What Is HIPAA? HIPAA Compliance and Law Explained

Alex Kehayias | May 11, 2024

What Is HIPAA? HIPAA Compliance and Law Explained

HIPAA is the rulebook for handling sensitive patient information in the healthcare field. It’s the law for how medical records and insurance details can be used and shared. If your business touches any aspect of healthcare, understanding HIPAA is a must — especially if you have employees across different locations.

You may be wondering about the reason for this. For one, HIPAA compliance protects patients. It also keeps your business out of hot water. Mistakes can cost you big time, both in fines and a tarnished reputation.

We’ll give you a good starting point for understanding and complying with HIPAA. Keep reading to find out why compliance matters in this sensitive area.

What Is HIPAA Law?

First, what does HIPAA stand for? HIPAA is an acronym for the Health Insurance Portability and Accountability Act. At its core, the HIPAA law protects sensitive patient data known as Protected Health Information (PHI) or Individually Identifiable Health Information.

This personal health information includes everything from name, address, and Social Security Number to medical records, diagnoses, and insurance details. Think of it as the most confidential file in a doctor’s office.

HIPAA regulations apply to specific players in the healthcare world:

  • Covered Entities (CEs): The frontline of healthcare. These include doctors, hospitals, clinics, health insurance plans, and healthcare clearinghouses (companies that process health data).

  • Business Associates (BAs): Companies that support covered entities and handle PHI. Think IT providers, billing companies, consultants, and cloud storage vendors.

Enacted by Congress in 1996, this federal law set national standards for protecting the privacy and security of an individual’s health information. It also addressed concerns about healthcare fraud and abuse and aimed to improve the efficiency of the healthcare system.

Understanding HIPAA is important for anyone handling patient data, ensuring both the privacy of individuals and the smooth flow of health information for optimal care.

HIPAA Privacy Rule and HIPAA Security Rule

Next, what does HIPAA protect? To answer this, we need to look at HIPAA’s two main pillars:

  • HIPAA Privacy Rule: This rule sets the ground rules for who can access and use PHI. It aims to give patients control over their health information.

  • HIPAA Security Rule: This focuses on protecting electronic PHI (ePHI). It mandates strict technical, physical, and administrative safeguards to secure sensitive data.

Together, the HIPAA Privacy Rule and HIPAA Security Rule form a comprehensive framework for protecting patient data. These rules work hand-in-hand to protect patient privacy and ensure the secure handling of both paper-based and electronic health records.

A key goal of HIPAA legislation is Administrative Simplification — streamlining how patient data is shared for efficiency and to help reduce healthcare costs.

Why HIPAA Compliance Matters: Penalties and Reputational Damage

Violating HIPAA is serious business. The Office for Civil Rights, the enforcement arm of the Department of Health and Human Services (HHS), can impose hefty penalties for noncompliance. “The purpose of HIPAA is to protect the patient and their privacy. The value of that privacy is priceless to individuals, which is why a breach of HIPAA can be so costly,” highlights Taylor Fike, Partner at Fike Advisors and Expert Contributor for Mosey.

HIPAA fines can reach up to $1.5 million per violation category per year. Worse yet, a HIPAA breach erodes patient trust, tarnishes your reputation, and can lead to costly legal troubles.

What Is HIPAA Compliance?

Achieving HIPAA compliance requires you to go beyond checking boxes. It’s important to cultivate a culture of security and privacy. This involves a combination of technical safeguards, tough policies, and a commitment to ongoing vigilance.

Physical and Technical Safeguards

Think of these as your digital and physical fortresses against unauthorized access to patient data. Here’s what they entail:

Technical Safeguards:

  • Encryption: Scrambling data to make it unreadable without the right key, even if it’s intercepted.

  • Access Controls: Think of these like virtual bouncers. Strict user authentication using strong passwords, two-factor authentication, and role-based permissions limit who can see what information.

  • Audit Logs: Meticulous records track who accessed what data and when, helping spot suspicious activity quickly.

Physical Safeguards:

  • Facility Access Controls: Secured doors, card readers, and surveillance systems safeguard buildings where PHI is stored or processed.

  • Workstation Security: Guidelines dictating where laptops and desktops containing PHI can be used and how screens should be positioned.

  • Device Disposal: Secure wiping or destruction of devices that previously held PHI to prevent data leaks.

  • Disclosure of PHI: Posting a disclosure of PHI lets users know which information systems contain vulnerable data.

