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  Title	Business Associates Under the HIPAA/HITECH Final Rule
  ID	6059353
  External ID	7485835759
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  Published Date	Jan. 21, 2025, 1:21 p.m.
  Summary	On January 17, 2013, the Department of Health and Human Services (HHS) released the Omnibus Final Rule pursuant to the Health Information Technology for Economic and Clinical Health Act (HITECH Act) –
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  Content ID	3713093
  Key	67b88fbe-37aa-42e2-8953-1faca564c057
  Content	On January 17, 2013, the Department of Health and Human Services (HHS) released the Omnibus Final Rule pursuant to the Health Information Technology for Economic and Clinical Health Act (HITECH Act) – “The Final Rules.” These rules explained business associates (BA) broadly. The effective date of the Final Rule was March 26, 2013, and covered entities and business associates must be in compliance with the requirements by Sept. 23, 2013. Under the Final Rule, BAs are directly liable to the federal government for noncompliance in regard to certain provisions of the Privacy Rule and the Security Rule and are subject to the Breach Notification and Enforcement Rules of the Final Rules Prior to the HITECH Act. Formal contractual liability to covered entities is pursuant to contractually bound BAs in regard to an executed BA agreements, but the BA does not have direct liability to the federal government under HIPAA laws and regulation. Business associates bound in the ambit of the HITECH Act and the broad definition of these entities adopted in the Final Rule impose compliance obligations, and the risk of substantial penalties for noncompliance applies to all entities dealing with covered entities. Clarifying the Definition of Business Associate Now, a BA of HHS is an entity that, on behalf of [a] covered entity or of an organized healthcare arrangement (as defined in [45 C.F.R. § 160.103]) 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 [the] 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 (45 C.F.R. § 160.103). A written contract between a covered entity and a business associate must accomplish the 10 items outlined in Table 1. Contracts between business associates and business associates that are subcontractors are subject to these same requirements. HHS states that “this change is intended to make the definition more consistent with language at [Section] 164.308(b) of the Security Rule and [Section] 164.502(e) of the Privacy Rule, as well as to clarify that entities that maintain or store protected health information (PHI) on behalf of a covered entity are business associates, even if they do not actually view the protected health information.” Conduits of PHI like Fedex are not subject to the final rules. Entity-holding PHI engaged in the long-term storage of PHI includes (1) bulk storage providers of hard copy data, (2) cloud storage providers and (3) other providers of electronic data storage services. HHS provided a short list of the types of entities that, by definition, constitute business associates including (1) a “subcontractor that creates, receives, maintains, or transmits protected health information on behalf of the business associate.” (45 C.F.R. § 160.103). Thus, subcontractors of a business associate who use or disclose PHI on behalf of the business associate are now directly subject to HIPAA. In the Final Rule, HHS noted that it included subcontractors in the definition of business associate “to avoid having privacy and security protections for PHI lapse merely because a function is performed by an entity that is a subcontractor rather than an entity with a direct relationship with a covered entity.” HHS clarified that disclosures by a business associate to a third-party entity for its own management and administration or legal responsibilities do not create a business associate relationship with the recipient of the PHI. This is because such disclosures are made outside the entity’s role as a business associate. Nevertheless, such disclosure must otherwise be made in accordance with Section 164.504 of the Privacy Rule, including the requirement for assurances that the PHI will be appropriately safeguarded. To cover the loophole that sub-contactors would not be subject to the Final Rule, HHS modified the HIPAA Rule to provide that a covered entity is not required to directly contract with downstream subcontractors (45 C.F.R. § 164.502(e)(1); 45 C.F.R. §164.308(b)(1)). Instead, a business associate who discloses PHI to a subcontractor must enter into a BA agreement with the subcontractor that provides assurances that the subcontractor will appropriately safeguard the information with the strictures of the Final Rule. See 45 C.F.R. § 164.308(b)(2). Therefore, liability for impermissible uses and disclosures attaches immediately when an entity (contactor or subcontractor) creates, receives, maintains or transmits PHI on behalf of a covered entity or business associate and otherwise meets the definition of a business associate not contingent on the existence of a BA agreement. One-year Safe Harbor Extends Amending Contract Until September 2014 In the general compliance deadline of the Final Rule, HHS provides a transition provision that allows a covered entity and a business associate (or a business associate and subcontractor) to continue operating under an existing business associate agreement for up to one year beyond the compliance date of the Final Rule, so long as certain requirements are satisfied (45 C.F.R. § 164.532(d)). An existing business associate agreement may continue to operate beyond the compliance deadline if (I) the agreement took effect prior to Jan. 25, 2013 and contains all the elements required by the regulations as of that date and (2) the agreement will not be modified or renewed from March 26, 2013 (the date the Final Rule took effect) to Sept. 23, 2013 (the Final Rule compliance date) (45 C.F.R. § 164.532(e)(1)). An existing business associate agreement that meets such specifications will be deemed compliant until the earlier of the date the agreement is modified or renewed on or after Sept. 23, 2013 or Sept. 22, 2014. Appendix 1: Sample Business Associate Agreement Provisions Editor’s Note: The following information was obtained from the HHS website under Health Information Privacy – for Covered Entities and Business Associates. The remainder of the column is a sample agreement. Items in brackets are either optional language or instructions for users of these samples. This is only sample language and use of these samples is not required for HIPAA compliance. Language may be changed to more accurately reflect business arrangements between a covered entity and business associate or business associate and subcontractor. These or similar provisions may be incorporated into an agreement for the provision of services between a covered entity and business associate or business associate and subcontractor or into a separate business associate agreement. The provisions address only concepts and requirements set forth in the HIPAA Privacy, Security, Breach Notification and Enforcement Rules and alone may not be sufficient to result in a binding contract under state law. They do not include many formalities and substantive provisions that may be required or typically included in a valid contract. Reliance on this sample may not be sufficient for compliance with state law and does not replace consultation with a lawyer or negotiations between parties. Definitions Catch-all Definition The following terms used in this Agreement shall have the same meaning as those terms in the HIPAA Rules: Breach, Data Aggregation, Designated Record Set, Disclosure, Health Care Operations, Individual, Minimum Necessary, Notice