Most companies in the U.S. likely feel that Health Insurance Portability and Accountability Act (HIPAA) violations are strictly a healthcare industry concern. But any company with a self-funded group health plan (GHP) is now subject to HIPAA regulations, and the penalties imposed for violations are getting too costly to ignore.

Due to changes in the civil monetary penalty system under the government’s Omnibus Final Rule, the penalties for HIPAA violations involving willful neglect have risen from $25,000 per violation to an alarming $1.5 million. And since a healthcare data breach typically involves multiple HIPAA violations, a company’s GHP can potentially incur penalties totaling many millions of dollars.

Companies outside the healthcare field can benefit from the painful lessons learned by hospitals and other HIPAA-covered entities in recent years. Since 2012, every healthcare organization that has undergone an Office for Civil Rights investigation resulting in a corrective action plan has been cited for failing to conduct a thorough risk analysis beforehand. Many healthcare organizations have learned the hard way that a risk analysis involves much more than a security assessment or a so-called “penetration test” of IT system safeguards.

Because they’ve been burned, many healthcare systems are moving to more rigorous risk methodologies and benchmarks, such as the guidelines from the National Institute of Standards and Technology (NIST). That’s because the NIST approach involves a formal process for assessing risk based on assets, threats, vulnerabilities, controls, likelihood and impact, and the HIPAA Security Rule is based on the NIST Security Framework.

Until recently, it’s been prohibitively expensive and time-consuming to conduct a rigorous NIST-style risk analysis because the job is too difficult to handle manually. But now there are cloud-based software solutions that are both comprehensive and easy-to-use. These tools walk organizations through every facet of risk analysis and help operationalize the entire compliance program.

The healthcare industry, perhaps more than any other field, understands that risk analysis is not a “once and done” task; it’s a process that gets stronger over time. A NIST-caliber risk analysis can become the cornerstone of a risk-management program in any field, not just one that deals daily with confidential patient data.

Achilles Heel: Your Group Health Plan

Any GHP with more than 50 participants must now meet specific requirements under the HIPAA privacy and security rules and the HITECH breach notification rule. These provisions also apply to the plan’s many business associates (BAs) who handle eligibility, enrollment, claims management, IT services and more.

Group plans are now required to have BA agreements for all service providers with access to protected health information (PHI). These agreements need to impose the same PHI restrictions and conditions that apply to the plan sponsor.

Any company—whether it’s in banking, aviation, manufacturing or any other industry—can face costly HIPAA penalties if just one business associate snoops into confidential patient records. It’s a growing problem in both urban and rural locations. BAs in metropolitan areas are more likely to snoop into celebrities’ health records; those in rural areas are tempted to view the health records of friends and neighbors in the community.

A NIST-style risk analysis can help uncover any weaknesses in your plan’s current management of BA agreements. The process starts by determining exactly where health data “lives” in your group plan—on paper, electronically and even verbally. This helps your GHP authorize and limit access to confidential data and lays the groundwork for effective policies and procedures. It’s also important to provide ongoing HIPAA training for all BAs who handle sensitive data and to keep training logs that show regulators that you’re being diligent in that effort.

Because a group plan’s many BAs are now subject to stringent HIPAA regulations, even companies outside the healthcare field are on the radar of federal regulators. The best way to avoid seven-figure penalties is to conduct a thorough risk analysis and refine that process year after year.

Written By

Bob Chaput, CIPP/US


If you want to comment on this post, you need to login.


Board of Directors

See the esteemed group of leaders shaping the future of the IAPP.

Contact Us

Need someone to talk to? We’re here for you.

IAPP Staff

Looking for someone specific? Visit the staff directory.

It's Innovation Awards Time!

We're searching for today's privacy innovators. Sound like anyone you know? (Perhaps even you?) Tell us about it! We'll announce the winners at P.S.R.

Learn more about the IAPP»

Daily Dashboard

The day’s top stories from around the world

Privacy Perspectives

Where the real conversations in privacy happen

The Privacy Advisor

Original reporting and feature articles on the latest privacy developments

Privacy Tracker

Alerts and legal analysis of legislative trends

Privacy Tech

Exploring the technology of privacy

Canada Dashboard Digest

A roundup of the top Canadian privacy news

Europe Data Protection Digest

A roundup of the top European data protection news

Asia-Pacific Dashboard Digest

A roundup of the top privacy news from the Asia-Pacific region

Latin America Dashboard Digest

A roundup of the top privacy news from Latin America

IAPP Westin Research Center

Original works. Groundbreaking research. Emerging scholars.

Get more News »

It's Innovation Awards Time!

We're searching for today's privacy innovators. Sound like anyone you know? (Perhaps even you?) Tell us about it! We'll announce the winners at P.S.R.

Find a KnowledgeNet Chapter Near You

Network and talk privacy at IAPP KnowledgeNet meetings, taking place worldwide.

Women Leading Privacy

Events, volunteer opportunities and more designed to help you give and get career support and expand your network.

IAPP Job Board

Looking for a new challenge, or need to hire your next privacy pro? The IAPP Job Board is the answer.

Join the Privacy List

Have ideas? Need advice? Subscribe to the Privacy List. It’s crowdsourcing, with an exceptional crowd.

Find more ways to Connect »

Find a Privacy Training Class

Two-day privacy training classes are held around the world. See the complete schedule now.

NEW! Raise Staff Awareness

Equip all your data-handling staff to reduce privacy risk, with Privacy Core™ e-learning essentials.

Online Privacy Training

Build your knowledge. The privacy know-how you need is just a click away.

The Training Post—Can’t-Miss Training Updates

Subscribe now to get the latest alerts on training opportunities around the world.

Upcoming Web Conferences

See our list of upcoming web conferences. Just log on, listen in and learn!

Train Your Team

Get your team up to speed on privacy by bringing IAPP training to your organization.

Learn more »

CIPP Certification

The global standard for the go-to person for privacy laws, regulations and frameworks

CIPM Certification

The first and only privacy certification for professionals who manage day-to-day operations

CIPT Certification

The industry benchmark for IT professionals worldwide to validate their knowledge of privacy requirements

Certify Your Staff

Find out how you can bring the world’s only globally recognized privacy certification to a group in your organization.

Learn more about IAPP certification »

Looking for Certification Study Resources?

Find out what you need to prepare for your exams

Get Schooled in Privacy

Looking to get some higher-ed in privacy? Check out these schools that include data privacy courses in their curricula.

Are You Ready for the GDPR?

Check out the IAPP GDPR Readiness Assessment Powered by TRUSTe and find out where you stand when it comes to GDPR compliance.

Privacy Vendor List

Find a privacy vendor to meet your needs with our filterable list of global service providers.

More Resources »

The IAPP Asia Privacy Forum Returns

Delivering inspired education and discussion on the top data protection issues of today, you can’t miss it. Register now.

P.S.R.: Lewinsky to Explore Online Shaming

With three stellar keynotes confirmed, incl. Monica Lewinsky, we’ve opened registration early so you can secure your spot now.

Sponsor an Event

Increase visibility for your organization—check out sponsorship opportunities today.

It's Innovation Awards Time!

We're searching for today's privacy innovators. Sound like anyone you know? (Perhaps even you?) Tell us about it! We'll announce the winners at P.S.R.

Exhibit at an Event

Put your brand in front of the largest gatherings of privacy pros in the world. Learn more.

More Conferences »

Become a Member

Start taking advantage of the many IAPP member benefits today

Corporate Members

See our list of high-profile corporate members—and find out why you should become one, too

Renew Your Membership

Don’t miss out for a minute—continue accessing your benefits

Join the IAPP»