Regulatory Compliance In Healthcare: What Is It & Importance

Healthcare regulations are essential to protect patients and ensure the quality of care. Learn about the risks of non-compliance, the different regulations that apply to US and European healthcare organizations, and how to develop a compliance strategy that will help your organization avoid costly fines, protect patient data, and improve patient care.

According to The Commonwealth Fund, healthcare spending in the United States is the highest in the world. The official website of the United States government reported that U.S. healthcare spending reached $4.3 trillion in 2021, averaging $12,914 per person. In today’s economy and with the cost of healthcare being so high, the industry requires strict and vigorous regulations from the government.

Percent of GDP spent on health, 1980-2021
resource: https://www.commonwealthfund.org/publications/issue-briefs/2023/jan/us-health-care-global-perspective-2022


What is regulatory compliance in healthcare?

Regulatory compliance in healthcare means all healthcare stakeholders, including providers, payers, vendors, non-governmental organizations, not-for-profit organizations, and other institutions, adhere to industry regulations and laws. If you are wondering what is the importance of compliance in healthcare consider that healthcare regulations dictate strict rules for ensuring data privacy, patient safety, and quality of healthcare services. 

The regulatory requirements in healthcare affect small hospitals and major healthcare providers. Compliance is not a single action but a complex process that requires the deep involvement of a healthcare-related institution and recognition of the patient’s trust and safety as the core value. 

Regulatory requirements for healthcare frequently change, causing a need to change workflows and continuously educate staff on compliance with the regulations. However, it is better to deal with these challenges than the nasty consequences of compliance failure.

Advantages of Healthcare Regulatory Compliance

Requirements for data protection are aimed at making healthcare stakeholders prioritize the privacy of patients’ data while ensuring their well-being and the integrity of healthcare services. Here are some benefits of regulatory compliance in healthcare:

Patient Data Protection 

Given the value of data privacy and the sensitivity of information gathered in such systems in EHR, patients’ concerns regarding the security of their health data are not surprising. Proper safeguarding prevents patient data from unauthorized access, thus satisfying requirements defined by regulations and laws.

High Quality of Healthcare Services

Quality services are an essential aspect of a modern patient-centric approach to healthcare. Regulatory compliance requires following strict protocols aimed at improving the quality of patient care by minimizing the likelihood of errors and malpractice within healthcare, creating a trustworthy image for a healthcare services provider. 

Avoidance of Legal Consequences

Neglecting data protection in healthcare can lead to severe legal consequences for those who use, exchange, and store healthcare data. Integrating a system with robust data protection mechanisms allows for avoiding penalties for non-compliance while ensuring smooth operations and focusing on delivering quality patient care.

HEALTHCARE REGULATORY NON-COMPLIANCE RISKS

Disregarding healthcare regulatory requirements puts healthcare providers at risk of penalties and significant reputational damage. Recently, we discussed why healthcare data security solutions are important and talked our readers through the major healthcare data threats. Healthcare data breaches are a consequence of failing hospital regulatory compliance.

Cybercriminals attack healthcare databases for the high value and costliness of sensitive data on the back market. Sensitive healthcare information can be used for compromising patients, financial fraud, and extortion. Thus, non-compliant providers are more exposed to cybersecurity breaches due to the lack of sensitive data safeguards. 

What are the legal and financial consequences of neglecting healthcare regulations and compliance?

According to the HIPAA Journal, there are different penalties for violating each HIPAA category. The Office of Civil Rights sets the fines after a thoughtful analysis of violation factors, such as the nature of exposed data, the level of harm caused by the data exposure, the number of individuals affected, etc. Financial penalties for a HIPAA violation can reach up to $50,000.

Criminal penalties for HIPAA violations
під зображенням додати Resource: https://www.hipaajournal.com/what-are-the-penalties-for-hipaa-violations-7096/

Apart from financial penalties and reputational loss, neglecting healthcare compliance regulations can significantly lower patient care quality. For example, some healthcare regulations include strict protocols defining the quantity and consequences of medication prescriptions. Violating these protocols may directly affect a patient’s medical condition and result in fatal outcomes. 

Healthcare compliance laws are critical to ensure the safety of patients and their data. Thus, healthcare stakeholders should prioritize compliance with regulations and study the compliance laws for healthcare deeply.