of Privacy Practices, Protected Health Information, Required By Law, Secretary, Security Incident, Subcontractor, Unsecured Protected Health Information and Use. Specific Definitions (a) Business Associate: The “Business Associate” shall generally have the same meaning as the term “business associate” at 45 CFR 160.103, and in reference to the party to this agreement, shall mean [insert name of Business Associate]. (b) Covered Entity: “Covered Entity” shall generally have the same meaning as the term “covered entity” at 45 CFR 160.103, and in reference to the party to this agreement, shall mean [insert name of Covered Entity]. (c) HIPAA Rules: “HIPAA Rules” shall mean the Privacy, Security, Breach Notification and Enforcement Rules at 45 CFR Part 160 and Part 164. Obligations and Activities of Business Associate The Business Associate agrees to: (a) Not use or disclose PHI other than as permitted or required by the Agreement or as required by law. (b) Use appropriate safeguards and comply with Subpart C of 45 CFR Part 164 with respect to protected electronic health information to prevent the use or disclosure of PHI other than as provided for by the Agreement. (c) Report to covered entity any use or disclosure of PHI not provided for by the Agreement of which it becomes aware, including breaches of unsecured protected health information as required at 45 CFR 164.410, and any security incident of which it becomes aware. (The parties may wish to add additional specificity regarding the breach notification obligations of the business associate, such as a stricter timeframe for the business associate to report a potential breach to the covered entity and/or whether the business associate will handle breach notifications to individuals, the HHS Office for Civil Rights (OCR), and potentially the media, on behalf of the covered entity.) (d) In accordance with 45 CFR 164.502(e)(1)(ii) and 164.308(b)(2), if applicable, ensure that any subcontractors that create, receive, maintain or transmit protected health information on behalf of the business associate agree to the same restrictions, conditions and requirements that apply to the business associate with respect to such information. (e) Make available protected health information in a designated record set to the [Choose either “covered entity” or “individual or the individual’s designee”] as necessary to satisfy covered entity’s obligations under 45 CFR 164.524. (The parties may wish to add additional specificity regarding how the business associate will respond to a request for access that the business associate receives directly from the individual [such as whether and in what time and manner a business associate is to provide the requested access or whether the business associate will forward the individual’s request to the covered entity to fulfill] and the timeframe for the business associate to provide the information to the covered entity.) (f) Make any amendment(s) to protected health information in a designated record set as directed or agreed to by the covered entity pursuant to 45 CFR 164.526 or take other measures as necessary to satisfy the covered entity’s obligations under 45 CFR 164.526. (The parties may wish to add additional specificity regarding how the business associate will respond to a request for an amendment that the business associate receives directly from the individual [such as whether and in what time and manner a business associate is to act on the request for amendment or whether the business associate will forward the individual’s request to the covered entity] and the timeframe for the business associate to incorporate any amendments to the information in the designated record set.) (g) Maintain and make available the information required to provide an accounting of disclosures to the [Choose either “covered entity” or “individual”] as necessary to satisfy covered entity’s obligations under 45 CFR 164.528. (The parties may wish to add additional specificity regarding how the business associate will respond to a request for an accounting of disclosures that the business associate receives directly from the individual [such as whether and in what time and manner the business associate is to provide the accounting of disclosures to the individual or whether the business associate will forward the request to the covered entity] and the timeframe for the business associate to provide information to the covered entity.) (h) To the extent the business associate is to carry out one or more of covered entity’s obligation(s) under Subpart E of 45 CFR Part 164, comply with the requirements of Subpart E that apply to the covered entity in performing of such obligation(s). (i) Make its internal practices, books and records available to the Secretary of HHS for purposes of determining compliance with the HIPAA Rules. Permitted Uses and Disclosures by BA (a) The business associate may only use or disclose protected health information. 1. Option 1 – Provide a specific list of permissible purposes. 2. Option 2 – Reference an underlying service agreement, such as “as necessary to perform the services set forth in Service Agreement.” (In addition to other permissible purposes, the parties should specify whether the business associate is authorized to use protected health information to de-identify the information in accordance with 45 CFR 164.514(a)-(c). The parties also may wish to specify the manner in which the business associate will de-identify the information and the permitted uses and disclosures by the business associate of the de-identified information.) (b) Business associate may use or disclose protected health information as required by law. (c) Business associate agrees to make uses and disclosures and requests for protected health information. 1. Option 1 consistent with covered entity’s minimum necessary policies and procedures. 2. Option 2 subject to the following minimum necessary requirements: Include specific minimum necessary provisions that are consistent with the covered entity’s minimum necessary policies and procedures. (d) Business Associate may not use or disclose PHI in a manner that would violate Subpart E of 45 CFR Part 164 if done by covered entity [if the Agreement permits the business associate to use or disclose protected health information for its own management and administration and legal responsibilities or for data aggregation services as set forth in optional provisions (e), (f), or (g) below, then add “except for the specific uses and disclosures set forth below.”] (e) [Optional] Business Associate may use PHI for the proper management and administration of the business associate or to carry out the legal responsibilities of the business associate. (f) [Optional] Business Associate may disclose PHI for the proper management and administration of business associate or to carry out the legal responsibilities of the business associate, provided the disclosures are required by law, or business associate obtains reasonable assurances from the person to whom the information is disclosed that the information will remain confidential and used or further disclosed only as required by law or for the purposes for which it was disclosed to the person, and the person notifies business associate of any instances of which it is aware in which the confidentiality of the information has been breached. (g) [Optional] Business associate may provide data aggregation services relating to the health care operations of the covered entity. Provisions for Covered Entity to Inform BA of Privacy Practices and Restrictions (a) [Optional] Covered entity shall notify business associate of any limitation(s) in the notice of privacy practices of covered entity under 45 CFR 164.520, to the extent that such limitation may affect business associate’s