MSP HIPAA Compliance: The Ultimate Checklist

The healthcare industry reports the highest number of ransomware attacks. In 2022 alone, 25% of all ransomware attacks were aimed at organizations in the healthcare sector. This is according to data from the FBI Internet Crime Complaint Center. Why should this trend worry MSPs?

As an MSP, some of your customers may be healthcare providers or organizations that work with healthcare providers. To provide these customers with assurance, your MSP must become HIPAA compliant itself to not only protect them but also protect your business from breaches and legal implications. It’s also your duty to make sure that all clients that handle PHI are HIPAA compliant.

For this reason, MSPs need to take a thorough look into HIPAA compliance, and do everything to comply accordingly.

This article discusses MSP HIPAA compliance with the goal of helping all types of MSPs become compliant at all times. Let’s do this.

Also Read: Attacks on US hospitals

What is MSP HIPAA Compliance?

MSP HIPAA compliance refers to meeting the standards set by the federal Health Insurance Portability and Accountability Act (HIPAA). This includes the MSP’s obligation to comply with all applicable rules and regulations for using, storing, encrypting and processing Protected Health Information (PHI).

MSPs are tasked with ensuring that all technology systems utilized in healthcare settings meet HIPAA requirements, thereby protecting PHI from loss or misuse. Covered entities, who handle PHI (Protected Health Information), are obligated to implement «reasonable and appropriate» administrative, technical, and physical safeguards to protect both PHI and ePHI (electronically-protected health information) as per the HIPAA security rule. MSPs in particular must monitor systems regularly to ensure these stringent security requirements continue to be met; any services found in breach of regulations could incur heavy penalties.

There are two key HIPAA compliance points for MSPs. One is when an MSP works directly with a healthcare provider, and this means they automatically become Business Associates. The second is when an MSP works with an organization that works with a healthcare provider. In both cases, the MSP is subject to HIPAA requirements. For example, if your MSP is in charge of data backup and recovery for a law firm providing legal services to a healthcare facility, it is possible that the MSP may be subject to HIPAA regulations, depending on the kind of data stored by the law firm.

Benefits of HIPAA compliance for MSPs

For MSPs, achieving HIPAA compliance is not only a legal responsibility but also comes with multiple rewards. Here are the top benefits:

  1. Trust: Becoming HIPAA compliant helps MSPs create trust with their clients, demonstrating that their services are duly compliant with the highest industry standards.
  2. Data handling:Attaining compliance makes it easier for MSPs to handle protected health information, reducing the chances of lost data or security breaches.
  3. Collaboration:The compliance process encourages better collaboration between the MSP and its healthcare partner organizations.
  4. New opportunities:By being HIPAA compliant, Managed Service Providers can position themselves as reliable and capable to potential clients. That in turn will lead to more business opportunities due to their demonstrated ability to handle sensitive healthcare data according to the regulations set by HIPAA.
  5. More revenue streams:MSPs can increase their revenue by selling services designed for HIPAA compliance. Examples include selling risk assessments, privacy policies and procedures, customer awareness and training programs, as well as disaster recovery plans.
  6. Network security reinforcement:HIPAA compliance implementations also improve your overall network performance and that of all clients on that network. These improvements come from updated policies, procedures, technologies, and strategies aimed at providing a secure network that meets all the requirements specified by HIPAA regulations.
  7. Competitive advantage: An MSP that is HIPAA compliant offers a level of assurance that cannot be found elsewhere: security, confidentiality and trust. Potential clients will no doubt find your MSP more attractive than your competitors who are not HIPAA compliant.

HIPAA violations

When it comes to HIPAA violations, there are three main categories that MSPs must pay more attention to — unencrypted data, employee errors, and breaches caused by theft.

  • Unencrypted data refers to information that has not been encoded or scrambled in any way. All devices which come into contact with PHI – such as computers, laptops, tablets, smartphones, etc. – must be encrypted.
  • Employee errors are simply a result of human error. However, in some cases they may be evidence of larger problems such as system failures or organizational deficiencies.
  • A data breach is the unauthorized access, use, disclosure, interception, or acquisition of any personal data. This can include names, addresses, Social Security numbers, credit card numbers, and medical information.

Besides these three, you should ensure you understand all applicable regulations.

HIPAA penalties

The penalties for violating privacy regulations are organized into four tiers.