HEALTHCARE REGULATIONS IN THE U.S. 

Healthcare in the U.S. is regulated by various government agencies. We will talk you through the major healthcare regulators in the United States, which are excellent examples of how regulators ensure safe and effective patient care.

Read Also: Improving Efficiency in Government Healthcare Systems

The Office of the National Coordinator for Health Information Technology (ONC) 

ONC is a government agency that promotes the implementation and use of advanced health information technology in the U.S. ONC’s regulations improve the safety and efficiency of patient care by encouraging providers to adopt the most effective health IT solutions. The ONC regulations cover such aspects as patient data protection and security and interoperability of healthcare systems. 

Regulations such as HITECH, which we mentioned in our previous article, and the 21st Century Cures Act have revolutionized healthcare by setting up rules for the meaningful use of EHRs. ONC stimulates the adoption and practical use of health IT for the seamless electronic exchange of healthcare data to ensure the highest quality care and safety of patient data and promote compliance with necessary healthcare data standards.

Food and Drug Administration (FDA)

The FDA regulates drugs, medical devices, and other healthcare products to protect public health. Their main goal is to ensure the mentioned products are safe, efficient, and benefit society. The FDA also provides clear and accurate labeling and packaging for healthcare products so they are used correctly and on purpose.

Before selling a medical product, any producer should pass the FDA’s testing and evaluation, including the labeling, manufacturing, and other aspects that could impact the quality of a product and patient safety. For example, the Center for Drug Evaluation and Research (CDER) analyzes drug studies by manufacturers, the benefit-to-risk relationship, and approves or rejects a product.

The FDA’s thoughtful pre-market evaluation guarantees high-quality medical products and patient safety.

Federal Trade Commission (FTC)

The FTC ensures the enforcement of antitrust laws in healthcare markets. They reduce healthcare costs by promoting competition in the industry and protecting consumers from false advertising. The agency also plays a critical role in promoting consumer data privacy and providing guidance to protect health-related information.  

The FTC is responsible for bringing cases against those who violate competition laws and customer protection rules the agency enforces. In the Legal Library of the Federal Trade Commission, you will find details about cases that involve identity threats, misleading advertising, scams, fraud, privacy violations, and more. 

Overall, the FTC enforces affordable healthcare and patient safety by preventing anti-competitive behavior and promoting innovations in healthcare.

Office of Civil Rights (OCR)

The OCR plays a critical role in protecting civil rights and enforcing laws that protect people from discrimination based on race, color, age, sex, disability, and national origin in healthcare in human services. OCR investigates civil rights complaints and HIPAA violations to enforce civil rights laws and HIPAA Privacy Rule requirements.

There are several ways the OCR enforces privacy and security rules: 

  • investigate complaints;
  • conduct compliance reviews for entities;
  • educate on compliance with the Privacy and Security Rules requirements.

The FDA, FTC, and OCR are the major agencies that enforce healthcare regulations and laws to create a trusting atmosphere within the healthcare industry. Therefore, healthcare regulations and compliance questions should be a top priority for healthcare stakeholders since it is the way to provide the safest and most effective care possible to patients. 

MAJOR HEALTHCARE REGULATIONS AND LAWS IN THE U.S

The list of healthcare compliance laws and regulations in the United States is immense. However, it is important to examine several examples of healthcare regulations and laws to understand how they impact the industry. In a previous article, we discussed top data protection laws designed to solve healthcare data privacy problems in Europe and the U.S., such as HIPAA. 

Health Insurance Portability and Accountability Act (HIPAA) of 1996

HIPAA stands for the Health Insurance Portability and Accountability Act. It is a federal law requiring national standards to protect sensitive patient health data from unwanted disclosure. 

HIPAA protects policy applicants from discrimination, sets boundaries on the use of health records, provides patients with more control over their health data, and sets data-safeguarding healthcare compliance requirements for providers and other healthcare stakeholders to achieve top-level protection for sensitive healthcare data.

Check out our article about the value of data privacy in healthcare for more detailed information about HIPAA and its rules. Now let’s look at some of the major laws for regulating the healthcare industry in the United States. 

