Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE

The Department of Health and Human Services released final Health Insurance Portability and Accountability Act (HIPAA) privacy and security regulations on January 25, 2013. These regulations impact covered entities, including group health plans, most health care flexible spending accounts, and their business associates. The new rules were effective March 26, 2013, but covered entities and business associates generally have until September 23, 2013 to comply. The new rules also require the Department of Health and Human Services (HHS) to investigate HIPAA complaints and increase penalties for HIPAA violations. The regulations include four levels of violations with four tiers of penalties, ranging from $100 to $50,000 per violation to a maximum fine of $1.5 million.

Here are some things employers (on behalf of their group health plan or health care flexible spending account) should be doing now:

1. Review and Revise HIPAA Privacy Policies. Covered entities should pay special attention to policies such as: (a) the treatment of protected health information (PHI) of deceased persons. The plan may disclose PHI to family members or others involved in the decedent’s health care or payment for health care prior to the decedent’s death so long as the disclosure is relevant to the person’s involvement and is not inconsistent with the decedent’s express wishes; (b) access to electronic PHI. The plan must provide a copy of the PHI in electronic format if the participant requests it, and it is readily producible in such format; (c) response to request for access to PHI. The plan must respond to such requests within 30 days – the final rule eliminates the old provision that gave the plan extra time to respond if records are maintained offsite; (d) limits on disclosures to insurers or third-party administrators. The plan cannot disclose information about a participant’s care if the participant paid for the care and requests the information not be given to the insurer or third-party administrator; and (e) school immunization information may be disclosed to a school if state law requires such information for enrollment and the individual or his/her personal representative orally consents to such disclosure.

2. Review and Revise Breach Notification Procedures. Under the final regulations, the unauthorized access, use or disclosure of electronic PHI that compromises the security or privacy of PHI is presumed to be a reportable breach unless the plan or business associate can demonstrate there is a low probability the information has been compromised based on a risk assessment of certain factors, or the breach fits into certain exceptions. Plans should understand that discretion on deciding whether or not a breach must be reported has been severely curtailed, and must ensure that their breach notification procedures incorporate this new stricter standard.

3. Review and Revise Notice of Privacy Practices. Health plans must include certain information in the Notice of Privacy Practices, including a description of the types of information that require authorization, a statement that other uses or disclosures not described will require an authorization, a statement that a recipient of fundraising material may opt out of such material, a description of an individual’s right to limit disclosures if the patient paid for the care, and a statement that the plan must notify the affected individual of a breach of unsecured PHI. The revised notice must be posted electronically by September 23, 2013, or delivered 60 days later, by November 23, 2013.

4. Review and Revise Business Associate Agreements, if necessary. The HIPAA privacy and security rules now DIRECTLY apply to a covered entity’s business associates – in the past, the HIPAA provisions applied only by contract through the business associates agreement. Health plans are required to have agreements in place with their business associates (those entities acting on their behalf in a function involving PHI) before sharing PHI with those entities. Covered entities, including health plans, are responsible for the actions of business associates if the business associate is acting on their behalf, so may want to include indemnification language in the business associate agreement to protect themselves from actions of their business associate. The business associate agreement must require that the business associate complies with the HIPAA security rule, execute business associate agreements with their subcontractors, and report breaches of unsecured PHI to the covered entity. Agreements in place on January 25, 2013 generally must be modified by September 22, 2014. The OCR has provided sample business associate agreement language which can be found at: http://www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/contractprov.html

5. Train employees. Employers will need to train employees on the final regulations and changes to the plan’s policies and procedures.

Please contact us if we can be of assistance in updating your Notice of Privacy Practices, Business Associate Agreements or HIPAA policies and procedures.

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