On January 17, 2013, the Office for Civil Rights (OCR) of the Department of Health and Human Services (HHS) issued an omnibus final rule implementing various provisions of the Health Information Technology for Economic and Clinical Health Act (HITECH Act). The Final Rule revises the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the interim final Breach Notification Rule. This will affect not only physician practices, but also their business associates who have access to protected health information (PHI) and even business associates’ subcontractors. Now is the time to make sure your agreements with business associates comply with these new rules.
Explore this issue:May 2013
On February 17, 2009, President Barack Obama signed the American Recovery and Reinvestment Act of 2009 into law, which included the HITECH Act. The HITECH Act expanded the obligations of covered entities and business associates to protect the confidentiality and security of PHI.
Under HIPAA, covered entities may disclose PHI to business associates and permit business associates to create and receive PHI on behalf of the covered entity, subject to the terms of a business associate agreement between the parties. A “covered entity” is defined as a health plan, health care clearinghouse or health care provider (e.g., physician practice or hospital) that transmits health information electronically. In general, the HIPAA regulations have traditionally defined a “business associate” as a person (other than a member of the covered entity’s workforce) or entity who, on behalf of a covered entity, performs a function or activity involving the use or disclosure of PHI, such as the performance of financial, legal, actuarial, accounting, consulting, data aggregation, management, administrative or accreditation services to or for a covered entity.
Prior to the HITECH Act, business associates were contractually obligated under their business associate agreements to maintain the privacy and security of PHI but could not be sanctioned for failing to comply with HIPAA. However, the HITECH Act expanded the obligations and exposure of business associates by:
- Applying many of the privacy and security standards to business associates;
- Subjecting business associates to the breach notification requirements; and
- Imposing civil and criminal penalties on business associates for HIPAA violations.
In addition, the HITECH Act strengthened the penalties and enforcement mechanisms under HIPAA and required periodic audits to ensure that covered entities and business associates are compliant.
Expansion of Breach Notification Requirements
The Final Rule expands the breach notification obligations of covered entities and business associates by revising the definition of “breach” and the risk assessment process for determining whether notification will be required. Under the Final Rule, a use or disclosure of unsecured PHI that is not permitted under the Privacy Rule is presumed to be a breach (and therefore requires notification to the individual, OCR and possibly the media) unless the incident satisfies an exception* or the covered entity or business associate demonstrates a low probability that PHI has been compromised. This risk analysis is based on at least the following four factors: