The Omnibus Rule & Its Impact on IT

Brien Posey, Freelance Writer and Former CIO | 6/27/2013 | 16 comments

Brien Posey
Earlier this week, I wrote about how the Omnibus rule impacts cloud service usage. Healthcare IT departments must also consider how the law impacts them, even if the organization has not yet delved into the cloud.

The new HIPAA Omnibus rule primarily impacts the HIPAA privacy, security, and breach notification rules. The good news is that there isn’t a lot in the Omnibus rule that is really new. The Omnibus rule formalizes the requirements that were already put into place by the HITECH act and subsequent Health and Human Services (HHS) rules (or proposed rules).

The main things that healthcare organizations will have to watch out for with regard to the Omnibus rule are the relationships that they have with the vendors that they use and the relationships between various departments within the healthcare organization.

Although a healthcare provider might be classified by HIPAA as a covered entity, the organization may designate a "health care component" ("HCC"). This is done by treating the organization in a compartmentalized manner and documenting “components” of the organization that should be treated as a Covered Entity. In doing so, the organization excludes those components from being treated as a covered entity (or as a part of a covered entity).

The advantage to doing so is that it can ease the burden (and cost) of HIPAA compliance. The problem is that if a component that is treated as a covered entity were to disclose protected health information to a component that is not treated as a covered entity, then the disclosure is treated in the same way that it would be if protected health information were disclosed outside of the organization. As such, healthcare providers must exercise great care with regard to the way that protected health information is shared within the organization.

The Omnibus rule also changes the relationship between a covered entity and the IT vendors that they use. This change primarily impacts cloud service providers, but can impact other types of vendors as well. Under the law, certain types of vendors are now treated as business associates rather than merely being treated as vendors. This means that these providers share the responsibility for the security and privacy of electronic protected health information.

The types of vendors that must be treated as business associates are those that routinely store, transmit, access, or use protected health information. Interestingly, the law doesn’t just effect vendors who provide service to the covered entity, but also impacts those who provide services to the covered entity’s business associates. For example, if a covered entity decided to use company A as an E prescribing gateway and Company A outsourced their datacenter to Company B, then Company B would be covered by the law’s requirements, because they are handling electronic protected health information on behalf of a covered entity’s business associate.

Section 160.103 goes to great lengths describing what constitutes a business associate relationship, even going so far as to state that one covered entity can be a business associate of another. Generally speaking, however, a business associate is an organization that in some way stores, accesses, uses, or transmits protected health information. The exact definition can be found here.

Thankfully, the Omnibus rule does make an exception for those organizations that merely transmit protected health information. For example, an Internet Service Provider would not be considered to be a covered entity’s business associate because they merely act as a conduit for passing electronic protected health information between a sender and a recipient. The Internet Service Provider does not store the data or attempt to access or make use of the data. As such, they are not treated as a business associate.

A covered entity is responsible for determining which of its vendors should and should not be treated as business associates and for establishing a business associate agreement with those providers. The Omnibus rule went into effect on March 26, 2013, and covered entities have 180 days from that date to fully comply. Vendors who are treated as business associates must also establish compliance by the same date, but those who are operating under existing agreements can continue to do so until March 26, 2014, so long as the vendor is HIPAA compliant.

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Susan Nunziata   The Omnibus Rule & Its Impact on IT   9/6/2013 5:27:38 PM
Re: exceptions
@Keith: Yes, and also decisions about where to invest limited funds and which projects will please the government lobbyists the most.
KeithGrinsted   The Omnibus Rule & Its Impact on IT   8/31/2013 6:35:31 AM
Re: exceptions
@susan that's the crazy thing. Governments are always pushing us to use public transport yet so often I hear people have gone back to the car because public transport let them down. Our bus services are generally not very good but there are exceptions. So, if some can make it work then why can't everyone? Inefficiencies in their operations I'd guess.
SunitaT   The Omnibus Rule & Its Impact on IT   8/11/2013 7:26:13 AM
Re : The Omnibus Rule & Its Impact on IT
Given how many establishments are moving to the cloud, this new standard offers a main game change for many retailers, who now find themselves as contractually responsible for non-compliance as covered bodies. From impermissible data uses and exposers to failures to provide breach notices, vendors can face a new set of consequences for violations that used to be someone else's headache.
Susan Nunziata   The Omnibus Rule & Its Impact on IT   7/29/2013 6:31:54 PM
Re: exceptions
@Keith: Exactly so, and I speak from experience when I can tell you that these private-sector bus companies do not put the needs of the customers first because the municipality grants them exclusive rights to certain routes. Knowing they have no competition in those areas means they can get away with delivering awful service. 

I lived along a commuter bus line back east where the bus company would routinely cancel scheduled buses with absolutely no warning, leading to wait times of up to an hour for those of us trying to get to work. I finally had to give up on that and started driving to the office.
KeithGrinsted   The Omnibus Rule & Its Impact on IT   7/29/2013 5:16:16 PM
Re: exceptions
@susan yes, its a bit of a dichotomy really. Called public transport but anything like a public service it is not! ! Local authorities licence the bus companies to run rural services but have no further control over them. The bus company decides whether or not a route is commercial and upon what basis to run. There are more and more community bus services now.
Susan Nunziata   The Omnibus Rule & Its Impact on IT   7/16/2013 10:06:19 PM
Re: exceptions
@Ketih: That surprises me, I tend to have a view of other countries' public transport services, particularly in the EU, being far more evolved than in the U.S. 

We have huge swathes of territory that is untouched by public transport, resulting in abominable automobile traffic situations. 
KeithGrinsted   The Omnibus Rule & Its Impact on IT   7/6/2013 5:48:41 PM
Re: exceptions
@susan in some of our outlying villages it's 'what day of the week is it' as some of our rural bus services only run on certain days of the week! ! And then quite often one out in the morning and one back in the evening!
MDMConsult   The Omnibus Rule & Its Impact on IT   7/1/2013 10:14:27 AM
Re: exceptions
@David Yes, it definitely is interesting. Training and making sure implementation is important. Having management trained on this standard and the correct implementation is significant to ensure compliance measures. This type of training should be documented for proper audit & analysis.
Susan Nunziata   The Omnibus Rule & Its Impact on IT   6/30/2013 10:16:08 PM
Re: exceptions
@Keith: Ha. funny. Here in Bay Area we call that the "WheresTheBus?" Rule.
Susan Nunziata   The Omnibus Rule & Its Impact on IT   6/30/2013 10:15:21 PM
Vendor relationships
Compelling post. I'm particularly struck by this element:

Under the law, certain types of vendors are now treated as business associates rather than merely being treated as vendors. This means that these providers share the responsibility for the security and privacy of electronic protected health information.

How will this impact vendor relationships going forward? What steps do you recommend for healthcare IT organizations be taking now to make sure their vendor relationships are in compliance?
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