Business Associates and Breach Reporting Under HITECH and the Omnibus Final HIPAA Rule

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1 Business Associates and Breach Reporting Under HITECH and the Omnibus Final HIPAA Rule Patricia D. King, Esq. Associate General Counsel Swedish Covenant Hospital Chicago, IL I. Business Associates under the Omnibus Final HIPAA Rule: what s new? 1.1 Definition of Business Associate under the original HIPAA rules Under the original HIPAA rules, a business associate: Was not a member of the workforce of a covered entity or organized health care arrangement (OHCA); and either Performed a function or activity on behalf of a covered entity or OHCA that involved the use or disclosure of individually identifiable health information (including claims processing or administration, data analysis, processing or administration, utilization review, quality assurance, billing, benefit management, practice management, and repricing; or Provided legal, actuarial, accounting, consulting, data aggregation, management, administrative, accreditation, or financial services to or for the covered entity or OHCA, if the provision of service involved the disclosure of individually identifiable health information. 1 The Office for Civil Rights (OCR) has periodically issued guidance to clarify the definition of business associate, through the Frequently Asked Questions section of its website and other means. One clarification has been that services which serve only as 1 45 C.F.R

2 conduits of protected health information (PHI) without accessing it (such as delivery services), are not business associates. Also, services whose employees may access information only incidentally (such as a janitorial service or copy machine repair services) are not business associates. 1.2 Modifications to the definition of business associate The Omnibus Final HIPAA Rule 2 modified the definition of business associate by: Including Patient Safety Organizations; Including Health Information Organizations, E Prescribing Gateways, and other persons that provide data transmission service and require routine access to PHI; Including persons that offer a personal health record to individuals on behalf of a covered entity; Including subcontractors; and Excluding a health care provider disclosing information for treatment purposes; a plan sponsor which receives information from a group health plan; a government agency with respect to determining eligibility for or enrollment in a government health plan; and a covered entity performing functions for an OHCA in which it participates. In the preamble to the Omnibus Final HIPAA Rule, OCR provided further clarification of some of the exceptions to the definition of business associate which have been recognized over time. In particular, OCR contrasted organizations that require 2 Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under the Health Information Technology for Economic and Clinical Health Act and the Genetic Information Nondiscrimination Act; Other Modifications to the HIPAA Rules; Final Rule, 78 Fed. Reg (Jan. 25, 2013). 2

3 routine access to PHI with the conduit exception. The conduit exception is a narrow, fact based exception, applying only to couriers, and their electronic equivalents, such as internet service providers (ISPs) providing mere data transmission services. 3 Also, the conduit exception is limited to transmission services, including any temporary storage incident to the transmission, but does not apply to an entity (such as a data storage company) that maintains PHI on behalf of a covered entity, even if the data storage company does not view the PHI. 1.3 New Obligations of Business Associates The original HIPAA rules applied only to covered entities (health care providers utilizing electronic transactions, health plans, and health care clearinghouses). HIPAA had an indirect application to business associates, because the HIPAA rules required a covered entity to enter into a written agreement with the covered entity s business associate which required the business associate to protect the security and privacy of PHI. One of the most significant changes introduced by the HITECH Act was to apply the security provisions of HIPAA directly to business associates. 4 Business associates are now directly liable for violation of the HIPAA Security Rule, and for uses and disclosures of PHI in violation with the Privacy Rule. Business associates also have the following responsibilities: 3 78 Fed. Reg at P.L , Sec

4 (1) To keep records and submit compliance reports to HHS, when HHS requires such disclosure in order to investigate the business associate s compliance with HIPAA, and to cooperate with complaint investigations and compliance reviews 5 ; (2) To disclose PHI as needed by a covered entity to respond to an individual s request for an electronic copy of his/her PHI 6 ; (3) To notify the covered entity of a breach of unsecured PHI 7 ; (4) To make reasonable efforts to limit use and disclosure of PHI, and requests for PHI, to the minimum necessary 8 ; (5) To provide an accounting of disclosures 9 ; and (6) To enter into agreements with its subcontractors which comply with the HIPAA Privacy and Security Rule 10. Because OCR included subcontractors within the definition of business associate, those organizations will likewise be subject to the HIPAA Security Rule and the Enforcement Rule. 1.4 Business Associate Agreements What s New? Previously, the HIPAA rules required that the business associate contract provide that the business associate ensure that any agent, including a subcontractor, receiving PHI would agree to the same restrictions that apply to the business associate. Now, 5 45 C.F.R (a), (b) C.F.R (a)(4) C.F.R (a) C.F.R (b)(1) Fed.Reg (May 31, 2011) C.F.R. 314(a)(2)(iii); (e)(5). 4

