This post is motivated by three phone conversations in one day with likely Business Associates (BAs), trying to sort out if they really are a HIPAA Business Associate. Millions of companies are now statutorily obligated to comply with HIPAA-HITECH regulations, because of their BA status. They would prefer to meet the “conduit exception” requirements and not have to comply. I bet you wanna be a HIPAA Conduit too! In the preamble to the Omnibus Final Rule, clarity and guidance is provided. Here’s today’s big tip – Be Very Careful – “The conduit exception is a narrow one and…!”
HIPAA Audit Tips – Be Careful Claiming “Conduit”
This is a very long blog post — sorry — not for the light at heart. Only for Business Associates who really want to know.
Bottom Line Up Front
- Read/study the information below.
- View our recorded webinar: What Business Associates Need to Know about HIPAA
- Attend an upcoming Live HIPAA-HITECH Educational web event
- Decide whether you’re playing offense (use compliance for competitive advantage?) or defense (check off some boxes?)
- Consult competent counsel.
- Make your business risk management decision – comply!
First, reference the definition of Business Associate from 45 CFR §160.103 Definitions: (emphasis added).
(1) Except as provided in paragraph (4) of this definition, business associate means, with respect to a covered entity, a person who:
(i) On behalf of such covered entity or of an organized health care arrangement (as defined in this section) in which the covered entity participates, but other than in the capacity of a member of the workforce of such covered entity or arrangement, creates, receives, maintains, or transmits protected health information for a function or activity regulated by this subchapter, including claims processing or administration, data analysis, processing or administration, utilization review, quality assurance, patient safety activities listed at 42 CFR 3.20, billing, benefit management, practice management, and repricing; or
(ii) Provides, other than in the capacity of a member of the workforce of such covered entity, legal, actuarial, accounting, consulting, data aggregation (as defined in § 164.501 of this subchapter), management, administrative, accreditation, or financial services to or for such covered entity, or to or for an organized health care arrangement in which the covered entity participates, where the provision of the service involves the disclosure of protected health information from such covered entity or arrangement, or from another business associate of such covered entity or arrangement, to the person.
(2) A covered entity may be a business associate of another covered entity.
(3) Business associate includes:
(i) A Health Information Organization, E-prescribing Gateway, or other person that provides data transmission services with respect to protected health information to a covered entity and that requires access on a routine basis to such protected health information.
(ii) A person that offers a personal health record to one or more individuals on behalf of a covered entity.
(iii) A subcontractor that creates, receives, maintains, or transmits protected health information on behalf of the business associate.
(4) Business associate does not include:
(i) A health care provider, with respect to disclosures by a covered entity to the health care provider concerning the treatment of the individual.
(ii) A plan sponsor, with respect to disclosures by a group health plan (or by a health insurance issuer or HMO with respect to a group health plan) to the plan sponsor, to the extent that the requirements of § 164.504(f) of this subchapter apply and are met.
(iii) A government agency, with respect to determining eligibility for, or enrollment in, a government health plan that provides public benefits and is administered by another government agency, or collecting protected health information for such purposes, to the extent such activities are authorized by law.
(iv) A covered entity participating in an organized health care arrangement that performs a function or activity as described by paragraph (1)(i) of this definition for or on behalf of such organized health care arrangement, or that provides a service as described in paragraph (1)(ii) of this definition to or for such organized health care arrangement by virtue of such activities or services.
Next, reference the preamble in the Omnibus Final Rule as published in the Federal Register (Page 7 of the 138 page document or Federal Register /Vol. 78, No. 17 / Friday, January 25, 2013 /Rules and Regulations 5571). Specifically, this excerpt (emphasis added):
The final rule adopts the language that expressly designates as business associates: (1) a Health Information Organization, E-prescribing Gateway, or other person that provides data transmission services with respect to protected health information to a covered entity and that requires routine access to such protected health information; and (2) a person who offers a personal health record to one or more individuals on behalf of a covered entity.