use or disclosure of protected health information. (b) [Optional] Covered entity shall notify business associate of any changes in, or revocation of, the permission by an individual to use or disclose his or her protected health information, to the extent that such changes may affect business associate’s use or disclosure of protected health information. (c) [Optional] Covered entity shall notify business associate of any restriction on the use or disclosure of protected health information that covered entity has agreed to or is required to abide by under 45 CFR 164.522, to the extent that such restriction may affect business associate’s use or disclosure of protected health information. Permissible Requests by Covered Entity [Optional] Covered entity shall not request business associate to use or disclose protected health information in any manner that would not be permissible under Subpart E of 45 CFR Part 164 if done by covered entity. [Include an exception if the business associate will use or disclose protected health information for, and the agreement includes provisions for, data aggregation or management and administration and legal responsibilities of the business associate.] Term and Termination (a) Term. The Term of this Agreement shall be effective as of [Insert effective date], and shall terminate on [Insert termination date or event] or on the date covered entity terminates for cause as authorized in paragraph (b) of this Section, whichever is sooner. (b) Termination for Cause. Business associate authorizes termination of this Agreement by covered entity, if covered entity determines business associate has violated a material term of the Agreement [and business associate has not cured the breach or ended the violation within the time specified by covered entity]. [Bracketed language may be added if the covered entity wishes to provide the business associate with an opportunity to cure a violation or breach of the contract before termination for cause.] (c) Obligations of Business Associate Upon Termination [Option 1 – if the business associate is to return or destroy all protected health information upon termination of the agreement] Upon termination of this Agreement for any reason, business associate shall return to covered entity [or, if agreed to by covered entity, destroy] all protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, that the business associate still maintains in any form. Business associate shall retain no copies of the protected health information. [Option 2—if the agreement authorizes the business associate to use or disclose protected health information for its own management and administration or to carry out its legal responsibilities and the business associate needs to retain protected health information for such purposes after termination of the agreement.] Upon termination of this Agreement for any reason, business associate, with respect to protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, shall: 1. Retain only that protected health information which is necessary for business associate to continue its proper management and administration or to carry out its legal responsibilities; 2. Return to covered entity [or, if agreed to by covered entity, destroy] the remaining protected health information that the business associate still maintains in any form; 3. Continue to use appropriate safeguards and comply with Subpart C of 45 CFR Part 164 with respect to electronic protected health information to prevent use or disclosure of the protected health information, other than as provided for in this Section, for as long as business associate retains the protected health information; 4. Not use or disclose the protected health information retained by business associate other than for the purposes for which such protected health information was retained and subject to the same conditions set out at [Insert section number related to paragraphs (e) and (f) above under “Permitted Uses and Disclosures By Business Associate”] which applied prior to termination; and 5. Return to covered entity [or, if agreed to by covered entity, destroy] the protected health information retained by business associate when it is no longer needed by business associate for its proper management and administration or to carry out its legal responsibilities. [The agreement also could provide that the business associate will transmit the protected health information to another business associate of the covered entity at termination, and/or could add terms regarding a business associate’s obligations to obtain or ensure the destruction of protected health information created, received, or maintained by subcontractors.] (d) Survival. The obligations of business associate under this Section shall survive the termination of this Agreement. Miscellaneous [Optional] (a) [Optional] Regulatory References. A reference in this Agreement to a section in the HIPAA Rules means the section as in effect or as amended. (b) [Optional] Amendment. The Parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for compliance with the requirements of the HIPAA Rules and any other applicable law. (c) [Optional] Interpretation. Any ambiguity in this Agreement shall be interpreted to permit compliance with the HIPAA Rules. Dr. Scheinfeld graduated from Harvard Law School in 1989 and Yale Medical School in 1997. He is an Assistant Clinical Professor in the Department of Dermatology at Weill Cornell Medical College in New York, NY. Disclosure: Dr. Scheinfeld has no conflicts of interest with any material in this column. On January 17, 2013, the Department of Health and Human Services (HHS) released the Omnibus Final Rule pursuant to the Health Information Technology for Economic and Clinical Health Act (HITECH Act) – “The Final Rules.” These rules explained business associates (BA) broadly. The effective date of the Final Rule was March 26, 2013, and covered entities and business associates must be in compliance with the requirements by Sept. 23, 2013. Under the Final Rule, BAs are directly liable to the federal government for noncompliance in regard to certain provisions of the Privacy Rule and the Security Rule and are subject to the Breach Notification and Enforcement Rules of the Final Rules Prior to the HITECH Act. Formal contractual liability to covered entities is pursuant to contractually bound BAs in regard to an executed BA agreements, but the BA does not have direct liability to the federal government under HIPAA laws and regulation. Business associates bound in the ambit of the HITECH Act and the broad definition of these entities adopted in the Final Rule impose compliance obligations, and the risk of substantial penalties for noncompliance applies to all entities dealing with covered entities. Clarifying the Definition of Business Associate Now, a BA of HHS is an entity that, on behalf of [a] covered entity or of an organized healthcare arrangement (as defined in [45 C.F.R. § 160.103]) 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 [the] 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 (45 C.F.R. § 160.103). A written contract between a covered entity and a business associate must accomplish the 10 items outlined in Table 1. Contracts between business associates and business associates that are subcontractors are subject to these same requirements. HHS states that “this change is intended to make the definition more consistent with language at [Section] 164.308(b) of the Security Rule and [Section] 164.502(e) of the Privacy Rule, as well as to clarify that entities that maintain or store protected health information (PHI) on behalf of a covered entity are business associates, even if they do not actually view the protected health information.” Conduits of PHI like Fedex are not subject to the final