Employer Considering Allocating Costs By Department - HIPAA Issues?

[Guest Edward McElroy]

An employer is considering breaking down heath care costs (including prescription drug charges) by department. Individual depts. would be charged for the actual costs oftheir employees. Some depatments have only one employee. Do HIPAA issues result because Co. in-house accountants could see that a spike in charges could be associated with an employee's health issues. Thanks in advance. Ed

[GBurns]

I assume that this is a self-insured plan.

The answer depends on whether or not any personally identifiable information is used by or disclosed to the employer. If none, no HIPAA problem. If yes, What and Why would an employer even have been given this information by the Claims Administrator in the first place?

However, such information could be produced by the Claims Administrator or a Third Party, who would produce the Departmental allocations without identifying the individual employees or disclosing any detail imformation.

Care has to be taken regarding those Depts with only 1 employee especially if any action is ever taken against that employee that might be construed as having a connection to either the operating costs of that Dept or the cost of providing employee health benefits in general.

[Steve72]

The fact that one employee departments are involved makes it possible that there MUST be individually identifiable information shared. If a $300,000 bill is attributable to a one person department, then the accounting department knows that that person has a $300,000 bill. This is probably individually identifiable health information due to paragraph (2)(ii) of the definition of that term.

However, the billing is a permissible payment function. Therefore, if the plan sponsor wishes to administer its plan in this manner, I would recommedn including the accounting personall in the "HIPAA Firewall", meaning they should be trained and mentioned in the HIPAA amendment to the plan.

Their training should indicate that they are to use this information solely for accounting functions, and that violation of this rule will be subject to sanctions.

[Kirk Maldonado]

I don't think that you can do that for purposes of determining the amount of the COBRA premium.