July 22, 1999

The Honorable Albert Gore, Jr.
President of the Senate
Washington, D.C. 20510

Dear Mr. President:

In compliance with Section 263, Subtitle F of Public Law 104-191, I am pleased to transmit the Second Annual Report to Congress on the Implementation of the Administrative Simplification Provisions of the Health Insurance Portability and Accountability Act (HIPAA). The report covers the period January – December, 1998 and was developed by the National Committee on Vital and Health Statistics (NCVHS), the public advisory committee to the U.S. Department of Health and Human Services on health data, privacy, and health information policy.

The Administrative Simplification provisions of HIPAA require the Secretary of Health and Human Services (HHS) to adopt standards to support electronic interchange for administrative and financial health care transactions. These standards are to include data elements and code sets for those transactions; unique health identifiers for health care providers, health plans, employers, and individuals for use in the health care system; and security standards to protect individually identifiable health information. Within 24 months of their adoption, the standards would be required for use by health plans, providers and clearinghouses. Small plans would have another 12 months to comply.

The issue of privacy protections plays a prominent role in the law as well. The law requires the Secretary to submit detailed recommendations for federal health information privacy legislation to the Congress. Secretary Shalala forwarded these recommendations to the Congress on September 11, 1997. Several health information privacy bills have subsequently been introduced in Congress.

In addition, the statute gives expanded responsibilities to the National Committee on Vital and Health Statistics, including advising the Secretary on health information privacy and on the adoption of health data standards. The Committee is further directed to submit an annual report to Congress on the status of implementation of the Administrative Simplification effort. The second annual report is enclosed.

During 1998, significant progress was made in the implementation of the administrative simplification provisions of HIPAA. After extensive consultation with the industry and other interested and affected parties, including over 40 days of public hearings sponsored by the NCVHS involving over 200 witnesses from throughout the industry, research and public health communities, HHS published four Notices of Proposed Rulemaking relating to the standards for public comment in the Federal Register. HHS is now in the process of reviewing the comments and work is now proceeding on the final regulations. Subsequent annual reports will describe progress on later stages of standards adoption and implementation.

In the process of adopting health data standards, HHS has worked closely with the NCVHS, the industry, and the research and public health communities. To date, the process has been extremely open, collaborative, and productive. The success of the process to date bodes well for the ultimate implementation of these standards.

During 1998, while continuing to work on data standards and health information privacy issues, the NCVHS also turned its attention to a comprehensive framework for the national health information infrastructure. The Committee believes that such a framework can help guide the development of the nation’s health information resources to improve the health status of all Americans. To that end, the NCVHS developed a concept paper on Assuring a Health Dimension for the National Information Infrastructure and plans to continue work in this area in the months ahead.

We hope that you will find this second annual report informative and look forward to continued progress on these important issues for the nation’s health system. If you or your staff would like a presentation on any of our past or anticipated activities, please let me know. We are committed to dramatic improvements in health information systems that will enhance the quality of health care, lower costs, and facilitate access to care in the U.S.

  Sincerely,  
     
  John R. Lumpkin, M.D.
Chairman		  

Enclosure

Identical letters to:

The Honorable Dennis Hastert
Speaker of the House of Representatives
Washington, D.C. 20515

The Honorable William Roth
Chairman
Committee on Finance
219 Senate Dirksen Office Building
United States Senate
Washington, D.C. 20510

The Honorable James Jeffords
Chairman
Committee on Health, Education, Labor and Pensions
428 Senate Dirksen Office Building
United States Senate
Washington, D.C. 20510

The Honorable William Archer
Chairman
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515

The Honorable Thomas Bliley
Chairman
Committee on Commerce
U.S. House of Representatives
2125 Rayburn House Office Building
Washington, D.C. 20515

The Honorable William Goodling
Chairman
Committee on Education and the Workforce
U.S. House of Representatives
2181 Rayburn House Office Building
Washington, D.C. 20515