Standards for Privacy of Individually Identifiable Health Information. Final Privacy Rule Preamble.. Qualitative Discussion

12/28/2000

A well designed privacy standard can be expected to build confidence among the public about the confidentiality of their medical records. The seriousness of public concerns about privacy in general are shown in the 1994 Equifax-Harris Consumer Privacy Survey, where "84 percent of Americans are either very or somewhat concerned about threats to their personal privacy." 53 A 1999 report, "Promoting Health and Protecting Privacy" notes "...many people fear their personal health information will be used against them: to deny insurance, employment, and housing, or to expose them to unwanted judgements and scrutiny." 54 These concerns would be partly allayed by the privacy standard.

Fear of disclosure of treatment is an impediment to health care for many Americans. In the 1993 Harris-Equifax Health Information Privacy Survey, seven percent of respondents said they or a member of their immediate family had chosen not to seek medical services due to fear of harm to job prospects or other life opportunities. About two percent reported having chosen not to file an insurance claim because of concerns of lack of privacy or confidentiality. 55 Increased confidence on the part of patients that their privacy would be protected would lead to increased treatment among people who delay or never begin care, as well as among people who receive treatment but pay directly (to the extent that the ability to use their insurance benefits will reduce cost barriers to more complete treatment). It will also change the dynamic of current payments. Insured patients currently paying out-of-pocket to protect confidentiality will be more likely to file with their insurer and to seek all necessary care. The increased utilization that would result from increased confidence in privacy could be beneficial under many circumstances. For many medical conditions, early and comprehensive treatment can lead to lower costs.

The following are four examples of areas where increased confidence in privacy would have significant benefits. They were chosen both because they are representative of widespread and serious health problems, and because they are areas where reliable and relatively complete data are available for this kind of analysis. The logic of the analysis, however, applies to any health condition, including relatively minor conditions. We expect that some individuals might be concerned with maintaining privacy even if they have no significant health problems because it is likely that they will develop a medical condition in the future that they will want to keep private.

Cancer

The societal burden of disease imposed by cancer is indisputable. Cancer is the second leading cause of death in the U.S., 56 exceeded only by heart disease. In 2000, it is estimated that 1.22 million new cancer cases will be diagnosed. 57 The estimated prevalence of cancer cases (both new and existing cases) in 1999 was 8.37 million. 58 In addition to mortality, incidence, and prevalence rates, the other primary methods of assessing the burden of disease are cost-of-illness and quality of life measures. 59 Cost of illness measures the economic costs associated with treating the disease (direct costs) and lost income associated with morbidity and mortality (indirect costs). The National Institutes of Health estimates that the overall annual cost of cancer in 1990 was $96.1 billion; $27.5 billion in direct medical costs and $68.7 billion for lost income due to morbidity and mortality. 60 Health-related quality of life measures integrate the mortality and morbidity effects of disease to produce health status scores for an individual or population. For example, the Quality Adjusted Life Year (QALY) combines the pain, suffering, and productivity loss caused by illness into a single measure. The Disability Adjusted Life Year (DALY) is based on the sum of life years lost to premature mortality and years that are lived, adjusted for disability. 61 The analysis below is based on the cost-of-illness measure for cancer, which is more developed than the quality of life measure.

Among the most important elements in the fight against cancer are screening, early detection and treatment of the disease. However, many patients are concerned that cancer detection and treatment will make them vulnerable to discrimination by insurers or employers. These privacy concerns have been cited as a reason patients do not seek early treatment for diseases such as cancer. As a result of forgoing early treatment, cancer patients may ultimately face a more severe illness and/or premature death.

Increasing people's confidence in the privacy of their medical information would encourage more people with cancer to seek cancer treatment earlier, which would increase cancer survival rates and thus reduce the lost wages associated with cancer. For example, only 24 percent of ovarian cancers are diagnosed in the early stages. Of these, approximately 90 percent of patients survive treatment. The survival rate of women who detect breast cancer early is similarly high; more than 90 percent of women who detect and treat breast cancer in its early stages will survive. 62

We have attempted to estimate the annual savings in foregone wages that would result from earlier treatment due to enhanced protection of the privacy of medical records. We do not assume there would be increased medical costs from earlier treatment because the costs of earlier and longer cancer treatment are probably offset by the costs of treating late-stage cancer among people who would otherwise not be treated until their cases had progressed.

