HIPAA goes HITECH in stimulus bill

July 13, 2009
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Included in the economic stimulus legislation are provisions making important changes to the HIPAA privacy and security rules. The changes are included within the Health Information Technology for Economic and Clinical Health Act (HITECH) provisions of the American Recovery and Reinvestment Act of 2009. The changes are generally effective as of Feb. 17, 2010. Key new requirements include the following:

Currently, only covered entities, such as health care providers and health plans, are directly subject to the HIPAA privacy and security rules. Business associates — entities that perform a function on behalf of a covered entity that involves the use or disclosure of protected health information — were not previously subject to HIPAA. Rather, their only liability was on a contractual basis to the covered entity pursuant to the business associate agreement. That is changing under HITECH.

Beginning next year, the HIPAA privacy and security rules will apply to business associates in a similar manner as they apply to covered entities.

Currently, if there is a breach of the privacy or security rules, the covered entity is required to mitigate any harm caused by the breach, which may, in certain circumstances, include notification. There is no other affirmative obligation to provide notice of a breach. Under HITECH, covered entities must notify individuals within 60 days after discovery of a breach of unsecured protected health information. Any such information that is transmitted electronically through encryption and any that is destroyed under rules prescribed by the U.S. Department of Health and Human Services is not considered unsecured, and it is not subject to the new notification rules, even if compromised.

In addition to notifying individuals, HHS must be notified annually of any breaches. If the breach involves 500 or more individuals, the agency must be notified immediately and will identify the covered entity on its Web site. Further, the covered entity must notify the media (that’s right— alert the media!) if the covered entity reasonably believes that a breach of unsecured protected health information affects more than 500 individuals in a state or jurisdiction. Business associates who discover a breach must notify the covered entity, who then must notify the affected individuals and HHS, and if necessary, the media.

HITECH increases individuals’ rights under HIPAA. For example, individuals will now have the right to request and receive their protected health information in electronic form if the covered entity maintains the information as an electronic health record.

Further, covered entities maintaining protected health information as an electronic health record must supply requesting individuals an accounting of the uses and disclosures of those records for treatment, payment and health care operations purposes during the prior three years.

HITECH significantly strengthens enforcement of HIPAA. Civil penalties are increased and will now vary depending on whether the breach was innocent, due to reasonable cause, or due to willful neglect. While there is still no private cause of action for HIPAA violations, HITECH provides a mechanism for individuals to obtain a portion of civil monetary penalties recovered by HHS.

What do employers need to do in response? HIPAA privacy and security policies and procedures will need to be updated, as well as the individual notice of privacy practices. Further, new business associate agreements will be required, as well as additional training of the work force.

Mary V. Bauman is an employee benefit attorney with Miller Johnson.

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