HITECH Business Associate Rule Tool Section 8: Contents of a HITECH-Compliant Business Associate Contract – Updated 1/25

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NOTE: In general, this discussion applies also to group health plan documentation and arrangements between governmental entities. However, each of these has a few specific wrinkles which for simplicity’s sake will not be covered here.

The good news for Covered Entities and First Tier Business Associates with existing Business Associate Contracts is that there really aren’t very many differences between a HIPAA-Compliant Business Associate Contract and a HITECH-Compliant Business Associate Contract.

This is probably not as good news for most organizations contracting downstream from the first tier, where contracts consistent with the Business Associate Contract requirements have not necessarily been used. Parties to agreements or arrangements at this level will probably all too often have to negotiate more or less from scratch, but at least they will have the advantage of the previous experience of Covered Entities and First Tier Business Associates.

One potentially confusing element of the revised Business Associate Contract rule is that the implementation specifications for the contract form refer to a contract between a Covered Entity and a Business Associate. This is solved by a subsequent specification which specifies that the Business Associate Contract implementation specification applies between Business Associates and Subcontractors as well.

The original version of the rule applied only to Covered Entities, and required the Covered Entity to implement a Business Associate Contract before permitting a Business Associate to “create or receive” PHI. The revised version applies to both Covered Entities and Business Associates, and requires them to have Business Associate Contracts before they allow a downstream entity to “create, receive, maintain or transmit” PHI. (Emphasis added.)

In both cases, consistently with the original version, the upstream entity will be in violation of the regulations if it “knows” of “a pattern of activity or practice” which “constitutes a material breach or violation” of the Business Associate Contract, and fails to either take “reasonable steps to cure the breach,” or terminates the contract. The original version, however, allowed a Covered Entity to notify DHHS if it couldn’t get the breach cured and it wasn’t “feasible” to terminate the contract. This alternative was deleted from the revised rule, on the theory that DHHS now has jurisdiction over Business Associates and can intervene on its own authority.

What the Omnibus Rule Changed in Business Associate Contract Content.

The only differences in the regulatory requirements for HIPAA-Compliant Business Associate Contracts and HITECH-Compliant Business Associate Contracts are the following:

• For any agreement or arrangement where a downstream entity is “carrying out” a “Covered Entity’s [or upstream Business Associate’s?] obligation” under the HIPAA/HITECH regulations, the downstream entity must comply with the HIPAA/HITECH requirements which would apply to the Covered Entity (or upstream Business Associate?) in performing the obligation.

This provision is probably intended to ensure that downstream Business Associates performing Covered Entity functions governed by Privacy Rule requirements which do not apply directly to Business Associates are made applicable by contract. For example, a downstream Business Associate EHR services vendor has agreed to be the access point for individuals wanting copies of their medical records, the vendor has to comply with an upstream hospital Covered Entity’s obligation to provide it in electronic format upon request, under the time limits which would apply to the Covered Entity. In the absence of this requirement the Business Associate would not be subject to such requirements.

This suggests that whenever a downstream entity is performing a function which is governed by the Privacy Rule, the Business Associate Contract should specify the standards for its performance consistently with the regulatory requirements. I would also be concerned this might have some unintended consequences, which will show up in unexpected ways and pose annoying but hopefully reasonably solvable problems.

• The contract must require the downstream entity to comply with the Security Rule, rather than simply requiring it to “implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the electronic protected health information that it creates, receives, maintains, or transmits on behalf of the Covered Entity.” In practical terms this means the contract requires the downstream entity to comply with the documentation and organizational requirements of the Security Rule in addition to the safeguards requirements, consistently with the direct regulatory obligation under the new rules.
• The contract must require the downstream entity to report security breaches as well as security incidents. Business Associates have already been required to do so under the Security Breach Notification Rule. Opening up the incident reporting provisions of a Business Associate Contract for amendment to add breaches may in some (many?) cases lead to negotiations about indemnification for breach response and notification cost indemnification and possibly other remedies, which might be difficult for some parties.
• It should be noted that while this is not specified in the regulations, the DHHS discussion in the Preamble indicates that downstream Business Associate Contracts need not include the same use and disclosure permissions as apply to an upstream Business Associate, but may be the same as or “more stringent” than those requirements.

Summary of HITECH-Compliant Business Associate Contract Content.

