Some Privacy Snags For Comp Info

"They are taking a cautious approach," Mr. Bateman said. "When in doubt, they say no."

Bruce Wood, assistant general counsel with the Washington-based American Insurance Association, said the problem is not to the point where it could be considered systemic. Rather, he said, there have been a number of anecdotal reports of difficulties faced by comp insurers in acquiring information.

"For now," Mr. Wood said, "insurers are trying to educate and work with the medical provider community when problems occur."

Julie Gackenbach, assistant vice president of federal affairs for the Des Plaines, Ill.-based National Association of Independent Insurers, said that insurers are seeing all the problems they predicted before the new privacy regime took effect. Doctors, she said, are unwilling to accept release forms and are unwilling to provide information.

Moreover, Ms. Gackenbach said, some providers are insisting that workers comp insurers sign business associate agreements, even though insurance companies technically are not business associates under the new privacy regime.

The controversy surrounds the Health Insurance Portability and Accountability Act, which directed the Department of Health and Human Services to develop a set of rules aimed at protecting the privacy of medical information. The rules apply to what are called "covered entities," which includes health care plans and medical providers.

Workers comp insurers are not "covered entities," but need medical information in order to process claims.

Under the rules, covered entities are allowed to disclose information to workers compensation insurers, but with strict limitations.

In guidance developed by HHS, the department says it "recognizes the legitimate need of insurers and other entities involved in the workers compensation systems to have access to individuals health information as authorized by state or other law."

But, HHS says, providers are "required reasonably to limit the amount of protected health information disclosed to the minimum necessary to accomplish the workers compensation purpose."

The problem, the insurance industry says, is that the minimum necessary standard requires providers to make decisions they are not qualified to make about what information is necessary to process a workers comp claim.

In a joint filing to HHS, more than 60 insurance and business groups argued that the burden for determining what is "necessary" is far greater in workers comp than for group health insurance because the determination is legal, rather than medical, and doctors are not competent to make this judgment.

Indeed, the filing said that workers comp insurers may be forced to seek court orders to obtain all the relevant medical information relating to claims.

Thus far, Mr. Wood said, that has not happened. There has not been a systemic breakdown yet, he said.

But the insurance industry has to remain vigilant of what is going on.

"We will be evaluating what is happening in the marketplace and making a judgment of whether there is a systemic problem," he said.

Mr. Bateman added that health care providers are in a tough spot. They can get into trouble for releasing too much information, but not for releasing too little, he noted.

The industry, he said, will try to do some self-help. Where there are clear trouble spots, Mr. Bateman said, the insurance industry will try to reach out to the provider community and clarify what can be released.

Ms. Gackenbach added that from the provider standpoint, the new rules are overwhelming and there are severe penalties for getting it wrong.

"I understand their frustration," she said. "They are being asked to do a lot in a short time frame."

Mr. Wood noted that guidance issued by HHS emphasizes that it is not the intent of the rules to impede the flow of information in the workers comp context. However, he said, it would be helpful if HHS issued further clarification expressly addressing the needs of workers comp insurers.

Ms. Gackenbach agreed, saying that the word is not getting out to providers about the needs of workers comp insurers. NAII, she said, is gathering information and will take its concerns to HHS.

Mr. Wood said that at this point, AIA probably will not make a formal request for new rulemaking. That would only happen if there is evidence of a systemic breakdown, he said.

Short of that, he said, AIA will likely ask HHS for additional guidance.

For its part, HHS says it will "actively monitor the effects of the privacy rule, and in particular the minimum necessary standard, on the workers compensation systems and consider proposing modifications, where appropriate, to ensure that the rule does not have any unintended negative effects that disturb these systems."

It would also help, Mr. Wood said, if state insurance departments and workers comp agencies provided better information on the information needs of workers comp insurers.

He noted that AIA recently did an Internet search of insurance departments and workers comp agencies to see how the issue was addressed.

Several departments did address the issue of HIPAAs privacy rules and the needs of insurers, Mr. Wood noted. However, he said, while the state governments guidance did not contain any misinformation, they generally did not provide sufficient information, with the exception of Nevadas Department of Industrial Relations.

Mr. Bateman emphasized that it is still early in the game. The rules have been in effect for only a short period of time and it may be a while before all the necessary information on the needs of the workers comp system filters down to providers.

But at least one nightmare scenario has not yet occurred, Mr. Bateman said. So far, he said, attorneys have not yet tried to "game" the system. That, he said, is one of the industrys biggest fears down the line.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 18, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.