Educational Rights and
Privacy Act, as amended, 20 U.S.C. 1232g;
(ii) Records described at 20 U.S.C. 1232g(a)(4)(B)(iv); and
(iii) Employment records held by a covered entity in its role as
employer.
* * * * *
5. Amend Sec. 164.502 as follows:
a. Revise paragraphs (a)(1)(ii), (iii), and (vi).
b. Revise paragraph (b)(2)(ii).
c. Redesignate paragraphs (b)(2)(iii) through (v) as paragraphs
(b)(2)(iv) through (vi).
d. Add a new paragraph (b)(2)(iii).
e. Redesignate paragraphs (g)(3)(i) through (iii) as (g)(3)(i)(A)
through (C) and redesignate paragraph (g)(3) as (g)(3)(i).
f. Add a new paragraph (g)(3)(ii).
The revisions and additions read as follows:
Sec. 164.502 Uses and disclosures of protected health information:
general rules.
(a) Standard. * * *
(1) Permitted uses and disclosures. * * *
(ii) For treatment, payment, or health care operations, as
permitted by and in compliance with Sec. 164.506;
(iii) Incident to a use or disclosure otherwise permitted or
required by this subpart, provided that the covered entity has complied
with the applicable requirements of Sec. 164.502(b), Sec. 164.514(d),
and Sec. 164.530(c) with respect to such otherwise permitted or
required use or disclosure;
* * * * *
(vi) As permitted by and in compliance with this section,
Sec. 164.512, or Sec. 164.514(e), (f), or (g).
* * * * *
(b) Standard: Minimum necessary. * * *
(2) Minimum necessary does not apply. * * *
(ii) Uses or disclosures made to the individual, as permitted under
paragraph (a)(1)(i) of this section or as required by paragraph
(a)(2)(i) of this section;
(iii) Uses or disclosures made pursuant to an authorization under
Sec. 164.508;
* * * * *
(g)(1) Standard: Personal representatives. * * *
(3) Implementation specification: unemancipated minors. * * *
(i) * * *
(ii) Notwithstanding the provisions of paragraph (g)(3)(i) of this
section:
(A) If, and to the extent, permitted or required by an applicable
provision of State or other law, including applicable case law, a
covered entity may disclose, or provide access in accordance with
Sec. 164.524 to, protected health information about an unemancipated
minor to a parent, guardian, or other person acting in loco parentis;
(B) If, and to the extent, prohibited by an applicable provision of
State or other law, including applicable case law, a covered entity may
not disclose, or provide access in accordance with Sec. 164.524 to,
protected health information about an unemancipated minor to a parent,
guardian, or other person acting in loco parentis; and
(C) Where the parent, guardian, or other person acting in loco
parentis, is not the personal representative under paragraphs
(g)(3)(i)(A), (B), or (C) of this section and where there is no
applicable access provision under State or other law, including case
law, a covered entity may provide or deny access under Sec. 164.524 to
a parent, guardian, or other person acting in loco parentis, if such
action is consistent with State or other applicable law, provided that
such decision must be made by a licensed health care professional, in
the exercise of professional judgment.
* * * * *
6. Amend Sec. 164.504 as follows:
a. In paragraph (a), revise the definitions of ``health care
component'' and ``hybrid entity''.
b. Revise paragraph (c)(1)(ii).
c. Revise paragraph (c)(2)(ii).
d. Revise paragraph (c)(3)(iii).
e. Revise paragraph (f)(1)(i).
f. Add paragraph (f)(1)(iii).
The revisions and addition read as follows:
Sec. 164.504 Uses and disclosures: Organizational requirements.
(a) Definitions. * * *
Health care component means a component or combination of
components of a hybrid entity designated by the hybrid entity in
accordance with paragraph (c)(3)(iii) of this section.
Hybrid entity means a single legal entity:
(1) That is a covered entity;
(2) Whose business activities include both covered and non-covered
functions; and
[[Page 53268]]
(3) That designates health care components in accordance with
paragraph (c)(3)(iii) of this section.