Policies and Procedures

Written policies and procedures form the bedrock of HIPAA compliance. These policies and procedures should guide day-to-day operations.

Here are some essentials:

  • Risk Assessments: Regularly pinpointing vulnerabilities in your systems, physical spaces, and processes. This reveals the areas you need to strengthen.

  • Employee Training: An educated workforce is your best defense. Ongoing sessions on HIPAA rules, security practices, and the importance of data privacy regulations are necessary.

  • Breach Notification Policy: In the unfortunate event of a data breach, a clear plan outlines how to respond promptly, notify affected patients and the HHS, and minimize damage.

Well-defined policies and procedures protect you from HIPAA penalties. They also streamline operations, foster a culture of security-mindedness within your organization, and ultimately strengthen your patients’ trust in you.

What Are the Elements of Effective Compliance Programs?

The Office for Civil Rights created seven elements to provide a framework for rigid HIPAA compliance programs. Implementing them demonstrates a commitment to protecting patient data and can mitigate penalties in case of a breach.

Appointing HIPAA Compliance Officers

A dedicated compliance officer (or committee) oversees HIPAA implementation and enforcement within your organization. This individual ensures up-to-date policies, conducts risk assessments, coordinates staff training, and acts as the point of contact for HIPAA-related concerns.

Creating Thorough Policies and Procedures

Clear, detailed policies and procedures are the heart of compliance. They define how your organization handles PHI in areas like access controls, data storage, incident response, and more. Regularly updated policies ensure compliance with current regulations and best practices.

Extensive Staff Training and Education

Every employee who interacts with PHI requires in-depth HIPAA training. This includes healthcare providers, administrators, IT staff, and anyone with access to sensitive data. Ongoing training and refresher sessions keep everyone aware of their obligations and reinforce the importance of data security.

Clear Lines of Communication for Reporting Issues

Creating an open and non-punitive environment for reporting potential breaches or security incidents is important. Employees must know who to contact and how to report suspected issues without fear of reprisal. This facilitates early detection and swift responses that can minimize harm.

Regular Audits and Monitoring Systems

Regular internal HR audits and audits of IT systems, physical security, and administrative procedures are essential for spotting potential vulnerabilities. Ongoing monitoring of network activity and access logs helps detect unauthorized access attempts and flags unusual behavior for investigation.

Enforcing Compliance Through Disciplinary Measures

Well-publicized disciplinary guidelines for HIPAA violations underscore the seriousness of compliance. Consequences should be proportional to the severity of the violation but serve as a deterrent to negligence or intentional misconduct that could compromise PHI.

Quick Response and Corrective Actions if a Breach Occurs

Even with the best safeguards, breaches can happen. Having a comprehensive breach response plan is essential. This involves promptly notifying affected individuals and the HHS, containing the breach, investigating the root cause, and taking corrective actions to prevent future incidents.

A Note on Proportionality

The OCR recognizes that not every organization has the same resources. When evaluating compliance, they consider your company’s size, depth, and capabilities. The goal is to implement these elements to the best of your ability, demonstrating good faith in protecting PHI.

What Are the Consequences of HIPAA Noncompliance?

Slipping up on HIPAA compliance can have far-reaching consequences, ranging from hefty fines to lasting reputational damage.

Understanding the repercussions underscores the importance of proactive compliance efforts for any organization handling sensitive health information.

This is especially important for those operating under the Health Insurance Portability and Accountability Act of 1996.

Types of HIPAA Violations

HIPAA violations come in a variety of forms, some more serious than others:

  • Unauthorized Access or Disclosure: This involves accessing or sharing PHI without proper authorization. Examples include snooping on patient records, sharing PHI inappropriately, or data theft by hackers.

  • Lack of Safeguards: Failure to implement the necessary physical, technical, or administrative safeguards to protect PHI. This could mean weak passwords, unencrypted Electronic Protected Health Information, outdated software, or a lack of physical security measures.

  • Breach Notification Failures: Not notifying affected individuals and the Department of Health and Human Services within the strict timeframes required after a breach, as mandated by the Breach Notification Rule.

  • Inadequate Training: Neglecting to adequately train employees on HIPAA regulations and proper data handling practices, leading to unintentional breaches.

These violations highlight the many ways in which PHI can be compromised and underscore the need for all covered entities and business associates to prioritize HIPAA compliance. Protecting patient data maintains trust and demonstrates a commitment to the well-being of those you serve.