A HITECH-Compliant Business Associate Contract must (or in some case may) have the following provisions:

1. A provision which establishes the permitted and required uses and disclosures of PHI, which does not authorize the downstream Business Associate to use or further disclose the PHI in a manner which would violate the HIPAA/HITECH rules if done by the upstream entity.
2. Optionally, a provision which permits the downstream Business Associate to use PHI for its own “proper management and administration.”
3. Optionally, a provision which permits the downstream Business Associate to use PHI in order to carry out the Business Associate’s own “legal responsibilities.”
4. Optionally, a provision which permits the downstream Business Associate to use PHI to provide data aggregation services for purposes of the Covered Entity at the top of the contract chain.
5. Optionally, a provision permitting the downstream Business Associate to disclose PHI to carry out the Business Associate’s “legal responsibilities” if “required by law.”
6. Optionally, a provision permitting the downstream Business Associate to disclose PHI for purposes of its own “proper management and administration,” to a person from whom the Business Associate obtains “reasonable assurances” that –
   1. The PHI will be “held confidentially;”
   2. The PHI will only used or further disclosed as “required by law” or for the purposes for which the PHI was disclosed to the person
   3. The person will notify the Business Associate of “any instances of which it is aware in which the confidentiality of the PHI has been breached
   4. The person will implement “reasonable and appropriate security measures to protect the information.”
7. A provision prohibiting the downstream Business Associate from using or further disclosing PHI other than as permitted or required by the contract or as required by law.
8. A provision requiring the downstream Business Associate to ensure that it has a compliant Business Associate Contract with any further downstream entity with which it agrees or arranges to have it create, receive, maintain, or transmit PHI for purposes, functions or services for or on behalf of a Covered Entity at the top of the contract chain.
9. A provision requiring the downstream Business Associate to comply with the Security Rule.
10. A provision requiring the downstream Business Associate to report security incidents, as well as “breaches of unsecured PHI” subject to the Security Breach Notification Rule, to the upstream entity. This provision in particular should have careful attention to make sure reporting time periods and content are consistent with Security Breach Notification Rule compliance, which may be especially problematic for Business Associates far down a Business Associate Contract chain.
11. A provision requiring the downstream Business Associate to accept restrictions on the use or disclosure of PHI which have been agreed to by the Covered Entity at the top of the contract chain.
12. A provision requiring the downstream Business Associate to make PHI available to individuals consistently with the obligation of the Covered Entity at the top of the contract chain.
13. A provision requiring the downstream Business Associate to amend or incorporate the amendment of PHI consistently with the obligations of the Covered Entity at the top of the contract chain.
14. A provision requiring the downstream Business Associate to make information available for an accounting of disclosures by or for the Covered Entity at the top of the contract chain.
15. If the downstream Business Associate is carrying out a Covered Entity’s obligation governed by the Privacy Rule, in particular (but perhaps not limited to) one of the activities identified in Sections 11, 12, 13 and 14 above, to comply with the HIPAA/HITECH requirements which would apply to the Covered Entity at the top of the contract chain.
16. A provision requiring the downstream Business Associate to make its “internal practices, books, and records relating to the use and disclosure of PHI received from, or created or received by the business associate on behalf of” a Covered Entity available to DHHS “for purposes of determining the Covered Entity’s compliance” with HIPAA/HITECH.

It is not clear to me that this provision shouldn’t have been amended to provide that this access should apply to an investigation of either the Covered Entity at the top of the contract chain as well as the upstream Business Associate, but it wasn’t. I’m not sure this has any practical implications, since Business Associates are directly subject to this requirement by regulation anyway.

1. A provision that when the Business Associate Contract terminates, “if feasible,” the downstream Business Associate will return or destroy all PHI subject to the Business Associate Contract, or if that is not “feasible,” will “extend the protections of the Business Associate Contract to the PHI and limit further uses and disclosures to those purposes that make the return or destruction infeasible.”
2. A provision authorizing termination of the Business Associate Contract by the upstream entity, if there upstream entity determines that the downstream Business Associate has violated a material term of the Business Associate Contract.

UPDATE JANUARY 25

DHHS has posted “Sample Business Associate Contract Provisions” with some discussion on its website.  My impression is that they are a good starting point, and definitely better than the sample provided with the original Privacy Rule. It should help standardize Business Associate Contracts and reduce some negotiating and drafting disputes, which is a good thing.

However, this is a demonstration sample, not a required form. I expect some will take this as the required form and content of a Business Associate Contract, as occurred with the original sample. Over the years I’ve periodically run into avoidable trouble where parties adopted the sample verbatim and it didn’t actually work for them. So as noted, I would take this as a starting point while considering carefully how it would actually work for any specific arrangement. In fact, I will be working on exactly that.

I’ve reprinted them here (no copyright claimed in these U.S. Government materials):

Sample Business Associate Agreement Provisions

    Words or phrases contained in brackets are intended as either optional language or as instructions to the users of these sample provisions.

Definitions

Catch-all definition:

The following terms used in this Agreement shall have the same meaning as those terms in the HIPAA Rules: Breach, Data Aggregation, Designated Record Set, Disclosure, Health Care Operations, Individual, Minimum Necessary, Notice of Privacy Practices, Protected Health Information, Required By Law, Secretary, Security Incident, Subcontractor, Unsecured Protected Health Information, and Use.