* * * * *
(c)(1) Implementation specification: Application of other
provisions. * * *
(ii) A reference in such provision to a ``health plan,'' ``covered
health care provider,'' or ``health care clearinghouse'' refers to a
health care component of the covered entity if such health care
component performs the functions of a health plan, health care
provider, or health care clearinghouse, as applicable; and
* * * * *
(2) Implementation specifications: Safeguard requirements. * * *
(ii) A component that is described by paragraph (c)(3)(iii)(B) of
this section does not use or disclose protected health information that
it creates or receives from or on behalf of the health care component
in a way prohibited by this subpart; and
* * * * *
(3) Implementation specifications: Responsibilities of the covered
entity. * * *
(iii) The covered entity is responsible for designating the
components that are part of one or more health care components of the
covered entity and documenting the designation as required by
Sec. 164.530(j), provided that, if the covered entity designates a
health care component or components, it must include any component that
would meet the definition of covered entity if it were a separate legal
entity. Health care component(s) also may include a component only to
the extent that it performs:
(A) Covered functions; or
(B) Activities that would make such component a business associate
of a component that performs covered functions if the two components
were separate legal entities.
* * * * *
(f)(1) Standard: Requirements for group health plans. (i) Except as
provided under paragraph (f)(1)(ii) or (iii) of this section or as
otherwise authorized under Sec. 164.508, a group health plan, in order
to disclose protected health information to the plan sponsor or to
provide for or permit the disclosure of protected health information to
the plan sponsor by a health insurance issuer or HMO with respect to
the group health plan, must ensure that the plan documents restrict
uses and disclosures of such information by the plan sponsor consistent
with the requirements of this subpart.
* * * * *
(iii) The group health plan, or a health insurance issuer or HMO
with respect to the group health plan, may disclose to the plan sponsor
information on whether the individual is participating in the group
health plan, or is enrolled in or has disenrolled from a health
insurance issuer or HMO offered by the plan.
* * * * *
7. Revise Sec. 164.506 to read as follows:
Sec. 164.506 Uses and disclosures to carry out treatment, payment, or
health care operations.
(a) Standard: Permitted uses and disclosures. Except with respect
to uses or disclosures that require an authorization under
Sec. 164.508(a)(2) and (3), a covered entity may use or disclose
protected health information for treatment, payment, or health care
operations as set forth in paragraph (c) of this section, provided that
such use or disclosure is consistent with other applicable requirements
of this subpart.
(b) Standard: Consent for uses and disclosures permitted. (1) A
covered entity may obtain consent of the individual to use or disclose
protected health information to carry out treatment, payment, or health
care operations.
(2) Consent, under paragraph (b) of this section, shall not be
effective to permit a use or disclosure of protected health information
when an authorization, under Sec. 164.508, is required or when another
condition must be met for such use or disclosure to be permissible
under this subpart.
(c) Implementation specifications: Treatment, payment, or health
care operations.
(1) A covered entity may use or disclose protected health
information for its own treatment, payment, or health care operations.
(2) A covered entity may disclose protected health information for
treatment activities of a health care provider.
(3) A covered entity may disclose protected health information to
another covered entity or a health care provider for the payment
activities of the entity that receives the information.
(4) A covered entity may disclose protected health information to
another covered entity for health care operations activities of the
entity that receives the information, if each entity either has or had
a relationship with the individual who is the subject of the protected
health information being requested, the protected health information
pertains to such relationship, and the disclosure is:
(i) For a purpose listed in paragraph (1) or (2) of the definition
of health care operations; or
(ii) For the purpose of health care fraud and abuse detection or
compliance.
(5) A covered entity that participates in an organized health care
arrangement may disclose protected health information about an
individual to another covered entity that participates in the organized
health care arrangement for any health care operations activities of
the organized health care arrangement.
8. Revise Sec. 164.508 to read as follows:
Sec. 164.508 Uses and disclosures for which an authorization is
required.
(a) Standard: authorizations for uses and disclosures.--(1)
Authorization required: general rule. Except as otherwise permitted or
required by this subchapter, a covered entity may not use or disclose
protected health information without an authorization that is valid
under this section. When a covered entity obtains or receives a valid
authorization for its use or disclosure of protected health
information, such use or disclosure must be consistent with such
authorization.
