Thomas J. Gilligan

Executive Director & Washington Representative

July 15, 2001


Washington Wire


Ø      Tom Scully, New CMS Administrator, on HIPAA “Delay”

Ø      Congressional Staff on HIPAA “Delay”

Ø      Materials from July 9 & 10 AFEHCT meeting at



Tom Scully, CMS’s (formerly HCFA) new Administrator, made news at AFEHCT’s Annual Washington Policy Forum, on July 10th.  He shared with the attendees that he had had many years experience with government, both in government and lobbying government.  He addressed a number issues, including the implementation of the ‘administrative simplification’ provisions of HIPAA.


Among Scully’s remarks:






The significance of Scully’s remarks are they represent the only time HHS has spoken in public and on the record about the implementation of ‘administrative simplification’.


People can put whatever interpretation on these remarks they wish.  One possible interpretation is that CMS and HHS will not take sides in the debate over the “delay” of the implementation of ‘administrative simplification’ / HIPAA.



Congressional Staff on HIPAA “Delay”

At AFEHCT’s Annual Washington Policy Forum, on July 10th, the possibility of a “delay” in the implementation of “administrative simplification” / HIPAA was discussed by three Congressional staffers very close to the situation on Capitol Hill.  Because of a certain serendipity in Tom Scully’s schedule, Scully’s presentation interrupted the presentation of the three Congressional staffers. We couldn’t have planned the visual and the interaction of these presentations any better if we tried.


The Congressional background, in which these presentations took place are somewhat cloudy.

The ”delay proposal in the Senate supported by the Blues is S. 836 and the proposal in the House is H.R. 1975.  Basically, under these proposals, covered entities would not be required to begin implementation of all administrative simplification provisions (except the privacy provision) would not be required until all the remaining standards and the enforcement regulation had been published in final form. The attachment standards ready for publication are only a small number of the attachment standards that are expected to be published over time. The beginning of the implementation of administrative simplification, under the Blue’s proposal could therefore be five to ten years out. Thus “killing” administrative simplification / HIPAA. 


Although the Blue’s proposals purport not to delay the implementation of the privacy rule, HHS staff claims that the applicability sections of the privacy final rule applies to providers who transmit the standard transactions.  No transaction standards no privacy rule. This interpretation has caused several Senators such as Kennedy and Leahy who vigorously support the privacy rule to actively oppose the Blues “delay” proposal.


Senator Baucus, (D MT), Chairman of the Senate Finance Committee, is up for reelection 2002.  It is expected to be a rough race. The Montana state Medicaid program has very strongly pressed the case for “delay”.  Given the tough race he faces, Sen. Baucus would like to be responsive.

Sen. Grassley, lead Republican on the Senate Finance Committee has been under heavy pressure from Iowa Blue Cross.


At the AFEHCT July 10 meeting the presentation by staffers from the Senate Finance Committee provided the following information:


ü       Sen. Grassley is concerned about the readiness of Iowa providers and is
exploring ways to provide relief without jeopardizing privacy protections or
diminishing too substantially the savings associated with standardization and


ü       Staff to Sens. Baucus, Dorgan, Craig and Kennedy have been working together
since June to understand the problem, to hear stakeholders' concerns, and to
assess compromise legislation.  We have made a concerted effort to hear all
interested parties and to confer with experts in the public and private sectors.


ü       The duration of any delay in any compromise is still in question, but
agreement exists among all staff that an open-ended delay timeframe (like that
in S. 836) would defeat the goals of HIPAA.  Any compromise would have to
include provider compliance incentives, would have to attract wide support in
the Senate and would probably be targeted for the unanimous consent calendar.


ü       The staffers indicated action in the Senate on a compromise proposal before the August recess


Rep. David L. Hobson (R OH) has been administrative simplification’s / HIPAA’s strongest defender in Congress.  Recently the Blues have been increasing the pressure they put on him.  His staff indicated that Hobson is amenable to providing some relief but not at the expense of savings or the original timetable of the transaction standards.


Bottom Line: The Blues are not going to get what they want in the way of a “delay”  proposal.  But there is some serious movement in the Senate.  Movement in the House is less sure.  The Blues are pushing for Senate action on their proposal by August 3.


Materials from AFEHCT’s Annual Washington Policy Forum will be published on AFEHCT’s web site over the next few days.  See for the Agenda and related materials.



Tom Gilligan

Association For Electronic Health Care Transactions(AFEHCT)

Tel:                 202 244 6450

Fax:                202 244 6570


web site