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How To Catch-Up in a Revised HIPAA World
From: Audrey McNeil <audrey () riskbasedsecurity com>
Date: Mon, 6 Jan 2014 17:53:04 -0700
The HIPAA final omnibus rule (Omnibus Rule) made sweeping changes to the
HIPAA Privacy, Security, Breach Notification and Enforcement Rules earlier
this year. Although the compliance deadline of September 23, 2013 has come
and gone, if you are like many organizations, your HIPAA compliance efforts
Whether you’re still in “where do I start” mode or seeing light at the end
of the tunnel, consider the following HIPAA compliance action items if you
1. Consider Contractor Relationships in Light of Business Associate Changes
The Omnibus Rule has expanded the scope of business associates (BAs) to
include downstream subcontractors that create, receive, maintain or
transmit PHI on behalf of another BA. The new rules have also clarified
that those who merely maintain or store PHI, such as cloud service
providers also qualify as BAs.
Those who meet the legal definition of a BA are now directly subject to
HIPAA and face direct enforcement by HHS. Even with this additional layer
of legal exposure, the requirement to enter into a BA agreement remains
intact. Thus, covered entities are still required to execute BA agreements
with their BAs, and BAs are required to execute BA agreements with their
Action: Evaluate your organization’s contractor relationships to ensure
that appropriate BA agreements are in place.
2. Revise Content of Business Associate Agreements
The Omnibus Rule includes new content requirements for BA agreements,
including, for example:
- Representations regarding compliance with the Security Rule;
- Commitments to provide PHI in electronic format in response to individual
- Restrictions on the sale of PHI and uses and disclosures of PHI for
fundraising and marketing purposes.
BA agreements with downstream subcontractors should impose the same
restrictions and obligations as the BA agreements with any upstream covered
entity or BA. Note that most existing BA agreements will need to be updated
as a result of the Omnibus Rule. Existing BA agreements entered before
January 25, 2013 (and not renewed or modified from March 26, 2013 to
September 23, 2013) will not need to be updated until the earlier of (a)
the date the BA agreement is renewed or modified, or (b) September 22,
Action: Review BA agreements to determine whether updates are needed to
incorporate new content requirements and to make sure they appropriately
allocate risk through the use of insurance requirements, indemnity
provisions, damages exclusion and liability cap provisions.
3. Review and Revise Policies and Provide Updated Training
The Omnibus Rule imposes new restrictions regarding certain uses and
disclosures of PHI, including requiring specifically-worded authorizations
for marketing and selling PHI, and providing certain opt-out rights for
fundraising activities. In addition, the breach notification rule has
changed. The standard under the old rule requiring notification if the
breach posed a “significant risk of harm” to affected individuals has been
eliminated. Now, any use or disclosure of PHI not permitted by the Privacy
Rule is presumed to be a reportable breach. This presumption can be
overcome if a multi-factor risk analysis shows a “low probability” that PHI
has been compromised.
Action: Review privacy policies to determine whether updates to reflect
these changes are needed and plan to conduct updated workforce training
sessions for any policy revisions.
4. Address Security Compliance
BAs, including subcontractors, are now responsible for compliance with the
full Security Rule. The Security Rule generally requires protection of the
confidentiality, integrity and availability of electronic PHI.
The requirements of the Security Rule are designed to be technology-neutral
and scalable to the size of the organization. Certain safeguards are
“required” and some “addressable,” the latter allowing flexibility based on
an organization’s size and capabilities, cost and nature of the security
risk. If an addressable safeguard is not implemented, you must document the
rationale for why the safeguard is not reasonable and appropriate and
implement an equivalent alternative safeguard.
Action: Evaluate your organization’s security policies and procedures for
full Security Rule compliance and assess the status of physical, technical
and administrative safeguards by conducting risk assessments regarding
electronic PHI on a regular basis.
5. Appoint Privacy and Security Officers
Action: If you haven’t already done so, now is the time to appoint a
Privacy Officer and a Security Officer. These individuals are generally
responsible for implementing policies and training, responding to and
investigating allegations of non-compliance and potential breaches of PHI
and staying informed of HIPAA changes and HHS guidance.
6. Update Notice of Privacy Practices (NPP) - Covered Entities Only
The Omnibus Rule requires covered entities to include a number of new
statements in their NPPs. Examples include:
- A statement that uses and disclosures of PHI for marketing purposes and
disclosures that constitute the sale of PHI require an authorization;
- A statement that the covered entity is required by law to notify affected
individuals following a breach of unsecured PHI;
- A statement that maintained “psychotherapy notes” will only be used and
disclosed with the individual’s authorization; and
- A statement acknowledging an individual’s right to restrict certain PHI
from disclosure to health plans where the individual pays out of pocket in
full for the care and requests such a restriction.
Action: Determine whether these updates are applicable to your covered
entity operations, revise your existing NPP accordingly and distribute your
modified NPP in accordance with the new rules.
7. Sensitize Workforce to Increased HHS Enforcement and Penalties
HHS is now required to conduct compliance reviews and investigate
complaints when a preliminary review of the facts indicates a violation due
to willful neglect. Depending on the level of culpability, penalties can
range from $100 to $50,000 per violation of each individual HIPAA
provision. The annual penalty cap is $1.5 million per violation of an
identical provision of HIPAA. If a violation of one provision exists, there
are likely other violations, resulting in the possibility of multi-million
dollar penalties in a calendar year.
Action: The threat of enforcement and penalties are just two of the reasons
that your workforce should pay close attention to HIPAA compliance.
Sensitize your teams to financial and reputational considerations and the
significant impact that non-compliance can have on an organization.
8. Explore Insurance Coverage
Certain insurance policies are tailored to HIPAA-related losses. For
example, cyber liability policies can cover expenses related to forensic
investigations, notification costs, credit monitoring, public relations
assistance and the cost of retaining counsel to evaluate obligations in
response to a breach of unsecured PHI.
Action: Review your organization’s insurance coverage with respect to
HIPAA-related losses. If existing insurance policies do not cover losses
relating to breaches of unsecured PHI or other HIPAA violations, consider
the potential cushioning effect of a tailored policy.
 This Client Alert is not a comprehensive summary of all Omnibus Rule
requirements and necessary actions. For the complete Omnibus Rule, please
see Modifications to the HIPAA Privacy, Security, Breach Notification and
Enforcement Rules under the Health Information Technology for Economic and
Clinical Health Act and the Genetic Information Nondiscrimination Act;
Other Modifications to the HIPAA Rules, 78 Fed. Reg. 5566 (Jan. 25, 2013)
(codified at 45 C.F.R. Parts 160 and 164).
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- How To Catch-Up in a Revised HIPAA World Audrey McNeil (Jan 07)