It's a common misconception that HIPAA fines only apply to big hospitals or major health systems. The truth is, the majority of enforcement actions from the Office for Civil Rights (OCR) involve small-to-medium-sized practices—and the fines can be devastating.
Here are five of the most common reasons small practices get hit with HIPAA fines and what you can do to avoid them.
1. Not Having a HIPAA Security Officer
The problem: The HIPAA Security Rule requires every covered entity to designate a Security Officer who is responsible for developing and implementing security policies. Many small clinics, often with limited staff, don't assign this role, leaving a critical gap in their compliance efforts.
How to avoid it: Officially designate a Security Officer (this can be the practice owner or office manager). Their primary responsibility is to create and maintain your practice’s security policies, like the one you can find in our HIPAA Startup Kit.
2. Lack of a Formal Risk Analysis
The problem: The HIPAA Security Rule requires every practice to conduct a comprehensive risk analysis to identify potential vulnerabilities to electronic protected health information (ePHI). This is not just a suggestion—it's a requirement. Failure to do so is one of the most common reasons for fines, with penalties sometimes reaching hundreds of thousands of dollars.
How to avoid it: Conduct a formal risk analysis at least once a year or whenever there is a significant change in your IT environment. The checklist included in our kit is a great starting point for this process.
3. Failure to Implement Physical Safeguards
The problem: Not all PHI is digital. Physical safeguards are critical. A surprisingly common violation is leaving patient charts or files unsecured, or not restricting access to server rooms.
How to avoid it: Ensure all paper records are stored in locked cabinets. Restrict physical access to areas where servers or computers with PHI are stored. Our HIPAA Policy Template has a section dedicated to these physical safeguards.
4. No Business Associate Agreements (BAAs)
The problem: You can't just trust that your vendors are HIPAA compliant. The HIPAA rules require a signed BAA with every vendor who handles your patient's data, from your EHR provider to your billing service and even some cloud storage providers. Using a vendor without a BAA is a serious violation.
How to avoid it: Identify every vendor that handles your PHI. Use a BAA template to create a formal, legally binding agreement with each of them. Our HIPAA Startup Kit includes a BAA template and a vendor tracking sheet to help you manage this process.
5. Not Having a Breach Notification Policy
The problem: If you suffer a data breach, you have a very limited time to notify affected patients and the Department of Health and Human Services (HHS). Without a clear, documented plan, you will miss these deadlines and face significant fines.
How to avoid it: Create a formal breach notification policy that outlines every step you will take in the event of a breach. Our template includes a comprehensive breach notification policy to ensure you're prepared.