New HIPAA Omnibus Rule Implementing Provisions Of The HITECH Act: An Overview Of Changes

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Final implementing regulations for many provisions of the HITECH Act (Health Insurance Technology for Economic and Clinical Health Act) were issued by the Department of Health and Human Services (HHS) recently, and appeared in the Federal Register on January 25, 2013. Informally referred to as the Omnibus Rule, the regulations address a number of changes to the HIPAA Privacy Rule, HIPAA Security Rule, HIPAA breach notification rule, HIPAA privacy and security enforcement provisions, Business Associate requirements, and the interaction between HIPAA and the Genetic Information Nondiscrimination Act.  Proposed and interim final regulations addressing some of these topics were issued previously, but the final regulations provide the definitive requirements for compliance.

The final regulations require compliance by September 23, 2013. (The "effective date" is March 26, 2013, but compliance is not required until the later date.) The final regulations do not change the original compliance dates for the Privacy Rule (April 14, 2003), the Security Rule (April 20, 2005) or the interim final breach notification rule (September 23, 2009).

There is a special transition rule for compliance with the new Business Associate agreement (BAA) requirements: If a Covered Entity and a Business Associate had a BAA in place before January 25, 2013 that complied with all requirements in force at that time, and the BAA is not renewed or modified between March 26, 2013 and September 23, 2013, that BAA will be deemed compliant until the earlier of (1) the date the BAA is renewed or modified on or after September 23, 2013, or (2) September 22, 2014. The transition rule extends the time for the paperwork only—it does not extend the time allowed for the Covered Entity and the Business Associate to comply with the changes to the rules that govern the relationship between the Covered Entity and the Business Associate.

This Update summarizes some of the key changes made by the Omnibus Rule.

Business Associates

Definition of Business Associate

Under HIPAA, a Covered Entity may disclose “protected health information” (PHI) to its Business Associates, and allow Business Associates to create or receive such information, provided the parties meet certain requirements, such as executing a BAA.  The Omnibus Rule expands the definition of a Business Associate to, in some cases, include entities not previously regulated under HIPAA.

Specifically, “Business Associate” has been expanded to mean any entity that creates, receives, maintains or transmits PHI on behalf of a Covered Entity or an organized health care arrangement. Expressly included are health information organizations, e-prescription gateways and data transmission providers that require routine access to PHI, as well as persons offering personal health records to individuals on behalf of Covered Entities.

Consistent with the proposed rule, the Omnibus Rule also broadened the definition of Business Associate to include any downstream subcontractors of Business Associates.  According to HHS, a subcontractor is a person who has been delegated a function, an activity or a service that a Business Associate has agreed to perform on behalf of a Covered Entity or another Business Associate.  By expanding the definition to include subcontractors, HHS intended to ensure that the privacy and security protections under HIPAA, as well as any associated liability for noncompliance, followed an individual’s PHI, regardless of whether the entity creating, receiving, maintaining or transmitting the information contracted directly with a Covered Entity. 

Conduit Exception

The Omnibus Rule maintains the exception for entities that act as mere conduits to transport PHI but do not access the information other than on a random or infrequent basis. Whether an entity falls under the exception for mere conduits is a fact-specific analysis based on the nature of services an entity provides to a Covered Entity and the extent to which the entity needs access to PHI to perform these services. Generally speaking, the exception is narrow and applies only to entities providing data transmission services, such as mail couriers and their electronic equivalents, including ISPs that store any PHI only temporarily during its transmission. In contrast, entities that “maintain” PHI on behalf of a Covered Entity are considered Business Associates under the Omnibus Rule.  Accordingly, a data storage company that stores physical or electronic data and that has access to PHI is a Business Associate under the Omnibus Rule, regardless of whether that entity actually views the information being stored. 

Business Associate Agreements

In addition to executing BAAs with Covered Entities, Business Associates now must execute BAAs with any of their subcontractors that create, receive, maintain or transmit PHI on their behalf, and can be held liable for failing to enter into such agreements. 