5 agreements between business associates and their subcontractors will have to meet all elements required for a business associate agreement with the covered entity. 11 Business associate agreements have provided that the business associate must report to the covered entity uses or disclosures of PHI not provided for in the business associate s contract; now, the business associate must report inappropriate uses and disclosures, including breaches of unsecured PHI. 12 Business associates must also agree to comply with Subpart C of the HIPAA rules (dealing with compliance and investigations). 13 Also, to the extent that the business associate is responsible for carrying out any of the covered entity s responsibilities under the HIPAA rules (such as responding to patient requests for copies of their records), the business associate is required to comply with the provisions of the HIPAA rules that would apply to the covered entity in carrying out that function When Must Business Associate Agreements Be Modified? While the effective date of the Omnibus Final HIPAA Rule is March 26, 2013, there are transitional rules that apply if a business associate agreement was entered into prior to January 25, 2013, and complied with the HIPAA rules in effect on that date. As long as the business associate agreement is not renewed or modified between March 26, 2013 and September 23, 2013 (the compliance date), the agreement is deemed C.F.R (e)(5) C.F.R (e)(2)(C) C.F.R (e)(2)(B) C.F.R (e)(2)(H). 5

6 compliant until the earlier of (i) the date it is renewed or modified after September 23, 2013, or (ii) September 22, PRACTICE TIPS: You should be using a Business Associate Agreement that complies with the Omnibus Final HIPAA Rule for any business associate arrangement that you entered into after January 25, Start now to compile a list of existing Business Associate Agreements with service providers you intend to continue using past August You will need to amend or replace these agreements. II. Breach notification under the Omnibus Final HIPAA Rule: what s new? 2.1 Then, the harm standard; now, an inappropriate use/disclosure is presumed to be a breach The interim final regulations implementing the breach notification provisions of HITECH 16 defined a breach as the acquisition, access, use or disclosure of PHI in violation of HIPAA that compromises the security or privacy of PHI. The security or privacy of PHI was compromised when there was a significant risk of financial, reputational or other harm to the individual. In the Omnibus Final HIPAA Rule, OCR abandoned the harm standard in favor of a risk assessment, which OCR considers to be more objective. In the Omnibus Final HIPAA Rule, an acquisition, access, use or disclosure of PHI not permitted under HIPAA is presumed to be a breach unless the covered entity or C.F.R (e) Fed. Reg (Aug. 24, 2009). 6

7 business associate demonstrates that there is a low probability that PHI has been compromised. 17 This determination is to be derived from a risk assessment considering at least the following factors: The nature and extent of the PHI involved, including the types of identifiers and likelihood of re identification; The unauthorized person who used or received the PHI; Whether the PHI was actually acquired or viewed; and The extent to which the risk to the PHI has been mitigated. Covered entities can choose to report all inappropriate uses and disclosures of PHI, in lieu of performing the risk assessment. In either case, it is likely that more incidents will be reported to OCR. 2.2 No substantive changes to breach notification procedures OCR retains most of the other provisions of the breach notification interim final regulations. As those rules provided, a breach is deemed discovered when any employee, officer, or agent of the covered entity or business associate knew, or should reasonably have known, of the breach. The covered entity must notify affected individuals without unreasonable delay, but no later than 60 calendar days from discovery of the breach (unless a delay is requested by law enforcement). If contact information for affected individuals is not available, substitute notice may be given via media or the covered entity s website. Notification to OCR is required if the breach C.F.R (2). 7

8 involves 500 or more individuals, and to media if it involves 500 or more individuals in a single state. PRACTICE TIPS: You will likely need to amend your breach notification policy. (A sample policy is attached.) Make sure that staff is appropriately trained to timely report any incident that may constitute a breach. Consider an ad hoc committee to participate in performing the risk assessment to evaluate potential breaches. Possible representation: privacy officer, security official, human resources (to consider disciplinary consequences of potential breach), legal counsel, operations. Maintain documentation of risk assessments performed and reason for concluding that an incident was/was not a breach. Consider outside assistance in appropriate cases (information security forensics, crisis communications, etc.). This would include risk management assistance from your insurer if you have privacy risk coverage. Revisit HIPAA Security policies to reduce exposure to potential breaches and mitigate risks from new activities, such as expanding use of mobile technology. Encrypt PHI in transmission and on mobile devices. Consider risks from emerging practices, such as bring your own device policies. 8

9 Sample Policy Notice of Breach of Unsecured PHI POLICY If unsecured PHI is acquired, accessed, used or disclosed in a manner not permitted under the Health Insurance Portability and Accountability Act (HIPAA) Privacy Standards which compromises the security or privacy of the PHI, the Covered Entity will notify the individual whose PHI was affected, and the U.S. Department of Health and Human Services (HHS). PROCEDURE 1. Definitions Breach means the acquisition, access, use, or disclosure of PHI in a manner not permitted under the HIPAA Privacy Standards, which compromises the security or privacy of the PHI. Certain unintentional incidents do not constitute a breach, as described in Section 3. Protected Health Information or PHI means information that (i) is created or received by a health care provider, health plan, employer, or health care clearinghouse; (ii) relates to the past, present, or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past, present or future payment for the provision of health care to an individual; and (iii) that identifies the individual, or provides a reasonable basis to identify the individual. PHI does not include employment records held by the 9

