Can Patients Profit from a Health-Care Breach?

The digital era has been a boon to the health-care industry, replacing illegible physician notes with electronic copies and letting records get e-mailed instantaneously. But it has come with some costs, chiefly the rising threat of computer hackers intent on stealing patient information. An upcoming government proposal is set to give patients some financial recourse when data breaches happen.

The proposed rule from the Health and Human Services Office for Civil Rights would ask for public comment on creating a way to share a percentage of the proceeds from health-care data breach settlements with individuals who were harmed by the breach. The proposal was included in the HHS semiannual regulatory agenda, and an advanced notice of proposed rulemaking is expected to be published in November.

However, implementing the proposal won’t be easy. Determining who is directly harmed by a data breach and how much they should be paid is a complex question and will pose an administrative challenge for the government, Andrea L. Frey, a health-care attorney with Hooper, Lundy & Bookman PC in San Francisco, told me.

“Very rarely is harm provable with data breaches, and more often than not the harm ends up being entirely speculative,” Frey said. Breaches can affect thousands of patients records, which also complicates the effort to calculate a payment, Frey said.

The Health Information Technology for Economic and Clinical Health (HITECH) Act included a provision mandating the sharing of breach civil monetary penalties with affected individuals, but it hasn’t been acted on until now.

The proposal could also create an environment where physician practices have frivolous complaints lodged against them by individuals simply in the hopes of receiving a financial reward, Robert Tennant, director of health information technology policy at the Englewood, Colo.-based Medical Group Management Association, told me.

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