Building HIPAA Compliant Software Applications: Best Practices

With 725 data breaches reported to the Office for Civil Rights (OCR) in 2023 alone, compromising over 133 million records, healthcare organizations can’t afford to ignore the importance of securing patient data. As a result, more are shifting from traditional systems to HIPAA-compliant solutions. This growing demand has driven the market for HIPAA-compliant software to an estimated value of USD 2.7 billion in 2023, with projections to exceed USD 8.5 billion by 2031.

With these stats in mind, ensuring HIPAA software compliance is no longer optional. It’s critical for safeguarding patient data and protecting your organization from costly fines and reputational damage. Whether you're building an EHR system, telehealth platform, or medical billing app, following best practices from the start will help you create secure, compliant applications.

In this guide, we’ll cover the essential best practices, technical safeguards, and compliance requirements to help you create software that meets HIPAA standards and stands up to today’s security challenges. Let’s get started!

What is HIPAA and Why is it Important?

The Health Insurance Portability and Accountability Act (HIPAA) is a U.S. federal law that was created by the American Congress in 1996.  It is designed to protect medical records and other personal health information by setting national standards for privacy and security.

 Let’s explore why HIPAA is so crucial:

• Protects patient data: It sets clear rules for safeguarding Protected Health Information (PHI), ensuring that sensitive data stays secure.
• Holds organizations accountable: If there’s a breach or violation, HIPAA makes sure the responsible parties are held accountable.
• Standardizes practices: HIPAA creates a consistent, high standard for handling health information, making processes smoother across the board.
• Gives patients control: HIPAA empowers patients by giving them more say over their own health data, allowing them to better manage their privacy.

Who Needs to Comply with HIPAA?

HIPAA compliance is essential for anyone involved in handling patient data in the healthcare industry. Here’s a quick breakdown of who needs to be HIPAA-compliant:

• Healthcare Providers: This includes doctors, hospitals, clinics, dentists, and any other medical professionals who have access to patient health information.
• Health Plans: Insurance companies and health maintenance organizations (HMOs) that deal with medical records and claims must comply with HIPAA.
• Healthcare Clearinghouses: These are organizations that process health data, like billing services and data processors.
• Business Associates: Any third-party vendors or contractors who handle PHI on behalf of healthcare organizations, such as IT providers, accountants, or legal consultants.
• Software Developers & Technology Providers: If you're building, managing, or providing software solutions that store, transmit, or process patient data, HIPAA compliance is a must.

As we look ahead, it’s important to stay informed about the latest changes and updates to HIPAA regulations. Let’s dive into what’s new in 2025.

HIPAA Updates and HIPAA Changes in 2025

HIPAA regulations are continuously evolving, with both minor updates and major changes being proposed. Here's an overview of key updates expected in 2025:

• Notice of Proposed Rulemaking (NPRM) for HIPAA Privacy Rule
  In December 2020, the HHS' Office for Civil Rights (OCR) issued a proposed rule to amend the HIPAA Privacy Rule. A final update is anticipated in 2025.
• HIPAA Security Rule Changes
  In December 2024, the OCR proposed updates to the HIPAA Security Rule to strengthen cybersecurity standards. Public comments are open until March 2025.
• 42 CFR Part 2 Alignment
  Final changes to align substance use disorder patient records with HIPAA were made in 2024, impacting privacy requirements.
• Reproductive Health PHI Changes
  Updates on the use and disclosure of reproductive healthcare-related PHI were finalized in 2024.

These updates are part of an ongoing effort to adapt HIPAA to current data protection needs.  Now that we know the basics of HIPAA, let's look at its key components.
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Key Components of HIPAA Compliance

HIPAA compliance is built on six key components that define how healthcare organizations and their partners handle protected health information (PHI).

1. Privacy Rule – Sets standards for handling PHI, grants patients rights to access and control their data, and requires organizations to provide clear privacy policies. Unless explicit consent is given, PHI can only be shared for treatment, payment, or healthcare operations.
   
   
2. Security Rule – Establishes safeguards for electronic PHI (ePHI), covering administrative (risk assessments, policies), physical (facility access controls), and technical (encryption, access controls) protections to prevent unauthorized access or breaches.
   
