How to Develop HIPAA-compliant Software: A 6-Step Guide

With the cost of healthcare industry data breaches averaging at $7.42 million, the importance of HIPAA-compliant software development is higher than ever. HIPAA-compliant applications are digital tools and platforms that adhere to specific laws and regulations designed to protect patient data. Costs aside, data exposure builds distrust, sending patients away from your services. In this article, we will go deeper into the HIPAA rulebook, discuss key rules, explore the steps to building HIPAA-compliant software, and address common challenges.

Key Takeaways

Take a look at the key aspects of HIPAA-compliant software development overview of what’s important in healthcare software development:

• A HIPAA-compliant software solution is any digital application built to deal with Protected Health Information (PHI) that strictly adheres to the US Health Insurance Portability and Accountability Act (HIPAA).
• HIPAA-compliant parties include healthcare providers, healthcare plans, healthcare clearinghouses, and healthcare business associates.
• HIPAA rules consist of the Privacy Rule, the Security Rule, the Breach Notification Rule, and the Omnibus Rule.
• 6 steps to ensuring software HIPAA compliance: Assure Core HIPAA Security Training, Establish Security Requirements, Ensure Risk Prevention Activities, Implement HIPAA Compliant Software, Initiate HIPAA Compliance Verification, and Build an Incident Response and Contingency Plan
• 4 main challenges of developing HIPAA-compliant software: Legacy system integration, balancing security with user experience, frequent regulatory changes, and the inability to test with real medical data.

Who Needs to Obtain HIPAA Compliance?

Before we dive deeper into the nuances of HIPAA-compliant software development, let’s establish what this type of software means. HIPAA-compliant software is a type of digital solution designed to meet the administrative, legal, and technical security measures to safeguard patient data and ensure compliant healthcare data management. Within this framework, we refer to patient data as patient health information (PHI), which is individually identifiable health information belonging to patients. PHI in electronic form is abbreviated ePHI and encompasses patient data that’s stored, created, received, and shared digitally.

HIPAA-covered entities are individuals or companies that receive, forward, or update electronic protected health information (ePHI) or electronic health records (EHRs). Based on the U.S. Department of Health & Human Services (HHS) classification, we can divide them into four main groups:

• Healthcare providersare doctors, clinics, psychologists, and dentists, who transfer any data in an electronic form along with a transaction for which HHS has selected a standard.
• Healthcare plans are health insurance companies, Health Maintenance Organizations (HMOs), company health plans, etc.
• Healthcare clearinghouses are organizations that process nonstandard health data they receive from another facility into a standard electronic format or vice versa.
• Healthcare business associates – a person or entity that delivers services that involve the use or disclosure of PHI on behalf of a covered entity.

More specifically, business associates slightly stand out from the other entities. Unlike healthcare providers, plans, and clearinghouses, business associates are vendors or contractors who perform services for a covered entity. These include software developers, attorneys, Certified Public Accountant (CPA) firms, etc. Despite their third-party nature, business associates are legally liable under the HIPAA compliance rulebook.

Key HIPAA Rules Software Developers Must Know

HIPAA-compliant software development requires strict adherence to key rules: HIPAA Privacy Rule, HIPAA Security Rule, Breach Notification Rule, and Omnibus Rule. An integral part of healthcare data security best practices, the following table provides a concise overview of what these laws regulate and how their effects businesses and software developers.

Key HIPAA Rules Developers Must Know

Rule	What It States	Takeaways for Businesses	Takeaways for Developers
HIPAA Privacy Rule	Regulates how protected health information (PHI) is collected, used, shared, and accessed while protecting patient privacy rights.	Establish privacy policies, control PHI access, and ensure patient consent where required.	Apply privacy by design, role-based access control (RBAC), and collect only the minimum necessary PHI.
HIPAA Security Rule	Requires administrative, physical, and technical safeguards to protect electronic PHI (ePHI).	Conduct risk assessments, secure infrastructure, and continuously monitor systems.	Implement encryption, MFA, audit logs, secure APIs, vulnerability scanning, and regular security testing.
Breach Notification Rule	Defines when and how organizations must report breaches involving unsecured PHI.	Maintain an incident response plan and meet HIPAA notification deadlines.	Build audit trails, real-time monitoring, security alerts, and incident logging capabilities.
Omnibus Rule	Extends HIPAA compliance requirements to Business Associates and strengthens enforcement.	Verify vendor compliance and sign Business Associate Agreements (BAAs).	Use HIPAA-ready cloud services and third-party tools that support BAAs and compliant ePHI handling.