  • Tier 1 is for cases where the entity was not aware of the breach and consequent fines can range from $100 to $50,000, with a maximum fine limit of $1.5 million.
  • Tier 2 involves the cases where the covered entity has knowledge or reasonably should have known about the violation and can incur a penalty of up to $1.5 million in total fines, ranging from $1,000 -$50,000 per incident.
  • Tier 3 entails cases where the concerned entity acted with willful neglect but remediated within 30 days and could face penalties from $10,000 -$50,000 per incident or up to a total of $1.5 million in fines.
  • Tier 4 involves cases where there has been willful neglect to make timely corrections and these can be liable for a minimum fine of $50,000 per incident with a potential max fine limit of $1.5 million.

HIPAA related prosecutions

If the Department of Health and Human Services (HHS) finds evidence that a covered entity had reckless intent in violating HIPAA security rules, the Department of Justice is allowed to prosecute the case. Should a criminal act be judged to have been committed, penalties applied could include incarceration and other punitive measures. Such sanctions are intended to serve both as deterrence for future infractions as well as punishment of wrong-doing. The duration typically depends on what laws were broken and the intended maliciousness behind the offending party’s actions.

These criminal penalties are broken down into three broad categories, depending on the severity of the violation.

  • Tier 1 offenses are those committed with reasonable cause or without knowledge of any wrongdoing, resulting in up to one year in jail.
  • Tier 2 offenses involve obtaining PHI under false pretenses, which carries a penalty of up to five years in jail.
  • Tier 3 covers serious violations, such as obtaining PHI for personal gain or with malicious intent and could bring a sentence of up to ten years in jail.

Essentials for MSP HIPAA Compliance

Generally, HIPAA requires the following in order to declare an organization compliant: HIPAA relevant policies, annual self-audits, remediation, annual staff training, business associate agreements, and reporting

1. HIPAA policies and procedures, reviewed annually

HIPAA regulations require organizations to set up and maintain detailed policies and procedures related to HIPAA. It is important to review these policies and procedures on an annual basis in order to ensure that they are up-to-date with the current regulatory framework, as well as any changes or updates your MSP has made over the course of the year.

All you need to do is look at the policies that apply to your organization and integrate them to your overall network security policy.

2. Annual self-audits

The purpose of these audits is to verify whether security procedures related to the privacy and security of medical information are properly implemented. Taking stock in this way is critical, as it helps MSPs understand their accountability regarding compliance with these important regulations while maintaining the confidentiality and integrity of patient data. Furthermore, a sound self-audit process can identify potential problem areas and assist with recommending corrective measures to provide assurance that all regulatory requirements are met.

Independent third party audits would allow clients and partners to view reports from an unbiased auditor regarding the effectiveness of existing security measures and make any improvements they might need to ensure HIPAA compliance. Having this third-party assurance gives customers greater confidence in the MSP's services, ensuring it remains a trusted partner in providing managed IT services.

The auditing should go beyond a basic security checklist and encompass an in-depth review of the MSP's practices in data access, physical security measures, account monitoring and more.

The most important items that need to be assessed during the audits are:

  • Privacy
  • Administration
  • NIST
  • Risk

The goal of the audit is to identify and document all gaps.

3. Remediation

When any gaps are found during the annual audits, the MSP must be accountable and respond quickly to any findings from the audit, ensuring that remediation efforts are executed efficiently to address the gaps found and help put systems in place to prevent repetition of the same problems in future. This effort also helps restore trust among customers and demonstrate commitment towards providing quality services.

Be sure to establish in-depth security practices such as regular user credential changes, access control reviews, encryption standards, and role-based access.

4. Annual staff training

Annual staff training allows staff to stay up-to-date on the latest best practices, helps them to develop a better understanding of their roles, and reinforces the importance of following HIPAA regulations. With regular training, MSPs can be confident that their staff are equipped with the most current knowledge regarding data privacy and security protocols required by HIPAA.

Training helps all individuals involved in handling PHI to remain vigilant when dealing with confidential medical information. Additionally, they are constantly aware of all associated risks as well as how to properly assess and address any potential issues both before and after they occur.

Also Read: What type of third party data can be accessed by medical staff?

5. Business Associate Agreements

Business associate agreements (BAA) are legally binding contracts between two parties (usually businesses) in which the parties agree to exchange certain confidential information with each other. The purpose of a business associate agreement is to protect both parties from potential legal issues that could arise if the confidential information is mishandled or shared without permission.

