Summary SummaryThis template business associate agreement is for an employer health plan subject to the Health Insurance Portability and Accountability Act (HIPAA),42 U.S.C. §§ 1320d to 1320d-9, and a third-party service provider that will handle protected health information on its behalf (a HIPAA business associate), drafted in accordance with HIPAA requirements. This template includes practical guidance, drafting notes, and alternate and optional clauses. This template covers the specific business associate agreement requirements under HIPAA's Security and Privacy Rules (see 45 C.F.R. §§ 164.314(a) and 164.504(e)), as amended by Health Information Technology for Economic and Clinical Health Act (HITECH). Based in part on the January 2013 sample agreement available at the Department of Health and Human Services website, this template is enhanced to more clearly reflect HITECH compliance. For a full listing of key content covering HIPAA considerations, see HIPAA Resource Kit. For a full listing of related data security & privacy content for first-year associates, see First-Year Associate Resource Kit: Data Security and Privacy. For a full listing of data security content that applies to federal government agencies, see Data Security & Privacy for Government Agencies Resource Kit. For more information on business associate agreements and HIPAA generally, see HIPAA Privacy, Security, Breach Notification, and Other Administrative Simplification Rules. For a business associate policy designed for use by HIPAA covered entities, see HIPAA Business Associate Policy. For other HIPAA-related materials, see HIPAA Resource Kit.
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Drafting Note to First Paragraph The business associate agreement in the employer-sponsored group health plan context is typically entered into between the employer's group health plan(s) (as covered entity) and a third-party service provider (the business associate) that is creating, maintaining, or disclosing protected health information. The effective date of the business associate agreement must be effective prior to the disclosure or transmission of PHI to the business associate.
Optional Section 2.(b): (b) Maintain a HIPAA compliance program that includes specific policies and procedures, workforce training, and documentation requirements and permit Covered Entity, upon reasonable advanced notice, to review or audit such compliance program and all documentation relating to the services contemplated by this Agreement;
Drafting Note to Optional Section 2.(b) Although a business associate is required to have in place procedures that comply with the HIPAA Privacy Rule and Security Rule, to the extent applicable, there is no requirement that a business associate agreement must require the business associate to subject their HIPAA practices to a covered entity's oversight. Nevertheless, it is not uncommon for a covered entity to impose such a condition as part of its own HIPAA compliance program.
Drafting Note to Section 2.(c) The parties may wish to add additional specificity regarding the breach- and security incident-related notification obligations of the business associate, such as establishing a specific time frame and format for the business associate to report such incidents, any requirement to report potential breaches or security incidents, and/or whether the business associate will have a role in handling breach notifications to individuals, the HHS Office for Civil Rights (OCR), and potentially the media on behalf of the covered entity. See also the breach notification provision in Section 6.. Note that, as a practical matter, business associates may not agree to report individually on all security incidents of which it becomes aware because the HIPAA regulations broadly define that term to include any unauthorized attempted access of the relevant information systems, whether or not successful. A more pragmatic solution is for the business associate to promptly report any successful security incidents involving covered entity PHI and to provide periodic reports of other security incidents on an aggregate basis.
(d) In accordance with 45 C.F.R. §§ 164.502(e)(1)(ii) and 164.308(b)(2), if applicable, ensure that any Subcontractors that create, receive, maintain, or transmit Protected Health Information on behalf of the Business Associate agree to the same restrictions, conditions, and requirements that apply to the Business Associate with respect to such information;
Drafting Note to Section 2.(d) A subcontractor of a business associate that handles the covered entity's PHI is also considered a business associate under HIPAA. 45 C.F.R. § 160.103 (definition of "business associate"). The HIPAA regulations pass along responsibility of obtaining business associate agreements with subcontractors to the business associate that retains the subcontractor. That is, a business associate must (and must represent in its business associate agreement that it will) procure a business associate agreement with any subcontractor that it retains to assure that subcontractor's compliance with HIPAA to protect the covered entity's PHI. See 45 C.F.R. §§ 164.502(e)(1), 164.504(e)(2)(ii)(D). This provision addresses compliance with these rules. See also First Alternate Section 2.(d), which requires the business associate to first obtain the covered entity's consent to delegate such services to a subcontractor, and Second Alternate Section 2.(d), which simply prohibits the business associate is from delegating such duties to a third party.
