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Health records giant Epic cracks down on startup for unauthorized sharing of
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HEALTH RECORDS GIANT EPIC CRACKS DOWN ON STARTUP FOR UNAUTHORIZED SHARING OF
PATIENT DATA

Published Fri, Apr 12 20245:49 PM EDTUpdated Mon, Apr 22 20245:30 PM EDT
Ashley Capoot@in/ashley-capoot-02496b173/
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Key Points
 * Epic Systems told customers in a notice on Thursday that the company cut off
   data access to a startup called Particle Health.
 * Epic said Particle was sharing patient data with companies that were using
   the information for reasons having nothing to do with treatment.
 * “This poses potential security and privacy risks, including the potential for
   HIPAA Privacy Rule violations,” Epic said in the notice, which was obtained
   by CNBC. 

The eponymous sign outside Epic headquarters in Verona, Wisconsin.
Source: Yiem via Wikipedia CC

Epic Systems, the largest provider of software for managing medical records,
says a venture-backed startup called Particle Health is using patient data in
unauthorized and unethical ways that have nothing to do with treatment.

Epic told customers in a notice on Thursday that it cut off its connection to
Particle, hindering the company’s ability to tap a system with more than 300
million patient records. Particle is one of several companies that acts as a
sort of middleman between Epic and the organizations — typically hospitals and
clinics — that need the data.



Patient data is inherently sensitive and valuable, and it’s protected by the
Health Insurance Portability and Accountability Act, or HIPAA, a federal law
that requires a patient’s consent or knowledge for third-party access. One way
Epic’s electronic health records (EHR) are accessed is through an
interoperability network called Carequality, which facilitates the exchange of
more than 400 million documents a month, according to its website. Particle is a
member of the Carequality network.

To join the network, organizations are vetted and have to agree to abide by
clear “Permitted Purposes” for the exchange of patient data. Epic responds to
requests for data that fall under the “Treatment” permitted purpose, which means
the recipient is providing care to the person whose records they are
requesting. 

Epic said in its notice on Thursday that it filed a formal dispute with
Carequality on March 21, over concerns that Particle and its participant
organizations “might be inaccurately representing the purpose associated with
their record retrievals.” The company suspended its connection with Particle
that day.

“This poses potential security and privacy risks, including the potential for
HIPAA Privacy Rule violations,” Epic said in the notice, which was obtained by
CNBC. 

In a blog post late Friday, Carequality said it takes disputes “very seriously
and is committed to maintaining the integrity of the dispute resolution process
as well as trusted exchange within the framework.” The organization said it
can’t comment about the existence of any disputes or member activities.



Representatives from Epic and Particle didn’t respond to requests for comment.
However, Particle published a blog post Friday evening and said it began
“addressing this issue immediately” after Epic “stopped responding to data
requests from a subset of customers” on March 21. Particle said in the post that
a big challenge in such matters is that there is “no standard reference to
assess the definition of Treatment.”

“These definitions have become more difficult to delineate as care becomes more
complicated with providers, payers, and payviders all merging in various large
healthcare conglomerates,” Particle wrote.

Particle also said that it’s been in conversations with Epic and has “made
significant progress towards resolving this connectivity, with some customers
already turned back on.” For other customers that aren’t facing complaints, “we
are actively collaborating with Epic” to get them back online, Particle said.

Epic, a 45-year-old privately held company based in Wisconsin, is the largest
EHR vendor by hospital market share in the U.S., with 36% of the market,
according to a May report from KLAS Research. Oracle is second at 25%, following
the software company’s $28 billion purchase of Cerner in 2022.

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As of July 2022, Particle had raised a total of $39.3 million from investors
including Menlo Ventures, Story Ventures and Pruven Capital, according to a
release. The New York-based startup said at the time that its technology
“uniquely combines data from 270 million plus patients’ medical records by
aggregating and unifying healthcare records from thousands of sources.”

Epic said Particle introduced thousands of new participant connections to
Carequality in October, and asserted that they fell under the treatment use
case. In the following months, all of Particle’s participant organizations
claimed a permitted purpose of treatment for their requests, Epic said. 


‘NON-TREATMENT USE CASE’

However, Epic began to notice some red flags. The company said it observed
anomalies in the patient record exchange patterns, like requests for large
numbers of records within a certain geographical region. Additionally, Epic said
that the companies connected to Particle weren’t sending new data back from
patients, which “suggests a non-treatment use case.” 

Epic and its Care Everywhere Governing Council, consisting of 15 industry
representatives, evaluated Particle’s new participant connections and determined
that organizations like Integritort, MDPortals and Reveleer, which acquired
MDPortals last year, “likely didn’t conform to a Treatment Permitted Purpose,”
the notice said.

Epic said it learned that another Carequality member was planning to file a
dispute, alleging that Integritort was using the patient data to try and
identify potential class action lawsuit participants. On March 28, Epic said it
discovered that a participant called Novellia claimed it was requesting records
under treatment, despite publicly advertising its product as a “personal health
tool.”

Integritort, Reveleer and Novellia didn’t respond to requests for comment.

Epic said it filed a formal dispute with Carequality at the Governing Council’s
recommendation. On April 4, Epic asked Particle to provide additional
information to illustrate how its participants qualify for the treatment use
case, according to the notice. 

Michael Marchant, director of interoperability and innovation at University of
California Davis Health, serves as the chair of Epic’s Governing Council. He
said it’s hard to know exactly why Particle might have provided these
organizations with records, or whether it intentionally engaged in wrongdoing.
But, he said, companies have to act responsibly even if pressured to deliver
financial results.

“If they were selling to things that they knew were not treatment-related
organizations in an effort to match VC funding or profit margins or revenue
targets or what have you, then that would be really bad,” Marchant told CNBC in
an interview.

In a statement on LinkedIn Wednesday, Particle founder Troy Bannister said Epic
acted unilaterally, and that Particle has not seen “rationale, justification or
official claims” surrounding these issues.

Bannister wrote that, to the company’s knowledge, “all of the affected partners
directly support treatment.” He said these organizations pull data for care
providers and share data back with the Carequality network. 

“While we continue maintaining our connection with Carequality, the ability for
one implementor to decide, without evidence or even so much as a warning, to
disconnect providers at massive scale, jeopardizes clinical operations for
hundreds of thousands of patients as well as the trust that is so critical to a
trust-based exchange,” Bannister wrote.

Bannister didn’t address Epic’s April 4 request for additional information.

The formal dispute process is still ongoing. Marchant, who also serves as the
co-chair of an advisory council at Carequality, said it’s the first time in the
network’s history that a complaint has gotten this far.

Correction: A prior version of this story had an incorrect figure for the number
of documents Carequality facilitates each month.

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