rules. Entity-holding PHI engaged in the long-term storage of PHI includes (1) bulk storage providers of hard copy data, (2) cloud storage providers and (3) other providers of electronic data storage services. HHS provided a short list of the types of entities that, by definition, constitute business associates including (1) a “subcontractor that creates, receives, maintains, or transmits protected health information on behalf of the business associate.” (45 C.F.R. § 160.103). Thus, subcontractors of a business associate who use or disclose PHI on behalf of the business associate are now directly subject to HIPAA. In the Final Rule, HHS noted that it included subcontractors in the definition of business associate “to avoid having privacy and security protections for PHI lapse merely because a function is performed by an entity that is a subcontractor rather than an entity with a direct relationship with a covered entity.” HHS clarified that disclosures by a business associate to a third-party entity for its own management and administration or legal responsibilities do not create a business associate relationship with the recipient of the PHI. This is because such disclosures are made outside the entity’s role as a business associate. Nevertheless, such disclosure must otherwise be made in accordance with Section 164.504 of the Privacy Rule, including the requirement for assurances that the PHI will be appropriately safeguarded. To cover the loophole that sub-contactors would not be subject to the Final Rule, HHS modified the HIPAA Rule to provide that a covered entity is not required to directly contract with downstream subcontractors (45 C.F.R. § 164.502(e)(1); 45 C.F.R. §164.308(b)(1)). Instead, a business associate who discloses PHI to a subcontractor must enter into a BA agreement with the subcontractor that provides assurances that the subcontractor will appropriately safeguard the information with the strictures of the Final Rule. See 45 C.F.R. § 164.308(b)(2). Therefore, liability for impermissible uses and disclosures attaches immediately when an entity (contactor or subcontractor) creates, receives, maintains or transmits PHI on behalf of a covered entity or business associate and otherwise meets the definition of a business associate not contingent on the existence of a BA agreement. One-year Safe Harbor Extends Amending Contract Until September 2014 In the general compliance deadline of the Final Rule, HHS provides a transition provision that allows a covered entity and a business associate (or a business associate and subcontractor) to continue operating under an existing business associate agreement for up to one year beyond the compliance date of the Final Rule, so long as certain requirements are satisfied (45 C.F.R. § 164.532(d)). An existing business associate agreement may continue to operate beyond the compliance deadline if (I) the agreement took effect prior to Jan. 25, 2013 and contains all the elements required by the regulations as of that date and (2) the agreement will not be modified or renewed from March 26, 2013 (the date the Final Rule took effect) to Sept. 23, 2013 (the Final Rule compliance date) (45 C.F.R. § 164.532(e)(1)). An existing business associate agreement that meets such specifications will be deemed compliant until the earlier of the date the agreement is modified or renewed on or after Sept. 23, 2013 or Sept. 22, 2014. Appendix 1: Sample Business Associate Agreement Provisions Editor’s Note: The following information was obtained from the HHS website under Health Information Privacy – for Covered Entities and Business Associates. The remainder of the column is a sample agreement. Items in brackets are either optional language or instructions for users of these samples. This is only sample language and use of these samples is not required for HIPAA compliance. Language may be changed to more accurately reflect business arrangements between a covered entity and business associate or business associate and subcontractor. These or similar provisions may be incorporated into an agreement for the provision of services between a covered entity and business associate or business associate and subcontractor or into a separate business associate agreement. The provisions address only concepts and requirements set forth in the HIPAA Privacy, Security, Breach Notification and Enforcement Rules and alone may not be sufficient to result in a binding contract under state law. They do not include many formalities and substantive provisions that may be required or typically included in a valid contract. Reliance on this sample may not be sufficient for compliance with state law and does not replace consultation with a lawyer or negotiations between parties. Definitions Catch-all Definition The following terms used in this Agreement shall have the same meaning as those terms in the HIPAA Rules: Breach, Data Aggregation, Designated Record Set, Disclosure, Health Care Operations, Individual, Minimum Necessary, Notice of Privacy Practices, Protected Health Information, Required By Law, Secretary, Security Incident, Subcontractor, Unsecured Protected Health Information and Use. Specific Definitions (a) Business Associate: The “Business Associate” shall generally have the same meaning as the term “business associate” at 45 CFR 160.103, and in reference to the party to this agreement, shall mean [insert name of Business Associate]. (b) Covered Entity: “Covered Entity” shall generally have the same meaning as the term “covered entity” at 45 CFR 160.103, and in reference to the party to this agreement, shall mean [insert name of Covered Entity]. (c) HIPAA Rules: “HIPAA Rules” shall mean the Privacy, Security, Breach Notification and Enforcement Rules at 45 CFR Part 160 and Part 164. Obligations and Activities of Business Associate The Business Associate agrees to: (a) Not use or disclose PHI other than as permitted or required by the Agreement or as required by law. (b) Use appropriate safeguards and comply with Subpart C of 45 CFR Part 164 with respect to protected electronic health information to prevent the use or disclosure of PHI other than as provided for by the Agreement. (c) Report to covered entity any use or disclosure of PHI not provided for by the Agreement of which it becomes aware, including breaches of unsecured protected health information as required at 45 CFR 164.410, and any security incident of which it becomes aware. (The parties may wish to add additional specificity regarding the breach notification obligations of the business associate, such as a stricter timeframe for the business associate to report a potential breach to the covered entity and/or whether the business associate will handle breach notifications to individuals, the HHS Office for Civil Rights (OCR), and potentially the media, on behalf of the covered entity.) (d) In accordance with 45 CFR 164.502(e)(1)(ii) and 164.308(b)(2), if applicable, ensure that any subcontractors that create, receive, maintain or transmit protected health information on behalf of the business associate agree to the same restrictions, conditions and requirements that apply to the business associate with respect to such information. (e) Make available protected health information in a designated record set to the [Choose either “covered entity” or “individual or the individual’s designee”] as necessary to satisfy covered entity’s obligations under 45 CFR 164.524. (The parties may wish to add additional specificity regarding how the business associate will respond to a request for access that the business associate receives directly from the individual [such as whether and in what time and manner a business associate is to provide the requested access or whether the business associate will forward the individual’s request to the covered