HIPAA Privacy & Breach Compliance

INTERNAL AUDIT REPORT 


Information Technology Audit 
Health Insurance Portability and Accountability Act (HIPAA) 
Privacy & Breach Compliance Audit 

January 2016  July 2019 
Issue Date: September 13, 2019 
Report No. 2019-14 A 
Prepared by Apgar & Associates, LLC in partnership with the Port of Seattle's Internal Audit
Department 
INTERNAL AUDIT

HIPAA Privacy & Breach Compliance Audit 
Table Of Contents 

Executive Summary ................................................................................................................................................ 3 
Background ............................................................................................................................................................. 4 
Audit Scope and Methodology ............................................................................................................................... 4 
Schedule of Findings and Recommendations ....................................................................................................... 5 
Appendix A: Risk Ratings ..................................................................................................................................... 11 















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HIPAA Privacy & Breach Compliance Audit 
Executive Summary 
Internal Audit (IA) in partnership with Apgar & Associates, LLC completed an audit of HIPAA Privacy and
Breach compliance for the period January 2016 through July 2019. HIPAA Security compliance, which
has security sensitive elements, will be addressed in a separate audit report. The audit was performed
to assess the privacy practices at the Port of Seattle involving the use, maintenance, transmission and
disclosure of protected health information (PHI) and personally identifiable information (PII) in connection
with the Port's employee benefit plans. Existing processes and controls in place to protect PHI were
assessed against the HIPAA Privacy and Breach Rules using the federal Office for Civil Rights (OCR)
Audit Protocol to determine the level of compliance and identify areas for improvement. 
Self-funded group health plans, and other employer welfare plans providing medical benefits that share
information with employers, must comply with the privacy, security and breach notification rules under
HIPAA. Employer-maintained self-funded medical plans, such as a major medical plan, a medical Flexible
Spending Account, a Health Reimbursement Arrangement (HRA), or a self-funded dental plan, are
"covered entities" under HIPAA. These covered entities are required to evaluate risks and necessary
protections for plan information and to document the evaluation and the policies and procedures the
employer adopts for the plan to protect all plan information. While the audit noted that the Port maintains
certain employee PHI such as enrollment and eligibility data, the Port does not maintain employee
medical records. 
Our audit noted that the Port is not in compliance with several requirements of HIPAA Privacy & Breach
Notification Rules, and we identified the following issues. 
1.  (High)  The Port had not designated itself as a hybrid entity for the purposes of the HIPAA Rule. The
Port had not defined what units within the Port were part of the designated health care component. 
2.  (Medium)  The Port's understanding of what systems and applications create, receive, use, maintain
or transmit PHI and EPHI was incomplete. Combined with the hybrid entity issue, this could result in
team members having more access to sensitive information than allowed by law and regulation. 
3.  (Medium)  The Port did not consistently enter into and manage business associate agreements with
vendors that use, disclose, maintain or transmit the Port's PHI and EPHI to perform a business
function for the Port. 
4.  (Medium)  HIPAA Privacy and Breach Training were not being provided to Port employees within a
reasonable timeframe. 
5.  (Medium)  The Port did not provide any four-factor risk assessment required under federal law to
document how the organization made the determination that there was a low risk of compromise to
PHI from the acquisition, access, use, or disclosure of protected health information in a manner not
permitted under the Privacy Rule. 
These issues are discussed in more detail beginning on page five of this report. 


Glenn Fernandes, CPA 
Director, Internal Audit 
Responsible Management Team 
Katie Gerard, Sr. Director Human Resources 
Matt Breed, Chief Information Officer 
Brad Jenson, Interim Director of Information Security 
Sandra Spellmeyer, Total Rewards Mgr. Human Resources (Privacy Official) 
Tammy Woodard, Director HR-Total Rewards 