HIPAA Penalties with the Four-Tier System

The Office for Civil Rights imposes penalties for HIPAA violations based on their severity and level of culpability. This four-tier system reflects whether the legal entity knew, or should have known, about the violation:

  • Unknowing (Tier 1): Lowest severity, with fines ranging from $100-$50,000 per violation.

  • Reasonable Cause (Tier 2): The organization should have been aware of the violation. Fines range from $1,000-$50,000 per violation.

  • Corrected Willful Neglect (Tier 3): The organization consciously disregarded HIPAA but fixed the issue within 30 days. Fines range from $10,000-$50,000 per violation.

  • Not Corrected Willful Neglect (Tier 4): The most severe category, demonstrating a blatant disregard for HIPAA rules. Remember, fines for this tier can reach a staggering $1.5 million per violation category per year.

These escalating penalties serve as a stark reminder that HIPAA compliance isn’t optional. Organizations handling PHI must take their responsibilities seriously to avoid severe financial repercussions that can damage their financial standing and reputation.

Examples of Noncompliance

To drive home the real impact of HIPAA violations, let’s look at a few hypothetical scenarios:

  • Hospital A experiences a data breach when unencrypted patient records are stolen from a misconfigured server. Inadequate safeguards result in hefty fines and a major blow to patient trust.

  • Clinic B fails to notify patients promptly after a staff member accidentally emails PHI to the wrong individuals. This breach notification delay draws the OCR’s attention, leading to costly penalties.

  • Insurance Company C has a history of lax employee training on HIPAA. This results in recurring incidents of unauthorized PHI access, eventually triggering an OCR audit, fines, and corrective actions.

HIPAA noncompliance carries significant financial and reputational risks. Investing in security measures, thorough training, and proactive compliance efforts are crucial safeguards for both your business and the patients you serve.

What Are Some Recent HIPAA Updates?

The healthcare data privacy industry is constantly evolving. To maintain HIPAA compliance, it’s essential for covered entities and business associates to stay informed about recent updates and regulatory shifts from the Department of Health and Human Services.

Here are some key developments to be aware of:

Information Blocking Rule (21st Century Cures Act)

Effective April 5, 2021, this rule aims to improve patient access to their health information and promote interoperability among electronic health record (EHR) systems.

It prohibits any practices that could be considered “information blocking,” which includes actions that interfere with the sharing of electronic health information (EHI). Noncompliance carries the potential for hefty penalties.

OCR’s Right of Access Initiative

Launched in 2019, this initiative underscores patients’ fundamental right under HIPAA to receive timely access to their medical records, often in an electronic form and for a reasonable fee.

The Office for Civil Rights has been aggressively enforcing this right through investigations and penalties against healthcare providers who obstruct access or charge excessive copying fees.

Ransomware Guidance

In response to the growing threat of ransomware attacks on the healthcare industry, the OCR released guidance in June 2021. This highlights the importance of having a cybersecurity program in place to prevent and respond to ransomware threats.

The guidance emphasizes data backups, employee training, and incident response health plans as crucial protection measures.

Telehealth Flexibilities

The COVID-19 pandemic spurred a surge in telehealth adoption, leading to temporary relaxations in certain HIPAA rules. This allowed healthcare providers to use non-public-facing communication tools for patient care.

It’s essential for organizations utilizing telehealth to monitor the latest HHS guidelines, as some flexibilities may be phased out while others might become a permanent fixture in public health.

Resources for Staying Informed

Subscribing to reputable HIPAA news sources like the HIPAA Journal is a great way to stay on top of the latest updates and regulatory changes. The HHS website, particularly the Office for Civil Rights section, also provides valuable resources and guidance on HIPAA compliance.

It’s always advisable to consult a legal professional for specific advice on how these updates might impact your organization’s HIPAA compliance obligations.

Ensure Business Compliance with Mosey

Keeping your business compliant shouldn’t feel like a constant battle. Mosey can be your secret weapon, helping to keep your company on track with practical tools and guidance. From generating tailored policies to making it easier to manage state compliance tasks, Mosey cuts through the confusion.

Want to see Mosey in action? Book a demo today, and let us show you how we take the stress out of protecting patient data and safeguarding your business.

Read more from Mosey:

Review your compliance risks, free.

Ready to get started?

Sign up now or schedule a free consultation to see how Mosey transforms business compliance.