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The hard drive that went missing from a Birmingham, Ala., Veterans Affairs Department facility last month contained highly sensitive information on nearly all U.S. physicians and medical data for about 535,000 VA patients, agency officials announced over the weekend.

The data for the 1.3 million physicians who have billed Medicaid and Medicare, both living and deceased, could result in widespread fraud, such as the creation of fake Medicare and Medicaid invoices.

There are 902,053 physicians in the United States, according to the American Medical Association.

According to congressional sources, the personal information on patients and the medical data were kept in separate files, but there is enough information that files could be linked.

A VA research assistant was using the physician data to analyze VA health care providers and compare them to non-VA providers, according to a statement from the department. The research assistant used the hard drive to back up information contained on an office computer, and the data is not believed to have been encrypted.

VA officials are not sure at this point whether the data was stolen or simply lost. They are arranging to provide one year of free credit monitoring to those whose information was compromised.

The employee has been placed on administrative leave pending the outcome of a criminal investigation, which is being conducted by the VA's inspector general and the FBI. The VA announcement said there is no information that the data has been misused.

In a statement, VA Secretary James Nicholson said the investigation into the incident is ongoing, but he believes that "it is important to provide the public additional details as quickly as we can."

A spokesman for the Centers for Medicare and Medicaid Services said the agency is aware of the situation and is working with the VA to get more information.

The incident marks the third major breach at the VA in less than a year.

In May 2006, the theft of computer equipment containing sensitive information put 26.5 million people at risk for identity theft. Four months later, another breach put at risk the personal data of up to 38,000 people. In both instances, the data was recovered and officials determined it was probably not touched.

"[The] VA is unwavering in our resolve to bolster our data security measures," Nicholson said. "We remain focused on doing everything that can be done to protect the personal information with which we are entrusted."

COMMENTS

• Perhaps someone with some authority will ask why the VA is collecting data on non-VA doctors, and would the VA be so kind as to inform the doctors already in the VA that such information was collected by someone, something other than for credentialing at VetPro. Is there a HIPAA violation here? GovExec.com reader Posted February 15, 2007 1:16 PM
• Just goes to show how bad the VA has gotten. I work for them and the VA has gotten worse every year. IG inspections are all but hoaxes with smoke and mirrors and advance warnings. Hiring is all old girl now and promoting friends with little or no education and credentials. What did Nicholson say the last time about stopping this mess? I wish I still had a copy but I had to delete. The entire VA needs to be investigated and most of the big shots run off. GovExec.com reader Posted February 14, 2007 9:04 AM
• Weasels! The lost data of average Vets is no biggie; it "probably" wasn't accessed. But for the doctors’ data, quick, set them up with a free year’s worth of credit monitoring. The doctors didn't get much but it's more than the "crocodile tears" us serfs received from dear old King George when the VA "misplaced" our info. Cracked & Wired Posted February 13, 2007 11:08 AM