May 23, 2023

HIPAA Compliance: Can You Fail an Audit?

Since the arrival of HIPAA privacy and security requirements in 1996, healthcare providers and covered Business Associates have scrambled to comply…but many of these organizations have yet to experience the true pressure of a formal HIPAA audit ordered by the HHS Office of Civil Rights, which administers HIPAA statutes.

While HIPAA audits may not be as regular as the rising sun, they do happen, and their frequency is gradually increasing. Learn more about the process (and protect yourself from phishing scams) by reviewing HHS HIPAA audit program information here.

In the meantime, keep these common issues in mind.

If we receive notice of an audit, how long will we have to prepare?

Not long. The HHS will allow about 10 to 14 days to get your documentation in order, which is not quite long enough for many organizations that are woefully unprepared, haven’t taken HIPPA compliance seriously, or have launched too recently to have the necessary documentation and privacy protections in place. The best protection against a panicked rush is simple: start now.

We won’t be audited because our organization is way too small.

Think twice; smaller organizations are actually more likely to be targeted by auditors, not less. There’s a reason for this: small medical practices tend to have more compliance problems and breach vulnerabilities that large health systems, and the same rule applies to Covered Entities versus Business Associates.

We are not a healthcare provider, only a Business Associate. Our hospital clients are likely to be audited, but not us.

Again, Business Associates are certainly reasonable targets for a HIPAA audit, and keep in mind that your Covered Entity clients may fail their audit if compliance gaps are found within your own systems. If your privacy protections are too flimsy, you may be penalized by HHS and ALSO lose clients.

We haven’t had a data incident, which means we haven’t sent up any red flags.

Recognized data breaches aren’t the only events that can draw attention and trigger an audit. Besides, you may have actually had data breaches, complaints, or issues arising before your current protocols were set in place. If you’ve ever experienced the loss or theft of an unencrypted device, this may sound an alarm and reveal signs of more serious data weaknesses.

Keep in mind that encryption, a high-level risk assessment (not just a checklist review), and a professional analysis of your data management systems are all less expensive than HIPAA penalties. Contact our team today to learn more.  

We’re here to help.

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Frequently Asked
Questions

What type of compliance standard can you help with?

We help our clients based on their needs. The majority of our contracts involve SOC-2, HIPAA, and most recently GDPR. Feel free to ask us if we can help with your particular case. If we aren't able to, we can most likely recommend you to someone who can.

How long does a SOC 2 engagement usually take?

We move as fast as our clients are able to make progress. Our fastest client to date got their SOC-2 Type I four months after signing our engagement letter. That record is up for grab if you are up for it.

In our experience however, it takes 6-9 months to achieve a SOC-2 Type I,  and 3-6 additional months to obtain a SOC-2 Type II report.

Which standard do you follow for your security policies?

All of our security policies follow the ISO-27001 standard. The Confidentiality, Integrity, and Availability standards cover the range of standards we like to work with for SOC 2.

Why do we have to become SOC 2 compliant if we are relying on AWS which is already compliant?

SOC 2 stands for Service Organization Control, meaning your clients are interested in understanding your controls, not your hosting provider’s control. As part of your vendor assessment we recommend reviewing AWS’ SOC 2 report, but relying on their report is not enough to become SOC 2 compliant.

Who is behind SOC 2?

The American Institute of CPAs. The AICPA is an established and respected organization that provides two forms of audits to companies that demonstrate evidence of a secure data-protection infrastructure. A Type I is a point in time audit that addresses the company’s description of its system, the suitability of the system’s design, and the effectiveness of its internal data controls. A Type II report happens over a period of time and emphasizes design and also focuses on the validity of the company’s controls.

Are SOC 2 reports a legal obligation?

No, but most enterprise level organizations that engage with sensitive data (again, almost all of them) have an obligation to their stakeholders to prove due diligence regarding data security, which means they’ll want to vet their service providers using this tool. SOC 2 can help these prospective service providers set themselves apart from the competition. Just as important, a SOC 2 report represents a meaningful and respected signifier of trust.

What can happen to a company without a SOC 2 report?

A lack of a SOC 2 report won’t result in legal problems, but it can and will limit outside assessments of the company’s commitment to data security. When large-scale clients look for providers, or large-scale backers look for a likely return on their investment, they don’t want concerns about security to stand in the way. Trust is a chain made of links that have each been put the test and have proven their ability to withstand pressure and scrutiny. Company leaders are wise to let SOC 2 auditors apply this pressure so their clients and backers don’t have to.

When is it too late for a SOC 2 audit?

Never. Even companies that have been in business for years but have never obtained a SOC 2 report can—and should—take steps in this direction now. Being compliant with SOC 2 can open the door to a broader base of more significant clients and larger contract opportunities. That being said, startups in the threshold of the marketplace, and new business owners who hope for an eventual public offering, should obtain a SOC 2 report during the development and financing process. By the time the company approaches Series B and C fundraising rounds, a report should be in hand.

How complicated is the auditing process?

The auditing process can be easy, or complicated depending on your level of preparation.

Preparing for the audit can take some time, attention, and the guidance of reliable data security experts. Don’t leave any part of this process to chance. Approach SOC 2 compliance one step at a time, and start by contacting a consulting firm with track record of experience in your area of the marketplace.