Agents Hit Privacy Restrictions

Washington

Key functions performed by insurance agents and brokers in theplacement of group health insurance are threatened by the healthprivacy rule proposed by the U.S. Department of Health and HumanServices, agent groups contend.

In statements filed with the department, agent groups say thatthe proposed rule will not allow agents and brokers to obtaininformation necessary for such functions as amending, supplementingand replacing group health plans.

The groups noted that “to evaluate alternative and replacementbenefit plans, group health plans must be able to obtain, use andshare personally identifiable health information of plan enrollees.Prospective insurers cannot and will not price a group plan withoutspecific information on the claims history of members of thatplan.”

Agent groups filed two separate statements with HHS. One was ajoint statement filed by the Independent Insurance Agents andBrokers of America, the National Association of ProfessionalInsurance Agents, both of Alexandria, Va., and the NationalAssociation of Insurance and Financial Advisors, based in FallsChurch, Va.

The Washington-based Council of Insurance Agents and Brokersfiled the other statement. Although the statements were filedseparately, they closely track each other.

Specifically, the agents are concerned about a provision in theproposed rule that says that any covered entity may discloseprotected health information to another covered entity for “healthcare operations” only if two conditions are met.

The first condition is that both entities have a relationshipwith the affected individual.

The second condition is that the disclosure falls under one ofthe first two paragraphs of the definition of health careoperations, or is necessary to detect health care fraud.

However, agents say both conditions will impair the ability ofgroup health plans to add benefits or replace existing contracts.First, they say, neither agents and brokers nor insurance carrierswill have a “relationship” with the affected individual. “That issimply not how the group health market works,” the agent groupssay.

Insurance agents and brokers and potential new insurers willhave a relationship with the employer or plan sponsor, they say,and the individual will have a relationship with the currentinsurance carrier. “Accordingly, this condition on its own willpreclude a plan–through its agent or broker or otherwise–fromobtaining claims information from its health insurance carriersthat is necessary to obtain premium quotes on supplemental and/orreplacement coverages,” the groups said.

As for the second condition, they said that underwriting andpremium rating are not in the first two paragraphs of thedefinition of “health care operations.” Rather, the agent groupsnoted, they are in the third paragraph, and thus are not among thereasons why protected health information may be disclosed.

The groups are asking HHS to revise the rule to statespecifically that a covered entity other than a health careprovider may disclose protected health information for underwritingor premium rating activities.

This poses no threat to consumer privacy rights, the agents say.Agents and brokers are covered entities under the rules, and theirown use and disclosure of protected information is strictly limitedby the privacy regulations.

The groups say that allowing disclosure for underwriting andpremium rating activities is “absolutely necessary” for agents andbrokers to service group health plans.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, April 29, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.