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HIPAA Privacy & Breach Compliance Audit 
Background 
The U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) enforces the
following HIPAA Privacy, Security and Breach Notification Rules: 
1. HIPAA Privacy Rule, which protects the privacy of individually identifiable health information. 
2. HIPAA Security Rule, which sets national standards for the security of electronic protected health
information (EPHI). 
3. HIPAA Breach Notification Rule, which requires covered entities and business associates to provide
notification following a breach of unsecured protected health information. 
HIPAA established important national standards for the privacy and security of protected health
information and the Health Information Technology for Economic and Clinical Health Act (HITECH)
established breach notification requirements to provide greater transparency for individuals whose
information may be at risk. HITECH required the OCR to conduct periodic audits of covered entity and
business associate compliance with the HIPAA Privacy, Security, and Breach Notification Rules. A pilot
program in 2011 and 2012 assessed the controls and processes implemented by 115 covered entities
to comply with HIPAA's requirements. OCR implemented phase two of the program in 2016, auditing
both covered entities and business associates. As part of this program, OCR developed enhanced
protocols to assess compliance in each of the regulatory areas. The OCR uses the protocols to assess
organizational compliance in case of complaint or breach investigation.
HIPAA is applicable to the Port's medical and dental programs. The objective of this audit was to
evaluate the effectiveness of management controls to assure the proper protection of individually
identifiable health information in compliance with the HIPAA Privacy and Breach requirements while
following the OCR Audit Protocol. 
HIPAA Security is addressed in audit report number 2019-14B. 
Audit Scope and Methodology 
We conducted the engagement in accordance with GAGAS and the International Standards for the
Professional Practice of Internal Auditing. Those standards require that we plan and conduct an
engagement to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our engagement objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our engagement objectives. 
The period audited was January 2016 through July 2019 and included the following procedures: 
Onsite assessment of the physical safeguards in place to assure the privacy of PHI and PII at
the Port of Seattle occurred at Port offices. 
Structured interviews with Port management charged with HIPAA compliance activities. 
Review of policies and procedures related to HIPAA compliance. 
Obtained evidence as defined in the OCR audit protocol. 
Reviewed vendor contracts and related agreements. 
Tested relevant controls to assess their operating effectiveness. 
Performed an assessment of the HIPAA training process. 



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HIPAA Privacy & Breach Compliance Audit 
Schedule of Findings and Recommendations 
1) Rating: High 
The Port had not designated itself as a hybrid entity for the purposes of the HIPAA
Rule. The Port had not defined what units within the Port were part of the
designated health care component. 
The Port offers, administers and self-insures various group health plans and is a covered entity for
purposes of the HIPAA Privacy & Breach Notification Rules. Absent the hybrid entity designation, all
Port operations and personnel are subject to HIPAA Privacy & Breach Notification Rules. This was a
repeat finding from the Port's HIPAA Compliance Audit performed in 2016 by Apgar & Associates, LLC. 
Recommendations: 
We recommend that the Port's Privacy Official should: 
1.  Take the action necessary to designate the Port as a hybrid entity. 
2.  Designate the positions and function that fall within the designated health care component of the
Port. 
Management Response/Action Plan: 
After consulting with legal counsel; Human Resources, Information/Communication Technology, and
Information Security, have determined the Port, as a whole, is not a covered entity under HIPAA. We
do agree that specific health plans sponsored by the Port are covered by HIPAA and we should work
through the process of designating the benefit plans as a hybrid entity. We appreciate the Auditor helping
us to understand that the steps we previously took did not fully accomplish this goal. The Port's Human
Resources, Information/Communication Technology, Information Security and internal legal staff are
consulting with outside counsel to complete the steps necessary to fully designate the group health
plans sponsored by the Port as the health care component of a Hybrid Entity. 

