On January 25, 2013, the Department of Health and Human Services (HHS) published the highly anticipated Health Insurance Portability and Accountability Act (HIPAA) Omnibus Final Rule (the “Final Rule”). The Final Rule represents a material development in the area of health care privacy, and has important operational consequences for covered entities and business associates. Major changes include the following:

- Final Rule Requires Changes in Breach Notice Policies; Likely to Increase Breach Reporting. The Final Rule eliminates the “significant risk of harm” threshold for breach notification. Under the Final Rule, any impermissible use or disclosure of protected health information (PHI) is presumed to be a breach requiring notification, unless the covered entity or business associate demonstrates through a risk assessment that there is a “low probability that the PHI has been compromised” or unless an exception applies. The Final Rule requires entities to consider at least four “objective” factors in conducting their risk assessments. These changes are likely to increase breach notifications. As a result, affected entities should make a concerted effort to encrypt PHI, since HIPAA breach notification requirements do not apply to PHI that has been encrypted in accordance with HHS guidance. In addition, breach notification policies, procedures and protocols will need to be revised.