Last updated: November 4, 2026
By ZapAI Team
Microsoft’s HIPAA Business Associate Agreement already covers Dynamics 365, Power Apps, Power Automate, Power BI and Copilot Studio for most US healthcare customers, because it ships inside the standard data protection terms. But the BAA covers the service, not your setup. Previews, Bing web search, outside connectors and some AI models sit beyond it. Our healthcare technology team finds that configuration decides whether a build holds up.
Dynamics 365 is covered by Microsoft’s HIPAA BAA, which applies by default to covered entities and business associates through the Data Protection Addendum. That makes it HIPAA-ready, not HIPAA compliant. Compliance depends on how you configure and use it.
Every healthcare IT leader asks us some version of one question. Is Dynamics 365 HIPAA compliant? Fair question. Wrong framing.
No software is HIPAA compliant by itself. HIPAA applies to covered entities and their business associates, and Microsoft becomes a business associate the moment it stores or processes your protected health information. Microsoft can sign a Business Associate Agreement, run its services under the HIPAA Security Rule, and hand you controls. It can’t configure your environments, choose your connectors, or stop a maker from sending patient notes to a personal Dropbox.
This guide is for US providers, payers, clinics and health-tech companies evaluating Dynamics 365, Power Platform, Copilot Studio and Fabric. We cover how the Microsoft BAA works, which services sit inside it as of November 2026, where the gaps are, and the setup checklist we run before any PHI goes in. If you’re a covered entity weighing Dynamics 365 against a point product, or a health-tech startup deciding whether to build on Dataverse at all, the scope question comes first and it shapes every architecture choice after it. We checked every coverage claim against Microsoft Learn, the Product Terms and HHS guidance on November 4, 2026.
One thing up front. This isn’t legal advice. Your compliance officer and counsel own the decision, and they should read the BAA itself, not our summary of it.
How Does the Microsoft HIPAA BAA Actually Work?
There’s nothing separate to sign. Microsoft offers its HIPAA BAA by default to every customer that is a covered entity or business associate, through the Data Protection Addendum (DPA) that’s part of your licensing agreement.
Mechanics first. Microsoft’s Azure HIPAA offering page spells them out. The Product Terms reference the DPA, and the DPA says that executing your volume licensing agreement includes executing the HIPAA BAA. Bought Dynamics 365 through an Enterprise Agreement, a CSP partner or the Microsoft Customer Agreement? Then you already have one. No wet signature. No redlines.
Three details trip people up.
- Microsoft won’t sign your BAA. Its HIPAA and HITECH compliance page explains that multitenant services run the same way for everyone, so it uses one standard agreement built with a consortium of academic medical centers.
- Coverage is per service. Anything off the in-scope list, or outside Microsoft’s control, gets nothing from the BAA.
- The Service Trust Portal holds the current BAA plus ISO 27001 and HITRUST CSF reports, which your auditors will want.
HHS settled the cloud question years ago. Its guidance on HIPAA and cloud computing says a cloud provider that stores ePHI is a business associate even if it only holds encrypted data and has no key. So the BAA isn’t optional paperwork. It’s the legal basis for putting PHI in the service at all.
Health-tech companies get a twist. If you sell a SaaS product built on Azure or Power Platform, your customers sign a BAA with you, and your own Microsoft agreement covers your use of Microsoft’s services. Microsoft says exactly that in the FAQ on the Azure HIPAA page. If you’re mapping where Dynamics 365 apps fit in that product, decide the PHI boundary before the first sprint.
Which Microsoft Services Does the BAA Cover in 2026?
As of November 2026, Microsoft’s HIPAA compliance page names Dynamics 365, Power Apps, Power Automate and Power BI as in scope. Copilot Studio’s documentation says it’s covered. Microsoft 365 Copilot and Copilot Chat appear in the Office 365 in-scope list.
