Can a CSP be considered to be a “conduit” like the postal service, and, therefore, not a business associate that must comply with the HIPAA Rules?
Generally, no. CSPs that provide cloud services to a covered entity or business associate that involve creating, receiving, or maintaining (e.g., to process and/or store) electronic protected health information (ePHI) meet the definition of a business associate, even if the CSP cannot view the ePHI because it is encrypted and the CSP does not have the decryption key.
As explained in previous guidance,[i] the conduit exception is limited to transmission-only services for PHI (whether in electronic or paper form), including any temporary storage of PHI incident to such transmission. Any access to PHI by a conduit is only transient in nature. In contrast, a CSP that maintains ePHI for the purpose of storing it will qualify as a business associate, and not a conduit, even if the CSP does not actually view the information, because the entity has more persistent access to the ePHI.
Further, where a CSP provides transmission services for a covered entity or business associate customer, in addition to maintaining ePHI for purposes of processing and/or storing the information, the CSP is still a business associate with respect to such transmission of ePHI. The conduit exception applies where the only services provided to a covered entity or business associate customer are for transmission of ePHI that do not involve any storage of the information other than on a temporary basis incident to the transmission service.
[i] See 78 Fed. Reg. 5,566, 5,572 (January 25, 2013). Also see http://www.hhs.gov/hipaa/for-professionals/faq/245/are-entities-business-associates/