American Psychiatric Association

on

H.R. 4585

The Medical Financial Privacy Protection Act

before the

Committee on Banking and Financial Services

U.S. House of Representatives

Presented by Richard K. Harding, M.D.

June 14, 2000

Mr. Chair, I am Richard Harding, M.D.,Vice-Chairman of Clinical Affairs and Professor of Neuropsychiatry and Pediatrics at the University of South Carolina School of Medicine. In addition to treating patients and my responsibilities at the School of Medicine, I am President-Elect of the American Psychiatric Association and serve on the National Committee on Vital and Health Statistics – the panel that advises the U.S. Secretary of Health and Human Services on medical privacy and health information issues.

Thank you Chairman Leach, Ranking Member LaFalce, Mrs. Roukema, Mr. Vento and other members of the Committee for this opportunity to testify. The views I am presenting today are both my views and the views of the APA.

We now face what a bipartisan national panel of experts called a "health privacy crisis". Some observers would even say this view represents an understatement; just several months ago a leading computer magazine proclaimed on its cover "We know everything about you…Privacy is dead; get used to it." What’s clear is that today, we live with a 21^st Century cyberspace financial and health care system, but we live with medical privacy protections designed for the bygone black and white television era of Marcus Welby, MD.

Fortunately, a groundswell of public opposition is developing to the numerous invasions of privacy confronting us. Groups as diverse as Phyllis Schafly’s Eagle Forum, the American Medical Association, major patient groups and the ACLU all believe it is critically important to address the dramatic loss of medical privacy. However, in my opinion, those "inside the beltway" are only beginning to realize the great extent of the public’s discontent with the loss of their privacy.

Your efforts Mr. Chairman, as well as those of the Clinton Administration, Mr. LaFalce, and Mr. Markey, to add needed privacy protections to the Financial Services Modernization Act are very important first steps to address the public’s concern. We strongly urge you and your colleagues to come together on a bipartisan basis and pass legislation to add critically needed privacy protections to the financial modernization law. Mr. Chairman, while we believe there are issues still to be resolved, we welcome your valuable legislation and look forward to working with you to advance medical privacy.

As we consider this issue I hope each of us will think not only in terms of public policy but also in terms of our own medical records and our own family’s privacy. Medical records contain some of the most personal information about ourselves and our families. I can assure you as a patient I want to make the choice myself as to whether my medical information is disclosed, and I want members of my family to have that same right. This decision should not be made for us by a financial institution. This is not information that a life insurance salesman, a telemarketer, or a bank’s mortgage officer should have at their fingertips. Disclosure of certain medical records information can jeopardize our careers, our friendships, our marriages and even our health.

How, you might ask, could a financial modernization law affect your medical privacy? Simply put, as a result of the 1999 financial modernization law, insurers, including health and life insurers, can merge easily with banks and other financial services companies. As a result, in these large new holding companies it is easy for a health insurance company to disclose medical records information to a corporate affiliate such as a life insurance company, mortgage lender or credit card issuer.

As a result of these disclosures customers and patients can be harmed in many ways. The most obvious example is that medical records would be disclosed to an affiliated banking company. The individual would be denied credit on the basis of his or her medical condition. Affiliates and others could also use customer medical information for marketing and other purposes. But there are additional areas of concern as well. For example, will individuals face discrimination and not be able to obtain health insurance or life insurance they need to protect themselves and their families? And of course the original law contains virtually no limits on police access to records maintained by financial institutions.

In addition to the importance of privacy in our consumer transactions, personal relationships and professional lives, patient privacy is needed for physicians to provide the highest quality medical care. It is too often forgotten that doctor-patient confidentiality is an essential element for effective medical treatment. Without a very high level of patient privacy, many patients will be deterred from seeking needed health care and from making a full and frank disclosure of information needed for their treatment. After all, the information in our medical records can include information on heart disease and high blood pressure, terminal illness, domestic violence and other women’s health issues, psychiatric treatment, alcoholism and other sensitive issues. Patients’ legitimate fears about medical privacy if unaddressed by policymakers can also compromise the integrity of research data needed for scientists to make breakthroughs in treating illness and disease. Unfortunately, the more people who see our medical records in a financial institution, the more likely our records will be disclosed and the greater chance that patients will be afraid to seek treatment and provide the fullest information possible to their physicians.