First Alternate Section 2.(d): (d) Obtain Covered Entity's prior written consent[, which shall not be unreasonably delayed or denied,] prior to retaining any Subcontractor to create, receive, maintain, or transmit Protected Health Information of the Covered Entity on behalf of Business Associate, and, if such consent is granted, ensure that any such Subcontractors agree to the same restrictions, conditions, and requirements that apply to Business Associate with respect to such Protected Health Information, in accordance with 45 C.F.R. §§ 164.502(e)(1)(ii) and 164.308(b)(2), if applicable;
Drafting Note to First Alternate Section 2.(d) Use this alternate language if the business associate must obtain the covered entity's consent before delegating PHI-handling duties to a third-party subcontractor. Include the bracketed language if appropriate. Use the default language for Section 2.(d) if the business associate may freely delegate such duties to a third party so long as it complies with HIPAA requirements. Use Second Alternate Section 2.(d) if the subcontractor is prohibited from delegating such duties.
Second Alternate Section 2.(d): (d) Not retain any third party as a Subcontractor that will create, receive, maintain, or transmit Protected Health Information of the Covered Entity on behalf of Business Associate;
Drafting Note to Second Alternate Section 2.(d) Use this alternate language if the business associate is prohibited from delegating PHI-handling duties to a third-party subcontractor. Use the default language for Section 2.(d) if the business associate may freely delegate such duties to a third party so long as it complies with HIPAA requirements. Use First Alternate Section 2.(d) if the business associate must first obtain the covered entity's consent before delegating such duties.
Drafting Note to Section 2.(e) The parties may wish to add additional specificity regarding how the business associate will respond to a request for access that the business associate receives directly from an individual (such as whether, and in what time and manner, a business associate is to provide the requested access or whether the business associate will forward the individual's request to the covered entity to fulfill) and the time frame for the business associate to provide information regarding such requests to the covered entity so that it can fulfill its documentation obligations.
Drafting Note to Section 2.(f) The parties may wish to add additional specificity regarding how the business associate will respond to a request for amendment that the business associate receives directly from the individual (such as whether and in what time and manner a business associate is to act on the request for amendment or whether the business associate will forward the individual's request to the covered entity) and the time frame for the business associate to incorporate any amendments to the information in the designated record set and to provide information regarding such requests to the covered entity so that it can fulfill its documentation obligations.
Drafting Note to Section 2.(g) The parties may wish to add additional specificity regarding how the business associate will respond to a request for an accounting of disclosures that the business associate receives directly from the individual (such as whether and in what time and manner the business associate is to provide the accounting of disclosures to the individual or whether the business associate will forward the request to the covered entity) and the time frame for the business associate to provide information regarding such requests to the covered entity so that it can fulfill its documentation obligations.
(a) Business Associate may Use or Disclose Protected Health Information for the following permissible purposes: [list of permissible purposes]
Drafting Note to Section 4.(a) List the specific purposes for which protected health information will be used by the business associate in its performance of services for the covered entity under the Agreement. See Alternate Section 4.(a) for language to set forth this information on a separate schedule. In addition to other permissible purposes, the parties should specify whether the business associate is authorized to use protected health information to de-identify the information in accordance with 45 C.F.R. 164.514(a)-(c). The parties also may wish to specify the manner in which the business associate will de-identify the information and the permitted uses and disclosures by the business associate of the de-identified information.
Alternate Section 4.(a): (a) Business Associate may Use or Disclose Protected Health Information as necessary to perform the services set forth in the Service Agreement attached hereto as Exhibit 1.