(2) Authorization required: psychotherapy notes. Notwithstanding
any provision of this subpart, other than the transition provisions in
Sec. 164.532, a covered entity must obtain an authorization for any use
or disclosure of psychotherapy notes, except:
(i) To carry out the following treatment, payment, or health care
operations:
(A) Use by the originator of the psychotherapy notes for treatment;
(B) Use or disclosure by the covered entity for its own training
programs in which students, trainees, or practitioners in mental health
learn under supervision to practice or improve their skills in group,
joint, family, or individual counseling; or
(C) Use or disclosure by the covered entity to defend itself in a
legal action or other proceeding brought by the individual; and
(ii) A use or disclosure that is required by Sec. 164.502(a)(2)(ii)
or permitted by Sec. 164.512(a); Sec. 164.512(d) with respect to the
oversight of the originator of the psychotherapy notes;
Sec. 164.512(g)(1); or Sec. 164.512(j)(1)(i).
(3) Authorization required: Marketing. (i) Notwithstanding any
provision of this subpart, other than the transition provisions in
Sec. 164.532, a covered entity must obtain an authorization for any use
or disclosure of protected health
[[Page 53269]]
information for marketing, except if the communication is in the form
of:
(A) A face-to-face communication made by a covered entity to an
individual; or
(B) A promotional gift of nominal value provided by the covered
entity.
(ii) If the marketing involves direct or indirect remuneration to
the covered entity from a third party, the authorization must state
that such remuneration is involved.
(b) Implementation specifications: general requirements.--(1) Valid
authorizations. (i) A valid authorization is a document that meets the
requirements in paragraphs (a)(3)(ii), (c)(1), and (c)(2) of this
section, as applicable.
(ii) A valid authorization may contain elements or information in
addition to the elements required by this section, provided that such
additional elements or information are not inconsistent with the
elements required by this section.
(2) Defective authorizations. An authorization is not valid, if the
document submitted has any of the following defects:
(i) The expiration date has passed or the expiration event is known
by the covered entity to have occurred;
(ii) The authorization has not been filled out completely, with
respect to an element described by paragraph (c) of this section, if
applicable;
(iii) The authorization is known by the covered entity to have been
revoked;
(iv) The authorization violates paragraph (b)(3) or (4) of this
section, if applicable;
(v) Any material information in the authorization is known by the
covered entity to be false.
(3) Compound authorizations. An authorization for use or disclosure
of protected health information may not be combined with any other
document to create a compound authorization, except as follows:
(i) An authorization for the use or disclosure of protected health
information for a research study may be combined with any other type of
written permission for the same research study, including another
authorization for the use or disclosure of protected health information
for such research or a consent to participate in such research;
(ii) An authorization for a use or disclosure of psychotherapy
notes may only be combined with another authorization for a use or
disclosure of psychotherapy notes;
(iii) An authorization under this section, other than an
authorization for a use or disclosure of psychotherapy notes, may be
combined with any other such authorization under this section, except
when a covered entity has conditioned the provision of treatment,
payment, enrollment in the health plan, or eligibility for benefits
under paragraph (b)(4) of this section on the provision of one of the
authorizations.
(4) Prohibition on conditioning of authorizations. A covered entity
may not condition the provision to an individual of treatment, payment,
enrollment in the health plan, or eligibility for benefits on the
provision of an authorization, except:
(i) A covered health care provider may condition the provision of
research-related treatment on provision of an authorization for the use
or disclosure of protected health information for such research under
this section;
(ii) A health plan may condition enrollment in the health plan or
eligibility for benefits on provision of an authorization requested by
the health plan prior to an individual's enrollment in the health plan,
if:
(A) The authorization sought is for the health plan's eligibility
or enrollment determinations relating to the individual or for its
underwriting or risk rating determinations; and
(B) The authorization is not for a use or disclosure of
psychotherapy notes under paragraph (a)(2) of this section; and
(iii) A covered entity may condition the provision of health care
that is solely for the purpose of creating protected health information
for disclosure to a third party on provision of an authorization for
the disclosure of the protected health information to such third party.
(5) Revocation of authorizations. An individual may revoke an
authorization provided under this section at any time, provided that
the revocation is in writing, except to the extent that:
(i) The covered entity has taken action in reliance thereon; or
(ii) If the authorization was obtained as a condition of obtaining
insurance coverage, other law provides the insurer with the right to
contest a claim under the policy or the policy itself.
