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Increased Penalties for Healthcare Privacy and Security Violations? Batten Down the Hatches!

The 2009 HITECH Act authorized the Health and Human Resources Office for Civil Rights (HHS OCR) to add teeth to existing security and privacy regulations, and they’ve obviously taken the responsibility seriously.

On the same day that HHS OCR imposed a whopping $4.3 million dollar fine on Maryland-based Cignet Health for violating a provision of the HIPAA Privacy Rule, we also learned that HHS OCR intends to tighten healthcare data breach regulations further and to increase financial penalties across the board for privacy and security violations.

The Cignet Health fine was the first civil fine issued specifically under the existing provision of the Privacy Rule which requires covered entities to provide copies of patients’ health records within 30 days of request. As you may know, as covered entities (CE) and eligible professionals (EP) move to electronic health records (EHR), the time limit for responding to a patient’s request for access will become even shorter. To qualify for meaningful use incentives, an EP must provide EHR access within 4 business days. More recently, OCR suggested that, if patients request copies of the protected health information (PHI) and it is not readily available in the format requested, they must be directed to their EHR.

A senior OCR health IT and privacy advisor spoke at HIMMS11 this week. In addition to confirming that the final privacy, security and breach notification rules will be issued simultaneously in 2011, he got everyone’s rapt attention by announcing increases in financial penalties for privacy and security violations. This raises the security stakes considerably. The penalty for a single violation will be increased to $50,000 with a maximum penalty per year of $1.5 million per each provision of the rules. Since many breach incidents can include multiple violations, the corresponding fines could be huge.

Further, OCR is expanding the requirements for business associates. They will now assume direct liability for adhering to privacy and security rules 240 days after the final rules are issued. Subcontractors will also be held to the same standard as business associates. Currently business associates can only be found directly liable under the breach notification rule.

While it’s been publicly reported that over 220 organizations have suffered large data breaches (each impacting >500 individuals), we also got the stunning details that the OCR has been notified of more than 14,000 smaller breaches of PHI (each affecting <500 individuals).

As we noted in Redspin’s 2010 Protected Health Information Breach Report, theft or loss of portable devices such as laptops caused >65% of large breaches. But portable media is here to stay. Instead of trying to restrict where sensitive data is taken, adopt a more data driven view and protect it where it is stored. Solutions like Imation’s Defender product line (encrypted storage: flash, external hard drive and optical) may be right for your organization.

Clearly OCR also understands that business associates are data rich targets and will likely encounter an increase in malicious activity. At present, covered entities must extend their oversight of their business associates IT environment and security posture. This should be included in the CE’s HIPAA Risk Analysis. And with the impending extensions of direct liability to business associates, those organizations should also start preparing to conduct security assessments of their own. And sooner not later.

Of course, at Redspin we think every organization that handles ePHI should have a process in place for external security testing, remediation, validation and retesting. As security consultants, you may think our view is self serving but we consider it an issue in the common interest. After all, even security consultants are healthcare patients at one time or another! We’re all in the same boat – when malevolent storms or hackers strike, we want to avoid data leakage and protect our privacy. So “batten down the hatches – quick men!” (Chambers Journal, 1883)

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