Bill Gardner Marshall University, Huntington, WV, USA
Data breaches cost money. In some cases, the cost of a data breach is so large that it can put a company out of business. The cost of data breaches results from industry and regulatory fines such as HIPAA/HITECH and PCI DSS. Other costs result from lost of business, state notification laws, and fixing the security issues that lead to the breach. Organizations that track cost related to data breaches include the Ponemon Institute, Symantec, and Verizon.
There are a number of institutions that track information related to the cost of data breaches, but the only organization that devotes its entire time and budget to tracking data breach costs is the Ponemon Institute (http://www.ponemon.org/). According to the current research, the per record cost of data breaches averaged $194.00 in the United States. The Ponemon Institute in partnership with Symantec released “Ponemon Cost of Data Breach 2013” in May 2013 [1]. The report covers data collected worldwide and is further broken down by country.
In the United States, the costs of breaches are from paying regulatory fines, mandatory notification of affected parties, and lost of business due to customer lost of trust. Figures for fines for violating HIPAA alone have resulted in millions of dollars [2] of fines for covered entities.
A covered entity is defined as an organization that has a role in handling medical records including doctors, clinics, dentists, psychologists, chiropractors, and nursing homes. Also included in the definition are health plans such as medical, dental, and vision plans and health-care clearinghouses that handle health data such as billing and collection companies [3].
Covered entities are subject to the HIPAA Security Rule. The HIPAA Security Rule applies to any protected health information (PHI) that is in an electronic state. Not all specifications from the Security Rule are required. Some are “addressable,” meaning that a covered entity can further assess whether the specification is reasonable and appropriate for the organization. The term addressable does not mean that the specification is optional; rather, it means if it's reasonable based on the size and make-up of the organization. Whether required or addressable, you should carefully document implementation choices [4].
The compliance deadline for the HIPAA Security Rule, finalized and published on February 20, was February 21, 2005. If you were required to comply with the Privacy Rule or Electronic Transactions and Code Sets Rule, you are a “covered entity” and must also comply with the Security Rule.
The Department of Health and Human Services (DHHS) provides flexibility to covered entities by stating whether a specification is “required” or “addressable.”
If the specification is “required,” the covered entity must implement the specification as stated in the Security Rule.
If the specification is “addressable,” then the covered entity must do the following:
1. Assess whether the specification is a reasonable and appropriate safeguard in its environment and is likely to contribute to protecting the entity's electronically protected health information.
2. Implement the specification or document why it would not be reasonable and appropriate and implement an equivalent alternative measure if reasonable and appropriate.
Implementation specifications
(R) = required, (A) = addressable
Administrative safeguards
Standards
Security management process
■ Risk management (R)
■ Sanction policy (R)
■ Information system activity review (R)
Assigned security responsibility (R)
Workforce security
■ Authorization and/or supervision (A)
■ Workforce clearance procedure (A)
■ Termination procedures (A)
Information access management
■ Isolating health-care clearinghouse function (R)
■ Access authorization (A)
■ Access establishment and modification (A)
Security awareness and training
■ Protection from malicious software (A)
■ Log-in monitoring (A)
■ Password management (A)
Security incident procedures
Contingency plan
■ Disaster recovery plan (R)
■ Emergency mode operation plan (R)
■ Testing and revision procedure (A)
■ Applications and data criticality analysis (A)
Evaluation (R)
Business associate contracts and other arrangements
■ Written contract or other arrangements (R)
Physical safeguards
Standards
Facility access controls
■ Facility security plan (A)
■ Access control and validation procedures (A)
■ Maintenance records (A)
Workstation use (R)
Workstation security (R)
Device and media controls
■ Media reuse (R)
■ Accountability (A)
■ Data backup and storage (A)
Technical safeguards
Standards
Access control
■ Unique user identification (R)
■ Emergency access procedure (R)
■ Automatic logoff (A)
■ Encryption and decryption (A)
Audit controls (R)
Integrity
■ Mechanism to authenticate electronic PHI (A)
Person or entity authentication (R)
Transmission security
■ Encryption (A)
Organizational safeguards
Standards
Business associate contracts or other arrangements (R)
Group health plans (R)
Policies and procedures (R)
Documentation
■ Availability (R)
■ Updates (R)
While “Security Awareness and Training” is “addressable” under the HIPAA Security Rule [5], it doesn't mean that your organization should go without it. In many cases, as you review regulations specific to your organization, you will find that regulations only go so far. Many only address the bare minimum of what it takes to make your organization secure. It has been repeated time and time again that complying with government and industry regulations alone will not make your organization secure, but it will save you a lot of money and is often an important first step to building a mature security program.
