Feds likely to pre-empt state confidentiality

Here’s a heads-up for risk managers who have depended on their state confidentiality laws to determine some of their institution’s policies on medical records. Everything you know may be about to change.

Federal efforts to enact confidentiality laws probably will come to a head in the next session of Congress, and you’ll be better off if you know what’s coming. Activists on both sides of the issue say it is likely that federal legislation soon will pre-empt state confidentiality laws, but opinions differ sharply on whether that is going to be a good thing or a bad thing.

Depending on who you listen to, the federal pre-emption could be either a big step forward from a mishmash of state laws that sometimes don’t offer enough protection, or a concession to managed care plans that will rob patients of much of their privacy rights.

Efforts to enact federal legislation that would, in one way or another, pre-empt state confidentiality laws have been around for years, starting as early as the Carter administration. The federal government offered a model of uniform state legislation that could be enacted to eliminate the many discrepancies in the 1980s, but states did not adopt the model. The 105th Congress just toyed with the idea again by trying to pass several bills that would have involved creating federal laws that usurp state confidentiality laws, but the bills did not pass before the session ended.

Now it looks as if the next session of Congress will see some sort of action on the matter. Exactly what will happen is still to be seen, but most observers agree that state confidentiality laws will be addressed in some way. Either Congress will pass a law that pre-empts federal legislation, extend the deadline it is under for addressing confidentiality concerns, or just punt the matter on to the secretary of Health and Human Services (HHS).

The deadline imposed by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) will force some resolution of the issue, says Kathleen Frawley, JD, MS, RRA, vice president of legislative and public policy services with the American Health Information Management Association in Washington, DC. HIPAA requires Congress to pass legislation regarding uniform state confidentiality laws by August 1999.

"I’ve been involved in this issue for seven years, and I’m surprised that it is taking this long to get something done on a federal level," Frawley says. "We’ll probably get something done in the next Congress because they have to. They could extend the deadline, but if they can’t settle on legislation, I think they’re more likely to let the Health and Human Services secretary do it."

Shalala could strike moderate position

If the Congress punts the issue to HHS Secretary Donna Shalala, the result may be a change that falls somewhere between the extremes of the debate. In her recommendation to Congress required by HIPAA, Shalala said on Sep. 11, 1997, that the country does need a new national standard for protecting the privacy of health information.

She went on to say that, under her recommendation, "This new national standard would not limit or reduce other stronger legal protections for confidentiality of health information. Stronger state laws [such as those covering mental health and HIV infection and AIDS information] would continue to apply."

Federal law and state law would apply simultaneously so that if either forbade disclosure of the information, it could not be disclosed. The goal would be what Shalala calls "floor pre-emption" of state laws, so that everyone is ensured the protection afforded in the federal law. But in some cases, they would be afforded an extra measure of protection from their own state laws.

"Floor pre-emption" is a goal that seems acceptable to those on both sides of the debate, with some seeing it as the most they would accept and others seeing it as the least they would accept. On one side of the debate is Donald Palmisano, MD, JD, a member of the American Medical Association (AMA) Board of Trustees and a surgeon in New Orleans. Representing the official views of the AMA, Palmisano is a strong opponent of any measure that would threaten the privacy of medical records. He says floor pre-emption might be the way to settle the debate.

"We have seen bills so far that handled the issue in different ways, with some establishing a ceiling and some establishing a floor," he says. "We say it must be a floor. We support efforts that improve the protection of medical information, but some of the proposals have sacrificed some state confidentiality laws in favor of uniformity. Uniformity is not sufficient cause to weaken a state’s laws."

The AMA could support federal legislation that would establish more privacy protection than is currently found in any state, but Palmisano says that is not likely.

Could this affect how patients talk to docs?

Much of Palmisano’s concerns about federal pre-emption are related to the way patients must confide in their doctors regarding some delicate health matters. If federal laws take away some rights to the confidentiality of that information, patients may be reluctant to tell their doctors about mental health problems, drug and alcohol abuse, and similar issues that they may want to keep private. Some proposed legislation has included provisions that would allow managed care companies to collect such data on a routine basis without obtaining specific permission from the patient, sometimes for the purpose of accounting research, marketing, medical research, law enforcement, or other needs that do not directly benefit the patient.

"We recognize the importance of medical research and don’t want to impede it. We also recognize the importance of technological efficiency, but those needs do not supersede the patient’s right to confidentiality of health information," Palmisano says. "We’re not Luddites. We’re not anti-technology, but at the same time, we don’t want to violate basic rights of our patients just because that makes it easier to use some types of technology."

In particular, Palmisano says that whatever law is passed should not put the burden on the patient to prevent the release of information. Patients will be harmed, he says, by catchall phrases that would allow the health care plan to use information about patients "to further the activities of the health plan," for instance. Patients also should not be asked to sign a blanket statement that allows the health plan to use information in that way, he says.

"We don’t want any kind of default in favor of the insurance company so that the patient has to protest if he doesn’t want information used in that way," Palmisano says. "Whatever the phrasing, it should put the burden on the health care plan to ask for that information if it wants to use it some way."

Frawley does not dispute much of what Palmisano says about the need to protect patient privacy, but she says you must remember that the nature of health care and management of medical records has changed dramatically in recent years. Information is flowing between states much more than it did previously because of the upsurge in managed care, so matters are complicated by conflicting state laws.

"Our recommendation would be to get the strongest federal regulation possible and you wouldn’t need the state legislation," she says. "States are all over the place in terms of what they’ve done. If one rule applies in this state, what happens when that information goes to an insurer in another state? The notion of preserving existing state statutes and protections is probably comforting to individuals, but it doesn’t give the patient better protection."

Interstate commerce often can leave insurers, providers, and patients wondering what restrictions apply to a particular situation, and Frawley points out that the individual patient rarely is present or capable of arguing about the fine points of one state law vs. another. A strong federal law would eliminate the ambiguity and protect the patient, she says.

"A lot of other issues have been worked out in the previous bills we’ve seen, but pre-emption is a very complex issue," she says. "States are responsible for the health of their citizens, so Congress is reluctant to intrude in an area that has long been reserved for state action."

For More Information

Kathleen Frawley, American Health Information Management Association, 1225 I St. NW, Suite 500, Washington, DC 20005. E-mail: Kfrawley@ahima.org.

o Donald Palmisano, 4417 Lorino St., Suite 200, Metairie, LA 70006. Telephone: (312) 464-4016.