A guide to developing policies for handling PHI

Protected health information (PHI) is among the most sensitive data in healthcare, and safeguarding establishes patient privacy, maintains trust, and complies with the legal requirements of the Health Insurance Portability and Accountability Act (HIPAA). Mishandling PHI can result in financial penalties, reputational damage, and harm to patients.

Developing effective policies for handling PHI is a key step in protecting both the individuals whose information you manage and the reputation of your organization. These policies provide clear guidance to employees, contractors, and business associates on how PHI should be collected, stored, transmitted, and disposed of. In addition, well-defined policies make it easier to demonstrate compliance during audits and inspections.

Understanding the scope of PHI

Before developing policies, you must first define what constitutes PHI: PHI refers to any health information that can identify an individual and is related to their physical or mental health, healthcare services, or payment for healthcare. This includes, but is not limited to:

• Personal identifiers: This includes names, addresses, phone numbers, Social Security numbers, and any other information that could be used to identify an individual.
• Health records: This covers diagnoses, treatment plans, medical histories, prescriptions, lab results, and imaging reports.
• Payment information: Insurance details, billing records, and payment histories are considered PHI.

Excluded from this definition is “individually identifiable health information that is maintained in education records covered by the Family Educational Rights and Privacy Act …, and employment records containing individually identifiable health information that are held by a covered entity in its role as an employer,” says the National Institutes of Health (NIH).

Understanding these distinctions ensures that policies target the appropriate types of information and that healthcare staff know what information requires protection.

See also: FAQs: Protected health information (PHI)

Policies for handling PHI

Effective PHI policies should address multiple layers of security, including technical, administrative, and physical safeguards. Below are essential components of robust PHI handling policies.

Access control

The HIPAA Security Rule technical safeguards require the implementation of access control standards. These standards “provide users with rights and/or privileges to access and perform functions using information systems, applications, programs, or files. Access controls should enable authorized users to access the minimum necessary information needed to perform job functions. Rights and/or privileges should be granted to authorized users based on a set of access rules that the covered entity is required to implement.”  Policies should clearly define who can access PHI and under what circumstances. Best practices include:

• Restrict access to PHI based on job roles and responsibilities.
• Implement user authentication and authorization mechanisms to ensure that only authorized personnel can access PHI.
• Use strong passwords and multi-factor authentication (MFA) for accessing systems containing PHI.

Data encryption

The proposed 2025 HIPAA Security Rule update requires mandating encryption of data at rest and in transit to protect data from unauthorized access. Policies should specify:

• Encrypt PHI during storage and transmission to protect it from unauthorized access or interception.
• Use secure communication channels (e.g., HTTPS, secure email) when sending PHI electronically.

Data minimization

Collecting and storing only the necessary PHI is another key principle. Excessive data collection increases the risk of exposure and complicates compliance. Policies should require staff to:

• Only collect, use, and store PHI that is necessary for the task at hand.
• Avoid sharing unnecessary or excessive PHI, particularly in communications or external reports.
  
  

Training and awareness

The HIPAA Security Rule administrative safeguards state that “A regulated entity must train all workforce members on its security policies and procedures.” Comprehensive training programs must educate employees on how to handle PHI responsibly. Policies should mandate:

• Initial and ongoing training for all staff, including employees, contractors, and temporary personnel.
• Education on proper PHI handling, storage, transmission, and disposal.
• Regular updates on emerging threats, regulatory changes, and best practices.

Go deeper: Developing a HIPAA compliant training policy

Confidentiality agreements

Employees, contractors, and third-party vendors with access to PHI should sign confidentiality agreements. These agreements:

• Ensure that the agreements outline the expectations and legal consequences for mishandling PHI.
• Serve as a formal acknowledgment of an individual’s responsibilities regarding PHI.
  