That page was last refreshed on September 11, 2026. It lists Power Apps, Power Automate and Power BI as covered either standalone or when included in an Office 365 or Dynamics 365 plan. Power Pages isn’t named there. Neither is Fabric. That’s where one source stops being enough.
| Service | Covered by Microsoft BAA? | Key caveat |
|---|---|---|
| Dynamics 365 apps (Sales, Customer Service, Field Service, Customer Insights, Finance, Business Central and others) | Yes. Named as Dynamics 365 on the HIPAA page | Mobile and device apps and separately branded connected services sit outside the core services definition. Confirm each app you license |
| Power Apps and Dataverse | Yes for Power Apps. Dataverse is its data layer | Client tools like Power Apps Studio aren’t core services. Connectors can push data outside |
| Power Automate | Yes | A flow that sends PHI to a non-Microsoft service needs that vendor’s BAA |
| Power BI | Yes, the cloud service | Power BI Desktop and Report Server are client software. Publish to web exposes data publicly |
| Power Pages | Likely. Listed as a Power Platform core service in the Product Terms, not named on the HIPAA page | Get written confirmation. Anonymous table permissions expose data to anyone |
| Copilot Studio | Yes, per Microsoft’s Copilot Studio compliance page | Not a medical device. Bing grounding, outside models and preview features change the picture |
| Microsoft 365 Copilot and Copilot Chat | Yes, in the Office 365 in-scope list | Web search queries go to Bing, which the DPA doesn’t cover |
| Anthropic models in Copilot and Copilot Studio | Unclear. The DPA applies when Anthropic acts as a subprocessor | Not named on the HIPAA page. Models labeled with Data Retention run under Anthropic’s own terms |
| Microsoft Fabric | Yes, per Microsoft’s 2024 Fabric announcement | Not named on the HIPAA page. Preview workloads follow the preview rules |
| Preview and Early Access features | No, with narrow exceptions | Only previews designated for personal data processing keep the DPA terms |
| Bing web search | No | Turn it off in PHI environments unless counsel approves |
Why hedge on Power Pages? The Privacy and Security Terms in the Product Terms group Power BI, Power Apps, Power Automate, Power Pages and Copilot Studio together as Power Platform Core Services, and Microsoft’s own patient access template runs on Power Pages. Strong signal. Not the same as seeing the name on the HIPAA list, so ask your Microsoft account team to confirm it in writing and file the reply with your risk analysis.
Fabric has a cleaner paper trail. Microsoft updated its Fabric HIPAA announcement on March 7, 2024 to say Fabric had been added to the Microsoft HIPAA BAA, and the Product Terms list Fabric among Azure core services. That matters because healthcare analytics projects tend to land claims, encounter and scheduling data in the same lakehouse, and you want the BAA question settled before the first pipeline copies PHI out of the EHR. Settle it early. It’s good news for anyone planning analytics on our Microsoft Fabric services track.
Is Copilot HIPAA Compliant, and What About Claude Models?
Copilot Studio and Microsoft 365 Copilot are in scope. The gaps sit around them. Bing web search isn’t covered by the DPA, preview AI features are excluded, and some Anthropic models run under Anthropic’s own terms.
Start with Copilot Studio. Microsoft’s Copilot Studio compliance page says the product is covered under the HIPAA BAA, and that you can build agents that ask people for health information like blood pressure or weight. It also says Copilot Studio isn’t intended for use as a medical device. Put that sentence in your design document. A triage agent that suggests a diagnosis is a different regulatory conversation.
Bing is the quiet leak. The Product Terms say the DPA doesn’t apply to Bing Search Services or to Bing used inside a product. So when an agent or Copilot grounds an answer in a web search, that query leaves BAA territory. For Power Platform and Dynamics 365, Microsoft’s article on data movement for Copilots and generative AI shows the Bing search setting on each environment’s Generative AI features card. It also says US environments process Azure OpenAI requests in region. Good. Bing still lives in a separate bucket.
Claude is newer and more nuanced. Microsoft’s page on Anthropic models in Microsoft Online Services, updated October 31, 2026, says Anthropic is onboarded as a Microsoft subprocessor and that the Product Terms and DPA apply to Anthropic models used through Microsoft’s enterprise Online Services. Those models are on by default for most commercial tenants outside the EU, EFTA and UK. One carve-out matters a lot, though. Models labeled Anthropic models with Data Retention fall under Anthropic’s own commercial terms, Anthropic stores most inputs and outputs for up to 30 days, and they stay off until an admin opts in.
