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New HIPAA Privacy Rules Take Effect April 14
Congress recently amended the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to include what has become known as the 'Privacy Rule,' a statutory provision addressing the privacy of health information. The Rule covers health care providers, health care clearinghouses and health plans, including employer-sponsored group health plans. Those plans that have fewer than 50 participants and are self-administered are exempt. This is the only HIPAA exemption for health plans. The compliance date for most providers and health plans is April 14, 2003. 'Small' health plans ' that is, those with annual receipts of $5 million or less ' have until April 14, 2004 to achieve compliance. Penalties for noncompliance include civil penalties of up to $25,000 per person, and criminal penalties of up to 10 years in prison and fines of up to $250,000.
As a practical matter, insured health plans will have a lighter compliance burden than self-funded plans because the insurance company or HMO will have the most exposure to, and interaction with, employees and their health information, and will therefore have the greatest compliance responsibilities. Self-funded group health plans, for the most part, have access to the information that an insurer or HMO would have, and will therefore have corresponding compliance requirements.
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Bit Parts
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