Covered entities under HIPAA include health care clearinghouses, health care providers and health plans. Specifically included in the definition of "health plan" are group health plans (as defined in section 2791(a) of the Public Health Service Act) with 50 or more participants or those of any size that are administered by an entity other than the employer who established and maintains the plan. These group health plans may be fully insured or self-insured. Neither employers nor other group health plan sponsors are defined as covered entities. However, employers and other plan sponsors - particularly those sponsors with self-insured group health plans - may perform certain functions that are integrally related to or similar to the functions of group health plans and, in carrying out these functions, often require access to individual health information held by the group health plan.
Most group health plans are also regulated under the Employee Retirement Income Security Act of 1974 (ERISA). Under ERISA, a group health plan must be a separate legal entity from its plan sponsor. ERISA-covered group health plans usually do not have a corporate presence, in other words, they may not have their own employees and sometimes do not have their own assets (i.e., they may be fully insured or the benefits may be funded through the general assets of the plan sponsor, rather than through a trust). Often, the only tangible evidence of the existence of a group health plan is the contractual agreement that describes the rights and responsibilities of covered participants, including the benefits that are offered and the eligible recipients.
ERISA requires the group health plan to identify a "named fiduciary," a person responsible for ensuring that the plan is operated and administered properly and with ultimate legal responsibility for the plan. If the plan documents under which the group health plan was established and is maintained permit, the named fiduciary may delegate certain responsibilities to trustees and may hire advisors to assist it in carrying out its functions. While generally the named fiduciary is an individual, it may be another entity. The plan sponsor or employees of the plan sponsor are often the named fiduciaries. These structural and operational relationships present a problem in our ability to protect health information from being used inappropriately in employment-related decisions. On the one hand, the group health plan, and any health insurance issuer or HMO providing health insurance or health coverage to the group health plan, are covered entities under the regulation and may only disclose protected health information as authorized under the regulation or with individual consent. On the other hand, plan sponsors may need access to protected health information to carry out administration functions on behalf of the plan, but under circumstances in which securing individual consent is impractical. We note that we sometimes refer in the rule and preamble to health insurance issuers and HMOs that provide health insurance or health coverage to a group health plan as health insurance issuers or HMOs with respect to a group health plan.
The proposed rule used the health care component approach for employers and other plan sponsors. Under this approach, only the component of an employer or other plan sponsor would be treated as a covered entity. The component of the plan sponsor would have been able to use protected health information for treatment, payment, and health care operations, but not for other purposes, such as discipline, hiring and firing, placement and promotions. We have modified the final rule in a number of ways.
In the final rule, we recognize plan sponsors' legitimate need for health information in certain situations while, at the same time, protecting health information from being used for employment-related functions or for other functions related to other employee benefit plans or other benefits provided by the plan sponsor. We do not attempt to directly regulate employers or other plan sponsors, but pursuant to our authority to regulate health plans, we place restrictions on the flow of information from covered entities to non-covered entities.
The final rule permits group health plans, and allows them to authorize health insurance issuers or HMOs with respect to the group health plan, to disclose protected health information to plan sponsors if the plan sponsors voluntarily agree to use and disclose the information only as permitted or required by the regulation. The information may be used only for plan administration functions performed on behalf of the group health plan which are specified in plan documents. The group health plan is not required to have a business associate contract with the plan sponsor to disclose the protected health information or allow the plan sponsor to create protected health information on its behalf, if the conditions of § 164.504(e) are met.
In order for the group health plan to disclose protected health information to a plan sponsor, the plan documents under which the plan was established and is maintained must be amended to: (1) describe the permitted uses and disclosures of protected health information; (2) specify that disclosure is permitted only upon receipt of a certification from the plan sponsor that the plan documents have been amended and the plan sponsor has agreed to certain conditions regarding the use and disclosure of protected health information; and (3) provide adequate firewalls to: identify the employees or classes of employees who will have access to protected health information; restrict access solely to the employees identified and only for the functions performed on behalf of the group health plan; and provide a mechanism for resolving issues of noncompliance.
Any employee of the plan sponsor who receives protected health information for payment, health care operations or other matters related to the group health plan must be identified in the plan documents either by name or function. We assume that since individuals employed by the plan sponsor may change frequently, the group health plan would likely describe such individuals in a general manner. Any disclosure to employees or classes of employees not identified in the plan documents is not a permissible disclosure. To the extent a group health plan does have its own employees separate from the plan sponsor's employees, as the workforce of a covered entity (i.e. the group health plan), they also are bound by the permitted uses and disclosures of this rule.