Drafting Note to Alternate Section 4.(a) This alternate language identifies the permitted activities for which PHI may be used and disclosed (to the minimum extent necessary) by the business associate by reference to a separate services agreement attached as an exhibit to the business associate agreement, instead of enumerating the types of uses and disclosures contemplated by the services agreement as in the default language.
(c) Business Associate agrees to make Uses and Disclosures and requests for Protected Health Information consistent with Covered Entity's Minimum Necessary policies and procedures, a copy of which has been furnished to Business Associate.
Drafting Note to Section 4.(c) The default language for this section merely incorporates by reference a separate document setting forth the covered entity's minimum necessary standard. See First Alternate Section 4.(c) to put customized language consistent with the covered entity's minimum necessary requirements into the business associate agreement in lieu of providing a separate policy and procedures document. Second Alternate Section 4.(c) contains sample language for this purpose.
First Alternate Section 4.(c): (c) Business Associate agrees to make Uses and Disclosures and requests for Protected Health Information subject to the following Minimum Necessary requirements: [include specific provisions that are consistent with covered entity's minimum-necessary-use policies and procedures].
Drafting Note to First Alternate Section This alternate clause is intended to provide within the business associate agreement a description of the minimum necessary standard that is appropriately tailored to reflect the covered entity's policies in lieu of providing a separate policy and procedures document. For an example of sample language, see Second Alternate Section 4.(c)
Second Alternate Section 4.(c): (c) Business Associate agrees to make Uses and Disclosures and requests for Protected Health Information subject to the following Minimum Necessary requirements: In accordance with HIPAA's Minimum Necessary standard, Business Associate shall make reasonable efforts to ensure that its access to Protected Health Information in connection with its services for the Covered Entity shall be limited to the minimum necessary information to accomplish the intended purpose of any particular use, disclosure, or request. Further, Business Associate shall support any determinations it makes with respect to the Minimum Necessary standard with a rational justification that, as applicable, (i) reflects the technical capabilities of the Business Associate and (ii) factors in relevant privacy and security risks. Business Associate shall record and maintain documentation of all such determinations consistent with reasonable recordkeeping practices and the HIPAA Rules.
Drafting Note to Second Alternate Section4.(c) This clause contains sample language expressing the HIPAA minimum necessary standard that covered entities and business associates must adhere to when using PHI. Make sure this language is consistent with the covered entity's HIPAA policies. Alternatively, you can incorporate a separate document or policy be reference, as in the default language for this Section 4.(c). Use First Alternate Section 4.(c) to customize the language as necessary to reflect the covered entity's policies.
(d) Business Associate may not Use or Disclose Protected Health Information in a manner that would violate Subpart E of 45 C.F.R. Part 164 if done by Covered Entity.
Drafting Note to Section 4.(d) If the agreement permits the business associate to use or disclose PHI for its own management and administration and to carry out its legal responsibilities, as set forth in Optional Section 4.(e) (PHI use), Optional Section 4.(e) (PHI disclosure), and/or for data aggregation services, as set forth in Optional Section 4.(e), then use Alternate Section 4.(d) and include the appropriate optional section(s). In such cases, a covered entity that wishes to impose specific limitations on these additional permitted uses and disclosures should modify those optional provisions accordingly. See also the optional provisions in Section 5. relating to certain covered entity disclosure obligations that may be appropriate for the business associate's use of the PHI.
Alternate Section 4.(d): (d) Business Associate may not Use or Disclose Protected Health Information in a manner that would violate Subpart E of 45 C.F.R. Part 164 if done by Covered Entity, except for the specific Uses and Disclosures set forth in the following provisions of this Section 4.
First Optional Section 4.(e): (e) Business Associate may Use Protected Health Information for the proper management and administration of Business Associate or to carry out the legal responsibilities of Business Associate.
