Health Care Providers Brace For New HIPAA Enforcement Risks

Updated: February 25, 2011

General Hospital Corporation and Massachusetts General Physicians Organization Inc. (Mass General) has agreed to pay the U.S. government $1,000,000 to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule. The incident giving rise to the agreement involved the loss of protected health information (PHI) of 192 patients of Mass General's Infectious Disease Associates outpatient practice The U.S. Department of Health and Human Services (HHS) Office of Civil Rights (OCR) announced the Resolution Agreement two days after announcing that its first official assessment of a civil monetary penalty CMP under HIPAA - a $4.3 million against Cignet Health of Prince George's County, Md., (Cignet). Read more details here

HIPAA Privacy Rule restricts the use, access and disclosure by covered entities of PHI and other individually identifiable health care information to those outlined within the Rules. Under HIPAA covered entities also are responsible for establishing and enforcing policies and procedures that safeguard PHI against improper use, access or disclosure by employees, business associates, and other third parties. Noncompliance with the Privacy and Security Rules exposes a covered entity to criminal prosecution and penalties, civil penalties or both. The Privacy Rule requires health plans, health care clearinghouses and most health care providers (covered entities) to safeguard the privacy of patient information, including such information during its disposal Under amendments to HIPAA enacted under the HITECH Act, business associates now also are accountable and subject to direct liability for failing to comply with HIPAA's requirements. Amendments to HIPAA under the HITECH Act, further expand the risks and responsibilities of health care providers and other covered entities.

Announced just two days before the Mass General Resolution Agreement, the Cignet CMP announced February 22, 2011 is the first CMP ever assessed by OCR under the HIPAA Privacy Rule. The assessment resulted after OCR found Cignet violated 41 patients' HIPAA rights and committed other HIPAA violations. The $4.3 million CMP against Cignet applies the expanded HIPAA violation categories and increased HIPAA civil monetary penalty amounts authorized by HIPAA amendments made by Section 13410(d) of the Health Information Technology for Economic and Clinical Health (HITECH) Act. Read more details.

Even before the Mass General Resolution Agreement and Cignet CMP announcements, HIPAA Privacy exposures of covered entities for failing to comply with HIPAA already had risen significantly. While OCR had not assessed any civil monetary penalties against any covered entity for violation of HIPAA before Cignet, OCR's collection of $1 Million from Rite Aid in a 2010 Resolution Agreement, $2.25 million from CVS Pharmacy, Inc. under a 2009 Resolution Agreement and $100,000 from Providence Health & Services under a 2008 Resolution Agreement demonstrated that covered entities could face significant civil liability for willful violations of the Privacy Rules. In addition to these civil enforcement actions by OCR, the Department of Justice has secured several criminal convictions or pleas under HIPAA's criminal provisions. OCR data confirms that the covered entities involved in these actions included health care providers, health plans, and others. Coupled with the HITECH Act changes, these and other enforcement actions signal growing potential hazards for covered entities and their business associates that fail to properly manage their HIPAA compliance obligations and risks.

The Mass General and Cignet announcements and other enforcement actions demonstrate that OCR is moving forward on its announced plans to hold health plans, health care providers, health care clearinghouses (covered entities) and their business associates that violate HIPAA accountable. Added to other recent developments, the Mass General and Cignet enforcement actions demonstrate that OCR's commitment to enforcing HIPAA and illustrate the significant exposures that covered entities and business associates risk by disregarding their HIPAA obligations.

As stated by OCR Director Georgina Verdugo when announcing the Mass General Resolution Agreement, stating, "We hope the health care industry will take a close look at this agreement and recognize that OCR is serious about HIPAA enforcement. It is a covered entity's responsibility to protect its patients' health information."

"To avoid enforcement penalties, covered entities must ensure they are always in compliance with the HIPAA Privacy and Security Rules," Verdugo added, "A robust compliance program includes employee training, vigilant implementation of policies and procedures, regular internal audits, and a prompt action plan to respond to incidents."