Best Practices for Securing Patient Data in Medical Billing

Securing patient data is crucial for healthcare entities in today's high-risk digital environment. Find out what your practice can do!

As data becomes increasingly important and prized in the digital age, healthcare providers face unique challenges in securing patient information from data breaches and cyberattacks. The transition to electronic health records has generated an overwhelming amount of patient data, with every diagnosis, prescription, and payment leaving a different digital footprint. This wealth of information, while invaluable for care, has left a massive red X on the healthcare industry.

Over the past decade, data breaches have been on a steady rise, with 2021 marking a record high. For almost 15 years—from 2009 to 2022—there were over 5,150 reported healthcare data breaches involving 500 or more records. The breaches have led to the exposure or improper disclosure of over 382 million healthcare records. Beyond the immediate financial impact, with the average cost of a healthcare data breach reaching $10.1 million, there are other damaging consequences.

Data breaches of any size can lead to devastating patient outcomes such as identity theft, insurance fraud, and the exposure of sensitive health details. The reputational harm can undermine trust, an important element in the patient-provider relationship. The numbers underscore the critical importance of securing patient data in medical billing. It's not just about compliance; it's about safeguarding trust and ensuring the integrity of healthcare itself.

Patient Data in Medical Billing

Medical billing involves a wide range of patient data, which features two types: personal information and medical information.

Personal Information

  • Patient name and Demographics: Social Security Number, Medical Record Number, etc.
  • Insurance Information: Patient's health insurance provider, policy number, etc.
  • Contact Information: Home address, phone numbers, email addresses, etc.

Medical Information

  • Medical History: Past health issues, surgeries, allergies, etc.
  • Test Results: Results from lab tests, imaging studies, etc.
  • Diagnosis: Information about the patient's health condition, including symptoms and diagnoses.
  • Treatment: Medications prescribed, surgeries performed, etc.

Highly personal and sensitive medical information may be linked to intimate health issues, mental illnesses, substance use disorders, and more. If any of this information lands in the wrong hands, it could lead to fraud or identity theft. Patients rightfully expect this information to remain private and confidential. Regulations like HIPAA hand out strict penalties for unauthorized or improper use of patient information. 

Legal Requirements: HIPAA and Beyond

 A doctor using a laptop while reviewing patient data and other medical information.

HIPAA regulations clearly define patient privacy rights and healthcare entities' security responsibilities. The core purpose of HIPAA is to set national standards for keeping patient data and other personal health information private and secure. HIPAA requires entities to “implement policies and procedures to limit physical access to electronic information systems and the facility or facilities in which they are housed while ensuring that properly authorized access is allowed”.

  • Healthcare entities need to regularly review changes and update compliance policies as HIPAA regulations are still evolving. 
  • State lawmakers will have different points of view on whether providers can disclose certain health information to insurers without consent.
  • Healthcare entities that experience a HIPAA data breach must properly notify affected patients and regulators promptly.
  • Even with HIPAA, patients have little control over how their de-identified data may be used or sold for research, marketing, etc.

The HIPAA Privacy Rule lays out requirements for healthcare providers and other covered entities regarding how they can access, use, and share patients' protected health information. It aims to give patients more control over who can see their medical data. The HIPAA Security Rule focuses more on the technical safeguards that must be in place to secure electronic protected health information. While HIPAA provides a baseline level of protection, healthcare organizations still have to comply with any other stricter federal, state, or local laws that require patient consent before revealing their health details.

Risk Assessment

Conducting thorough and continuous risk assessments is a pressing requirement for healthcare organizations under HIPAA regulations. Performing thorough risk analyses allows healthcare organizations to identify and evaluate potential threats, vulnerabilities, and risks to the privacy and security of patient data in their care. This process allows healthcare providers, payers, and other stakeholders to truly understand their unique risk profile based on the types of patient data they collect and store, how the data is received, maintained, used, and transferred, as well as who needs to have access to it.

Having a strong and accurate risk assessment should never be overlooked because it is foundational to developing and implementing appropriate administrative, physical, and technical safeguards customized to mitigate identified risks and protect health data as it has been required by the HIPAA Security Rule. Without being aware of vulnerabilities healthcare organizations cannot properly evaluate and prioritize risks or select the necessary controls. That is why risk assessments are fundamental requirements under HIPAA.

Access Control and Authentication

Implementing role-based access controls is crucial for healthcare organizations to restrict unnecessary access to patient data. This means thoughtfully assigning access privileges so users can only view the data required for their duties – for instance, nurses can see full medical records, but billing staff may only need appointment details. When it comes to data privacy, segmenting access makes sure that not everyone in the facility has access to all information.

Multi-factor authentication is also key to prevent unauthorized access if login credentials are compromised. Biometrics, one-time codes, security keys, or a combination of methods enhance security beyond basic passwords. Healthcare facilities should be diligent about revoking former employee access promptly when roles change or when departing. It is also crucial not to leave credentials active longer than needed. Individual user accounts per employee, instead of shared logins, are best practices for accountability.

Healthcare entities also need documented access control policies aligned with “least privilege” and “need to know” principles. Train all staff on appropriate data access, and audit permissions regularly to restrict to current job needs.

