United States: HIPAA Happenings - The New HITECH Act Megarule

Shannon Hartsfield Salimone is a Partner in our Tallahassee office

Way back on February 17, 2009, Congress passed a stimulus bill that contained provisions referred to as the Health Information Technology for Economic and Clinical Health ("HITECH") Act.1 The HITECH Act was geared toward encouraging members of the healthcare industry to adopt and standardize health information technology, and included provisions augmenting the Health Insurance Portability and Accountability Act's ("HIPAA") privacy and security provisions by increasing penalties and expanding HIPAA's reach to business associates, among other things. On July 14, 2010, the federal Department of Health and Human Services' ("HHS") Office for Civil Rights ("OCR") issued a Notice of Proposed Rulemaking relating to certain sections of the HITECH Act.

Two and a half years after publication of those proposed rules, on January 17, 2013, the health industry got a huge dose of HIPAA upon OCR's release of a 563-page pre-publication version of what have become known as the "omnibus" HITECH Act rules, or the "Megarule."2 The January 25, 2013 edition of the Federal Register contains the official version.3 The Megarule is actually a group of regulations finalizing four sets of proposed or interim final rules. OCR combined final versions of four separate sets of regulations in an effort to reduce the number of times regulated entities would need to undertake certain compliance activities. The four main topic areas covered are discussed below.

The Megarule implements changes to the HIPAA Privacy, Security and Enforcement Rules as mandated by the HITECH Act. It also changes and finalizes the interim final breach notification rules,4 makes certain modifications to the interim final enforcement rule,5 and makes changes to implement provisions of the Genetic Information Nondiscrimination Act of 2008 ("GINA").

I. FINALIZATION OF BREACH NOTIFICATION RULES FOR UNSECURED PROTECTED HEALTH INFORMATION

Since publication of the August 24, 2009 interim final HITECH Act rules regarding breach notifications, members of the healthcare industry have debated vigorously the provisions of those rules allowing breach notifications to be avoided if there is not a sufficient risk of harm. The Megarule sets out a more objective and detailed standard, which may result in more breach notifications in the future. This is because situations involving impermissible access, acquisition, use or disclosure of protected health information are now presumed to be a breach unless the covered entity or business associate is able to demonstrate that there is a low probability that the information has been compromised. The interim final rule continues to apply until the enforcement deadline for the new provisions. The four factors that must now be considered in a risk assessment used to determine whether protected health information has been compromised are set forth in the definition of a "breach" found in the new version of 45 CFR 164.402 and include:

  • the nature and extent of the protected health information involved, including the types of identifiers and the likelihood of re-identification
  • the unauthorized person who used the protected health information or to whom the disclosure was made
  • whether the protected health information was actually acquired or viewed
  • the extent to which the risk to the protected health information has been mitigated

OCR still recognizes that there are situations where an unauthorized use, disclosure, access or acquisition is very inconsequential and may not warrant notification. Covered entities and business associates will have to consider each situation carefully.

II. HIPAA AND HITECH ACT MODIFICATIONS

The Megarule contains few surprises, and, aside from a change to the breach notification requirements discussed above, do not depart substantially from the proposed rules. HHS received only about 300 comments on the proposed rules. The Megarule finalizes a number of changes that will be significant for the healthcare industry.

A. Business Associate Requirements 

The Megarule implements the HITECH Act's expansion of HIPAA to business associates. Under the new Megarule, business associates are required to comply with specific HIPAA privacy and security provisions.

1. Business Associates vs. Subcontractors

The July 2010 proposed rules surprised some in the healthcare industry by extending HIPAA's requirements, not just to business associates, but to subcontractors that handle protected health information on behalf of business associates. The Megarule defines a "business associate" to include subcontractors and agents that receive, create, maintain or transmit protected health information on behalf of the business associate. A business associate does not include a third party that receives protected health information from a business associate for the business associate's own management and administration or legal responsibilities. The business associate does, however, have to obtain reasonable assurances from the recipient of the information that the information will be maintained confidentially and used or further disclosed only as required by law or for the purposes for which it was disclosed. Business associates do not include healthcare providers that receive protected health information from a covered entity for treatment purposes.

2. Clarification of Business Associate Status of Certain Entities

The Megarule clarifies whether certain entities are business associates, and the discussion in the preamble to the regulations provides useful insight on a number of questions related to these entities. For example, a bank would not normally be a business associate, but it would be if it is performing services that go beyond payment processing, such as providing accounts receivable functions to a healthcare provider. While a medical liability insurance company would not usually be characterized as a business associate, such a relationship could arise if the insurer is performing other services, such as risk management, assessment activities or legal services.

