In an evolving world of cyber terrorism where individuals such as Edward Snowden grab headlines by stealing national secrets, it should come as no surprise that protected healthcare information (“PHI”) kept by providers has become a “target rich environment” for foreign governments and individual hackers alike. In addition to threats from outside entities, healthcare providers must also realize and appreciate that state and federal regulatory and statutory requirements govern the creation, maintenance and protection of PHI, including through but not limited to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the Health Information Technology for Economic and Clinical Health (“HITECH”) Act.  Failure to abide by these complex and stringent rules can lead to significant penalties. 

As discussed in my prior post, recent massive data breaches at major retailers and health insurance providers paint a bleak picture of modern data and emphasize the importance of strong security safeguards and plans for handling suspected security breaches for electronic protected health information (“ePHI”). In the healthcare context, a security breach of a covered entity or a Business Associate’s (BA) data security system triggers the Security Rule and can trigger certain breach notification requirements under Health Insurance Portability and Accountability Act (“HIPAA”) and Health Information Technology for Economic and Clinical Health Act (“HITECH”). This post will discuss the investigation needed to determine whether a breach has taken place, while the next post will discuss the necessary notifications in the event of a breach.

Pursuant to the HIPAA Final Omnibus Rule (“Final Rule”), covered entities and their business associates were required to enter into new business associate agreements (“BAAs”) or modify existing BAAs by Sept. 23, 2013. However, existing BAAs that (i) were entered into on or before Jan. 25, 2013; (ii) met the requirements that were applicable prior to the promulgation of the Final Rule; and (iii) were not modified after March 26, 2013, have until Sept. 23, 2014 to be updated. That deadline is quickly approaching.

On Tuesday, I shared information about the U.S. Health and Human Services (“HHS”) Office of Civil Rights’ (“OCR”) first settlement with a medical practice for alleged violations of the breach notification provisions of the Health Information Technology for Economic and Clinical Health (“HITECH”) Act. The $150,000 settlement was made with Adult & Pediatric Dermatology, P.C., (“the Practice”) after the entity reported a stolen jump drive that contained PHI of approximately 2,200 patients.

Before a covered entity can use cloud storage for ePHI, the covered entity must enter into a business associate agreement (BAA) with the cloud vendor.[i]  It seems that there is some uncertainty surrounding this requirement, with some cloud vendors taking the position that a BAA is unnecessary for passive storage of ePHI or that they qualify for an exception under HITECH Act as a personal health records vendor.

Virtual or “cloud” data storage is an increasingly popular method for storing data electronically in a safe and yet conveniently accessible manner that may also represent a cost savings over traditional onsite data storage options.  Health care providers, including hospitals, pharmacies and physicians, have been slow to avail themselves of the benefits of “cloud computing” due in part to concerns about whether the cloud offers the rigorous privacy and security safeguards required for storing electronic protected health information (ePHI) under Federal and State privacy laws, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH Act) and implementing regulations.