Patient Privacy in the
Fishbowl of Bankruptcy
Companies across numerous industries—from airlines to steel manufacturers to automakers
and their suppliers—have availed
themselves of Chapter 11 of the U.S.
Bankruptcy Code not only to resolve
untenable debt loads, but also to
address legacy issues and, ultimately,
transform their business models to
allow them to compete successfully
in current market conditions.
In many ways, the healthcare industry
is only the latest sector to embark on
a journey of transformation. Secular
trends in this industry, including
upcoming cuts in Medicare and
Medicaid reimbursement rates and
recent changes within the insurance
industry compelled by the Affordable
Care Act, will undoubtedly drive
the need for even more financial
reorganizations in this troubled sector.
Like so many companies that came
before them, a significant number
of healthcare facilities will choose
to address these issues through
the Chapter 11 process. However,
these cases are remarkably different
in a couple of very significant
ways from the scores of Chapter 11
filings that have preceded them.
One of the most daunting issues in
administering bankruptcy cases in
the healthcare sector is maintaining
federally mandated patient privacy
and confidentiality while still meeting
the level of transparency required by
bankruptcy law. The Health Insurance
Portability and Accountability Act
(HIPAA) was enacted by Congress in
1996 and included the Privacy Rule,
which set standards in connection
with the use and disclosure of
individuals’ health information.
Among other things, the Privacy
Rule prohibits disclosure of patients’
personally identifiable information.
Yet, the first step in administering
any bankruptcy case is compiling
a listing or matrix of all potential
creditors, which can include patients’
names for a variety of reasons.
In some instances, for example,
it’s simply that a patient is owed a
refund by the healthcare provider.
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