HIPAA (Health Insurance Portability and Accountability Act of 1996) is United States legislation that provides data privacy and security provisions for safeguarding medical information. The law has emerged into greater prominence in recent years with the proliferation of health data breaches caused by cyber attacks and ransom ware attacks on health insurers and providers.
The act, which was signed into law by President Bill Clinton on Aug. 21, 1996, contains five sections, or titles.
What is the purpose of HIPAA?
HIPAA, also known as Public Law 104-191, has two main purposes: to provide continuous health insurance coverage for workers who lose or change their job, and to reduce the administrative burdens and cost of healthcare by standardizing the electronic transmission of administrative and financial transactions. Other goals include combating abuse, fraud and waste in health insurance and healthcare delivery and improving access to long-term care services and health insurance.
HHS expanded the act when it put the HIPAA omnibus rule in place in 2013 to implement modifications to HIPAA in accordance with guidelines set in 2009 by the Health Information Technology for Economic and Clinical Health (HITECH) Act. These guidelines concern the responsibilities of business associates of covered entities. The omnibus rule also increased penalties for HIPAA compliance violations to a maximum of $1.5 million per incident.
The HHS Office for Civil Rights (OCR), which enforces HIPAA, issued guidance in 2016 clarifying that cloud service providers and other business associates of healthcare organizations are covered by the HIPAA privacy, security and breach notification rules. HIPAA violations can prove quite costly for healthcare organizations.
The HIPAA Breach Notification Rule within the omnibus set of regulations requires covered entities and any affected business associates to notify patients following a data breach.
In addition to the notification costs, healthcare organizations can encounter fines after HIPAA audits mandated by the HITECH Act and conducted by the Office for Civil Rights. Providers could also face criminal penalties stemming from violations of the HIPAA privacy and security rules.
In 2010, the Federal Trade Commission extended the breach notification rule and its enforcement to healthcare organizations not covered by HIPAA, including vendors of electronic health records (EHRs) and EHR-related systems.
OCR undertook its first round of HIPAA audits of healthcare organizations in 2012 and 2013. Those pilot audits carried no fines or penalties.
A considerably wider, formal round of desk and in-person audits of about 200 healthcare-covered entities and business associates began in 2016 and continued into 2017. These audits were expected to carry fines or corrective plans.
OCR further strengthened the HIPAA security rule in 2016 by releasing a crosswalk between aspects of the National Institute of Standards and Technology’s Cybersecurity Framework to identify cybersecurity gaps and align HIPAA with national cybersecurity standards.
Organizations can lower their risk of regulatory action through HIPAA compliance training programs. OCR has six educational programs on complying with privacy and security rules. A number of consultancies and training groups offer programs, as well. Healthcare providers may also choose to create their own training programs, which often encompass each organization’s current HIPAA privacy and security policies, the HITECH Act, mobile device management processes and other applicable guidelines.
While there is no official HIPAA compliance certification program, training companies offer certification credentials to indicate an understanding of the guidelines and regulations specified by the act.
HIPAA Privacy Rule
The Standards for Privacy of Individually Identifiable Health Information, commonly known as the HIPAA Privacy Rule, establishes the first national standards in the United States to protect patients’ personal or protected health information (PHI).
HHS issued the rule to limit the use and disclosure of sensitive PHI. It seeks to protect the privacy of patients by requiring doctors to provide patients with an account of each entity to which the doctor discloses PHI for billing and administrative purposes, while still allowing relevant health information to flow through the proper channels.
The privacy rule also guarantees patients the right to receive their own PHI, upon request, from healthcare providers covered by HIPAA.
Who is covered by and must follow HIPAA?
The HIPAA Privacy Rule applies to organizations that are considered HIPAA-covered entities, including health plans, healthcare clearinghouses and healthcare providers. In addition, the HIPAA Privacy Rule requires covered entities that work with a HIPAA business associate to produce a contract that imposes specific safeguards on the PHI that the business associate uses or discloses.
What information is protected?
