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CMS Proposes Data Breach Reporting Standards for Insurance Marketplaces

Posted by Kendra Casey Plank on https://www.bna.com

The Centers for Medicare & Medicaid Services has proposed steps it expects health insurance marketplaces and their business partners to take in cases of data breaches involving consumers’ information.

In a proposed rule published in the June 19 Federal Register (78 Fed. Reg 37,032), CMS said federally facilitated exchanges (FFEs), state exchanges, and non-exchange entities associated with FFEs and state exchanges should have written policies and procedures for handling and reporting data breaches and breach incidents, including how entities would protect the privacy and security of consumers’ personally identifiable information (PII).

CMS cautioned it did not rely on existing Health Insurance Portability and Accountability Act definitions and requirements for data breach notifications because HIPAA rules would not be broad enough to cover the PII that insurance marketplaces (also known as insurance exchanges) will capture and hold.

The privacy and data security provisions were part of a larger, 253-page proposed rule establishing broad oversight and financial integrity standards for the online marketplaces (116 HCDR, 6/17/13)(19 HPPR 5, 6/19/13). The marketplaces were mandated under the Affordable Care Act and are expected to open for enrollment Oct. 1.

CMS will accept comments on the proposed rule until July 19.

Breach Reporting Time Frame

Among proposed requirements for breach incident reporting is a one-hour time frame in which entities would be required to notify the Department of Health and Human Services of an incident.

FFEs, state exchanges, and non-exchange entities associated with FFEs would be required to report breach incidents directly to HHS within one hour of discovering them. Non-exchange entities associated with state exchanges would be required, within the same time frame, to report incidents to their state exchanges.

CMS proposed to define a breach as “the loss of control, compromise, unauthorized disclosure, unauthorized acquisition, unauthorized access, or any similar term referring to situations where persons other than authorized users and for an other than authorized purpose have access or potential access to personally identifiable information, whether physical or electronic.”

Breach incidents, under the rule, would be defined as violations of security policies to gain unauthorized access to systems and data, CMS proposed.

Attorney Kirk Nahra, Wiley Rein LLP in Washington, told BNA that although the reporting time frame is similar to that for other CMS programs, it is “wildly out of line” with other requirements for the insurance marketplaces.

“It is also almost impossible to meet and will require over-reporting of many minor incidents,” Nahra said.

The rule is at https://www.gpo.gov/fdsys/pkg/FR-2013-06-19/pdf/2013-14540.pdf.