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Pharmacy Fined $125,000 for Breach

April 28, 2015

By , April 27, 2015.

Paper Patient Records Not Properly Destroyed

A small Denver compounding pharmacy has been slammed with a $125,000 federal penalty for a 2012 breach involving improper disposal of paper patient records. It’s the second such HIPAA enforcement action within a year by federal regulators tied to an incident involving records dumping by a covered entity.

In an April 27 statement, the Department of Health and Human Services’ Office for Civil Rights says Cornell Prescription Pharmacy has agreed to a HIPAA settlement that includes the $125,000 penalty and calls for adopting a corrective action plan to correct deficiencies in its compliance program.

Cornell is a single-location pharmacy that specializes in compounded medications and related services for hospice care agencies in the region.

Proper PHI Disposal

“Regardless of size, organizations cannot abandon protected health information or dispose of it in dumpsters or other containers that are accessible by the public or other unauthorized persons,” says OCR Director Jocelyn Samuels. “Even in our increasingly electronic world, it is critical that policies and procedures be in place for secure disposal of patient information, whether that information is in electronic form or on paper.”

OCR launched a compliance review and investigation in February 2012 after the agency received notification from a Denver news outlet regarding the disposal of unshredded documents containing the protected health information of 1,610 patients in an unlocked, open container on Cornell’s premises.

OCR’s investigation determined Cornell failed to implement any written policies and procedures as required by the HIPAA Privacy Rule. The pharmacy also failed to provide training on policies and procedures to its workforce as required by HIPAA, OCR says.

Similar Cases

OCR last June approved an $800,000 HIPAA settlement with Parkview Health System, an Indiana-based community health system, tied to an incident involving paper records dumping. In that case, the organization was cited for leaving 71 cardboard boxes of medical records on thousands of patients unattended and accessible to unauthorized persons on the driveway of a retiring physician’s home (see $800,000 Penalty for Paper Records Breach).

An in addition to the Parkview case, OCR has issued hefty settlements for several other breaches involving improper disposal of PHI.

“The latest OCR settlement is almost identical to 2009 and 2010 settlements against CVS and Rite Aid over the pharmacies allegedly dumping protected health information in publicly-accessible waste containers,” says privacy attorney Adam Greene of law firm Davis Wright Tremaine.

“In both of those cases, as in the current case with Cornell Prescription Pharmacy, the OCR investigation was triggered by a local television news report identifying the issue at local pharmacies,” Greene notes. “In response to the CVS and Rite Aid cases, OCR issued specific guidance on properly disposing of protected health information. Apparently, when OCR learned of a news report indicating that a pharmacy was not heeding this guidance, OCR determined that an additional settlement was needed.”

Covered entities and business associates should closely track OCR settlement agreements “and ensure that any similar issues are addressed within your own organization,” Greene stresses.

Attorney David Holtzman, vice president of compliance at the security consulting firm CynergisTek, says he’s surprised there haven’t been even more such enforcement actions by OCR for these kinds of improper disposal cases.

There have been approximately 30 large breaches since April 2011 that have involved covered entities or business associates that failed to make paper or printed PHI unreadable or indecipherable, “such as by shredding into itty-bitty pieces,” says Holtzman, who was a senior adviser at OCR prior to joining CynergisTek in 2013. “This [latest] case represents a drop in the bucket.”

Corrective Action Plan

As part of its resolution agreement with OCR, Cornell has agreed to implement a corrective action plan that includes developing, maintaining and revising, as necessary, written policies and procedures to comply with the HIPAA Privacy Rule and submitting documentation of those policies and procedures to OCR for its review and approval.

The policies and procedures must include administrative and physical safeguards for the disposal of all non-electronic PHI, including those records being “shredded, burned, pulped or pulverized so that the PHI is rendered essentially unreadable, indecipherable, and otherwise cannot be reconstructed.”

The pharmacy also agreed to distribute those policies and procedures to all members of its workforce within 30 days of OCR approving them and to also issue those policies and procedures to new members of the workforce within 30 days of their beginning of service.

In addition, the pharmacy agreed to provide its workforce HIPAA privacy training and to report violations of its privacy policies and procedures by its workforce to OCR.

More Settlements Soon?

