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Part 2 Proposed Rule Brings Clarity and Reduces Regulatory Burdens for Substance Use Disorder Providers, but Challenges Remain

On August 22, the Substance Abuse and Mental Health Services Administration (“SAMHSA”) announced a new proposed rule (the “Proposed Rule”) amending 42 CFR part 2 (“Part 2”), which is aimed at protecting patient records created by federally funded programs for the treatment of substance use disorder (“SUD”).  The Proposed Rule, which was published last Monday, follows on recent revisions to Part 2 in 2017 and 2018, which were aimed at addressing challenges related to the exchange of health information, patient privacy, and interoperability in an increasingly coordinated health care environment.  The Proposed Rule is also aimed at alleviating these concerns within the constraints of the underlying statute, while also addressing the increasingly urgent need to streamline SUD services in light of the opioid epidemic.  Here we’ll discuss some of the major changes under the Proposed Rule while highlighting the challenges that remain. 

Treatment Records of Non-Part 2 Providers (42 CFR § 2.12)

The Part 2 confidentiality requirements only apply to records created by federally funded programs for the treatment of SUD.  The Proposed Rule seeks to clarify that records created by non-Part 2 providers of SUD services are not automatically subject to Part 2.  This is true even if the non-Part 2 entity initially receives records from a Part 2 entity, so long as the records created by the Part 2 entity are segregated from the records created by the non-Part 2 entity.

Although this clarification ostensibly reduces the burden on non-Part 2 SUD providers, in order to avoid their records becoming subject to Part 2, non-Part 2 entities must ensure that any records created by Part 2 providers are kept entirely separate from the records created by the non-Part 2 entity.  The challenge here is that Part 2 applies so broadly, the provider recipient may not always be able to identify a Part 2 provider in order to ensure compliance with this requirement.

Consent Requirements (42 CFR § 2.31; 42 CFR § 2.33)

The Proposed Rule also includes several provisions aimed at decreasing the burden for patients accessing care by streamlining consent requirements. 

First, SAMHSA is proposing to amend the consent requirements to allow patients to consent to disclosure of their records to a wide range of entities without having to specifically name individuals receiving the information on behalf of the entity.  Under the existing regulations, consents for disclosures to entities without a treating provider relationship are required to specify the names of the individuals to whom the disclosure is to be made.  As written, the Proposed Rule will allow patients to specify the names of the recipient individuals or entities.  According to SAMHSA, this will be particularly helpful for individuals seeking to apply for federal, state and local resources and benefits. 

If, however, the recipient entity is an entity that facilitates the exchange of health information or a research institution, the consent for disclosure must still include either the name of the individual or a general designation of an individual or entity participant or class of participants, limited to those who have a treating provider relationship with the patient. 

The Proposed Rule also clarifies provisions related to disclosure of SUD information to specified entities for payment and health care operational activities.  While SAMHSA contends that, pursuant to the patient’s written consent, such disclosures to contractors, subcontractors and legal representatives are allowed under the existing regulations, the Proposed Rule clarifies the specific types of payment and health care operations activities for which such disclosure is allowed.  SAMHSA has also clarified that the list is meant to be illustrative and not an exhaustive list of all payment and health care operations activities.  The list of permitted activities includes: 

  • Billing, claims management, collections activities, obtaining payment under a contract for reinsurance, claims filing and related health care data processing;
  • Clinical professional support services (e.g., quality assessment and improvement initiatives; utilization review and management services);
  • Patient safety activities;
  • Activities pertaining to: (1) The training of student trainees and health care professionals; (2) The assessment of practitioner competencies; (3) The assessment of provider and/or health plan performance; and/or (4) Training of non-health care professionals
  • Accreditation, certification, licensing, or credentialing activities;
  • Underwriting, enrollment, premium rating, and other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits, and/or ceding, securing, or placing a contract for reinsurance of risk relating to claims for health care;
  • Third-party liability coverage;
  • Activities related to addressing fraud, waste and/or abuse;
  • Conducting or arranging for medical review, legal services, and/or auditing functions;
  • Business planning and development, such as conducting cost management and planning-related analyses related to managing and operating, including formulary development and administration, development or improvement of methods of payment or coverage policies;
  • Business management and/or general administrative activities, including management activities relating to implementation of and compliance with the requirements of this or other statutes or regulations;
  • Customer services, including the provision of data analyses for policy holders, plan sponsors, or other customers;
  • Resolution of internal grievances;
  • The sale, transfer, merger, consolidation, or dissolution of an organization;
  • Determinations of eligibility or coverage (e.g., coordination of benefit services or the determination of cost sharing amounts), and adjudication or subrogation of health benefit claims;
  • Risk adjusting amounts due based on enrollee health status and demographic characteristics; and
  • Review of health care services with respect to medical necessity, coverage under a health plan, appropriateness of care, or justification of charges.