My former colleague Bob Coffield covered one recent large fine related to violation of the HIPAA Security Rule in his “Health Care Law Blog”:
“The HHS Office for Civil Rights (OCR) announced a settlement of $1.5M with Blue Cross Blue Shield of Tennessee (BCBST) relating to potential violations under the HIPAA Privacy and Security Rules. According to the OCR press release, the enforcement action by OCR is the first reported as resulting from a breach report required under the new Breach Notification Rule implemented as a result of the HITECH provisions of HIPAA.
The breach involved 57 unencrypted computer hard drives that were stolen from a facility leased by BCBST in Tennessee. The hard drives contained protected health information of approximately 1 million individuals. The breach was reported by BCBST to OCR under the HITECH provisions and regulations that require reporting of potential breaches. The press release indicates that OCRs investigation found that BCBST failed to implement appropriate administrative safeguards to adequately protect information remaining at the leased facility by not performing the required security evaluation in response to operational changes. In addition, the investigation showed a failure to implement appropriate physical safeguards by not having adequate facility access controls; both of these safeguards are required by the HIPAA Security Rule” [6].
Another regulation covering data breaches is PCI DSS.
“The Payment Card Industry Data Security Standard (PCI DSS) is a proprietary information security standard for organizations that handle cardholder information for the major debit, credit, prepaid, e-purse, ATM, and POS cards.”
“Defined by the Payment Card Industry Security Standards Council, the standard was created to increase controls around cardholder data to reduce credit card fraud via its exposure. Validation of compliance is done annually — by an external Qualified Security Assessor (QSA) that creates a Report on Compliance (ROC) for organizations handling large volumes of transactions, or by Self-Assessment Questionnaire (SAQ) for companies handling smaller volumes” [7].
PCI DSS to many was a reaction to the TJX data breach, which at the time was the largest and most expensive breach in history. According to accounts, 45 million customer credit and debit card numbers were taken by criminals in the breach. The total cost, including litigation costs and the cost to fix the issues that lead to the breach, to cardholders, banks, and the credit card industry is estimated to be $256 million [8].
According to the 2012 Verizon Data Breach Investigation Report, 96% of the merchants experiencing a data breach in 2011 had not complied with the PCI DSS [9]. According to the 2011 Cost of Data Breach Study, direct cost associated with recovering from a security breach average in 2011 was $194 per stolen record [10]. Since the typical breach involves tens of thousands of records, the results can be catastrophic to a business [11].
HIPAA and PCI DSS are just two examples of regulations that might affect your organization. Become familiar with the regulations in your field, and make sure you include them in your security awareness training.
A number of states of now enacted breach notification laws that result in data breach cost over and above regulations such as HIPAA, SOX, and PCI DSS. According to the National Conference of State Legislatures (NCSL), 46 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands have enacted breach notification laws [12]. Breach notification laws were enacted as a result of a number of high-profile data breaches such as the much-covered TJX breach.
The ideas behind the laws were to give consumers notification and credit protection in the event customers' data have been lost. Not providing notification and credit protection can result in large fines to the organization that lost the data via thief or negligence. In the case of a loss, an organization's first duty is to determine what has been lost: social security, credit card information, home address, date of birth, or other personally identifiable information (PII). Each state has different triggers for the laws. Common criteria include a number of records and the type of data lost [13].
Below is the breach notification law for the state of West Virginia, which is typical of other state breach notification laws:
Notification and mandatory credit protection cost money. Depending on the size of the breach, it could cost millions of dollars to notify all the persons affected. Not reporting the breach could result in criminal and civil penalties. The cost of defending such legal actions would result in even more costs [15].