HIPAA and the Cloud – Moving Toward 2015

In the healthcare sector, the storing and sharing of sensitive digitized patient data has become a significant undertaking and is a heavy burden on resources. Preparation for a complete conversion from paper medical records to electronic health records (EHR) by 2015 has independent practitioners and small healthcare entities making significant investments in equipment, hardware and software, and tech-savvy personnel. Rather than focusing on the delivery of core patient care services, they must now worry about IT infrastructure issues, underlying network constraints and data center accessibility as well. This is problematic as very few medical offices or small health service organizations can afford to employ dedicated IT staff.

In this context, it is obvious that cloud-based solutions, which consolidate and outsource computing resources to external entities, would provide substantial relief to healthcare service providers. Data stored in the cloud is available on-demand and requires no expensive equipment, physical home or hired staff to manage and maintain it.

But while other business sectors have fully embraced the cloud for cheaper, more flexible, scalable and secure computing, many in the healthcare sector have yet to entertain putting patient data into the cloud. HIPAA-driven security and privacy concerns have been a serious deterrent.

This is about to change. Recent modifications to the HIPAA Privacy, Security, Enforcement and Breach Rules have made it clearer that data center operators are to be classified as business associates under HIPAA. This means cloud-service providers are required by law to report and respond to data breaches and uphold their obligation to properly protect and secure patient info.

These modifications are a game changer because they now assure covered entities such as doctor offices, hospitals, and health insurers that they can remain HIPAA compliant while adopting cloud technology.

Cloud Computing in Healthcare Sector Projected to Grow

According to recent report by the research firm Markets and Markets, although the healthcare sector has been notoriously slow when it comes to adopting new technology trends, the cloud computing market in this sector is projected to grow to $5.4 billion by 2017.

Breaking Down HIPAA and the Cloud

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was upgraded in 2009 with the Health Information Technology for Economic and Clinical Health (HITECH) ruling addressing the growing use of digitized medical records. HITECH was introduced to provide federal funding to deploy HER and establish a protocol for protecting the electronic storage and transmission of Protected Health Information (PHI). [PHI is defined as any information obtained, used or disclosed in the course of providing a healthcare service–treatment, payment, operations or medical records–that can be used to identify an individual.]

Compliance with HIPAA requires the reporting of any potential unauthorized PHI access. Because any impermissible access, use, or disclosure of PHI can severely damage an organization’s reputation, as well as levy penalties varying from $100 to $50,000 for first time offenders, it is understandable that many in the healthcare industry have chosen to avoid migrating patient data to the cloud unless they’re absolutely certain that a cloud-service provider (CSP) is HIPAA compliant.

Cloud-Service Providers as HIPAA Business Associates

Over the past five years, there has been much confusion whether cloud-service providers were classified as business associates (BAs) under HIPAA. The Department of Health and Human Services holds BAs accountable for certain required privacy and security obligations to protect PHI data, upholding them to a signed Business Associate Agreement (BAA). If confidential health data is compromised, the Associate is liable for responsibilities on their end.

The HIPAA privacy rule defines a BA as “a person or entity that performs certain functions or activities that involve the use or disclosure of protected health information on behalf of, or provides services to, a covered entity.”

Since most CSPs “maintain” PHI on behalf of either the covered entity or another BA that subcontracts them, one would assume they’d be deemed a BA themselves. But that hasn’t always been the case due to some ambiguous language that originally accompanied the regulation, language that was only just recently modified to expand the scope of BAs as defined by HIPAA.

As you can see, this language easily leaves “access on a routine basis” up to interpretation. For instance, although it states that HIPAA requires those accessing PHI data on a routine basis be treated as BAs, some CSPs felt they were mere “conduits” of protected data – not very different than courier services or postal services, having only random or infrequent access to public health information as they transport/share it with others. These CSPs would often argue that a signed BAA wasn’t necessary, thus avoiding the added due diligence or security control requirements and liability.

Take a high-volume Platform-as-a-Service (PaaS) for example. Here the CSPs primary role is to provide storage services that enable the covered healthcare entity’s staff, such as a doctor’s office, to routinely look at data stored remotely. While the CSP providing the PaaS bears responsibility for maintenance and upgrades to the hardware, software and the operating system, they don’t touch the actual PHI data all that much. Therefore, a CSP offering PaaS doesn’t necessarily have the same level of PHI access as a cloud provider using Software-as-a-Service (SaaS) who must grant their personnel daily access to PHI.

A similar argument could be made for a CSP who maintains encrypted PHI for a covered healthcare entity but doesn’t hold the encryption key.

This uncertainty was the reason for much of the healthcare sector’s reluctance to take to the cloud. If a cloud-service provider (CSP) didn’t feel the need to sign a BAA, and the patient info they managed was breached, the covered healthcare entity, not the CSP, would be fined.

The new HIPAA Omnibus Rule further clarifies that BAs and subcontractors of BAs are directly liable for compliance with certain HIPAA Privacy and Security Requirements. This has calmed skeptics, resulting in a healthcare industry now actively looking to cloud-based solutions.

Protecting personal information and cloud security are a must by 2015. CLICK HERE for a free network assessment and choose Cognoscape for your HIPAA compliant managed IT services.