HIPAA

Protected Health Information (HIPAA)

The Health Insurance Portability and Accountability Act(HIPAA) was enacted by the U.S. Congress in 1996. According to the Centers for Medicare and Medicaid Services (CMS) website, Title I of HIPAA protects health insurance coverage for workers and their families when they change or lose their jobs.

HIPAA regulations define health information as "any information, whether oral or recorded in any form or medium" that:

• "Is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or health care clearinghouse"
• "Relates to the past, present, or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past, present, or future payment for the provision of health care to an individual."
  

It is worth emphasizing that while HIPAA's primary privacy concern is health information exchanged or stored electronically, the Privacy Rule also reaches to data "[t]ransmitted or maintained in any other form or medium." That includes paper records, fax documents and oral communications.

In contrast, HIPAA's Security, Identifier, and Transaction and Code Set rules only cover electronic information. For details on what is and is not "electronic" see the discussion of Security Rule applicability.

Protected health information (PHI) under HIPAA includes any individually identifiable health information. Identifiable refers not only to data that is explicitly linked to a particular individual (that's identified information). It also includes health information with data items which reasonably could be expected to allow individual identification.

De-indentified information is that from which all potentially identifying information has been removed. (HIPAA also has a provision for a limited data set, from which most but not all potentially identifying information has been removed.)

Note that the definition of PHI excludes individually identifiable health information in education records covered by the Family Educational Rights and Privacy Act. It also excludes employment records held by a covered entity in its role as employer.

HIPAA

Title II of HIPAA, the Administrative Simplification (AS) provisions, requires the establishment of national standards for electronic health care transactions and national identifiers for providers, health insurance plans, and employers.

The Administrative Simplification (AS) provisions also address the security and privacy of health data. The standards are meant to improve the efficiency and effectiveness of the nation's health care system by encouraging the widespread use of electronic data interchange in the US health care system.

Title I: Health Care Access, Portability, and Renewability

Title I of HIPAA regulates the availability and breadth of group and individual health insurance plans. It amends both the Employee Retirement Income Security Act and the Public Health Service Act.

Title I prohibits any group health plan from creating eligibility rules or assessing premiums for individuals in the plan based on health status, medical history, genetic information, or disability. This does not apply to private individual insurance.

Title I also limits restrictions that a group health plan can place on benefits for preexisting conditions. Group health plans may refuse to provide benefits relating to preexisting conditions for a period of 12 months after enrollment in the plan or 18 months in the case of late enrollment. However, individuals may reduce this exclusion period if they had health insurance prior to enrolling in the plan. Title I allows individuals to reduce the exclusion period by the amount of time that they had “creditable coverage” prior to enrolling in the plan and after any “significant breaks” in coverage. “Creditable coverage” is defined quite broadly and includes nearly all group and individual health plans, Medicare, and Medicaid. A “significant break” in coverage is defined as any 63 day period without any creditable coverage.

Title I also forbids individual health plans from denying coverage or imposing preexisting condition exclusions on individuals who have at least 18 months of creditable group coverage without significant breaks and who are not eligible to be covered under any group, state, or federal health plans at the time they seek individual insurance.

Title II: Preventing Health Care Fraud and Abuse; Administrative Simplification; Medical Liability Reform

Title II of HIPAA defines numerous offenses relating to health care and sets civil and criminal penalties for them. It also creates several programs to control fraud and abuse within the health care system. However, the most significant provisions of Title II are its Administrative Simplification rules. Title II requires the Department of Health and Human Services (HHS) to draft rules aimed at increasing the efficiency of the health care system by creating standards for the use and dissemination of health care information.

These rules apply to “covered entities” as defined by HIPAA and the HHS. Covered entities include health plans, health care clearinghouses, such as billing services and community health information systems, and health care providers that transmit health care data in a way that is regulated by HIPAA.

Per the requirements of Title II, the HHS has promulgated five rules regarding Administrative Simplification: the Privacy Rule, the Transactions and Code Sets Rule, the Security Rule, the Unique Identifiers Rule, and the Enforcement Rule.

The Privacy Rule

The Privacy Rule is the most complex of the four, setting standards for how protected health information (PHI) "in any form or medium" should be controlled. (HIPAA's other rules cover only electronic information.) This Rule took effect in April 2003 for large entities, and a year later for small ones. (For details, see the HIPAA compliance calendar.) Privacy Rule protections extend to every patient whose information is collected, used or disclosed by covered entities. It imposes responsibilities on the entire workforce of a covered entity -- including all employees and volunteers -- in order to secure those rights. It also requires contractual assurances for any business associates of health care institutions that handle health care information on a covered entity's behalf. States have many laws and regulations that address health information. HIPAA adds its protections to those the states provide. In most cases, where state requirements are stricter they remain in force; HIPAA does not preempt them. Put differently, the Privacy Rule establishes a federal floor for health privacy, but not a ceiling.

