By Kim Coghill

Washington Editor

WASHINGTON - Three weeks shy of the deadline to implement medical privacy rules given the go-ahead by former President Bill Clinton, organizations on either side of the issue are speaking up in hopes of swaying the new administration to their points of view.

The House Subcommittee on Health Thursday opened the floor for testimony, as promised by the Bush administration in late February when Secretary of Health and Human Services Tommy Thompson announced that the date of implementation had been pushed back from Feb. 26 to April 14 for further comment. The rules were issued under the Health Insurance Portability and Accountability Act (HIPAA) of 1996, and upon final approval would be fully implemented over a two-year period. (See BioWorld Today, Feb. 27, 2001.)

The former administration said the privacy rules were written to give patients more control over their medical records while placing stiffer penalties on health plans, Internet web sites and other organizations that distribute medical information without consent.

Clinton's Department of Health and Human Services said the rules limit the nonconsensual use and release of private health information; give patients new rights to access their medical records and to know who else has accessed them; restrict most disclosure of health information to the minimum needed for the intended purpose; establish new criminal and civil sanctions for improper use or disclosure; and establish new requirements for access to records by researchers and others.

But early into his term, the Bush team raised concerns about the "expensive" rules that critics said could cost the health care system up to $18 billion over 10 years. Supporters, however, said the rules would save the industry $12 billion through streamlining regulations and billing practices.

The Washington-based Biotechnology Industry Organization was among those that either submitted written testimony to the subcommittee or were in attendance for an oral presentation.

In its written remarks, BIO, which is jockeying for a delay in final approval of the regulations, attacked several issues surrounding the rules, including the feared cost.

"BIO is deeply concerned that the additional costs of the significant new regulations, together with the new civil and criminal liability to which they are exposed, may have the unintended consequence of making institutions reluctant to host sponsored research, or incur greater cost and risk to do so."

As proposed and approved by the Clinton administration, the regulations establish criminal and civil penalties to punish anyone improperly using or disclosing personal health information, including a fine of up to $50,000 and a year in prison for intentional disclosure. Disclosure with intent to sell the data would be punishable by a fine of up to $250,000 and up to 10 years in prison.

Janlori Goldman, director of the Health Privacy Project for Georgetown University, offered testimony before the subcommittee that countered the concern about cost, saying, "If we as a society do not put federal privacy protections in place, millions more people will engage in privacy-protective behaviors to the detriment of their own health and the integrity of research and confidence in our health care system will continue to erode."

BIO said it supports federal legislation and regulations that safeguard the confidentiality of medical information because the availability of sensitive and detailed medical information is indispensable to biomedical research. Furthermore, the availability of the information depends on a patient's trust and confidence that researchers will use medical information responsibly and protect it from misuse.

However, BIO argues that research activities of biotechnology companies already are subject to the regulations of the FDA, state laws and federal regulations that govern institutional review boards. And because of the Common Rule, the research protocols that companies sponsor, including the arrangements for safeguarding the privacy of participants and protecting the confidentiality of the data collected, are independently reviewed by IRBs at each institution where data are collected. The Common Rule refers to federal research regulations that have been adopted and codified by 16 federal agencies involved in conducting or supporting research with human research participants.

BIO also suggests that the Common Rule should be reviewed to ensure that it still provides the kind of comprehensive protection for research participants that is integral to the conduct of high-quality research.

Bush Nominates HCFA Administrator

President Bush Friday nominated Tom Scully to serve as administrator of the Health Care Financing Administration. Scully currently is the president and CEO of the Federation of American Hospitals.

He served as deputy assistant to the president and counselor to the director of the Office of Management and Budget from 1992 to 1993 and as associate director of the OMB for human resources, veterans and labor from 1989 to 1992.

Scully is a graduate of the University of Virginia and earned his law degree from Catholic University.

Carl Feldbaum, BIO president, released a prepared statement supporting the nomination, saying, "Mr. Scully . . . [has] the substantive background to make HCFA an agency which has the potential to recognize the innovative benefits biotechnology brings to medicine.

"Mr. Scully's background in leading the Federation of American Health Systems has undoubtedly made him aware of the need to modernize the agency's hodgepodge of bureaucratic rules and regulations. Updating HCFA's operations are critical to the health care of millions of U.S. citizens, particularly if there is to be forward movement on a Medicare prescription drug benefit." n