HIPAA Compliant Costs: A Complete Breakdown

HIPAA compliance costs can greatly vary depending on the kind of application you’re developing. Developing a healthcare application that complies with the Health Insurance Portability and Accountability Act (HIPAA) is essential for safeguarding sensitive patient information and adhering to legal standards. However, achieving HIPAA compliance involves additional considerations that can impact development costs.

Factors such as implementing robust security measures, conducting thorough risk assessments, and ensuring ongoing compliance can influence the overall budget. This article explores the various elements that contribute to the cost of developing a HIPAA-compliant app, providing insights to help healthcare organizations plan effectively and allocate resources appropriately.

As per a report, till May 2022, around 298,834 privacy rule complaints were received by the HHS, hence in order to decrease privacy breaches in the healthcare industry, HIPAA compliant app is crucial.

Average HIPAA Compliant Costs

The primary goal of the Health Insurance Portability and Accountability Act (HIPAA) is to provide continuous health insurance coverage for individuals transitioning between jobs or experiencing employment loss. In addition to protecting coverage, HIPAA aims to reduce the overall cost of healthcare and minimize administrative inefficiencies by standardizing electronic healthcare transactions, such as claims processing, eligibility verification, and billing.

It also plays a critical role in establishing national standards for safeguarding the privacy and security of patients’ protected health information (PHI), particularly as the healthcare industry adopts digital systems for storing and exchanging medical records. HIPAA compliance is now a foundational element of any healthcare organization’s operations, especially those leveraging digital tools and telehealth platforms.

After releasing the HIPAA Final Rule in 2013 by HHS, an estimated cost for developing a HIPAA compliant application are (per organization):

1. Updated notice of privacy practices: $80
2. Breach notification requirement updates: $763
3. Business associates updates: $84
4. Security rule compliance: $113
5. Grand total per organization: $1,040

In this cost estimates, the complexities of Security Rule aren’t considered; when the Security Rule was added back in 2013, it encompassed 75 new requirements and 254 points that need to be adhered to.

Average HIPAA expenses for a small covered entity are:

1. Management plan and risk analysis: $2,000
2. Policy and training development: $1,000 – $2,000
3. Remediation: $1,000 – $8,000

For medium and large covered entity, average HIPAA costs are:

1. Management plan and risk analysis: $20,000 +
2. Onsite audit: $40,000 +
3. Vulnerability scans: $800
4. Remediation: Based on where an entity stands in terms of security and compliance.
5. Policy development and training: $5,000 +

Aspects Influencing HIPAA Compliance Costs

1. Privacy Incorporation Expenses influence HIPAA compliance costs

Anticipated costs differ amongst organizations, based on the size, computer system used, covered entities (CE) involved, business associates involved, and more.

Under privacy rule, one of the debated topics is whether this rule allows covered entities to charge individuals who request for a copy of their PHI records.

The covered entities are permitted to charge certain amount based on the expenses involved with transferring the PHI copy to the individual. These expenses consist of and not limited to postage, copy supplies, and labor cost. Covered entities can charge for clerical preparation of PHI summary and explanation.

CE can get the agreement of cost before preparing explanation or summary of PHI. Furthermore, HIPAA doesn’t allow covered entities to charge for the time required to supervise individual during PHI review.

One of the requirements of HIPAA is to appoint a person responsible for assuring compliance under the privacy rule.

Healthcare organizations require certain amount to appoint a person for this role, and in case of a tight budget, the existing health information management (HIM) can take up the responsibility.

2. Security Implementation Expenses impact HIPAA compliance cost

There are numerous factors that are within budget for incorporating security measures for PHI. The risks detected during security risk analysis along with security measures that are in place helps to scrutinize money spent on security rule compliance.

One of the positive factors of security rule is its flexibility in terms of costs, the covered entities have flexibility as per situations.

Security best practices that require money or none at all are –

1. Applying critical patches
2. Sending periodic security alerts
3. Turning on logging functions that are created in existing operating systems and applications.
4. Usage of strong passwords

While outsourcing HIPAA to system integrators, consultants, or accounting firms, then expect a wide range of hourly rates. Estimated costs varies as per current location and state of the economy.

While working with experienced healthcare mobile app developers, app deployment and maintenance costs go hand in hand. However, in silo, the maintenance costs are considered after implementing security rule requirements, and these costs deliver secure information services that meet customer needs and adhere to the security rule.

Furthermore, HIPAA mandates appointment of a privacy officer for assuring compliance of the security rule, and salaries for this position differs based on needs and the size of covered entities.

Smaller covered entities can’t afford to hire a security officer, hence they can opt for an office manager role that is responsible for both security and privacy compliance. Large covered entities such as health plans and hospitals would want to recruit a security officer that focuses only on security compliance.

3. Additional Variables that influence HIPAA compliance costs

The cost of HIPAA compliance differs based on the organization, and additional variables that impact the cost of compliance are as follows:

1. Size of the organization: The cost of compliance is directly proportional to the size of the organization. The bigger the organization, the larger the staff, and more PHI and PHI encompassing devices, that adds on to the cost of HIPAA compliance.
2. Type of organization: Risk levels and quantity of PHI safeguarded depends on the type of organization. Types of organization that need to comply with HIPAA are hospitals, business associates, medical centers, health information exchange companies, healthcare clearing houses, and healthcare providers.
3. Culture of organization: Organizations with a culture of compliance have lower cost of remediation, for instance if management fails to invest amount in data security or cybersecurity program, then the compliance cost augments as there are other areas to catchup on.
4. Dedicated HIPAA team: A HIPAA team helps to assess how far an organization is to close the HIPAA gap. This team is responsible for ensuring that staff adheres to HIPAA policies, training sessions, and overseeing the security measures for protecting PHI and other devices.

Cost of Ignoring HIPAA Compliance and Resultant Fines for Breach

Building a healthcare app by ignoring regulatory requirements can be a major blow to budget planned. Here is an average amount to be paid for fines, data breaches, and penalties –

1. FTC fines: $16,000 per violation
2. HHS fines: $1.5 million per violation per year
3. Class action lawsuits: $1,000 per record
4. Patient loss: 40 percent
5. State attorneys general: $150,000 – $6.8 million
6. Free credit monitoring for affected individuals: $10 – $30 per record
7. Lawyer fees: $2,000 +
8. ID theft monitoring: $10 – $30 per record
9. Breach notification costs: $1,000 +
10. Technology repairs: $2,000 +
11. Business associate changes: $5,000 +

These are numerous ways in which HIPAA can be violated, some of them are inappropriate disposal of PHI, failure to conduct risk analysis, unauthorized access to PHI, and more.

Recently, Aetna Life Insurance Company and the affiliated covered entity – Aetna, agreed to pay $1,000,000 to the OCR (Office for Civil Rights) at the HHS (Health and Human Services), and to adopt a corrective plan to settle violations of HIPAA.

Partner With an Experienced HIPAA App Developer

If you’re looking to develop a HIPAA compliant app while optimizing expenses for it, get in touch with Arkenea – 13+ years experienced healthcare app development company that specializes in developing custom healthcare applications that follow HIPAA and other compliance requirements.