Some privacy and security experts believe the resolution agreement with Cornell could be the first of several additional enforcement actions in the works at OCR for 2015, including cases involving other examples of HIPAA non-compliance.

“This is likely the beginning of a more active phase of OCR enforcement that we have been anticipating,” Holtzman says. “I believe that OCR has been investigating a number significant investigations and compliance reviews, many resulting from breaches reported to HHS.”

Holtzman adds: “I do not believe that OCR limits itself to reserving its enforcement resources to a predetermined checklist or agenda prioritizing one type of incident over another.”

In a recent interview with Information Security Media Group, Greene also predicted that OCR will likely announce a number of eye-popping financial settlements for HIPAA violations later this year (see Could Big HIPAA Settlement be Coming?).

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HIPAA Compliance Audits Remain on Hold

April 16, 2015

OCR Official Describes New Guidance in the Works

By , April 15, 2015.

HIPAA Compliance Audits Remain on Hold

After a three-year delay, federal regulators remain tight-lipped about when the next round of HIPAA compliance audits will begin. But a variety of new HIPAA-related guidance is in the works, a government official says.

During an April 15 session at the HIMSS 2015 Conference in Chicago, a regional official from the Department of Health and Human Services’ Office for Civil Rights told attendees the next phase of the random HIPAA audit program “is under development.” Attorney Alessandra Swanson, an OCR team leader from the agency’s Chicago office, declined to say whether there’s a potential timeline for when OCR expects to kick off the next round of HIPAA audits, or what the program might look like.

OCR, which enforces HIPAA, had hoped to kick off phase two of its compliance audit program last fall, but officials last September revealed the program was being delayed. The culprit blamed at the time: technology that the agency said was still being rolled out at the agency that will allow OCR to collect audit-related documentation from covered entities and business associate via a Web portal (see HIPAA Compliance: What’s Next?).

OCR also had a change in leadership last year. In July, Jocelyn Samuels was named the office’s new director. Samuels, who was formerly acting assistant attorney general for the Civil Rights Division at the U.S. Department of Justice, replaced Leon Rodriguez, who was named director of U.S. Citizenship and Immigration Services, a unit of the Department of Homeland Security.

Privacy attorney Adam Greene, a partner at the law firm Davis Wright Tremaine, told Information Security Media Group in an interview at the HIMSS Conference that he believes the delay in various OCR enforcement activities, including the audit rollout, could be related to tight OCR resources, as well as the new leadership settling in.

But OCR appears to be staffing up for the audit program. In an announcement posted last week by HHS, the agency said it had open a “compliance specialist – auditing” position available within its Washington headquarters.

“This position serves as the senior auditing subject matter expert who provides leadership, oversight, coordination and advice necessary to design, plan and execute an audit program of covered entity and business associate compliance with the HIPAA privacy, security and breach notification rules,” the job posting said.

OCR officials in recent months have said the agency also is working on updating its audit protocol for covered entities and creating a new audit protocol for business associates. BAs became directly liable for compliance under the HIPAA Omnibus Rule last year and are subject to OCR enforcement actions, including financial penalties that range up to $1.5 million per HIPAA violation.

Other Activities

In addition to preparing for resuming the random HIPAA compliance audit program, OCR is working on new guidance, including material relating to business associates; the breach notification rule as well as a breach assessment tool; the use of protected health information for marketing; the “minimum necessary” standard for data; and HIPAA Security Rule compliance updates, Swanson says.

In addition, OCR is continuing breach investigations and rule-making.

“Our goal is, and has always been to get entities into compliance,” Swanson says. “I know that our enforcement cases get a lot of attention, but when you look at the number of enforcement cases versus those that are resolved with technical assistance and corrective actions, you’ll see that we always try to go the compliance route first. “We’re interested in getting everyone into compliance; we’re not out there trolling for enforcement cases.”

OCR is anticipating receiving 15,000 to 17,000 HIPAA complaints in 2015, she says. All health data breaches affecting more than 500 individuals are investigated by the agency, she says. Although there have been no enforcement actions involving monetary settlements with business associates, Swanson says the agency is current investigating a number of breaches involving BAs.