entity to fulfill] and the timeframe for the business associate to provide the information to the covered entity.) (f) Make any amendment(s) to protected health information in a designated record set as directed or agreed to by the covered entity pursuant to 45 CFR 164.526 or take other measures as necessary to satisfy the covered entity’s obligations under 45 CFR 164.526. (The parties may wish to add additional specificity regarding how the business associate will respond to a request for an amendment that the business associate receives directly from the individual [such as whether and in what time and manner a business associate is to act on the request for amendment or whether the business associate will forward the individual’s request to the covered entity] and the timeframe for the business associate to incorporate any amendments to the information in the designated record set.) (g) Maintain and make available the information required to provide an accounting of disclosures to the [Choose either “covered entity” or “individual”] as necessary to satisfy covered entity’s obligations under 45 CFR 164.528. (The parties may wish to add additional specificity regarding how the business associate will respond to a request for an accounting of disclosures that the business associate receives directly from the individual [such as whether and in what time and manner the business associate is to provide the accounting of disclosures to the individual or whether the business associate will forward the request to the covered entity] and the timeframe for the business associate to provide information to the covered entity.) (h) To the extent the business associate is to carry out one or more of covered entity’s obligation(s) under Subpart E of 45 CFR Part 164, comply with the requirements of Subpart E that apply to the covered entity in performing of such obligation(s). (i) Make its internal practices, books and records available to the Secretary of HHS for purposes of determining compliance with the HIPAA Rules. Permitted Uses and Disclosures by BA (a) The business associate may only use or disclose protected health information. 1. Option 1 – Provide a specific list of permissible purposes. 2. Option 2 – Reference an underlying service agreement, such as “as necessary to perform the services set forth in Service Agreement.” (In addition to other permissible purposes, the parties should specify whether the business associate is authorized to use protected health information to de-identify the information in accordance with 45 CFR 164.514(a)-(c). The parties also may wish to specify the manner in which the business associate will de-identify the information and the permitted uses and disclosures by the business associate of the de-identified information.) (b) Business associate may use or disclose protected health information as required by law. (c) Business associate agrees to make uses and disclosures and requests for protected health information. 1. Option 1 consistent with covered entity’s minimum necessary policies and procedures. 2. Option 2 subject to the following minimum necessary requirements: Include specific minimum necessary provisions that are consistent with the covered entity’s minimum necessary policies and procedures. (d) Business Associate may not use or disclose PHI in a manner that would violate Subpart E of 45 CFR Part 164 if done by covered entity [if the Agreement permits the business associate to use or disclose protected health information for its own management and administration and legal responsibilities or for data aggregation services as set forth in optional provisions (e), (f), or (g) below, then add “except for the specific uses and disclosures set forth below.”] (e) [Optional] Business Associate may use PHI for the proper management and administration of the business associate or to carry out the legal responsibilities of the business associate. (f) [Optional] Business Associate may disclose PHI for the proper management and administration of business associate or to carry out the legal responsibilities of the business associate, provided the disclosures are required by law, or business associate obtains reasonable assurances from the person to whom the information is disclosed that the information will remain confidential and used or further disclosed only as required by law or for the purposes for which it was disclosed to the person, and the person notifies business associate of any instances of which it is aware in which the confidentiality of the information has been breached. (g) [Optional] Business associate may provide data aggregation services relating to the health care operations of the covered entity. Provisions for Covered Entity to Inform BA of Privacy Practices and Restrictions (a) [Optional] Covered entity shall notify business associate of any limitation(s) in the notice of privacy practices of covered entity under 45 CFR 164.520, to the extent that such limitation may affect business associate’s use or disclosure of protected health information. (b) [Optional] Covered entity shall notify business associate of any changes in, or revocation of, the permission by an individual to use or disclose his or her protected health information, to the extent that such changes may affect business associate’s use or disclosure of protected health information. (c) [Optional] Covered entity shall notify business associate of any restriction on the use or disclosure of protected health information that covered entity has agreed to or is required to abide by under 45 CFR 164.522, to the extent that such restriction may affect business associate’s use or disclosure of protected health information. Permissible Requests by Covered Entity [Optional] Covered entity shall not request business associate to use or disclose protected health information in any manner that would not be permissible under Subpart E of 45 CFR Part 164 if done by covered entity. [Include an exception if the business associate will use or disclose protected health information for, and the agreement includes provisions for, data aggregation or management and administration and legal responsibilities of the business associate.] Term and Termination (a) Term. The Term of this Agreement shall be effective as of [Insert effective date], and shall terminate on [Insert termination date or event] or on the date covered entity terminates for cause as authorized in paragraph (b) of this Section, whichever is sooner. (b) Termination for Cause. Business associate authorizes termination of this Agreement by covered entity, if covered entity determines business associate has violated a material term of the Agreement [and business associate has not cured the breach or ended the violation within the time specified by covered entity]. [Bracketed language may be added if the covered entity wishes to provide the business associate with an opportunity to cure a violation or breach of the contract before termination for cause.] (c) Obligations of Business Associate Upon Termination [Option 1 – if the business associate is to return or destroy all protected health information upon termination of the agreement] Upon termination of this Agreement for any reason, business associate shall return to covered entity [or, if agreed to by covered entity, destroy] all protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, that the business associate still maintains in any form. Business associate shall retain no copies of the protected health information. [Option 2—if the agreement authorizes the business associate to use or disclose protected health information for its own management and administration or to carry out its legal responsibilities and the business associate needs to retain protected health information for such purposes after termination