The HIPAA Privacy Rule protects all individually identifiable health information that is held or transmitted by a covered entity or a business associate. This information can be held in any form, including digital, paper or oral. This individually identifiable health information is also known as PHI under the Privacy Rule.
What is considered protected health information under HIPAA?
- a patient’s name, address, birth date and Social Security number;
- an individual’s physical or mental health condition;
- any care provided to an individual; or
- information concerning the payment for the care provided to the individual that identifies the patient, or information for which there is a reasonable basis to believe could be used to identify the patient.
The HIPAA Privacy Rule does not consider employment records — including information about education, as well as other records subject to or defined in the Family Educational Rights and Privacy Act — as PHI.
For de-identified data, however, there are no restrictions to its use or disclosure. De-identified data does not identify or provide information that could identify an individual.
The Privacy Rule lays out certain administrative requirements that covered entities must have in place.
These requirements include the following:
- A privacy official must be appointed who is responsible for developing and implementing policies and procedures at a covered entity.
- Employees, including volunteers and trainees, must be trained on policies and procedures.
- Appropriate administrative, technical and physical safeguards must be maintained to protect the privacy of PHI in a covered entity.
- A process for individuals to make complaints concerning policies and procedures must be in place at a covered entity.
- If PHI is disclosed in violation of its policies and procedures, a covered entity must mitigate, to the furthest extent actionable, any harmful effects.
Under the HIPAA Privacy Rule, falling victim to a healthcare data breach, as well as failing to give patients access to their PHI, could result in a fine from OCR.
The minimum penalty for:
- Unknowingly violating HIPAA is $100 per violation, with an annual maximum of $25,000 for repeat violations.
- Reasonable cause for violating HIPAA is $1,000 per violation, with an annual maximum of $100,000 for repeat violations.
- Willful neglect of HIPAA, but the violation is corrected within a given time period, is $10,000 per violation, with an annual maximum of $250,000 for repeat violations.
- Willful neglect of HIPAA, and the violation remains uncorrected, is $50,000 per violation, with an annual maximum of $1.5 million for repeat violations.
The maximum penalty for all of these is $50,000 per violation, with an annual maximum of $1.5 million for repeat violations.
Covered entities and individuals who intentionally obtain or disclose PHI in violation of the HIPAA Privacy Rule can be fined up to $50,000 and receive up to one year in prison. If the HIPAA Privacy Rule is violated under false pretenses, the penalties can be increased to a $100,000 fine and up to 10 years in prison.
HIPAA Security Rule
The Security Standards for the Protection of Electronic Protected Health Information, commonly known as the HIPAA Security Rule, establishes national standards for securing patient data that is stored or transferred electronically.
The rule requires the placement of safeguards, both physical and electronic, to ensure the secure passage, maintenance and reception of PHI. When addressing the risks and vulnerabilities associated with PHI and electronic protected health information (ePHI), health care organizations should ask three key questions.
- Can you identify the sources of ePHI and PHI within your organization, including all PHI that you create, receive, maintain or transmit?
- What are the external sources of PHI?
- What are the human, natural and environmental threats to information systems that contain ePHI and PHI?
OCR enforces the HIPAA Security Rule, which aims to protect patient security, while still allowing the health care industry to advance technologically.
Under HHS’ meaningful use program for certified health IT, healthcare organizations receiving federal incentive payments must attest to following privacy and security procedures based on HIPAA.
HIPAA Omnibus Rule
The HIPAA omnibus rule, in a health information technology context, is a rule enacted by OCR to modify the HIPAA Privacy, Security and Enforcement Rules to implement statutory amendments under the HITECH Act.
The HIPAA omnibus rule marked the most extensive changes to the HIPAA Privacy and Security Rules since they were first implemented. Changes include the following:
- Strengthening the privacy and security protection for individuals’ PHI.
- Modifying the Breach Notification Rule for unsecured PHI, and putting in place more objective standards for assessing a healthcare provider’s liability following a data breach.
- Modifying the HIPAA Privacy Rule to strengthen the privacy protections for genetic information.
- Outlining OCR’s data privacy and security enforcement strategies, as updated for the EHR era and as mandated by the HITECH Act.