Although figures on the number of individuals who avoid cancer treatment due to privacy concerns do not exist, some indirect evidence is available. A 1993 Harris-Equifax Health Information Privacy Survey (noted earlier) found that seven percent of respondents reported that they or a member of their immediate family had chosen not to seek services for a physical or mental health condition due to fear of harm to job prospects or other life opportunities. It should be noted that this survey is somewhat dated and represents only one estimate. Moreover, given the wording of the question, there are other reasons aside from privacy concerns that led these individuals to respond affirmatively. However, for the purposes of this estimate, we assume that privacy concerns were responsible for the majority of positive responses.

Based on the Harris-Equifax survey estimate that seven percent of people did not seek services for physical or mental health conditions due to fears about job prospects or other opportunities, we assume that the proportion of people diagnosed with cancer who did not seek earlier treatment due to these fears is also seven percent. Applying this seven percent figure to the estimated number of total cancer cases (8.37 million) gives us an estimate of 586,000 people who did not seek earlier cancer treatment due to privacy concerns. We estimate annual lost wages due to cancer morbidity and mortality per cancer patient by dividing total lost wages ($68.7 billion) by the number of cancer patients (8.37 million), which rounds to $8,200. We then assume that cancer patients who seek earlier treatment would achieve a one-third reduction in cancer mortality and morbidity due to earlier treatment. The assumption of a one-third reduction in mortality and morbidity is derived from a study showing a one-third reduction in colorectal cancer mortality due to colorectal cancer screening. 63 We could have chosen a lower or higher treatment success rate. By multiplying 586,000 by $8,200 by one-third, we calculate that $1.6 billion in lost wages could be saved each year by encouraging more people to seek early cancer treatment through enhanced privacy protections. This estimate illustrates the potential savings in lost wages due to cancer that could be achieved with greater privacy protections.

HIV/AIDS

Early detection is essential for the survival of a person with HIV (Human Immunodeficiency Virus). Concerns about the confidentiality of HIV status would likely deter some people from getting tested. For this reason, each state has passed some sort of legislation regarding confidentiality of an individual's HIV status. However, HIV status can be revealed indirectly through disclosure of HAART (Highly Active Anti-Retroviral Therapy) or similar HIV treatment drug use. In addition, since HIV/AIDS (Acquired Immune Deficiency Syndrome) is often the only specially protected condition, "blacked out" information on medical charts could indicate HIV positive status. 64 Strengthening privacy protections beyond this disease could increase confidence in privacy regarding HIV as well. Drug therapy for HIV positive persons has proven to be a life-extending, cost-effective tool. 65 A 1998 study showed that beginning treatment with HAART in the early asymptomatic stage is more cost-effective than beginning it late. After five years, only 15 percent of patients with early treatment are estimated to develop an ADE (AIDS-defining event), whereas 29 percent would if treatment began later. Early treatment with HAART prolongs survival (adjusted for quality of life) by 6.2 percent. The overall cost of early HAART treatment is estimated at $23,700 per quality-adjusted year of life saved. 66

Other Sexually Transmitted Diseases

It is difficult to know how many people are avoiding testing for STDs despite having a sexually transmitted disease. A 1998 study by the Kaiser Family Foundation found that the incidence of disease was 15.3 million in 1996, though there is great uncertainty due to under-reporting. 67 For a potentially embarrassing disease such as an STD, seeking treatment requires trust in both the provider and the health care system for confidentiality of such information. Greater trust should lead to more testing and greater levels of treatment. Earlier treatment for curable STDs can mean a decrease in morbidity and the costs associated with complications. These include expensive fertility problems, fetal blindness, ectopic pregnancies, and other reproductive complications. 68 In addition, there could be greater overall savings if earlier treatment translates into reduced spread of infections.

