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June 2003

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HMO’s Invade Patient Privacy

By Kip Sullivan
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T hanks to the Bush administration, a new federal rule took effect on April 14 that authorizes HMOs to take medical records from clinics, hospitals, and pharmacies without patient consent. The new rule drew enormous media attention when it took effect, but the media’s description of the rule was grossly misleading. Most news outlets not only failed to report the new privileges extended to HMOs, they also described the rule as if it enhanced medical privacy. 

Consider these headlines: “A tougher medical privacy law” ( Los Angeles Times ), “Patients gain greater privacy” ( San Jose Mercury News ), “More privacy, fewer flowers for patients” ( St. Paul Pioneer Press ), “Patients’ rights include healthy dose of privacy” ( Cleveland Plain Dealer ), and “New legislation will benefit patients” ( Richmond Times-Dispatch ). Consider these lead-off sentences: “File cabinets with medical records are being locked” ( Associated Press ); “New federally mandated rules...allow patients to keep their names and conditions private, even from loved ones and relatives” (“ABC News”); and “When Dr. Stephen C. Albrecht of Olympia, Washington, called a hospital in Tacoma recently to inquire about one of his patients,...he had trouble getting information” ( New York Times ).  The media justified its description of the new rule as pro-patient by ignoring the damage HMOs may now legally wreak on patient privacy and by focusing on three relatively minor changes: (1) providers must take steps to reduce accidental revelations of patient information (such as placing hoods on computer screens); (2) patients now have a federally mandated right to see their own medical records (a right that was already guaranteed by state laws in about half the states); and (3) providers and HMOs have to make an effort to give patients copies of their so-called privacy policies.  

Here are some examples of the changes the media talked about. “In hospitals, patient charts should be turned to face the wall so people walking by cannot read them” (AP). “Dr. Matthew J. Messina, a dentist in…Ohio…said he had changed the schedule posted each day in his treatment room, so patients would be identified only by their first names” ( New York Times ). According to Time maga- zine, patients picking up their Viagra prescription will no longer have to hear pharmacists call out, “Yoohoo. Your Viagra prescription is ready.” 

But these protections afforded by the new rule, known as the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule, are minor compared to the loss of protection HMO patients will suffer. One can appreciate, for example, the rule’s effort to minimize the possibility that strangers might see patient names on a file, a scheduling board, or a computer screen. But the possibility that providers might inadvertently reveal patients’ names or even data about their health to a few strangers passing by poses a tiny threat to patient privacy compared to the certainty that HMOs have been routinely examining, and now, with the blessing of the federal government, will continue to examine routinely, patient medical records without patient consent. Moreover, the Privacy Rule permits HMOs to share those medical records with hundreds of thousands of firms the HIPAA rule calls “business associates.” 

Ditto for the new federal right of patients to see their own medical records and to receive notices of provider and insurer privacy policies. But like the right not to have doctors talk about patients in the elevator with people standing around, these rights offer only minor protection at best. When people worry about damage to their medical privacy, they’re not thinking the damage will occur because the information in their medical record is false; they’re thinking damage will be done because third parties who didn’t have their consent will paw through their records. The right to see statements of providers is less significant than the right to see one’s own records. These “notices of privacy practices” list dozens of vaguely defined reasons patient privacy can be invaded and dozens of vaguely defined individuals who can look at patient records without patient consent.  Given that the media failed to comprehend the importance of reporting the damage HIPAA will do to privacy via the exception made for HMOs, it is no surprise that the media also failed to explain the role that the health insurance industry played in persuading the Bush administration to let HMOs invade patient privacy. Other industries, most notably the hospital and drug industries, complained about the consent requirement, but it was the HMO industry that complained the loudest. Thanks in part to the media’s lackadaisical attention to the HMO industry’s lobbying, the industry ultimately got what it wanted. Before April 14, HMOs routinely commandeered medical records in a legal twilight zone. After April 14, HMOs will routinely commandeer medical records with the assurance that their actions are legal. 

As the end of 2000, the HMO industry was not happy with the proposed HIPAA rule, then nearing what was expected to be its final form. When the Clinton administration published its recommended version of the rule in December, President Clinton made a point of highlighting the fact that patient consent was now in the rule. But the next month, the health insurance and hospital industries began to lobby Tommy Thompson, Bush’s new Secretary of the Department of Health and Human Services (HHS), to reverse the consent rule. It is no accident that Thompson made his announcement that he would “review” the HIPAA rule at a meeting of the American Association of Health Plans, the national trade group for the HMO industry. 

When a draft version of the HIPAA rule was announced by HHS on March 21, 2002, the removal of the patient consent requirement was denounced by Democrats, doctors, and privacy advocates. Senator Ted Kennedy (D-MA) said the new rule was “a surrender to major corporate interests.” Al Gore asked, “What kind of values lead this Administration to dismantle the medical privacy of Americans and allow insurance companies greater access to your private files?” None of it mattered. The final version of the rule— posted in August 2002 and effective last April 14—left out the consent requirement. 

The battle is by no means over. In early April, a coalition of privacy advocates, including physicians, filed a suit against Secretary Thompson in the U.S. District Court of Philadelphia. According to the coalition, Thompson exceeded his authority when he “eliminate[d] the right to privacy of individuals for their personal medical records...” 

There is, of course, Congress. When Congress enacted HIPAA in 1996, it gave away its authority to the executive branch to draft the privacy rule, but it did not give away that authority forever. Congress can always take it back. At least two bills have been introduced to do that. Representatives Edward Markey (D-MA) and Dana Rohrabacher (R-CA) have introduced the Stop Taking Our Health Privacy Act, which would repeal. Representative Ron Paul (R-TX) has introduced a bill to repeal the entire rule. 

Kip Sullivan, a Minneapolis resident, writes frequently on health policy. 

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