Wednesday, February 7, 2001
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Posted on: Wednesday, February 7, 2001

Medical privacy law hits dead end

By Kevin Dayton
Advertiser Capitol Bureau Chief

Support for Hawaii’s ambitious new law to protect the privacy of medical records has collapsed at the Legislature, with lawmakers proposing to either repeal the law entirely or put it on hold for the next three years.

Critics of the medical privacy law said the federal government has just issued complex new regulations dealing with medical privacy, and companies have two years to comply with the new rules.

Health insurers and others argue they shouldn’t be required to meet the requirements of a complicated new state privacy law at the same time as they try to digest and comply with federal regulations.

The House committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs have approved a bill to delay the effective date of the Hawaii privacy law until July 1, 2004, which is more than five years after the Legislature voted to adopt the privacy law.

"We need more time," said House Consumer Protection Chairman Ken Hiraki, D-25th (Downtown, Ala Moana). "We don’t know if we need the law at all, need to amend the law, or need to strengthen the law."

Approved in Senate

In the Senate, the Health and Human Services Committee has approved a bill to repeal the medical privacy law entirely, a position supported by Gov. Ben Cayetano’s administration as well as the City and County of Honolulu.

Lt. Gov. Mazie Hirono said the law should be repealed, arguing there are adequate state and federal laws and regulations in place to protect the privacy of medical records.

George Fox, president of the community group Advocates for Consumer Rights, worried that if the Hawaii law is repealed, lobbyists in Washington will undermine the federal medical privacy law and leave consumers back where they started.

An array of lobbyists ranging from the Chamber of Commerce of Hawaii, the Hawaii Bankers Association, public and private sector union leaders and the Hawaii Medical Association also are lined up to oppose the bill, with only a handful of people speaking up to support it.

Critics of the bill also include some very capable lobbyists for the local insurance industry, which is another sign the privacy law is in deep trouble.

The law to protect patient records was approved by the Legislature in 1999, and caused a commotion in the health care and insurance industries when it took effect July 1.

The law created a "free-flow" zone for patients’ medical information where records could move freely between doctors, hospitals, health insurers and other players in the health care system. It required that signed releases be obtained before any information that identified a patient could move outside of the "free-flow" zone. And it established harsh criminal penalties for anyone who deliberately violated the new requirements.

Insurers and others involved in health care said the new law caused chaos. Since workers’ compensation and no-fault insurers weren’t mentioned in the new law, they were excluded from the free-flow zone and were faced with new requirements to obtain releases from patients to get medical records they needed to process claims.

Rules not ready

The administrative rules that normally accompany new laws in Hawaii weren’t ready in time for the original July 1, 2000 effective date of the law, and no single state agency was designated as an authority for interpreting the law. Lawyers for health care professionals and others who handle medical records advised their clients to obtain signed releases for almost any transfer of records, which stalled or halted the release of records.

Lawmakers then met in special session last August to halt implementation of the state law and delay the date it would take effect until next July. That was supposed to allow time to address the problems.

Now, two large industry players who initially supported the original medical privacy law — the Hawaii Medical Services Association and Kaiser Permanente Hawaii — have yanked their support for the new law.

The two organizations are Hawaii’s largest health insurers, and their lobbyists pointed out the federal Department of Health and Human Services issued new rules on medical records privacy standards on Dec. 28, 2000. The health insurers are required under the 1996 Health Insurance Portability and Accountability Act (HIPAA) to comply with the new rules within two years, and the insurers said they don’t want to be forced to comply with complicated new state and federal privacy requirements at the same time.

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