In its most visible change, the Privacy Rule requires covered entities to provide patients with a Notice of Privacy Practices. The Notice must describe, in general terms, how organizations will protect health information, and specify the patient's right to:

• Gain access to and, if desired, obtain a copy of his or her own health records
• Request corrections of errors that the patient finds (or include the patient's statement of disagreement if the institution believes the information is correct)
• Receive an accounting of how their information has been used (including a list of the persons and institutions to whom or which it has been disclosed)
• Request limits on access to, and additional protections for, particularly sensitive information
• Request confidential communications (by alternative means or at alternative locations) of particularly sensitive information
• Complain to the facility's privacy officer if there are problems
• Pursue the complaint with the US Department of Health and Human Services' Office of Civil Rights if the problems are not satisfactorily resolved
  

A copy of the Privacy Notice must be provided the first time a patient sees a direct treatment provider, and any time thereafter when requested. On that first visit, treatment providers must also make a good faith effort to obtain a written acknowledgment, confirming that a copy of the Notice was obtained. Health plans and insurers must also provide periodic Notices to their customers, but do not need to secure any acknowledgment.
HIPAA requires no other documentation from the patient to use or disclose information for basic functions, like treatment and payment, or for a broad range of other core health care operations. State laws may nonetheless require some kind of consent or authorization form from the patient for these purposes. (It is common for institutions to claim, incorrectly, that HIPAA does.)

By contrast, the Privacy Rule does require that patients sign a supplemental authorization before information can be used for certain "extra" purposes like research, or certain kinds of marketing and fund raising. Health care institutions cannot condition treatment or payment for health care services on receiving a patient's authorization for such supplemental uses.

The general approach of the Rule beyond that is: If a person has a right to make a health care decision, then he or she has the right to control information associated with that decision. Children and those who are incompetent may have decisions about both health care and health information made by a personal representative. (Typically, the personal representative is the parent in the case of a child.) HIPAA extends extra protections for especially sensitive information -- notably psychotherapy notes, which require a supplemental authorization for release. Genetic information issues are not yet addressed by HIPAA, nor does HIPAA extend any special protections to HIV, substance abuse or other information categories that often receive special treatment in state law.

Although the Privacy Rule is complicated (to put it mildly) it does have an overall scheme for its protections:

• Uses for treatment, payment and a long list of other routine health care operations are covered by the "Notice" that patients acknowledge receiving
• A few particular kinds of uses -- notably for research, marketing or fund raising -- require a specific, separate written "authorization"
• A few others require only an opportunity to agree or object orally, but no consent or authorization -- notably, this includes listing of patients in facility directories, and disclosures to those involved in a patient's care, such as family members. (It is common to get written authorization for this too, though it is not required)
  

Beyond treatment, payment and health care operations, there is another broad category of uses and disclosures that are permitted without patients' permission.

This includes PHI uses and disclosures:

• For public health activities
• About victims of abuse, neglect or domestic violence
• For health oversight activities
• For judicial or administrative proceedings
• For law enforcement
• About deceased persons (including organ and tissue donations)
• For research, without any authorization, where permitted by an IRB or Privacy Board waiver
• To avert a serious, imminent threat to public safety
• Certain specialized government functions (e.g., national security, military, corrections)
• Anything else required by law
  

Individuals would be entitled to an accounting of (some of) these disclosures, though that accounting might be temporarily suspended in certain circumstances.

Over and above all the categories, HIPAA imposes a very general rule on anyone who deals with protected health information: collection, use and disclosure should be no greater than necessary to complete a work-related task. For obvious reasons, this is called the minimum necessary standard. The minimum necessary standard is partially waived for health practitioners engaged in treatment -- it still applies to treatment uses, but not to disclosures between or among practitioners. The regulations relax the requirement in part to avoid any possible interference in the daily practice of delivering health care.

Health care facilities are under an obligation to integrate a minimum necessary standard into their policies and procedures. That includes administrative rules as well as, where available, computer-enforced access controls. Every covered entity must put in place general privacy policies that reflect HIPAA's requirements, and, if they are stricter, the requirements of state law. Those policies must include sanctions for employees that violate them, including termination for serious or repeated violations.

Institutions must designate a privacy officer, who will have the responsibility for enforcing the regulations, as well as supervising (or handling directly) the procedures to handle requests for information access, corrections to records, accountings of disclosures, processing complaints and so forth. Institutions must also, as noted, include privacy requirements in their contracts with business associates. All employees (and volunteers) must be educated about privacy practices in a manner "appropriate" to their job responsibilities.

