Fox continued its record as one of the most unreliable sources for health care information today by hosting legal analyst Peter Johnson Jr. on Fox & Friends to fearmonger about a rule change being proposed by the Department of Health and Human Services (HHS). Johnson attacked the rule, which has to do with the handling of medical records, as an effort by HHS Secretary Kathleen Sebelius to obtain “access to each and every doctor visit, every part of your medical record, every part of your medical history” in “one way or the other.”

Johnson went on to claim that “some congresspeople are saying, well, this is going to lead to some Orwellian kind of state.” Watch:

But Johnson's fearmongering that “Joe American or Jane American” might “wake up some morning ... and read about your health care on the Internet” is a wild distortion of what HHS is actually proposing, and his explanation of what is occurring is an irresponsible oversimplification of a complicated subject.

One of the primary goals of the Patient Protection and Affordable Care Act (PPACA) is to ensure that all Americans have access to quality health care, regardless of their age or medical condition. For years, health insurance companies have favored insuring the young and healthy at the expense of those who have the greatest need for health insurance. One of the legislative mechanisms for balancing this inequality in access to health care is the “risk adjustment” program. The basic theory behind the program is to compensate insurance plans in the exchanges, as well as in the small group and individual market, which have higher-than-average risk enrollees. A study funded by the Robert Wood Johnson foundation found:

Insurance market reforms face the key challenge of addressing the threat that risk selection poses to the availability of stable, high-value insurance policies that provide long-term risk protection. Many of the strategies in use today fail to address this breakdown in risk pooling, and some even exacerbate it. Flexible risk adjustment schemes are a promising avenue for promoting market stability and limiting insurer cream-skimming, potentially providing greater benefits at lower cost. Reforms intended to increase insurance coverage and the value of care delivered will be much more effective if implemented in conjunction with policies that address these fundamental selection issues.

In order for risk adjustment to operate, the level of risk incurred by a plan for insuring a group of people must be assessed and compared with the level of risk for competing plans. This is where the proposed HHS rule change comes in. As the HHS summary points out, “a robust risk adjustment process requires data to support the determination of an individual's risk score and the corresponding plan and State averages.” As a result, HHS is soliciting comments from readers and interested parties as to how to go about this in a way that both maximizes efficiency and protects the privacy of individuals.

This is where Johnson's fearmongering begins to break down. First of all, a shadowy governmental agency attempting to create an “Orwellian kind of state” probably wouldn't post its plans in a public setting and ask the general public to scrutinize its proposal. But this is exactly what HHS has done. In fact, peppered throughout the summary is HHS “solicit[ing] comment” on how best to carry out the proposal.

Second of all, a careful reading of HHS' language reveals that the privacy question is at least as important to them as it is to Johnson. In the explanation of one of the plans HHS formulated for transacting claims data, it explains (emphasis added):

A fully distributed approach would leverage existing infrastructures established to support Exchanges. A distributed approach also keeps individual-level data with the issuers, eliminating privacy risks related to transmission. However, there is reason to be concerned that some issuers would make errors in calculating individual risk scores and plan averages.

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We believe the proposed intermediate approach would result in the most complete, actuarially sound risk adjustment methodology and provides support for other functions that also require encounter level data, while maintaining State flexibility. We recognize this approach may raise concerns related to consumer privacy and standard submission formats. Accordingly, we propose national standards to address each of these issues. We seek comment on the proposed approach, as well as comments on the potential advantages and disadvantages of the alternative approaches.

Finally, it is clear from the legislative language provided by HHS that protecting consumers' privacy is a priority. From the HHS proposed rule change (emphasis added):

(d) Uses of risk adjustment data. The State, or HHS on behalf of the State, must make relevant claims and encounter data collected under risk adjustment available to support claims-related activities as follows:

(1) Provide HHS with de-identified claims and encounter data for use in recalibrating Federally-certified risk adjustment models;

(2) Provide HHS with summarized claims cost for use in verifying risk corridor submissions; and

(3) Provide the reinsurance entity with summarized claims and encounter data from reinsurance-eligible plans for payment verification purposes and individual-level from reinsurance-eligible plans for audit purposes.

Wake Forest professor and Commonwealth Fund contributor Mark Hall pointed out:

HHS also deals intelligently with the second hot potato of who controls the clinical data used for risk adjustment. There are two competing issues: patient privacy and verifying the accuracy of risk scores. On privacy, some people might object to government collecting medical data about privately insured people.

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To mitigate this possible concern, the proposed rule allows states to collect the necessary clinical and demographic data and turn them over to HHS for risk-adjustment purposes only after identifying information has been removed.

As the health care system transitions toward modern, electronic recordkeeping, there is always going to be cause for concern that, as Johnson puts it, we could “have a wikileaks.” But it is a baseless and misleading attack to suggest that individual consumers are more at risk while HHS is processing de-identified claims as they are if their records are held by insurance companies.

Of course, all of this is a complicated way of pointing out what we already know: Peter Johnson Jr. is Fox's go-to man for baseless fearmongering about health care reform. His claim that HHS is saying “one way or the other, we're going to get Americans' health records” is no exception.