Sale of Protected Health Information (PHI) Policy

Introduction

The sale of Protected Health Information (PHI) is a critical issue in healthcare, and it is highly regulated to ensure that patient privacy and confidentiality are protected. Under the Health Insurance Portability and Accountability Act (HIPAA), the sale of PHI is tightly controlled. Healthcare organizations must understand the legal boundaries and the steps necessary to comply with these regulations.

When PHI is involved in business transactions, a Business Associate Agreement (BAA) becomes essential. This agreement ensures that external vendors or partners handling PHI comply with HIPAA standards and safeguard the information accordingly. If your organization is considering the sale or transfer of PHI, it is crucial to understand the legal frameworks in place to protect patient rights.

Here, we will discuss the importance of creating robust policies around the sale of PHI, including the use of a Code of Conduct Policy and how it can help your organization notice complex regulations. 

To get started, download our Free Downloadable Sale of Protected Health Information (PHI) Policy Template and take the first step toward managing PHI transactions securely and in full compliance with the law.

What is the Sale of PHI?

The sale of Protected Health Information (PHI) refers to the exchange or transfer of personal health data for compensation or any other form of value. This could include selling medical records, patient histories, or any other sensitive data related to a person’s health, treatments, diagnoses, or medications.

Under HIPAA (Health Insurance Portability and Accountability Act), PHI is strictly protected to prevent misuse or unauthorized sharing. The law ensures that organizations, businesses, or individuals who handle PHI follow very specific guidelines regarding its collection, use, and disclosure. So, when we talk about the sale of PHI, we are discussing scenarios where this data might be used for profit or traded without the explicit consent of the individual it concerns.

A common example would be if a company were to sell a database containing health information to advertisers, marketers, or even other healthcare providers. It’s important to note that selling PHI in this manner is illegal unless it’s done under strict circumstances, such as anonymizing the data or obtaining the patient’s consent in writing.

The term “sale” in this case can be misleading, as most businesses cannot just freely exchange or trade health data. Instead, the transfer of PHI is highly regulated, with strict rules ensuring that any information shared is done so under specific legal guidelines.

To get started, download our Free Downloadable Sale of Protected Health Information (PHI) Template and take the first step toward protecting your organization and its valuable data.

Why is the Sale of PHI So Sensitive?

The sale of Protected Health Information (PHI) isn’t something that should be taken lightly. PHI includes personal details about a patient’s health, treatments, or medical history. This information is deeply private and can affect someone’s life in many ways. If PHI gets into the wrong hands, it could lead to identity theft, insurance fraud, or even discrimination against a person because of their medical conditions.

Because of the risks involved, HIPAA (Health Insurance Portability and Accountability Act) has strict rules about who can access, use, and share PHI. The main point here is that PHI is not for sale, at least not under normal circumstances. This rule is in place to make sure healthcare organizations, doctors, hospitals, and anyone else handling PHI can’t just sell or share this information without patients’ consent.

So, if a business wants to buy or sell PHI, there’s a big need for clear guidelines. Any transaction involving PHI must be transparent, secure, and fully compliant with HIPAA. That’s where having the right policies comes into play, policies that outline how PHI is handled and who is allowed to access it.

Without these protections in place, an organization could face huge fines, lawsuits, and damage to its reputation. That’s why healthcare businesses need a clear Code of Conduct Policy around PHI and follow the necessary steps to ensure that all rules are respected and adhered to.

Legal and Ethical Concerns Surrounding the Sale of PHI

The sale of Protected Health Information (PHI) is surrounded by a number of legal and ethical concerns, mainly because of the privacy rights it involves. Under U.S. law, PHI is protected by HIPAA (Health Insurance Portability and Accountability Act), which sets strict rules on how health information should be handled. There are serious implications for violating these rules, not only for businesses but also for individuals involved in such transactions.

Legal Risks

1. Violating HIPAA Regulations
   HIPAA prohibits the sale of PHI without patient consent. If a healthcare provider, insurer, or any organization shares or sells PHI without the patient’s authorization, they could face heavy fines and penalties. These penalties can range from hundreds of thousands to millions of dollars, depending on the severity of the violation. Criminal charges are also possible in some extreme cases.
2. Breach of Contract
   Many healthcare providers and organizations enter into agreements to protect patient data. If PHI is sold or shared inappropriately, it could violate these contracts. This could lead to lawsuits, loss of business licenses, or even loss of trust from patients, which is difficult to recover.
3. State Laws
   In addition to HIPAA, some states have their laws about the sale of PHI. These laws can be even stricter, imposing additional requirements on how health information is used or shared. Violating these can lead to further legal consequences.

