Workplace Privacy, Data Management & Security Report : Privacy Lawyers & Attorneys : Jackson Lewis Law Firm : Data Security, HIPAA & Confidentiality Issues

Rite Aid Corporation and its affiliates have agreed to pay $1 million to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule, the U.S. Department of Health and Human Services (HHS) announced today. At the same time, Rite Aid signed a consent order with the Federal Trade Commission (FTC) to settle potential violations of the FTC Act.

The lesson to be learned from this case:

Disposing of individuals’ health information in an industrial trash container accessible to unauthorized persons is not compliant with several requirements of the HIPAA Privacy Rule and exposes the individuals’ information to the risk of identity theft and other crimes.

The Office of Civil Rights, which enforces the HIPAA Privacy and Security Rules, opened its investigation of Rite Aid after television media videotaped incidents in which pharmacies were shown to have disposed of prescriptions and labeled pill bottles containing individuals’ identifiable information in industrial trash containers that were accessible to the public. These incidents were reported as occurring in a variety of cities across the United States. Rite Aid pharmacy stores in several of the cities were highlighted in media reports.

The investigation also indicated other potential concerns about Rite Aid's policies related to safeguarding patient information during the disposal process, training employees, and a related sanction policy.

The Director of OCR noted:

It is critical that companies, large and small, build a culture of compliance to protect consumers’ right to privacy and safeguard health information. OCR is committed to strong enforcement of HIPAA.

The corrective action Rite Aid has agreed to includes improving policies and procedures to safeguard the privacy of its customers' health information, and applies to all of its nearly 4,800 retail pharmacies. More specifically, the settlement requires Rite Aid to take a number of steps including

• Revising and distributing its policies and procedures regarding disposal of protected health information and sanctioning workers who do not follow them;
• Training workforce members on these new requirements;
• Conducting internal monitoring; and
• Engaging a qualified, independent third-party assessor to conduct compliance reviews and render reports to HHS and FTC.

The HHS corrective action plan will be in place for three years; the FTC order will be in place for 20 years. The length and scope of these plans show the seriousness these agencies are taking concerning compliance with requirements to safeguard personal information.  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Guest Post from Pat Yu* of Accero. We are happy to make Mr. Yu's insights available to our readers as they are important considerations for companies considering alternative data and systems management strategies. Enjoy this post: 

To host or not to host . . . That’s ultimately the critical question when it comes to major internal system deployments, such as human capital management (HCM) solutions. To help you move toward a smart, strategic decision, here is a high-level overview of each model:

Licensed

Still widely used by most companies, licensed software delivery often provides user’s more control. You purchase a license, install the software and use your internal resources to manage and configure or customize the solution. When companies purchase licenses for a major software solution, they are ultimately responsible for all aspects of application management, including: installing upgrades, troubleshooting issues and hardware maintenance.

Hosted
 

Hosting is most often provided today in the form of Software as a Service, or SaaS. In this model, the vendor hosts the solution and users access it via the web. One of the key benefits of selecting a hosted model, besides the scalability and convenience of 24x7 web access, is the fact that the software provider is responsible for:

• Managing both the software and hardware components of the application
• Network issues such as redundancy, data backup and disaster recovery planning
• Managing the data center or centers that deliver the application
• Upgrading the software automatically for customers on a regular schedule

A checklist for decision makers

Hosting in and of itself is simply a delivery model. A software application must meet your business requirements; how it is delivered (licensed vs. SaaS) may be part of your requirement, but it should not be the primary factor. Follow the checklist below to help your organization determine which solution best fits your needs:

• Clearly define your business requirements
• Inventory solution providers (licensed and hosted)
• Evaluate systems to ensure they meet your high priority requirements
• Consider growth strategies and make sure the solution will scale to match
• Prepare a minimum four-year cost analysis to evaluate cost of ownership (this should include the cost to host the solution in house if you are considering a traditional license – and the IT resources needed to manage it)
• Review implementation timeframe (SaaS is often faster to deploy)
• Consider other costs – IT resources, hardware, software, time, etc.

