Deadline Approaches for Business Associate Agreement Compliance Updates

Employer group health plans and other covered entities that have not already amended business associate agreements (BAAs) to incorporate changes required by the Final Omnibus Rule must do so by September 22, 2014. (You can read our prior blog post on the Final HIPAA Omnibus Rule here.)

In January 2013 the Department of Health and Human Services published the Final HIPAA Omnibus Rule. Among other things, the Final Omnibus Rule expanded the scope of entities considered “business associates,” extended direct liability to business associates who fail to comply with certain HIPAA requirements, and required the addition of certain language to new and existing BAAs. Specifically, the Final Omnibus Rule required that existing BAAs be amended and new BAAs be drafted to include (among other things) provisions requiring a business associate to:

• Comply with applicable provisions of the HIPAA security rule;
• Ensure that any subcontractor creating, receiving, maintaining, or transmitting protected health information (PHI) on behalf of the business associate agrees in writing to the same restrictions and conditions that apply to the business associate with respect to such information;
• Report to the covered entity breaches of unsecured PHI as required by the breach notification rules; and
• To the extent the business associate carries out a covered entity’s obligations under the privacy rule, comply with the requirements of the privacy rule that apply to the covered entity in the performance of such obligations.

New and existing BAAs were required to comply with the Final Omnibus Rule by September 23, 2013, though parties with a BAA in place prior to January 25, 2013 were given the opportunity to delay amending the BAA for an additional year. Specifically, if, prior to January 25, 2013 (the publication date of the Final Omnibus Rule), the covered entity and the business associate were parties to a BAA that complied with the prior provisions of the HIPAA rules and the BAA was not renewed or modified after March 25, 2013, the parties could delay amendment of the BAA until September 22, 2014.

Employers who sponsor self-funded group health plans should review their existing BAAs to ensure that they comply with the Final Omnibus Rule. (HHS has provided sample language.) One final thought. Since the Final Omnibus Rule makes clear that covered entities may be liable for the acts of their business associates functioning in an agent capacity, employers should consider adding language to their BAAs to affirmatively disavow any agency relationship with a business associate in appropriate cases. This type of protective provision does not appear in the model language published by HHS, but competent legal counsel certainly can provide it.