Ethical Concerns

1. Patient Privacy
   Selling or sharing PHI without consent undermines the trust patients place in healthcare providers. When a person visits a doctor, they expect that their sensitive health data will be kept private and secure. Selling this data without clear, informed consent raises significant ethical concerns.
2. Exploitation of Vulnerable Individuals
   Some people may feel coerced into agreeing to share their PHI, especially if they don’t fully understand the consequences or what’s being sold. This raises questions about informed consent and whether people can truly make an educated decision about their data.
3. Impact on Public Trust
   If healthcare organizations are seen as profiting from personal health data, it could damage the public’s trust in the healthcare system. Patients may become more hesitant to share their health information with doctors, leading to negative consequences for both individual care and public health initiatives.

How to Protect Against Unauthorized Sale of PHI

Protecting Protected Health Information (PHI) from unauthorized sale is a critical responsibility for healthcare providers, organizations, and businesses dealing with sensitive data. Various strategies and steps can be taken to prevent the illegal or unethical sale of PHI and ensure compliance with HIPAA and other privacy laws.

1. Implement Strong Data Security Measures

To prevent unauthorized access to PHI, organizations must invest in strong data security protocols. This includes encrypting all electronic PHI (ePHI), using secure networks for data transmission, and implementing multi-factor authentication (MFA) for accessing sensitive information. Research shows that the healthcare industry has been experiencing increased cyber threats and attacks, resulting in more data breaches. In the last decade, these incidents have tripled in the US, with ransomware attacks alone affecting over 42 million patients from 2016 to 2021. This makes security a top priority.

• Encrypt PHI: Data encryption prevents unauthorized users from accessing PHI, even if they gain access to your systems.
• Regular audit access: Frequent audits help ensure that only authorized individuals can access PHI.

2. Ensure Proper Employee Training

One of the most common ways PHI is sold or accessed unlawfully is due to employee negligence or lack of understanding. Employees must be trained regularly on HIPAA compliance, the importance of protecting patient data, and recognizing attempts at social engineering or phishing. A CybSafe study found that 90 percent of breaches in the UK in 2019 were caused by user error. A study from Stanford University attributed 88% of breaches to employee mistakes.

• Educate staff about the risks of unauthorized access to PHI.
• Reinforce confidentiality and encourage employees to report suspicious activities.

3. Use Business Associate Agreements (BAAs)

When sharing PHI with third parties (such as vendors, contractors, or consultants), it’s crucial to have a Business Associate Agreement (BAA) in place. A BAA ensures that all third parties understand their legal obligation to safeguard PHI and comply with HIPAA regulations. Failure to have a BAA can expose organizations to significant legal and financial penalties if PHI is improperly shared or sold.

• Regularly update BAAs to reflect changes in legal regulations.
• Ensure BAAs include specific clauses about data security protocols.

4. Obtain Explicit Patient Consent

One of the most important protections against the unauthorized sale of PHI is obtaining explicit, informed patient consent. Patients should be fully aware of how their data will be used, who will have access to it, and if any part of it will be sold. By making patient consent a clear part of the healthcare process, organizations can ensure compliance and reduce the risk of violating privacy laws.

• Clear consent forms should detail what data is being collected and how it will be used.
• Patients should have the option to opt out of certain data sharing or sales agreements.

5. Conduct Regular Audits and Monitoring

Regular audits and continuous monitoring of all transactions involving PHI are essential for identifying any unauthorized access or breaches. This can help organizations quickly identify when PHI has been inappropriately shared or sold. According to a report by Verizon, healthcare organizations saw a 71% increase in breaches due to compromised credentials, emphasizing the need for continuous vigilance.

• Use automated systems for real-time alerts on unauthorized PHI access.
• Conduct thorough internal audits at least annually.

6. Enforce Penalties for Breaches

Organizations should establish clear and enforceable penalties for employees or partners who are found to be involved in unauthorized access, sale, or distribution of PHI. By setting these standards and holding violators accountable, organizations can determine unethical behavior. The penalties for violations can be severe, with fines ranging from $100 to $50,000 per violation under HIPAA, along with possible criminal charges.

Key Components of a Sale of PHI Agreement

A Sale of Protected Health Information (PHI) Agreement is a crucial document that outlines the terms and conditions under which PHI can be shared or sold to third parties. This agreement helps organizations protect patient privacy and ensure compliance with HIPAA and other relevant laws. When drafting this agreement, several key components must be included to safeguard against unauthorized use or sale of PHI.