Entities commenting on the proposed rules asked for clarification regarding the types of service providers that would not be business associates. The final Megarule includes in the definition of "business associate" health information organizations, e-prescribing gateways, and other persons providing data transmission services and that require "routine access" to such information, as well as a person who offers a personal health record to patients on behalf of a covered entity. In the preamble of the Megarule, OCR indicated that the exception for conduits like the U.S. Postal Service, other couriers and their electronic equivalents, such as Internet service providers, is very narrow. A conduit is an entity that transports information but does not access it other than on a random or infrequent basis. On the other hand, if a data storage company stores or maintains protected health information on behalf of a covered entity on more than a temporary basis incident to a data transmission, that entity is a business associate, "even if the entity does not actually view the information."6

B. Limits on Fundraising and Marketing

Under the Megarule, covered entities and business associates have specific new parameters on uses and disclosures of protected health information for fundraising and marketing. Fundraising communications must include a clear and conspicuous opportunity to opt out of receiving further communications. Treatment or payment may not be conditioned on the individual's agreement to receive fundraising communications. A broader range of information may be used for fundraising purposes,7 however. Specifically, in addition to the information listed in the existing rules, the omnibus rules allow covered entities to use the treating physician's name, department of service information, health insurance status and outcome information in crafting their fundraising documents.

The Megarule contains additional specificity regarding HIPAA's marketing restrictions. The Megarule still allows covered entities to receive financial remuneration to provide refill reminders or to send out other communications about a drug or biologic currently prescribed for the patient. The financial remuneration received by the covered entity must be reasonably related to the covered entity's costs associated with making the communication. Additionally, a number of other communications are not considered "marketing," including communications for treatment, case management, care coordination or describing health-related products or services provided by the covered entity, as long as the covered entity does not receive financial remuneration in exchange for making the communication. "Financial remuneration" means direct or indirect payment from or on behalf of a third party whose product or service is being described.

C. Notices of Privacy Practices

The Megarule requires modifications to and redistribution of a covered entity's notice of privacy practices. Notices of privacy practices must be updated to include a description of the types of uses and disclosures that require an authorization. The notices must also explain, if applicable, that the individual has a right to opt out of fundraising communications. If the covered entity is a health plan that uses protected health information for underwriting purposes, in accordance with GINA, the notice must state that genetic information may not be used for that purpose. Notices must also state that the covered entity is required to notify affected individuals following a breach of unsecured protected health information.

Not all health plans have to provide the notice to covered individuals within 60 days of a material revision. Instead, if the health plan has a website, the plan may post the notice prominently on that site, and then provide information about the material change and how to obtain the revised notice in its next annual mailing to covered individuals. A health plan that does not post its notice on its website must still provide the notice, or information about the change and how to obtain the revised notice, to individuals within 60 days of the material revisions.

D. Research

Researchers may find some useful changes in the new Megarule. HHS's National Institutes of Health published guidance on HIPAA's impact on research repositories and databases.8 This guidance indicated that a single authorization may cover uses and disclosures for two different research studies, such as where one study collects information and also stores tissues for future research. If provision of research-related treatment, payment or benefits eligibility was conditioned on the patient signing only one of the authorizations and not the other, however, the guidance stated that the documents could not be combined. The Megarule clarifies that an authorization for the use or disclosure of protected health information for a research study may be combined with another authorization to create or maintain a research database or repository. Research authorizations may be combined even if one of the authorizations must be signed as a condition of obtaining treatment, as long as that portion of the authorization is clearly differentiated from the rest of the document.

E. Immunization Records

The Megarule allows covered entities to make certain disclosures to schools where the individual is a student or prospective student. Specifically, immunization records may be disclosed to a school if the school is required by law to have the information, and the covered entity obtains and documents that the individual, or the individual's parent or guardian, agreed to the disclosure.

F. Decedents

The Megarule changes the definition of "protected health information" to indicate that the HIPAA Privacy and Security Rules do not apply to the information of individuals who have been dead for more than 50 years. The Megarule also makes it clear that, when a patient dies, a covered entity may disclose protected health information to a family member or close personal friend to the extent the information is relevant to the family member or friend's involvement in the patient's healthcare prior to death and the disclosure is consistent with any prior expressed preference of the individual.

