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Jordan Cohen is an  Associate Editor of Health Law & Policy Matters and Associate in the Health Law Practice based in the firm’s New York office. He provides clients with advice and counsel relating to federal health care laws and regulations, including the Stark Law, the Anti-Kickback Law, the Anti-Markup Rule, and state health care laws and regulations. Jordan also counsels clients on compliance with HIPAA’s Privacy Rule and Security Rule, including new requirements under the HITECH Act and 2013 Omnibus Regulations.

Unbeknownst to many, Congress established the Health Care Industry Cybersecurity Task Force in 2015 to address the health care industry’s cybersecurity challenges. That Task Force–a combination of public and private participants–released a report last week describing U.S. healthcare cybersecurity as being in “critical condition.” This conclusion, while disheartening, shouldn’t be surprising to readers of this blog. We’ve blogged about a range of cybersecurity issues affecting health care, from the potential hacking of medical devices with deadly consequences, to ransomware attacks that threaten to shut down hospitals.  Continue Reading HHS Task Force Says Healthcare Cybersecurity is in “Critical Condition”

Last week, the Department of Justice (DOJ) entered into a $34 million settlement with Mercy Hospital Springfield (“Hospital”) of Springfield, Missouri, and its affiliate Mercy Clinic (“Clinic”). The settlement resolves an allegation that the Clinic violated the Stark Law by compensating twelve Clinic physicians in a manner that took into account the volume and value of the physicians’ referrals to the Hospital’s infusion center.  The U.S. contended that the defendants’ Stark Law violations caused their reimbursement claims to Medicare for infusion services to violate the False Claims Act. Continue Reading Hospital and its Clinic Agree to $34 Million Settlement to False Claims Act Allegation that Compensation to Oncologists Violated the Stark Law

HealthLaw_stethoscope2The Trump administration is considering releasing a rule to ease the burden that small practices are facing in trying to comply with the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), according to a recent report in The Hill.

By way of background, MACRA consolidates a number of existing reporting programs into a two-track system under which eligible clinicians will receive incentive reimbursement payments through either the Merit-Based Incentive Payment Systems (MIPS) or through certain alternative payment models (APMs). Under MIPS, eligible clinicians can receive incentive payment (or penalties) based on their reporting of various measures. (For a detailed discussion of MACRA and these reporting requirements, see our prior post.) Alternatively, clinicians can be reimbursed under the second track if they participate in an “Advanced APM,” which include certain accountable care organizations (ACOs) and patient-centered medical homes. Continue Reading Insiders Say New MACRA Rule Likely as Providers Look to Sec. Price to Ease Burden

Last week the Health Care Compliance Association hosted its annual “Compliance Institute.”  Iliana Peters, HHS Office for Civil Rights’ Senior Advisor for HIPAA Compliance and Enforcement, provided a thorough update of HIPAA enforcement trends as well as a road map to OCR’s current and future endeavors.

Continuing Enforcement Issues

Ms. Peters identified key ten enforcement issues that OCR continues to encounter through its enforcement of HIPAA. These issues include:

