Business Associate Contracts and Other Arrangements: What the contract must require of a vendor

45 CFR 164.308(b)(1) covers business associate contracts and other arrangements. In most assessments the control itself is present and the record proving it is not, which is why this requirement produces findings at organizations that are, in practice, doing the work.

What the rule says

Business associate contracts and other arrangements. A covered entity may permit a business associate to create, receive, maintain, or transmit electronic protected health information on the covered entity's behalf only if the covered entity obtains satisfactory assurances, in accordance with § 164.314(a), that the business associate will appropriately safeguard the information. A covered entity is not required to obtain such satisfactory assurances from a business associate that is a subcontractor.

That is the text of 45 CFR 164.308(b)(1). Read each condition in it: it says what must be in place, and the method is yours only where the text leaves it open.

This is a standard, and a standard is met in full: 45 CFR 164.306(c) requires a covered entity or business associate to comply with the applicable standards.

What the contract must say is in 45 CFR 164.314(a)(2)(i): that the business associate will comply with the applicable requirements of the Security Rule; will ensure, under 164.308(b)(2), that any subcontractor creating, receiving, maintaining, or transmitting ePHI on its behalf agrees to comply with them; and will report to the covered entity any security incident of which it becomes aware, including breaches of unsecured PHI as 164.410 requires. 45 CFR 164.308(b)(2) gives a business associate the same duty toward its own subcontractors.

What this looks like in practice

In an assessment, 45 CFR 164.308(b)(1) is not one question. It resolves into several, and each one is really asking for different evidence. These are among the questions asked about it:

• Does the organization govern its use of externally hosted cloud services that handle sensitive data, including an inventory of those services and documentation of the security responsibilities shared with each provider?
• Does the organization periodically reassess the security posture of existing third parties, with higher-risk parties reviewed more frequently?
• Do the organization's agreements require third parties to obtain equivalent protective commitments from any subcontractor that handles the organization's sensitive data on their behalf?

Ownership usually sits with the IT or security team, though the evidence is often produced by someone else, which is where the trail breaks. A control that works but has no owner tends to stop working the month the person who quietly maintained it changes roles.

Who this applies to

Every covered entity and every business associate, at any size. 45 CFR 164.306(b) allows flexibility of approach, so a two-provider practice and a hospital system may implement this differently and both comply. What flexibility does not allow is skipping the decision: the smaller the organization, the more the written reasoning carries the weight, because there is no scale of operation to make the control self-evident.

Building it, in order

These steps are one way to meet it, drawn from our question bank. Unless a step names a provision, the Security Rule does not require that particular measure: 45 CFR 164.306(b)(1) lets you use any security measures that allow you to reasonably and appropriately implement the standards and implementation specifications, chosen with the factors in 45 CFR 164.306(b)(2).

The sequence below is the order that produces evidence as a by-product rather than as a separate documentation exercise:

1. Inventory all cloud services (infrastructure, platform, and software) that store, process, or transmit sensitive data, including discovery of unsanctioned usage.
2. For each provider, document the shared responsibility model identifying which controls the organization owns versus the provider.
3. Define and apply baseline secure-configuration standards for each service.
4. Confirm a written business associate agreement meeting 45 CFR 164.314(a) is in place with each cloud provider that creates, receives, maintains, or transmits ePHI on the organization's behalf (45 CFR 164.308(b)(3), Required).
5. Define review cadences by risk tier (for example annual for high-risk, less frequent for lower-risk parties).
6. At each review, request updated independent audit reports, refreshed security questionnaire responses, or other evidence of current safeguards.

Where else this maps

The questions behind 45 CFR 164.308(b)(1) also map to HHS 405(d) HICP (2023 Edition) CSP 4, CSP 5 and NIST SP 800-66 Rev. 2 5.1.1, 5.1.9, 5.4.1, which are voluntary guidance rather than law; following them does not by itself establish compliance with any law. That matters for scoping: the same evidence can be written once and referenced from each, rather than rewritten per framework.

Evidence an assessor asks for

For this requirement the evidence types that satisfy it are agreement, inventory, procedure, and report. The distinction matters more than it looks: a policy states what you intend to do, a procedure states how, and a record proves it happened on a date. Auditors ask for all three, and a practice that has written the first two often has nothing for the third.

Date every document and keep the superseded versions. 45 CFR 164.316(b)(2)(i) requires the documentation 164.316(b)(1) calls for (the Security Rule policies and procedures, and the written record of any action, activity or assessment the Security Rule requires to be documented) to be retained for six years from the date of its creation or the date when it last was in effect, whichever is later, so a policy you replaced two years ago is still part of the record.

Where this usually goes wrong

In our question bank this is weighted Critical: a gap here is raised as a critical finding (a partial answer as high). The usual cause of a gap is drift: the control was implemented once, the environment changed, and nothing re-checked it. A dated review on a fixed cadence is cheaper than the remediation.

What to do about it

• Produce the evidence, not the intention. For 45 CFR 164.308(b)(1) that means the executed agreement, with the signature date on it, an inventory with an owner and a last-reviewed date on every row, a step-by-step procedure someone unfamiliar with the task could follow, and a dated report with the period it covers and who reviewed it. If the only evidence is that someone knows how this works, you have a practice and not a record.
• Put a name on it. Whoever administers the systems should be recorded as the owner. Where the work is done by someone else, say so in the document: the split between who owns it and who performs it is where the trail usually breaks. A control with no owner stops working the month the person who quietly maintained it changes roles, and nobody notices.
• Review it on a fixed date, not when you remember. In our question bank this is weighted Critical: a gap here is raised as a critical finding (a partial answer as high). Put the review on the calendar with an owner, and keep the dated output of each one.
• There is no documented-alternative route for the requirement itself. It is required (45 CFR 164.306(d)(2) for a specification, 164.306(c) for a standard), so a risk-based decision not to meet it is not available. How you meet it is yours to choose under 45 CFR 164.306(b); the measures in this post are examples, not the rule's text.

If 45 CFR 164.308(b)(1) is new to you, the useful first step is not a policy template. It is writing down what you already do, dating it, and naming an owner. That turns an undocumented practice into evidence, and it usually reveals the real gap.

Related requirements

• Evaluation: The periodic evaluation most practices skip
• Facility Access Controls: Facility access controls in a leased clinical suite
• Applications and Data Criticality Analysis: Ranking applications and data by criticality

References

• 45 CFR 164.308(b)(1), in 45 CFR 164.308 on eCFR. Quoted text verified against the eCFR text current as of 2026-10-06.
• The Required and Addressable designations are defined at 45 CFR 164.306(d).
• Crosswalk references in this post are the mappings in our question bank, and are not verified against the published text of those standards.
• This post describes what a requirement asks for and what evidence documents it. It is not legal advice, and your counsel owns the conclusion. State law may impose additional obligations; HIPAA preempts a State law only where it is contrary to HIPAA (45 CFR 160.202, 160.203).