Health Care Alert April 2008 Author: Patricia C. Shea 717.231.5870 patricia.shea@klgates.com K&L Gates comprises approximately 1,500 lawyers in 25 offices located in North America, Europe and Asia, and represents capital markets participants, entrepreneurs, growth and middle market companies, leading FORTUNE 100 and FTSE 100 global corporations and public sector entities. For more information, please visit www.klgates.com. www.klgates.com Death, Taxes, and Security Rule Audits: Three Things You Can Count On Recently, the Centers for Medicare and Medicaid Services (CMS) issued a HIPAA Security Rule Interview and Document Request Guidelines for Investigations checklist (the “Audit Checklist”). The Audit Checklist notifies covered entities about the information CMS plans to review during Security Rule audits. Perhaps more importantly, the Audit Checklist also suggests that CMS is seriously making plans to conduct audits. Consequently, covered entities – including employer-sponsored health plans – should review their Security Rule compliance in anticipation of being audited. What’s on the Audit Checklist? The Audit Checklist identifies the covered entity management and staff positions CMS plans to interview and the Security Rule-mandated documents CMS plans to review during the course of the audit. Interviewees include the President, CEO, or Directors of the covered entity; the Systems Security Officer; and the Security Incident Response Team Leader. Documents include the covered entity’s risk assessment and the risk management plan. CMS regards these individuals and documents as the keystone of the covered entity’s Security Rule compliance. As such, these people and these documents must convey to CMS and others the covered entity’s commitment to compliance with the Security Rule. A copy of the Audit Checklist is electronically attached to the end of this Alert. What are risk assessment and risk management plans? Covered entities must identify the “who, what, where and how” of their use, storage, and transmission of electronic protected health information, or EPHI. Once covered entities know the answers to these questions, covered entities can begin to identify vulnerabilities and threats to the EPHI that create a risk of a security breach. For example, transmitting unencrypted EPHI creates a risk that the EPHI could be intercepted. That risk must be prioritized according to the other risks that have been identified for each use, storage or transmission. The result is the risk assessment document that CMS will be looking for during the audit. Once the risks are identified and prioritized, covered entities must plan to contain them. Risks are contained by implementing appropriate physical, administrative, and technical safeguards to protect the EPHI. In the above example about transmitting unencrypted EPHI, a technical safeguard would be the use of encryption software for such transmissions, possibly in conjunction with an administrative safeguard that mandates the use of such encryption software. Regardless of the selected approach, the covered entity must evaluate the alternatives and select the best one given the particular circumstances the covered entity faces. The result of this evaluation process, which must be documented, is the risk management plan. Both the risk assessment and the risk management plans must be periodically reviewed and updated, as necessary. So, performing an internal test audit would be a great way to prepare for a CMS audit while at the same time performing a task that the Security Rule requires. Health Care Alert Avoiding Liability Given today’s landscape, and despite the warnings about failure to comply with the Security Rule, many covered entities are still not compliant. In some cases, covered entities’ compliance personnel may not have the systems/technical skills to fully appreciate the Security Rule’s requirements. In other cases, covered entities may have taken some compliance steps but just never finished the job. Covered entities that have taken no compliance steps should begin immediately because CMS will consider whether a violation is the result of “willful neglect” when assessing penalties. “Willful neglect” means the “conscious, intentional failure or reckless indifference to the obligation to comply.” 45 CFR 160.410(a). CMS would consider willful neglect as an aggravating factor when assessing penalties. Time is running out. Fines and penalties for noncompliance can be severe, up to $100 per day per violation not to exceed $25,000 per year per violation. 42 USC § 1320d-5(a). And “[i]n the case of continuing violation of a provision, a separate violation occurs each day the covered entity is in violation of the provision.” 45 CFR 160.406 (emphasis added). So, a covered entity that has taken little or no effort to comply with the Security Rule could be facing multiple fines of up to $25,000 per year – for a period of up to six years. Covered entities that think they are compliant should nevertheless consider performing a test audit. The results may confirm that the compliance program works. If the results prove otherwise, covered entities should address problems before CMS comes knocking at the door. 