21st Century Cures Act 

The 21st Century Cures Act sets up the Interoperability and Patient Access Rule and aims to modernize the healthcare industry in the U.S. The Act accelerates the development of new health IT products. One of its requirements is the adoption of certified APIs that can improve interoperability within healthcare.  

The technical requirements for compliance with API certification criterion include support for the HL7 FHIR Standard paired with US Core profiles and the SMART ON FHIR framework. 

Compliance with ONCs requirements ensures fast and timely access to healthcare data. In addition, the Act promotes medical innovations and the wide use of IT in healthcare, improving patients’ treatment and outcomes. The penalties for 21st Century Cures Act violations may be up to $1 million. 

The Affordable Care Act (ACA)

The ACA, sometimes called Obamacare, was developed to ensure accessible and affordable healthcare. The ACA includes the requirement for health insurance to provide access to health services for more individuals and improve outcomes. In addition, the ACA has reformed the insurance industry by establishing insurance exchanges, subsidizing coverage, and allowing people with preexisting conditions to get insurance.

One of the key benefits of the Affordable Care Act is improved healthcare accessibility and expanded Medicaid. Non-compliance with ACA’s regulations can result in financial penalties, limit patient access to healthcare services, and lead to poorer outcomes. 

Medicaid

Medicaid is a federal and state program that ensures medical services are accessible for people with low incomes. Medicaid has been one of the main healthcare coverage sources in the United States since 1965. The program is funded by federal and state governments and provides coverage to over 72 million people, including children, pregnant women, individuals with disabilities, and low-income families. 

It covers various medical services, including prescription drugs, laboratory and x-ray services, physician services, home health services, long-term care, and more. In addition, Medicaid providers must comply with certain care standards. Otherwise, providers can be penalized or excluded from the Medicaid program. Moreover, Medicaid fraud can result in up to ten years in prison and fines of up to $500,000 for providers.

Medicaid regulations are significant to the healthcare industry since they provide essential healthcare coverage to vulnerable populations. 

Medicare

Medicare is another federal health insurance program for people aged 65 and older, including individuals with disabilities and chronic conditions. Payroll tax revenues and general revenues fund the Medicare program. Medicare covers various medical services for seniors, including physician services, hospital stays, preventive care, prescription medications, and more.  

Medicare is a major healthcare payer in the U.S., which impacts the healthcare industry largely. Like all regulations and federal programs, Medicare has certain requirements for healthcare providers and facilities to comply with to participate in the program and receive reimbursement for the services provided.

Medicare regulatory requirements for hospitals include patient safety protocols, infection control measures, and various staffing and delivery of care requirements. Compliance with Medicare regulations is essential for the quality care of seniors in the U.S. and helps healthcare providers avoid penalties and protect their reputations. 

The Healthcare Quality Improvement Act (HCQIA) of 1986

HCQIA is a federal law that was established in 1986. This law requires conducting employee background checks to determine if they have the necessary education, training, and license to provide healthcare services. The HCQIA established a confidential database known as the National Practitioner Data Bank (NPDB). The database includes information about healthcare professionals captured on negligence, malpractice, and other professional misconduct.

HCQIA ensures the qualification and competency of healthcare professionals to deliver the best quality care possible. The information from the NPDB is the main data source for informed hiring decisions. Compliance with the HCQIA allows for a spotless reputation, accreditation maintenance, and receiving federal funding. 

The Federal Trade Commission Act (FTC Act)

The FTC Act regulates various business practices, including healthcare services. Its goal is to nip unfair business practices in commercial companies, healthcare, and insurance-providing entities. It prohibits misleading advertising that could harm individuals’ health or financial welfare. 

According to the FTC Act, patients must be provided with accurate information about products and services. For example, the Act ensures accurate claims about dietary supplements with proven states about their safety and efficacy. Accurate advertising and conscientious marketing practices will help healthcare stakeholders build a trustworthy reputation and avoid legal repercussions.

Federal Food, Drug, and Cosmetic Act (FD&C Act)

The FD&C Act regulates the production and sale of food, drugs, medical devices, and cosmetics. It also approves new medications and mandates manufacturers submit evidence of their safety and efficiency for FDA approval. In addition, the FD&C Act inspects the mentioned products and detains ones that do not comply with regulations. FDAs requirements include accurate labeling and FDA registration for approval before advertising.

