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Beware: HIPAA Applies to the Health Plans You Never Knew You Had

May 9, 2018Articles For Your Benefit

You may be surprised to learn that those “extra” benefits your company offers to its employees such as your employee assistance program (EAP) and wellness program likely are subject to the HIPAA privacy, security and breach notification rules (collectively, HIPAA Rules). In both cases, EAPs and wellness programs must comply with the HIPAA Rules to the extent that they are “group health plans” that provide medical care.

As background, the HIPAA Rules apply to “covered entities” and their “business associates.” Health plans and most healthcare providers are “covered entities.” Employers, in their capacity as employers, are not subject to the HIPAA Rules. However, the HIPAA Rules do apply to any “protected health information” (PHI) an employer/plan administrator holds on a health plan’s behalf when the employer designs or administers the plan.

Employee Assistance Programs

Plan administrators and some EAP vendors may not consider EAPs to be group health plans because they do not think of EAPs as providing medical care. Most EAPs, however, do provide medical care. They are staffed by health care providers, such as licensed counselors, and assist employees who are struggling with family or personal problems that rise to the level of a medical condition, including substance abuse and mental health issues. In contrast, an EAP that provides only referrals on the basis of generally available public information, and that is not staffed by health care providers, such as counselors, does not provide medical care and is not subject to the HIPAA Rules.

A self-insured EAP that provides medical care is subject to the HIPAA Rules, and the employer that sponsors and administers the EAP remains responsible for compliance with the HIPAA Rules because it acts on behalf of the plan. On the other hand, for an EAP that is fully-insured or embedded in a fully-insured policy, such as long-term disability coverage, the insurer will have the primary obligations for compliance with the HIPAA Rules for the EAP. The employer will not be responsible for overall compliance with the HIPAA Rules for an insured EAP even though it provides medical care, but only if the employer does not receive PHI from the insurer or only receives summary health information or enrollment/disenrollment information. Even then, the employer needs to ensure it doesn’t retaliate against a participant for exercising their rights under the HIPAA Rules or require waiver of rights under the HIPAA Rules with respect to the EAP.

An EAP that qualifies as an “excepted benefit” for purposes of HIPAA portability and the Affordable Care Act – as is most often the case because the EAP is offered at no cost, eligibility is not conditioned on participation in another plan (such as a major medical plan), benefits aren’t coordinated with another plan and the EAP does not provide “significant benefits in the nature of medical care” – can be subject to the HIPAA Rules. In other words, just because you’ve determined that your EAP is a HIPAA excepted benefit doesn’t mean the EAP avoids the HIPAA Rules. Most EAPs are HIPAA excepted benefits, yet subject to full compliance with the HIPAA Rules.

Employers/plan administrators facing unexpected compliance obligations under the HIPAA Rules because of a self-insured EAP that provides medical care will need to enter into a HIPAA business associate agreement with the EAP vendor, amend the EAP plan document to include language required by the HIPAA Rules and develop and implement other compliance documents and policies and procedures under the HIPAA Rules. One option is to amend any existing compliance documents and policies and procedures under the HIPAA Rules for another self-insured group health plan to make them apply to the EAP as well. If the EAP is the plan administrator’s only group health plan for which it has compliance responsibility under the HIPAA Rules, the plan administrator should consult with legal counsel to develop and implement all necessary documentation for compliance with the HIPAA Rules.

Wellness Programs

Although many employers do not think of their wellness programs as a group health plan, wellness programs may be considered a group health plan in at least two common ways. First, if an employer offers a wellness program as part of another group health plan (e.g., a major medical plan), any individually identifiable health information collected from participants in the wellness program is PHI under the HIPAA Rules. In other words, if the wellness program is part of another group health plan, such as a major medical plan—for example, by offering incentives like premium reductions or lower cost-sharing amounts for major medical coverage based on participation in the wellness program—the wellness program will be subject to the HIPAA Rules.

Second, a wellness program will be a group health plan subject to the HIPAA Rules if it provides medical care to employees. Some benefits commonly provided by wellness programs are not medical benefits—a health risk assessment (HRA), for example, is typically a questionnaire intended to identify an employee’s possible health risks and to motivate the employee to make positive behavior changes to reduce those risks. HRAs are not medical care if they are not administered by medical professionals and are not intended to diagnose illness or prescribe treatment. Other non-medical benefits offered by wellness programs include exercise, nutrition, or weight loss programs, as long as they are not connected with or recommended in response to a medical practitioner’s diagnosis. A wellness program may also provide general health-related information, or referrals (if made by people without any special medical training), without providing medical care (and without triggering compliance obligations under the HIPAA Rules).

Other common wellness program benefits, however, may provide medical care. A biometric screening (often conducted in conjunction with an HRA) is typically medical care because it often involves a blood draw, labs and a clinical assessment of an employee’s health and is intended to diagnose, or indicate an increased risk of, certain health conditions (heart disease, diabetes, etc.). Wellness programs also often include disease management and smoking cessation services, which are considered medical care because they are designed to assist with specific health conditions. Even something as simple as an employee flu shot is medical care, whether or not it is part of another group health plan. Individualized health coaching by trained nurses or counseling provided by trained counselors also would be considered medical care. Providing any of this medical care through a wellness program may lead to unexpected compliance obligations under the HIPAA Rules.

Employers/plan administrators facing unexpected compliance obligations under the HIPAA Rules because of a self-insured wellness program that provides medical care will need to enter into a the HIPAA Rules business associate agreement with the wellness program vendor, amend the plan document for the wellness program to include language required by the HIPAA Rules and develop and implement other compliance documents and policies and procedures under the HIPAA Rules. One option is to amend any existing compliance documents and policies and procedures in place under the HIPAA Rules for another self-insured group health plan (such as a major medical plan) to make them apply to the wellness program as well. If the wellness program is the plan administrator’s only group health plan for which it has compliance responsibility under the HIPAA Rules, the plan administrator should consult with legal counsel to develop and implement all necessary documentation for compliance under the HIPAA Rules.