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New HIPAA rule revises breach notification process

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Indiana Lawyer Focus

Financial institutions sending letters and emails alerting customers of possible unauthorized access to their bank accounts or credit cards are more common that anyone would like. Soon, however, such notices may come from hospitals and medical insurance companies.

The change is being ushered in by the new Health Insurance Portability and Accountability Act of 1996 rule announced in January by the U.S. Department of Health and Human Services. At 563 pages, the regulation is being touted as finalizing a number of provisions in the Health Information Technology for Economic and Clinical Health Act and strengthening the privacy and security protections for health information provided under HIPAA.

eckhardt-chad-mug Eckhardt

When the omnibus rule was unveiled, Kathleen Sebelius, HHS secretary, pointed to the growing use of electronic medical records as part of the cause for the new rule.

“Much has changed in health care since HIPAA was enacted over 15 years ago,” Sebelius stated in a press release. “The new rule will help protect patient privacy and safeguard patients’ health information in an ever expanding digital age.”

Attorneys agreed with the government’s assessment that these are “sweeping changes.”

“It’s a significant piece of regulation enforcing a patient’s privacy rights,” said Chad Eckhardt, an associate in Frost Brown Todd LLC’s Cincinnati office. “It’s going to take a while for covered entities to get their arms around.”

The final omnibus rule addresses four regulatory areas. It provides the final modifications to the HIPAA privacy, security and enforcement rules; sets the final rule adopting the increased civil money penalty structure; issues the final standard on breach notification for unsecured protected health information; and modifies the HIPAA privacy rule that prevents most health plans from using or disclosing genetic information for underwriting purposes.

Most of the regulations have been public for some time and the language of the final rule was expected. Although few surprises were contained in the document, Eckhardt said, the change to the breach notification provision has turned many heads.

ziels-susan-mug Ziel

Namely, the standard of “significant harm” has been dropped which could lead to more people getting letters from their doctors and insurance companies that their medical records may have been compromised.

Breach notification

The push toward electronic medical records was accelerated by the Patient Protection and Affordable Care Act. Early projections that billions of dollars would be saved by moving to electronic records have been dampened, but computerized health information still has advantages. Some can alert physicians to tests a patient needs, reduce mistakes in prescriptions, and aid in research.

Yet, as with bank records and credit card information, going online brings new risks.

“Privacy is a big issue because if health records are more accessible to doctors, they’re also more accessible to everybody else,” said David Orentlicher, professor at the Indiana University Robert H. McKinney School of Law.

Medical records contain a great deal of information from details of a patient’s health to financial account numbers and Social Security numbers.

With an apparent eye on the increased potential health information being lost or stolen, the HHS revised the Breach Notification Rule first published in the 2009 HITECH Act.

Under the initial provision, patients did not have to be notified of any breach if the covered entity, such as health care provider or health insurance company, determined the information improperly accessed did not pose a “significant risk of harm” to those patients.

The covered entities were required to perform a risk assessment to examine elements such as who accessed the information and what type of information was disclosed. Then, if that analysis indicated the breach did not put the patient’s financial or personal wellbeing at risk, no notification had to be sent.

Advocates supporting the significant harm standard pointed to the increased costs and burden that covered entities and their business associates would have to bear if the threshold for notification was lowered. In addition, alerting consumers when there was no risk of damage could cause unnecessary anxiety and, eventually, apathy.

However, opponents countered the significant harm provision set the standard too high.

In the final rule just released, the HHS removed the harm standard and modified the risk assessment. Now, the focus has shifted from assessing the risk to the individual to proving that the improper disclosure did not compromise the protected health information. The HHS is also providing more objective guidelines for doing the risk assessment to determine if a notification is necessary.

Penalties

Accordingly, costs for covered entities and business associates will likely rise because they will have to pay for not only the alert but also repairing the breach and offering any mitigating services like credit monitoring.

Also, since enforcement happens after the breach has occurred, the notification could become even more costly.

The financial penalties were unveiled in the HITECH Act. Fines for improper releases of protected health information have long been a part of HIPAA, but the new reparations are substantially higher.

Prior to HITECH, the fine could not be more than $100 per violation and the total penalty could not exceed $25,000 a year. Attorneys said the dollar amounts were so low that hardly anyone paid them much attention.

zoccola-christine-mug Zoccola

They are paying attention now. The civil money penalty provision divides the violations into four tiers, ranging from “Did Not Know” to “Willful Neglect – Not Corrected.” The fines for each violation go from a low $100 to a high $50,000, and the total penalty could reach $1.5 million per violation of HIPAA rules within a calendar year.

“I think that’s probably what it takes to get people’s attention sometimes, or so the government thinks,” said Susan Ziel, partner at Krieg Devault LLP’s Minneapolis office.

Moreover, the new rule expands the liability. Now, not only are covered entities liable to HIPAA violations but so are their business associates, which includes anyone who has access to medical records like lawyers, transcribers and accountants.