Covered Entities and Business Associates must amend or revise their current BAAs to reflect the new requirements under the Omnibus Rule.  For example, BAAs will need to provide that:

  • The Business Associate will not only report any security incidents of which it becomes aware, but also any breaches of unsecured PHI (we discuss the breach notification rule elsewhere in this Update); and
  • To the extent a Covered Entity delegates any of its Privacy Rule obligations, the Business Associate will comply with the Privacy Rule in the performance of those obligations.

Marketing

The Omnibus Rule tightens the restrictions on the use or disclosure of PHI for marketing purposes by Covered Entities and Business Associates.  Prior patient authorization for nearly all treatment and health care operations communications where the Covered Entity is marketing the products or services of a third party and receives “financial remuneration” for making the communications (subsidized communications) is required.  The authorization must state that remuneration is involved but may apply broadly to subsidized communications so long as the authorization otherwise meets the requirements of a valid authorization.

As an exception to the subsidized communication authorization requirement, the Omnibus Rule permits the use of PHI for refill reminders and other communications about drugs or biologics that are currently prescribed for the individual if the financial remuneration is reasonably related to the Covered Entity's cost of making the communication.  The preamble to the Omnibus Rule suggests that permitted communications can include drug compliance information and information about the drug delivery system for self-administered drugs. In addressing what might be included in remuneration reasonably related to the Covered Entity's cost of making the communication, the preamble mentions labor, supplies and postage expenses as permissible costs.

Fundraising 

The Omnibus Rule allows a Covered Entity to use or disclose certain limited PHI without an authorization for purposes of raising funds for its own benefit.  However, to do so, a Covered Entity is required to include in each fundraising communication a clear and conspicuous opportunity for the individual to whom the PHI relates to elect not to receive further fundraising communications.  The opt-out method used cannot cause the individual to incur an undue burden or more than a nominal cost and a Covered Entity may not condition treatment or payment on the individual’s choice.

Enforcement

The Omnibus Rule adopts changes to the HIPAA enforcement rules required by the HITECH Act and not previously adopted in the October 2009 Interim Final Rule.  Under the Omnibus Rule, the HIPAA enforcement provisions clearly apply directly to Business Associates.  These new provisions address the investigation of complaints by HHS and the imposition of civil money penalties for violations due to "willful neglect." 

The Omnibus Rule incorporates the increased and tiered civil money penalty structure provided by the HITECH Act and published in the Interim Final Rule.  The tiered penalties (for violations occurring after February 18, 2009) tie ranges of penalty amounts to the culpability of the Covered Entity or Business Associate and whether problems were corrected within 30 days after the date the entity first acquired actual or constructive knowledge of the violation.  The Omnibus Rule specifies other factors that will be considered in determining the amount of the penalty, such as the number of individuals affected, the period of violations and the nature of the harm.  A maximum penalty of $1.5 million applies to all violations of an identical provision within a calendar year.  The methodology for counting violations remains unclear, however.

Individual Rights

The HIPAA Privacy Rule grants individuals various rights relating to PHI, including rights to:

  • Receive a Notice of Privacy Practices from the Covered Entity;
  • Request restrictions on the use and disclosure of PHI;
  • Request confidential communications of PHI;
  • Request access to the individual's own PHI;
  • Request an amendment of the individual's own PHI; and
  • Obtain an accounting of disclosures of PHI.

The changes to the contents of a Notice of Privacy Practices to be distributed to individuals are discussed elsewhere in this Update, and no changes have been made to the right to request confidential communications, an amendment to an individual's PHI or an accounting of disclosures of PHI.  (In 2011 HHS proposed changes to the rules relating to the accounting of disclosures, but those regulations have not been issued in final form and the accounting of disclosures is not addressed in the Omnibus Rule.)

Restrictions on Uses and Disclosures of PHI

Under the HIPAA Privacy Rule, an individual is permitted to request that the Covered Entity restrict both use and disclosure of PHI for treatment, payment or health care operations and disclosures to others who are involved in the individual's care or payment for that care.  For example, an individual who sees a physician to determine whether the individual is suffering from a sexually transmitted disease may request that the physician not disclose that information to the individual's adult child who is usually involved in the individual's health care.  In general, a Covered Entity is not required to agree to a requested restriction.  The final regulations add a provision that requires certain Covered Entities to agree to requests to restrict disclosure if the disclosure would be for the purpose of payment or health care operations, the disclosure is not otherwise required by law, and the PHI pertains only to a health care item or service for which the individual or another person (other than a health plan) has paid in full.  Under this new provision, if the individual requests that the physician not disclose information relating to treatment for a sexually transmitted disease to the individual's health plan, the physician would be required to agree to the restriction if the individual pays for the treatment in full and there is no law that requires the reporting of the sexually transmitted disease.

