How to Implement HIPAA Data Classification to Ensure Compliance

Healthcare organizations generate and exchange large volumes of sensitive information every day. As IT and security teams work to secure this data across cloud services, medical systems and remote workflows, the ability to classify it correctly becomes central to meeting requirements put in place under the Health Insurance Portability and Accountability Act (HIPAA). A clear and repeatable data classification process helps organizations identify what information qualifies as Protected Health Information (PHI), determine its sensitivity and apply appropriate safeguards.

This article explains how HIPAA data classification works, the levels organizations commonly use, and how Forcepoint’s data security products help classify and protect healthcare data at scale.

The Role of Data Classification in HIPAA Compliance

HIPAA’s Privacy Rule and Security Rule establish strict requirements for how covered entities and business associates handle PHI. While HIPAA does not prescribe a specific classification schema, the standards assume organizations can distinguish PHI from other forms of data and apply controls based on its sensitivity.

Effective data classification supports HIPAA compliance by helping teams:

• Identify which data sets, files or systems contain PHI
• Apply the minimum necessary standard when granting access
• Determine whether information should be encrypted or masked
• Respond appropriately to potential exposure
• Demonstrate due diligence during audits and investigations

A structured classification process also reduces ambiguity across departments. When compliance, IT and clinical teams share a common understanding of PHI categories, organizations can maintain consistent handling practices and reduce legal risk. This consistency is especially important as healthcare expands its digital footprint into cloud platforms, connected medical devices and telehealth environments. 

Source: IRI

The Main Levels of HIPAA Data Classification

Although classification models vary across healthcare organizations, most follow a tiered structure aligned to sensitivity and regulatory expectations. The following levels are commonly used in HIPAA programs.

Public data

Public data includes information intended for open distribution. Its disclosure does not create regulatory or operational risk. Examples include:

• Public health statistics released by government agencies
• Research findings that have been de-identified following HIPAA’s Safe Harbor method
• Marketing information, job postings and facility directories (when opt-in requirements are met)

Even though public data does not require HIPAA controls, organizations should confirm de-identification meets regulatory standards before releasing datasets.

Internal or confidential data

Internal or confidential information is operationally sensitive but does not meet PHI criteria. Unauthorized disclosure may cause business disruption or reputational impact. Examples include:

• Employee directories
• Internal financial reports
• Nonclinical scheduling details or administrative communications

Security controls for this category typically include access control, user authentication, secure configuration management and routine monitoring.

Protected Health Information (PHI)

PHI is the central category for HIPAA programs. It includes individually identifiable health information created, maintained or transmitted by a covered entity or business associate. PHI may appear in electronic health records, billing systems, wearable devices or even oral communications.

Examples include:

• Medical histories, diagnostic codes, lab results
• Claims and billing information
• Appointment records linked to a patient identifier
• Images, recordings or sensor data associated with a patient

Because PHI carries the highest regulatory sensitivity, organizations typically enforce:

• Encryption for data in transit and at rest
• Strict access control with role-based authorization
• Continuous activity monitoring
• Incident response procedures and breach notification workflows
• Data minimization and retention policies

Classification decisions should consider HIPAA standards, the context in which data is used, how easily it can be linked to an individual and risk exposure if the information is compromised.

How to Implement HIPAA Data Classification

Implementing HIPAA data classification requires both governance and technology. A well-designed program combines policy definitions, automated discovery and cross-functional collaboration.

Use predefined HIPAA policy templates

Many security platforms provide templates aligned to HIPAA identifiers. These templates accelerate classification by mapping known PHI elements such as patient names, Social Security numbers, medical record numbers and treatment details. Templates reduce manual effort and ensure consistency across systems.

Apply machine learning for AI-powered classification

Machine learning enhances accuracy by identifying sensitive data patterns even when PHI appears in unstructured formats such as clinician notes, chat logs, scanned documents or diagnostic images. AI-powered classification reduces the likelihood of false negatives and improves visibility across cloud repositories that store large volumes of unstructured data.

Automate labeling across data stores

Automated labeling adds persistent tags to data, indicating its sensitivity and compliance requirements. Labels help downstream systems enforce encryption, retention or access controls without manual intervention.

Build classification collaboratively

Effective programs involve compliance, legal, IT and clinical teams. These groups define sensitivity levels, establish acceptable use policies and document escalation paths. Collaboration ensures classifications reflect real operational needs rather than purely technical assumptions.

Monitor continuously and audit regularly

Classification is not a one-time exercise. Healthcare data changes frequently and may move across repositories. Continuous monitoring helps identify new PHI sources, detect misconfigurations and validate that controls remain effective.

To deepen your implementation strategy, see Forcepoint’s recommendations on DSPM best practices and our guidance on cloud security for HIPAA.

Protect HIPAA Data with Forcepoint

Forcepoint provides integrated data security capabilities that help healthcare organizations classify, monitor and protect PHI throughout its lifecycle.

Forcepoint DSPM

Forcepoint Data Security Posture Management (DSPM) gives teams visibility into where PHI resides across cloud services, SaaS applications and internal environments. It automatically identifies sensitive data, assigns risk scores and flags misconfigurations that could expose PHI. DSPM provides the foundation for risk-based classification and continuous compliance.

Read our guide to the best DSPM solutions in 2025.

Forcepoint DLP

Forcepoint Data Loss Prevention (DLP) applies classification outcomes to enforce real-time protections. With predefined HIPAA templates, AI-powered detection and automated policy enforcement, Forcepoint DLP for healthcare prevents unauthorized transmission of PHI across email, cloud services, endpoints and network channels.

How DSPM and DLP work together

Integrating Forcepoint DSPM with Forcepoint DLP gives healthcare organizations a unified framework for protecting HIPAA-regulated information:

• DSPM discovers PHI and other sensitive healthcare data across cloud and on-premises systems
• Classification decisions sync to DLP for consistent enforcement
• DLP blocks or remediates risky actions, ensuring PHI stays within authorized workflows
• Security teams gain end-to-end visibility into data movement, user activity and policy compliance

These capabilities support covered entities seeking stronger protection across health information exchanges, telehealth services, and cloud-based EHR platforms. To learn more, see our customer story showcasing how a global healthcare organization strengthened its security posture with Forcepoint solutions.

You can also explore Forcepoint insights on protecting PII in healthcare.

Set a Foundation for Healthcare Data Protection

HIPAA data classification forms the foundation of effective healthcare data protection. By understanding sensitivity levels, applying consistent definitions, and adopting automated tools, organizations can strengthen compliance, reduce risk and support patient trust. Forcepoint’s DSPM and DLP products give healthcare teams the visibility and control they need to classify and safeguard PHI across complex digital environments.

Ready to strengthen your HIPAA compliance strategy? Talk to a Forcepoint expert or request a demo to see how our data security solutions can help.