Our read, and it’s opinion. The DPA wording suggests standard Anthropic models inherit Microsoft’s BAA, but the HIPAA page doesn’t name them and we haven’t seen Microsoft confirm HIPAA coverage for them in writing. Until your account team does, keep PHI environments on Microsoft-hosted models and leave Data Retention models off. We compare the two assistants for everyday work in Claude vs Microsoft Copilot for business.
Why Do Previews Matter So Much?
Previews are the biggest trap. Microsoft’s supplemental preview terms say the DPA’s HIPAA Business Associate terms don’t apply to previews, unless a preview is designated as allowing personal data processing. Early Access previews can’t run in production at all.
Read the supplemental terms for Power Platform and Dynamics 365 previews, updated May 2025. The DPA sections on processing personal data, GDPR, data security and HIPAA Business Associate terms are switched off for previews, with that one exception. Copilot and generative AI previews aren’t intended for production unless explicitly designated. And the DPA doesn’t apply to Bing inside Microsoft generative AI previews. Three exclusions in one document.
Why does it bite in practice? Because previews are one toggle away. A maker turns on a preview feature in Copilot Studio to try a new agent capability. An admin flips on a preview in an environment so a pilot group can test it. Neither person thinks about the BAA, and within a week real patient messages are flowing through a feature that has no Business Associate terms behind it, which nobody notices until an auditor asks for the feature list.
Connectors are the other exit. Power Automate can reach services Microsoft doesn’t run. Gmail. Dropbox. Slack. Your EHR vendor’s API. The moment a flow sends PHI to one of them, the BAA you need is with that vendor, and Microsoft’s agreement has nothing to say about it.
Who’s Responsible for What Under HIPAA?
Microsoft secures the platform and honors the BAA. You own everything you configure, including who sees which records, which connectors run, what gets logged, and whether a maker can publish PHI to an anonymous web page.
Even Microsoft’s own FAQ puts it bluntly. Using Microsoft services doesn’t by itself achieve HIPAA compliance, and your organization is responsible for an adequate compliance program and for making sure your particular use lines up with HIPAA. Fair enough. Here’s how the split usually lands.
| Area | Microsoft handles | You handle |
|---|---|---|
| Contract | Standard BAA through the DPA | Confirming your agreement includes it, and BAAs with every other vendor in the flow |
| Infrastructure | Datacenters, physical security, platform patching | Endpoints, browsers, mobile devices, client tools |
| Encryption | Encryption at rest by default, TLS 1.2 or higher in transit | Deciding whether you need customer-managed keys and running them safely |
| Access | Entra ID, security roles, field security as features | Least-privilege roles, multifactor authentication, removing leavers |
| Logging | Audit capability in Dataverse and Purview | Turning auditing on, choosing tables and columns, reviewing logs |
| Data movement | Data residency commitments for core services | Data policies, connector choices, Copilot and Bing settings |
| Compliance evidence | Third-party audits like ISO 27001 and HITRUST CSF | Your risk analysis, policies, training and breach response |
In our experience the right-hand column is where audits find problems, because it’s spread across Power Platform admins, Dynamics 365 admins, security, compliance and the makers in each department, and nobody owns the whole list. Fix ownership first.
HHS may tighten the rules, too. It published a proposed Security Rule update in January 2025 that would make encryption and multifactor authentication required rather than addressable. When we checked in November 2026, it still hadn’t been finalized. Build to the stricter version anyway. Retrofitting MFA onto a live patient portal is miserable.
What Happened to Microsoft Cloud for Healthcare?
It’s branded Microsoft for Healthcare on Microsoft Learn now, and the Dynamics 365 healthcare templates are changing hands. Since October 1, 2026, new customers get a downloadable source package instead of the Microsoft-managed version, and managed template support ends December 31, 2027.
Details sit at the top of Microsoft’s Microsoft for Healthcare deployment guide. Starting August 3, 2026, customers can download a source code and documentation package to build customer-managed or partner-managed implementations. From October 1, 2026, only existing customers can deploy the current managed version. Existing customers can keep running it while they plan a transition.
Templates on that page still cover these pieces, each with its dependency.
- Care management, built on Dynamics 365 Customer Service.
- Patient access needs Power Pages plus Customer Service.