   
3. Breach Notification Rule – Requires organizations to notify affected individuals, the Department of Health and Human Services (HHS), and sometimes the media if unsecured PHI is compromised.
   
   
4. Enforcement Rule – Defines penalties for non-compliance, ranging from fines to criminal charges, depending on the severity of the violation.
   
   
5. HITECH Act – Strengthens HIPAA, expanding requirements for business associates and increasing penalties for violations.
   
   
6. Business Associate Agreements (BAAs) – Ensures third-party vendors handling PHI follow HIPAA regulations, holding them accountable for compliance.

Strict compliance is essential to protect patient data, maintain trust, and avoid legal and financial consequences. Next, let's review the best practices to implement effective compliance measures.

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Best Practices For Building HIPAA Compliant Software

Whether developing a healthcare app or managing an IT system for a medical organization, ensuring compliance with HIPAA guidelines is critical to avoid legal risks and maintain data integrity. Here’s how you can make sure your software meets the necessary standards:

1. Conduct Regular IT Audits

HIPAA compliance begins with identifying potential risks. Regular audits help uncover vulnerabilities within IT infrastructure, administrative policies, and business partnerships. Some key considerations include: 

• Where is your sensitive data stored?
• Are all access logs reviewed consistently?
• Do you have security mechanisms in place to prevent breaches?
• How is data shared with third parties?

By answering these questions, organizations have a clearer picture of where their software stands regarding compliance and what areas need improvement.

2. Control Access to Sensitive Data

Not everyone needs full access to patient information. Implementing strict access control measures ensures that employees only see the data necessary for their roles. This includes:

• Strong password policies
• Multi-factor authentication (biometrics, OTPs, security questions)
• Single Sign-On (SSO) for streamlined authentication
• Automatic logout after inactivity
• Firewalls and intrusion detection tools to prevent unauthorized access

Extending these security measures to mobile devices is also crucial, especially for remote healthcare applications.

3. Encrypt Everything

Encryption is one of the strongest defenses against data breaches. HIPAA requires all electronic protected health information (ePHI) to be encrypted at rest and in transit. Implement encryption protocols like AES-256, SSL/TLS, and PGP to keep your data unreadable to unauthorized parties.

If your software stores data in the cloud, ensure the hosting provider supports HIPAA-compliant encryption configurations.

4. Maintain Regular Data Backups

Healthcare data loss can have severe consequences. A solid backup strategy should include:

• Daily backups for high-risk data
• Secure storage in a HIPAA-compliant facility
• Regular testing of backup systems to prevent failures
• Defined protocols for restoring critical data during an emergency

By prioritizing backup and disaster recovery measures, you minimize downtime and protect patient information even in the event of cyberattacks or system failures.

5. Minimize Data Retention

Storing unnecessary data increases security risks. Healthcare systems often contain duplicate or outdated patient records, which should be identified and securely deleted. Your software should automatically scan databases for redundant information and implement strict data deletion protocols, especially for portable devices like laptops and USB drives. 

Proper data disposal is equally important. HIPAA requires organizations to securely dispose of patient information when it is no longer needed. This includes:

• Data wiping for digital records
• Physical destruction of hard drives and printed documents
• Secure decommissioning of outdated storage devices

Additionally, HIPAA mandates that data be stored within the U.S., requiring cloud or physical storage solutions to comply with this regulation.

6. Monitor System Activity

HIPAA mandates that organizations keep records of all PHI-related activities for at least six years. Your software should log every login attempt, access request, and modification to patient data. Automating this process ensures that suspicious activity is detected early and potential breaches are prevented before they escalate.

Continuous activity monitoring can be enhanced with:

• Automated logging and record-keeping tools
• Alerts for unusual access patterns
• AI-driven threat detection to identify potential breaches

7. Ensure Compliance Across Business Partnerships

​When healthcare organizations engage third-party vendors for software development, cloud storage, or IT services, ensuring these partners comply with HIPAA regulations if they handle Protected Health Information (PHI) is crucial.

A Business Associate Agreement (BAA) should be signed with all third-party vendors, clearly outlining how patient data is used and protected. 

HIPAA compliance in software development is about building trust with patients and healthcare providers. By following these key steps, developers can create software prioritizing security and compliance while delivering a seamless user experience.