(6) Documentation. A covered entity must document and retain any
signed authorization under this section as required by Sec. 164.530(j).
(c) Implementation specifications: Core elements and
requirements.--(1) Core elements. A valid authorization under this
section must contain at least the following elements:
(i) A description of the information to be used or disclosed that
identifies the information in a specific and meaningful fashion.
(ii) The name or other specific identification of the person(s), or
class of persons, authorized to make the requested use or disclosure.
(iii) The name or other specific identification of the person(s),
or class of persons, to whom the covered entity may make the requested
use or disclosure.
(iv) A description of each purpose of the requested use or
disclosure. The statement ``at the request of the individual'' is a
sufficient description of the purpose when an individual initiates the
authorization and does not, or elects not to, provide a statement of
the purpose.
(v) An expiration date or an expiration event that relates to the
individual or the purpose of the use or disclosure. The statement ``end
of the research study,'' ``none,'' or similar language is sufficient if
the authorization is for a use or disclosure of protected health
information for research, including for the creation and maintenance of
a research database or research repository.
(vi) Signature of the individual and date. If the authorization is
signed by a personal representative of the individual, a description of
such representative's authority to act for the individual must also be
provided.
(2) Required statements. In addition to the core elements, the
authorization must contain statements adequate to place the individual
on notice of all of the following:
(i) The individual's right to revoke the authorization in writing,
and either:
(A) The exceptions to the right to revoke and a description of how
the individual may revoke the authorization; or
(B) To the extent that the information in paragraph (c)(2)(i)(A) of
this section is included in the notice required by Sec. 164.520, a
reference to the covered entity's notice.
(ii) The ability or inability to condition treatment, payment,
enrollment or eligibility for benefits on the authorization, by stating
either:
(A) The covered entity may not condition treatment, payment,
enrollment or eligibility for benefits on whether the individual signs
the authorization when the prohibition on conditioning of
authorizations in paragraph (b)(4) of this section applies; or
(B) The consequences to the individual of a refusal to sign the
authorization when, in accordance with paragraph (b)(4) of this
section, the covered entity can condition treatment, enrollment in the
health plan, or eligibility for benefits on failure to obtain such
authorization.
[[Page 53270]]
(iii) The potential for information disclosed pursuant to the
authorization to be subject to redisclosure by the recipient and no
longer be protected by this subpart.
(3) Plain language requirement. The authorization must be written
in plain language.
(4) Copy to the individual. If a covered entity seeks an
authorization from an individual for a use or disclosure of protected
health information, the covered entity must provide the individual with
a copy of the signed authorization.
9. Amend Sec. 164.510 as follows:
a. Revise the first sentence of the introductory text.
b. Remove the word ``for'' from paragraph (b)(3).
The revision reads as follows:
Sec. 164.510 Uses and disclosures requiring an opportunity for the
individual to agree or to object.
A covered entity may use or disclose protected health information,
provided that the individual is informed in advance of the use or
disclosure and has the opportunity to agree to or prohibit or restrict
the use or disclosure, in accordance with the applicable requirements
of this section. * * *
* * * * *
10. Amend Sec. 164.512 as follows:
a. Revise the section heading and the first sentence of the
introductory text.
b. Revise paragraph (b)(1)(iii).
c. In paragraph (b)(1)(v)(A) remove the word ``a'' before the word
``health.''
d. Add the word ``and'' after the semicolon at the end of paragraph
(b)(1)(v)(C).
e. Redesignate paragraphs (f)(3)(ii) and (iii) as (f)(3)(i) and
(ii).
f. In the second sentence of paragraph (g)(2) add the word ``to''
after the word ``directors.''
g. In paragraph (i)(1)(iii)(A) remove the word ``is'' after the
word ``disclosure.''
h. Revise paragraph (i)(2)(ii).
i. In paragraph (i)(2)(iii) remove ``(i)(2)(ii)(D)'' and add in its
place ``(i)(2)(ii)(C)''.
The revisions read as follows:
Sec. 164.512 Uses and disclosures for which an authorization or
opportunity to agree or object is not required.