DUE DATE: 11/30/2019 







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HIPAA Privacy & Breach Compliance Audit 
2) Rating: Medium 
The Port's understanding of what systems and applications create, receive, use,
maintain or transmit PHI and EPHI was incomplete. Combined with the hybrid
entity issue, this could result in team members having more access to sensitive
information than allowed by law and regulation. 
Staff members throughout Total Rewards and ICT had access to protected health information and
electronic protected health information (PHI and EPHI) through their access to Port-hosted and vendorhosted
tools to implement and manage benefit plans. Since the Port had not defined what units within
the Port were part of the designated health care component, access to PHI may not be appropriately
designed. We additionally noted that carrier portal access by Port staff was not routinely monitored or
reviewed. 
Recommendations: 
We recommend that the Port's Privacy Official should: 
1.  Conduct  a  thorough  review  of  all  Port-hosted  tools  and  applications  that  create,  receive,
maintain, use or disclose PHI or EPHI.
2.  Review employee access to the tools and applications discovered in step one.
3.  Restrict access as appropriate to employees who are part of the designated health care
component and need the access to perform their job duties.
4.  Conduct  the  same  review  with  vendor-hosted  tools  and  applications  that  create,  receive,
maintain, use or disclose PHI or EPHI.
5.  Review employee access to the tools and applications discovered in step four.
6.  Restrict access as appropriate to employees who are part of the designated health care
component and need the access to perform their job duties.
7.  Train the relevant employees. 
8.  Develop a process to routinely review carrier portal access by Port employees. This should
include definition of who can authorize such access; written records of approval and steps to be
taken at employee termination from employment in the designated health care component. 
Management Response/Action Plan: 
The Port's perspective is points 1-3 are applicable to Port hosted tools to manage benefit plans. The
Port's Human Resources, Information/Communication Technology, and Information Security teams are
working with legal counsel to confirm which Port hosted tools or application contain PHI and EPHI. 
Information/Communications Technology has a documented list of individuals with access of the
different Port-hosted tools and applications and reviews and maintains this access by the list on a
quarterly basis. Once the tools and applications that contain PHI/EPHI are confirmed, Human Resources
will work with Information/Communications Technology to update their current list to specify the tools
containing  PHI/EPHI  on  the  list.  When  access  to  the  tools  containing  PHI/EPHI  is  updated
Information/Communications Technology can notify Human Resources of the individuals with access to
these so Human Resources can ensure HIPAA training has been provided. 
The Port's perspective is points 4-6 & 8 are applicable to Vendor hosted tools to manage benefit plan
data. Human Resources is aware of the vendor hosted tools and applications contain PHI/EPHI and is
taking steps to confirm that Information/Communications Technology also maintains a list documenting
Port employee with access of Vendor-hosted tools and applications, and that this list is reviewed and
updated quarterly with changes to employees having access. Once the vendor tools and applications
access list is confirmed, Human Resources, Information Security and Information/Communications
Technology will confirm which vendor tools contain PHI/EPHI so this can be noted on the list.

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HIPAA Privacy & Breach Compliance Audit 
Information/Communications Technology can then notify Human Resources of the individuals with
access to the vendor tools containing PHI/EPHI so that Human Resources can ensure HIPAA training
has been provided to employees who require it. 
The Port agrees training employees on HIPAA is important, please see our response to number 4. 

DUE DATE: 11/30/2019 
















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HIPAA Privacy & Breach Compliance Audit 

3) Rating: Medium 
The Port did not consistently enter into and manage business associate agreements
with vendors that use, disclose, maintain or transmit the Port's PHI and EPHI to
perform a business function for the Port. 
No Business Associate Agreement was provided for SharePoint (Microsoft). The Port stores PHI and
EPHI in SharePoint. A business associate agreement is required. Business Associate Agreements are
missing pages. In at least one instance, the Business Associate Agreement does not explicitly address
the business associate's regulatory responsibility to ensure compliance with the HIPAA Security Rule. 
A business associate agreement was provided with an original effective date of July 26, 2019. The
Service Agreement between the Port and the vendor was fully executed in September 2016. No single
group appears to have been tasked with business associate contract management. This was a repeat
finding from the Port's HIPAA Compliance Audit performed in 2016 by Apgar & Associates, LLC. 
Recommendations: 
We recommend that the Port's Privacy Official should: 
1.  Execute a business associate agreement with SharePoint at the earliest possible date. 
2.  Clarify the process by which vendors are determined to be business associates.
3.  Designate a work unit as lead in the business associate contracting process. 
4.  Review all existing business associate agreements to make sure that they are fully compliant
with the requirements of the HIPAA Privacy and Security Rule.
Management Response/Action Plan: 
The Port is working with legal counsel to determine which vendors are Business Associates and require
Business Associate Agreements. If vendors are determined to be Business Associates and the Port's
contract with that vendor does not include a Business Associate Agreement work will begin to add a
Business Associate Agreement to the contract. 
The Port agrees that having a defined process for determining which vendors are Business Associates
and therefore require a Business Associate Agreement is beneficial and will bring relevant groups
together to establish this process. 
The Port agrees that designating a work unit lead to ensure Business Associate Agreement are
appropriately in place will be beneficial and will bring relevant groups together to identify these work unit
leads. 
All current Business Associate Agreement have been reviewed and one Business Associate Agreement
was identified, which needs updated language. Work is underway with the vendor to get an updated
Business Associate Agreement in place. 

