Risk Analysis: Prepare Now or Pay Later

MeetingManaging risk to confidential patient health information (PHI) is not only a critical component of healthcare today; it is also a mandate of the HIPAA Omnibus Rule (HIPAA).

HIPAA mandates that organizations conduct a regular risk analysis to identify and mitigate risks to patient records and the PHI they manage in their electronic health records systems (EHRs). Failure to secure PHI and mitigate the threats and vulnerabilities identified in a risk analysis can result in investigations by the Department of Health and Human Services (HHS) and other federal and state regulatory agencies. These agencies have authority to impose millions of dollars in penalties and fines as well as extended regulatory oversight, and can do so simultaneously for the same offense.

The Situation

According to the HIPAA Omnibus Rule (HIPAA Omnibus Rule) [1], Failing to protect patient records and prevent disclosure of PHI can damage patients’ financial status, job prospects, and reputation, far exceeding the impact of their medical conditions.

The HIPAA Omnibus Rule requires Covered Entities and Business Associates to conduct regular risk analyses [2] to identify and address threats and vulnerabilities to the confidentiality, integrity and availability of patient records and the PHI they manage and maintain in electronic health information systems.

Millions of dollars in penalties and fines as well as extended regulatory oversight can result from these failures, levied after investigations by the Department of Health and Human Services (HHS) and other federal and state regulatory agencies.

Nearly 30 million patient records have been reported to HHS as compromised in breaches since 2009, according to surveys conducted by healthcare IT security consultants as recently as February 2014[3]. The report states that “(i)n 2013 alone, 199 incidents of breaches of PHI were reported to HHS impacting over 7 million patient records, a 138% increase over 2012.” These statistics do not include breaches that have not been reported to HHS.

Furthermore, HIPAA requires notification of HHS and the patients whose PHI has been breached. Such notification can negatively impact patients’ confidence in as well as the reputation of the service provider. The flip side is that patients build trust in and strengthen their loyalty for their healthcare providers when their PHI is securely managed. A reputation for private and secure management of health information can also serve as a marketing tool for the provider.

In the early roll-out of HIPAA, HHS’ history of lax oversight and few consequences for non-compliance resulted in minimal implementation of the privacy and security standards. Covered Entities lacked comprehensive compliance planning, allocating responsibility over multiple departments to provide workforce training and accountability programs and taking the position that electronic health records systems (EHRs) successfully producing electronic records and bills was sufficient to demonstrate HIPAA and HITECH compliance.

Meanwhile, reports of patient complaints and breaches poured into HHS by the millions. Eighty-three per cent of all large HIPAA privacy and security breaches are the result of theft, according to surveys from HHS sources reported by Healthcare IT News. More specifically, the surveys report that approximately 22% of breaches since 2009 were due to unauthorized access to PHI, 35% were attributed to theft or loss of unencrypted devices containing PHI, and 6% were due to hacking[1].

The results of HITECH’s pilot audit program demonstrated that covered entities lacked understanding of the actual privacy and security standards as well as grounding in the specific implementation requirements the standards impose on internal systems, operations and resources necessary to meet HIPAA compliance requirements.

The HIPAA Omnibus Rule amendments confirm that anything short of a comprehensive, documented and implemented risk management process will not meet HIPAA compliance requirements today. It also requires that risk management program incorporate the results of a comprehensive complaint and breach investigation procedure focused on identifying and addressing workforce errors and patient complaints within the organization. Finally, the HIPAA Omnibus Rule extends these compliance requirements to Business Associates performing services or functions for or on behalf of covered entities.

The Solution

Risk management begins with an organization-wide risk analysis– i.e. an accurate and thorough assessment and mapping out of actual use and disclosure procedures in place for PHI in all formats throughout the whole organization. This includes satellite and multi-state offices, subsidiaries, patient portals, remote access to its PHI/ePHI, and PHI/ePHI disclosed to its Business Associates.

A key component of the assessment involves identifying and planning for mitigation of reasonably anticipated human, natural and environmental threats and vulnerabilities to the organization’s internal and external processes and systems. To be most effective, a risk analysis should be conducted regularly and at key intervals when changes, upgrades and/or mergers take place. The findings from the risk analysis should be incorporated into a document comprehensive and regularly updated risk management strategy for the organization. This documentation is what the OCR will likely request during investigations or audits to evaluate the organization’s compliance efforts.

The next round of OCR audits is scheduled to begin in October 2014. Covered Entities’ and Business Associates’ compliance with the HIPAA security standard’s risk analysis and risk management standard is in the OCR’s cross hairs. Failure to take affirmative steps towards compliance before the OCR comes a’knocking can add additional sanctions for willful neglect to corrective action plans and/or settlement agreements.

Whether the OCR is knocking on your door or not, the private and secure management of the Covered Entity’s or Business Associate’s health information is a critical aspect of quality healthcare services today. Leaders in the industry have this as a critical core value for their organizations, making compliance with the HIPAA Omnibus Rule just par for the course. The availability of secure and reliable healthcare information and data to support quality treatment and services requires the practice of good IT governance and due diligence[2].


[1] The Health Insurance Portability and Accountability Act of 1996 (HIPAA) defined privacy and security standards for management of protected health information (PHI) in all formats, including oral, paper and electronic (ePHI). HIPAA was amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (HITECH) which incorporated provisions of the Genetic Information Non-discrimination Act of 2008 (GINA). HITECH, among other provisions, addressed gaps in HIPAA, expanded categories of Business Associates and pulled Business Associates into the regulatory authority of the Department of Health and Human Services (HHS) and other federal and state agencies, and increased sanctions for non-compliance with HIPAA introducing a new punitive sanction for willful neglect. HITECH focuses on ePHI only and provides incentive payments for meaningful use of electronic health records systems (EHRs). HITECH’s ultimate goal is to develop a national network of health information and data which will drive efficiencies and improve the administration of healthcare in the US. The final HIPAA Omnibus Rule of 2013 (HIPAA Omnibus Rule) is HHS’ final rulemaking focused on strengthening the privacy and security provisions for PHI originally defined by HIPAA.

[2] See 45 CFR subsections 164.530 (c) [Privacy Standard] and 164.308(a)(1)(ii)(A) [Security Standard]

[3] See Redspin Report on the “State of Healthcare IT Security” (February 5, 2014) at www.redspin.com/redspin-reports-state-healthcare-security-130000284.html.

[4]   See HIPAA Data Breaches Climb 138% atHealthcare IT News (February 6, 2014) www.healthcareitnews.com/news/hipaa-data-breaches-climb-138-percent

[5]   See In Defense of HIPAA: How Compliance Drives Innovation at algonquinstudios (April 1, 2014) http://blog.algonquinstudios.com/2014/04/01/in-defense-of-hipaa-how-compliance-drives-innovation/


© 2014 Merit Career Development. All rights reserved. For more information, please contact Jim Wynne at jwynne@MeritCD.com.

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