Transactions and Code Sets Standards

The HIPAA/EDI provision was scheduled to take effect October 16, 2003 with a one-year extension for certain "small plans"; however, due to widespread confusion and difficulty in implementing the rule, CMS granted a one-year extension to all parties. As of October 16, 2004, full implementation was not achieved and CMS began an open-ended "contingency period." Penalties for non-compliance were not levied; however, all parties are expected to make a "good-faith effort" to come into compliance.

Note: (Normally, small covered entities have one year more than their large colleagues. However, the Administrative Simplification Compliance Act (PL107-105) provided a one-year extension for large covered entities that submitted a compliance plan by 15 October 2002. Small entities were not provided with an extension opportunity. For other rule dates, see the HIPAA compliance calendar.)

Regulations associated with the TCS Rule mandate uniform electronic interchange formats for all covered entities. It is this standardization -- along with the introduction of uniform identifiers for plans, providers, employers and patients under the Identifier Rule -- that is expected to produce the lion's share of the efficiency savings of "administrative simplification." Unlike the HIPAA Privacy Rule, which applies to protected health information (PHI) in "any form or medium," the TCS Rule covers only PHI in electronic form. (Perhaps it is self-evident that an electronic format standard could apply only to electronically-rendered information. However, this "electronic focus" is true of the HIPAA Identifier and Security rules as well. For more information, see the discussion of electronic applicability under the Security Rule.)

While many entities in the health sector have developed, or are in the process of developing, electronic data interchange (EDI) standards, the consensus remains that "the lack of common, industry-wide standards [is] a major obstacle to realizing potential efficiency and savings." (Final TCS Rule, p.3) Hence HIPAA allows the US Department of Health and Human Services (DHHS) to select the best of these efforts and require their use by all covered entities.

The TCS Rule has selected its standards from among the preexisting transaction and code set specifications of a variety of non-governmental designated standards maintenance organizations (DSMOs). The DSMOs retain the primary responsibility for updating their standards as evolving health sector needs dictate. (The Secretary of DHHS may at any time pick an alternative to those from DMSOs if it will substantially reduce administrative costs. But any new standard must be promulgated using formal rule-making procedures, including appropriate time for notice and comment.)

At present, the TCS Rule encompasses the following standard electronic transaction formats -- preponderantly derived from the ANSI X12N standards:

• Health Care Claims or equivalent encounter information (X12N 837)
• Eligibility for a Health Plan (X12N 270/271)
• Referral Certification and Authorization (X12N 278 or NCPDP for retail pharmacy)
• Health Care Claim Status (X12N 276/277)
• Enrollment and Dis-enrollment in a Health Plan (X12N 834)
• Health Care Payment and Remittance Advice (X12N 835)
• Health Plan Premium Payments (X12N 820)
• Coordination of Benefits (X12N 837 or NCPDP for retail pharmacy)
  

Copies of the detailed implementation specifications for each X12N standard may be downloaded for free. (Note, however, that each one runs several hundred pages.)

Within these transactions, the standards for coding information include:

• International Classification of Disease, Clinical Modification (ICD-CM)
• National Drug Codes (NDC)
• Code on Dental Procedures and Nomenclature (CDT)
• Health care Common Procedure Coding System (HCPCS)
• Current Procedure Terminology (CPT)
  

The Security Rule

The Final Rule on Security Standards was issued on February 20, 2003. It took effect on April 21, 2003 with a compliance date of April 21, 2005 for most covered entities and April 21, 2006 for “small plans”. The Security Rule complements the Privacy Rule. While the privacy pertains to all protected heath information (PHI), including paper and electronic. The Security rule deals specifically with electronic protected health information (EPHI). It lays out three types of security safeguards required for compliance: administrative, physical, and technical. For each of these types, the Rule identifies various security standards, and for each standard, it names both required and addressable implementation specifications. Required specifications must be adopted and administered as dictated by the Rule. Addressable specifications are more flexible. Individual covered entities can evaluate their own situation and determine the best way to implement addressable specifications.

The standards and specifications are as follows:

• Administrative Safeguards: Policies and procedures designed to clearly show how the entity will comply with the act.
  • Covered entities (entities that must comply with HIPAA requirements) must adopt a written set of privacy procedures and designate a privacy officer to be responsible for developing and implementing all required policies and procedures.
  • The policies and procedures must reference management oversight and organizational buy-in to compliance with the documented security controls.
  • Procedures should clearly identify employees or classes of employees who will have access to electronic protected health information (EPHI). Access to EPHI must be restricted to only those employees who have a need for it to complete their job function.
  • The procedures must address access authorization, establishment, modification, and termination.
  • Entities must show that an appropriate ongoing training program regarding the handling of PHI is provided to employees performing health plan administrative functions.
  • Covered entities that out-source some of their business processes to a third party must ensure that their vendors also have a framework in place to comply with HIPAA requirements. Companies typically gain this assurance through clauses in the contracts stating that the vendor will meet the same data protection requirements that apply to the covered entity. Care must be taken to determine if the vendor further out-sources any data handling functions to other vendors and monitor whether appropriate contracts and controls are in place.
  • A contingency plan should be in place for responding to emergencies. Covered entities are responsible for backing up their data and having disaster recovery procedures in place. The plan should document data priority and failure analysis, testing activities, and change control procedures.
  • Internal audits play a key role in HIPAA compliance by reviewing operations with the goal of identifying potential security violations. Policies and procedures should specifically document the scope, frequency, and procedures of audits. Audits should be both routine and event-based.
  • Procedures should document instructions for addressing and responding to security breaches that are identified either during the audit or the normal course of operations.
    