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It’s Time to Re-Examine Risk Management

March 30, 2015

Attacks Against Anthem, Others Are a Call to Action

By Bob Chaput, March 27, 2015

Bob Chaput

Just as 9/11 shattered our assumptions about the impregnability of U.S. defense systems, the recent Anthem Inc., Premera Blue Cross and Community Health Systems mega-breaches show that we need a top-to-bottom re-examination of what information risk management really requires.

To be fair, most healthcare boards of directors and C-suite executives have had their hands full just dealing with the Affordable Care Act and the momentous shift from the fee-for-service model to value-based care. That may be the reason why so many healthcare boards and C-suites are either ill-informed or disengaged from information risk management.

“We must move from the technical/tactical/spot-welding approach to a business architectural solution that’s strategic.”

In the wake of the highly publicized Community Health Systems, Anthem and now Premera hacking incidents, most organizations are scrambling to play catch-up – often trying to “checklist” their way to security. By default, and in the absence of board and C-suite direction, this approach is often too technical, too tactical and involves too much spot-welding.

Here are some reasons why it’s not a matter of if, but when, the next Anthem-style disaster strikes:

Most organizations don’t truly understand the scope of the problem. Although the Anthem hacking incident, which affected 78.8 million individuals, made headlines worldwide, hackers only account for about 8 percent of major health data breaches since September 2009, according to the Department of Health and Human Services. The other 92 percent are mainly due to preventable mistakes made by an organization’s own employees and business associates – losing a laptop containing unencrypted PHI, improperly disposing of paper records, “snooping” into and disclosing confidential data, etc. A health system might pat itself on the back for avoiding an Anthem-type breach, then get stung by a smaller scale breach that can still tarnish its reputation and cost millions to remedy.

The value and vulnerability of patient data are increasing dramatically. The anticipated growth of the national eHealth Exchange means that the likelihood of breaches will continue to rise. The exchange is predicted to soon connect hundreds of hospitals and thousands of medical groups. Hackers will no doubt be encouraged by what the Anthem thieves got their hands on: dates of birth, physical and e-mail addresses, and Social Security numbers of nearly 80 million individuals. That’s the equivalent of the entire populations of California, New York, Illinois and Maryland.

Too few organizations have a formal process for benchmarking the maturity of their IRM programs. The healthcare field is way behind other industries in this regard. The FBI said as much in its April 2014 Privacy Industry Notice and its August 2014 Alert. Many manufacturers and retailers routinely use maturity models to test the efficacy of their supply chain management and business intelligence. Healthcare needs to make it a priority to benchmark its IRM programs.

The term “data security expert” doesn’t equate with “risk management expert.” Too many healthcare organizations rely on their IT staff to ward off hackers, forgetting that breaches also come in a variety of low-tech (or no-tech) varieties. Plus the Anthem breach begs the question: What were the “experts” really doing?

Although the hackers did penetrate several layers of Anthem security, they may have gained access to the huge database by using a stolen password. And numerous media reports suggest that Anthem hadn’t bothered to encrypt the database. At the very least, we shouldn’t be making it easier for hackers to do their job. Whether the Anthem hackers were part of an international cyber-espionage team – or just brainy teenagers – doesn’t really matter. Several news organizations are reporting that the insurer will soon exhaust its $100 million cyber-insurance coverage to meet the staggering cost of identity theft repair and credit monitoring.

The healthcare field has “HIPAA compliance” myopia. The Anthem breach proves once and for all that information risk management is much more than a HIPAA compliance issue. IRM has a direct impact on patient safety and quality of care. But even more than that, it’s a discipline that’s essential to the health of a company’s brand and bottom line.

The Anthem breach demonstrates that there’s still a glaring need for better board and C-suite education about what constitutes comprehensive IRM. We must move from the technical/tactical/spot-welding approach to a business architectural solution that’s strategic. To do so, healthcare organizations need to use new benchmarking tools to help them assess the maturity of their IRM initiatives.

If the CHS breach was a wake-up call, the massive Anthem breach was a bugle blaring across healthcare boardrooms and C-suites nationwide. Let’s hope that it rouses leaders to action.

Bob Chaput, CISSP, HCISPP, CRISC, CIPP/US, is CEO of Clearwater Compliance, an information risk management advisory firm based in Nashville, Tenn., that offers an IRM benchmarking tool.

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