A covered entity may use or disclose protected health information
without the written authorization of the individual, as described in
Sec. 164.508, or the opportunity for the individual to agree or object
as described in Sec. 164.510, in the situations covered by this
section, subject to the applicable requirements of this section. * * *
* * * * *
(b) Standard: uses and disclosures for public health activities.
(1) Permitted disclosures. * * *
(iii) A person subject to the jurisdiction of the Food and Drug
Administration (FDA) with respect to an FDA-regulated product or
activity for which that person has responsibility, for the purpose of
activities related to the quality, safety or effectiveness of such FDA-
regulated product or activity. Such purposes include:
(A) To collect or report adverse events (or similar activities with
respect to food or dietary supplements), product defects or problems
(including problems with the use or labeling of a product), or
biological product deviations;
(B) To track FDA-regulated products;
(C) To enable product recalls, repairs, or replacement, or lookback
(including locating and notifying individuals who have received
products that have been recalled, withdrawn, or are the subject of
lookback); or
(D) To conduct post marketing surveillance;
* * * * *
(i) Standard: Uses and disclosures for research purposes. * * *
(2) Documentation of waiver approval. * * *
(ii) Waiver criteria. A statement that the IRB or privacy board has
determined that the alteration or waiver, in whole or in part, of
authorization satisfies the following criteria:
(A) The use or disclosure of protected health information involves
no more than a minimal risk to the privacy of individuals, based on, at
least, the presence of the following elements;
(1) An adequate plan to protect the identifiers from improper use
and disclosure;
(2) An adequate plan to destroy the identifiers at the earliest
opportunity consistent with conduct of the research, unless there is a
health or research justification for retaining the identifiers or such
retention is otherwise required by law; and
(3) Adequate written assurances that the protected health
information will not be reused or disclosed to any other person or
entity, except as required by law, for authorized oversight of the
research study, or for other research for which the use or disclosure
of protected health information would be permitted by this subpart;
(B) The research could not practicably be conducted without the
waiver or alteration; and
(C) The research could not practicably be conducted without access
to and use of the protected health information.
* * * * *
11. Amend Sec. 164.514 as follows:
a. Revise paragraph (b)(2)(i)(R).
b. Revise paragraph (d)(1).
c. Revise paragraph (d)(4)(iii).
d. In paragraph (d)(5), remove the word ``discloses'' and add in
its place the word ``disclose''.
e. Revise paragraph (e).
The revisions read as follows:
Sec. 164.514 Other requirements relating to uses and disclosures of
protected health information.
* * * * *
(b) Implementation specifications: Requirements for de-
identification of protected health information. * * *
(2)(i) * * *
(R) Any other unique identifying number, characteristic, or code,
except as permitted by paragraph (c) of this section; and
* * * * *
(d)(1) Standard: minimum necessary requirements. In order to comply
with Sec. 164.502(b) and this section, a covered entity must meet the
requirements of paragraphs (d)(2) through (d)(5) of this section with
respect to a request for, or the use and disclosure of, protected
health information.
* * * * *
(4) Implementation specifications: Minimum necessary requests for
protected health information. * * *
(iii) For all other requests, a covered entity must:
(A) Develop criteria designed to limit the request for protected
health information to the information reasonably necessary to
accomplish the purpose for which the request is made; and
(B) Review requests for disclosure on an individual basis in
accordance with such criteria.
* * * * *
(e) (1) Standard: Limited data set. A covered entity may use or
disclose a limited data set that meets the requirements of paragraphs
(e)(2) and (e)(3) of this section, if the covered entity enters into a
data use agreement with the limited data set recipient, in accordance
with paragraph (e)(4) of this section.
(2) Implementation specification: Limited data set: A limited data
set is protected health information that excludes the following direct
identifiers of the individual or of relatives, employers, or household
members of the individual:
(i) Names;
(ii) Postal address information, other than town or city, State,
and zip code;
(iii) Telephone numbers;
(iv) Fax numbers;
[[Page 53271]]
(v) Electronic mail addresses;
(vi) Social security numbers;
(vii) Medical record numbers;
(viii) Health plan beneficiary numbers;
(ix) Account numbers;
(x) Certificate/license numbers;
(xi) Vehicle identifiers and serial numbers, including license
plate numbers;
(xii) Device identifiers and serial numbers;
(xiii) Web Universal Resource Locators (URLs);
(xiv) Internet Protocol (IP) address numbers;
(xv) Biometric identifiers, including finger and voice prints; and
(xvi) Full face photographic images and any comparable images.