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A list of the partners in each entity is available for inspection at any K&L Gates office. This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. Data Protection Act 1998—We may contact you from time to time with information on Kirkpatrick & Lockhart Preston Gates Ellis LLP seminars and with our regular newsletters, which may be of interest to you. We will not provide your details to any third parties. Please e-mail london@klgates.com if you would prefer not to receive this information. ©1996-2008 Kirkpatrick & Lockhart Preston Gates Ellis LLP. All Rights Reserved. April 2008 | 2 DEPARTMENT OF HEALTH & HUMAN SERVICES Office of E-Health Standards and Services Sample - Interview and Document Request for HIPAA Security Onsite Investigations and Compliance Reviews 1. Personnel that may be interviewed • President, CEO or Director • HIPAA Compliance Officer • Lead Systems Manager or Director • Systems Security Officer • Lead Network Engineer and/or individuals responsible for: o administration of systems which store, transmit, or access Electronic Protected Health Information (EPHI) o administration systems networks (wired and wireless) o monitoring of systems which store, transmit, or access EPHI o monitoring systems networks (if different from above) • Computer Hardware Specialist • Disaster Recovery Specialist or person in charge of data backup • Facility Access Control Coordinator (physical security) • Human Resources Representative • Director of Training • Incident Response Team Leader • Others as identified…. 2. Documents and other information that may be requested for investigations/reviews a. Policies and Procedures and other Evidence that Address the Following: • Prevention, detection, containment, and correction of security violations • Employee background checks and confidentiality agreements • Establishing user access for new and existing employees • List of authentication methods used to identify users authorized to access EPHI • List of individuals and contractors with access to EPHI to include copies pertinent business associate agreements • List of software used to manage and control access to the Internet • Detecting, reporting, and responding to security incidents (if not in the security plan) • Physical security • Encryption and decryption of EPHI • Mechanisms to ensure integrity of data during transmission - including portable media transmission (i.e. laptops, cell phones, blackberries, thumb drives) • Monitoring systems use - authorized and unauthorized • Use of wireless networks • Granting, approving, and monitoring systems access (for example, by level, role, and job function) • Sanctions for workforce members in violation of policies and procedures governing EPHI access or use • Termination of systems access 1 DEPARTMENT OF HEALTH & HUMAN SERVICES Office of E-Health Standards and Services • • • • • Session termination policies and procedures for inactive computer systems Policies and procedures for emergency access to electronic information systems Password management policies and procedures Secure workstation use (documentation of specific guidelines for each class of workstation (i.e., on site, laptop, and home system usage) Disposal of media and devices containing EPHI b. Other Documents: • Entity-wide Security Plan • Risk Analysis (most recent) • Risk Management Plan (addressing risks identified in the Risk Analysis) • Security violation monitoring reports • Vulnerability scanning plans o Results from most recent vulnerability scan • Network penetration testing policy and procedure o Results from most recent network penetration test • List of all user accounts with access to systems which store, transmit, or access EPHI (for active and terminated employees) • Configuration standards to include patch management for systems which store, transmit, or access EPHI (including workstations) • Encryption or equivalent measures implemented on systems that store, transmit, or access EPHI • Organization chart to include staff members responsible for general HIPAA compliance to include the protection of EPHI • Examples of training courses or communications delivered to staff members to ensure awareness and understanding of EPHI policies and procedures (security awareness training) • Policies and procedures governing the use of virus protection software • Data backup procedures • Disaster recovery plan • Disaster recovery test plans and results • Analysis of information systems, applications, and data groups according to their criticality and sensitivity • Inventory of all information systems to include network diagrams listing hardware and software used to store, transmit or maintain EPHI • List of all Primary Domain Controllers (PDC) and servers • Inventory log recording the owner and movement media and devices that contain EPHI 2