MEMORANDUM FOR THE SECRETARY OF LABOR

THE SECRETARY OF HEALTH AND HUMAN SERVICES

THE DIRECTOR OF THE OFFICE OF PERSONNEL MANAGEMENT

SUBJECT: Ensuring Compliance with the Health Insurance Portabilityand Accountability Act of 1996

Earlier this year, my Administration received a number of troubling reports that health insurers were circumventing insurance protections under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) by giving financial incentives to agents to avoid enrolling Americans with pre-existing conditions. In addition, we learned that some agents were delaying the processing of applications submitted by qualified individuals in order to ensure that the applicant had a sufficient break in coverage to lose eligibility for HIPAA protections. Such actions clearly were and are inconsistent with the letter and spirit of HIPAA.

In February, I directed the Department of Health and Human Services (HHS) to take appropriate actions to encourage health insurers and their agents to stop all such harmful practices. The Health Care Financing Administration (HCFA) responded by immediately releasing a strong guidance bulletin on March 18 to every insurance commissioner in the Nation, advising them of our strong commitment to ensure compliance with HIPAA.

Today, I am taking additional actions to ensure that health plans comply with this law. I direct the Office of Personnel Management (OPM) to use its contractual relationship with health plans to improve HIPAA compliance. The OPM oversees the Federal Employees Health Benefit Program (FEHBP), the Nation's largest employer-sponsored health benefits program with 9 million enrollees and 350 participating health plans.

Specifically, I direct the OPM to take all appropriate action -- up to and including termination of a participating health plan from the FEHBP -- if the OPM determines, consistent with HIPAA and implementing regulations, that a plan is engaging in insurance practices that are inconsistent with the letter and spirit of HIPAA. In order to be eligible to participate in the FEHBP, carriers subject to HIPAA will have to certify to the OPM that they are providing access to health insurance in compliance with HIPAA. Such action by the OPM will provide another enforce-ment tool to the Federal Government without in any way altering or hindering any other enforcement action by the HCFA or State insurance commissioners.

To help ensure that the OPM can take these important enforcement actions, I direct the HCFA to immediately send to the OPM reports of violations by insurers or their representatives that preclude or inhibit access to the insurance protections provided under HIPAA. Any such referral to the OPM would not alter the responsibility of States or the HCFA to utilize any and all enforcement tools at their disposal to ensure HIPAA compliance.

Finally, I direct that the HHS and the Department of Labor report to me, through the Vice President, within 6 months on the successes and shortcomings of HIPAA. This report should be produced after consultation with the States and the National Association of Insurance Commissioners and should include specific legislative or regulatory recommendations to further strengthen this law.

My Administration has zero tolerance for any actions that hinder vulnerable Americans from accessing insurance, consistent with HIPAA's protections. This directive is intended to ensure that health plans come into compliance with this important statute so that Americans are assured these insurance protections.

WILLIAM J. CLINTON