Comment: One comment expressed concern that the regulation would place tremendous burdens on providers already struggling with the effects of the Balanced Budget Act of 1997.
Response: We appreciate the costs covered entities face when complying with other statutory and regulatory requirements, such as the Balanced Budget Act of 1997. However, HHS cannot address the impact of the Balanced Budget Act or other statutes in the context of this regulation.
Comment: Another comment stated that the regulation is in direct conflict with the Balanced Budget Act of 1997 ("BBA"). The comment asserts that the regulation's compliance date conflicts with the BBA, as well as Generally Acceptable Accounting Principles. According to the comment, covered entities that made capital acquisitions to ensure compliance with the year 2000 ("Y2K") problem would not be able to account for the full depreciation of these systems until 2005. Because HIPAA requires compliance before that time, the regulation would force premature obsolescence of this equipment because while it is Y2K compliant, it may be HIPAA non-compliant.
Response: This comment raises two distinct issues-(1) the investment in new equipment and (2) the compliance date. With regard to the first issue, we reject the comment's assertion that the regulation requires covered entities to purchase new information systems or information technology equipment, but realize that some covered entities may need to update their equipment. We have tried to minimize the costs, while responding appropriately to Congress' mandate for privacy rules. We have dealt with the cost issues in detail in the "Regulatory Impact Analysis" section of this Preamble. With regard to the second issue, Congress, not the Secretary, established the compliance data at section 1175(b) of the Act.