(3) Implementation specification: Permitted purposes for uses and
disclosures. (i) A covered entity may use or disclose a limited data
set under paragraph (e)(1) of this section only for the purposes of
research, public health, or health care operations.
(ii) A covered entity may use protected health information to
create a limited data set that meets the requirements of paragraph
(e)(2) of this section, or disclose protected health information only
to a business associate for such purpose, whether or not the limited
data set is to be used by the covered entity.
(4) Implementation specifications: Data use agreement.--(i)
Agreement required. A covered entity may use or disclose a limited data
set under paragraph (e)(1) of this section only if the covered entity
obtains satisfactory assurance, in the form of a data use agreement
that meets the requirements of this section, that the limited data set
recipient will only use or disclose the protected health information
for limited purposes.
(ii) Contents. A data use agreement between the covered entity and
the limited data set recipient must:
(A) Establish the permitted uses and disclosures of such
information by the limited data set recipient, consistent with
paragraph (e)(3) of this section. The data use agreement may not
authorize the limited data set recipient to use or further disclose the
information in a manner that would violate the requirements of this
subpart, if done by the covered entity;
(B) Establish who is permitted to use or receive the limited data
set; and
(C) Provide that the limited data set recipient will:
(1) Not use or further disclose the information other than as
permitted by the data use agreement or as otherwise required by law;
(2) Use appropriate safeguards to prevent use or disclosure of the
information other than as provided for by the data use agreement;
(3) Report to the covered entity any use or disclosure of the
information not provided for by its data use agreement of which it
becomes aware;
(4) Ensure that any agents, including a subcontractor, to whom it
provides the limited data set agrees to the same restrictions and
conditions that apply to the limited data set recipient with respect to
such information; and
(5) Not identify the information or contact the individuals.
(iii) Compliance. (A) A covered entity is not in compliance with
the standards in paragraph (e) of this section if the covered entity
knew of a pattern of activity or practice of the limited data set
recipient that constituted a material breach or violation of the data
use agreement, unless the covered entity took reasonable steps to cure
the breach or end the violation, as applicable, and, if such steps were
unsuccessful:
(1) Discontinued disclosure of protected health information to the
recipient; and
(2) Reported the problem to the Secretary.
(B) A covered entity that is a limited data set recipient and
violates a data use agreement will be in noncompliance with the
standards, implementation specifications, and requirements of paragraph
(e) of this section.
* * * * *
12. Amend Sec. 164.520 as follows:
a. Remove the words ``consent or'' from paragraph (b)(1)(ii)(B).
b. In paragraph (c), introductory text, remove ``(c)(4)'' and add
in its place ``(c)(3)''.
c. Revise paragraph (c)(2)(i).
d. Redesignate paragraphs (c)(2)(ii) and (iii) as (c)(2)(iii) and
(iv).
e. Add new paragraph (c)(2)(ii).
f. Amend redesignated paragraph (c)(2)(iv) by removing
``(c)(2)(ii)'' and adding in its place ``(c)(2)(iii)''.
g. Amend paragraph (c)(3)(iii) by adding a sentence at the end.
h. Revise paragraph (e).
The revisions and addition read as follows:
Sec. 164.520 Notice of privacy practices for protected health
information.
* * * * *
(c) Implementation specifications: provision of notice. * * *
(2) Specific requirements for certain covered health care
providers. * * *
(i) Provide the notice:
(A) No later than the date of the first service delivery, including
service delivered electronically, to such individual after the
compliance date for the covered health care provider; or
(B) In an emergency treatment situation, as soon as reasonably
practicable after the emergency treatment situation.
(ii) Except in an emergency treatment situation, make a good faith
effort to obtain a written acknowledgment of receipt of the notice
provided in accordance with paragraph (c)(2)(i) of this section, and if
not obtained, document its good faith efforts to obtain such
acknowledgment and the reason why the acknowledgment was not obtained;
* * * * *
(3) Specific requirements for electronic notice. * * *
(iii) * * * The requirements in paragraph (c)(2)(ii) of this
section apply to electronic notice.
