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    HIPAA Regulations: Preemption of State Law: Statutory Basis - § 160.201

    As Contained in the HHS HIPAA Rules

     

    HHS Regulations as Amended January 2013
    Preemption of State Law: Statutory Basis - § 160.201

     

    The provisions of this subpart implement section 1178 of the Act, section 262 of Public Law 104-191, section 264(c) of Public Law 104-191, and section 13421(a) of Public Law 111-5.

     

    HHS Description and Commentary From the January 2013 Amendments
    Preemption of State Law: Statutory Basis

     

    Proposed Rule

    We proposed to modify § 160.201 regarding the statutory basis for the preemption of State law provisions to add a reference to section 264(c) of HIPAA, which contains the statutory basis for the exception to preemption at § 160.203(b) for State laws that are more stringent than the HIPAA Privacy Rule. We also proposed to add a reference to section 13421(a) of the HITECH Act, which applies HIPAA’s preemption rules to the HITECH Act’s privacy and security provisions. Finally, we proposed to re-title the provision to read “Statutory basis” instead of “Applicability.”

    Overview of Public Comments

    Several commenters expressed concerns about the lack of uniform Federal and State privacy laws and the resultant confusion and expense associated with determining which laws apply to a given circumstance, particularly as more and more health care entities operate across multiple state lines. Commenters recommended that the Department make efforts to engage States and other partners to examine divergent Federal and State requirements and to attempt to coordinate various disclosure rules to drive Federal-State consensus.

    Final Rule

    The final rule adopts the proposed modifications. In response to the comments concerned with the lack of uniform Federal and State privacy laws, we note that the preemption provisions of the HIPAA Rules are based on section 1178 of the Social Security Act and section 264(c)(2) of HIPAA. Through these statutory provisions, Congress made clear that the HIPAA privacy requirements are to supersede only contrary provisions of State law, and not even in all such cases, such as where the provision of State law provides more stringent privacy protections than the HIPAA Privacy Rule.

    Accordingly, the HIPAA Privacy Rule provides a Federal floor of privacy protections, with States free to impose more stringent privacy protections should they deem appropriate.

     

    HHS Response to Comments Received
    General Provisions: Statutory Basis

     

    We summarize and respond below to comments received in the Transactions rulemaking on the issue of preemption, as well as those received on this topic in the Privacy rulemaking. Because no process was proposed in the Transactions rulemaking for granting exceptions under section 1178(a)(2)(A), a process for making exception determinations was not adopted in the Transactions Rule. Instead, since a process for making exception determinations was proposed in the Privacy rulemaking, we decided that the comments received in the Transactions rulemaking should be considered and addressed in conjunction with the comments received on the process proposed in the Privacy rulemaking. See 65 FR 50318 for a fuller discussion. Accordingly, we discuss the preemption comments received in the Transactions rulemaking where relevant below.

    Comment: The majority of comments on preemption addressed the subject in general terms. Numerous comments, particularly from plans and providers, argued that the proposed preemption provisions were burdensome, ineffective, or insufficient, and that complete federal preemption of the “patchwork” of state privacy laws is needed. They also argued that the proposed preemption provisions are likely to invite litigation. Various practical arguments in support of this position were made. Some of these comments recognized that the Secretary's authority under section 1178 of the Act is limited and acknowledged that the Secretary's proposals were within her statutory authority. One commenter suggested that the exception determination process would result in a very costly and laborious and sometimes inconsistent analysis of the occasions in which state law would survive federal preemption, and thus suggested the final privacy regulations preempt state law with only limited exceptions, such as reporting child abuse. Many other comments, however, recommended changing the proposed preemption provisions to preempt state privacy laws on as blanket a basis as possible.

    One comment argued that the assumption that more stringent privacy laws are better is not necessarily true, citing a 1999 GAO report finding evidence that the stringent state confidentiality laws of Minnesota halted the collection of comparative information on health care quality.

    Several comments in this vein were also received in the Transactions rulemaking. The majority of these comments took the position that exceptions to the federal standards should either be prohibited or discouraged. It was argued that granting exceptions to the standards, particularly the transactions standards, would be inconsistent with the statute's objective of promoting administrative simplification through the use of uniform transactions.

    Many other commenters, however, endorsed the “federal floor” approach of the proposed rules. (These comments were made in the context of the proposed privacy regulations.) These comments argued that this approach was preferable because it would not impair the effectiveness of state privacy laws that are more protective of privacy, while raising the protection afforded medical information in states that do not enact laws that are as protective as the rules below. Some comments argued, however, that the rules should give even more deference to state law, questioning in particular the definitions and the proposed addition to the “other purposes” criterion for exception determinations in this regard.

