Tech Guide: Privacy: Keeping Regulators Happy - InformationWeek
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7/11/2003
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Tech Guide: Privacy: Keeping Regulators Happy

As tough new privacy protections are put in place, lessons are emerging about savvy ways to keep regulators at bay

Tech GuideThere's more to managing privacy than simply minding your own business. You have to swallow a whole dose of alphabet soup, from HIPAA to FMA to the latest one: DNC for Do Not Call, which isn't the same as "don't ask, don't tell," but may soon become equally well known.

The Health Insurance Portability and Accountability Act is just the most recent in a string of regulations affecting the way companies handle customer information, and it won't be the last. The federal Financial Modernization Act (commonly known as Gramm-Leach-Bliley, for its authors) was enacted in July 2001 to regulate what financial-services firms can do with data and how customers could opt out, and this year U.S. lawmakers created the Do Not Call list, which restricts telemarketing activity.

State lawmakers have jumped in, too. Most notable is California's Security Breach Notice Law, which mandates that, as of this month, companies, state agencies, and nonprofit organizations must notify Californians if their personal information is in a database that's been breached. That law will likely have national impact, too. "Are you going to tell your customers in California and nowhere else?" asks Alex Fowler, a privacy-practice leader at auditor PricewaterhouseCoopers.

What's the best way to manage privacy in this era of fast-changing regulations and increasingly invasive security threats? Understanding the immediate regulatory conditions is the first step, followed by translating those into broad action areas.

The first of several HIPAA compliance deadlines--ensuring privacy--came in April, so many organizations are still dealing with the impact of becoming compliant, and their experiences offer lessons for any company that keeps information about individuals. HIPAA legislation covers four main areas, all of which have corollaries to business processes outside of health care:

Electronic transactions and code sets: Health-care transactions ranging from patient records to insurance claims must move to a unified format set by the American National Standards Institute. In addition, uniform codes must be adopted for referring to health problems, treatments, and related information. These systems are in testing, with a compliance deadline of Oct. 16, though smaller hospitals have a later compliance date.

Security: Patient records must be stored, maintained, transmitted, and accessed in a secure fashion. The rules also outline provisions for electronic signatures.

Unique identifiers: Patients, care providers, employers, and health-care plans will be assigned their own identification numbers.

Privacy: Patient information can't be disclosed unnecessarily, and patients have the right to access their records and know who else has had access.

Businesses can think of these in terms of three critical elements: customer needs, data issues, and business processes.

The first step is to put the customer at the center of regulatory discussions. "Don't focus on compliance. Focus on what the customer needs," says Dennis Behrman, an analyst at Financial Insights, which advises financial-services companies on technology issues. He says companies such as American Express Co. have managed to go through such regulatory efforts looking first at what's important to the customer and implementing that. Often, that effort will put a company ahead of regulations and thus allow it to spend less time on compliance.

As far as data issues and technology, protecting data involves familiar security technologies such as authorization, access control, data monitoring, encryption, and intrusion detection. Mark Loveless, a senior security analyst at Bindview Corp., a maker of security and policy-enforcement tools, calls much of the technology needed to achieve HIPAA compliance "Security 101."

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