42 CFR Part 2 Compliance in SUD Billing: What You Need to Know

On February 16, 2024, the U.S. Department of Health and Human Services (HHS), along with SAMHSA and the Office for Civil Rights (OCR), announced a Final Rule that updates 42 CFR Part 2. This new rule brings Part 2 more in line with the HIPAA privacy laws, as required by the CARES Act. The goal is to make it easier to share health information for better care coordination, while still protecting patient privacy. The rule officially takes effect on April 16, 2024, but the clinic must fully comply with all the new requirements by February 16, 2026. This blog will talk about every crucial aspect of 42 CFR Part 2 to ensure compliance in SUD billing.

What is 42 CFR Part 2?

42 CFR Part 2 is a federal law that protects the privacy of individuals receiving treatment for Substance Use Disorders (SUD). It ensures that their treatment records remain confidential, so they can seek help without fear of being judged, discriminated against, or facing legal problems. This law was created to encourage more individuals to access the support they need by ensuring their personal health information remains private. It applies to programs that are federally assisted and offer services like diagnosing, treating, or referring patients for SUD care. These are known as "Part 2 programs."

Who Must Follow 42 CFR Part 2?

You must follow the rules of 42 CFR Part 2 if both of the following conditions apply to your clinic:

1. You are federally assisted. This means you receive federal funding, are registered to prescribe controlled substances, or have a license or certification issued by a federal agency.
2. You provide services for Substance Use Disorder (SUD). This includes diagnosing, treating, or referring people for SUD treatment, and you publicly present yourself as offering these services.

If only one of these conditions is true, your clinic is not considered a Part 2 program and the law does not apply to you.

Special Note for Non-Part 2 Providers:

If you don’t qualify as a Part 2 program but receive Part 2 records, you must protect those records under Part 2 rules. You cannot redisclose them without express consent.

Key Compliance Updates for SUD Billing

The 2024 Final Rule introduces several important changes to 42 CFR Part 2 that directly affect how billing for SUD services should be handled. Below are the most relevant updates for ensuring compliance in SUD billing processes:

• Single TPO Consent

Patients can now give one written consent that allows their SUD treatment records to be used or shared for treatment, payment, and healthcare operations (TPO). However, verbal consent is not allowed - all consents must be in writing. This change helps streamline billing by removing the need to collect multiple consents for different uses.

• Redisclosure of Records

If a healthcare provider or SUD billing company (covered under HIPAA) receives SUD records through valid TPO consent, they are allowed to redisclose those records as permitted under HIPAA. This means that billing-related information can be shared more easily across systems, but records cannot be shared for legal purposes unless a new consent or court order is obtained.

• Updated Notice of Privacy Practices (NPP)

SUD providers must now ensure their Notice of Privacy Practices (NPP) aligns with HIPAA’s format. This notice should explain how patient data may be used or disclosed, including billing and insurance information. This makes it clearer for patients to understand how their billing records are handled.

• No Segmentation Required

SUD Billing staff and administrators no longer need to separate SUD records from other medical records in electronic health systems. This helps simplify Electronic Health Record (EHR) workflows and billing processes by reducing technical barriers to processing claims and payments.

• SUD Counseling Notes and Consent

If billing includes details from SUD counseling notes, a separate consent is required. These notes must be stored separately and should only be accessible by the clinician who created them. If they are not properly separated, they do not receive this extra protection and may affect compliance in billing systems.

• Sharing De-identified Records for Public Health

De-identified SUD records can now be disclosed to public health authorities without patient consent, provided they meet HIPAA’s de-identification standards. This may support some types of public health reporting that indirectly affect funding or billing analytics.

• Added Patient Rights

Patients now have two new rights that SUD billing teams must be aware of:

• The right to request a list of all disclosures of their records (including billing-related ones).
• The right to request restrictions on how their records are used or shared, which may apply to billing communications.

• Breach Notification Rule

If any SUD-related billing records are improperly disclosed or breached, SUD clinics must follow HIPAA's Breach Notification Rule. This includes timely notification to the affected individuals and raising the compliance stakes for protecting billing data.

• Civil Penalties for Non-Compliance

Violating any of the updated Part 2 rules, including those related to billing and payment information, can result in civil penalties similar to HIPAA violations. Therefore, it is essential for billing departments to follow the updated rules carefully.

Steps to Ensure Compliance in SUD Billing

To stay compliant with the updated 42 CFR Part 2 rules, SUD providers must take proactive steps. The following are the key steps every SUD clinic or program should follow to meet the 2024 requirements-

• Identify if you’re a Part 2 Program

The first step is to determine whether your clinic is considered a Part 2 program. You can use the guidance provided by SAMHSA or the decision tree developed by the Center of Excellence for Protected Health Information (CoE-PHI). If your program receives federal assistance and provides SUD treatment, diagnosis, or referrals, it likely falls under Part 2.

• Review and Update Consent Forms

The next step is to review all existing patient consent forms and make necessary updates. The forms should allow for broad TPO consent. They should also include a separate consent section for SUD counseling notes, set clear limits on redisclosure, and ensure that the process is opt-in, not opt-out. This ensures that patients fully understand and agree to how their information will be used.

• Train Staff and Billing Teams

Everyone involved in billing, patient communication, or records management must be trained on the new rules. In fact, the billing in-house staff should be able to explain consent requirements, respond to patient questions, and handle records properly. Regular training can help prevent accidental violations and build confidence in handling sensitive information.

• Collaborate with Your EHR Vendor

Many electronic health record (EHR) systems are not yet fully set up for the updated Part 2 requirements. It is better to work with your EHR vendor to develop or improve workflows that can handle patient consent, redisclosures, and data access properly. This step is important to avoid compliance gaps in how billing and treatment data are stored and shared.

• Update Your Policies and Privacy Notices

Make sure your policies and privacy-related documents are up to date. Your Notice of Privacy Practices (NPP) should now match HIPAA’s structure while still meeting Part 2 requirements. Your internal compliance manuals should also reflect the 2024 rule changes and be available to all relevant staff.

• Track Disclosures and Respect Patient Rights

Establish systems to keep track of when and how patient records are shared. Be prepared to handle patient requests for a list of disclosures or requests to limit how their information is used. This assists in building trust and keeping your practice compliant with new patient rights introduced under the updated rules.

• Consider Outsourcing to an SUD Billing Company

To reduce the risk of non-compliance and improve accuracy, consider outsourcing SUD billing and coding processes to a 24/7 Medical Billing Services. Our team is trained in the latest 42 CFR Part 2 and HIPAA regulations to ensure that sensitive patient data is handled properly during every stage of the billing cycle. In fact, our tailored support helps streamline billing operations, minimize compliance risks, and improve overall revenue performance.

FAQs

Q1. Are SUD mobile apps covered under Part 2?

Some SUD treatment apps may qualify as Part 2 programs depending on their services and funding.

Q2. Does Part 2 apply to peer support specialists?

Yes, if they provide SUD services in a federally assisted program.

Q3. Are Medicare or Medicaid billing systems Part 2 compliant?

They must comply when handling records from Part 2 programs, especially with consent-based disclosures.

Q4. Can patients revoke their consent under Part 2?

Patients can revoke written consent at any time in writing.