1. HIPAA and the States Critical Issues & Compliance Strategies Presented by Robert J. Burns National Governors Association Center for Best Practices Regional Technical Assistance Meetings Substance Abuse and Mental Health Services Administration April 18, 2002 Phoenix, AZ May 2, 2002 Atlanta, GA May 16, 2002 Chicago, IL June 20, 2002 Boston, MA

2. © 2002 National Governors Association About NGA Professional association of, by, and for the nation’s Governors Nonpartisan Unique relationship with Governors/States Organization – NGA Committee (“voice” in DC) – NGA Center for Best Practices (technical assistance to states)

3. © 2002 National Governors Association FY2002 Budget Overview Revenue nearly 4 percent below expectations By end of June, shortfall will reach $40 to $50 billion (4 to 5 percent of total state budgets) Post-9/11 activities responsible for $5 to $7 billion in state costs

4. © 2002 National Governors Association How States Are Coping First tier cuts: hiring freezes, delaying new capital projects, delaying payments, salary freezes Recent tier cuts: across-the-board slashes, halting road projects, eliminating new and some existing programs, some job cuts

5. © 2002 National Governors Association Revenue Enhancements Few states calling for tax increases – IN (cigarettes, gambling) – KS (fuel, sales, cigarettes) Some tax cuts postponed (FL, MD) Other revenue sources tapped – Rainy day funds (drained) – Some bonds (borrowing at record levels) – Lottery funds

6. © 2002 National Governors Association Top Gubernatorial Priorities Bolstering Homeland Security Fostering Economic Recovery Maintaining Education Initiatives Containing Health Care Costs

7. © 2002 National Governors Association Top State Health Priorities Containing Pharmaceutical Costs Medicaid Reform – Enhancing waiver authority – Overall reform Emerging Issues – Workforce – Malpractice – HIPAA compliance

8. © 2002 National Governors Association Why Just Now “Emerging?” Legally Complex – PHI definitions – Covered entities, business associates, trading partners – Minimum amount necessary, reasonable efforts – Preemption, exemptions Technically Complex – Transactions, codes, identifiers, data format – Electronic data interchange Poor Guidance – CMS underestimated Medicaid costs – No data on fiscal impact outside Medicaid – Program differences among states

9. © 2002 National Governors Association Regulation Status Proposed Rule Final Rule Compliance Deadline † Privacy11/998/02 ‡ 4/03 Security8/98—— Transactions and Codes5/9810/0010/02 * National Provider Identifier5/98—— Health Plan Identifier——— Employer Identifier6/987/027/04 Enforcement——— † Small health plans have one additional year following this date to be compliant. ‡ HHS proposed modifications to the privacy rule on March 27, 2002. The modifications were finalized on August 14, 2002. The compliance deadline will not change. * The compliance deadline may be extended by one year if a compliance plan is submitted to HHS before October 16, 2002. Small health plans are not eligible for the conditional extension.

10. © 2002 National Governors Association The Ripple Effect Community-based providers (“safety net”) Public hospitals/clinics Mental health facilities Substance abuse treatment centers State/local health departments Academic medical/research centers Organ donation Law enforcement and corrections (coroners, medical examiners) School-based health programs (immunizations, dental) SAPT-funded programs MCH programs (Title V) HIV/AIDS (“Ryan White”) TANF-funded programs State employee benefits Worker’s compensation Health policy offices

11. © 2002 National Governors Association HIPAA Cost Estimates MedicaidNon-Medicaid California$100 million Pennsylvania$50-$200 million Indiana$160 million

12. © 2002 National Governors Association Critical Issues Liability – Privacy and Security – Lawsuits – Civil, criminal penalties Operational Disruption – Electronic Transactions & Codes (and Identifiers) – Enrollment, eligibility, billing, payment, etc. – Reporting, budgeting, research, etc. Funding

13. © 2002 National Governors Association Compliance Strategies Oversight commission or committee – Governor’s office – Budget Director, State CIO – Attorney General, General Counsel – Directors of affected (or likely affected) agencies Designated HIPAA office – Medicaid agency – Privacy or IT office – Special project office (HIPAA-specific) – Leadership (and authority) Specialty workgroups Multi-year business plan

14. © 2002 National Governors Association North Carolina HIPAA Statewide Assessment Team Collaborative Leadership – Oversight committee Centralized Management – Housed within DHHS Decision Making Authority – Legislature – Governor – Budget director, IT office Clear Mission – Assess statewide impact – Build awareness – Develop strategic plan, compliance tools – Coordinate state activities General Assembly (SB 1005)

15. © 2002 National Governors Association New York Central HIPAA Coordination Project Collaborative Leadership – Steering Committee Centralized Management – Led by IT office Decision Making Authority – Governor – Budget director – Agency directors Clear Mission – Assess statewide impact – Build awareness – Develop compliance tools – Provide technical support

16. © 2002 National Governors Association Ohio Engagement Management Structure Collaborative Leadership – Governor, Cabinet Centralized Management – Deputy Directors Team Decision Making Authority – Governor – Agency Directors Clear Mission – Assess statewide impact – Build awareness – Develop strategic plan, compliance tools – Coordinate state activities

17. © 2002 National Governors Association Public-Private Partnerships Hawaii HIPAA Readiness Collaborative New Hampshire & Vermont Strategic HIPAA Implementation Plan (NHVSHIP) North Carolina Healthcare Information and Communications Alliance (NCHICA) Southern HIPAA Administrative Regional Process (SHARP) Washington State HIPAA Partnership

18. © 2002 National Governors Association Impact Assessment Tools Covered Entity Screening Tools – Covered Entity Screening Tool (OH) – HIPAA Impact Assessment (NY) Organizational Impact Assessments – HIPAA Awareness Self-Assessment Checklist (WA) – HIPAA Facilities Checklist (CA) – A Guide to Privacy Readiness (MD) – HIPAA EarlyView Privacy (NC) – Business Information Flow Assessment (NC) – Electronic Data Interchange Assessment (NC)

19. © 2002 National Governors Association Model Forms & Educational Materials Business Associate Agreement (OH) Patient Consent/Authorization Form (OH) Monthly HIPAA Newsletter (NC) HIPAA Awareness Brochure (OH)

20. © 2002 National Governors Association Kentucky Cabinet-Level Awareness Survey Developed by Governor’s Office for Technology Cabinet Awareness Cabinet Impact Costs, budget needs

21. © 2002 National Governors Association Building Support & Awareness Difficult to estimate implementation costs Initially, costs will exceed savings “Systems remediation” signals that administrative simplification is like Y2K— just another technical problem “Business transformation” implies that a greater commitment of resources is needed

22. © 2002 National Governors Association NGA Center Activities (www.nga.org/center) Issue Brief (HIPAA) Executive-level technical assistance meeting (late summer) Internet broadcast (fall) State-specific technical assistance (via Governor’s office)

23. © 2002 National Governors Association NGA Center for Best Practices (www.nga.org/center) Robert J. Burns Policy Analyst Health Policy Studies Division National Governors Association Center for Best Practices 444 North Capitol Street, Suite 267 Washington, DC 20001-1512 (202) 624-7729 fax: (202) 624-5313 email: rburns@nga.orgrburns@nga.org