June 1998 Bulletin

Privacy bill raises worker’s comp concern

Most state statutes give employers, insurers access to patient information

A comprehensive medical records privacy bill introduced in the Senate in April has raised concerns about the implications for worker's compensation.

Patients expect physicians to maintain private information in a confidential and dignified manner. However, in worker's compensation cases, physicians are justified, if not obligated, to reveal patient information.

The issues of debate of worker's compensation are how to balance patients' medical privacy rights with insurers' and self-insured employers' obligations under the law and how much information is necessary for insurers and self-insured employers to efficiently and effectively process worker's compensation benefits.

The Health Care Personal Information Nondisclosure Act of 1998 (S 1921), sponsored by Sen. James Jeffords (R-Vt.), would establish uniform national standards for medical records confidentiality. Individuals personally must authorize the disclosure of identifiable health data and would have the right to access and amend medical records. The bill creates tough new criminal and civil sanctions for wrongful disclosure of protected health information.

The American Insurance Association (AIA), which represents more than 300 health insurers and other property and casualty insurance underwriters, is concerned that Sen. Jefford's bill only defines ìinsurerî in terms of life and health insurance. "It is unclear how property and casualty worker's compensation are intended to be incorporated into the proposed regulatory scheme," said Bruce Wood, assistant general counsel, AIA. AIA is concerned whether privacy regulations that require authorizations for obtaining medical information could effectively preclude insurers from making timely benefit payment determinations, as required by state law.

The AIA said "the information a property and casualty insurer needs in evaluating and settling claims is not information in its possession, but is in the hands of the claimant third party. For this reason, it is imperative for the insurer to have unimpeded access to medical information to evaluate the merits of the claim and manage medical treatment in order to ensure an expeditious recovery and return to work, and protect against fraud."

Most worker's compensation statutes provide employers and insurers access to information relevant to the worker's claim to allow accurate investigation and processing of the claim. Worker's compensation statutes contain strict reporting and claim deadlines and access to patient information is considered necessary to meet the obligations.

Several state statutes dictate that an employee's claim for worker's compensation benefits, or the receipt of such benefits, waives any privilege of confidentiality relating to the claim, history or treatment of the injury. The physician must provide the employer, when requested, all information and records related to the examination, treatment and testing of the injured employee. The physician also may have to provide, under oath, information relating to the injury and its treatment.

If a state worker's compensation statute does not explicitly address the confidentiality waiver, some courts have recognized a common law waiver of confidentiality. This waiver is limited to information relevant to the claim and necessary for the employer's defense.

The waiver provided may not apply to information regarding HIV and other sensitive health issues unrelated to a worker's compensation claim. Disclosure of patient HIV status is generally regulated by state public health law. Physicians may want to become familiar with these statutes in their state to protect themselves against lawsuits that may arise from unwittingly releasing protected information. The law on this issue is still emerging and physicians should take precautions, such as obtaining a specific written consent, prior to divulging HIV information unrelated to a worker's compensation claim.

Congress and state legislatures will be attempting to address this issue this year. The 1996 Health Insurance Portability and Accountability Act requires Congress to pass medical records privacy legislation by August 1999 or the Department of Health and Human Services is required to adopt regulations by early 2000. In addition to Sen. Jeffords' bill, Sen. Patrick Leahy (D-Vt.) and Sen. Edward Kennedy (D-Mass.) introduced medical privacy legislation in November 1997.

The National Association of Insurance Commissioners (NAIC) is reworking its model legislation, the Health Information Privacy Model Act, to address the issue of medical records privacy. This update of the model legislation contains a section called the Special Rules for Workers' Compensation Insurance Carriers. If the proposed model legislation is adopted by the NAIC, it may serve as model for medical records privacy legislation at the state and possibly federal levels.

The Academy has developed a Health Policy Update, "Confidentiality of Medical Information in Worker's Compensation Cases," which is on the home page www.aaos.org or fax-on-demand (800) 999-2939, document 9013.

Susan Koshy is a policy analyst in the Academy's department of health policy and practice.

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