American Association for Clinical Chemistry
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April 2011 Clinical Laboratory News: Regulatory Profiles

Regulatory Profiles

Feds Stepping Up HIPAA Enforcement

Two recent cases demonstrate that the Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) is stepping up enforcement of rules that govern privacy of medical information set forth in the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

For the first time, HHS has imposed a $4.3 million civil monetary penalty for HIPAA violations after finding that Cignet Health of Prince George’s County, Md., violated 41 patients’ rights by denying them access to their medical records. The HIPAA Privacy Rule requires that a covered entity provide patients with a copy of their medical records within 30 days of the patient’s request.

During the investigations, Cignet refused to respond to OCR’s demands to produce the records and failed to cooperate with OCR’s investigations of the complaints. OCR found Cignet’s failure to cooperate was due to Cignet’s willful neglect to comply with the Privacy Rule, adding to the large sum of the fine.

In a separate case, the General Hospital Corporation and Massachusetts General Physicians Organization Inc. (Mass General) has agreed to pay $1 million to settle potential violations of the Privacy Rule. Mass General signed a resolution agreement with HHS that requires it to develop and implement a comprehensive set of policies and procedures to safeguard the privacy of its patients. The settlement follows an extensive investigation by OCR.

The incident giving rise to the agreement involved the loss of protected health information of 192 patients of Mass General’s Infectious Disease Associates outpatient practice, including patients with HIV/AIDS. OCR opened its investigation of Mass General after a complaint was filed by a patient. OCR’s investigation indicated that Mass General failed to implement reasonable, appropriate safeguards to protect the privacy of protected health information when removed from Mass General’s premises and impermissibly disclosed protected health information, potentially violating HIPAA.

Additional information about OCR’s enforcement activities can be found at The HHS agreement is available from the OCR website. 

Payment Advisory Board for Medicare Under Fire

The new Independent Payment Advisory Board (IPAB) that is to be formed under the healthcare reform law is coming under fire from Congress, with a recent bill introduced that would repeal the statue. As it stands, starting in 2014, IPAB will be authorized to make cuts to the Medicare program, eventually including the laboratory fee schedule, if overall healthcare spending exceeds specified spending targets. The 15-member board displaces the current Medicare Payment Advisory Commission (MedPAC). In contrast to MedPAC, IPAB recommendations will automatically become law unless shot down by both Congress and the president.

Although the healthcare reform law specifically prohibits IPAB from submitting proposals that would ration care, increase revenues or change benefits, eligibility, or Medicare beneficiary cost sharing, it has come under fire by opponents of the healthcare reform law.

Representative Phil Roe, MD (R-Tenn.) introduced H.R.452, the “Medicare Protection, and Affordable Care Act,” repealing the statute that created IPAB, and expressed his concern that the board would harm patient care and lack sufficient Congressional oversight.

A copy of H.R.452 is available on the congressional Website, A press release discussing the legislation is available on Rep. Roe’s website.

Whitehouse Proposes Giving States Flexibility on Healthcare Reform

State governments may soon be able to try their hand at healthcare reform on their own terms. The Obama administration has proposed new rules outlining steps states may take in order to receive a State Innovation Waiver under the healthcare reform law. The act would gives states the flexibility to receive a waiver so they can experiment with customized reform strategies that focus on ensuring their residents have access to high quality, affordable health insurance. President Obama is supporting bipartisan legislation that would speed this option to states and begin offering waivers in 2014 instead of 2017.

The waivers allow states to implement policies that differ from the reform law as long as they provide coverage that is at least as comprehensive as that offered through Health Insurance Exchanges—new competitive, private health insurance marketplaces.

States have significant flexibility in implementing the law, from how they design exchanges to cracking down insurance company abuses. The Obama administration is sweetening the deal by offering resources to improve and lower costs in states’ Medicaid programs.  For example, if states choose to operate their own exchange, they are eligible for grants to help design them and determine the rules, including whether to allow all companies to offer insurance in the exchange or to select only plans that improve the quality and affordability of the choices. 

To read more, go online. 

Medicaid Recovery Audit Contractor Program Postponed

The Centers for Medicare and Medicaid Services (CMS) announced it will put on hold the pending April 1 deadline for states to implement their Medicaid Recovery Audit Contractor (RAC) programs, which currently only operate under Medicare. RACs are a new breed of anti-fraud initiative where private-sector firms audit provider billing practices and get to keep 10% of over- or underpayments they discover. CMS said it planned to publish a final rule later this year that will include information on the new implementation deadline.

More information is available from the CMS website.

Government Says Health IT Working Well

A study completed by the Office of the National Coordinator for Health Information Technology (ONC) reports evidence of the benefits of health information technology (HIT). Using methods that were employed by two previous independent reviews, the new study finds that 92 % of HIT-related articles reached conclusions showing overall positive effects of HIT on key aspects of care, including quality and efficiency.

In addition, the study finds increasing evidence of benefits for all healthcare providers, not just the larger health IT organizations—early adopters—that have provided much of the data on experience with HIT in the past. The previous reviews identified a gap between “leaders” and non-leaders in demonstrating benefits from HIT.

The review found positive results in 96 of the articles (62%), and mixed but predominantly positive results in 46 other articles (30%). Ten articles were found to have negative or mixed-negative results. In addition to quality and efficiency of care, the authors categorized additional outcomes including access to care, preventive care, care process, patient safety, and provider or patient satisfaction.

The article, “The Benefits of Health Information Technology: A Review of the Recent Literature Shows Predominantly Positive Results,” is available online.