We decline to provide a definition for Health Information Organization. We recognize that the industry continues to develop and thus the type of entities that may be considered Health Information Organizations continues to evolve. For this reason, we do not think it prudent to include in the regulation a specific definition at this time. We anticipate continuing to issue guidance in the future on our web site on the types of entities that do and do not fall within the definition of business associate, which can be updated as the industry evolves.
Regarding what it means to have “access on a routine basis” to protected health information with respect to determining which types of data transmission services are business associates versus mere conduits, such a determination will be fact specific based on the nature of the services provided and the extent to which the entity needs access to protected health information to perform the service for the covered entity. The conduit exception is a narrow one and is intended to exclude only those entities providing mere courier services, such as the U.S. Postal Service or United Parcel Service and their electronic equivalents, such as internet service providers (ISPs) providing mere data transmission services. As we have stated in prior guidance, a conduit transports information but does not access it other than on a random or infrequent basis as necessary to perform the transportation service or as required by other law. For example, a telecommunications company may have occasional, random access to protected health information when it reviews whether the data transmitted over its network is arriving at its intended destination. Such occasional, random access to protected health information would not qualify the company as a business associate. In contrast, an entity that requires access to protected health information in order to perform a service for a covered entity, such as a Health Information Organization that manages the exchange of protected health information through a network on behalf of covered entities through the use of record locator services for its participants (and other services), is not considered a conduit and, thus, is not excluded from the definition of business associate. We intend to issue further guidance in this area as electronic health information exchange continues to evolve.
We note that the conduit exception is limited to transmission services (whether digital or hard copy), including any temporary storage of transmitted data incident to such transmission. In contrast, an entity that maintains protected health information on behalf of a covered entity is a business associate and not a conduit, even if the entity does not actually view the protected health information. We recognize that in both situations, the entity providing the service to the covered entity has the opportunity to access the protected health information. However, the difference between the two situations is the transient versus persistent nature of that opportunity. For example, a data storage company that has access to protected health information (whether digital or hard copy) qualifies as a business associate, even if the entity does not view the information or only does so on a random or infrequent basis. Thus, document storage companies maintaining protected health information on behalf of covered entities are considered business associates, regardless of whether they actually view the information they hold. To help clarify this point, we have modified the definition of “business associate” to generally provide that a business associate includes a person who “creates, receives, maintains, or transmits” (emphasis added) protected health information on behalf of a covered entity.
Proven HIPAA Audit Tips – Other Actions You Should Take Now to Prepare for OCR HIPAA Audits
We recommend that organizations who have not already done so complete some fundamental preparation activities which include, but are not limited to:
- Establish a formal Privacy and Security Risk Management & Governance Program. (45 CFR § 164.308(a)(1))
- Complete a HIPAA Security Evaluation. (45 CFR § 164.308(a)(8))
- Complete a Privacy Rule compliance assessment. (45 CFR §164.530)
- Complete a Breach Rule compliance assessment. (45 CFR §164.400)
- Complete a HIPAA Security Risk Analysis (45 CFR §164.308(a)(1)(ii)(A))
- Develop comprehensive HIPAA Privacy and Security and Breach Notification Policies & Procedures. (45 CFR §164.530, 45 CFR §164.316 and 45 CFR §164.414 )
- Document and act upon a corrective action plan.
Join the 400+ companies (both covered entities and business associates) that work with Clearwater Compliance. We can help your organization jump-start your HIPAA Compliance program.
Wanna be even more ready for an audit or hip on HIPAA? Learn more…
The complete HIPAA Privacy, Security and Breach regulations are here.
If you’d like keep up to date on Audit Preparation, Risk Analysis or HIPAA-HITECH in general, please consider (all optional!):
- Joining our AboutHIPAA LinkedIn Group: http://AboutHIPAALI.org
- Following me: https://twitter.com/ClearwaterHIPAA
- Subscribing to our eNewsletter
- Attending a HIPAA HITECH live webinar: http://clearwatercompliance.com/live-educational-webinars/
- Attending a HIPAA HITECH Blue Ribbon Panel Live Web Event: http://clearwatercompliance.com/hipaa-hitech-blue-ribbon-panel/
- Viewing a pre-recorded webinar: http://clearwatercompliance.com/on-demand-webinars/