Request for Access to the Individual's PHI

Under the HIPAA Privacy Rule, an individual is permitted to request access to his or her PHI that is maintained in a designated record set and, with limited exceptions, a Covered Entity must grant that access (or provide a written explanation of why access is being denied) within 30 days after receipt of the request.  The HIPAA Privacy Rule allowed up to 60 days to provide access if the PHI is not maintained by the Covered Entity on-site.  The final regulations delete the provision granting this 60–day period. 

In addition, under the final regulations, if the requested PHI is maintained electronically, and the individual requests an electronic copy, the Covered Entity must provide the PHI in the electronic form and format requested by the individual if the PHI is readily producible in that form and format.  If the PHI is not readily producible in the requested form and format, the Covered Entity must provide the PHI in a readable electronic form and format that is acceptable to the individual.  Finally, under the final regulations, if an individual requests that his or her PHI be provided directly to another person, the Covered Entity must comply with the request if the request is in writing, signed by the individual, and identifies the designated person and where to send the PHI.

Notice of Privacy Practices: New Content and Distribution Requirements

Many Covered Entities are currently required to have and to distribute a Notice of Privacy Practices (Notice).  The Notice generally describes the Covered Entity’s permitted uses and disclosures, privacy practices, and legal duties, as well as an individual’s rights with respect to his or her PHI.  The Omnibus Rule amends the content requirements of the Notice to require:

  • A statement that (1) most uses and disclosures of psychotherapy notes (if the Covered Entity records or maintains psychotherapy notes); (2) uses and disclosures of PHI for marketing purposes; (3) disclosures that constitute a sale of PHI; and (4) uses and disclosures other than those described in the Notice, require an individual’s authorization and that such authorization may be revoked. 
  • If a Covered Entity intends to contact an individual for fundraising purposes, a statement of such intent and the individual’s right to opt out of receiving fundraising communications. 
  • For health care provider Covered Entities, a statement informing individuals (1) of the right to request the restriction of the disclosure of PHI to a health plan or other party, when the PHI relates solely to a health care item or service for which the individual, or another person on behalf of such individual (other than a health plan), has paid the Covered Entity; and (2) that the health care provider Covered Entity is required to agree to such request. 
  • For health plan Covered Entities (other than certain issuers of long-term care policies) that intend to use or disclose PHI for underwriting purposes, a statement that the health plan Covered Entity is prohibited from using or disclosing PHI that is genetic information about an individual for such purposes. 
  • A statement describing an individual’s right to be notified following a breach of unsecured PHI. 

The Omnibus Rule provides that the inclusion of these required statements constitutes a material change to the Notice and Covered Entities are required to inform individuals of such change.  The Omnibus Rule includes new avenues to provide such information with respect to health plan Covered Entities: 

  • With respect to a health plan Covered Entity that currently posts its Notice on its website, the Omnibus Rule requires that the Covered Entity (1) prominently post notice of the change to, or a copy of, the revised Notice on the website by the effective date of the change; and (2) provide a copy of the revised Notice, or information about the change and how to request a copy of the revised Notice, in the next annual mailing for the plan. 
  • With respect to a health plan Covered Entity that does not currently post its Notice on its website, the Omnibus Rule requires that the Covered Entity provide a copy of the revised Notice, or information about the change and how to request a copy of the revised Notice, within 60 days of the change. 

Breach Notification

Section 13402 of the HITECH Act requires Covered Entities to provide notification to affected individuals, to HHS and, in some cases, to the media following the discovery of a breach of unsecured PHI.  We’ve highlighted a few of the changes made by the final regulations.