1. Purpose

The purpose of this policy is to establish guidelines for the sale of Protected Health Information (PHI) in compliance with the Health Insurance Portability and Accountability Act (HIPAA) and applicable state laws. This policy aims to protect the privacy and confidentiality of individuals’ health information while allowing for potential revenue generation through permissible sales of PHI.

2. Scope

This policy applies to all employees, contractors, and agents of [Organization Name] who have access to PHI and are involved in the sale of PHI.

3. Definitions

1. Protected Health Information (PHI): Any individually identifiable health information that is transmitted or maintained in any form or medium, including oral, written, or electronic.
2. Sale of PHI: The disclosure of PHI by a covered entity to a third party in exchange for remuneration, including cash, services, or any other form of compensation.
3. Remuneration: Any direct or indirect payment or other benefit received in exchange for PHI.

4. Policy Statement

[Organization Name] prohibits the sale of PHI without meeting the requirements set forth in HIPAA and applicable state laws. The sale of PHI will only occur under the following conditions:

4.1 Permissible Sales

The sale of PHI is permissible only if:

• Individual Authorization: Written authorization is obtained from the individual whose PHI is being sold. The authorization must clearly state the information being sold, the purpose of the sale, and the remuneration involved.
• De-identified Data: The PHI has been de-identified in accordance with HIPAA standards, ensuring that the data cannot be used to identify an individual.
• Limited Data Set: The sale involves a limited data set, which excludes certain direct identifiers and meets HIPAA’s definition of a limited data set.

4.2 Prohibited Sales

The sale of PHI is strictly prohibited in the following circumstances:

• Sales of PHI that do not meet the criteria outlined in Section 4.1.
• Sales of PHI for marketing purposes without individual authorization.
• Sales of PHI that violate state or federal laws.

5. Procedures

5.1 Request for Sale of PHI

• Employees must submit a written request to the Compliance Officer for any proposed sale of PHI, including the purpose, potential buyers, and compensation details.
• The Compliance Officer will review the request to ensure it complies with this policy and HIPAA regulations.

5.2 Documentation

All approved sales of PHI must be documented, including:

• • A copy of the individual’s authorization (if applicable)
  • Details of the PHI sold
  • The recipient’s identity
  • The purpose of the sale
  • The amount of remuneration received

Documentation must be maintained for a minimum of six years from the date of the transaction.

5.3 Training and Awareness

• All employees with access to PHI will receive training on this policy and HIPAA requirements related to the sale of PHI.
• Periodic audits will be conducted to ensure compliance with this policy.

6. Enforcement

Failure to comply with this policy may result in disciplinary action, up to and including termination of employment. Legal action may also be pursued if violations result in harm to individuals or the organization.

7. Policy Review

This policy will be reviewed annually or as needed to ensure compliance with changes in HIPAA regulations and organizational practices.

Best practices to Create a Sale of PHI Template

Creating a Sale of PHI involves a deep understanding of HIPAA regulations, data privacy laws, and the ethical considerations involved in handling sensitive health information. Below are the essential steps that will guide you in creating a comprehensive, secure, and legally compliant template for selling Protected Health Information (PHI).

1. Identify the Purpose and Scope of the Sale

Before you begin drafting your template, it’s critical to define the purpose and scope of the sale clearly. You need to understand why and how PHI is being sold. What is the primary reason for selling this information? Whether it’s for research purposes, data analytics, or to meet business development goals, this clarity will help shape the rest of your template.

• Define the scope of the sale by determining which specific data elements will be involved. This could include things like demographic information, medical treatment history, or diagnostic data.
• Consider whether you’re selling de-identified data (data stripped of personal identifiers) or a limited data set (data that still allows some identification, but within certain restrictions). Both have different compliance requirements under HIPAA.

Being clear on the purpose and scope ensures that the sale complies with privacy laws and aligns with ethical standards.

2. Ensure Compliance with HIPAA

HIPAA (the Health Insurance Portability and Accountability Act) provides the legal foundation for safeguarding Protected Health Information. Your template must reflect strict adherence to HIPAA’s rules and regulations. Compliance is essential for legal reasons and also for maintaining the trust of individuals whose data is being sold.

• Authorization: Ensure that explicit patient consent is obtained unless the data is de-identified or consists of a limited data set. The individual must be fully informed about the purpose and extent of the sale.
• HIPAA Privacy Rule: Your template must outline how the sale aligns with HIPAA’s Privacy Rule, which governs the use and disclosure of PHI.
• Security Rule: This rule requires organizations to implement security safeguards to protect PHI during its sale. Your template should explain the security measures in place to ensure that PHI is not exposed or misused.

Legal compliance is paramount. A template that doesn’t comply with HIPAA could expose your organization to significant fines, legal action, and loss of reputation.