- Holding HIPAA business associates to the same standards for protecting PHI as covered entities, including subcontractors of business associates, in the compliance sense.
- Stipulating that, when patients pay by cash, they can instruct their provider not to share information about their treatment with their health plan.
- Setting new limits on how information is used and disclosed for marketing and fundraising purposes.
- Prohibiting the sale of an individual’s health information without their permission.
- Making it easier for parents and others to give permission to share proof of a child’s immunization with a school.
- Streamlining an individual’s ability to authorize the use of his health information for research purposes.
- Increasing penalties for noncompliance based on the level of negligence, with a maximum penalty of $1.5 million per violation.
- Guaranteeing that organizations can operate with certainty that their privacy and security policies comply with all the applicable regulations.
HIPAA Business Associate
HIPAA defines a business associate as any organization or person working in association with or providing services to a covered entity who handles or discloses PHI or personal health records (PHR).
Examples of business associates include accounting or consulting firms that work with covered entities, such as hospitals or doctors, or any number of other organizations that have or could have access to PHI or PHR.
Updates made to the HIPAA regulation by the HITECH Act require business associates to comply with HIPAA mandates regarding the handling and use of PHI.
As of Feb. 18, 2010, the Department of Health and Human Services can audit business associates for HIPAA compliance.
Examples of HIPAA business associates
According to the HHS, examples of HIPAA business associates include:
- When a health plan uses a third-party administrator to help with claims processing.
- If a certified public accounting firm provides accounting services to a healthcare provider and has access to protected health information.
- When a hospital has a consultant perform utilization reviews.
- When a healthcare clearinghouse translates a claim from a nonstandard format to a standard format for a healthcare provider, and then sends the process transaction to a payer.
- When a physician uses an independent medical transcriptionist’s services.
- When a pharmacy benefits manager manages a health plan’s pharmacist network.
Mobile application developers could also be considered HIPAA business associates because many healthcare mobile applications handle PHI.
HHS gave a scenario where an app developer would be considered a HIPAA business associate: A patient is told by her provider to download a health app to her smartphone. The app developer and the provider have a contract for patient management services that includes remote patient health counseling, patient messaging, monitoring the patient’s food and exercise, and EHR integration and application prosgram interfaces. Furthermore, the information the patient inputs into the application is automatically incorporated in the EHR.
Under HIPAA, a HIPAA business associate agreement (BAA) is a contract between a HIPAA-covered entity and a HIPAA business associate (BA). The contract protects PHI in accordance with HIPAA guidelines.
Effective Feb. 18, 2010, in accordance with the HITECH Act, a BA’s disclosure, handling and use of PHI must comply with HIPAA Security Rule and HIPAA Privacy Rule mandates. Under the HITECH Act, any HIPAA business associate that serves a healthcare provider or institution is subject to audits by OCR within HHS, and it can be held accountable for a data breach and penalized for noncompliance.
HIPAA Business Associate Contract Requirements
According to HHS, HIPAA business associate contracts or other written arrangements should:
- Describe how the business associate is permitted and required to use PHI.
- Require that the business associate not use or disclose PHI, other than as specified in the contract or as required by law.
- Require the business associate to use appropriate safeguards to ensure the PHI is used as detailed in the contract.
- Require the covered entity to take reasonable steps to cure any breach by the HIPAA business associate if and when they know of one. If this is unsuccessful, the covered entity is required to terminate the contract with the business associate.
- Report the event to the OCR if terminating the contract with the business associate is impossible.
- Report to the HHS OCR if there is a problem in terminating the contract with the business associate.
With these new regulations in mind, a HIPAA business associate agreement should explicitly spell out how a BA should report and respond to a data breach, including data breaches that are caused by a business associate’s subcontractors. In addition, HIPAA business associate agreements should require a BA to demonstrate how it should respond to an OCR investigation.
A HIPAA-covered entity is any organization or corporation that directly handles PHI or PHR. The most common examples of covered entities include hospitals, doctors’ offices and health insurance providers.
Covered entities are required to comply with HIPAA and HITECH mandates for the protection of PHI and PHR.