    Response: With respect to the exception process provided for by section 1178(a)(2)(A), the contention that the HIPAA standards should uniformly control is an argument that should be addressed to the Congress, not this agency. Section 1178 of the Act expressly gives the Secretary authority to grant exceptions to the general rule that the HIPAA standards preempt contrary state law in the circumstances she determines come within the provisions at section 1178(a)(2)(A). We agree that the underlying statutory goal of standardizing financial and administrative health care transactions dictates that exceptions should be granted only on narrow grounds. Nonetheless, Congress clearly intended to accommodate some state laws in these areas, and the Department is not free to disregard this Congressional choice. As is more fully explained below, we have interpreted the statutory criteria for exceptions under section 1178(a)(2)(A) to balance the need for relative uniformity with respect to the HIPAA standards with state needs to set certain policies in the statutorily defined areas.

    The situation is different with respect to state laws relating to the privacy of protected health information. Many of the comments arguing for uniform standards were particularly concerned with discrepancies between the federal privacy standards and various state privacy requirements. Unlike the situation with respect to the transactions standards, where states have generally not entered the field, all states regulate the privacy of some medical information to a greater or lesser extent. Thus, we understand the private sector's concern at having to reconcile differing state and federal privacy requirements.

    This is, however, likewise an area where the policy choice has been made by Congress. Under section 1178(a)(2)(B) of the Act and section 264(c)(2) of HIPAA, provisions of state privacy laws that are contrary to and more stringent than the corresponding federal standard, requirement, or implementation specification are not preempted. The effect of these provisions is to let the law that is most protective of privacy control (the “federal floor” approach referred to by many commenters), and this policy choice is one with which we agree. Thus, the statute makes it impossible for the Secretary to accommodate the requests to establish uniformly controlling federal privacy standards, even if doing so were viewed as desirable.

    Comment: Numerous comments stated support for the proposal at proposed Subpart B to issue advisory opinions with respect to the preemption of state laws relating to the privacy of individually identifiable health information. A number of these comments appeared to assume that the Secretary's advisory opinions would be dispositive of the issue of whether or not a state law was preempted. Many of these commenters suggested what they saw as improvements to the proposed process, but supported the proposal to have the Department undertake this function.

    Response: Despite the general support for the advisory opinion proposal, we decided not to provide specifically for the issuance of such opinions. The following considerations led to this decision. First, the assumption by commenters that an advisory opinion would establish what law applied in a given situation and thereby simplify the task of ascertaining what legal requirements apply to a covered entity or entities is incorrect. Any such opinion would be advisory only. Although an advisory opinion issued by the Department would indicate to covered entities how the Department would resolve the legal conflict in question and would apply the law in determining compliance, it would not bind the courts. While we assume that most courts would give such opinions deference, the outcome could not be guaranteed.

    Second, the thousands of questions raised in the public comment about the interpretation, implications, and consequences of all of the proposed regulatory provisions have led us to conclude that significant advice and technical assistance about all of the regulatory requirements will have to be provided on an ongoing basis. We recognize that the preemption concerns that would have been addressed by the proposed advisory opinions were likely to be substantial. However, there is no reason to assume that they will be the most substantial or urgent of the questions that will most likely need to be addressed. It is our intent to provide as much technical advice and assistance to the regulated community as we can with the resources available. Our concern is that setting up an advisory opinion process for just one of the many types of issues that will have to be addressed will lead to a non- optimal allocation of those resources. Upon careful consideration, therefore, we have decided that we will be better able to prioritize our workload and be better able to be responsive to the most urgent and substantial questions raised to the Department, if we do not provide for a formal advisory opinion process on preemption as proposed.

    Comment: A few commenters argued that the Privacy Rule should preempt state laws that would impose more stringent privacy requirements for the conduct of clinical trials. One commenter asserted that the existing federal regulations and guidelines for patient informed consent, together with the proposed rule, would adequately protect patient privacy.

    Response: The Department does not have the statutory authority under HIPAA to preempt state laws that would impose more stringent privacy requirements on covered entities. HIPAA provides that the rule promulgated by the Secretary may not preempt state laws that are in conflict with the regulatory requirements and that provide greater privacy protections.

    Applicability

    Comment: Several commenters indicated that the guidance provided by the definitions at proposed § 160.202 would be of substantial benefit both to regulated entities and to the public. However, these commenters argued that the applicability of such definitions would be too limited as drafted, since proposed § 160.201 provided that the definitions applied only to “determinations and advisory opinions issued by the Secretary pursuant to 42 U.S.C. 1320d-7.” The commenters stated that it would be far more helpful to make the definitions in proposed § 160.202 more broadly applicable, to provide general guidance on the issue of preemption.

    Response: We agree with the comments on this issue, and have revised the applicability provision of subpart B below accordingly. Section 160.201 below sets out that Subpart B implements section 1178. This means, in our view, that the definitions of the statutory terms at § 160.202 are legislative rules that apply when those statutory terms are employed, whether by HHS, covered entities, or the courts.