Health Insurance Reform: Standards for Electronic Transactions. 8. Exceptions for State law (Section 1178)


Proposal Summary: The proposed rule did not propose preemption requirements in the regulation text and did not directly request comments on the preemption issue. However, it did set forth a summary of the preemption provision of the Act, section 1178, and, therefore, raised the issue for public comment (63 FR 25274). In response, we received a number of comments regarding the preemption issue, and requesting guidance on how preemption questions will be resolved.

Comment: Many commenters recommended the exception for State law process be delineated or clarified in the final rule. Many commenters stated that exceptions in general should not be granted, saying that this is contrary to the idea of national standards. Other commenters stated exceptions should be discouraged.

Response: The statute clearly states that the Secretary may grant exceptions in certain circumstances. The proposed rule regarding Standards for Privacy for Individually Identifiable Health Information, published in the Federal Register on November 3, 1999 (64 FR 59967), specifically raised the preemption issue. Comments received in response to that proposed rule are being analyzed. We will issue conforming amendments to Part 160 Subpart B when the preemption issues have been resolved in the context of the Standards for Privacy for Individually Identifiable Health Information final rule.