• Physical Safeguards: Controlling physical access to protect against inappropriate access to protected data.
  • Controls must govern the introduction and removal of hardware and software from the network. (When equipment is retired it must be disposed of properly to ensure that PHI is not compromised.)
  • Access to equipment containing health information should be carefully controlled and monitored.
  • Access to hardware and software must be limited to properly authorized individuals.
  • Required access controls consist of facility security plans, maintenance records, and visitor sign-in and escorts.
  • Policies are required to address proper workstation use. Workstations should be removed from high traffic areas and monitor screens should not be in direct view of the public.
  • If the covered entities utilize contractors or agents, they too must be fully trained on their physical access responsibilities.
    

• Technical Safeguards: Controlling access to computer systems and enabling covered entities to protect communications containing PHI transmitted electronically over open networks from being intercepted by anyone other than the intended recipient.
  • Information systems housing PHI must be protected from intrusion. When information flows over open networks, some form of encryption must be utilized. If closed systems and or networks are utilized, existing access controls are considered sufficient and encryption is optional.
  • Each covered entity is responsible for ensuring that the data within its systems has not been changed or erased in an unauthorized manner.
  • Data corroboration, including the use of check sum, double-keying, message authentication, and digital signature may be used to ensure data integrity.
  • Covered entities must also authenticate entities it communicates with. Authentication consists of corroborating that an entity is who it claims to be. Examples of corroboration include: password systems, two or three-way handshakes, telephone callback, and token systems.
  • Covered entities must make documentation of their HIPAA practices available to the government to determine compliance.
  • In addition to policies and procedures and access records, information technology documentation should also include a written record of all configuration settings on the components of the network because these components are complex, configurable, and always changing.
  • Documented risk analysis and risk management programs are required. Covered entities must carefully consider the risks of their operations as they implement systems to comply with the act. (The requirement of risk analysis and risk management implies that the act’s security requirements are a minimum standard and places responsibility on covered entities to take all reasonable precautions necessary to prevent PHI from being used for non-health purposes.)

Identifier Standard Rule

It is this standardization -- along with the introduction of uniform transaction formats for electronice data interchange (EDI) -- that is expected to yield the efficiency savings of "administrative simplification."

The Enforcement Rule

On February 16, 2006, HHS issued the Final Rule regarding HIPAA enforcement. It became effective on March 16, 2006. The Enforcement Rule sets civil money penalties for violating HIPAA rules and establishes procedures for investigations and hearings for HIPAA violations, however its deterrent effects seems to be negligible with few prosecutions for violations. washingtonpost.com

HIPAA includes substantial civil and criminal penalties for violations of its provisions, ranging from $100 per violation up to $250,000 and 10 years in prison. The harshest penalties attend deliberate misuse, particularly for sale or use of information for personal gain, commercial advantage or malicious harm.

An individual who believes that the Privacy Rule is not being upheld can file a complaint with the United States Department of Health and Human Services Office for Civil Rights (OCR). How to File A Health Information Privacy Complaint with the Office for Civil Rights

Costs of Implementation

In the period immediately prior to the enactment of the HIPAA Privacy and Security Acts, medical centers and medical practices were charged with getting "into compliance". With an early emphasis on the potentially severe penalties associated with violation, many practices and centers turned to private, for-profit "HIPAA consultants" who were intimately familiar with the details of the legislation and offered their services to ensure that physicians and medical centers were fully "in compliance". In addition to the costs of developing and revamping systems and practices, the increase in paperwork and staff time necessary to meet the legal requirements of HIPAA may impact the finances of medical centers and practices at a time when insurance company and Medicare reimbursement is also declining.

External References

• Centers for Medicare and Medicaid Services - HIPAA Page
• Office for Civil Rights page on HIPAA
• Full text of the Health Insurance Portability and Accountability Act
• Full text of the Final HIPAA Enforcement Rule
• California Office of HIPAA Implementation CalOHI Burt R. Cohen, Director.
• Congressional Research Service (CRS) Reports regarding HIPAA from University of North Texas Libraries
• HIPAA Helpful Hints: Transaction Implementation Assistance from the Experts