DUE DATE: 12/31/2019 




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HIPAA Privacy & Breach Compliance Audit 

4) Rating: Medium 
HIPAA Privacy and Breach Training were not being provided to Port employees
within a reasonable timeframe. 
According to the Privacy Rule, HIPAA training is required for "each new member of the workforce within
a reasonable period of time after the person joins the Covered Entitys workforce" and also when
"functions are affected by a material change in policies or procedures"  again within a reasonable period
of time. According to the Privacy Rule, HIPAA training is required initially and for all new hires, while
best practice is to periodically repeat the training. 
The external consultant noted that the HIPAA Privacy and Breach Training at the Port most recently
occurred in October 2017 and that the training videos were produced in December 2017. 
Recommendations: 
We recommend that the Port's Privacy Official should: 
1.  Train  all  the existing  employees  in  the  designated  health  care  component  no  later  than
December 31, 2019.
2.  Train all new hires in the designated health care component within 30 days from their date of
hire.
3.  Institute regular refresher training for staff in the designated health care component no less
frequently than annually.
4.  Review and update as necessary any existing training videos. 
Management Response/Action Plan: 
Information Security has set up HIPAA Compliance training as a required learning module in the
Learning Management System for certain departments and job roles that may have access to HIPAA
information. Those training records are available upon request. This training is not required of all
employees, only those in designated areas. 
Human Resources has not had automated HIPAA training available through the Learning Management
System. New hires have been manually notified of required HIPAA training and received this training via
video or paper materials when Human Resources was made aware of a new hire with access to PHI
and EPHI in conjunction with the Port sponsored health plans. 
Human Resources is in the process of automating HIPAA training through the Learning Management
System. This training will be assigned to all employees identified as potentially having access to HIPAA
related information associated with the Port sponsored health plans. Training will be assigned to all
applicable new hires to be completed within 30 days from their date of hire. In addition, annual HIPAA
refresher training is being implemented. 

DUE DATE: 10/31/2019 




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HIPAA Privacy & Breach Compliance Audit 

5) Rating: Medium 
The Port did not provide any four-factor risk assessment required under federal law
to document how the organization made the determination that there was a low
risk of compromise to PHI from the acquisition, access, use, or disclosure of
protected health information in a manner not permitted under the Privacy Rule. 
The Rule requires that any acquisition, access, use, or disclosure of protected health information in a
manner not permitted in the Privacy Rule is presumed to be a breach unless the entity demonstrates
that there is a low probability that the protected health information has been compromised based on a
risk assessment. While the Port stated that no breaches have occurred, there was at least one situation
where the Port investigated to determine whether a security weakness had led to a breach but did not
document the use of a four-factor risk assessment. 
Recommendations: 
We recommend that the Port's Privacy Official should: 
1.  Review all privacy and security incidents that involved plan member PHI and EPHI that was
acquired, accessed, used or disclosed in a manner not permitted by the Privacy Rule during the
audit period.
2.  Determine if regulatory requirements were followed  i.e., documentation of a breach exception
and completion of a four-factor risk assessment.
3.  For  any  2019  incidents  in  which  regulatory  requirements  weren't  followed,  execute  and
document the required regulatory steps.
4.  Consult with the Legal Department to determine treatment of 2018 incidents in which regulatory
requirements weren't followed. 
Management Response/Action Plan: 
Human Resources and Information Security will create a log to document all the incidents involving PHI
and EPHI that are brought to the Port's attention. These departments will bring together appropriate
individuals to conduct an appropriate risk assessment on each identified incident. Human Resources,
Information/Communication Technology, and Information Security will also bring together appropriate
individuals  to  discuss any  2018-2019  incidents  to  ensure  appropriate  assessments  have  been
completed. Any 2018-2019 incidents and assessments will be added to the Port's incident log. 

DUE DATE: 10/31/2019 





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HIPAA Privacy & Breach Compliance Audit 
Appendix A: Risk Ratings 
Findings identified during the audit are assigned a risk rating, as outlined in the table below. Only one
of the criteria needs to be met for a finding to be rated High, Medium, or Low. Findings rated Low will
be evaluated and may or may not be reflected in the final report. 

Financial      Internal                                               Commission/
Rating                                   Compliance      Public 
Stewardship  Controls                                         Management 
High probability
Missing or not   Non-compliance
for external audit    Requires
High       Significant     followed         with Laws, Port
issues and / or      immediate
Policies,
negative public     attention 
Contracts 
perception 
Partial controls   Partial              Potential for
compliance with   external audit
Requires
Medium   Moderate                  Laws, Port       issues and / or
attention 
Not functioning  Policies            negative public
effectively         Contracts           perception 
Functioning as
Low probability
intended but     Mostly complies                       Does not
for external audit
could be        with Laws, Port                       require
Low      Minimal                                    issues and/or
enhanced to     Policies,                            immediate
negative public
improve        Contracts                           attention 
perception 
efficiency 










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