Defining Covered Entities Under HIPAA: Roles and Responsibilities

Overview of Covered Entities

Under the Health Insurance Portability and Accountability Act (HIPAA), covered entities are the organizations primarily responsible for safeguarding Protected Health Information (PHI). They include health plans, healthcare providers that conduct standard electronic transactions, and healthcare clearinghouses.

The HIPAA Privacy Rule governs how PHI may be used and disclosed, while the HIPAA Security Rule sets safeguards for electronic PHI (ePHI). Together, these rules define roles and responsibilities, establish patient rights, and require controls that limit access to PHI to the minimum necessary.

Health Plans Explained

Health plans include group and individual health insurers, HMOs, Medicare, Medicaid, and certain employer-sponsored group health plans. In this context, the plan—not the employer—is the covered entity, and it must protect PHI it creates, receives, maintains, or transmits.

Health plans may use and disclose PHI for treatment, payment, and healthcare operations, but must follow the minimum necessary standard and respect member rights. Plans routinely rely on vendors for enrollment, claims, and analytics, which requires a Business Associate Agreement to ensure downstream protection of PHI.

Healthcare Providers Defined

Healthcare providers—such as physicians, hospitals, clinics, pharmacies, dentists, laboratories, therapists, and ambulance services—are covered entities when they transmit health information electronically in connection with standard transactions (e.g., claims, eligibility checks, referrals). Most modern providers meet this threshold.

As covered entities, providers must issue a Notice of Privacy Practices, verify identity before disclosures, and apply appropriate privacy and security safeguards to EHR systems and workflows. They also must train their workforce and enforce policies that prevent unauthorized use or disclosure of PHI.

Role of Healthcare Clearinghouses

Healthcare clearinghouses transform nonstandard health data into standard transaction formats and vice versa. Examples include billing services, repricing organizations, and community health information networks that route or reformat claims data.

Because clearinghouses handle PHI at scale, they are covered entities in their own right and often act as business associates for plans and providers. They must implement strong technical, physical, and Administrative Safeguards to maintain the integrity and confidentiality of ePHI during conversion and transmission.

Responsibilities of Covered Entities

Covered entities share core obligations that shape daily operations and compliance programs. Key responsibilities include:

• Privacy Rule compliance: limit uses/disclosures to permitted purposes, apply the minimum necessary standard, provide a Notice of Privacy Practices, and honor individual rights (access, amendment, accounting of disclosures, restrictions, and confidential communications).
• Security Rule compliance: implement Administrative Safeguards (enterprise-wide Risk Analysis, risk management, workforce training, sanction policy, contingency planning), as well as physical and technical safeguards (facility controls, unique user access, audit logging, transmission security, and encryption where appropriate).
• Business Associate oversight: execute a Business Associate Agreement before sharing PHI with vendors; monitor vendor performance and remediate noncompliance.
• Data Breach Reporting: investigate incidents, conduct a risk assessment of compromise, mitigate harm, and notify affected individuals, regulators, and when applicable the media without unreasonable delay and no later than 60 days after discovery.
• Documentation and governance: designate privacy and security officials, maintain policies and procedures, train staff regularly, and retain required records for the mandated period.

Business Associates and Their Impact

Business associates are service providers that create, receive, maintain, or transmit PHI on behalf of a covered entity. Examples include cloud hosting providers, EHR and billing vendors, claims processors, transcription services, and data analytics firms; their subcontractors are also subject to HIPAA safeguards.

A Business Associate Agreement defines permitted uses and disclosures, required security controls, breach notification duties, and termination or return of PHI. Because vendor practices directly influence your risk posture, evaluate security maturity, audit results, and incident response capabilities before sharing PHI.

Ensuring HIPAA Compliance

Effective compliance is an ongoing program that aligns policy, technology, and people. To build and sustain it, you should:

• Inventory PHI and map data flows across systems, vendors, and locations to identify where PHI is created, stored, transmitted, and disposed.
• Conduct an enterprise-wide Risk Analysis, prioritize risks, and implement risk management plans with measurable milestones.
• Operationalize Administrative Safeguards: designate responsible officials, enforce least-privilege access, train the workforce, and apply sanctions for violations.
• Strengthen technical and physical controls: access management, multi-factor authentication, encryption in transit and at rest where appropriate, endpoint protection, backups, and facility security.
• Formalize Business Associate management: execute and maintain each Business Associate Agreement, perform vendor due diligence, and reassess periodically.
• Prepare for incidents: establish escalation channels, test your response plan, and execute timely Data Breach Reporting when required.
• Measure and improve: perform internal audits, track metrics, remediate findings, and document decisions to demonstrate compliance.

By defining roles clearly and embedding Privacy Rule and Security Rule requirements into daily operations, you reduce risk, protect patients, and maintain trust while meeting regulatory obligations.

FAQs.

What entities qualify as covered entities under HIPAA?

Covered entities are health plans, healthcare providers that conduct standard electronic transactions, and healthcare clearinghouses. If you are a provider who submits claims or eligibility checks electronically, or a plan or clearinghouse that handles PHI, you fall within HIPAA’s scope.

How do covered entities safeguard protected health information?

They apply the HIPAA Privacy Rule to govern uses and disclosures and the HIPAA Security Rule to protect ePHI with Administrative, physical, and technical safeguards. Core practices include enterprise-wide Risk Analysis, access controls, workforce training, auditing, and incident response with timely Data Breach Reporting.

What are the responsibilities of business associates?

Business associates must protect PHI they handle, comply with Security Rule requirements, limit uses to those permitted in the Business Associate Agreement, and notify the covered entity of security incidents and breaches without unreasonable delay. Their subcontractors must meet the same obligations.

What steps must covered entities take to ensure HIPAA compliance?

Establish governance, perform and update a Risk Analysis, implement Administrative Safeguards, manage vendors with written Business Associate Agreements, secure systems and facilities, train staff, document policies and actions, and maintain a tested incident response plan that supports timely breach notification when required.