HIPAA Privacy Rules

[Guest jgf810]

I am the privacy officer for an employer that sponsors' a self-insured health plan. The current practice for budgeting for H&W is to provide estimated individual employee cost to the budgeting mangers to calculate their budgets for the coming year. My interpretion of HIPAA privacy rules (minimum necessary) has me questioning my company's current practice. However, I am getting a major push back from our accounting dept. and managers to "show me" where in HIPAA does it state we can not provide employee coverage levels (single, couple, family) cost to managers to perform their budgeting duties. Can you offer any guidance on this issue?

Note: The coverage level information comes from an ORACLE software based system that we use for benefits enrollment and payroll. The coming year cost are calculated by TPA vendor underwriters for the health plans.

[KIP KRAUS]

I’m not sure what the problem is. If your group medical plan has premium rates based on single coverage two person coverage and family coverage providing this information to budgeting managers is a reasonable expectation. It doesn’t give them PHI because all employees similarly situated have the same premium cost regardless of individual health. It has nothing to do with HIPAA as far as I’m concerned.

[GBurns]

I also do not see a HIPAA problem, however, I see potential labor or state privacy issues.

Individual premium and coverage info is not needed for purposes of budgeting. Your Oracle or TPA can easily provide the total amount applicable to those employees in the various Depts.

Leaving the calculation to the Dept is asking for errors. Giving the Dept this individual info leaves the way open for charges of discrimination, favoritism, wrongful termination etc decisions made against an employee allegedly because they "cost more" than another employee.

A little research of Benefits Buzz and the Forums should bring out some case law related to this issue, if not other searches will do so.

[mbozek]

GB: Headline in todays Wall Street Journal- "New Recipe for Cost Savings- Replace Expensive Workers". Circuit City recently terminated the highest paid 20% of its sales force to save money. Salary used to be considered a proxy for age, e.g. ,since older workers made more money than younger workers, firing the higher paid workers would be a violation of age discrimination laws. A few years ago the US Supreme Ct held that terminating a high paid older worker wasn't age discrimination if the basis for termination is to reduce cost of doing business. However, terminating employees to reduce pension costs (e.g., to prevent an employee from vesting in a benefit) would be considered a violation of ERISA.

[GBurns]

Using your statement that termination "to reduce pension costs (e.g., to prevent an employee from vesting in a benefit) would be considered a violation of ERISA.", it would follow that to terminate to reduce health plan costs would also be considered a violation of ERISA, Would it not?

I also pointed out that the employer would also have to face charges of possible unlawful disclosure of PHI and misuse of PHI.

[mbozek]

It is very difficult, almost impossible for an employee to prove termination in violation of ERISA 510 without an employer admission. The employee must prove that the reason for termination was expressly to prevent the employee from receiving benefits- the fact that the employer's benefit costs were reduced because of a reduction in force is not proof of a violation of ERISA.

[GBurns]

So What???

That is why you have lawsuits and subsequent discovery with depositions and testimony and cross examination and rebuttals etc . Have you forgotten the hows and why of lawsuits already?

By the way, no one raised the issue of ERISA 510 and you were the one who raised ERISA. In any case, What would ERISA 510 have to do with wrongful termination of employment anyhow?

[mbozek]

ERISA 510 prohibits discriminatory action against employees by employers in benefit plans. The cases are usually dismissed without trial or discovery because the employee does not allege facts in the complaint to show that employer action (e.g., termination) was taken to deny benefit rights. Anyway this is beyond the scope of the original post.

[GBurns]

Erisa 510 deals with discriminatory actions in benefits plans.

EEOC, labor laws and Tort and contract laws deal with wronful termination regardless of cause. An employee who feels that they were wrongfully terminated and who feels that it was because of their "higher cost" to the employer would not have had a denial etc of benefits and therefore there is no ERISA 510 issue. The employee has a simple wrogful termination case. ERISA is irrelevant and ERISA 510 is an even more irrelevant cite.

As you stated this has nothing to do with the issue so I again wonder why you posted the irrelevant and misleading cite in the first place?

[Sandra Pearce]

If I were doing the budgeting I would either use a figure per employee that is reflective of the maximum or possibly the average per person. Turn over and election changes during a calendar year happen in every department. Thus eliminating the need for any department head to know what level of coverage each employee is actually carrying at any given time.