Drafting Note to First Optional Section 4.(e) Only include this clause if the business associate will need to use PHI for its own administrative or management purposes or to fulfill its legal responsibilities. See 45 C.F.R. § 164.504(e)(4)(i). See Second Optional Section 4.(e) for language that allows the business associate to also disclose PHI for such purposes. See 45 C.F.R. § 164.504(e)(4)(ii).
Second Optional Section 4.(e): (e) Business Associate may Disclose Protected Health Information for the proper management and administration of Business Associate or to carry out the legal responsibilities of the Business Associate, provided the Disclosures are Required by Law, or Business Associate obtains reasonable assurances from the person to whom the information is Disclosed that the information will remain confidential and Used or further Disclosed only as Required by Law or for the purposes for which it was Disclosed to the person, and the person will notify Business Associate of any instances of which the person becomes aware in which the confidentiality of the information has been Breached.
Drafting Note to Second Optional Section 4.(e) Only include this clause if the business associate will need to disclose PHI for its own administrative or management purposes or carry out legal responsibilities. The limiting conditions are required under 45 C.F.R. § 164.504(e)(4)(ii). See also First Optional Section 4.(e) for language allowing the business associate to use PHI for such purposes.
Third Optional Section 4.(e): (e) Business Associate may Use Protected Health Information to provide Data Aggregation services relating to the Health Care Operations of Covered Entity[, but only with the prior written consent of Covered Entity].
Drafting Note to Third optional Section 4.(e) Only include this clause if the business associate will need to use or disclose PHI for purposes of providing data aggregation services. PHI-related data aggregation services are defined as the combining of PHI handled by a business associate with other PHI received by the business associate in its capacity as a business associate of another covered entity to permit data analyses that relate to the health care operations of the respective covered entities. 45 C.F.R. § 164.501. Although not a HIPAA requirement, consider whether the requirement to obtain the covered entity's consent in the bracketed clause is appropriate for the arrangement.
First Optional Section 5.(a): (a) Covered entity shall notify Business Associate of any limitation(s) in the Notice of Privacy Practices of Covered Entity under 45 C.F.R. § 164.520, to the extent that such limitation may affect Business Associate's Use or Disclosure of Protected Health Information.
Second Optional Section 5.(a): (a) Covered entity shall notify Business Associate of any changes in, or revocation of, the permission by an individual to Use or Disclose his or her Protected Health Information, to the extent that such changes may affect Business Associate's Use or Disclosure of Protected Health Information.
Third Optional Section 5.(a): (a) Covered entity shall notify Business Associate of any restriction on the Use or Disclosure of Protected Health Information that Covered Entity has agreed to or is required to abide by under 45 C.F.R. § 164.522, to the extent that such restriction may affect Business Associate's Use or Disclosure of Protected Health Information.
Drafting Note to Section 5.The optional clauses in this Section 5., which impose notification obligations on the covered entity, may be appropriate for agreements where the business associate's permissible uses and disclosures are subject to change by the covered entity or where the covered entity may receive pertinent requests from covered individuals that should be conveyed to the business associate (e.g., regarding restrictions on use of their PHI where they have the right to opt out).
Drafting Note to Section 6.(b) There is a hard 60-day deadline under HIPAA regulations for business associates to alert covered entities of a PHI breach. 45 C.F.R. § 164.410(b). A covered entity will inevitably want to ensure more prompt notice from a business associate regarding a breach of which it becomes aware to allow the covered entity time to assess the situation and to coordinate with the business associate on remedial steps and any notification that may be required as promptly as is practicable.
Optional Section 7.: 7. Permissible Requests by Covered Entity Covered Entity shall not request Business Associate to Use or Disclose Protected Health Information in any manner that would not be permissible under Subpart E of 45 C.F.R. Part 164 if done by Covered Entity.
Drafting Note to Optional Section 7. Although this language is not required, it may help protect a business associate from liability where it violates HIPAA's Privacy Rule based on a use or disclosure specifically requested by the covered entity.
(b) Termination for Cause. Business Associate authorizes termination of this Agreement by Covered Entity if Covered Entity reasonably determines in good faith that Business Associate has violated a material term of the Agreement.
