FTC Finalizes Rules On Health Care Breach Disclosure

The Federal Trade Commission yesterday issued a final rule that will require Web-based businesses to notify consumers when the security of their electronic health information has been breached.

The new rule was put into place by Congress as part of the American Recovery and Reinvestment Act of 2009. The rule applies to both vendors of personal health records " which provide online repositories that people can use to keep track of their health information " and entities that offer third-party applications for personal health records.

Many organizations that offer these types of services are not subject to the privacy and security requirements of the Health Insurance Portability and Accountability Act (HIPAA), the FTC explained. Under the Recovery Act, the Department of Health and Human Services has been assigned to conduct a study and report by February 2010 on potential privacy, security, and breach-notification requirements for vendors of personal health records and related entities that are not subject to HIPAA.

In the meantime, the Recovery Act requires the FTC to issue a rule requiring these entities to notify consumers if the security of their health information is breached. The Commission announced a proposed rule in April 2009, collected public comments until June 1, and issued the final rule yesterday.

The Final Rule requires vendors of personal health records and related entities to notify consumers following a breach involving unsecured information. In addition, if a service provider to one of these entities has a breach, it must notify the entity, which in turn must notify consumers.

The Final Rule also specifies the timing, method, and content of notification, and in the case of certain breaches involving 500 or more people, requires notice to the media. Entities covered by the rule must also notify the FTC.

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