*Pat Yu is the Director of Product Development at Accero, a Payroll, Human Resources and Human Capital Management software and service provider. Visit www.accero.com or call 800.429.2674.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

U.S. Department of Health and Human Services Secretary Kathleen Sebelius has announced final rules for eligible health care professionals and hospitals to qualify for a portion of the $27 billion or so in Medicare and Medicaid incentive payments for implementation and meaningful use of certified electronic health records (EHR). Many are concerned these incentives will increase the risks for data privacy and security that will come with more health data being maintained, used and disclosed in electronic format. Under the rules, eligible professionals may receive as much as $44,000 under Medicare and $63,750 under Medicaid, and hospitals may receive millions of dollars under both Medicare and Medicaid.
 

"We will make the immediate investments necessary to ensure that within five years, all of America's medical records are computerized."

President Barack H. Obama, January 8, 2009 

HHS’s July 13 action is consistent with the agenda of President Obama and some of his predecessors to help improve Americans’ health, increase safety and reduce health care costs through expanding use of EHRs and simplifying the administrative costs of healthcare. The enactment of the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 significantly advanced this agenda by establishing the statutory structure for eligible health care professionals and hospitals to receive government subsidies to adopt certified EHR technology. The HITECH Act, however, also expanded and tightened the HIPAA privacy and security regulations to address, in part, concerns about improper access and use of EHRs.

HHS’s regulations (consisting of more than 1,000 pages) define the minimum requirements and “meaningful use” objectives to qualify for the bonus payments (pdf) and identify the technical capabilities required for certified EHR technology (pdf). At the same time, providers and hospitals will need to focus on the evolving privacy and security mandates under HITECH, as well as under state law, to minimize the risks to protected health information and other personal information. So, as providers and hospitals look to Medicare and Medicaid funds to jumpstart their move to EHR systems, it will be important for them to be sure to have in place the appropriate policies, procedures and agreements to safeguard those records, which should include the careful handling and/or disposition of the mountains of paper records they currently maintain.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Further to our discussions of the proposed regulations to implement statutory amendments under the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), we summarize here a proposed changed to the definition of “business associate.” A significant part of the “HIPAA community” (covered entities, business associates and their agents and subcontractors) already is aware of the expanded application of HIPAA to business associates under HITECH. This expansion went into effect February 18, 2010, and, in fact, many business associate agreements currently are being modified in an attempt to reflect the statutory provisions. The HIPAA community, however, may not yet be aware of the proposal to further expand the direct application of the privacy and security rules under HIPAA to subcontractors performing functions for business associates.

A New Class of Business Associate

Prior to the HITECH Act changes, business associates and their agents and subcontractors were not directly subject to HIPAA. Instead, HIPAA required covered entities to obtain certain written assurances from their business associates. One of those written assurances was that business associates would ensure that their agents and subcontractors would agree to be subject to the same conditions and restrictions contained in the business associate agreement entered into with the covered entity.

The proposed regulations would include subcontractors in the group of “business associates” to the extent that they require access to protected health information. Such subcontractors are those persons who are not members of the business associate’s workforce, but perform functions for or provide services to a business associate. This would be the case even if the business associate has failed to enter into a business associate contract with the subcontractor. The regulator’s goal is to ensure the privacy and security protections will not lapse merely because a function is performed by an entity with no direct relationship with a covered entity, although the regulations seek public comments on the definition of subcontractor.

The proposed regulations state (emphasis added):

[W]e propose that downstream entities that work at the direction of or on behalf of a business associate and handle protected health information would also be required to comply with the applicable Privacy and Security Rule provisions in the same manner as the primary business associate, and likewise would incur liability for acts of noncompliance. We note, and further explain below, that this proposed modification would not require the covered entity to have a contract with the subcontractor; rather, the obligation would remain on each business associate to obtain satisfactory assurances in the form of a written contract or other arrangement that a subcontractor will appropriately safeguard protected health information. For example, under this proposal, if a business associate, such as a third party administrator, hires a company to handle document and media shredding to
securely dispose of paper and electronic protected health information, then the shredding company would be directly required to comply with the applicable requirements of the HIPAA Security Rule (e.g., with respect to proper disposal of electronic media) and the Privacy Rule (e.g., with respect to limiting its uses and disclosures of the protected health information in accordance with its contract with the business associate).

