Limiting Offshore Coding Risks with the New Administration- CBS is here to help!

In an age where personal data security is more critical than ever, the handling of health information by healthcare providers and institutions faces unprecedented risks. Every time a person visits a doctor, clinic, or hospital, their private medical and demographic information is entered into electronic medical records (EMRs), creating a permanent and detailed history of their healthcare journey.

While the U.S. has implemented federal HIPAA regulations to protect this sensitive information, outsourcing the handling of these records to foreign countries could dangerously undermine patient privacy.

These risks become even more acute when we consider what might happen under the new U.S. Presidential Administration. On a wide variety of trade, data and intellectual property fronts, it is likely that there will be significant restrictions on the transfer of healthcare records out of the U.S. This looming issue makes the case for fully domestic Medical Coding and HIM even more pressing.

The Hidden Vulnerability in Electronic Medical Records

EMRs include a range of personal data beyond basic health details, such as social security numbers, home addresses, workplace information, prescription histories, and even family demographics like children’s schools. Sensitive mental and physical health information, including potentially stigmatizing diagnoses or explicit medical images, also lives within these records. Given the personal and sensitive nature of this data, any compromise could lead to severe consequences for individuals and their families, from identity theft to exposure of private health issues.

The Outsourcing Dilemma: Sacrificing Security for Savings

Over the past decade, healthcare providers increasingly turned to outsourcing companies based in countries like India, Pakistan, and the Philippines to manage HIM functions, primarily due to the cost savings of cheaper labor. Not only do these foreign resources often produce lower quality results than domestic coding firms, but these cost-saving measures introduce a substantial risk: these foreign workforces are not bound by HIPAA or U.S. privacy laws, leaving a critical gap in accountability and enforcement.

In the U.S., HIPAA regulations require strict controls to protect patient data, and the Department of Health and Human Services (HHS) Office for Civil Rights actively enforces these regulations. Violations can result in significant penalties for U.S.-based providers, coders, and contractors. Overseas entities, however, operate outside the reach of HIPAA and U.S. law. Even if a foreign outsourcing firm claims HIPAA compliance, there is no legal recourse if that compliance is not upheld. This reality leaves patients’ EMRs vulnerable to breaches and misuse without the protective recourse available within the U.S.

The Consequences of Data Exposure in Foreign Hands

Medical records have high black-market value, estimated at $100 to $1,000 per record. Cybersecurity experts warn that any patient information processed overseas faces an increased risk of being sold or leaked, with little accountability for the individuals or organizations that misuse it. If foreign workers mishandle or sell this information, U.S. patients have no legal remedy, and enforcement agencies like the HHS cannot prosecute foreign violations. The risk is magnified as foreign countries may lack the stringent data protection standards the U.S. maintains, making it easier for bad actors to access and exploit sensitive information.

Why U.S.-Based HIM Processing is Essential

The most effective solution to safeguarding patients’ privacy is to keep all HIM processing within the U.S. Here are key reasons why:

1. Legal Protections and Accountability: Processing HIM within U.S. borders ensures that federal privacy laws like HIPAA apply. Domestic coders, record-keepers, and other HIM professionals are legally obligated to follow rigorous data protection standards. If a breach occurs, U.S. agencies can investigate, penalize, and ensure corrective action, holding violators accountable in a way that is impossible with foreign firms.
2. Higher Standards and Compliance Assurance: U.S.-based HIM professionals are trained in HIPAA regulations, and their employers must pass routine audits and uphold security certifications. By contrast, foreign companies may not face the same rigorous standards, creating a lower threshold for compliance and increasing the risk of data compromise.
3. National Security Concerns: The security of U.S. citizens’ personal and medical data is not merely a private concern but a matter of national security. With identity theft and fraud posing substantial risks to individuals and financial systems, any weakness in data security can ripple out into wider social and economic instability. U.S.-based processing helps mitigate these risks by keeping sensitive data within the country’s regulatory and legal reach.
4. Probable Upcoming Legislation: We expect that their will be upcoming scrutiny of offshoring medical coding by the Trump administration, which could produce a seismic shift back towards fully domestic medical coding.
5. Supporting Domestic Workforce and Privacy Protections: Moving HIM functions offshore not only endangers patient data but also erodes the U.S. job market for health information professionals. By keeping these jobs domestic, the U.S. strengthens its workforce in this critical sector, benefiting both privacy standards and the economy.

The Path Forward: Patient Privacy Before Cost Savings

While cost-saving incentives may drive healthcare institutions to consider outsourcing HIM functions, the potential consequences for patient privacy and security are simply too high. Patients trust that their healthcare providers will protect their most sensitive information. This trust can only be preserved by ensuring that data handling stays within the framework of U.S. laws, oversight, and accountability.

To truly protect patient privacy, healthcare institutions must prioritize domestic processing of HIM tasks. When patients can trust that their medical records remain protected by robust U.S. privacy laws, they can focus on their health with confidence and peace of mind.

To get ahead of any changes in government policies regarding the offshoring of HIM and medical coding, you may want to talk to the Team at Coding & Billing Solutions. Are superior results and 100% fully domestic approach are something your organization needs to consider.