HIPAA compliance for startups

HIPAA Compliance for Startups: Why Should Startups Care About Being Compliant?

Kyle Morris

Senior Compliance Success Manager


The process can seem complicated when it comes to being HIPAA compliant. However, one thing should always be crystal clear; HIPAA is a federal law. Therefore, if you’re subject to The Privacy Rule, compliance isn’t merely a matter of ‘if’ you should comply, but rather ‘how’. Here’s what you need to know to navigate HIPAA compliance as a startup and whether or not it applies to your business.

Who is required to follow HIPAA regulations?

At its core, HIPAA is set out to protect one thing; protected health information (PHI). Protected Health Information is the holy grail, and if your organization (from startup to fortune 500) has even an ounce of PHI filtering through your business – tag you’re it. And by ‘it,’ we mean subject to mandatory compliance. 

It’s important to note that not every startup will handle PHI, and therefore, not all will be subject to HIPAA. The critical factor is whether your startup handles PHI in any capacity.

To better understand whether or not your business comes into contact with PHI, it’s best first to understand what exactly classifies as PHI. Protected Health Information is any individually identifiable health information. This includes medical histories, insurance information, test results, payment information, demographic data, or any additional information related to a person’s healthcare, treatment, or coverage. 

The Privacy Rule provides guidelines for knowing if you need HIPAA compliance. The Privacy Rule sets out two overarching categories of entities required by law to comply with HIPAA rules and regulations. According to The Privacy Rule, HIPAA compliance is mandatory for Covered Entities (CE) and Business Associates (BA)

Covered Entities include organizations in the Healthcare industry and all individuals, businesses, or organizations that work directly with protected health information (healthcare providers, healthcare plan providers, and healthcare clearinghouses). 

Business Associates are any individual or organization under a contractual agreement with a covered entity. Covered entities rarely operate in silos. Therefore, any business that deals with PHI as a third party may be subject to HIPAA’s Privacy Rule and consequently required to be HIPAA compliant. 

If your startup falls into one of these categories or handles PHI – there’s no gray area. Either you’re compliant, or you’re breaking the law. We know it sounds harsh, but so are HIPAA violations and penalties due to non-compliance. Unfortunately, they don’t offer a grace period for startups still learning about their role in compliance. 

If you’d like to dig a little deeper into what a covered entity and business associate entails, read our HIPAA bible to learn everything you need about compliance. However, if you’re comfortable with compliance but want to see how to best approach it for your startup – keep reading. 

Why is HIPAA compliance for startups important?

As mentioned before, HIPAA is a federal law. If your startup handles PHI and is subject to The Privacy Rule, you are required by law to comply. Failure to do so comes paired with significant financial and civil charges. However, many benefits are attached to HIPAA compliance, which contributes to better (and safer) business practices. 

So, rather than feeling as if you’re stuck between a rock and a HIPAA place, here’s why compliance for startups is important. 

HIPAA compliance and business agreements

In 2013, HHS passed The Omnibus Rule. The Omnibus Rule introduced the idea of Business Associates. In addition, the Omnibus Rule confirms that third parties can be significant liabilities to Covered Entities in terms of compliance and extends the accountability to businesses who work with PHI on behalf of CEs. Therefore, companies must create a Business Associate Agreement between them and their BAs to be HIPAA compliant. An example of this may be when a startup or software company stores PHI via a cloud solution on behalf of a CE. In this case, HIPAA applies to the startup as well. Therefore a HIPAA-compliant BAA is a must. 

Although it means that startups or third-party vendors are at risk of a HIPAA breach or violation, compliance can also ensure more significant opportunities for your business as it gets off the ground. By being on top of compliance and adhering to all the regulatory and security standards, you’ll receive more significant and better business opportunities and be considered a trusted and risk-free partner. 

HIPAA compliance for startups

For your startup to become HIPAA compliant, you must first understand that there is no HIPAA certification body. Although the OCR works to enforce HIPAA rules and regulations, no certificate or plaque provides evidence that your startup is abiding by the law. That being said, it’s each organization’s responsibility to ensure that they have done due diligence regarding compliance. This is achieved through first understanding the rules and regulations of HIPAA and how it applies to your business. 

Step 1: Understand the rules of HIPAA

After you’ve established that your startup is, in fact, subject to The Privacy Rule and, therefore, HIPAA compliance, you must come to terms with what exactly that requires from you as a business. The requirements and standards that startups need to adhere to for compliance are laid out in the four rules of HIPAA. After that, getting compliant (and staying compliant) requires a mix of internal procedures, policies, training, and consistent strategic monitoring. Here’s how; 

Step 2: Start with your safeguards

HIPAA compliance hinges on your safeguards, both physical and digital. The Security Rule sets out specific controls that organizations should implement to comply with the different administrative, physical and technical standards required to stay compliant and mitigate any risk of exposure. 

Step 3: Create policies

The next step is implementing robust HIPAA security standards, procedures, and policies. This includes training your employees on security awareness and implementing a breach protocol. When creating your policies, it’s also critical to keep a record of all your policies and training procedures to ensure that it’s well-documented in case of a suspected violation and audit. 

Step 4: Perform routine risk assessment and self-audits

As no certifying body confirms compliance, it’s each organization’s responsibility to self-assess and ensure that there are no breaches, violations or apparent risks of non-compliance. Ultimately, a self-audit is a startup’s best way to gauge its compliance and the efficacy of its current safety controls. The OCR will only conduct an official audit if there is a cause of suspicion. Therefore, self-audits and risk assessments are effective ways to ensure your business is prepared and compliant, always. 

Become HIPAA compliant with Scytale

Running a business is a full-time job, especially when it comes to growing a successful startup. So rather than having HIPAA compliance keep you up at night, protect your PHI without breaking a sweat. Our automated compliance software helps you get compliant and stay compliant with everything you need to get HIPAA compliant in one place and 90% faster

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