  1. Impermissible Disclosures. HIPAA’s Privacy Rule prohibits covered entities and business associates from disclosing PHI except as permitted or required under HIPAA. Impermissible disclosures identified by Ms. Peters all center on the need for authorization, and include:
    • Covered entities permitting news media to film individuals in their facilities prior to obtaining a patient’s authorization.
    • Covered entities publishing PHI on their website or on social media without an individual’s authorization.
    • Covered entities confirming that an individual is a patient and providing other PHI to reporters without an individual’s authorization.
    • Covered entities faxing PHI to an individual’s employer without the individual’s authorization.
  2. Lack of Business Associate Agreements. OCR continues to see covered entities failing to enter into business associate agreements.
  3. Incomplete or Inaccurate Risk Analysis. Under HIPAA’s Security Rule, covered entities are required to conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic PHI (ePHI). According to Ms. Peters, organizations frequently underestimate the proliferation of ePHI throughout their environment, including into systems related to billing, faxing, backups, and medical devices, among others.
  4. Failure to manage identified risks. HIPAA requires regulated entities to put in place security measures to reduce risks and vulnerabilities. According to the presentation, several OCR breach investigations found that the causes of reported breaches were risks that had previously been identified in a risk analysis but were never mitigated. In some instances, encryption was included as part of the remediation plan, but was never implemented.
  5. Lack of transmission security. While not required in all cases, HIPAA does require that ePHI be encrypted whenever it is deemed appropriate. The presentation identified a number of applications in which encryption should be considered when transmitting ePHI, including email, texting, application sessions, file transmissions (e.g., FTP), remote backups, and remote access and support services (e.g., VPNs).
  6. Lack of Appropriate Auditing. HIPAA requires the implementation of mechanisms (whether hardware, software or procedural) that record and examine activity in systems containing ePHI. HIPAA-regulated entities are required to review audit records to determine if there should be additional investigation. The presentation highlighted certain activities that could warrant such additional investigation, including: access to PHI during non-business hours or during time off, access to an abnormally high number of records containing PHI, access to PHI of persons for which media interest exists, and access to PHI of employees.
  7. Patching of Software. The use of unpatched or unsupported software on systems which contain ePHI could introduce additional risk into an environment. Ms. Peters also pointed to other systems that should be monitored, including router and firewall firmware, anti-virus and anti-malware software, and multimedia and runtime environments (e.g., Adobe Flash, Java, etc.).
  8. Insider Threats. The presentation identifies insider threats as a continuing enforcement issue. Under HIPAA, organizations must implement policies and procedures to ensure that all members of its workforce have appropriate access to ePHI and to prevent those workforce members who do not have access from obtaining such access. Termination procedures should be put in place to ensure that access to PHI is revoked when a workforce member leaves.
  9. Disposal of PHI. HIPAA requires organizations to implement policies and procedures that ensure proper disposal of PHI. These procedures must guarantee that the media has been cleared, purged or destroyed consistent with NIST Special Publication 800-88: Guidelines for Media Sanitization.
  10. Insufficient Backup and Contingency Planning. Organizations are required to ensure that adequate contingency planning (including data backup and disaster recovery plans) is in place and would be effective when implemented in the event of an actual disaster or emergency situation. Organizations are required to periodically test their plans and revise as necessary.

Upcoming Guidance and FAQs

OCR also identified upcoming guidance and FAQs that it will use to address the following areas:

  • Privacy and security issues related to the Precision Medicine Initiative’s All of Us research program
  • Text messaging
  • Social media
  • Use of Certified EHR Technology (CEHRT) & compliance with HIPAA Security Rule (to be release with the Office of the National Coordinator for Health Information Technology (ONC))
  • The Resolution Agreement and Civil Monetary Penalty process
  • Updates of existing FAQs to account for the Omnibus Rule and other recent developments
  • The “minimum necessary” requirement

Long-term Regulatory Agenda

The presentation also identifies two long-term regulatory goals to implement certain provisions of the HITECH Act. One regulation will relate to providing individuals harmed by HIPAA violations with a percentage of any civil monetary penalties or settlements collected by OCR, while the second will implement a HITECH Act provision related to the accounting of disclosures of PHI.

Audit Program Status

The presentation discussed the current status of OCR’s audit program. As we have previously discussed, OCR is in the process of conducting desk audits of covered entities and business associates. These audits consist of a review of required HIPAA documentation that is submitted to OCR. According to Ms. Peters, OCR has conducted desk audits of 166 covered entities and 43 business associates. Ms. Peters also used the presentation to confirm that on-site audits of both covered entities and business associates will be conducted in 2017 after the desk audits are completed. We will continue to follow and report on developments in the audit program.

Commentary

The list of continuing enforcement issues provides covered entities and business associates with a helpful reminder of the compliance areas that are most likely to get them in compliance trouble. Some of the enforcement issues may require HIPAA-regulated entities to revisit decisions that they previously made as part of a risk analysis. Transmission security (#5, above) is an example of such an area that may warrant reexamination. In the past, encrypting data was often too expensive or too impracticable for many organizations. However the costs of encryption have decreased while it has become easier to implement. A covered entity or business associate that suffers a breach due to transmitting unencrypted PHI over the internet will likely garner little sympathy from OCR going forward. The presentation is also notable for the long list of guidance and FAQs that OCR will be publishing, as well as their plan to issue regulations to address changes ushered in by the HITECH Act that were not captured by the 2013 Omnibus Rule. These regulations, particularly the regulations related to accounting for disclosures of PHI, could have a far-reaching impact on how covered entities and business associates comply with HIPAA in the future.

