The final version of regulations coming from Health and Human Services (HHS) includes adjustments for inflation of HIPAA penalties. These civil penalties are for violations of “administrative simplification” rules.

Administrative Simplification

HIPAA’s administrative simplification rules are a set of national standards for electronic transactions designed to maintain the privacy of protected health information (PHI). These standards are designed to help streamline systems as they switch from paper-based to electronic health records. HIPAA covered entities are required to meet national standards for patient privacy and information security when utilizing electronic records. The 2010 Affordable Care Act updated the administrative simplification rules and included new operating rules with information that must be included in all transactions.

2020 HIPAA Penalties

The Federal Civil Penalties Inflation Adjustment Act allows agencies to annually adjust all penalties for inflation by January 15th each year. In 2016, HHS issued an interim rule that was a catch-up of its civil monetary penalties and in 2017, ya final rule was published that allowed for annual inflation.

The latest adjustments for inflation went into effect November 5, 2019, and applies to all civil monetary penalties assessed on or after that date and on violations that occurred on or after November 2, 2019. Most penalties increase by 2.5%. The annual inflation adjustment comes from the Consumer Price Index for Urban Consumers and the Office of Management and Budget. HHS uses these published multipliers each year when calculating penalty increases and announces increases in advance of when they will apply.

For example, the maximum penalty for failure to make required reports relating to drug samples increased from $205,211 to $210,386. The new final rule contains sixteen pages listing the various violations and their associated civil monetary penalties, ranging from a few hundred to hundreds of thousands of dollars.