With AI increasing in healthcare, compliance challenges become even more complex. Here's how AI-driven applications can stay HIPAA-compliant.

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HIPAA Compliance for AI Applications in Healthcare

AI has incredible potential to transform healthcare, but when it comes to handling patient data, it's not automatically HIPAA-compliant. Since AI models often process large amounts of Protected Health Information (PHI), developers need to ensure their systems meet HIPAA’s privacy and security standards. If the AI system handles PHI for a healthcare provider, it becomes a "business associate" and must comply with HIPAA rules.

Here are the biggest compliance risks to keep in mind, along with ways to mitigate them:

• Data Privacy & Usage: AI models need access to large datasets to function properly, but mishandling of PHI can lead to serious violations. The best way to avoid this is by ensuring all data is de-identified or encrypted before it's used for training or processing by the AI system. Always ensure that the data is anonymized to protect patient privacy.
• Transparency Issues: Many AI models, especially complex ones, work as "black boxes," meaning it's difficult to understand how data is processed. This can conflict with HIPAA’s requirement for transparency and accountability. To mitigate this, developers should implement clear documentation of how data is processed and ensure there’s an audit trail to track every step of the data’s journey.
• Vendor Management: AI systems often rely on third-party providers for components like cloud storage, machine learning algorithms, or data processing. These vendors must sign Business Associate Agreements (BAAs) and follow HIPAA guidelines. Always conduct thorough due diligence on third-party providers and ensure they are HIPAA-compliant before integrating them into your system.

To stay compliant, anonymize data before feeding it into AI models, enforce strict data governance policies, and only work with AI vendors willing to sign BAAs. 

AI is transforming healthcare, but HIPAA compliance matters for all apps. Here’s what to consider for healthcare apps.

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HIPAA Compliance in Healthcare Apps

HIPAA applies to any mobile app that collects, stores, or shares Protected Health Information (PHI) with healthcare providers, insurance companies, or health programs. Before developing a healthcare app, determine if compliance is required.

Does Your App Need HIPAA Compliance?

• Required if the app handles medical test results, prescriptions, treatment details, insurance information, or billing data.
• Needed for apps enabling doctor-patient communication via text, video calls, or forums.

Key Security Measures

• Data Storage: Use 256-bit encryption for PHI, clear stored data regularly, and enable auto log-out for inactivity.
• Data Transmission: Use HTTPS for backend communication; avoid sending PHI via SMS or push notifications.
• Third-Party Compliance: Ensure any integrated service (e.g., email, messaging) is HIPAA compliant.

Even with the most secure systems, compliance is only as strong as those handling patient data. This is where proper training becomes crucial.

For a real-world example, check out our case study on how a healthcare provider transitioned from chaos to harmony with HIPAA-compliant solutions. [Read the case study here].

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Employee Training and Education

The people handling protected health information (PHI) play a significant role in safeguarding data. Therefore, comprehensive HIPAA training is critical for developers and anyone interacting with PHI through software systems.

Who Needs HIPAA Training?

HIPAA training applies to:

• Software developers, engineers, and IT teams working on healthcare applications
• Healthcare providers, administrative staff, and billing teams using the software
• Business associates and third-party vendors with access to PHI

Training ensures all stakeholders understand data privacy, security risks, and regulatory obligations when handling sensitive patient information.

What Should HIPAA Training Cover?

A strong HIPAA training program should cover the essentials to make sure everyone in your organization knows how to protect patient data and follow the rules. Here’s what it should include:

• Privacy & Security Rules: Teach employees how to properly access, store, and share Protected Health Information (PHI) while maintaining patient privacy.
• Common Security Risks: Make sure staff are aware of common threats like phishing, social engineering, and poor authentication practices that can put patient data at risk.
• Role-Based Compliance: Different roles need different training. Developers should focus on encryption and secure coding, while end-users need to know how to handle patient data safely to avoid accidental breaches.
• Consequences of Violations: Everyone should understand the potential consequences of mishandling PHI, including legal penalties and the serious impact of data breaches.

Frequency of Training

While HIPAA does not mandate annual training, regular refreshers are recommended, especially when regulatory updates or software changes occur. Organizations should also conduct periodic compliance audits to ensure employees apply security best practices in daily operations.