Compliance with the FD&C Act and other healthcare regulations will protect healthcare stakeholders from being a subject of compliance reporting in healthcare, legal actions, penalties, and product recalls. Moreover, it will promote a trustworthy atmosphere within the industry, improve the quality and safety of medical products and services, and result in better patient outcomes. 

HEALTHCARE REGULATIONS IN EUROPE

When it comes to regulating healthcare, it is primarily the responsibility of each EU member. However, there are essential bodies that support and enforce healthcare regulations across members of the EU. The European Commission is one of the main independent organizations that support important initiatives for regulating healthcare in Europe. 

Data Protection Officer in the European Commission

The European Commission proposes new EU laws, monitors their implementation, and manages the EU’s budget. Data Protection Officer (DPO) is the role implemented by the European Commission to ensure the Commission applies personal data protection laws correctly. 

A main DPO responsibility is ensuring compliance with GDPR and other regulations. The DPO also informs and advises organizations on their data protection obligations. Therefore, working with the DPO and understanding its role in data protection regulation is crucial to ensure compliance with all applicable laws.  

NHS Digital (UK)

NHS Digital is a partner of the UK’s National Healthcare Services and social care system. One of the main goals of the NHS Digital organization is to create regulations and recommendations for the implementation of health IT standards in the UK.

The list of NHS Digital initiatives includes: 

  • The General Practice Data for Planning and Research (GPDPR): program’s primary goal is to collect patient data from GPs in UL for research and healthcare planning confidentially and securely; 
  • The National Data Opt-Out Policy: the regulation that grants patients more control over personal health data so they can refuse to share their data with research organizations and other institutions outside the national health service.  

NHS Digital is a regulatory body that enforces necessary health IT standards to enhance personal data protection measures and healthcare quality in the UK. 

The National IT Institute for Healthcare in the Netherlands – Nictiz (NL)

Nictiz is a Netherlands body that develops health IT standards for the country. In addition, the organization trains healthcare professionals on the effective use of healthcare IT systems. Also, it pushes the use of international IT standards, such as the HL7 FHIR, to facilitate interoperability in healthcare. 

The Nictiz standards provide a base for creating and implementing new health IT solutions. Failure to comply with the Nictiz standards can lead to fines and lower healthcare quality, which may lead to poorer outcomes. 

MAJOR HEALTHCARE REGULATIONS AND LAWS IN EUROPE

The General Data Protection Regulation (GDPR)

GDPR is one of the most important compliance regulations for healthcare organizations to comply with. Its main goal is to strengthen the protection of sensitive data and ensure privacy for all EU citizens. 

GDPR allows for more transparent control and processing of personal data. It provides individuals with more control over their data as well. Healthcare stakeholders and other organizations that process the personal data of EU citizens are subject to GDPR requirements. 

The GDPR includes the consent requirement, which means a healthcare stakeholder or any other entity that processes the data of an EU citizen must obtain consent from a patient before collecting and processing personal data. 

Privacy by design is one of the main requirements of the GDPR, which obligates organizations to implement technical measures that protect individuals’ data through its lifecycle. In addition, GDPR grants individuals (patients) the right to access their data and request its correction or deletion.

GDPR also obligates healthcare stakeholders to report data breaches to the relevant entities within 72 hours. Failure to comply with the General Data Protection Regulations Requirements can result in fines of up to 4% of an organization’s total global turnover of the preceding fiscal year or €20 million. 

The Open API Policy (UK)

The policy and supported guidelines ensure a standardized way for sharing healthcare data across different healthcare systems in the UK. The Open API policy includes key expectations for healthcare organizations in the UK when developing or upgrading their systems to move to open systems. 

One of the policy’s main goals is to allow healthcare stakeholders to choose a better system with greater flexibility and control. Also, it promotes the development and use of innovative health IT solutions, for example, providing a patient or a GP with an opportunity to access healthcare data via an app of choice. 

Compliance with statements of the Open API policy is essential for healthcare organizations to demonstrate alignment with nationally funded initiatives. Moreover, the policy will be part of the principles used in commercial and architectural governance processes for NHC England-commissioned systems. 