3. Outline the Terms and Conditions of the Sale

The terms and conditions of the sale should be clearly articulated in the template to ensure that all parties are on the same page and understand their rights and obligations. Key elements to include are:

• Payment Terms: Specify whether the sale involves a one-time payment, recurring payments, or another structure. Be clear about the amount, payment due dates, and any penalties for late payments.
• Data Access and Handling: Detail who will have access to the PHI and under what circumstances. Who can use the data, and for what purposes? Make sure to define whether the buyer is allowed to share, modify, or redistribute the data.
• Data Retention and Destruction: Specify how long the buyer can retain the data and the protocols they must follow to destroy the data once it is no longer needed.
• Security Protocols: List the security measures in place to protect the data throughout the sale process, such as encryption, data anonymization, and secure transmission protocols.

Clearly stating the terms and conditions helps prevent any misunderstandings or disputes later on and ensures that the sale is conducted within legal boundaries.

4. Clarify Buyer’s Responsibilities and Liabilities

The buyer of the PHI must assume full responsibility for handling and protecting the data in accordance with all applicable laws and regulations. It’s critical that your template clearly outlines the buyer’s obligations to avoid any potential misuse of the information:

• The buyer must adhere to HIPAA and other data protection laws, ensuring that the PHI is used only for the specified purposes and that security standards are met.
• Liability Clauses: Define what happens if the buyer fails to comply with these terms. This may include penalties, revocation of the sale, or other legal repercussions.
• Data Breaches: Specify the steps the buyer must take if a data breach occurs, including notification timelines and cooperation in investigations.

Clarifying these responsibilities and liabilities helps ensure that the buyer understands the importance of data protection and can be held accountable in case of non-compliance.

5. Include Consent and Authorization Sections

The consent section is the most crucial part of the template to ensure that the sale complies with both legal standards and ethical expectations. It should include:

• A section for the patient’s signature authorizing the sale of their PHI. This should outline the specific data being sold, the purpose of the sale, and the parties involved.
• The template should also clearly outline how the patient’s rights will be protected throughout the transaction, including their ability to revoke consent at any time, subject to the terms of the agreement.

The authorization section ensures transparency with patients, which helps maintain their trust and assures them that their data will only be used for agreed-upon purposes.

6. Add Data Security and Confidentiality Provisions

Since PHI is extremely sensitive, it’s essential to include provisions in your template that protect the security and confidentiality of the information. Key provisions include:

• Encryption and Secure Transmission: Specify that all PHI will be encrypted during both storage and transmission. Additionally, outline secure data-sharing protocols to prevent unauthorized access.
• Confidentiality Agreements: The buyer should sign confidentiality agreements that prohibit the use of the PHI for any purpose other than the one specified in the sale agreement.
• Monitoring and Auditing: Include a clause requiring the buyer to implement audit controls to track how the data is accessed and used. This could include maintaining logs and conducting periodic reviews.

These security measures are critical to protecting both the individuals’ privacy and your organization’s reputation.

7. Review and Obtain Legal Counsel

Once you have drafted your sale of PHI template, it’s time to have it reviewed by a legal professional. Given the complexity of HIPAA and data privacy regulations, legal counsel is essential to ensure that:

• The template complies with all relevant laws and regulations.
• The terms are fair, clear, and enforceable in a court of law.
• The document minimizes any legal risks related to the sale of PHI.

Working with legal professionals helps to ensure that the sale is legally sound and protects all parties involved from potential liabilities.

8. Test and Implement the Template

Once the template is finalized, the next step is to test it in real-world scenarios. This involves using the template for actual transactions to identify any gaps or areas of improvement. You may also need to:

• Train your team on how to use the template properly.
• Ensure that everyone involved in handling PHI understands their role in ensuring data privacy and security.
• Monitor the use of the template and update it as necessary based on changes in law, industry best practices, or lessons learned.

By thoroughly testing and refining your template, you can ensure that it functions as intended and that all data transactions are conducted securely and in full compliance with applicable regulations.

By following these steps, you can create a well-structured, legally compliant, and secure Sale of PHI template that protects both the privacy of individuals and the integrity of your organization. Taking the time to craft your template properly ensures that PHI is handled with the utmost care and respect for privacy.

FAQs

1. What is the difference between the sale of PHI and its use for healthcare operations?

The sale of Protected Health Information (PHI) refers to the exchange of PHI for remuneration or payment. This can include transactions where health data is sold to third parties for purposes such as marketing, research, or business development. Use for healthcare operations, on the other hand, involves the necessary handling of PHI for purposes such as treatment, diagnosis, payment, or operational activities like auditing and quality improvement.

Under HIPAA, the sale of PHI requires explicit patient consent, whereas uses for healthcare operations are generally allowed without additional consent as long as they align with the regulations.

2. Can PHI be sold under any circumstances?

Under HIPAA, the sale of PHI is heavily regulated. In general, PHI cannot be sold without written consent from the individual whose information is being used, except in certain cases. For instance, PHI can be sold under the following circumstances:

• Data use agreements that comply with HIPAA regulations.
• Business associate agreements where third parties involved have been authorized to use or disclose PHI for specific purposes.
• De-identified data: If PHI is properly de-identified, it may be used or sold without restriction as long as the data cannot be traced back to any individual.

3. Who is responsible for ensuring compliance when PHI is sold?

Both the covered entities (healthcare providers, insurers, etc.) and their business associates have shared responsibility for ensuring compliance with PHI privacy regulations when PHI is sold. It is the covered entity’s responsibility to ensure that the sale complies with HIPAA, and they must obtain the appropriate patient consent. The business associates must also ensure they handle the data as per the terms outlined in their agreements, including safeguards for PHI.

4. What happens if an organization sells PHI without proper consent?

Selling PHI without obtaining proper consent or in violation of HIPAA regulations can result in severe penalties, including:

• Fines: Penalties range from $100 to $50,000 per violation, depending on the severity and knowledge of the violation.
• Civil and criminal penalties: In some cases, individuals involved in unauthorized sales may face criminal charges.
• Reputational damage: Unauthorized sales of PHI can lead to loss of patient trust, legal disputes, and long-term damage to the organization’s reputation.

5. How can an organization protect itself when handling the sale of PHI?

To ensure compliance and protect the organization from legal risks, the following steps are critical:

• Obtain explicit patient consent: Ensure that all PHI transactions are covered under patient consent or HIPAA-compliant agreements.
• Implement secure data handling practices: Ensure that all PHI is securely stored, transmitted, and handled according to HIPAA standards.
• Use Business Associate Agreements (BAAs): Ensure any third-party vendor or partner involved in the handling of PHI is bound by a BAA that clearly defines their responsibilities for safeguarding PHI.
• Regular audits and training: Conduct routine audits to identify vulnerabilities in your processes and provide regular HIPAA training to staff members handling PHI.

6. Is it legal to sell PHI for research purposes?

Yes, selling PHI for research purposes is allowed only if:

• The PHI is de-identified, or the individual has given explicit consent for their data to be used for research.
• The transaction is part of an approved research study and is structured under a data use agreement that ensures the protection of personal health information.
• The research entity complies with all HIPAA regulations regarding the use of health information.

7. What is a Business Associate Agreement (BAA), and why is it important for the sale of PHI?

A Business Associate Agreement (BAA) is a contract between a covered entity (like a healthcare provider) and a third party (business associate) that ensures the third party will appropriately safeguard PHI. The BAA outlines how the business associate may use or disclose PHI and mandates that the associate take necessary security measures to protect the information. It is critical when PHI is sold or shared with a third party to ensure that both the covered entity and the business associate are legally accountable for the privacy and security of the PHI.

8. Are there any exemptions to the HIPAA rules on the sale of PHI?

While HIPAA imposes strict regulations on the sale of PHI, there are some exemptions. PHI can be sold or disclosed without patient consent under the following conditions:

• If the PHI is fully de-identified and cannot be traced back to any individual.
• If the PHI is part of a legal investigation or court order.
• If the transaction is related to government audits or oversight in compliance with HIPAA enforcement.

However, these exceptions are quite narrow, and healthcare entities must ensure any such sales are justified under HIPAA guidelines to avoid penalties.

Conclusion

The Sale of Protected Health Information (PHI) is a complex and heavily regulated topic that requires careful consideration of privacy laws, patient consent, and organizational policies. With increasing advancements in healthcare technology and data analytics, the potential for trading health data has grown, making it crucial for organizations to understand the strict guidelines set by HIPAA and other regulations.

By establishing a strong framework that includes clear policies, consent forms, and legal agreements like Business Associate Agreements (BAAs), organizations can ensure compliance also protect patient trust. Safeguarding sensitive information is about avoiding penalties and creating a culture of ethics and accountability.

To simplify the process, consider using tools like our free downloadable Sale of PHI template, which provides a structured approach to building your policy and ensuring that your organization is well-prepared to handle these legal complexities. Protect your organization, your clients, and your reputation by ensuring that all PHI transactions are secure, transparent, and compliant.

Download the free Sale of PHI template today, and get started with a 21-day free trial to enhance your organization’s compliance and security!