Drafting Note to Section 7.(b) This language gives the covered entity the discretion to determine whether a violation has occurred that triggers its right to terminate the agreement for cause. This is a requirement for business associate agreements. See 45 C.F.R. § 164.502(e). Business associates will often insist on a cure period (see First Alternate Section 7.(b) for sample language). Additionally, business associates may seek a reciprocal provision giving them a termination for cause right (see Second Alternate Section 7.(b).
First Alternate Section 7.(b): (b) Termination for Cause. Business Associate authorizes termination of this Agreement by Covered Entity if Covered Entity reasonably determines in good faith that Business Associate has violated a material term of the Agreement and Business Associate has not cured the Breach or ended the violation to the reasonable satisfaction of Covered Entity within [time period] or such longer time period agreed to in writing by Covered Entity.
Drafting Note to First Alternate Section 7.(b) This termination clause provides the business associate with an opportunity to cure a violation or breach of the contract before the covered entity has the right to terminate the agreement for cause. The Second Alternate Section 7.(b) provides language that gives the business associate a reciprocal right to terminate for cause if the covered entity breaches the agreement and provides a cure period in each case.
Second Alternate Section 7.(b): (b) Termination for Cause. Business Associate authorizes termination of this Agreement by Covered Entity if Covered Entity reasonably determines in good faith that Business Associate has violated a material term of the Agreement and Business Associate has not cured the Breach or ended the violation to the reasonable satisfaction of Covered Entity within [time period] or such longer time period specified by Covered Entity. Covered Entity authorizes termination of this Agreement by Business Associate if Business Associate reasonably determines in good faith that Covered Entity has violated a material term of the Agreement and Covered Entity has not cured the Breach or ended the violation to the reasonable satisfaction of Business Associate within [time period] or such longer time period agreed to in writing by Business Associate.
Drafting Note to Second Alternate Section 7.(b) This termination clause provides each party with a right to terminate the agreement early for a breach by the other party that is not cured within a specified time period. See the default language for Section 7.(b) for a provision that only gives this right to the covered entity (without a cure right). See First Alternate Section 7.(b) for language that gives the business associate a cure right, but does not make the provision reciprocal.
(c) Obligations of Business Associate Upon Termination. Except as set forth in Section 7.(d), upon termination of this Agreement for any reason, Business Associate shall return to Covered Entity (or, if agreed to by Covered Entity, destroy) all Protected Health Information received from Covered Entity, or created, maintained, or received by Business Associate on behalf of Covered Entity, that the Business Associate still maintains in any form. Business associate shall retain no copies of the Protected Health Information.
Drafting Note to Section 7.(c) Use this language if the business associate is to return or destroy all PHI upon termination of the agreement. See Alternate Section 7.(c) for language authorizing the business associate to retain certain PHI.
This language can be used if the agreement allows the business associate to use or disclose PHI for its own management and administration or to carry out its legal responsibilities and the business associate needs to retain PHI for such purposes after termination of the agreement.
Drafting Note to Section 7.(e) This clause may be omitted if the agreement prohibits the business associate from retaining subcontractors to handle the covered entity's PHI, as contemplated by Second Alternate Section 2.(d).
First Optional Section 8.: 8. Indemnification Business Associate agrees to indemnify, defend, and hold harmless Covered Entity and its employees, directors, officers, representatives, and agents (collectively, the "Indemnitees") from and against any and all claims, obligations, actions, suits, debts, judgments, losses, fines, penalties, damages, costs, expenses (including reasonable attorney's fees), and other liabilities ("Covered Liabilities") incurred by the Indemnitees that arise or result from a breach of the terms and conditions of this Agreement or a violation of HIPAA by Business Associate or its employees, contractors, or agents; provided, however, that (A) Covered Liabilities shall exclude consequential, special, and punitive damages), and (B) the indemnification rights hereunder are conditioned on (i) Covered Entity giving the Business Associate prompt written notice of any Covered Liability; (ii) Covered Entity providing commercially reasonable cooperation in the defense or mitigation of a Covered Liability, if reasonably requested by Business Associate (with Business Associate bearing any additional expense to Covered Entity); and (iii) Covered Entity not entering into any settlement or compromise in respect of a Covered Liability without Business Associate's prior written consent, such consent not to be unreasonably withheld or delayed.