Last week, the U.S. Department of Health and Human Services’ Office for Civil Rights (OCR) released new guidance on reporting and monitoring cyber threats.  The guidance urges covered entities and business associates to report suspicious activity, including cybersecurity incidents, to the United States Computer Emergency Readiness Team (US-CERT). US-CERT is an organization within the Department of Homeland Security’s National Cybersecurity and Communications Integration Center (NCCIC) that is responsible for analyzing and reducing cyber threats and vulnerabilities, disseminating cyber threat warning information, and coordinating incident response activities. It is operational 24 hours a day, and accepts, triages, and collaboratively responds to incidents. Continue Reading OCR Releases Guidance on Reporting and Monitoring Cyber Threats

On February 16, 2017, the HHS Office for Civil Rights (OCR) disclosed a $5.5 million settlement with Memorial Healthcare Systems (MHS) for HIPAA violations affecting the protected health information (PHI) of 115,143 individuals. The Resolution Agreement, which can be found here, also contains a detailed corrective action plan (CAP).

The Florida-based health system reported to OCR that the PHI had been impermissibly accessed by MHS employees and impermissibly disclosed to affiliated physician office staff. The PHI consisted of names, dates of birth, and social security numbers.

Continue Reading $5.5 Million HIPAA Settlement Underscores Importance of Audit Controls

Earlier this week, the U.S. Department of Homeland Security (DHS) updated a prior advisory revealing cybersecurity vulnerabilities in St. Jude Medical’s Merlin@home transmitter.

The Merlin@home transmitter is used by patients with St. Jude implantable cardiac devices to wirelessly transmit data from the patient’s cardiac device to the Merlin.net Patient Care Network. The uploaded data can then be monitored by a physician to determine whether the device is functioning properly.  This past January, DHS released an advisory detailing a vulnerability that could allow an unauthorized user to remotely access a patient’s RF-enabled implanted cardiac device by altering the Merlin@home Transmitter. The altered transmitter could then be used to modify the implanted device to rapidly deplete its battery and/or administer inappropriate pacing or shocks to the patient. St. Jude quickly made an update available to patch this vulnerability.

The updated advisory extends the vulnerability to Merlin transmitters that are used by providers. These transmitters contain the same hardware and software as the models used by patients in their home, but have an additional functionality called MerlinOnDemand that allows providers to use one transmitter in their office to obtain device data from multiple patients. According to the advisory, the endpoints between the implanted device and the Merlin.net website are not verified. This makes the transmission vulnerable to a “man-in-the-middle” that would allow an attacker to remotely access the device. St. Jude has said that the MerlinOnDemand-enabled devices will receive the same patch that was provided to the home-based models.

The new vulnerability comes on the heels of the U.S. Food and Drug Administration’s release of final guidance on the postmarket management of cybersecurity in medical devices.

While 2016 marked one of the least productive years in the history of Congress, the same cannot be said of health care enforcement and regulatory agencies.  Perhaps motivated by the impending change in administration, these agencies promulgated a number of notable regulations in 2016, including:

  • A Department of Justice (DOJ) Interim Final Rule that significantly increases penalties under the False Claims Act (FCA), making already high stakes litigation even higher.
  • An Interim Final Rule from the Office of Inspector General for the U.S. Department of Health and Human Services (OIG) and other agencies increasing civil penalties for violations of various statutes and regulations, including the Civil Monetary Penalties Law (CMPL) and its implementing regulations.
  • A Final Rule that addresses the OIG’s expanded authority under the CMPL.
  • A long-awaited Final Rule from the Center for Medicare & Medicaid Services (CMS) concerning the “60 Day Rule” for returning overpayments.
  • A Final Rule from the OIG that amends the safe harbors under the federal Anti-Kickback Statute (AKS) and adds exceptions under the CMPL’s beneficiary inducement prohibition.

Below we discuss the highlights of each rule and how we expect each to impact the enforcement environment in 2017 and beyond. Continue Reading Health Care Enforcement Review and 2017 Outlook: Significant Regulatory Developments

Last week, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services released a report analyzing CMS’ readiness to implement major parts of the Medicare Access and CHIP Reauthorization Act  of 2015 (MACRA). The report provides an inside look at the steps CMS is taking to implement MACRA’s Quality Payment Program (QPP), which is an ambitious transformation of the way in which the federal government reimbursements health care providers. The report highlights two key vulnerabilities for the MACRA transition, a process that will hopefully be smoother than the troubled roll out of HealthCare.gov.

Continue Reading OIG Report Offers Glimpse into CMS Progress Towards MACRA Implementation