of the agreement.] Upon termination of this Agreement for any reason, business associate, with respect to protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, shall: 1. Retain only that protected health information which is necessary for business associate to continue its proper management and administration or to carry out its legal responsibilities; 2. Return to covered entity [or, if agreed to by covered entity, destroy] the remaining protected health information that the business associate still maintains in any form; 3. Continue to use appropriate safeguards and comply with Subpart C of 45 CFR Part 164 with respect to electronic protected health information to prevent use or disclosure of the protected health information, other than as provided for in this Section, for as long as business associate retains the protected health information; 4. Not use or disclose the protected health information retained by business associate other than for the purposes for which such protected health information was retained and subject to the same conditions set out at [Insert section number related to paragraphs (e) and (f) above under “Permitted Uses and Disclosures By Business Associate”] which applied prior to termination; and 5. Return to covered entity [or, if agreed to by covered entity, destroy] the protected health information retained by business associate when it is no longer needed by business associate for its proper management and administration or to carry out its legal responsibilities. [The agreement also could provide that the business associate will transmit the protected health information to another business associate of the covered entity at termination, and/or could add terms regarding a business associate’s obligations to obtain or ensure the destruction of protected health information created, received, or maintained by subcontractors.] (d) Survival. The obligations of business associate under this Section shall survive the termination of this Agreement. Miscellaneous [Optional] (a) [Optional] Regulatory References. A reference in this Agreement to a section in the HIPAA Rules means the section as in effect or as amended. (b) [Optional] Amendment. The Parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for compliance with the requirements of the HIPAA Rules and any other applicable law. (c) [Optional] Interpretation. Any ambiguity in this Agreement shall be interpreted to permit compliance with the HIPAA Rules. Dr. Scheinfeld graduated from Harvard Law School in 1989 and Yale Medical School in 1997. He is an Assistant Clinical Professor in the Department of Dermatology at Weill Cornell Medical College in New York, NY. Disclosure: Dr. Scheinfeld has no conflicts of interest with any material in this column. On January 17, 2013, the Department of Health and Human Services (HHS) released the Omnibus Final Rule pursuant to the Health Information Technology for Economic and Clinical Health Act (HITECH Act) – “The Final Rules.” These rules explained business associates (BA) broadly. The effective date of the Final Rule was March 26, 2013, and covered entities and business associates must be in compliance with the requirements by Sept. 23, 2013. Under the Final Rule, BAs are directly liable to the federal government for noncompliance in regard to certain provisions of the Privacy Rule and the Security Rule and are subject to the Breach Notification and Enforcement Rules of the Final Rules Prior to the HITECH Act. Formal contractual liability to covered entities is pursuant to contractually bound BAs in regard to an executed BA agreements, but the BA does not have direct liability to the federal government under HIPAA laws and regulation. Business associates bound in the ambit of the HITECH Act and the broad definition of these entities adopted in the Final Rule impose compliance obligations, and the risk of substantial penalties for noncompliance applies to all entities dealing with covered entities. Clarifying the Definition of Business Associate Now, a BA of HHS is an entity that, on behalf of [a] covered entity or of an organized healthcare arrangement (as defined in [45 C.F.R. § 160.103]) 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 [the] 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 (45 C.F.R. § 160.103). A written contract between a covered entity and a business associate must accomplish the 10 items outlined in Table 1. Contracts between business associates and business associates that are subcontractors are subject to these same requirements. HHS states that “this change is intended to make the definition more consistent with language at [Section] 164.308(b) of the Security Rule and [Section] 164.502(e) of the Privacy Rule, as well as to clarify that entities that maintain or store protected health information (PHI) on behalf of a covered entity are business associates, even if they do not actually view the protected health information.” Conduits of PHI like Fedex are not subject to the final rules. Entity-holding PHI engaged in the long-term storage of PHI includes (1) bulk storage providers of hard copy data, (2) cloud storage providers and (3) other providers of electronic data storage services. HHS provided a short list of the types of entities that, by definition, constitute business associates including (1) a “subcontractor that creates, receives, maintains, or transmits protected health information on behalf of the business associate.” (45 C.F.R. § 160.103). Thus, subcontractors of a business associate who use or disclose PHI on behalf of the business associate are now directly subject to HIPAA. In the Final Rule, HHS noted that it included subcontractors in the definition of business associate “to avoid having privacy and security protections for PHI lapse merely because a function is performed by an entity that is a subcontractor rather than an entity with a direct relationship with a covered entity.” HHS clarified that disclosures by a business associate to a third-party entity for its own management and administration or legal responsibilities do not create a business associate relationship with the recipient of the PHI. This is because such disclosures are made outside the entity’s role as a business associate. Nevertheless, such disclosure must otherwise be made in accordance with Section 164.504 of the Privacy Rule, including the requirement for assurances that the PHI will be appropriately safeguarded. To cover the loophole that sub-contactors would not be subject to the Final Rule, HHS modified the HIPAA Rule to provide that a covered entity is not required to directly contract with downstream subcontractors (45 C.F.R. § 164.502(e)(1); 45 C.F.R. §164.308(b)(1)). Instead, a business associate who discloses PHI to a subcontractor must enter into a BA agreement with the subcontractor that provides assurances that the subcontractor will appropriately safeguard the information with the strictures of the Final Rule. See 45 C.F.R. § 164.308(b)(2). Therefore, liability for impermissible uses and disclosures attaches immediately when an entity (contactor or subcontractor) creates, receives, maintains or transmits PHI on behalf of a covered entity or business associate and otherwise meets the definition of a business associate not contingent on the existence of a BA agreement. One-year Safe Harbor Extends Amending Contract Until September 2014 In the general compliance deadline of the Final Rule, HHS provides a transition provision that allows a covered entity and a business associate (or a business associate and subcontractor) to continue operating under an existing business associate agreement for up to one year beyond the compliance date of the Final Rule, so long as certain requirements are satisfied (45 C.F.R. § 164.532(d)). An existing business associate agreement