  

Audit and monitoring

HIPAA’s Security Rule requires that “A regulated entity must implement hardware, software, and/or procedural mechanisms to record and examine activity in information systems that contain or use ePHI.” To align with this requirement, policies should require:

• Regularly monitoring systems that store, process, or transmit PHI for signs of unauthorized access or breaches.
• Conducting periodic audits of PHI access logs to ensure compliance with privacy policies.
• Documenting audit results and corrective actions to demonstrate compliance.
  
  

Incident response and breach notification

Despite preventive measures, breaches can still occur. Policies should include a clear incident response plan detailing:

• Establish a clear procedure for reporting and handling data breaches involving PHI.
• Steps for containing and mitigating the impact of a breach.
• How to notify affected individuals and relevant authorities, including the Department of Health and Human Services (HHS), as required by HIPAA within 60 days of discovering a breach.

Go deeper: Navigating HIPAA’s Breach Notification Rule

Data retention and disposal

Policies must specify how long PHI should be retained and how it should be securely disposed of when no longer needed. Key considerations include:

• Policies for retaining PHI for the necessary duration according to legal or regulatory requirements.
• When PHI is no longer needed, ensure that it is securely disposed of by shredding physical documents or using secure data-wiping tools for electronic records.
  
  

Physical security

Physical safeguards are often overlooked but are just as important as digital security measures. Policies should include:

• Securing physical locations containing PHI, such as filing cabinets and storage areas, with locked doors or cabinets.
• Implementing security measures for devices used to access PHI, such as laptops, mobile phones, and USB drives.
• Restricting physical access to authorized personnel only.

Read also: What physical safeguards are required by HIPAA?

Third-party access and business associate agreements (BAAs)

Many healthcare organizations rely on third-party vendors to handle PHI and therefore must have policies in place to guide these relationships. Policies should require:

• Ensuring that any third-party vendors or business associates that handle PHI sign a BAA that outlines their responsibilities for safeguarding the information.
• Regularly reviewing BAAs to ensure compliance with HIPAA requirements.

Best practices for developing policies

Developing effective policies for handling PHI is essential for ensuring patient privacy, complying with regulations, and protecting sensitive data. Best practices include:

• Understand legal framework: Familiarize yourself with HIPAA and relevant state laws to guide policy development.
• Collaborate with stakeholders: Involve healthcare teams, IT professionals, and legal advisors to create practical and comprehensive policies.
• Adopt a risk-based approach: Assess and prioritize risks to PHI, tailoring policies to address the most significant threats.
• Provide regular training: Offer initial and ongoing training to employees, covering security measures, privacy regulations, and potential risks.
• Regularly review policies: Continuously audit and update policies to remain compliant with evolving regulations and risks.
• Document and standardize procedures: Standardize PHI handling procedures and create written guidelines to ensure consistency.

Implementation tips

To ensure successful implementation, organizations should consider:

• Assigning responsibility: Designate a privacy officer or compliance lead to oversee PHI policy enforcement and updates.
• Integrating policies into workflow: Embed PHI handling procedures into day-to-day operations, such as electronic health record usage, billing, and patient communications.
• Leveraging technology: Use HIPAA compliant software solutions to enforce access controls, encryption, and secure data transmission.
• Creating a culture of privacy: Foster an organizational culture that values patient privacy, encourages reporting of potential issues, and emphasizes accountability at all levels.

See also: HIPAA Compliant Email: The Definitive Guide

FAQs

Why is it important to have policies for handling PHI? 

Developing policies for handling PHI ensures that sensitive patient data is protected, complies with HIPAA, reduces the risk of data breaches, and builds trust with patients by safeguarding their privacy.

How often should training on PHI handling be conducted? 

Initial training should be provided to all new employees as part of their onboarding process. Regular refresher training should also be conducted, ideally annually, to keep employees updated on security best practices, privacy regulations, and emerging risks.

What are the consequences of not following PHI handling policies? 

Failure to follow PHI handling policies can result in data breaches, legal penalties, loss of patient trust, and significant financial consequences. Under HIPAA, violations can lead to civil or criminal penalties, depending on the severity of the breach.