According to the Institute of Medicine, the federal government has a central role in shaping nearly all aspects of the health care industry as a regulator, purchaser, health care provider, and sponsor of research, education, and training. According to HHS, federal agencies fund more than a third of the nation’s total health care costs. Given the level of the federal government’s participation in providing health care, it has been urged to take a leadership role in driving change to improve the quality and effectiveness of medical care in the United States, including expanded adoption of IT. In April 2004, President Bush called for the widespread adoption of interoperable electronic health records within 10 years and issued an executive order that established the position of the National Coordinator for Health Information Technology within HHS as the government official responsible for the development and execution of a strategic plan to guide the nationwide implementation of interoperable health IT in both the public and private sectors. In July 2004, HHS released The Decade of Health Information Technology: Delivering Consumer-centric and Information-rich Health Care—Framework for Strategic Action. This framework described goals for achieving nationwide interoperability of health IT and actions to be taken by both the public and private sectors in implementing a strategy. HHS’s Office of the National Coordinator for Health IT updated the framework’s goals in June 2006 and included an objective for protecting consumer privacy. It identified two specific strategies for meeting this objective—(1) support the development and implementation of appropriate privacy and security policies, practices, and standards for electronic health information exchange and (2) develop and support policies to protect against discrimination based on personal health information such as denial of medical insurance or employment. In July 2004, we testified on the benefits that effective implementation of IT can bring to the health care industry and the need for HHS to provide continued leadership, clear direction, and mechanisms to monitor progress in order to bring about measurable improvements. Since then, we have reported or testified on several occasions on HHS’s efforts to define its national strategy for health IT. We have recommended that HHS develop the detailed plans and milestones needed to ensure that its goals are met and HHS agreed with our recommendation and has taken some steps to define more detailed plans. In our report and testimonies, we have described a number of actions that HHS, through the Office of the National Coordinator for Health IT, has taken toward accelerating the use of IT to transform the health care industry, including the development of its framework for strategic action. We have also described the Office of the National Coordinator’s continuing efforts to work with other federal agencies to revise and refine the goals and strategies identified in its initial framework. The current draft framework— The Office of the National Coordinator: Goals, Objectives, and Strategies—identifies objectives for accomplishing each of four goals, along with 32 high-level strategies for meeting the objectives, including the two strategies for protecting consumer privacy. Federal health care reform initiatives of the early- to mid-1990s were inspired in part by public concern about the privacy of personal medical information as the use of health IT increased. Congress, recognizing that benefits and efficiencies could be gained by the use of information technology in health care, also recognized the need for comprehensive federal medical privacy protections and consequently passed the Health Insurance Portability and Accountability Act of 1996 (HIPAA). This law provided for the Secretary of HHS to establish the first broadly applicable federal privacy and security protections designed to protect individual health care information. HIPAA required the Secretary of HHS to promulgate regulatory standards to protect certain personal health information held by covered entities, which are certain health plans, health care providers, and health care clearinghouses. It also required the Secretary of HHS to adopt security standards for covered entities that maintain or transmit health information to maintain reasonable and appropriate safeguards. The law requires that covered entities take certain measures to ensure the confidentiality and integrity of the information and to protect it against reasonably anticipated unauthorized use or disclosure and threats or hazards to its security. HIPAA provides authority to the Secretary to enforce these standards. The Secretary has delegated administration and enforcement of privacy standards to the department’s Office for Civil Rights and enforcement of the security standards to the department’s Centers for Medicare and Medicaid Services. Most states have statutes that in varying degrees protect the privacy of personal health information. HIPAA recognizes this and specifically provides that its implementing regulations do not preempt contrary provisions of state law if the state laws impose more stringent requirements, standards, or specifications than the federal privacy rule. In this way, the law and its implementing rules establish a baseline of mandatory minimum privacy protections and define basic principles for protecting personal health information. The Secretary of HHS first issued HIPAA’s Privacy Rule in December 2000, following public notice and comment, but later modified the rule in August 2002. Subsequent to the issuance of the Privacy Rule, the Secretary issued the Security Rule in February 2003 to safeguard electronic protected health information and help ensure that covered entities have proper security controls in place to provide assurance that the information is protected from unwarranted or unintentional disclosure. The