* * * * *
(e) Implementation specifications: Documentation. A covered entity
must document compliance with the notice requirements, as required by
Sec. 164.530(j), by retaining copies of the notices issued by the
covered entity and, if applicable, any written acknowledgments of
receipt of the notice or documentation of good faith efforts to obtain
such written acknowledgment, in accordance with paragraph (c)(2)(ii) of
this section.
13. Amend Sec. 164.522 by removing the reference to
``164.502(a)(2)(i)'' in paragraph (a)(1)(v), and adding in its place
``164.502(a)(2)(ii)''.
14. Amend Sec. 164.528 as follows:
a. In paragraph (a)(1)(i), remove ``Sec. 164.502'' and add in its
place ``Sec. 164.506''.
b. Remove the word ``or'' from paragraph (a)(1)(v).
c. Redesignate paragraph (a)(1)(vi) as (a)(1)(ix) and redesignate
paragraphs (a)(1)(iii) through (v) as (a)(1)(v) through (vii).
d. Add paragraphs (a)(1)(iii), (iv), and (a)(1)(viii).
e. Revise paragraph (b)(2), introductory text.
f. Revise paragraph (b)(2)(iv).
g. Remove ``or pursuant to a single authorization under
Sec. 164.508,'' from paragraph (b)(3), introductory text.
h. Add paragraph (b)(4).
The additions and revisions read as follows:
Sec. 164.528 Accounting of disclosures of protected health
information.
(a) Standard: Right to an accounting of disclosures of protected
health information.
(1) * * *
[[Page 53272]]
(iii) Incident to a use or disclosure otherwise permitted or
required by this subpart, as provided in Sec. 164.502;
(iv) Pursuant to an authorization as provided in Sec. 164.508;
* * * * *
(viii) As part of a limited data set in accordance with
Sec. 164.514(e); or
* * * * *
(b) Implementation specifications: Content of the accounting. * * *
(2) Except as otherwise provided by paragraphs (b)(3) or (b)(4) of
this section, the accounting must include for each disclosure:
* * * * *
(iv) A brief statement of the purpose of the disclosure that
reasonably informs the individual of the basis for the disclosure or,
in lieu of such statement, a copy of a written request for a disclosure
under Secs. 164.502(a)(2)(ii) or 164.512, if any.
* * * * *
(4)(i) If, during the period covered by the accounting, the covered
entity has made disclosures of protected health information for a
particular research purpose in accordance with Sec. 164.512(i) for 50
or more individuals, the accounting may, with respect to such
disclosures for which the protected health information about the
individual may have been included, provide:
(A) The name of the protocol or other research activity;
(B) A description, in plain language, of the research protocol or
other research activity, including the purpose of the research and the
criteria for selecting particular records;
(C) A brief description of the type of protected health information
that was disclosed;
(D) The date or period of time during which such disclosures
occurred, or may have occurred, including the date of the last such
disclosure during the accounting period;
(E) The name, address, and telephone number of the entity that
sponsored the research and of the researcher to whom the information
was disclosed; and
(F) A statement that the protected health information of the
individual may or may not have been disclosed for a particular protocol
or other research activity.
(ii) If the covered entity provides an accounting for research
disclosures, in accordance with paragraph (b)(4) of this section, and
if it is reasonably likely that the protected health information of the
individual was disclosed for such research protocol or activity, the
covered entity shall, at the request of the individual, assist in
contacting the entity that sponsored the research and the researcher.
* * * * *
15. Amend Sec. 164.530 as follows:
a. Redesignate paragraph (c)(2) as (c)(2)(i).
b. Add paragraph (c)(2)(ii).
c. Remove the words ``the requirements'' from paragraph
(i)(4)(ii)(A) and add in their place the word ``specifications.''
The addition reads as follows:
Sec. 164.530 Administrative requirements.
* * * * *
(c) Standard: Safeguards. * * *
(2) Implementation specifications: Safeguards. (i) * * *
(ii) A covered entity must reasonably safeguard protected health
information to limit incidental uses or disclosures made pursuant to an
otherwise permitted or required use or disclosure.