Enforcement activity has been increasing.

In September, the Massachusetts Eye and Ear Infirmary and Massachusetts Eye and Ear Associates Inc., reached a settlement agreement with the HHS to pay $1.5 million for potential HIPAA violations. The settlement came after the infirmary filed a breach notification, reporting the theft of an unencrypted personal laptop containing the electronic protected health information of patients and research subjects.

Getting started

The final omnibus rule was published Jan. 25 and goes into effect March 26. Compliance must be met by Sept. 23.

Many health care providers and insurance companies have not updated their HIPAA policies since the act took effect in 2003. Christine Zoccola, partner at Bose McKinney & Evans LLP in Indianapolis, noted attorneys will be working not only to educate their clients on the final rule but also to revise procedures, forms and contracts to meet the new provisions.

“It is a big change,” Zoccola said. “It is a massive overhaul.”•

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  • Very upset about hippos laws
    I have tried everywhere trying to get help and all I get is the run around I should able to protect my son from people I have to work with they think they can do what they want with personal information.

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  1. On a related note, I offered the ICLU my cases against the BLE repeatedly, and sought their amici aid repeatedly as well. Crickets. Usually not even a response. I am guessing they do not do allegations of anti-Christian bias? No matter how glaring? I have posted on other links the amicus brief that did get filed (search this ezine, e.g., Kansas attorney), read the Thomas More Society brief to note what the ACLU ran from like vampires from garlic. An Examiner pledged to advance diversity and inclusion came right out on the record and demanded that I choose Man's law or God's law. I wonder, had I been asked to swear off Allah ... what result then, ICLU? Had I been found of bad character and fitness for advocating sexual deviance, what result then ICLU? Had I been lifetime banned for posting left of center statements denigrating the US Constitution, what result ICLU? Hey, we all know don't we? Rather Biased.

  2. It was mentioned in the article that there have been numerous CLE events to train attorneys on e-filing. I would like someone to provide a list of those events, because I have not seen any such events in east central Indiana, and since Hamilton County is one of the counties where e-filing is mandatory, one would expect some instruction in this area. Come on, people, give some instruction, not just applause!

  3. This law is troubling in two respects: First, why wasn't the law reviewed "with the intention of getting all the facts surrounding the legislation and its actual impact on the marketplace" BEFORE it was passed and signed? Seems a bit backwards to me (even acknowledging that this is the Indiana state legislature we're talking about. Second, what is it with the laws in this state that seem to create artificial monopolies in various industries? Besides this one, the other law that comes to mind is the legislation that governed the granting of licenses to firms that wanted to set up craft distilleries. The licensing was limited to only those entities that were already in the craft beer brewing business. Republicans in this state talk a big game when it comes to being "business friendly". They're friendly alright . . . to certain businesses.

  4. Gretchen, Asia, Roberto, Tonia, Shannon, Cheri, Nicholas, Sondra, Carey, Laura ... my heart breaks for you, reaching out in a forum in which you are ignored by a professional suffering through both compassion fatigue and the love of filthy lucre. Most if not all of you seek a warm blooded Hoosier attorney unafraid to take on the government and plead that government officials have acted unconstitutionally to try to save a family and/or rescue children in need and/or press individual rights against the Leviathan state. I know an attorney from Kansas who has taken such cases across the country, arguing before half of the federal courts of appeal and presenting cases to the US S.Ct. numerous times seeking cert. Unfortunately, due to his zeal for the constitutional rights of peasants and willingness to confront powerful government bureaucrats seemingly violating the same ... he was denied character and fitness certification to join the Indiana bar, even after he was cleared to sit for, and passed, both the bar exam and ethics exam. And was even admitted to the Indiana federal bar! NOW KNOW THIS .... you will face headwinds and difficulties in locating a zealously motivated Hoosier attorney to face off against powerful government agents who violate the constitution, for those who do so tend to end up as marginalized as Paul Odgen, who was driven from the profession. So beware, many are mere expensive lapdogs, the kind of breed who will gladly take a large retainer, but then fail to press against the status quo and powers that be when told to heel to. It is a common belief among some in Indiana that those attorneys who truly fight the power and rigorously confront corruption often end up, actually or metaphorically, in real life or at least as to their careers, as dead as the late, great Gary Welch. All of that said, I wish you the very best in finding a Hoosier attorney with a fighting spirit to press your rights as far as you can, for you do have rights against government actors, no matter what said actors may tell you otherwise. Attorneys outside the elitist camp are often better fighters that those owing the powers that be for their salaries, corner offices and end of year bonuses. So do not be afraid to retain a green horn or unconnected lawyer, many of them are fine men and woman who are yet untainted by the "unique" Hoosier system.

  5. I am not the John below. He is a journalist and talk show host who knows me through my years working in Kansas government. I did no ask John to post the note below ...

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