HIPAA for healthcare AI companies
When HIPAA applies to an AI company in healthcare, the BAA chain through model and cloud providers, using PHI to train or improve models, and what applies when HIPAA doesn't.
On this page
HIPAA for healthcare AI companies: at a glance
HIPAA has no special rules for AI. An AI company is regulated by HIPAA when it handles PHI on behalf of a covered entity — then it is a business associate — for example an AI scribe, a patient-portal chatbot or a coding assistant used by a clinic. As a business associate it needs BAAs with its customers and with the model and cloud providers that process the PHI, Security Rule safeguards, and a BAA does not by itself authorize training general or cross-customer models on PHI — de-identified data is the cleaner route. Consumer AI health apps outside HIPAA can fall under the FTC Health Breach Notification Rule.
| HIPAA applies because of | Your role and the PHI you handle, not the use of AI |
|---|---|
| Typical status | Business associate of providers or health plans |
| HHS example | A vendor AI chatbot on a provider's patient portal is a business associate |
| BAA chain | Customers → you → model API, cloud, logging and support vendors |
| Training on PHI | A BAA alone does not authorize it; de-identified data is the cleaner route |
| Outside HIPAA | FTC Health Breach Notification Rule and state health privacy laws |
Your role decides, not your technology
HIPAA regulates covered entities and their business associates. An AI company becomes a business associate when it creates, receives, maintains or transmits PHI on behalf of a provider or health plan (45 CFR 160.103). HHS’s business associate guidance gives the example of a third-party AI chatbot on a provider’s patient portal that handles symptom assessment, reminders and scheduling with patients’ PHI.
Common healthcare AI products and their usual status:
| Product | Usual status |
|---|---|
| AI scribe or note assistant used by clinicians | Business associate of the practice |
| Patient-portal chatbot or triage tool run for a provider | Business associate |
| Coding, billing or prior-authorization assistant for providers | Business associate |
| Consumer symptom checker or wellness app used without a provider | Usually outside HIPAA — FTC rule may apply |
| Model provider whose API you call with PHI | Your subcontractor business associate |
This page assumes your product already touches healthcare data and asks what role, BAA chain and data uses follow. Whether HIPAA applies to your business model at all is covered on the health app startup page.
The BAA chain
Your obligations to customers flow down to every vendor that handles their PHI for you: model APIs, cloud hosting, vector databases, transcription, logging and support tools. Model providers’ BAAs usually cover specific products, endpoints and settings — often zero data retention or enterprise tiers — not every feature. Check before routing PHI; compare in AI and LLM tools and HIPAA hosting.
Using PHI to improve or train models
A business associate may use PHI only as its BAA permits or requires (164.504(e)), and a BAA cannot authorize uses the covered entity itself could not make — apart from narrow exceptions for the business associate’s own management and administration and for data aggregation serving the covered entity’s operations. A BAA is therefore necessary but not sufficient: it does not by itself authorize training general or cross-customer models on customer PHI, and any training use has to fit a specific HIPAA permission and the agreement. The common alternative is de-identification to HIPAA’s Safe Harbor or Expert Determination standard (164.514); removing names alone doesn’t qualify. Write down which data trains what, and under which permission.
Minimum necessary and logging
Send models only the PHI the task needs (minimum necessary), keep PHI out of evaluation sets and observability tools that aren’t covered, and log access to PHI in your own systems (audit controls). The engineering side is covered in How to build a HIPAA compliant app.
Beyond HIPAA
For consumer products outside HIPAA, the FTC Health Breach Notification Rule (16 CFR Part 318) and state consumer health privacy laws apply. Other federal and state rules on AI in healthcare — for example, nondiscrimination requirements and certification criteria for health IT — sit outside HIPAA and are not covered here.
Main risks
- Sending PHI to a model API or endpoint the provider's BAA doesn't cover.
- Prompts, transcripts and model outputs with PHI landing in logs, evaluation datasets or analytics tools.
- Training or fine-tuning on customer PHI without the BAA permitting it.
- Promising customers deletion while vendors keep copies under their own retention settings.
- Training data labeled "de-identified" that doesn't meet HIPAA's Safe Harbor or Expert Determination standard.