Encryption of Data

Encryption converts information into unreadable code that requires a decryption key to transform back into accessible data. It protects patient data both at rest and in transit between systems. HIPAA instructs the use of encryption protocols like Advanced Encryption Standard (AES) or Triple Data Encryption Standard (3DES).

Encryption should extend to computer devices, medical devices, file transfers, email, backups, databases, servers, and networks. Special attention should be taken to encrypting backup copies of patient data that has been stored long-term. It is important to regularly review and upgrade encryption strength when possible, for the highest level of protection.

Secure Storage and Backup

A male doctor using a laptop to backup patient data and other medical information.

In addition to the encryption of data, HIPAA requires healthcare organizations to implement tools that protect archived patient data against unauthorized access. Secure storage procedures protect data at rest inside servers, records, and databases. Backups and servers should be kept in locked rooms that only approved IT staff can access. Backups allow the restoration of data if there is ever a system failure, corruption, or if there is a natural disaster.

Healthcare facilities should perform daily data backups with weekly offsite rotation of physical storage media—test restoration periodically by testing backup copies. Also, carry a comprehensive disaster recovery plan that details how to access backups, restore systems, and recover data in an emergency. Update plans annually and run drills to prepare.

Employee Training and Awareness

Human error and negligence illustrate significant threats to data security. There needs to be employee training on HIPAA's privacy and security rules. Training or refreshers should discuss cybersecurity topics like physical security, social engineering, phishing, strong passwords, access procedures, as well as incident reporting.

Develop clear data security policies and ensure everyone understands their role. Foster a culture that fully emphasizes the duty everyone carries to protect patient data. Healthcare organizations should feel free to use email reminders, manuals, posters, events, as well as continued discussions to reinforce secure practices. 

Regular Audits and Monitoring

Continuous security monitoring means tracking access logs, network traffic, user activity, system performance metrics, data transfers, and other events for irregularities that are indicative of a data breach. Monitoring tools can automate log analysis, and these tools allow for a faster response to potential threats once detected.

There should also be regular manual reviews, and this can be done by analyzing logs on a week-to-week basis to check for unauthorized access attempts, suspicious activity by known users, policy violations, and more. Make sure that encryption is always enabled and compliant, access controls are still intact, and all systems are patched. When conducting internal and external audits, they should verify all controls meet legal obligations.

Data Sharing and Transfer Protocols

Medical billing requires the sharing of protected health information internally across healthcare departments and externally with insurance providers, government agencies, and other healthcare entities. HIPAA requires the end-to-end encryption of electronically transmitted PHI when possible. Secure file transfer systems using the HTTPS protocol allow authorized file sharing with data encryption and user access controls.

Secure messaging systems also permit encrypted email and attachments. Discourage emailing PHI when possible given the risks of unsecured email connections. If you use fax machines, verify recipients first, then include a cover sheet, and never share patient data on unsecured networks.

Incident Response Plan

Team of doctors in a hospital training for patient data protection.

Despite best efforts, data breaches can (and do) still happen. There needs to be an implementation of incident response plans that outline procedures for dealing with data breaches. The goal is to limit damage by responding quickly and notifying patients properly. Plans should identify response teams, lay out steps, provide reference materials, identify cyber insurance policies, and utilize public relations resources. 

When an incident surfaces, immediately contain it by isolating and securing affected systems. Start an investigation, recover data, and implement short-term fixes, allowing room to fully eliminate the root cause later. Document every step taken and try to comply with breach notification laws that require patients to be notified within 60-90 days, depending on the state. 

Third-Party Vendors and Business Associate Agreements

External service providers that handle PHI like billing companies, EHR vendors, cloud hosts, and others are considered business associates under HIPAA. Covered entities must ensure business associates also implement HIPAA safeguards through formal contracts called Business Associate Agreements (BAAs).

Before partnering with potential vendors, healthcare facilities must thoroughly assess that vendor's data security. Ask for copies of their policies, training programs, access controls, and results from past audits. Also, ask for site visits, especially for critical partners. The BAA should specify each party's responsibilities, breach notification procedures, and requirements for audits.

Every year, review agreements, and when vendor changes take place, review the agreements again.

Secure Your Medical Billing Experience With BillFlash

Securing patient data is non-negotiable for healthcare entities in today's high-risk digital environment. HIPAA and privacy laws exist to mandate proper safeguards, but legal compliance alone is not enough. Healthcare organizations hold an ethical obligation to patients to treat their highly sensitive medical and personal information with the greatest care.

Implementing strong technical controls around access, encryption, auditing, and disaster recovery is essential yet reactive. The human element represents the greatest vulnerability. Healthcare entities must proactively foster a culture of security awareness and vigilance at all levels. With the proper platforms, medical practices can guard patient data without compromising healthcare delivery.

BillFlash's secure platform allows providers and billing services to seamlessly send mailed bills, electronic billing notifications via text and email, process payments, and manage their past-due A/R with our Integrated Collections Service. Additionally, patients can easily view, understand, and pay their medical bills all within a HIPAA-compliant portal at With leading data protection and state-of-the-art encryption, BillFlash prioritizes privacy. Most importantly, we never lose sight of the human lives behind the data.

See BillFlash in action—schedule a demo today!

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