Historically, Congress has recognized that privacy standards must accompany the electronic data interchange standards and that the increased ease of transmitting and sharing individually identifiable health information must be accompanied by an increase in the privacy and confidentiality. In fact, the majority of the bulk of the first Administrative Simplification section that was debated on the floor of the Senate in 1994 (as part of the Health Security Act) was made up of privacy provisions. Although the requirement for the issuance of concomitant privacy standards remained a part of the bill passed by the House of Representatives, the requirement for privacy standards was removed in conference. This section was moved from the standard-setting authority of Title XI (section 1173 of the Act) and placed in a separate section of HIPAA, section 264. Subsection (b) of section 264 required the Secretary of HHS to develop and submit to the Congress recommendations for:
(1) The rights that an individual who is a subject of individually identifiable health information should have.
(2) The procedures that should be established for the exercise of such rights.
(3) The uses and disclosures of such information that should be authorized or required.
The Secretary's Recommendations were submitted to the Congress on September 11, 1997, and are summarized below. Section 264(c)(1) provides that:
If legislation governing standards with respect to the privacy of individually identifiable health information transmitted in connection with the transactions described in section 1173(a) of the Social Security Act (as added by section 262) is not enacted by [August 21, 1999], the Secretary of Health and Human Services shall promulgate final regulations containing such standards not later than [February 21, 2000]. Such regulations shall address at least the subjects described in subsection (b).
As the Congress did not enact legislation governing standards with respect to the privacy of individually identifiable health information prior to August 21, 1999, HHS has now, in accordance with this statutory mandate, developed proposed rules setting forth standards to protect the privacy of such information.
These privacy standards have been, and continue to be, an integral part of the suite of Administrative Simplification standards intended to simplify and improve the efficiency of the administration of our health care system.
The proposed rule should be considered along with all of the administrative simplification standards required by HIPAA. We assessed several strategies for determining the impact of this proposed rule. We considered whether it would be accurate to view the impact as a subset of the overall HIPAA standards or whether this privacy component should be viewed as an addition to the earlier impact analyses related to HIPAA. We decided that while this proposed rule is considered one of the HIPAA standards, any related costs or benefits should be viewed as an addition to earlier analyses. The original HIPAA analyses did not incorporate the expected costs and benefits of privacy regulation because, at the time of the original analyses, we did not know whether Congress would enact legislation or whether privacy would need to be addressed by regulation. Therefore, much of our cost analysis is based on the expected incremental costs above those related to other HIPAA regulations.