- Treating a consumer product as unregulated and missing the FTC Health Breach Notification Rule.
Requirements that matter most here
- Business associate →§ 160.103Who counts as a HIPAA business associate, common examples including SaaS and cloud vendors, subcontractors, and what business associates must do.
- Business associate agreements (BAAs) →§ 164.502(e)A vendor that creates, receives, maintains or transmits PHI on your behalf is generally a business associate, and you need a signed BAA with it before it touches patient data. No BAA means you should not put PHI in that tool.
- De-identification →§ 164.514(a)How HIPAA de-identification works — the Safe Harbor list of 18 identifiers and Expert Determination — and what it means for analytics, AI and research use of health data.
- Minimum necessary →§ 164.502(b)What the HIPAA minimum necessary standard requires, when it does not apply, and how small practices put it into practice with role-based access and standard disclosure limits.
- Security risk analysis →§ 164.308(a)(1)(ii)(A)Every covered entity and business associate must document an accurate and thorough assessment of risks to the ePHI it holds — and then act on it. It is one of the most commonly missing pieces of HIPAA compliance, including in small practices.
- Encryption of ePHI →§ 164.312(a)(2)(iv)Encryption is "addressable", not optional: you encrypt ePHI at rest and in transit where reasonable and appropriate, or document why not and use an equivalent alternative where that is reasonable. For email and cloud tools, encrypting is almost always the reasonable choice.
- Audit controls and activity logs →§ 164.312(b)Systems holding ePHI must record activity so you can review who accessed what. When choosing a tool, check that you — not only the vendor — can see sign-ins and access to records, and for how long.
- Online tracking technologies and HIPAA →§ 164.502(a)When analytics, pixels and session replay on a healthcare website or app become a HIPAA disclosure, what changed after the 2024 court ruling, and how to set tracking up safely.
Solutions to look at
- AI tools and LLMs →ToolWhich AI assistants and model APIs sign a BAA — ChatGPT, Claude, Gemini, Copilot and healthcare-specific assistants — on which plans, and what you have to switch on before any patient information goes in.
- HIPAA hosting and cloud platforms →ToolCloud platforms and managed hosts that sign a BAA — and the big difference between infrastructure you secure yourself and hosting where the provider runs the safeguards for you.
- AI medical scribes →ToolAI scribes that turn visits into clinical notes — whether they sign a BAA, what happens to the recordings, and what clinicians need to check before using them with patients.
- HIPAA compliance software →ToolPlatforms that help you run a HIPAA program — policies, risk analysis, staff training and vendor BAAs in one place — compared on what they actually include and whether they publish prices.
- Cloud storage and file sharing →ToolCloud storage services that sign a BAA — on which plans, how you put the agreement in place, and what you must configure before storing patient files.
If something happens
- You're launching a health app →The HIPAA decisions to make before a health app or digital health product goes live — whether the rules apply, which vendors need a BAA, and what applies if HIPAA doesn't.
- You had a data breach →A misdirected email, a lost laptop, a hacked mailbox. What to do, in order, in the first days — and the deadlines that start running when you discover it.
Your path to compliance
- Confirm HIPAA applies to you and in which role — Does HIPAA apply?
- Put the requirements above in place, starting with a documented risk analysis.
- Choose how to do the work — yourself, with templates, software, a consultant or an attorney — compare every route.
Frequently asked questions
Is there a HIPAA rule specifically for AI?
No. HIPAA applies to AI tools the same way it applies to other software: through the covered entity and business associate rules. Other laws and HHS programs address AI separately.
Can we train our model on customer PHI?
A BAA is necessary when you handle PHI for a covered entity, but it does not by itself authorize training general or cross-customer models on that PHI. A BAA cannot permit uses the covered entity itself could not make, apart from narrow exceptions such as your own management and administration and data aggregation. Most AI companies train on data de-identified to HIPAA's standard instead.
Do we need a BAA with OpenAI, Anthropic or another model provider?
If PHI goes to the model API, yes — and only the endpoints and settings the provider's BAA covers. Compare providers on the AI and LLM tools page.
Our app is for consumers, not clinics. Does HIPAA apply?
Usually not, if no covered entity is involved. The FTC Health Breach Notification Rule and state consumer health privacy laws may apply instead.