Specific definitions:

(a) Business Associate.  “Business Associate” shall generally have the same meaning as the term “business associate” at 45 CFR 160.103, and in reference to the party to this agreement, shall mean [Insert Name of Business Associate].

(b) Covered Entity.  “Covered Entity” shall generally have the same meaning as the term “covered entity” at 45 CFR 160.103, and in reference to the party to this agreement, shall mean [Insert Name of Covered Entity].

(c) HIPAA Rules.  “HIPAA Rules” shall mean the Privacy, Security, Breach Notification, and Enforcement Rules at 45 CFR Part 160 and Part 164.

Obligations and Activities of Business Associate

Business Associate agrees to:

(a) Not use or disclose protected health information other than as permitted or required by the Agreement or as required by law;

(b) Use appropriate safeguards, and comply with Subpart C of 45 CFR Part 164 with respect to electronic protected health information, to prevent use or disclosure of protected health information other than as provided for by the Agreement;

(c) Report to covered entity any use or disclosure of protected health information not provided for by the Agreement of which it becomes aware, including breaches of unsecured protected health information as required at 45 CFR 164.410, and any security incident of which it becomes aware;

[The parties may wish to add additional specificity regarding the breach notification obligations of the business associate, such as a stricter timeframe for the business associate to report a potential breach to the covered entity and/or whether the business associate will handle breach notifications to individuals, the HHS Office for Civil Rights (OCR), and potentially the media, on behalf of the covered entity.]

(d) In accordance with 45 CFR 164.502(e)(1)(ii) and 164.308(b)(2), if applicable, ensure that any subcontractors that create, receive, maintain, or transmit protected health information on behalf of the business associate agree to the same restrictions, conditions, and requirements that apply to the business associate with respect to such information;

(e) Make available protected health information in a designated record set to the [Choose either “covered entity” or “individual or the individual’s designee”] as necessary to satisfy covered entity’s obligations under 45 CFR 164.524;

[The parties may wish to add additional specificity regarding how the business associate will respond to a request for access that the business associate receives directly from the individual (such as whether and in what time and manner a business associate is to provide the requested access or whether the business associate will forward the individual’s request to the covered entity to fulfill) and the timeframe for the business associate to provide the information to the covered entity.]

(f) Make any amendment(s) to protected health information in a designated record set as directed or agreed to by the covered entity pursuant to 45 CFR 164.526, or take other measures as necessary to satisfy covered entity’s obligations under 45 CFR 164.526;

[The parties may wish to add additional specificity regarding how the business associate will respond to a request for amendment that the business associate receives directly from the individual (such as whether and in what time and manner a business associate is to act on the request for amendment or whether the business associate will forward the individual’s request to the covered entity) and the timeframe for the business associate to incorporate any amendments to the information in the designated record set.]

(g) Maintain and make available the information required to provide an accounting of disclosures to the [Choose either “covered entity” or “individual”] as necessary to satisfy covered entity’s obligations under 45 CFR 164.528;

[The parties may wish to add additional specificity regarding how the business associate will respond to a request for an accounting of disclosures that the business associate receives directly from the individual (such as whether and in what time and manner the business associate is to provide the accounting of disclosures to the individual or whether the business associate will forward the request to the covered entity) and the timeframe for the business associate to provide information to the covered entity.]

(h)  To the extent the business associate is to carry out one or more of covered entity’s obligation(s) under Subpart E of 45 CFR Part 164, comply with the requirements of Subpart E that apply to the covered entity in the performance of such obligation(s); and

(i) Make its internal practices, books, and records available to the Secretary for purposes of determining compliance with the HIPAA Rules.

Permitted Uses and Disclosures by Business Associate

(a) Business associate may only use or disclose protected health information

[Option 1 – Provide a specific list of permissible purposes.]

[Option 2 – Reference an underlying service agreement, such as “as necessary to perform the services set forth in Service Agreement.”]

[In addition to other permissible purposes, the parties should specify whether the business associate is authorized to use protected health information to de-identify the information in accordance with 45 CFR 164.514(a)-(c).  The parties also may wish to specify the manner in which the business associate will de-identify the information and the permitted uses and disclosures by the business associate of the de-identified information.]

(b) Business associate may use or disclose protected health information as required by law.

(c) Business associate agrees to make uses and disclosures and requests for protected health information

[Option 1] consistent with covered entity’s minimum necessary policies and procedures.

[Option 2] subject to the following minimum necessary requirements: [Include specific minimum necessary provisions that are consistent with the covered entity’s minimum necessary policies and procedures.]

(d) Business associate may not use or disclose protected health information in a manner that would violate Subpart E of 45 CFR Part 164 if done by covered entity [if the Agreement permits the business associate to use or disclose protected health information for its own management and administration and legal responsibilities or for data aggregation services as set forth in optional provisions (e), (f), or (g) below, then add “, except for the specific uses and disclosures set forth below.”]