may continue to operate beyond the compliance deadline if (I) the agreement took effect prior to Jan. 25, 2013 and contains all the elements required by the regulations as of that date and (2) the agreement will not be modified or renewed from March 26, 2013 (the date the Final Rule took effect) to Sept. 23, 2013 (the Final Rule compliance date) (45 C.F.R. § 164.532(e)(1)). An existing business associate agreement that meets such specifications will be deemed compliant until the earlier of the date the agreement is modified or renewed on or after Sept. 23, 2013 or Sept. 22, 2014. Appendix 1: Sample Business Associate Agreement Provisions Editor’s Note: The following information was obtained from the HHS website under Health Information Privacy – for Covered Entities and Business Associates. The remainder of the column is a sample agreement. Items in brackets are either optional language or instructions for users of these samples. This is only sample language and use of these samples is not required for HIPAA compliance. Language may be changed to more accurately reflect business arrangements between a covered entity and business associate or business associate and subcontractor. These or similar provisions may be incorporated into an agreement for the provision of services between a covered entity and business associate or business associate and subcontractor or into a separate business associate agreement. The provisions address only concepts and requirements set forth in the HIPAA Privacy, Security, Breach Notification and Enforcement Rules and alone may not be sufficient to result in a binding contract under state law. They do not include many formalities and substantive provisions that may be required or typically included in a valid contract. Reliance on this sample may not be sufficient for compliance with state law and does not replace consultation with a lawyer or negotiations between parties. Definitions Catch-all Definition The following terms used in this Agreement shall have the same meaning as those terms in the HIPAA Rules: Breach, Data Aggregation, Designated Record Set, Disclosure, Health Care Operations, Individual, Minimum Necessary, Notice of Privacy Practices, Protected Health Information, Required By Law, Secretary, Security Incident, Subcontractor, Unsecured Protected Health Information and Use. Specific Definitions (a) Business Associate: The “Business Associate” shall generally have the same meaning as the term “business associate” at 45 CFR 160.103, and in reference to the party to this agreement, shall mean [insert name of Business Associate]. (b) Covered Entity: “Covered Entity” shall generally have the same meaning as the term “covered entity” at 45 CFR 160.103, and in reference to the party to this agreement, shall mean [insert name of Covered Entity]. (c) HIPAA Rules: “HIPAA Rules” shall mean the Privacy, Security, Breach Notification and Enforcement Rules at 45 CFR Part 160 and Part 164. Obligations and Activities of Business Associate The Business Associate agrees to: (a) Not use or disclose PHI other than as permitted or required by the Agreement or as required by law. (b) Use appropriate safeguards and comply with Subpart C of 45 CFR Part 164 with respect to protected electronic health information to prevent the use or disclosure of PHI other than as provided for by the Agreement. (c) Report to covered entity any use or disclosure of PHI not provided for by the Agreement of which it becomes aware, including breaches of unsecured protected health information as required at 45 CFR 164.410, and any security incident of which it becomes aware. (The parties may wish to add additional specificity regarding the breach notification obligations of the business associate, such as a stricter timeframe for the business associate to report a potential breach to the covered entity and/or whether the business associate will handle breach notifications to individuals, the HHS Office for Civil Rights (OCR), and potentially the media, on behalf of the covered entity.) (d) In accordance with 45 CFR 164.502(e)(1)(ii) and 164.308(b)(2), if applicable, ensure that any subcontractors that create, receive, maintain or transmit protected health information on behalf of the business associate agree to the same restrictions, conditions and requirements that apply to the business associate with respect to such information. (e) Make available protected health information in a designated record set to the [Choose either “covered entity” or “individual or the individual’s designee”] as necessary to satisfy covered entity’s obligations under 45 CFR 164.524. (The parties may wish to add additional specificity regarding how the business associate will respond to a request for access that the business associate receives directly from the individual [such as whether and in what time and manner a business associate is to provide the requested access or whether the business associate will forward the individual’s request to the covered entity to fulfill] and the timeframe for the business associate to provide the information to the covered entity.) (f) Make any amendment(s) to protected health information in a designated record set as directed or agreed to by the covered entity pursuant to 45 CFR 164.526 or take other measures as necessary to satisfy the covered entity’s obligations under 45 CFR 164.526. (The parties may wish to add additional specificity regarding how the business associate will respond to a request for an amendment that the business associate receives directly from the individual [such as whether and in what time and manner a business associate is to act on the request for amendment or whether the business associate will forward the individual’s request to the covered entity] and the timeframe for the business associate to incorporate any amendments to the information in the designated record set.) (g) Maintain and make available the information required to provide an accounting of disclosures to the [Choose either “covered entity” or “individual”] as necessary to satisfy covered entity’s obligations under 45 CFR 164.528. (The parties may wish to add additional specificity regarding how the business associate will respond to a request for an accounting of disclosures that the business associate receives directly from the individual [such as whether and in what time and manner the business associate is to provide the accounting of disclosures to the individual or whether the business associate will forward the request to the covered entity] and the timeframe for the business associate to provide information to the covered entity.) (h) To the extent the business associate is to carry out one or more of covered entity’s obligation(s) under Subpart E of 45 CFR Part 164, comply with the requirements of Subpart E that apply to the covered entity in performing of such obligation(s). (i) Make its internal practices, books and records available to the Secretary of HHS for purposes of determining compliance with the HIPAA Rules. Permitted Uses and Disclosures by BA (a) The business associate may only use or disclose protected health information. 1. Option 1 – Provide a specific list of permissible purposes. 2. Option 2 – Reference an underlying service agreement, such as “as necessary to perform the services set forth in Service Agreement.” (In addition to other permissible purposes, the parties should specify whether the business associate is authorized to use protected health information to de-identify the information in accordance with 45 CFR 164.514(a)-(c). The parties also may wish to specify the manner in which the business associate will de-identify the information and the permitted uses and disclosures by the business associate of the de-identified information.) (b) Business associate may use or disclose protected health information as required by law. (c) Business associate agrees to make uses and disclosures and requests for protected health information. 