* * * * *
16. Revise Sec. 164.532 to read as follows:
Sec. 164.532 Transition provisions.
(a) Standard: Effect of prior authorizations. Notwithstanding
Secs. 164.508 and 164.512(i), a covered entity may use or disclose
protected health information, consistent with paragraphs (b) and (c) of
this section, pursuant to an authorization or other express legal
permission obtained from an individual permitting the use or disclosure
of protected health information, informed consent of the individual to
participate in research, or a waiver of informed consent by an IRB.
(b) Implementation specification: Effect of prior authorization for
purposes other than research. Notwithstanding any provisions in
Sec. 164.508, a covered entity may use or disclose protected health
information that it created or received prior to the applicable
compliance date of this subpart pursuant to an authorization or other
express legal permission obtained from an individual prior to the
applicable compliance date of this subpart, provided that the
authorization or other express legal permission specifically permits
such use or disclosure and there is no agreed-to restriction in
accordance with Sec. 164.522(a).
(c) Implementation specification: Effect of prior permission for
research. Notwithstanding any provisions in Secs. 164.508 and
164.512(i), a covered entity may, to the extent allowed by one of the
following permissions, use or disclose, for research, protected health
information that it created or received either before or after the
applicable compliance date of this subpart, provided that there is no
agreed-to restriction in accordance with Sec. 164.522(a), and the
covered entity has obtained, prior to the applicable compliance date,
either:
(1) An authorization or other express legal permission from an
individual to use or disclose protected health information for the
research;
(2) The informed consent of the individual to participate in the
research; or
(3) A waiver, by an IRB, of informed consent for the research, in
accordance with 7 CFR 1c.116(d), 10 CFR 745.116(d), 14 CFR 1230.116(d),
15 CFR 27.116(d), 16 CFR 1028.116(d), 21 CFR 50.24, 22 CFR 225.116(d),
24 CFR 60.116(d), 28 CFR 46.116(d), 32 CFR 219.116(d), 34 CFR
97.116(d), 38 CFR 16.116(d), 40 CFR 26.116(d), 45 CFR 46.116(d), 45 CFR
690.116(d), or 49 CFR 11.116(d), provided that a covered entity must
obtain authorization in accordance with Sec. 164.508 if, after the
compliance date, informed consent is sought from an individual
participating in the research.
(d) Standard: Effect of prior contracts or other arrangements with
business associates. Notwithstanding any other provisions of this
subpart, a covered entity, other than a small health plan, may disclose
protected health information to a business associate and may allow a
business associate to create, receive, or use protected health
information on its behalf pursuant to a written contract or other
written arrangement with such business associate that does not comply
with Secs. 164.502(e) and 164.504(e) consistent with the requirements,
and only for such time, set forth in paragraph (e) of this section.
(e) Implementation specification: Deemed compliance.-- (1)
Qualification. Notwithstanding other sections of this subpart, a
covered entity, other than a small health plan, is deemed to be in
compliance with the documentation and contract requirements of
Secs. 164.502(e) and 164.504(e), with respect to a particular business
associate relationship, for the time period set forth in paragraph
(e)(2) of this section, if:
(i) Prior to October 15, 2002, such covered entity has entered into
and is operating pursuant to a written contract or other written
arrangement with a business associate for such business associate to
perform functions or activities or provide services that make the
entity a business associate; and
(ii) The contract or other arrangement is not renewed or modified
from
[[Page 53273]]
October 15, 2002, until the compliance date set forth in Sec. 164.534.
(2) Limited deemed compliance period. A prior contract or other
arrangement that meets the qualification requirements in paragraph (e)
of this section, shall be deemed compliant until the earlier of:
(i) The date such contract or other arrangement is renewed or
modified on or after the compliance date set forth in Sec. 164.534; or
(ii) April 14, 2004.
(3) Covered entity responsibilities. Nothing in this section shall
alter the requirements of a covered entity to comply with part 160,
subpart C of this subchapter and Secs. 164.524, 164.526, 164.528, and
164.530(f) with respect to protected health information held by a
business associate.
[FR Doc. 02-20554 Filed 8-9-02; 2:00 pm]
BILLING CODE 4153-01-P