(e) [Optional] Business associate may use protected health information for the proper management and administration of the business associate or to carry out the legal responsibilities of the business associate.

(f) [Optional] Business associate may disclose protected health information for the proper management and administration of business associate or to carry out the legal responsibilities of the business associate, provided the disclosures are required by law, or business associate obtains reasonable assurances from the person to whom the information is disclosed that the information will remain confidential and used or further disclosed only as required by law or for the purposes for which it was disclosed to the person, and the person notifies business associate of any instances of which it is aware in which the confidentiality of the information has been breached.

(g) [Optional] Business associate may provide data aggregation services relating to the health care operations of the covered entity.

Provisions for Covered Entity to Inform Business Associate of Privacy Practices and Restrictions

(a) [Optional] Covered entity shall notify business associate of any limitation(s) in the notice of privacy practices of covered entity under 45 CFR 164.520, to the extent that such limitation may affect business associate’s use or disclosure of protected health information.

(b) [Optional] Covered entity shall notify business associate of any changes in, or revocation of, the permission by an individual to use or disclose his or her protected health information, to the extent that such changes may affect business associate’s use or disclosure of protected health information.

(c) [Optional] Covered entity shall notify business associate of any restriction on the use or disclosure of protected health information that covered entity has agreed to or is required to abide by under 45 CFR 164.522, to the extent that such restriction may affect business associate’s use or disclosure of protected health information.

Permissible Requests by Covered Entity

[Optional] Covered entity shall not request business associate to use or disclose protected health information in any manner that would not be permissible under Subpart E of 45 CFR Part 164 if done by covered entity. [Include an exception if the business associate will use or disclose protected health information for, and the agreement includes provisions for, data aggregation or management and administration and legal responsibilities of the business associate.]

Term and Termination

(a) Term. The Term of this Agreement shall be effective as of [Insert effective date], and shall terminate on [Insert termination date or event] or on the date covered entity terminates for cause as authorized in paragraph (b) of this Section, whichever is sooner.

(b) Termination for Cause. Business associate authorizes termination of this Agreement by covered entity, if covered entity determines business associate has violated a material term of the Agreement [and business associate has not cured the breach or ended the violation within the time specified by covered entity].  [Bracketed language may be added if the covered entity wishes to provide the business associate with an opportunity to cure a violation or breach of the contract before termination for cause.]

(c) Obligations of Business Associate Upon Termination.

[Option 1 – if the business associate is to return or destroy all protected health information upon termination of the agreement]

Upon termination of this Agreement for any reason, business associate shall return to covered entity [or, if agreed to by covered entity, destroy] all protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, that the business associate still maintains in any form.  Business associate shall retain no copies of the protected health information.

[Option 2—if the agreement authorizes the business associate to use or disclose protected health information for its own management and administration or to carry out its legal responsibilities and the business associate needs to retain protected health information for such purposes after termination of the agreement]

Upon termination of this Agreement for any reason, business associate, with respect to protected health information received from covered entity, or created, maintained, or received by business associate on behalf of covered entity, shall:

1. 1. Retain only that protected health information which is necessary for business associate to continue its proper management and administration or to carry out its legal responsibilities;
   2. Return to covered entity [or, if agreed to by covered entity, destroy] the remaining protected health information that the business associate still maintains in any form;
   3. Continue to use appropriate safeguards and comply with Subpart C of 45 CFR Part 164 with respect to electronic protected health information to prevent use or disclosure of the protected health information, other than as provided for in this Section, for as long as business associate retains the protected health information.
   4. Not use or disclose the protected health information retained by business associate other than for the purposes for which such protected health information was retained and subject to the same conditions set out at [Insert section number related to paragraphs (e) and (f) above under “Permitted Uses and Disclosures By Business Associate”] which applied prior to termination; and
   5. Return to covered entity [or, if agreed to by covered entity, destroy] the protected health information retained by business associate when it is no longer needed by business associate for its proper management and administration or to carry out its legal responsibilities.

[The agreement also could provide that the business associate will transmit the protected health information to another business associate of the covered entity at termination, and/or could add terms regarding a business associate’s obligations to obtain or ensure the destruction of protected health information created, received, or maintained by subcontractors.]

(d) Survival.  The obligations of business associate under this Section shall survive the termination of this Agreement.

Miscellaneous [Optional]

(a) [Optional] Regulatory References. A reference in this Agreement to a section in the HIPAA Rules means the section as in effect or as amended.

(b) [Optional] Amendment. The Parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for compliance with the requirements of the HIPAA Rules and any other applicable law.

(c) [Optional] Interpretation. Any ambiguity in this Agreement shall be interpreted to permit compliance with the HIPAA Rules.

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