HIPAA for Managed Service Providers

Understanding HIPAA is crucial for Managed Service Providers offering services to the healthcare sector or to organizations that assist the healthcare industry

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Navigating HIPAA regulations can be challenging for Managed Service Providers (MSPs). MSPs may fall under the category of Business Associates if they offer services to a healthcare organization. Additionally, they could be classified as HIPAA covered subcontractors if they provide services to a company that supports a healthcare organization. For instance, if an MSP handles data storage for an IT firm that provides services to a medical center, the MSP may need to comply with HIPAA rules depending on the information it stores for the IT firm. If the data includes personal identifiers classified as 'Protected Health Information,' the MSP must abide by HIPAA regulations and establish a 'Business Associate Agreement' while serving the healthcare facility or the supporting company.

The Importance of HIPAA Compliance for MSPs

Historically, MSPs didn't pay much attention to HIPAA, as they focused on their expertise in cloud technology, systems management, and security, leaving the HIPAA compliance to their healthcare clients. However, the landscape changed in 2013 with the implementation of the Final Omnibus Rule, extending the HIPAA obligations to Business Associates and subcontractors. Now, these MSPs can be held accountable for breaches of Protected Health Information, facing hefty fines of up to $63,973 per compromised record. Even without a breach, penalties may apply if patients are denied access to their health information. Therefore, it's crucial for Managed Service Providers to prioritize HIPAA compliance. In addition to avoiding penalties, MSPs can gain commercial benefits by ensuring their services meet HIPAA standards when working with healthcare organizations.

How MSPs Can Benefit Commercially from HIPAA Regulations

Research indicates that more than two million Business Associates and subcontractors serving healthcare facilities may not be familiar with HIPAA regulations and their scope. As a precautionary measure, many healthcare facilities opt to enter into Business Associate Agreements with all their business partners, regardless of their access to Protected Health Information. A strong understanding of HIPAA and adherence to its Security and Privacy Rules can give a Managed Services Provider (MSP) a competitive edge, not only in the healthcare industry but also in other regulated sectors. Demonstrating compliance with complex HIPAA regulations can attract clients from industries such as finance and law. Showing that your company comprehends the requirements of regulated industries can set you apart from competitors and increase your business opportunities, as many healthcare organizations prioritize working with HIPAA-compliant service providers.

MSPs Offering HIPAA Compliance Services can Drastically Boost Profit Margins

MSPs handling PHI must abide by HIPAA Rules, but they can go beyond by providing compliance services to assist clients in achieving or maintaining HIPAA compliance. Despite the obligatory nature of HIPAA compliance for healthcare organizations and their associates, a considerable number are not compliant. A report from HHS revealed that 70% of healthcare organizations do not fully comply with HIPAA Rules, with incomplete risk assessments being a primary area of non-compliance. Regular security risk assessments are crucial, with annual assessments being the recommended practice.MSPs that are HIPAA compliant can offer security risk assessment services to healthcare clients and other businesses in the healthcare sector. While MSPs are required to be HIPAA compliant, they do not need to be compliance experts themselves. They can collaborate with third-party HIPAA compliance experts and provide HIPAA compliance software solutions through referral programs. Some HIPAA compliance firms even offer marketing material for MSPs to sell compliance services to their clients. Offering HIPAA compliance not only boosts revenue but also enhances relationships with healthcare clients.Furthermore, navigating the compliance and risk assessment procedures often unveils security gaps that need attention. MSPs are well-positioned to offer solutions to address these gaps, thereby benefiting from providing additional services. The compliance process helps justify the necessity for these services, ultimately reinforcing the value proposition for both MSPs and their clients.

IT Service Providers and HIPAA Compliance

The importance of HIPAA compliance for IT service providers cannot be overstated, particularly in comparison to other business associates. IT service providers must have the capability to remotely access clients' systems, monitor networks, and resolve IT issues. Given that these systems often contain electronic protected health information (ePHI), it is imperative that IT service providers understand and adhere to the regulations outlined in the HIPAA Privacy and Security Rules. Safeguarding ePHI from potential threats, preventing data transfer to insecure locations, and ensuring all staff members are trained to comply with HIPAA Rules are key responsibilities for IT service providers. Notably, Managed Service Providers (MSPs) catering to the healthcare sector are frequently targeted by malicious actors who understand that infiltrating an MSP's network can provide access to valuable healthcare provider networks. By undergoing the HIPAA compliance process and implementing necessary safeguards to meet HIPAA Security Rule requirements, MSPs can bolster their defenses against cyber threats and make it more challenging for hackers to compromise their networks.

Services for Managing HIPAA Compliance

When MSP clients undergo compliance procedures and security risk assessments, they often uncover security deficiencies that jeopardize the confidentiality, integrity, and availability of ePHI. In order to comply with HIPAA regulations, these risks must be mitigated to a minimal and acceptable level. MSPs play a crucial role in this process by developing remediation strategies to address vulnerabilities, which may require implementing additional security measures offered by the MSP. Common security gaps typically involve communication barriers that can be resolved through secure messaging. Another common issue is the lack of robust disaster recovery plans, which MSPs can assist in by providing backup and disaster recovery services. Additionally, MSPs can support clients with secure cloud storage, encryption software, system monitoring, and auditing, ultimately increasing recurring revenue for healthcare clients and boosting profits for MSPs.

Why Understanding the HIPAA Privacy Rule is Essential for MSPs

Whether an MSP is serving a Covered Entity or a service provider, storing or handling ePHI on the customer's behalf may lead to situations where the data subject (e.g., a patient) requests access to their health information as allowed by the Privacy Rule. Therefore, it is essential for MSPs to have a clear understanding of the Privacy Rule's provisions regarding patient rights, acceptable uses and disclosures of personally identifiable health information, and the standard for minimum necessary information. Additionally, compliance with other aspects of the Privacy Rule may also be necessary for MSPs based on the services offered to the customer.

Is it possible for an MSP to face fines for breaching right of access rules?

Yes, in principle. When a patient asks for their health information, the Covered Entity must reply within 30 days. If the Managed Service Provider (MSP) stores archived health information and fails to respond to a request from a Covered Entity to retrieve the information, the MSP could be held responsible if the patient lodges a complaint with the Office for Civil Rights at the Department of Health and Human Services (HHS).

Do MSPs Always Fall Under HIPAA Business Associate Rules?

If a Managed Service Provider (MSP) offers a service to a Covered Entity or a service company that involves handling ePHI, they are typically classified as a Business Associate. In such cases, it is advisable to establish a Business Associate Agreement with the customer. Exceptions may arise in situations where state regulations take precedence over HIPAA requirements. For instance, Texas' Medical Records Privacy Act does not differentiate between Covered Entities and Business Associates; all businesses governed by the Act must adhere to its regulations entirely. Additionally, the Act applies to the medical records of all Texas residents, irrespective of the business's location or the resident's whereabouts when the health information was obtained, adding further complexity to compliance matters.

What kind of HIPAA training is required for employees at MSPs?

A Business Associate MSP must ensure that all workforce members, irrespective of their ePHI access level, undergo mandatory security and awareness training. The specific type of training needed will depend on the nature of the services offered by the MSP. For instance, certain workforce members may require training on handling patient access requests.

Is a Business Associate Agreement still required if an MSP offers a 'zero-knowledge' service to a Covered Entity?

Even if an MSP is unable to access encrypted ePHI because the Covered Entity holds the decryption key through zero knowledge service, the MSP is still categorized as a business associate if it is responsible for storing or transmitting ePHI on behalf of the Covered Entity. In such cases, a Business Associate Agreement is still required.


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