Privacy Rule reflects basic privacy principles for ensuring the protection of personal health information. Table 1 summarizes these principles. HHS and its Office of the National Coordinator for Health IT have initiated actions to identify solutions for protecting health information. Specifically, HHS awarded several health IT contracts that include requirements for developing solutions that comply with federal privacy and security requirements, consulted with the National Committee on Vital and Health Statistics (NCVHS) to develop recommendations regarding privacy and confidentiality in the Nationwide Health Information Network, and formed the American Health Information Community (AHIC) Confidentiality, Privacy, and Security Workgroup to frame privacy and security policy issues and identify viable options or processes to address these issues. The Office of the National Coordinator for Health IT intends to use the results of these activities to identify technology and policy solutions for protecting personal health information as part of its continuing efforts to complete a national strategy to guide the nationwide implementation of health IT. However, HHS is in the early stages of identifying solutions for protecting personal health information and has not yet defined an overall approach for integrating its various privacy-related initiatives and for addressing key privacy principles. HHS awarded four major health IT contracts in 2005 intended to advance the nationwide exchange of health information—Privacy and Security Solutions for Interoperable Health Information Exchange, Standards Harmonization Process for Health IT, Nationwide Health Information Network Prototypes, and Compliance Certification Process for Health IT. These contracts include requirements for developing solutions that comply with federal privacy requirements. The contract for privacy and security solutions is intended to specifically address privacy and security policies and practices that affect nationwide health information exchange. HHS’s contract for privacy and security solutions is intended to provide a nationwide synthesis of information to inform privacy and security policymaking at federal, state, and local levels and the Nationwide Health Information Network prototype solutions for supporting health information exchange across the nation. In summer 2006, the privacy and security solutions contractor selected 34 states and territories as locations in which to perform assessments of organization-level privacy- and security-related policies and practices that affect interoperable electronic health information exchange and their bases, including laws and regulations. The contractor is supporting the states and territories as they (1) assess variations in organization-level business policies and state laws that affect health information exchange, (2) identify and propose solutions while preserving the privacy and security requirements of applicable federal and state laws, and (3) develop detailed plans to implement solutions. The privacy and security solutions contractor is to develop a nationwide report that synthesizes and summarizes the variations identified, the proposed solutions, and the steps that states and territories are taking to implement their solutions. It is also to deliver an interim report to address policies and practices followed in nine domains of interest: (1) user and entity authentication, (2) authorization and access controls, (3) patient and provider identification to match identities, (4) information transmission security or exchange protocols (encryption, etc. ), (5) information protections to prevent improper modification of records, (6) information audits that record and monitor the activity of health information systems, (7) administrative or physical security safeguards required to implement a comprehensive security platform for health IT, (8) state law restrictions about information types and classes and the solutions by which electronic personal health information can be viewed and exchanged, and (9) information use and disclosure policies that arise as health care entities share clinical health information electronically. These domains of interest address the use and disclosure and security privacy principles. In June 2006, NCVHS, a key national health information advisory committee, presented to the Secretary of HHS a report recommending actions regarding privacy and confidentiality in the Nationwide Health Information Network. The recommendations cover topics that are, according to the committee, central to challenges for protecting health information privacy in a national health information exchange environment. The recommendations address aspects of key privacy principles including (1) the role of individuals in making decisions about the use of their personal health information, (2) policies for controlling disclosures across a nationwide health information network, (3) regulatory issues such as jurisdiction and enforcement, (4) use of information by non- health care entities, and (5) establishing and maintaining the public trust that is needed to ensure the success of a nationwide health information network. The recommendations are being evaluated by the AHIC work groups, the Certification Commission for Health IT, the Health Information Technology Standards Panel, and other HHS partners. In October 2006, the committee recommended that HIPAA privacy protections be extended beyond the current definition of covered entities to include other entities that handle personal health information. It also called on HHS to create policies and procedures to accurately match patients with their health records and to require functionality that allows patient or physician privacy preferences to follow records regardless of location. The committee intends to continue to update and refine its recommendations as the architecture and requirements of the network advance.