- Home health. Field Service underneath.
- Unified patient view and unified member view, both on Power Apps.
- Provider and payor data models, which you can also deploy standalone to build your own apps.
Some pieces are already gone. Patient insight cards, healthcare database templates and the patient population dashboard preview were retired on January 30, 2025, and patient outreach and the patient service center can’t be newly deployed. On the analytics side, Fabric’s healthcare data capabilities went generally available in November 2024.
So what do you do with all of it? Treat the healthcare data model as a starting point you own. A customer-managed copy is yours to patch, test and secure, which is more work and more control. Honestly, the managed templates were never a compliance shortcut. Bias disclosed. This shift creates partner work, and we’re a partner.
Where Do Dynamics 365 and Power Platform Fit in Healthcare?
The strongest fits are patient portals, care coordination, referral tracking, home health scheduling, payer member service and analytics. Dynamics 365 rarely replaces the EHR. It runs the relationships, service and workflow around it.
Patient access portals on Power Pages
Microsoft’s patient access template pairs Power Pages with Customer Service, which tells you the intended pattern. Patients sign in, see appointments, update details and message a care team, while staff work the cases in Dynamics 365. The risk is permissions. Microsoft’s table permissions guidance warns that granting a table to the anonymous users web role makes that data visible to anyone. Anyone. Our Power Pages portal guide walks through roles and scopes, and our Power Pages development team builds these with PHI tables locked to self or parent scope from day one.
Care coordination and referral management
Care management in Microsoft for Healthcare runs on Customer Service, so care plans, tasks and team assignments look a lot like cases and queues. That’s a feature. Our Dynamics 365 Customer Service guide covers the queue and routing pieces it borrows. Referral management has no Microsoft template that we know of. We’d build it on Dataverse with a model-driven app for coordinators and Power Automate for status updates, keeping faxes and EHR documents in the PHI environment.
Home health and field visits
Home health maps to Field Service. Scheduling, routing, visit notes, supplies. Nurses and aides will open visit notes on phones in driveways and kitchens, so those phones become PHI endpoints and device management through Intune or a similar tool belongs in scope from the first workshop. Our Field Service guide explains the scheduling side.
Agents and intake
Copilot Studio agents can answer benefits questions, collect intake details or route a patient to the right clinic. Keep them away from clinical advice, keep Bing off where PHI is involved, and log everything. Our Copilot Studio consulting starts with that design boundary before a single topic gets built.
Who shouldn’t bother? A small clinic with an EHR that already includes a decent patient portal probably doesn’t need Dynamics 365 at all. Use what you have. Dynamics 365 earns its keep when you coordinate across several systems, service lines or locations.
A HIPAA Configuration Checklist for Dynamics 365 and Power Platform
Before PHI goes into any environment, confirm the BAA, isolate PHI in Managed Environments, lock down connectors with data policies, turn on auditing, tighten security roles, decide on Copilot and outside-model settings, and document it all for your risk analysis.
What follows is ZapAI practice, not a Microsoft requirement. Your compliance team may want more. Rarely less.
- Paper first. Confirm with procurement that your agreement includes the DPA, download the BAA from the Service Trust Portal, and get your compliance officer’s written sign-off on the services list.
- Inventory where PHI will live, which tables, which flows, which reports. If nobody can answer, stop here.
- Separate PHI into dedicated production and test environments. Never the Default environment.
- Make those Managed Environments, since Customer Lockbox and customer-managed keys are only enforced there.
- Data policies next. Put approved Microsoft connectors in the business group, block everything else, and treat the HTTP and custom connectors as exceptions that need a ticket.
- Turn on Dataverse auditing at the environment, table and column levels.
- Security roles built on least privilege, business units that mirror your org, and column security on fields like diagnosis codes or member IDs.
- Customer Lockbox, if your policy requires approval before Microsoft engineers touch data.
- Customer-managed keys only if a policy demands it, and only with separated Key Vault and Power Platform admin duties.
- On each PHI environment’s Generative AI features card, switch Bing search off unless counsel signs off.
- Outside models off in PHI environments, Anthropic models with Data Retention off tenant-wide, and preview features off by policy.