The certification that must be given to the group health plan must state that the plan sponsor agrees to: (1) not use or further disclose protected health information other than as permitted or required by the plan documents or as required by law; (2) ensure that any subcontractors or agents to whom the plan sponsor provides protected health information agree to the same restrictions; (3) not use or disclose the protected health information for employment-related actions; (4) report to the group health plan any use or disclosure that is inconsistent with the plan documents or this regulation; (5) make the protected health information accessible to individuals; (6) allow individuals to amend their information; (7) provide an accounting of its disclosures; (8) make its practices available to the Secretary for determining compliance; (9) return and destroy all protected health information when no longer needed, if feasible; and (10) ensure that the firewalls have been established.
We have included this certification requirement in part, as a way to reduce the burden on health insurance issuers and HMOs. Without a certification, health insurance issuers and HMOs would need to review the plan documents in order to ensure that the amendments have been made before they could disclose protected health information to plan sponsors. The certification, however, is a simple statement that the amendments have been made and that the plan sponsor has agreed to certain restrictions on the use and disclosure of protected health information. The receipt of the certification therefore, is sufficient basis for the health insurance issuer or HMO to disclose protected health information to the plan sponsor.
Many activities included in the definitions of health care operations and payment are commonly referred to as plan administration functions in the ERISA group health plan context. For purposes of this rule, plan administration activities are limited to activities that would meet the definition of payment or health care operations, but do not include functions to modify, amend, or terminate the plan or solicit bids from prospective issuers. Plan administration functions include quality assurance, claims processing, auditing, monitoring, and management of carve-out plans - such as vision and dental. Under the final rule, "plan administration" does not include any employment-related functions or functions in connection with any other benefits or benefit plans, and group health plans may not disclose information for such purposes absent an authorization from the individual. For purposes of this rule, enrollment functions performed by the plan sponsor on behalf of its employees are not considered plan administration functions.
Plan sponsors have access to protected health information only to the extent group health plans have access to protected health information and plan sponsors are permitted to use or disclose protected health information only as would be permitted by group health plans. That is, a group health plan may permit a plan sponsor to have access to or to use protected health information only for purposes allowed by the regulation.
As explained above, where a group health plan purchases insurance or coverage from a health insurance issuer or HMO, the provision of insurance or coverage by the health insurance issuer or HMO to the group health plan does not make the health insurance issuer or HMO a business associate. In such case, the activities of the health insurance issuer or HMO are on their own behalf and not on the behalf of the group health plan. We note that where a group health plan contracts with a health insurance issuer or HMO to perform functions or activities or to provide services that are in addition to or not directly related to the provision of insurance, the health insurance issuer or HMO may be a business associate with respect to those additional functions, activities, or services. In addition, group health plans that provide health benefits only through an insurance contract and do not create, maintain, or receive protected health information (except for summary information described below or information that merely states whether an individual is enrolled in or has been disenrolled from the plan) do not have to meet the notice requirements of § 164.520 or the administrative requirements of § 164.530, except for the documentation requirement in § 164.530(j), because these requirements are satisfied by the issuer or HMO that is providing benefits under the group health plan. A group health plan, however, may not permit a health insurance issuer or HMO to disclose protected health information to a plan sponsor unless the notice required in 164.520 indicate such disclosure may occur.
The final rule also permits a health plan that is providing insurance to a group health plan to provide summary information to the plan sponsor to permit the plan sponsor to solicit premium bids from other health plans or for the purpose of modifying, amending, or terminating the plan. The rule provides that summary information is information that summarizes claims history, claims expenses, or types of claims experienced by individuals for whom the plan sponsor has provided health benefits under a group health plan, provided that specified identifiers are not included. Summary information may be disclosed under this provision even if it does not meet the definition of de-identified information. As part of the notice requirements in § 164.520, health plans must inform individuals that they may disclose protected health information to plan sponsors. The provision to allow summaries of claims experience to be disclosed to plan sponsors that purchase insurance will allow them to shop for replacement coverage, and get meaningful bids from prospective issuers. It also permits a plan sponsor to get summary information as part of its consideration of whether or not to change the benefits that are offered or employees or whether or not to terminate a group health plan.
We note that a plan sponsor may perform enrollment functions on behalf of its employees without meeting the conditions above and without using the standard transactions described in the Transactions Rule.