September 18, 2009

HHS guts health-care breach notification law, groups warn

Privacy and civil rights advocates accused the U.S. Department of Health and Human Services of trying to neuter a landmark data breach notification law for health care organizations that is scheduled to go into effect next week.

The law would require any organization covered under the Health Insurance Portability and Accountability Act (HIPAA) to notify patients of a data breach involving their personal health information. Companies that used encryption and data destruction methodologies to render sensitive health information unusable and unreadable to unauthorized individuals were exempt from the breach notification requirement.

However, in an interim final rule published late last month, the HHS introduced a new "harm threshold" for breach notification which critics say completely guts the original intent of the bill. Under the change, health-care entities will be required to publicly disclose breaches involving health-care data only if they think the breach will cause financial or reputational harm to those whose data was compromised.

The change allows health-care companies to do a self-assessment of the potential privacy and fraud risks stemming from a data breach and leaves it up to them to decide if a notification is justified. If a breached company decides there is no harm, it will have no obligation to disclose the breach to anyone -- even if it had taken no measures previously to protect the data.

"The harm standard completely undermines the purpose of mandatory notification, which is that covered entities protect their patient data with strong safeguards," said Harley Geigel, legal counsel at the Center for Democracy and Technology (CDT), a Washington-based think tank. "Now an entity can avoid both encryption and notification because they can decide that any information that was released poses no risk," he said.

The HHS did not respond immediately to a request for comment.

The health-care breach notification law is part of the $20 billion Health Information Technology for Economic and Clinical Health Act (HITECH) that was passed by Congress earlier this year as part of President Obama's economic stimulus plan. The act requires HHS to develop rules for breach notification in the health-care industry.

The interim final rule, which contains the harm standard, was released late last month. In justifying the change, the HHS said a harm threshold was necessary to prevent needless breach notifications. It argued that the impact of notifications would be diminished if individuals got "flooded" with notices of breaches that posed no risk to their protected health information.

The public has about 40 days to comment on the interim final rule before it becomes final. But the comments are unlikely to be acted upon until the first HHS update to the rule in April 2010, according to the CDT. Meanwhile, the statute is scheduled to go into effect next week.

Deborah Peel, founder and chairwoman of Patient Privacy Rights, a watchdog group in Austin, Texas, blasted the HHS' proposed harm threshold. The decision to include a harm threshold suggests that the HHS might have succumbed to pressure from the health-care industry, which has vehemently opposed a notification requirement, she said.

"This harm requirement actually violates Congress' intent in the stimulus bill," she said. "This is essentially an industry rewrite of the law." Given the way the law is worded, health-care organizations will have little incentive to own up to a breach involving protected health care data, she said.

"This is totally for the protection of the industry. It eliminates the consumer protection that Congress intended to be built into it," Peel said. She added that her organization will be part of a "giant response" to the proposed change by national consumer protection and privacy organizations.

Given the manner in which the harm threshold requirement was introduced in the notification bill, it appears unlikely that the HHS will budge easily on the issue, Geiger said. When making its original Request for Information on the notification rule, the HHS gave no indication that it planned on having a harm threshold, Geiger said. As a result, organizations such as the CDT and others had no chance to formally oppose or to have a public debate on the issue with the HHS, he said.

"The way we read the statute, a harm standard should never have figured in the equation to begin with," Geiger said. Originally for notification purposes, a breach was simply defined as a compromise in which protected health information was exposed or accessed in an unauthorized fashion, he said. "How the HHS made the leap from the language in Congress to the interim final rule we don't know," he said.

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