6 Steps to Build HIPAA-compliant Software

The digitization of patient data cannot be safely executed without compliance with HIPAA requirements. To achieve this, companies can either build an app from scratch or modernize the existing legacy solutions in use. Regardless of which route you choose to take, HIPAA-compliant software development is critical for the long-term success of the solution. Make sure your in-house team or IT partner has extensive experience in creative medical tools and building HIPAA-compliant software specifically.

In this section, we will guide you through each step of the healthcare software development process, from security training and requirements to developing a robust incident response plan.

Step 1: Assure Core HIPAA Security Training

Organize and perform regular HIPAA security training sessions.

As briefly mentioned, every single entity working on the creation of the medical solution must receive HIPAA security training. Even third parties are liable for compliance violations. Commonly, training is offered at the onboarding stage, tailored to the specific roles of the worker, before/if they interact with PHI-adjacent tools, as well as annual updates. However, you can host security sessions more often, if required and economically feasible.

In addition to educating employees and partners on HIPAA software compliance standards, it’s highly recommended to run specific security training on phishing scams, since social engineering is one of the most common methods of gaining access to sensitive data. Software developers should also be continuously educated on secure coding practices, including encryption standards, access controls, and input validation.

Step 2: Establish Security Requirements

Prioritize security measures from the very beginning with a shift-left strategy and threat modeling.

Instrumental in defining the security requirements is the threat modeling approach. Begin by identifying how PHI is used in a certain feature and who needs access to which information. The answers determine how access controls will be set up for the feature, including audit logging, access restrictions, and data encryption. All in all, the key to HIPAA-compliant software is to identify the potential risks a feature poses to protected health information (PHI). In case PHI is handled on behalf of a covered entity, such as by healthcare clients, contractors, and cloud providers, a Business Associate Agreement (BAA) must be prepared and signed.

Additionally, it’s crucial to integrate security measures into the coding pipeline from day one. The approach is known as shifting left, referring to building testing and HIPAA requirements into every step of the development cycle as opposed to leaving it to the very end of the process.

Step 3: Ensure Risk Prevention Activities 

Follow the steps in this section to make it easier for covered entities to acquire, build, integrate, and maintain the software in compliance with the HIPAA Security Rule during the whole security software development lifecycle (SDLC).

Use of Appropriate Cryptographic Standards

Apply the best-practice cryptographic standards at this stage of the process to evaluate whether the software meets HIPAA Security Rule requirements.

• Full-disk and virtual disk encryption

The full-disk encryption method involves encrypting all the data stored on the hard drive and the operating system to ensure that even a stolen device doesn’t expose any information. Virtual disk encryption is used to secure data containers. Both approaches comply with HIPAA regulations and enforce AES-256 encryption of data at rest and TLS in transit.

• File encryption

This approach allows encrypting specific files and folders with a unique key that mitigates threats involving malware and remote access to protected data. File encryption is necessary for data transfer and exchange to prevent data exchange vulnerabilities, while the same encryption standards (AES-256 and TLS) apply.

• Transport Layer Security

TLS is the secure transfer tunnel intended to encrypt PHI files in transit and safeguard data transferred between the user’s browser and cloud server or between different parts of the healthcare system. While TLS 1.2 is the minimal version accepted by the industry, the 1.3 version is preferable to maximize security. Keep in mind that SSL protocols are outdated and aren’t compliant with the latest HIPAA regulations.

Access Control and Authentication

Avoid data exposure by establishing access control policies like multi-factor authentication (MFA), unique IDs, role-based access controls, and automatic logoff.

To build HIPAA-compliant software, integrate unique user IDs to individually identify each user and trace their activities back to credentials. Multi-factor authentication (MFA) is another industry standard that provides a second layer of protection by requesting a one-time code or token in addition to a password.

Role-based control (RBAC) limits exposure to sensitive data by only granting access to files absolutely required to perform the assigned role. For example, an accountant in healthcare insurance companies doesn’t need to learn patient diagnoses to do their job.

Finally, automatic logoff terminates user sessions after a predefined period of inactivity. This feature helps minimize security incidents when users leave their workstations unattended without logging off or entering sleep mode.

Take a closer look at how access control and authentication are integrated in our recent medical records management case study. 

Finding Software Vulnerabilities by Analyzing Attack Surface

Limit the potential areas of exploitation by minimizing the attack surface.

There are several techniques that allow you to cut off unauthorized access to sensitive health information. For example, disable unused APIs to remove potential vulnerabilities that can be exploited by a hacker. Network segmentation is another practice bolstering the safety of HIPAA-compliant software solutions. This implies keeping vital data in isolation from each other to ensure that if one layer breaks or becomes compromised, the attack stops there and doesn’t make its way into other layers.

