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Can a contracted billing company withhold patient information from the company employing them?

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Yes. Not only can they withhold patient information, they are legally required to unless that patient information is necessary for the providing of services or the patient explicitly consents to the disclosure. All medical information is on a "need to know" basis unless the patient whose information it is says otherwise.

The Health Insurance Portability and Accountability Act (HIPAA) is extremely strict as to who can access what medical information about what patients when for what reason. It has in fact been criticized as being too strict, making our medical system needlessly complex; but I share the view that this strictness is a necessary safeguard for protecting privacy. We've seen what can happen in industries where information is not well-protected (such as Internet services).

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