In reference to mental health, privacy is essential for effective psychiatric care. As even the U.S. Supreme Court recognized in its 1996 Jaffee v. Redmond decision, mental health information is so sensitive that additional privacy protections are needed for psychiatric treatment. The Court held that "Effective psychotherapy depends upon an atmosphere of confidence and trust…disclosure of confidential communications made during counseling sessions may cause embarrassment or disgrace. For this reason the mere possibility of disclosure… may impede the development of the confidential relationship necessary for successful treatment." The 1999 U.S. Surgeon General’s Report on Mental Health reached a similar conclusion, i.e. that patient consent was an essential component of access to effective psychiatric care.

It is often extremely difficult for individuals to bring themselves to seek mental health treatment. Even in cases where the person is extremely emotionally distressed the individual may still avoid medical care at great cost to themselves and their families. Unfortunately, today these individuals also must overcome their fears that their privacy will be compromised if they seek treatment. I do not believe we as a society should create any additional barriers for effective psychiatric treatment.

The introduction of H.R. 4585 has added a key new element to the privacy debate by focusing exclusively on the medical privacy provisions of the Financial Services Modernization Act. A similar positive development has occurred in the Senate where Senator Shelby is attempting to add a medical privacy amendment to legislation before the Senate Banking Committee. When taken together, these efforts offer the hope of progress on adding urgently needed privacy provisions to the Financial Services Modernization Act.

APA believes that H.R. 4585 creates a valuable framework for protecting medical privacy, and we look forward to working with the committee to insure that the specific provisions of the bill insure that consumers benefit fully from the legislation’s protections. H.R. 4585 establishes a key principle for protecting the medical records held by financial services companies. The legislation would create a general rule allowing patients to choose if their medical records will be disclosed to an affiliated company or to a non-affiliated third party. In these cases companies would need the express written consent of the patient before disclosing medical records. We strongly support this patient consent rule. This broad rule is clearly preferable to enumerating specific purposes which require patient consent.

I am equally enthusiastic about the bill’s general rule insuring that patients’ mental health records will not be disclosed without the patient’s separate and specific consent. As I outlined earlier in my testimony, providing patients with this additional right is a sound business practice and, as the U.S. Surgeon General, the U.S. Supreme Court, and others have recognized, privacy is an essential component of effective psychiatric treatment.

The provisions of Representative Leach’s bill which allow consumers to decide if their information would be included in lists containing health information - lists which may be used to discriminate against them- are also valuable. In addition, the provisions insure that patients would be able to decide if disclosures of information on their spending habits (such as credit card payment information) is disclosed. In some cases this information can reveal the patient’s health condition.

However, I would be remiss not to state my belief that the wide scope of the exceptions to the legislation’s patient consent provisions needs to be discussed and reevaluated. For example, the legislation seems to recognize that strong protections are needed to insure that patients can elect to keep their medical records private without compromising their ability to obtain credit. After all if a mortgage lender can make consumers consent to release their medical records as a condition of receiving a loan little would be accomplished. Yet, as currently drafted, do these provisions insure that in the routine course of business patient consent will be voluntary and non-coerced? This remains unclear. I would also like to point out that virtually all exceptions from the original Financial Services Modernization Act’s privacy provisions are again included verbatim by reference in this legislation and that the Secretary is given new authority to create additional exceptions. Given the uncertainty surrounding the scope of the bill’s exceptions, we look forward to working with members of the Committee to ensure that consumers "in the real world" truly enjoy meaningful new protections. We look forward to resolving these questions with members of the Committee.

As part of the Committee’s deliberation on H.R. 4585, we believe the Committee should also review several other important bills before the Committee. Ranking Member LaFalce, working closely with the Clinton Administration, has introduced a very valuable and far reaching bill to provide needed medical and financial privacy protections to the Financial Services law. Likewise, Representative Ed Markey was the first to introduce, with Representative Joe Barton, comprehensive legislation to provide stronger medical and financial privacy protections to the Financial Services Modernization Act. Mr. Markey’s legislation is a very privacy protective bill, and Mr. Markey and Mr. Barton as Co-Chairs of the bipartisan House Privacy Caucus have very actively campaigned for urgently needed improvements in the law.

As Congress focuses greater attention on medical records privacy issues the American Psychiatric Association looks forward to building support for valuable patient privacy proposals. Last summer during the Congress’ final deliberations on the financial services bill APA led an ad-hoc coalition of over 40 groups, including key physician, provider, and patient groups as well as major unions and conservative family organizations, which all advocated for meaningful medical records privacy provisions. We look forward to working with these groups again in order to build support for needed medical privacy protections. Thank you for inviting me to testify and I look forward to continuing to work with you and members of the Committee on these issues.