Health Industry Turns to Bush for Help with Patient Privacy Rules

Hospitals, health plans and other health care providers moved swiftly yesterday to combat new patient privacy rules issued by the Clinton administration, urging President-elect Bush to revise the regulations and "lessen the burden" on the industry, the New York Times reports. But according to Clinton administration officials, "broad public support" for the regulations would likely force the Bush administration to "accept the rules." Ari Fleischer, a spokesperson for Bush, said, "As with all last-minute regulations, we will review them upon assuming the presidency on Jan. 20" (Pear, New York Times, 12/21). Bush spokesperson Ray Sullivan added, "Medical privacy is an important issue, but not one that dominated the recent election campaign. It is certainly an issue for public discussion and debate in the future" (AP/Arizona Republic, 12/21). While Bush could "delay or revise" the patient privacy rules, he would have to allow a "round of public comment" before taking formal action.

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Mary Grealy, president of the Health Care Leadership Council, said, "We definitely will be working with the new administration to seek a more balanced approach to protecting privacy. We are sending papers to the Bush transition team." Fearing that health care providers would have the "'privacy police' looking over their shoulders," Grealy criticized a provision in the rules that requires doctors, hospitals and other health care providers to obtain written consent from patients before disclosing their medical information, even for "routine purposes." Lawrence Ponemon of PricewaterhouseCoopers, which advises hundreds of health care institutions, said, "Our clients in the health care industry need to be very alarmed. Most hospitals, pharmaceutical companies and insurance companies are light-years away from complying with these rules. They don't understand the magnitude of the rules" (New York Times, 12/21). Health Insurance Association of America President Chip Kahn warned that the regulations will "add complexity, confusion and cost" to maintaining medical records and "impose an unfair burden upon health insurers and health plans" (HIAA release, 12/20). Calling the consent requirement "administratively cumbersome," American Hospital Association Vice President Melinda Hatton vowed to "ask the Bush administration to help us deal with some flaws in the regulations." Two lawmakers, Sen. Patrick Leahy (D-Vt.) and Rep. Edward Markey (D-Mass.), applauded the rules. "Requiring written consent is crucial to giving patients meaningful control over the most intimate details of their lives," Markey said (New York Times, 12/21). Leahy added, "This is a quantum leap forward for Americans' privacy rights in the Internet age. For the first time, our sensitive medical records will be protected by law" (Leahy release, 12/20). John Bentivoglio, former chief privacy officer at the Justice Department, said, "The new regulations are a tremendous step forward in protecting health privacy," but he warned that "they do not cover ... Web sites that dispense health information over the Internet and collect data on the browsing habits of consumers" (New York Times, 12/21). The American Medical Association also expressed "caution" about the new rules. "We will be closely examining the new rules to make sure there are no dangerous loopholes or unexpected problems," AMA board trustee Dr. Donald Palmisano said (AP/Arizona Republic, 12/21).

Rules Are Rules
However, HHS Secretary Donna Shalala said that Bush would probably not revise the rules, arguing that HHS "found a proper balance" and established regulations with "broad support" (New York Times, 12/21). The AP/Arizona Republic also reports that restarting the regulatory review process would prove a "monumental task" (AP/Arizona Republic, 12/21). In addition, although Congress could overturn the rules, Sally Katzen, deputy director of the Office of Management and Budget, said that passing such legislation remains unlikely (New York Times, 12/21). The Houston Chronicle reports that opponents of the rules probably could not "muster enough votes" to pass new measures and points out that, with regulations already "in place," the "urgency" for revising patient privacy legislation may have waned (Houston Chronicle, 12/20).

Beating Up Small-Time Docs?
The Boston Globe reports that the patient privacy rule will also "force costly changes" for doctors and hospitals, resulting in extended patient visits, additional computer security expenses and the potential "financial failure" of smaller physicians' practices. The White House says the regulations will cost the health care industry about $17.6 billion over 10 years, adding that the industry can "offset" the expenses by transferring paper records to computer databases (Mishra, Boston Globe, 12/21). AHA's Hatton contends, however, that the rules could cost hospitals alone $22 billion over five years (New York Times, 12/21). In addition, while hospitals and HMOs may "easily absorb" the added expenses, the costs could "drastically hurt" smaller physicians' practices and may put them "out of business." Dr. Charles Welch, vice president of the Massachusetts Medical Society, said, "These costs could be well beyond the resources of certain provider groups. Small physicians groups and rural clinics don't have a lot of overhead or large financial margins" (Boston Globe, 12/21). Dinah Massie of Houston's Harris County Hospital District said that the cost of the patient privacy rules would likely prove "onerous." As a result, many doctors nationwide have urged the federal government and health insurance companies to help subsidize the costs (Houston Chronicle, 12/20).

Good Rx for Privacy Ills?
Several newspapers also weighed in on the new patient privacy rules. Excerpts appear below.

• Philadelphia Inquirer: Inquirer editors call the rule "good preventive medicine" for a health care "woe" that most patients "hardly consider." Pointing out that the "stakes" for medical privacy "keep getting bigger," they add that patients should consider the regulations "a win" but should also remain "vigilant" and "leery." The editors conclude, "Business lobbies may push the incoming Bush administration for a second opinion on the privacy rules. Better that president-elect Bush sticks with this cure" (Philadelphia Inquirer, 12/21).
• USA Today: Calling the "common sense" reforms "[b]etter late than never," USA Today's editors warn that the "cavalier" health care industry -- which often profits from the "sale and use" of patient information -- may engage in "mischief-making" and attempt to block the new rules. They add that many insurers have already begun "spouting bogus arguments" to "scare" patients and influence Congress and the incoming Bush administration. They criticize the "all too familiar" tactics, concluding, "With real reform finally on the horizon, health industry lobbyists shouldn't be allowed to obstruct the view" (USA Today, 12/21).