In these agreements, the MSP agrees to limit the access, use and disclosure of protected health information (PHI), while also establishing appropriate technical and physical safeguards to protect PHI.

These agreements also outline the responsibilities of both parties involved in regards to security and privacy with regards to PHI. They take all the relevant laws into account and by signing them, MSPs can demonstrate their commitment to meeting HIPAA standards.

You might me interested in: MSP Contracts Explained

6. Reporting

HIPAA regulations require that both internal and external reporting of breaches happens as quickly as possible — and especially in advance of any additional damage being done by the malicious actors.

This comprehensive process not only helps to limit impacts, but also allows the MSP to research and develop better plans of action going forward that can protect client data and infrastructure.

MSP HIPAA compliance best practices

Here are some of the best practices for effective HIPAA compliance:

1. Accreditation

Through accreditation, MSPs can demonstrate to their clients that they take data security seriously and have implemented the necessary safeguards to protect against data breaches. This builds trust between MSPs and their clients, and helps to foster a long-term business relationship.

Accreditation works by performing third party assessments, requiring detailed documentation of system architecture and internal processes, as well as ensuring consistent improvement through ongoing maintenance, vulnerability testing, and corrective actions.

This demonstrates to existing and potential customers that your MSP has the experience and expertise needed to support their HIPAA compliance needs. It also allows MSPs to have peace of mind knowing sensitive patient information is safe in their hands and can quickly respond to any legal challenges regarding HIPAA compliance.

2. Documentation

Documentation is essential for MSPs to prove HIPAA compliance because it provides a record of the security measures that have been put in place and the steps that have been taken to protect patient data.

Documentation helps MSPs to demonstrate that they have implemented specific safeguards, such as access controls, encryption, and destruction procedures. It can also provide evidence of employee training and periodic reviews of security measures.

3. Annual security risk assessment

This should actually fall under the annual audits, but it's important that we distinguish it because of the important role it plays. The assessment should evaluate the entire IT infrastructure of the MSP, taking into account network architecture, workforce access and utilization, data storage and transmission, as well as any third-party vendors or other parties provided with access to PHI.

Identifying and assessing risks is an important yet often overlooked step that can make all the difference between a secure system and one vulnerable to exploitation by hackers or other malicious actors intent on using confidential health information for their own gains.

4. Help your clients to comply

Many of your clients who are covered entities under HIPAA may not be compliant. This is especially the case with small businesses and start-ups, who lack the resources and expertise to create a HIPAA compliant infrastructure.

As an MSP serving this type of clients, you must help them get into compliance or else their risks become yours. Their non-compliance could put you at risk of not meeting HIPAA standards even when you've done everything right within your company.

MSP HIPAA Compliance checklist

So, is your MSP HIPAA compliant? Use this basic checklist to find out

ItemQuestions to ask

HIPAA policies

  1. Do you have policies in place that are relevant to the HIPAA rules?
  2. Have all employees read and attested the policies and procedures?
  3. Have you documented the employee attestation and annual reviews of the policies?


1. Have you performed all these audits?

  • Security Risk Audit
  • Privacy Audit
  • Administrative Audit

2. Have you identified and documented all gaps from the audit process?


Have you remedied all the deficiencies identified during the audits


  1. Have you trained all staff members on relevant HIPAA compliance requirements?
  2. Have you documented the training?
  3. Have you identified one staff member to be in-charge of HIPAA compliance?
  4. Have you implemented a system that enables all employees to report incidents anonymously?

Business Associates

  1. Have you signed all necessary business associate agreements?
  2. Have you assessed your clients and helped them to become HIPAA compliant?


  1. Have you implemented a reporting mechanism for incidents?
  2. Can the reporting mechanism prove due diligence?
  3. Can the reporting mechanism demonstrate that all incidents have been fully investigated and remedied?

Also Read: HIPAA compliant cloud storage solutions


MSPS need not be HIPAA experts in order to become HIPAA compliant. You can partner with third-party HIPAA compliance companies to help you and your clients fulfill the requirements of HIPAA. You can also offer HIPAA compliant solutions under referral schemes. Some HIPAA compliance companies will also provide white-labeled sales and marketing material to help MSPs sell relevant HIPAA compliance services to their clients.

Not only will offering HIPAA compliance improve revenue, it will strengthen relationships with all clients that handle health information in one way or the other.

No comments yet. Be the first to add a comment!
Our site uses cookies