Does HIPAA and the HITECH Act Impact Medical Device and Pharma Companies?

The Question:

Are medical device or pharmaceutical companies designated as a qualifying entity subject to HIPAA and HITECH?

The Answer:

Yes.

Classifying the entity

Are medical device or pharmaceutical companies designated as a qualifying entity subject to HIPAA and the HITECH Act? Yes. In general, a provider that “transmits any health information in electronic form in connection with a transaction covered by this subchapter” is considered a covered entity. Moreover, according to the 45 CFR §160.103(2)(ii)(3), “a covered entity may be a business associate of another covered entity.” In fact, CMS recognized that as a government agency, it is subject to HIPAA, the HITECH Act and related rules in an October 2012 report issued by the Office of the Inspector General, “CMS Response to Breaches and Medical Identity Theft.”

In turn, a business associate, as defined by the HIPAA Rules, is “a person who performs functions or activitieson behalf of, or certain services for, a covered entity that involve the use or disclosure of protected health information” (emphasis added). A subcontractor is a person who contracts with a business associate and stores, handles or transmits PHI. Regardless, under Section 164.308(b) of the Security Rule and 164.502(e) of the Privacy Rule, a covered entity or business associate is required to enter into an arrangement known as a business associate agreement to provide parameters and some legal protection when a contracted entity is handling PHI.

Effective Feb. 18, 2010, Section 13408 of the HITECH Act provides that health information organizations, e-prescribing gateways, vendors of personal health records and other persons that facilitate data transmission and require access to PHI, regardless of their status as a covered entity, business associate or subcontractor, are subject to business associate agreements in accordance with the HIPAA Rules.

Therefore, medical device and pharmaceutical companies can be classified as a qualifying entity subject to HIPAA and the HITECH Act. As such, they are subject to handling, storing and transmitting in accordance with the requisite laws and regulations. The consequences from civil and criminal monetary penalties alone are significant. Since the HITECH Act expressly expanded HIPAA’s requirements to business associates and subcontractors, the same standards for access to medical records, business associate agreements and other provisions equally apply.

Patient access rights

The tension between patients wanting to have access to their health data from a medical device, which is implanted in them, and a medical device company is highlighted. According to a representative of a medical device maker quoted in the article, “Federal rules prohibit giving Ms. Hubbard’s data to anyone but her doctor and hospital. Our customers are physicians and hospitals.” In general, 45 C.F.R. §164.524, Access of Individuals to Protected Health Information, sets forth the parameters of the HIPAA Privacy Rule. Included in these standards are the circumstances for providing protected health information to a patient and exceptions. Nothing in the scenario of the PHI being transmitted from a patient’s implant to a medical device company, who would be classified as a business associate in this instance invokes an exception to deny the patient’s request.

Section 13410(d) of the Health Information Technology for Economic and Clinical Health Act authorizes penalties to be assessed for violations of the Privacy Rule. In February 2011, HHS issued a Final Notice of Determination and held Cignet Health, a business associate, liable for $4.3 million in civil monetary penalties when they denied 41 patients access to their medical records. As OCR Director Georgina Verdugo indicated, “covered entities and business associates must uphold their responsibility to provide patients with access to their medical records, and adhere closely to all of HIPAA’s requirements.” And, “The U.S. Department of Health and Human Services will continue to investigate and take action against those organizations that knowingly disregard their obligations under these rules.” This area should be considered in drafting business associate agreements. Therefore, business associates such as Medtronic are required to release the PHI to the patient requesting the information, unless one of the exceptions is met, and the patient is informed.

“How Does HIPAA and the HITECH Act Impact Medical Device and Pharma Companies?”. Becker Hospital Review, US. Retrieved December 20, 2018.