Drafting Note to First Optional Section 8. Indemnification clauses are common but not ubiquitous in business associate agreements. Sometimes indemnification terms are omitted from a business associate agreement where the indemnification provisions of an associated services agreement are intended to govern. Either or both parties may seek to be compensated for losses suffered due to the actions of the other party (or its agents and subcontractors). Indemnification provisions are highly contextual to the arrangement and often heavily negotiated. Considerations include triggers for indemnification (e.g., losses due to a breach of the agreement and/or a violation of HIPAA), any limitations on the indemnification obligation (e.g., a fixed dollar cap and/or general limitation to direct losses that specifically excludes consequential, special, punitive, and other damages), clarification on whether attorney's fees are included, a time limitation for indemnification claims. This First Optional Section8. provides sample language for unilateral indemnification by the business associate of losses incurred by the covered entity. See Second Optional Section8. for an example of a mutual indemnification provision.
Second Optional Section 8.: 8. Indemnification Business Associate agrees to indemnify, defend, and hold harmless Covered Entity and its employees, contractors, agents, and representatives (collectively, "Covered Entity Indemnitees") from and against any and all claims, obligations, actions, suits, debts, judgments, losses, fines, penalties, damages, costs, expenses (including reasonable attorney's fees), and other liabilities ("Covered Liabilities") incurred by Covered Entity Indemnitees that arise or result from a breach of the terms and conditions of this Agreement or a violation of HIPAA by Business Associate or its employees, contractors, agents, or representatives. Covered Entity agrees to indemnify, defend, and hold harmless Business Associate and its employees, contractors, agents, and representatives (collectively, "Business Associate Indemnitees") from and against Covered Liabilities incurred by Business Associate Indemnitees that arise or result from a breach of the terms and conditions of this Agreement or a violation of HIPAA by Covered Entity or its employees, contractors, agents, or representatives. Notwithstanding the foregoing, (A) Covered Liabilities shall exclude consequential, special, and punitive damages, and (B) the indemnification rights hereunder are conditioned on (i) the indemnified party giving the indemnifying party prompt written notice of any Covered Liability; (ii) the indemnified party providing commercially reasonable cooperation in the defense or mitigation of a Covered Liability, if reasonably requested by the indemnifying party (with the indemnifying party bearing any additional expense to the indemnified party); and (iii) the indemnified party not entering into any settlement or compromise in respect of a Covered Liability without the indemnifying party's prior written consent, such consent not to be unreasonably withheld or delayed.
Drafting Note to Second Optional Section 8. Indemnification clauses are common but not ubiquitous in business associate agreements. Sometimes indemnification terms are omitted from a business associate agreement where the indemnification provisions of an associated services agreement are intended to govern. Either or both parties may seek to be compensated for losses suffered due to the actions of the other party (or its agents and subcontractors). Indemnification provisions are highly contextual to the arrangement and often heavily negotiated. Considerations include triggers for indemnification (e.g., losses due to a breach of the agreement and/or a violation of HIPAA), any limitations on the indemnification obligation (e.g., a fixed dollar cap and/or general limitation to direct losses that specifically excludes consequential, special, punitive, and other damages), clarification on whether attorney's fees are included, a time limitation for indemnification claims. This Second Optional Section 8. provides for a mutual indemnification obligation. See the First Optional Section 8. for sample language that only provides for unilateral indemnification by the business associate of losses incurred by the covered entity.
The miscellaneous provisions provided here are fairly commonplace, but they are not mandatory for business associate agreements to comply with HIPAA requirements.
