Pharmacy Law Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

The definition of covered entities in the context of healthcare is correctly identified as any person, business, or institution involved in healthcare or patient record keeping. This includes healthcare providers who electronically transmit any health information in connection with a HIPAA transaction, health plans, and healthcare clearinghouses. Covered entities are integral to the welfare of a patient's sensitive information and ensure compliance with regulations to protect privacy.

The broad definition encompasses various stakeholders in the healthcare system, affirming that regardless of the specific services they provide, if they handle patient information or engage in healthcare transactions, they fall under the category of covered entities. In addition, they are required to adhere to HIPAA regulations, which govern the use and disclosure of protected health information (PHI) to safeguard patient confidentiality.

The other options are too narrow or specifically limited. They do not accurately reflect the comprehensive nature of covered entities as outlined in HIPAA regulations, which apply to all relevant sectors of healthcare, not just those providing psychological services or pharmaceuticals, nor does it apply solely to financial transaction records.