3 Differences Between Covered Entities and Business Associates You Should Know

Business Associates Health Insurance Portability and Accountability Act (HIPAA) is the federal legislation that ensures medical information remains private, safe, and secure. Data privacy is one of its purposes, but it’s the most prominent now due to the dangers posed by cyberattacks and data breaches.

The HIPAA is an extensive piece of legislature. The sheer magnitude of the law makes understanding its rules and nuances challenging and confusing. Two terms used extensively in HIPAA are Covered Entities and Business Associates.

These two groups are vital in ensuring the healthcare industry works like a well-oiled machine. Covered Entities and Business Associates must adhere to the HIPAA Privacy Rule. The problem is that the Privacy Rule legally only applies to covered entities. But since business associates work closely with them, a confusing overlap is inevitable.

Anyone working in a healthcare organization or health-oriented business has to undergo HIPAA training for business associates and covered entities to ensure they comply with the Privacy and Security Rule.

Covered Entities V.S Business Associates: Which is Which?

The HIPAA defines Covered Entities as entities or individuals who transmit personal health information electronically for transactions defined by HHS standards.

These are the healthcare providers, health plans, and healthcare clearinghouses. Doctors, dentists, and nursing homes fall under healthcare providers. Meanwhile, health insurance companies and Medicare are examples of health plans.

Meanwhile, a business entity is a company or individual that performs a service for a HIPAA-covered entity. They are given access to PHI in the fulfillment of their job. Software providers, cloud platforms, medical billing companies, law firms, and third-party administrators are examples of business associates.

Business associates are mandated to comply with HIPAA rules governing PHI. Failure to do so will result in fines and penalties for noncompliance. They’re also required to sign a Business Associate Agreement (BAA) with the covered entity they’re working with.

Both covered entities and business associates must comply with HIPAA rules or face severe penalties. However, a covered entity is responsible for ensuring its business associate is compliant. It’s also their job to correct noncompliance.

3 Main Differences Between Covered Entities and Business Associates

Protected or Personal Health Information is any information that can identify a patient. It can be the patient’s name, age, gender, email address, work, etc.

Covered entities and business associates both receive, transmit, and use PHI. The former gets it straight from the patient or other critical sources. The latter receives patient data from a covered entity. How they process the information is what sets them apart. For example:

  •     Work and Responsibilities

Their roles and responsibilities in the healthcare sector highlight the difference between covered entities and business associates.

A covered entity handles PHI. It receives medical information and transmits it. For instance, a nurse will get the patient’s information while a doctor deals with their diagnosis. Meanwhile, a business associate handles a specific activity for the covered entity. A cloud service provider will store PHI; a transcription company will listen and transcribe conversations between doctor and patient.

The two groups work together. Both have to comply with HIPAA standards. Both will enter a BAA contract to protect the health information.

  •     Rules for Sharing PHI

Covered entities and business associates must follow HIPAA rules for sharing private information. However, there are specific guidelines for each group.

A covered entity can follow the minimum necessary standard when using or disclosing health information. For example, a doctor can share a patient’s health information with another doctor when consulting about possible treatment. A clinic can also disclose PHI to a business associate who handles billing.

A business associate can only use or share PHI dictated in their BAA. They can process or store information transmitted by the covered entity. But they cannot use or share this information with anyone else.

  •     Way PHI is Shared or Used

The HIPAA permits covered entities to share specific patient information for a particular reason. A doctor can share the details of an operation with another doctor or surgeon. A hospital or clinic can transmit the patient’s details to a billing company to process payment.

A covered entity is also allowed to reveal PHI without getting authorization from the person. But this is only for specific circumstances, like a treatment process.

Business associates can only use PHI for some tasks. These can be administrative work, processing claims, data analysis, or quality assurance. The jobs performed will depend on their BAA.

There’s a world of difference between covered entities and business associates. It might look like there’s an overlap in how they use PHI. It’s essential to know how the two groups differ. A HIPAA training for business associates will emphasize what each can or cannot do.

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