For our healthcare friends and colleagues, here are a few "bits and bytes" from this morning’s "Healthcare in the Cloud" presentation at the International Association of Privacy Professionals ("IAPP") Summit in Washington D.C.

Clarification: Cloud service providers ("CSP") are business associates ("BA"), requiring them to enter into Business Associate Agreements ("BAAs") with their healthcare customers who are Covered Entities ("CEs") or themselves BAs. This is the case whether or not the CSP actually accesses the customer's PHI; the key is whether the CSP maintains the PHI. The good news is that many large CSPs that have historically avoided BAAs are now recognizing this clarification and willingly entering BAAs.

Developments: The industry is seeing increased enforcement activity from multiple regulatory bodies. The HITECH Act gave the Department of Health and Human Services ("HHS") direct authority to audit and impose penalties against BAs in much the same way it has done with CEs. Many state attorneys general offices are also stepping up their oversight of PHI protection, often using state consumer protection statutes to supplement their authority and available penalties. The Federal Trade Commission ("FTC") is similarly using consumer protection laws to increase its involvement in the protection of PHI.

Takeaway: CEs and BAs that use cloud service providers need to acknowledge their Business Associate relationship, and be diligent in negotiating and executing BAAs. Make sure your BAAs address required items, including defining the CSP's: 1) permissible uses and disclosures of PHI; 2) use of and controls over subcontractors; 3) authority to aggregate or de-identify PHI; 4) duties to return or destroy PHI upon termination; and 5) duties and liabilities in the event of a security incident or breach. Most importantly, you must be diligent in selecting your vendors and be wary of new vendors making unverifiable promises (e.g., there is no such thing as being "HIPAA Certified," though a subset of new companies is creatively using this designation, and a CSP cannot make a Covered Entity HIPAA compliant).