10 Covered Entity in its capacity as an employer, or information that has been deidentified in accordance with the HIPAA Privacy Standards. Unsecured PHI means PHI that has not been rendered unusable, unreadable or indecipherable to persons who are not authorized to access it, by shredding or destruction (in the case of paper, film or other hard copy media); or in the case of electronic records, by clearing, purging or destruction of electronic media in accordance with guidance of the National Institute for Standards and Technology (NIST), or encrypted in accordance with valid encryption processes recognized by the NIST. 2. Reporting of Known or Suspected Breach A. Any employee, workforce member or agent who discovers a potential breach shall report it to the Security Official 18 of the Covered Entity. B. If a business associate of the Covered Entity discovers a breach involving PHI of patients of the Covered Entity, the business associate shall report it to the Covered Entity in accordance with the business associate agreement. 3. Investigation of Suspected Breach A. The Security Official shall review the circumstances of the suspected breach to determine if the incident was intentional or unintentional. 18 Note: Some covered entities may prefer to assign this responsibility to the Privacy Officer, or Compliance Officer. 10

11 1. If PHI was acquired, accessed or used by a workforce member or agent of the Covered Entity or a business associate, but the acquisition, access or use was made in good faith and within the scope of permitted activities of the workforce member/agent, and there is no further unpermitted use or disclosure, then this does not constitute a breach. Example: An employee accessed the wrong record, but when he/she realized the error, the employee closed the record and did not retain any information. 2. If PHI was inadvertently disclosed by one workforce member or agent of the Covered Entity to another workforce member/agent, and there is no further unpermitted use or disclosure, then this does not constitute a breach. Example: PHI of patients of Physician A is disclosed to a physician assistant who works with Physician B. The employee does not use or further disclose the information and reports the error. 3. If PHI was inadvertently disclosed, but the unauthorized person would not reasonably have been able to retain the information. Example: A staff member hands discharge instructions for Patient A to Patient B, but immediately realizes the error and retrieves the discharge instructions before Patient B can read them. 11

12 B. Except for the situations listed in subsection A, an impermissible use or disclosure of PHI is presumed to be a breach unless it can be demonstrated that there is a low probability that the PHI has been compromised. This determination shall be based on a risk assessment including at least the following factors: The nature and extent of the PHI involved, including the types of identifiers and the likelihood of re identification The unauthorized person who used the PHI or to whom the disclosure was made Whether the PHI was actually acquired or viewed The extent to which the risk to the PHI has been mitigated. The risk assessment shall be documented. If the risk assessment results in a conclusion that PHI may have been compromised, notification will be made as described below. 4. Breach Notification to Individuals A. Written notice. 1. If there has been a breach of PHI that may have caused the PHI to be compromised, the individual will be notified in writing. If the breach was due to actions of a business associate, the business associate will coordinate notification with the Covered Entity so that individuals do not receive duplicate notification from both the business associate and the Covered Entity. 12

13 2. Notification will be sent without unreasonable delay, but in no event later than 60 days after discovery of the breach. EXCEPTION: If the Covered Entity has been notified by a law enforcement official that notification would impede a criminal investigation, notification will be delayed and the reason documented. 3. Notice will be sent to the individual s last known address by first class mail. If the individual had agreed in advance to receive notice electronically, notice may be given by The notice will contain the following information: A brief description of what happened A description of the types of unsecured PHI involved in the breach Any steps the individual should take to protect him/herself from potential harm resulting from the breach A brief description of steps the Covered Entity is taking to investigate the breach, to mitigate harm to individuals, and to protect against future breaches Contact procedures for the individual to ask questions, B. Substitute notice. including a toll free telephone number, an e mail address, Web site or postal address. 13

14 1. If contact information for the individual is out of date, substitute notice will be given in a way reasonably calculated to reach the individual. 2. If there is insufficient contact information for ten or more individuals, then substitute notice will either be posted on the home page of the Covered Entity s website, or notice will be conveyed through major print or broadcast media. C. Urgent notice. If there is danger of imminent misuse of the unsecured PHI, the individual will be notified by telephone or other means in addition to written notice. 5. Publication If a breach of unsecured PHI involves 500 or more residents of any state, then in addition to notifying the affected individuals, the Covered Entity will notify prominent media outlets in the state. The information conveyed will include the information required for individual notices. 6. Notice to HHS A. If a breach of unsecured PHI involves 500 or more individuals, the Covered Entity will notify HHS at the same time as notice is given to individuals. B. For breach incidents involving fewer than 500 individuals, the Covered Entity will maintain a log of breach incidents and report to HHS not later than 60 days after the end of each calendar year. 14

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