The process of creating a healthcare app varies from a general app development, as it needs to comply with HIPAA rules and regulations.
Failure to comply with these rules leads to security and privacy breaches, and app can be rejected from the market post launch; causing huge money loss for the organization.
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.
The first thought while creating a app is the budget or cost, this article gives a detailed cost breakdown while creating a HIPAA complaint app.
Average Cost of Building a HIPAA Compliant App
The purpose of HIPAA is to render continuous health insurance coverage to individuals who change or lose their jobs, and to decrease the cost of healthcare and administrative burden by standardizing electronic financial and administrative transactions.
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 Cost of HIPAA Compliant App Development
1. Privacy Incorporation Expenses
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
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
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
Looking to build a HIPAA compliant app while optimizing expenses for it, get in touch with Arkenea – an experienced healthcare software development company that specializes in developing customized healthcare applications that follow HIPAA and other compliance requirements.