HHS has issued a final rule, effective October 11, 2018, to implement certain inflation adjustments to the civil monetary penalties imposed on violations of the administrative simplification rules of the Health Insurance Portability and Accountability Act (“HIPAA”).
Background. The inflation adjustments are required under the Federal Civil Penalties Inflation Adjustment Act of 2015 (the “Act”). Among other things, the Act:
- Provided an initial “catch-up” adjustment for civil monetary penalties.
- Requires HHS to annually adjust the penalties for inflation (using a cost-of-living formula), by January 15 of each year.
In September 2016, HHS issued an interim final rule establishing an initial catch-up for its civil monetary penalties. The adjustments were required to take effect August 1, 2016, and HHS’s interim final rule became effective September 6, 2016.
In February 2017, HHS published a final rule that provided an annual inflation adjustment to the civil monetary penalties.
The final regulations (that became effective October 11, 2018) include the 2018 annual inflation adjustment to HHS’s civil penalties.
Final Rule. The adjusted penalty amounts apply to HIPAA penalties assessed on or after October 11, 2018, if the violation occurred on or after November 2, 2015 (i.e., the Act’s enactment date). The HIPAA penalty amounts in effect before September 6, 2016, apply if:
- The violation occurred before November 2, 2015; or
- The penalty was assessed before September 6, 2016.
The cost-of-living adjustment multiplier for 2018 is 1.02041. Therefore, to calculate the 2018 annual adjustment, HHS has multiplied the most recent penalty amount for each applicable penalty by the multiplier (i.e., 1.02041) and rounded to the nearest dollar.
HHS’s final rule is available at here.