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A Business Associate Agreement (BAA) is a mandatory requirement under HIPAA legislation aimed at protecting protected health information (PHI). It establishes a relationship between a business associate and a covered entity or between a covered entity's business associate and its subcontractor, creating shared responsibilities and liability. The BAA details how health information is used, maintained, or transmitted between the parties involved. It is a binding contract between entities, like a medical group and a third-party service provider, outlining service guarantees, incident response times, and disaster recovery expectations. It also specifies permitted uses and disclosures of PHI, ensuring clarity in the handling of sensitive information.