Quietly, at the end of April, HIPAA was significantly weakened. HHS published what sounds like an innocuous notification in the Federal Register: Notification of Enforcement Discretion Regarding HIPAA Civil Money Penalties. This notification is actually an enormous change to the HIPAA penalty structure, a drastic reduction in HIPAA fines.
The existing penalty structure under HIPAA is based on the HITECH Act of 2009, which increased HIPAA’s fines in an attempt to give teeth to HIPAA enforcement. Since HIPAA began being enforced in 2003 until the HITECH Act, fines had barely been issued despite an enormous amount of HIPAA violations. HITECH was Congress’s rebuff to this weak enforcement approach. After HITECH’s more potent penalty structure, HHS finally began issuing fines. The chart below is how HHS has been interpreting the HITECH penalty framework since the HITECH Act:
There were some ambiguities under the HITECH Act as to these penalty tiers, but HHS had long interpreted these tiers according to the above chart. But now, HHS has suddenly changed its mind and adopted a very different interpretation. Under this new interpretation, the penalty tier limits are now as follows:
Notice the new annual limits. There are severe reductions in the annual limits for nearly every category except for uncorrected willful neglect. This change yanks many of the teeth out of HIPAA enforcement.