The aforementioned least privilege principle is key to minimizing the attack surface. In addition to granting users access to only essentials, HIPAA-compliant software development includes limiting functions’ permissions to only necessary. For instance, an appointment scheduling feature doesn’t need access to patient data or billing history.

Risk Assessment, Analysis, and Measures

Start with risk analysis by carefully reviewing requirements and expectations to identify security concerns and privacy risks.

This step is more professional advice rather than a requirement for achieving HIPAA compliance. Since almost all medical systems interact with third-party networks, it’s a potential point of data loss or breach of PHI, requiring specific consideration. Risk analysis practice provides an organization with a high-level approach for evaluating and understanding how each integrated module affects its protected health information security. Having a big and clear picture of potential risks, respective causes, and prevention measures helps address HIPAA compliance software requirements.

Threats Modeling

Explore threat modeling frameworks to identify potential risks across physical, software, and operational areas and ensure the right controls are in place for HIPAA compliance.

STRIDE is a widespread methodology for creating HIPAA-compliant software solutions. The acronym stands for Spoofing, Tampering, Repudiation, Information Disclosure, Denial of Service, and Elevation of Privilege, offering a way to classify each threat:

• Spoofing: impersonating someone or something
• Tampering: maliciously changing data
• Repudiation: denial of an action performed
• Information disclosure: exposure of private or sensitive data
• Denial of service: intentionally crashing the system
• Elevation of Privilege: gaining access to higher-level data than authorized

Threat analysis is valuable in identifying systems integration vulnerabilities — for example, when integrating your product with hospital electronic healthcare record (EHR) systems.

Step 4: Implement the HIPAA Compliant Software

HIPAA-compliant software development becomes increasingly more difficult when it comes to legacy applications.

The healthcare application development best practices of the Security SDLC process are critical to the overall ability of healthcare software to protect PHI, particularly when building new HIPAA-compliant software from the ground up. These types of projects are slightly easier to navigate as security controls can be integrated from the start. The bulk of security issues appear when we deal with legacy systems, riddled with unencrypted protocols, insufficient or unused APIs, or outdated authorization methods.

For instance, some hospitals still rely on HL7 v2 interfaces that carry no support for TLS, granular access controls, and MFA. To meet HIPAA compliance standards, such healthcare providers must migrate to FHIR/REST APIs that allow for the adoption of TLS 1.3 and proper audit logs. However, the migration process itself is quite lengthy and complex, while potentially exposing valuable data during the transition period. This process needs to be executed by a seasoned IT partner who knows how to ensure PHI is never leaked.

The main goal is to deliver well-functioning HIPAA-compliant software with minimum defects to avoid potential outbreaks. Implementation is focused on the processes associated with how an organization develops and deploys software elements and their related deficiencies. 

Step 5: Initiate HIPAA Compliance Verification

Arguably the most crucial part of the entire development process, compliance verification is meant to ensure robust and long-term full HIPAA compliance.

This process includes rigorous testing using multiple methods, such as penetration testing and vulnerability scanning. Automated and manual code review is also essential to verify that the software security complies with HIPAA and provides higher assurance of safety than analysis alone. 

As for our experience, we estimate twice as much time for testing as for development since we understand the value of sensitive patient information. It’s essential to thoroughly verify huge volumes of HIPAA-related data to ensure that it’s secured. When working with a legacy project, it becomes even more critical – verification of HIPAA compliance goes first, and only then implementation and extension of functionality.

Step 6: Build an Incident Response and Contingency Plan

Finally, every HIPAA-compliant software development must include an incident response plan alongside the contingency plan.

Even if the software release is void of vulnerabilities, new threats might appear over time, demanding a plan of action that minimizes the exposure. The incident response plan should define how to identify and navigate the situation, how to contain the outbreak, how to fix the incident, and how to retrieve data affected by the incident. For example, integrate the HIPAA Breach Notification Rule that demands that all affected parties be informed within 60 days of discovering the breach.

A contingency plan is a plan B that helps teams address unexpected situations. It includes a data backup plan that ensures PHI copies are safely maintained to be retrieved when needed, a disaster recovery plan that states procedures for system restoration following an attack, and an emergency mode operation plan that regulates PHI protection when normal systems are down.

Together, these measures ensure the ability of software to maintain HIPAA compliance with each release and update.

Business Associate Agreements (BAA): What Software Vendors Need to Know

Collaborating with IT agencies, financial firms, cloud providers, and other partners and contractors requires negotiation of a business associate agreement (BAA).

