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As healthcare technology becomes increasingly global, it’s common for Business Associates (“BAs”) to rely on development, support, and data operations teams located outside the United States. Offshore personnel often handle critical technical functions such as troubleshooting, system maintenance, and software updates.
While HIPAA does not currently prohibit offshore access to Protected Health Information (“PHI”), the regulatory and contractual landscape around this issue is changing rapidly —and Bas that fail to address it directly in their Business Associate Agreements (“BAAs”) with Covered Entities risk running into compliance, contractual, and reputational challenges for the following reasons:
1. States Are Tightening Offshore Rules
Under HIPAA, there is no explicit restriction on offshore access to PHI. The key requirement is that Bas remain responsible for ensuring that all workforce members—wherever they are located—comply with HIPAA’s Privacy and Security Rules. However, more states are now stepping in to impose their own limits on offshore access. States such as Texas, Florida, Arizona, Wisconsin, and Virginia have enacted (or are in the process of considering) laws restricting the transfer or access of PHI outside the United States.
These laws often: (i) prohibit offshore storage or access to PHI for state residents unless strict security safeguards are in place; (ii) require explicit disclosure to the covered entity about any offshore use; (iii) and apply even if only temporary or incidental access occurs for system support or maintenance. This means that if your company serves clients across multiple states, you may need to comply with several overlapping state restrictions, not just HIPAA.
2. Health Plans and Provider Contracts Are Imposing Their Own Restrictions
Even where state law is silent, many enterprise healthcare clients and payors have begun adding their own prohibitions on offshore access to PHI. It’s increasingly common to see clauses in master service agreements or vendor onboarding documents stating that: “No PHI shall be accessed, processed, or stored outside the United States without prior written consent and documentation of equivalent security controls.” If your BAA doesn’t already disclose and limit offshore access, you may find yourself in a tough position during client audits or contract negotiations — especially with hospitals, health systems, and payors that have strict vendor management protocols.
Why Offshore Worker Clauses Protect Your Company
Including a specific offshore clause in your BAA:
(1) Provides Transparency: it discloses to the Covered Entity where your personnel are located and under what conditions they may or may not access PHI.
(2) Documents Internal Safeguards: you can specify that offshore access is limited to de-identified, encrypted, or non-sensitive PHI and subject to full HIPAA-compliant controls.
(3) Ensures multi-state compliance: it helps you align with the strictest applicable state rules.
(4) Strengthens Enterprise Credibility: larger clients increasingly expect to see this addressed directly in a BAA.
Conclusion
When it comes to offshore work under your Business Associate Agreement (BAA), address it early, disclose it clearly, and protect your company and your clients from unnecessary compliance exposure.
If you need assistance preparing the appropriate Offshore Work provision for your BAA, or any other section of your BAA, contact Foundry Law Group.
