New HIPAA Requirements for Business Associates and Their Subcontractors

Helpful write-up by Dena Feldman on the final HITECH rule as it applies to business associates and subcontractors includes:

Direct Liability under the Security Rule.  The final rule alters the regulations to expressly subject business associates to the administrative, physical, and technical safeguard requirements of the Security Rule.  HHS commented that, because business associates previously had to agree in their business associate agreements with covered entities to appropriately protect and safeguard PHI, business associates and subcontractors “should already have in place” security practices that are compliant with the rule or need only “modest improvements.”  HHS recognized, however, that many business associates will not have engaged in the “formal administrative safeguards” required by the rule.

Direct Liability under the Privacy Rule.  The final regulations modify the Privacy Rule to extend direct liability for disclosures of PHI by business associates.  However, the rule does not subject business associates to liability for all aspects of the Privacy Rule.  Business associates are liable for:

  • uses or disclosures of PHI in a manner not in accord with the business associate agreement or the Privacy Rule;
  • failure to disclose PHI when required by HHS for an investigation and/or determination of the business associate’s compliance with HIPAA;
  • failure to disclose PHI to the covered entity, an individual (to whom the information pertains), or the individual’s designee with respect to an individual’s request for an electronic copy of the information;
  • failure to make reasonable efforts to limit PHI uses, disclosures, and requests to the minimum necessary amount; and
  • failure to enter into a business associate agreement with a subcontractor that creates or receives PHI on their behalf.

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