HIPAA (the Health Insurance Portability and Accountability Act of 1996) is U.S. legislation created to improve healthcare standards. Covered entities (CEs) and their business associates (BAs) must be HIPAA compliant to protect the rights and privacy of patients and their protected health information (PHI). We know the HIPAA industry is vast and that finding a BA to send or receive secure patient payments is fundamental to patient care. This is especially true with the recent growth of telehealth and the need to receive payments electronically.
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Today, we will determine if Square as a financial institution is HIPAA compliant or not.
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Square is a financial service and mobile payment company founded in 2009 and based in San Francisco, California. The company is most known for its Square Reader which connects to a mobile device’s audio jack, transforming the device into a point-of-sale solution. Since first created, the company has upgraded the Square Reader several times. Now, they have a version that creates a complete payment system and a device that accepts chip and contactless payments. Square also allows for easy payments and/or money transfers via its app or website.
The business associate agreement and HIPAA complianceA business associate (BA) is a person or entity that performs certain functions or activities that involves the use or disclosure of PHI on behalf of a covered entity (CE). Generally, the HIPAA Privacy Rule allows CEs to disclose PHI to a BA if they receive assurance that the information is protected through a signed business associate agreement (BAA). However, several exceptions were built into the privacy rule including one addressing financial institutions:
. . . a financial institution processes consumer-conducted financial transactions by debit, credit, or other payment card, clears checks, initiates or processes electronic funds transfers, or conducts any other activity that directly facilitates or effects the transfer of funds for payment for health care or health plan premiums. When it conducts these activities, the financial institution is providing its normal banking or other financial transaction services to its customers; it is not performing a function or activity for, or on behalf of, the covered entity.
Nevertheless, for complete protection, a CE should utilize a financial institution that will offer and sign a BAA.
Square and the business associate agreementUnlike other online payment platforms such as PayPal or Stripe, Square will enter into a BAA with a healthcare organization. On its website, Square states:
If you are subject to HIPAA as a [CE] or [BA] (as defined in HIPAA) and use the Services in a manner that causes Square to create, receive, maintain, or transmit [PHI] on your behalf, then you agree to the HIPAA [BAA].
The only stipulation is that the Square users “are responsible for determining whether they are subject to HIPAA requirements and whether they intend to use the Services in connection with PHI.” While the BAA is downloadable, there is nothing to sign by either party.
Square and PHIAccording to HIPAA, any information that can identify a patient and is used or disclosed during care is considered PHI, including a patient’s name, which is used for financial transactions. Within its BAA, Square states that it will use or disclose PHI to perform services provided that the company’s use or disclosure does not violate HIPAA. Square further affirms that it will use appropriate cybersecurity safeguards (as specified in the HIPAA Security Rule) such as:
- Access controls
- Patches and updates
- Audit controls