The Proposed Rule also includes a catch-all for “other payment/health care operations activities not expressly prohibited.” 

The Proposed Rule retains the prohibition on disclosures to contractors, subcontractors and legal representatives for activities related to a patient’s diagnosis, treatment or referral for treatment.  This prohibition differs from the policy under HIPAA, which allows for disclosures related to case management and care coordination under the provisions related to health care operations.  With these revisions, SAMHSA comes close, but stops short of harmonizing Part 2 and HIPAA for health care operations disclosures.  While SAMHSA intends for these revisions to facilitate communications necessary for the business operations of all kinds of health care providers, the remaining disconnect may create practical difficulties.  It can be difficult for HIPAA-regulated entities to recognize and distinguish health care operations communications in general.  Part 2 and HIPAA regulated entities will have to distinguish a subset of health care operations communications in order to comply with both HIPAA and Part 2.   

Audit and Evaluation (42 CFR § 2.53)

The Proposed Rule also includes amendments to the provisions related to audit and evaluation to reduce confusion about the types of disclosures to and from government agencies and third-party payers permitted in connection with audit and evaluation.  The Proposed Rule seeks to clarify that government agencies and third-party payers are permitted to obtain Part 2 records without written patient consent in order to conduct audits or evaluations for the following purposes:  

  • Improving policies related to the care and outcomes for Part 2 patients;
  • Targeting limited resources to improve care for patients; or
  • Adjusting Medicaid or other insurance components to facilitate coverage and payment.  

SAMHSA has stated that it does not believe such audits and evaluations should be conducted on a routine or ongoing basis, unless the agency determines that extenuating circumstances exist.  SAMHSA further emphasized that it does not have statutory authority to authorize routine disclosure of Part 2 information for public health purposes.  That said, the Proposed Rule includes a new provision permitting patient identifying information to be disclosed to federal, state and local government agencies, and their contractors, subcontractors, and legal representatives in the course of conducting audits or evaluations mandated by statute or regulation, provided those audits or evaluations cannot be carried out using de-identified information. 

The Proposed Rule also clarifies that Part 2 providers may provide government agencies and third-party payers access to patient information for activities related to reviews of appropriateness of medical care, medical necessity, and utilization of services, in accordance with the restrictions outlined in the regulations to limit disclosure and protect patient confidentiality.  The Proposed Rule also states that auditors may include any non-Part 2 entity with direct administrative control over the Part 2 program or a lawful holder of Part 2 information.  A new section, “Quality Assurance Entities Included,” also states that disclosures for audit and evaluation purposes may be made to accrediting bodies or similar organizations focused on quality assurance.  These additions seek to address confusion around what constitutes audit and evaluation. 

Other Provisions

The proposed rule also includes a number of other new provisions and clarifications, including: 

  • Clarification regarding “sanitization” of Part 2 program employees’ personal devices in the event that a patient sends an incidental message to the personal device.  In such instances, the device is considered “sanitized” if the message is deleted. (42 CFR § 2.16; 42 CFR § 2.19)
  • Permitting disclosure to Central Registries for the purpose of avoiding multiple enrollments in SUD programs, and disclosure to state prescription drug monitoring programs in accordance with state law.  (42 CFR § 2.34; 42 CFR § 2.36)
  • Inclusion of declared emergencies resulting from natural disasters in the definition of “bona fide medical emergency,” for the purpose of disclosing SUD records without patient consent. (42 CFR § 2.51)
  • Streamlining overlapping requirements under Part 2, the HIPAA Privacy Rule and the Common Rule related to research on human subjects.  (42 CFR § 2.52)
  • Extension of the period of time during which court-ordered undercover agents or informants may be placed within a Part 2 program to 12 months.  (42 CFR § 2.67)

While the Proposed Rule loosens the privacy restrictions on SUD records and inches toward a more workable framework for Part 2 and non-Part 2 regulated providers, the requirements under Part 2 will remain far more stringent than the requirements under HIPAA and many state privacy laws, making ongoing compliance a continued challenge.  As such, providers of SUD treatment services should continue to be aware of the unique restrictions on their ability to share information related to their patients.   

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Dianne specializes in counseling researchers and research sponsors in matters related to FDA and OHRP regulated clinical research, and counsels health care clients on the HIPAA Privacy Rule and Security Standards.
Cassandra L. Paolillo is Of Counsel at Mintz whose practice involves advising health care clients on transactional and regulatory matters, including mergers and acquisitions, regulatory compliance, and general contracting. Cassie primarily works with providers and payors.