On August 17, the Federal Trade Commission (“FTC”) issued a final rule (“FTC Final Rule”) addressing security breaches of personal health records (“PHRs”).  The FTC Final Rule applies to all breaches discovered on or after September 24, 2009, and to “foreign and domestic vendors of personal health records, PHR related entities, and third party service providers” that “maintain information of U.S. citizens or residents.”  The FTC Final Rule does not apply to covered entities or business associates as defined under regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).  Full compliance is required by February 22, 2010.

The FTC Final Rule requires PHR vendors and PHR related entities to notify U.S. citizens and residents if their PHR identifiable health information is subject to a security breach, and requires additional notification of the FTC and prominent media outlets for breaches that affect 500 or more individuals.  Third party service providers must notify the PHR vendor, or PHR related entities to which they provide services, of any breaches they discover.  To facilitate the notification process, the FTC has developed a standard form entitled “Notice of Breach of Health Information” that PHR vendors and PHR related entities can complete and send to the FTC.

On August 19, 2009, as required by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), the Department of Health and Human Services (“HHS”) issued an interim final rule (“HHS Interim Final Rule”) addressing security breaches of unsecured protected health information (“PHI”).  The regulations will apply to all breaches occurring on or after September 23, 2009 that are discovered by covered entities and business associates, but the HHS Interim Final Rule indicates that HHS will not impose sanctions for failure to notify with respect to breaches that are discovered within the first 180 days after the effective date.

Notably, unlike the FTC Final Rule, the HHS Interim Final Rule includes a harm threshold limiting the breach notification requirement to breaches that present a significant risk of harm.  This disparity may be due to the fact that breaches common to HIPAA-covered entities, such as those involving disclosures to other HIPAA-covered entities, are less likely to result in actual harm than the kinds of breaches suffered by the service providers and vendors covered under the FTC’s Final Rule.  Similar to the FTC Final Rule, the HHS Interim Final Rule requires covered entities to (1) notify individuals if their PHI is subject to a security breach, and (2) notify the Secretary of HHS and prominent media outlets in the event of a breach that affects 500 or more individuals.  Business associates must notify the covered entity to which they provide services of any breaches they discover.  Finally, the HHS Interim Final Rule updated the  information security guidance issued by HHS in April 2009 to emphasize encryption and destruction as the only methods for securing PHI in a manner consistent with the HITECH Act’s breach notification provisions.