MedMij (NL)

MedMij is a program enabling fast and simple access to personal healthcare data for Netherlands citizens. In addition, MedMij promotes the interoperability of healthcare systems in the Netherlands by defining ways for healthcare providers to share healthcare data between different IT systems. 

The main tasks of the MedMij program:  

  • Develop and implement a Personal Health Environment;
  • Setup rules to ensure privacy and security;
  • Promote the digital exchange of health data between patients and healthcare professionals;
  • Provide a secure and maintainable framework with clear governance and clarify roles for all parties of data exchange.

Healthcare stakeholders must comply with MedMij standards to ensure patients can access their data regardless of which healthcare providers they use. The MedMij framework clarifies the agreements between healthcare stakeholders about architecture, information standards, legal rights, obligations, sanctions, etc.

Read Also: Why Choose an Event-Driven FHIR Architecture

Common Challenges in Regulatory Compliance in Healthcare

ENSURE HEALTHCARE REGULATORY COMPLIANCE

Healthcare IT regulatory compliance is the best way to ensure the legal operation and ethical nature of healthcare practices. The deliberate compliance strategy could help to overcome compliance issues quickly and efficiently. Here are the most important aspects of regulatory compliance strategy for healthcare stakeholders to consider.

1. Develop a regulatory compliance program: the program must include policies and procedures for conforming to all applicable healthcare regulations. Consultations with a compliance officer could come in handy to evaluate weak points since the specialist helps to assess risks and find optimal solutions to achieve medical regulatory compliance.

2. Access risks: it is not only a part of compliance program development but also a crucial action healthcare stakeholders should conduct regularly. Risk assessment allows for identifying vulnerabilities and preventing their harmful impact. In addition, frequent changes in healthcare regulations require a systematic regulatory compliance analysis.

3. Train employees: apart from proper education and licenses, healthcare professionals must be knowledgeable about the regulations and procedures in the organization. Compliance training must be conducted every time changes in laws and regulations occur.

4. Adopt FHIR APIs: In our recent article about HL7 Integration, we discussed the FHIR standard and its benefits in depth. Also, we talked in detail about the future of healthcare data management and FHIR APIs. The use of FHIR APIs is mandatory for healthcare stakeholders in the U.S. due to its capacity to ensure semantic interoperability in healthcare. FHIR API will help healthcare stakeholders comply with HIPAA regulations and provide seamless access to healthcare information for all healthcare actors. 

ENSURE ONC-COMPLIANCE WITH THE KODJIN FHIR SERVER

Compliance with healthcare regulation requires tools with proven effectiveness. The Kodjin FHIR Server is the ONC (g)(10) compliant solution to pass ONC’s IT certification

The server will help stakeholders implement Fast Healthcare Interoperability Resources (FHIR) and ensure timely patient healthcare data access. The Kodjin FHIR Server can improve care coordination by providing simplified data access. Overall, implementing the ONC-compliant FHIR server helps stakeholders overcome such interoperability challenges as information blocking. 

Apart from the server, we recommend considering the FHIR facade as a solution for non-FHIR systems to enable your medical data transmission in FHIR format. Discover the pros and cons of the FHIR facade, and feel free to contact us to discuss the details of your project.

FAQ 

How does health sector regulatory compliance impact patient care and safety?

Adhering to data privacy regulations and laws allows for protecting patient data, promoting best cybersecurity practices, and reducing the possibility of monetary penalties for the leaks of sensitive healthcare data.

How can healthcare organizations effectively train their staff to adhere to medical compliance standards?

Regular training on all aspects of cybersecurity, access to up-to-date resources and regulatory guidelines, regular assessments, and rewards for examination success can contribute to the effectiveness of employee training.

How can healthcare providers balance compliance with regulations while also driving innovation in patient care?

Healthcare data privacy should be a top priority for all stakeholders. Hence, driving innovation in healthcare is possible only when using innovative solutions that meet data security requirements. For example, the Kodjin FHIR Server is not only an enterprise-level tool for healthcare data management and storage but also both the HIPAA and ONC-compliant solution that ensures data interoperability and security.

Post author

Andrii Krylov

Product Owner at Edenlab

More article about Blog about Healthcare Data

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