As the example above shows, if made final, the proposed regulation would further HIPAA’s reach and affect many businesses that may not currently view themselves as directly subject to the requirements or penalties under HIPAA. Many companies, including those that service the healthcare industry, such as health plans, likely will need to revisit their HIPAA-compliance measures.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

We recently reported here that the Department of Health and Human Services (HHS) is issuing proposed regulations to implement statutory amendments under the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”). These proposed regulations contain a number of important points to think about for HIPAA covered entities (and business associates), even though these rules are in proposed form. One is avoiding HIPAA violations involving “willful neglect," which under the HITECH Act will require a formal investigation and civil penalties.

To date, the Secretary of HHS has attempted to resolve complaints and certain violations by informal means, as required by § 160.312 of the current regulations. A significant change to the HIPAA enforcement scheme in the HITECH Act requires that if a preliminary investigation of the facts of a complaint indicates a possible violation due to willful neglect, the Secretary is required to commence a formal investigation. If the formal investigation finds a HIPAA violation involving willful neglect, the Secretary must impose a civil money penalty.

What is “willful neglect”?

Willful neglect is defined at § 160.401 as the “conscious, intentional failure or reckless indifference to the obligation to comply with the administrative simplification provision violated.” The term not only presumes actual or constructive knowledge on the part of the covered entity that a violation is virtually certain to occur, but also encompasses a conscious intent or degree of recklessness with regard to the entity’s compliance obligations.

So what does that mean, what are some examples? The proposed regulations provide the following examples:

1. A covered entity disposed of several hard drives containing electronic protected health information in an unsecured dumpster, in violation of § 164.530(c) and § 164.310(d)(2)(i). HHS’s investigation reveals that the covered entity had failed to implement any policies and procedures to reasonably and appropriately safeguard protected health information during the disposal process.
2. A covered entity failed to respond to an individual’s request that it restrict its uses and disclosures of protected health information about the individual. HHS’s investigation reveals that the covered entity does not have any policies and procedures in place for consideration of the restriction requests it receives and refuses to accept any requests for restrictions from individual patients who inquire.
3. A covered entity’s employee lost an unencrypted laptop that contained unsecured protected health information. HHS’s investigation reveals the covered entity feared its reputation would be harmed if information about the incident became public and, therefore, decided not to provide notification as required by § 164.400 et seq.

In addition to having actual or constructive knowledge of one or more violations, the covered entities in the examples above, particularly Example 1, failed to develop or implement compliant policies and procedures and, thus, demonstrated either conscious intent or reckless disregard with respect to the compliance obligations under HIPAA.

Based on the proposed regulations, covered entities can no longer expect the velvet hand of the regulators to resolve a violation informally in all cases. Covered entities that fail to have policies and procedure and make a good faith compliance effort likely will find themselves subject to mandatory formal investigations and penalties.

Covered entities like the one in example 1 above might want to consider certain precautions, including:

• maintaining a record retention policy,
• maintaining media re-use policy,
• maintaining a data destruction policy,
• maintaining an e-discovery policy, and
• and engaging a good data destruction/shredding company.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Department of Health and Human Services announced this morning that it will be issuing a notice of proposed rulemaking to begin implementing the recent statutory amendments under the Health Information Technology for Economic and Clinical Health Act (“the HITECH Act”). According to HHS, the proposed regulations (pdf), set to be published July 14, 2010, are designed to strengthen the privacy and security protection of health information, and to improve the workability and effectiveness of the existing HIPAA privacy and security rules. 

More specifically, the proposed rules would modify the Standards for Privacy of Individually Identifiable Health Information (Privacy Rule), the Security Standards for the Protection of Electronic Protected Health Information (Security Rule), and the rules pertaining to Compliance and Investigations, Imposition of Civil Money Penalties, and Procedures for Hearings (Enforcement Rule) issued under HIPAA.

We will be reviewing these regulations and reporting on them further as appropriate.

• Email This
• Print
• Comments
• Trackbacks
• Share Link