The Sept. 23 deadline looms for businesses to comply with the HIPAA/HITECH changes on patient privacy

27 August 2013

By Jaikumar Vijayan

Organizations handling protected health information (PHI) have until Sept. 23 to comply with new security and privacy requirements that were included in the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009.

After that date, all covered entities, including online storage vendors and cloud service providers, will be subject to new breach notification standards and limitations on how they can use and disclose PHI. They will also be required to ensure that their business associates and subcontractors are compliant with the privacy and security requirements of the Health Insurance Portability and Accountability Act (HIPAA). The HITECH Act amended portions of HIPAA by adding new security and privacy provisions on patient information.

In addition, covered entities will be required to have updated patient privacy notices in place that state the patient’s rights over the data and how the data can be used and shared.

Unlike the original HIPAA privacy and security rules, which primarily applied to healthcare organizations and insurance companies, the new HIPAA Omnibus rules apply to business associates and their subcontractors. Under the omnibus rules, a business associate of a healthcare provider, such as a cloud service provider, is directly liable for protecting any patient data it handles, even if the vendor is just storing the data.

Business associates are also liable for ensuring that any subcontractor it hires, such as a document-shredding company, is similarly protecting PHI.

The new rules for safeguarding PHI create a complex liability chain, said Peter MacKoul, president of consulting firm HIPAA Solutions LC. A covered entity or a business associate could face stiff civil penalties for a breach by a subcontractor, regardless of how far down the chain the subcontractor might be, he said.

Under Omnibus HIPAA rules, covered entities and business associates are directly responsible for protecting against the use of PHI by employees, contract workers, trainees and even unpaid volunteers and interns, MacKoul noted.

The rules also give healthcare organizations and business associates less latitude to determine when to make a breach notification, he said.

Previously, a healthcare organization needed to notify individuals of a data breach only if there was a serious risk of financial or reputational harm. Under the new requirements, covered entities and business associates will be required to issue a breach notification in most cases, unless they can specifically show there is a “low probability” of the breached data being misused, MacKoul said.

Healthcare companies will be required to consider four specific factors, including the nature of the data that was breached and whether PHI was acquired or viewed only, to determine the seriousness of a breach. Importantly, breach notification requirements can be triggered even if an employee, contractor or unpaid volunteer uses PHI in an impermissible manner, he said.

Healthcare entities need to identify all their business associates, especially newly covered entities such as data storage companies, and ensure they have proper business associate agreements with them by Sept. 23, said William Maruca, a partner with Fox Rothschild LLP.

Healthcare companies also must have updated patient privacy notices in place by the deadline, Maruca said. The notice must specifically state that the covered entity is required to obtain the patient’s authorization to use or sell his or her information for marketing or other purposes and to use or disclose psychotherapy notes, Maruca said. Privacy notices will also need to include a description of how an individual can revoke an authorization and explain their right to receive a notification in the event of a data breach, Maruca said.

“I think the readiness level varies considerably,” Maruca noted. “Larger health systems and similar organizations with dedicated health privacy officers may be ahead of the curve, and some savvy smaller entities have been very proactive,” he said. But “others are dragging their feet. I think it may take a high-profile enforcement … to get the attention of the smaller players.”

Deborah Peel, founder and chairman of the advocacy group Patient Privacy Rights , noted that while the changes are designed to improve patient privacy, several loopholes remain.

Despite the changes, most health data can still be sold, she said. There is also no chain of custody for health data despite the generally strong security and contract requirements for business associates and subcontractors, Peel said.

As a result there is no way for patients “to obtain a complete map or picture of who used your health information or why. Without a complete data map that tracks all flows of data, we have no idea about the harms and misuses, making it impossible to weigh the risks vs. benefits of using,” health information technology systems, she noted.