Data Privacy Newsletter – Business Associate Agreements: What Indian Service Providers Need to Know : June 2025
Business Associate Agreements: What Indian Service Providers Need to Know
Executive Summary
Indian businesses providing services to U.S. healthcare organizations must comply with Health Insurance Portability and Accountability Act (“HIPAA”) deregulations when handling Protected Health Information (PHI). This compliance is formalized through Business Associate Agreements (BAAs), which establish legal obligations for safeguarding PHI and create potential liability for non-compliance. Understanding these requirements is essential for Indian IT, BPO, and healthcare analytics firms serving the U.S. healthcare sector.
What Is Protected Health Information (PHI)?
Protected Health Information (PHI) is individually identifiable health information that is transmitted or maintained in electronic or other forms by organizations. PHI includes:
- ·Medical records and patient charts
- ·Laboratory test results and medical images
- ·Billing information containing diagnostic codes
- ·Appointment schedules with patient names
- ·Insurance information linked to specific individuals
- ·Any health information that can be used to identify an individual
Real-World Example: The Hidden PHI
A Mumbai-based medical transcription company received audio files from a U.S. hospital for transcription. While the files were labeled with only patient numbers, the dictated content included patient names, addresses, and detailed medical histories. This information constituted PHI under HIPAA, requiring the company to implement specific safeguards and execute a BAA with the hospital before processing could begin.
Covered Entities vs. Business Associates
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Covered Entities |
Business Associates |
| According to HIPAA, Covered Entities include health plans, healthcare clearinghouses, and healthcare providers who transmit health information electronically in connection with standard transactions. Health plans encompass health, dental, vision, and prescription drug insurers, health maintenance organizations (HMOs), Medicare, Medicaid, employer-sponsored group health plans, and government health programs. Healthcare providers include hospitals, doctors, clinics, psychologists, dentists, chiropractors, nursing homes, and pharmacies that electronically transmit health information. | A Business Associate is generally a person or organization, other than a member of a covered entity’s workforce, that performs certain functions or activities on behalf of, or provides certain services to, a Covered Entity that involves the use or disclosure of individually identifiable health information. Indian IT companies, BPO providers, software developers, cloud service providers, data analytics firms, and medical transcription services working with U.S. healthcare organizations typically qualify as Business Associates when they handle PHI. Importantly, this designation extends to subcontractors who create, receive, maintain, or transmit PHI on behalf of a Business Associate. |
Case Study: Indian AI Startup and U.S. Diagnostic Data
A Bengaluru-based health AI startup was contracted by a U.S. radiology network to train models on diagnostic imaging scans. The startup initially assumed the data was de-identified, but upon review, the DICOM metadata included patient identifiers (names, dates, IDs). This triggered HIPAA applicability, requiring the startup to execute a Business Associate Agreement (BAA), implement access controls, and revise its vendor agreements to include flow-down HIPAA obligations to its cloud labeling partners.
What Is a Business Associate Agreement (BAA)?
A Business Associate Agreement (BAA) is a legal contractual document required under HIPAA when a covered entity engages a contractor or other non-workforce member to perform “business associate” services or activities involving PHI. The BAA establishes safeguards for protecting PHI and outlines the responsibilities of both parties.
Who Must Sign a BAA and When?
A BAA must be signed whenever a covered entity (such as a U.S. hospital or health insurer) engages a business associate (such as an Indian IT or BPO company) to perform functions or services involving the use or disclosure of PHI. Additionally, when a business associate subcontracts any portion of its services that involve PHI to another entity, a BAA must be established with that subcontractor.
Common Compliance Obligations under Business Associate Agreement:
- Indian businesses serving U.S. healthcare clients face several unique compliance challenges. Cross-border data transfers require careful attention to both HIPAA requirements and Indian data protection laws. Subcontractor management Implement appropriate safeguards and comply with HIPAA Security Rule requirements to protect electronic PHI
- Report any unauthorized use or disclosure of PHI, including breaches of unsecured PHI, to the Covered Entity within specified timeframes
- Ensure that any subcontractors handling PHI agree to the same restrictions and conditions regarding PHI protection
- Make PHI available to the Covered Entity as necessary to satisfy individual access requests
- Maintain and provide information required for accounting of disclosures
- Make internal practices, books, and records available to authorities
presents significant risks, as business associates remain liable for their subcontractors’ HIPAA compliance, necessitating robust vendor assessment and contractual protections. Breach notification requirements pose particular challenges due to time zone differences and communication barriers, potentially delaying required notifications that must occur within strict timeframes.
Practical Guidance for Indian Businesses
- Implement comprehensive HIPAA training programs for all staff handling PHI, with regular refreshers and updates on regulatory changes
- Develop robust subcontractor management processes including due diligence, contractual safeguards, and ongoing monitoring of compliance
- Establish clear breach notification procedures with designated response teams and communication protocols to ensure timely reporting within required timeframes
- Conduct regular security risk assessments to identify and address vulnerabilities in systems handling PHI
- Maintain detailed documentation of all privacy and security policies, procedures, and compliance activities
- Align cybersecurity practices with U.S. standards including encryption, access controls, and audit logging for PHI
- Review BAAs carefully before signing to ensure obligations are clearly understood and operationally feasible
Conclusion
As Indian businesses continue to provide critical services to the U.S. healthcare sector, understanding and complying with HIPAA requirements through properly executed BAAs is essential for legal compliance and business success. We strongly recommend that all service providers working with U.S. healthcare organizations review their existing BAAs to ensure they accurately reflect current operations and regulatory requirements. If your organization handles PHI for U.S. clients but lacks formal BAAs, or if you’re uncertain about your compliance obligations, we encourage you to consult with legal counsel experienced in both U.S. healthcare regulations and Indian data protection laws.
About us:
LegaLogic (www.legalogic.com) is a full-service law firm with more than 50 people team. Founded in 2013, LegaLogic has been advising across industry segments. It is a go-to firm for Corporate Commercial Matters, M&A, Intellectual Property, Employment Law, Real Estate, Dispute Resolution, Litigation, India Entry Strategy and Private Client Practice. To know more about our Data Privacy Practice, please write to us at data.privacy@legalogic.com.
Disclaimer:
This newsletter is for informational purpose only and should not be treated as legal advice or opinion. No part of this newsletter should be considered an advertisement or solicitation of professional services of LegaLogic.
