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By David Holtzman, CIPP/G, and Erin McMillan

With the changes to the HIPAA Privacy and Security Rules, the responsibilities and relationships between covered entities and their vendors have moved to the forefront of information-security management. Particularly, renewed emphasis has been placed on vendor security management and the responsibility that covered entities bear on performing appropriate due diligence.

Covered entities should consider management of their information security risks in the formation of a vendor contract to termination and beyond. Your organization should entrust its protected health information (PHI) to vendors who demonstrate willingness and/or ability to apply appropriate safeguards as called for in the Security Rule and the applicable portions of the Privacy Rule. A security questionnaire is an appropriate instrument to evaluate a vendor’s readiness to comply with the covered entity’s security expectations. Factors to consider in selecting a potential vendor include the level of access to PHI, performance specifications and the duration of the contract. 

Prior to establishing a relationship with a vendor, it is important for the covered entity to assess whether the vendor qualifies as a business associate (BA). The HIPAA Rules define a BA as an individual (or entity) other than a member of the covered entity’s workforce who assisted or performed a function or activity on behalf of the covered entity that involves creating, receiving, maintaining or transmitting PHI. In addition, the definition of a BA was recently expanded to include subcontractors of a BA. This means that BAs must have a business associate agreement (BAA) in place with any subcontractor who handles PHI on behalf of the BA.

Once a covered entity is contemplating a relationship with a vendor, there must be some type of contract, or BAA, to memorialize privacy and security assurances. New BA agreements put into place after January 25, 2013, and existing agreements updated or modified after that date must reflect the omnibus changes. All BA agreements in effect prior to that date and not scheduled for change must be updated to include the requirements called for in the Omnibus Rule by September 23. When updating BAAs, covered entities should consider developing agreements that meet their individual business requirements, such as notifications regarding material changes in a vendor’s business model (how or where information is stored), new relationships such as additional subcontractors and requests for PHI by third parties; e.g., OCR, law enforcement, etc.. BAAs should also include documentation of compliance requirements and third-party evaluation requirements.

While the changes brought by the Omnibus Rule do not alter the requirements of the original HIPAA Rules obligating a covered entity to monitor activities of its vendors, it may be sound business to monitor security and privacy issues arising from vendor services. Monitoring should be based on the level of risk presented to the covered entity. For example, vendors that host PHI will warrant a higher necessity for monitoring and maintenance compared to vendors who only access PHI while onsite.

Monitoring can include requesting and reviewing security-related documentation from vendors such as policies, proof of training, proof of background investigations, third-party security evaluations and facility assessments such as SSAE 16 reports. If the vendor is hosting data or systems, the documentation requested may be more specific, like proof of backups, actual contingency test reports, proof of terminations and destruction certificates. Some entities may consider site visits or require third-party security assessments. To assist their monitoring activities, organizations now have access to products and services that provide management of BAs by identifying which vendors are BAs and what requirements need to be monitored.

Monitoring to ensure vendors are compliant with the entity’s security expectations is especially significant to avoid a potential incident. BAAs should advise vendors on the organization’s process for dealing with a breach, documentation and notification (timelines). This is important because under the final rule, an integrated approach is to be taken to analyzing events around the breach that involves both the covered entity and the business associate. Maintenance of incidence reports by BAs and covered entities must be managed proficiently since this material is certainly reviewable and will likely be requested by OCR in the event of an investigation.

Finally, management of vendor activities does not cease on the termination date specified in the BAA. Requirements detailing the disposition of both access and retention of data should be included in the contract. The contract or addendum should also specify how to eliminate and document any and all access to patient information and instructions for returning or destroying all patient information in their possession. This documentation will be very important should a breach occur later involving a covered entity's information after that entity has terminated its relationship with the vendor.

David Holtzman, CIPP/G, is vice president of privacy and security compliance services for CynergisTek. He is considered a subject-matter expert in health information privacy policy and compliance issues involving the HIPAA Privacy, Security and Breach Notification Rules. Holtzman has over 10 years of experience in developing, implementing and evaluating health information privacy and security compliance programs from both government and private-sector positions. Prior to CynergisTek, Holtzman served on the health information privacy team at the Department of Health & Human Services, Office for Civil Rights (OCR/HHS), where he served as the senior advisor for health information technology and the HIPAA Security Rule. He led many OCR initiatives including the effort to integrate the administration and enforcement of the HIPAA Security Rule by establishing workflows for processing, identifying and investigating alleged violations of the rule. Prior to joining HHS, David was the privacy & security officer for Kaiser Permanente’s Mid-Atlantic Region where he was responsible for implementing and directing the continuing compliance with the HIPAA Privacy and Security rules. David is a graduate of the Western New England College of Law and the Brockport College of the State University of New York. He is admitted to the practice of low in New York and Illinois.

Erin McMillan specializes in privacy policies, processes and procedures as a compliance consultant for CynergisTek with cross training in security. McMillan has participated in HIPAA security assessments, security controls audits, privacy assessments, OCR mock-audit exercises, Safe Harbor strategy sessions and multiple HIPAA information security controls audits. Prior to joining CynergisTek, McMillan was a law clerk for a private firm, where she assisted lead counsel in representation of clients and participated in trial preparation. She earned her Juris Doctorate degree from the University of Oklahoma College of Law and served as chief counsel as a licensed legal intern for the OU Legal Clinic. During her time with the OU Legal Clinic, McMillan represented several clients and participated in mediation, attended resolution conference hearings, conducted discovery and interviewed and corresponded with clients, witnesses and opposing parties and counsel. McMillan is admitted to the practice of law in Texas.

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