Standards for Privacy of Individually Identifiable Health Information. Final Privacy Rule Preamble.. Business Associates

12/28/2000

Comment: A number of commenters were concerned about the cost of monitoring business partners. Specifically, one commenter stated that the provisions of the proposed regulation pertaining to business partners would likely force the discontinuation of outsourcing for some functions, thereby driving up the administrative cost of health care.

Response: The final regulation clarifies the obligations of the business associates in assuring privacy. As explained in the preamble, business associates must take reasonable steps to assure confidentiality of health records they may have, and the covered entity must take appropriate action if they become aware of a violation of the agreement they have with the business associate. This does not represent an unreasonable burden; indeed, the provider is required to take the same kind of precautions and provide the same kind of oversight that they would in many other kinds of contractual relationships to assure they obtain the quality and level of performance that they would expect from a business associate.

Comment: HHS failed to consider enforcement costs associated with monitoring partners and litigation costs arising from covered entities seeking restitution from business partners whose behavior puts the covered entity at risk for noncompliance.

Response: The Department acknowledged in the proposal that it was not estimating the cost of compliance with the business associates provision because of inadequate information. It requested information on this issue, but no specific information was provided in the comments. However, based on revisions in the final policy and subsequent factfinding, the Department has provided an estimate for this requirement, as explained below.