HIPAA compliance requires ongoing education and accountability. Regular training ensures that teams handling PHI remain compliant, reducing the risk of breaches and legal complications.

To wrap it up, here’s a practical checklist to ensure your software meets HIPAA requirements at every stage.

Must Read: AWS HIPAA Compliance for Healthcare Data Security

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HIPAA Compliance Checklist for Software Development

If you're building healthcare software, meeting HIPAA requirements is the baseline for handling patient data securely. Use the checklist below to ensure your software follows key compliance measures.

Security & Risk Management

☐ Have you conducted a security risk assessment to identify vulnerabilities?
☐ Is all ePHI (electronic protected health information) encrypted at rest and in transit (AES-256, SSL/TLS)?
☐ Are system logs enabled to track all access and modifications to patient data?
☐ Do you have a disaster recovery plan for data loss or system failure?
☐ Are automatic timeouts and session expirations implemented to prevent unauthorized access?

Access Control & Authentication

☐ Is multi-factor authentication (MFA) required for users accessing PHI?
☐ Are role-based access controls (RBAC) enforced, limiting PHI access based on job function?
☐ Do employees have the least access necessary to perform their jobs?
☐ Are inactive user accounts deactivated after a set period?

Data Integrity & Storage

☐ Are all PHI backups stored in HIPAA-compliant locations with encryption?
☐ Is there a process for securely deleting old or unnecessary patient records?
☐ Are secure APIs used for data sharing, ensuring encryption and proper authentication?
☐ Is data stored only in the U.S., as required by HIPAA?

Monitoring & Auditing

☐ Are audit logs retained for at least six years, as per HIPAA guidelines?
☐ Do logs record who accessed PHI, when, and why?
☐ Are regular internal audits conducted to check for compliance gaps?
☐ Do you have a process for monitoring third-party vendors (BAAs in place)?

Incident Response & Breach Management

☐ Is there a documented incident response plan in case of a data breach?
☐ Are procedures in place to notify affected individuals and HHS within required timeframes?
☐ Do employees know how to report a security incident?

Employee Training & Compliance Awareness

☐ Is HIPAA training required for all employees who handle PHI?
☐ Are employees trained in real-world security scenarios, such as phishing attacks?
☐ Is HIPAA training documented and refreshed annually?
☐ Do employees know how to handle and dispose of PHI securely?

This checklist makes sure your software is secure. If you’re handling healthcare data, compliance isn’t a one-time thing. Regular audits, updates, and training are key to staying HIPAA-compliant.

HIPAA-Compliant Healthcare Solutions by Ideas2It

Ensuring HIPAA compliance in your software applications is critical for safeguarding patient data and achieving regulatory success. At Ideas2It, we specialize in creating tailored, HIPAA-compliant software solutions designed to meet the unique needs of the healthcare industry. Our bespoke healthcare technology solutions providers improve patient care, enhance operational efficiency, and streamline workflows while ensuring full compliance.

Our expertise includes:

• Implementing AI-driven diagnostic tools for accurate and efficient patient care.
• Developing secure telehealth platforms that comply with HIPAA standards.
• Creating patient management systems that protect sensitive health data and improve communication.

But don't just take our word for it—here’s what our clients say about us:

"We witnessed an 815% increase in patient enrollment for our Empower Health Program, and an overall 184% increase across all our programs. I highly recommend Ideas2It."
Ruchika Singhal
President - Medtronic Labs

At Ideas2It, we're committed to helping you navigate the complexities of healthcare technology while ensuring full HIPAA compliance every step of the way.

Conclusion

Building HIPAA-compliant software ensures patient data is secure, private, and accessible only to authorized users. From implementing access controls and encryption to maintaining audit logs and ensuring proper data disposal, every step plays a role in compliance. 

Whether you’re developing an EHR system, a patient portal, or a telehealth platform, integrating HIPAA requirements from the start is crucial to avoiding costly fines and breaches.

Partner with Ideas2IT and benefit from our decade-plus experience in creating custom software solutions within the healthcare arena. Our experts ensure your applications meet the highest security and compliance standards, so you never have to worry about HIPAA violations. 

For more information, connect with one of our IT healthcare specialists today.