1. Option 1 consistent with covered entity’s minimum necessary policies and procedures. 2. Option 2 subject to the following minimum necessary requirements: Include specific minimum necessary provisions that are consistent with the covered entity’s minimum necessary policies and procedures. (d) Business Associate may not use or disclose PHI in a manner that would violate Subpart E of 45 CFR Part 164 if done by covered entity [if the Agreement permits the business associate to use or disclose protected health information for its own management and administration and legal responsibilities or for data aggregation services as set forth in optional provisions (e), (f), or (g) below, then add “except for the specific uses and disclosures set forth below.”] (e) [Optional] Business Associate may use PHI for the proper management and administration of the business associate or to carry out the legal responsibilities of the business associate. (f) [Optional] Business Associate may disclose PHI for the proper management and administration of business associate or to carry out the legal responsibilities of the business associate, provided the disclosures are required by law, or business associate obtains reasonable assurances from the person to whom the information is disclosed that the information will remain confidential and used or further disclosed only as required by law or for the purposes for which it was disclosed to the person, and the person notifies business associate of any instances of which it is aware in which the confidentiality of the information has been breached. (g) [Optional] Business associate may provide data aggregation services relating to the health care operations of the covered entity. Provisions for Covered Entity to Inform BA of Privacy Practices and Restrictions (a) [Optional] Covered entity shall notify business associate of any limitation(s) in the notice of privacy practices of covered entity under 45 CFR 164.520, to the extent that such limitation may affect business associate’s use or disclosure of protected health information. (b) [Optional] Covered entity shall notify business associate of any changes in, or revocation of, the permission by an individual to use or disclose his or her protected health information, to the extent that such changes may affect business associate’s use or disclosure of protected health information. (c) [Optional] Covered entity shall notify business associate of any restriction on the use or disclosure of protected health information that covered entity has agreed to or is required to abide by under 45 CFR 164.522, to the extent that such restriction may affect business associate’s use or disclosure of protected health information. Permissible Requests by Covered Entity [Optional] Covered entity shall not request business associate to use or disclose protected health information in any manner that would not be permissible under Subpart E of 45 CFR Part 164 if done by covered entity. [Include an exception if the business associate will use or disclose protected health information for, and the agreement includes provisions for, data aggregation or management and administration and legal responsibilities of the business associate.] Term and Termination (a) Term. The Term of this Agreement shall be effective as of [Insert effective date], and shall terminate on [Insert termination date or event] or on the date covered entity terminates for cause as authorized in paragraph (b) of this Section, whichever is sooner. (b) Termination for Cause. Business associate authorizes termination of this Agreement by covered entity, if covered entity determines business associate has violated a material term of the Agreement [and business associate has not cured the breach or ended the violation within the time specified by covered entity]. [Bracketed language may be added if the covered entity wishes to provide the business associate with an opportunity to cure a violation or breach of the contract before termination for cause.] (c) Obligations of Business Associate Upon Termination [Option 1 – if the business associate is to return or destroy all protected health information upon termination of the agreement] Upon termination of this Agreement for any reason, business associate shall return to covered entity [or, if agreed to by covered entity, destroy] all protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, that the business associate still maintains in any form. Business associate shall retain no copies of the protected health information. [Option 2—if the agreement authorizes the business associate to use or disclose protected health information for its own management and administration or to carry out its legal responsibilities and the business associate needs to retain protected health information for such purposes after termination of the agreement.] Upon termination of this Agreement for any reason, business associate, with respect to protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, shall: 1. Retain only that protected health information which is necessary for business associate to continue its proper management and administration or to carry out its legal responsibilities; 2. Return to covered entity [or, if agreed to by covered entity, destroy] the remaining protected health information that the business associate still maintains in any form; 3. Continue to use appropriate safeguards and comply with Subpart C of 45 CFR Part 164 with respect to electronic protected health information to prevent use or disclosure of the protected health information, other than as provided for in this Section, for as long as business associate retains the protected health information; 4. Not use or disclose the protected health information retained by business associate other than for the purposes for which such protected health information was retained and subject to the same conditions set out at [Insert section number related to paragraphs (e) and (f) above under “Permitted Uses and Disclosures By Business Associate”] which applied prior to termination; and 5. Return to covered entity [or, if agreed to by covered entity, destroy] the protected health information retained by business associate when it is no longer needed by business associate for its proper management and administration or to carry out its legal responsibilities. [The agreement also could provide that the business associate will transmit the protected health information to another business associate of the covered entity at termination, and/or could add terms regarding a business associate’s obligations to obtain or ensure the destruction of protected health information created, received, or maintained by subcontractors.] (d) Survival. The obligations of business associate under this Section shall survive the termination of this Agreement. Miscellaneous [Optional] (a) [Optional] Regulatory References. A reference in this Agreement to a section in the HIPAA Rules means the section as in effect or as amended. (b) [Optional] Amendment. The Parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for compliance with the requirements of the HIPAA Rules and any other applicable law. (c) [Optional] Interpretation. Any ambiguity in this Agreement shall be interpreted to permit compliance with the HIPAA Rules. Dr. Scheinfeld graduated from Harvard Law School in 1989 and Yale Medical School in 1997. He is an Assistant Clinical Professor in the Department of Dermatology at Weill Cornell Medical College in New York, NY. Disclosure: Dr. Scheinfeld has no conflicts of interest with any material in this column.
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