Business associates like software development agencies must enter a legal contract with a covered entity. Take a look at the standard components of BAAs that ensure HIPAA-compliant software development:

• Describes the extent of PHI access by the business associate
• Lists the requirements for the business associate to implement procedures and standards demanded by HIPAA rules
• States the requirements for reporting unauthorized access or breach
• Demands the disclosure of additional subcontractors that the business associate collaborates with and their entry into a BAA

Common Challenges in HIPAA-Compliant Software Development

Common compliance challenges will likely complicate the development and testing cycles. However, a HIPAA-compliant software development partner will help you alleviate the complexity without jeopardizing the security, accuracy, and user experience.

Legacy system integration: numerous healthcare organizations still utilize legacy systems that need to be modernized to ensure compliance with HIPAA. Especially during the transition period, it’s imperative to protect patient data at all costs, and partnering up with a seasoned IT specialist is key to building HIPAA-compliant software.

NIX pro tip: before modernization, identify each way patent information will be used, stored, and shared to discover potential threats and vulnerabilities that might occur at each step.

Balancing security with user experience: while security is instrumental in delivering robust healthcare applications, some measures might hinder the usability. It’s vital to find the balance between strong security protocols that keep your data safe and a smooth user experience.

NIX pro tip: integrate security into the SDLC itself by applying secure coding standards, conducting regular security audits and code reviews, and performing automated security scans. These measures alone will elevate the security features without complicating the app navigation. Take a look at the mental health app case study to learn more about our approach. 

Frequent regulatory changes: as new cybersecurity threats emerge, the HIPAA rulebook is updated with new regulatory compliance. While you’re building the HIPAA-compliant solution, regulations might be changed and updated, requiring you to immediately address them. This can prolong the development, increase the budget, and complicate the technical scope.

NIX pro tip: start using HIPAA-compliant tools from day one: cloud vendors like AWS and Azure offer infrastructure with HIPAA compliance built in, allowing businesses to rely on safety-first encryption, access management, and audit logging tools.

Inability to test with real medical data: the rule of HIPAA compliance for software development prohibits the usage of real PHI data in development and testing, which can inadvertently distort reality.

NIX pro tip: use synthetic data using specialized tools that produce statistically realistic PHI.

Need Help Building HIPAA-Compliant Software?

The recent technological developments designed to democratize access to healthcare and enhance personalized medicine, such as telemedicine and generative AI in healthcare, also pose additional threats to data safety. Working with a seasoned IT partner is key to navigating the ever-growing regulatory complexity of the industry.

NIX is a software development agency with over ten successful HIPAA projects and hundreds of high-performing applications. Our team of experts relies on the extensive portfolio of case studies to find a tailored solution that delivers a HIPAA-compliant software solution. Reach out to discuss your project and start building a powerful healthcare application.

FAQ on HIPAA-compliant Software Development

01/

What is HIPAA-compliant software?

HIPAA-compliant software is a type of digital tool designed to meet the administrative, technical, and physical safeguards to ensure the safety of patient data. The regulations control how medical data is created, stored, shared, and otherwise used to uphold data integrity.

02/

What are the requirements for HIPAA-compliant software?

HIPAA-compliant software requirements boast a lengthy list, spanning across technical, administrative, and physical specifications. Here are a few key requirements:

• Encryption: at rest with AES-256 and in transit with TLS 1.2/1.3
• Access control: unique user IDs, MFA, RBAC, automatic logoff
• Audit logs: consistent log maintenance for everyone who accessed PHI
• BAA: the development of BAAs for each partner, vendor, and contractor
• Risk assessment: regular risk assessments to identify vulnerabilities

03/

How long does it take to build HIPAA-compliant software?

Unfortunately, there is no easy answer on how long it takes to build HIPAA software, as the project duration depends on many factors, including the number and complexity of legacy integrations, volume of PHI, the involvement of third-party integrations, etc.

04/

Is HIPAA compliance mandatory for all healthcare apps?

Not all healthcare applications must comply with HIPAA; only the ones that handle PHI must follow the regulations.

05/

What happens if software is not HIPAA compliant?

The consequences of non-compliance with HIPAA carry devastating financial, reputational, and legal repercussions. Both covered entities and business associates are liable to excessive fines, including criminal charges, in case of deliberate misuse of patient data. Additionally, failing to comply with HIPAA can damage the reputation of the healthcare organization.

06/

What is a Business Associate Agreement (BAA)?

A BAA is a legal contract between a covered entity and a business associate, e.g., software developers, cloud provider. The agreement includes the obligations regarding how PHI is accessed, stored, and shared, as well as the consequences of non-compliance.

07/

What are HIPAA technical safeguards?

Among the main technical safeguards of HIPAA-compliant software development are:

• Encryption using AES-256 and TLS 1.2/1.3
• Access control and MFA
• Audit logs
• Automatic logoff