Checklist for Covered Entities and Business Associates

by Bradley Arant Boult Cummings LLP

As the countdown to the compliance deadline for the Health Information Technology for Economic and Clinical Health (HITECH) Act Omnibus Rule begins, we offer the following as a reminder of tasks that covered entities, business associates, and subcontractor business associates should complete by September 23, 2013. Whether you have a robust HIPAA compliance program in place or are a business associate entering the HIPAA regulatory regime for the first time, this checklist illustrates key updates and revisions. Additional topics and requirements may apply in specific situations.


 Covered entities must update and then post their notices of privacy practices in a clear and prominent location. If the covered entity maintains a website, the notice also must be posted there. Notices now must include the following provisions:

  • Breach notification statement: a statement that the covered entity must notify an affected individual of a breach of unsecured protected health information (PHI); 
  • Authorizations: a description of the disclosures of PHI requiring an authorization (e.g., psychotherapy notes, marketing, and sale of information, and a statement that other uses or disclosures not described in the notice require authorization);
  • Fundraising disclosures: a statement that the recipient of fundraising materials may opt out of future fundraising communications; and
  • Restrict disclosure to health plans: a description of an individual’s right to restrict disclosure of PHI to health plans if he or she paid for the relevant care.

Covered entities must update HIPAA authorization forms before engaging in marketing or sales of PHI.

Covered entities must update privacy policies and procedures, and business associates should develop policies to address any applicable Privacy Rule requirements, including changes in the following areas:

  • Individual access. If an individual requests a digital copy of certain electronic PHI or directs a covered entity in writing to transmit a copy to another person, the covered entity generally must produce the information in the format requested if readily producible within 30 days or negotiate an alternative format. Covered entities no longer have extra time to respond to requests for off-site records.
  • Requested restrictions on health plan disclosures. Unless the disclosure is required by law, covered entities must abide by individuals’ requests to restrict disclosures of PHI to health plans for payment or operations purposes if the individual or someone on their behalf paid the covered entity in full for the care to which the restriction pertains.
  • Sale of PHI. Covered entities and business associates must obtain written authorization to exchange PHI for direct or indirect remuneration (in addition to sales, this includes PHI access and licensing agreements), unless one of several exceptions applies. The authorization must disclose that the exchange will result in remuneration.
  • Marketing. Covered entities must obtain written authorization to use and disclose PHI for marketing purposes, including most non-face-to-face communications when the covered entity receives payment to make the communication. If payment is involved, the marketing authorization must disclose that fact.
  • Fundraising. Covered entities now may disclose more information to institutionally-related foundations for fundraising, but they must explain how the recipient may opt out of receiving future fundraising communications. The opt-out method cannot be burdensome to individuals.
  • Research. If a covered entity engages in research, it should review the new, relaxed standards applicable to research as described in 45 CFR § 164.508(b).
  • Deceased persons. Covered entities may disclose PHI to family members or others involved in a decedent’s health care or payment for care when the disclosure is relevant to their involvement and not inconsistent with the decedent’s previously-expressed wishes. Also, health information of persons deceased for more than 50 years is no longer considered PHI and therefore is not regulated under HIPAA.

 Covered entities and business associates must train their employees on these HITECH changes.


 The Omnibus Rule expanded the definition of “business associate” to include many new entities. Covered entities and business associates should identify (1) business associates who transmit PHI with routine access to it, (2) business associates who maintain, create, or receive PHI for you, and (3) for business associates, the subcontractors to whom you delegate a function, activity, or service involving PHI (e.g., cloud storage providers).

 Covered entities need updated BAAs with new business associates. Now that they are regulated directly, it is equally important for business associates to have BAAs in place with their covered entity clients and with subcontractors.

 BAAs must contain the elements required by 45 CFR § 164.314(a) and .504(e) by the compliance deadline, unless the BAA was in place before January 25, 2013 and has not been amended since (in those cases, BAAs may be updated as late as September 22, 2014). In addition to previous requisites, BAAs must require business associates to:

  • Comply with the Security Rule;
  • Execute BAAs with their subcontractors;
  • To the extent the business associate will carry out an obligation of a covered entity, agree to comply with any HIPAA rule applicable to that obligation; and
  • Timely report breaches of unsecured PHI to the covered entity.


 The Omnibus Rule did not substantially change the HIPAA security standards other than to make them directly applicable to business associates, who now must meet all the administrative, technical, and physical safeguards for electronic PHI. Importantly, the following safeguards have been at the forefront of recent HITECH enforcement actions:

  • Security risk assessment. Documenting an electronic PHI risk assessment is foundational. This safeguard requires an inventory of PHI and a complete and accurate assessment of the level of risk faced based on the likelihood of a threat occurring and the criticality of any impact should that threat occur.
  • Address encryption. Although encryption isn’t mandatory, the security risk of electronic PHI stored or transmitted is best safeguarded by encryption. If encryption isn’t reasonable and appropriate, you must document why that is and implement an equivalent alternative measure.
  • Device controls. Many reported breaches involve remote devices containing PHI (e.g., laptops, smart phones, thumb drives, and home computers). The Office for Civil Rights expects covered entities and business associates to pay special attention to risk management, policies and procedures, and training to safeguard remote device access, storage, and transmission of PHI.


 The Omnibus Rule modified the standard for reporting breaches of unsecured PHI. No longer will the “risk of harm” threshold be available to eliminate reporting. Under the new standard, a breach is reportable unless (1) the covered entity or business associate demonstrates a low probability that the information has been compromised based on a thorough risk assessment, or (2) the breach fits within certain limited exceptions. In light of this modified standard, covered entities and business associates should revise their breach notification policies and procedures.

  • Incident response policies and procedures. An incident response team needs to be able to quickly (1) review a potential breach, (2) identify whether it is reportable and how to mitigate harm, and (3) remediate the problem.
  • Breach analysis. An incident response team should address and document: 


  • 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 unauthorized disclosure was made
  • Whether the PHI was actually acquired or viewed; and
  • The extent to which the risk to the PHI has been mitigated following any impermissible use or disclosure.

Finally, in light of increased financial risks, covered entities and business associates should audit existing insurance policies to determine the scope and extent of existing coverage and consider whether additional coverage is warranted.

Copyright 2013, American Health Lawyers Association, Washington, DC. Reprint permission granted.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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