Mental Health Treatment

When individuals have a better understanding of the privacy practices that we are requiring in this proposed rule, some will be less reluctant to seek mental health treatment. One way that individuals will receive this information is through the notice requirement. Increased use of mental health and services would be expected to be beneficial to the persons receiving the care, to their families, and to society at large. The direct benefit to the individual from treatment would include improved quality of life, reduced disability associated with mental conditions, reduced mortality rate, and increased productivity associated with reduced disability and mortality. The benefit to families would include quality of life improvements and reduced medical costs for other family members associated with abusive behavior by the treated individual.

The potential economic benefits associated with improving privacy of individually identifiable health information and thus encouraging some portion of individuals to seek initial mental health treatment or increase service use are difficult to quantify well. Nevertheless, using a methodology similar to the one used above to estimate potential savings in cancer costs, one can lay out a range of possible benefit levels to illustrate the possibility of cost savings associated with an expansion of mental health and treatment to individuals who, due to protections offered by the privacy regulation, might seek treatment that they otherwise would not have. This can be illustrated by drawing upon existing data on the economic costs of mental illness and the treatment effectiveness of interventions.

The 1998 Substance Abuse and Mental Health Statistics Source Book from the Substance Abuse and Mental Health Services Administration (SAMHSA) estimates that the economic cost to society of mental illness in 1994 was about $204.4 billion. About $91.7 billion was due to the cost of treatment and medical care and $112.6 billion (1994 dollars) was due to loss of productivity associated with morbidity and mortality and other related costs, such as crime. 69 Evidence suggests that appropriate treatment of mental health disorders can result in 50-80 percent of individuals experiencing improvements in these types of conditions. Improvements in patient functioning and reduced hospital stays could result in hundreds of millions of dollars in cost savings annually.

Although figures on the number of individuals who avoid mental health treatment due to privacy concerns do not exist, some indirect evidence is available. As noted in the cancer discussion, the 1993 Harris-Equifax Health Information Privacy Survey found that 7 percent of respondents reported that they or a member of their immediate family had chosen not to seek services for a physical or mental health condition due to fear of harm to job prospects or other life opportunities. (See above for limitations to this data).

We assume that the proportion of people with a mental health disorder who did not seek treatment due to fears about job prospects or other opportunities is the same as the proportion in the Harris-Equifax survey sample who did not seek services for physical or mental health conditions due to the same fears (7 percent). The 1999 Surgeon General's Report on Mental Health estimates that 28 percent of the U.S. adult population has a diagnosable mental and/or substance abuse disorder and 20 percent of the population has a mental and/or substance abuse disorder for which they do not receive treatment. 70 Based on the Surgeon General's Report, we estimate that 15 percent of the adult population has a mental disorder for which they do not seek treatment. 71 Assuming that 7 percent of those with mental disorders did not seek treatment due to privacy concerns, we estimate that 1.05 percent of the adult population 72 (15 percent multiplied by 7 percent), or 2.07 million people, did not seek treatment for mental illness due to privacy fears.

The indirect (non-treatment) economic cost of mental illness per person with mental illness is $2,590 ($112.6 billion divided by 43.4 million people with mental illness). 73 The treatment cost of mental illness per person with mental illness is $2,110 ($91.7 billion divided by 43.4 million individuals). If we assume that indirect economic costs saved by encouraging more individuals with mental illness to enter treatment are offset by the additional treatment costs, the net savings is about $480 per person.

As stated above, appropriate treatment of mental health disorders can result in 50-80 percent of individuals experiencing improvements in these types of conditions. Therefore, we multiply the number of individuals with mental disorders who would seek treatment with greater privacy protections (2.07 million) by the treatment effectiveness rate by the net savings per effective treatment ($480). Assuming a 50 percent success rate, this equation yields annual savings of $497 million. Assuming an 80 percent success rate, this yields annual savings of $795 million.

Given the existing data on the annual economic costs of mental illness and the rates of treatment effectiveness for these disorders, coupled with assumptions regarding the percentage of individuals who would seek mental health treatment with greater privacy protections, the potential net economic benefits could range from approximately $497 million to $795 million annually.