  • “Breach” was redefined to include language clarifying that an impermissible use or disclosure of PHI is presumed to be a breach unless the Covered Entity or Business Associate, as applicable, demonstrates that there is a low probability that PHI has been compromised or that one of the other exceptions to the definition of “breach” applies. 
  • The harm standard has been removed, focusing the risk assessment more objectively on the risk that PHI has been compromised.  Thus, breach notification is not required if a Covered Entity or Business Associate, as applicable, demonstrates through a risk assessment that there is a low probability that PHI has been compromised, as opposed to demonstrating that there is no significant risk of harm to the individual, which the interim final rule included. 
  • The determination of whether PHI has been compromised is based on a risk assessment that considers at least the following factors as outlined in the final regulations:  (1) the nature and extent of PHI involved, including the types of identifiers and the likelihood of re-identification; (2) the unauthorized person who used PHI or to whom the disclosure was made; (3) whether PHI was actually acquired or viewed; and (4) the extent to which the risk to PHI has been mitigated.  Other factors may also be considered where necessary. 
  • The final regulations also remove the exception for limited data sets that do not contain any dates of birth and ZIP codes.  Hence, following the impermissible use or disclosure of any limited data set, a Covered Entity or Business Associate must perform a risk assessment that evaluates the factors discussed above to determine if breach notification is not required.

Implementation of Title I of the Genetic Information Nondiscrimination Act

The Genetic Information Nondiscrimination Act (GINA) prohibits discrimination based on an individual’s genetic information in the context of employment and health coverage.  Federal regulations implementing GINA's employment provisions (Title II) have been in place since November 2010, and regulations implementing GINA's health coverage provisions (Title I) have been in place even longer.  The Omnibus Rule modifies the HIPAA Privacy Rule to strengthen privacy protections for genetic information as mandated by Congress under the health coverage (Title I) provisions of GINA. 

The Omnibus Rule modifies the HIPAA Privacy Rule to provide specifically that "health information" includes "genetic information, whether oral or recorded in any form or medium" to the extent that such information is individually identifiable and held by an entity covered under HIPAA.  The Omnibus Rule also adopts and incorporates GINA's definition of "genetic information."  As a result of these modifications the HIPAA Privacy Rule now expressly prohibits most health plans from using or disclosing, for underwriting purposes, information about:

  • An individual’s genetic tests;
  • The genetic tests of the individual's family members;
  • Such individual's family members manifesting a disease or disorder; or
  • Any request for, or receipt of, genetic services, or participation in clinical research including genetic services, by the individual or any family member of the individual.

The Omnibus Rule's prohibition on the use or disclosure of genetic information for underwriting purposes applies to all health plans that are Covered Entities, with the exception of certain long-term care plans.  Acknowledging the importance of long-term care insurance coverage and the need to ensure its continued availability, HHS was persuaded during the rule-making process to exempt such long-term care plans from the prohibition on the use or disclosure of genetic information for underwriting purposes – at least until such time as HHS can gather "sufficient information to determine the proper balance between the individual's privacy interests and the industry's concerns about the cost effects of excluding genetic information."

Helpful Tips

  • Covered Entities should review their HIPAA policies and procedures to ensure compliance with the Omnibus Rule.  To the extent that any noncompliance is found, now is the time to begin the process of revising such policies and procedures to ensure compliance by the applicable deadline.
  • Notices should be reviewed to ensure that they accurately describe the policies and procedures to which they relate, including any changes required to be made under the Omnibus Rule, and that they comply with all of the new content requirements.
  • Health care provider Covered Entities should ensure that they have procedures in place to address and comply with individuals’ requests to restrict disclosure of PHI if the disclosure would be for the purpose of payment or health care operations, is not otherwise required by law, and the PHI pertains only to a health care item or service for which the individual or another person has paid in full.
  • Business Associate agreements should be reviewed to determine whether the transition guidance applies and by what date the agreements must be revised to satisfy the new content requirements.
  • Covered Entities should analyze whether, under the revised definition of Business Associate, they should have Business Associate agreements in place with other service providers with whom no such agreements currently exist.
  • Entities providing services to Covered Entities should analyze whether they are now considered Business Associates and are, as a result, subject to the enforcement rules.  If so, such entities should take steps to ensure compliance by the deadline.

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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  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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