G. Sale of Protected Health Information

The HITECH Act prohibits the sale of protected health information, with certain exceptions. The new Megarule provides specific guidance regarding circumstances that would constitute a prohibited sale. The receipt of remuneration from or on behalf of the recipient of protected health information is prohibited, with very limited exceptions. Information can be sold for certain purposes related to public health; research (where the remuneration is limited to a reasonable cost-based fee); treatment and payment purposes; or the sale, transfer, merger or consolidation of all or part of a covered entity. Business associates may also be paid for activities that the business associate undertakes on behalf of a covered entity as long as the only remuneration provided is by the covered entity to the business associate. Similar transactions between business associates and subcontractors are also permitted. Remuneration is also permitted in connection with certain other transactions, including providing health information to the individual who is the subject of the information, provision of protected health information as required by law, and other exchanges consistent with HIPAA where the only remuneration received by the covered entity or business associate is reasonable and covers the cost of preparing and transmitting the protected health information, or if information is transferred for a fee expressly permitted by another law.

H. Requests for Restrictions

Normally, covered entities do not have to agree if an individual requests restrictions related to a use or disclosure of his or her protected health information that is otherwise allowed under HIPAA. However, HITECH created an exception for certain healthcare services for which the patient pays out-of-pocket in full. The Megarule contains language implementing this requirement. Specifically, covered entities must agree to restrict disclosures of protected health information about the individual if the disclosure is for payment or healthcare operations purposes, is not required by law, and the protected health information pertains solely to a healthcare item or service for which the individual, or someone on the individual's behalf other than the health plan, has paid the covered entity in full.

I. Access to Protected Health Information

If an individual requests protected health information that is maintained electronically in a designated record set, the Megarule provides that the covered entity must provide the individual with electronic access in a form and format requested by the individual, if the information is readily producible in such format. If the information is not readily producible in that format, it must be given to the individual in a readable electronic form and format as mutually agreed by the covered entity and individual. The Megarule indicates that, if an individual requests that the covered entity send protected health information directly to a third party, the covered entity must send the information to that third party. To accomplish this, the individual must sign a written request that clearly identifies the third party.

III. ADOPTION OF HIPAA ENFORCEMENT RULE CHANGES

Changes to HIPAA enforcement provisions were published as an interim final rule on October 30, 2009.9 The Megarule adopts changes to the HIPAA Enforcement rule to implement the HITECH Act's civil money penalty structure that increased financial penalties for violations.

IV. FINAL HIPAA CHANGES RELATED TO GINA

The Megarule prohibits most health plans from using or disclosing genetic information for underwriting. Underwriting purposes include a number of activities, including determining eligibility, computation of premiums, application of preexisting condition exclusions and other activities related to the creation, renewal or replacement of a health insurance or health benefit contract.

Remaining Questions and Next Steps

The Megarule does not address all of the proposed rules implementing the HITECH Act provisions. For example, the industry is still waiting for final accounting rules, which were published in proposed form in May of 2011.10

The Megarule will be effective on March 26, 2013. Covered entities and business associates will still have an additional 180 days beyond that to achieve compliance with most of the regulatory provisions. Certain existing business associate agreements can remain in force for an additional year. Virtually all members of the healthcare industry will need to examine their privacy and security policies immediately to determine what changes will be needed to address the new requirements.

This alert originally appeared as an article in the January 2013 HIPAA Megarule Special Edition of the ABA e-newsletter ABA Health eSource.

Footnotes

1 See American Recovery and Reinvestment Act of 2009, Pub. Law 111-5.

2 Available at https://s3.amazonaws.com/public-inspection.federalregister.gov/2013-01073.pdf.

3 HHS, Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules under the Health Information Technology for Economic and Clinical Health Act and the Genetic Information Nondiscrimination Act; Other Modifications to the HIPAA Rules, 78 Fed. Reg. 5566 (Jan. 25, 2013).

4 OCR, HHS, Interim Final Rule With Request for Comments, Breach Notification for Unsecured Protected Health Information, 74 Fed. Reg. 42740 (Aug. 24, 2009).

5 HHS, Interim Final Rule, HIPAA Administrative Simplification: Enforcement, 74 Fed. Reg. 56123 (Oct. 30, 2009).

6 See 78 Fed. Reg. at 5572.

7 See 45 C.F.R. §164.514(f).

8 Available at http://privacyruleandresearch.nih.gov/research_repositories.asp (visited Jan. 23, 2013).

9 HHS, Interim Final Rule, HIPAA Administrative Simplification: Enforcement, 74 Fed. Reg. 56123 (Oct. 30, 2009).

10 OCR. HHS, Notice of Proposed Rulemaking, HIPAA Privacy Rule Accounting of Disclosures Under the Health Information Technology for Economic and Clinical Health Act, 76 Fed. Reg. 31426 (May 31, 2011).

www.hklaw.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
McLane Middleton, Professional Association
Bradley Arant Boult Cummings LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
McLane Middleton, Professional Association
Bradley Arant Boult Cummings LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions