Choose Your Business Associates Wisely: An $80K Mistake

January 8, 2025

As we ring in the new year, it’s important to remember that Business Associates (BAs) are just as responsible for protecting patient health data as their Covered Entity counterparts. 

A major misstep by a BA was highlighted recently on a federal level, and the first fine of 2025 was imposed. 

Elgon, a Massachusetts-based medical record and billing support company for Covered Entities, was levied a $80,000 fine due to numerous violations of the Security Rule, which were exposed by the fallout of a ransomware attack. 

As a proposed update to the Security Rule is currently open for public comment and may take effect in the spring, it is crucial for Covered Entities to select Business Associates (BAs) who prioritize compliance. BAs are just as responsible for ensuring that Protected Health Information (PHI) is kept secure.

 

What Happened? 

Elgon was the victim of a ransomware attack on March 25, 2023. Unfortunately, the BA didn’t realize the intrusion of its firewalls for over a week until a ransom note was discovered. Elgon then reported the breach, which affected over 30,000 patients of a Covered Entity. Thousands of social security numbers, addresses, and other personally identifiable information were leaked from the attack. 

When Elgon was investigated, it was uncovered that the organization failed to recognize its risks in a Security Risk Analysis (SRA). The SRA is at the foundation of a successful practice or business, giving an organization a benchmark on how it handles PHI and how it can improve. This fine is also the second enforcement of the OCR’s Risk Analysis Initiative, highlighting the importance of completing and maintaining this assessment. 

 

How to Protect Your Organization

Covered Entities and Business Associates need to uphold their commitment to protecting patient data. This recent fine is a stark reminder of what can happen when the proper procedures are not followed, exposing the personal information of thousands of patients. 

To avoid and mitigate situations like this, Covered Entities must carefully choose the right BA to work with, ensuring they also understand the importance of protecting patient data.  For BAs, having the proper safeguards in place is vital, earning trust from Covered Entities that you can keep their patients’ PHI safe. 

A key document that establishes the liability of both parties is the Business Associate Agreement (BAA). The BAA is a written document required when working with Business Associates and vice versa. This signed agreement ensures both parties know their responsibilities when handling patient data. Proposed updates to the Security Rule expand on this, with BAs potentially having to verify they are enforcing the proper safeguards on a yearly basis, certified by a compliance expert. 

Overall, this fine sets the tone for a new year of significant changes and enforcement by the OCR. Covered Entities and Business Associates must both understand their critical role in protecting patients. 

To learn more about how you can become HIPAA compliant, schedule a consultation with our team of experts today. 

 

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