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A Business Associate Agreement (BAA) is a mandatory requirement under HIPAA designed to protect 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 PHI is used, maintained, and transmitted, serving as a binding agreement between entities, such as a medical group and third-party service providers like IT hosting partners. It includes guarantees concerning service level agreements, incident response times, and expectations for disaster recovery while outlining the permitted uses and disclosures of PHI.