- Run the HIPAA assessment template in Purview Compliance Manager, update your risk analysis, and retest after every major release.
Logging and keys, in a bit more depth
Dataverse auditing works at three levels, per Microsoft’s auditing documentation. Environment, then table, then column. Change auditing alone misses reads, so turn on log access and read logs too, which flow to Microsoft Purview for production environments only. Retention defaults to forever. Pick a number your records policy supports.
Lockbox has strings attached. Microsoft’s Customer Lockbox article says the policy only applies to Managed Environments, and users in those environments need a qualifying license such as Microsoft 365 E5 or E5 Compliance. Unapproved requests expire after four days. Azure OpenAI features are excluded unless their documentation says otherwise. Customer-managed keys carry the same rules, plus a sharp edge. Revoke the key and the environment locks for everyone, Microsoft support included.
Mistakes we see most
- PHI sitting in the Default environment because a maker built a quick app there.
- A portal table shared with anonymous users during testing and never reverted.
- Preview features left on after a pilot ended.
- Who owns the connector policy? Nobody, in roughly every first audit.
Our Power Platform governance guide covers environment strategy and data policies in detail. If you’re also weighing broader AI use with patient data, run the AI readiness assessment checklist first.
Wrapping Up
Dynamics 365, Power Apps, Power Automate, Power BI, Copilot Studio and Microsoft 365 Copilot sit inside Microsoft’s HIPAA BAA as of November 2026, and Fabric was added in 2024. Power Pages and Anthropic models need written confirmation. Previews and Bing sit outside. The contract question takes an afternoon to answer, while the configuration question takes weeks of decisions about environments, connectors, roles, logging and AI settings that someone on your side has to own.
ZapAI is a Microsoft Dynamics 365, Power Platform, Fabric and AI consulting firm based in Irving, Texas, serving US mid-market companies, including providers, payers and health-tech teams. We design PHI environments, data policies, portals and agents across Power Platform services and Dynamics 365, then hand your compliance team the evidence they need to decide. If you’d like a second opinion on what’s in scope for your build, talk to our team and we’ll walk through your services list with you.
HIPAA Questions Healthcare Teams Ask Us
So is Dynamics 365 HIPAA compliant or not?
Wrong question, slightly. Dynamics 365 is covered by Microsoft’s HIPAA BAA and audited against frameworks like ISO 27001 and HITRUST CSF. Compliance is a property of your organization and your configuration, which Microsoft says plainly on its HIPAA page.
Do we have to sign anything to get Microsoft’s BAA?
No signature needed. The BAA is part of the Data Protection Addendum, and executing your volume licensing agreement includes executing it, for customers that are covered entities or business associates. Download a copy from the Service Trust Portal for your files.
Can our staff use Copilot with patient data?
Usually, with guardrails. Microsoft 365 Copilot and Copilot Chat are on the Office 365 in-scope list, and Copilot Studio is covered too. But web grounding uses Bing, which the DPA doesn’t cover, and preview features lose the HIPAA terms. Turn off Bing where PHI is involved, keep previews off, and fix SharePoint oversharing before rollout, because Copilot surfaces whatever a user can already open.
Realistically, is Power Pages safe for a patient portal?
It can be. Microsoft’s own patient access template runs on Power Pages, and the Product Terms treat Power Pages as a Power Platform core service. Get written confirmation of BAA coverage, keep PHI tables away from the anonymous role, require sign-in with MFA, and test logged out before go-live.
Does the BAA cover Claude models inside Copilot?
Not clearly enough to bet PHI on. Microsoft says Anthropic acts as a subprocessor and the DPA applies, except for models labeled with Data Retention, which run under Anthropic’s terms. The HIPAA page doesn’t name Anthropic, so ask Microsoft in writing first.
We already run Microsoft for Healthcare templates. Now what?
Keep running them and plan the move. Existing customers can still use the managed versions, but Microsoft’s support for them ends December 31, 2027, and new deployments since October 1, 2026 use the downloadable source package. Inventory customizations now, decide between customer-managed and partner-managed, and budget testing time. Thirteen months sounds long until a care management upgrade collides with open enrollment.
Who makes the final call on HIPAA, us or our partner?
You do. A partner can design controls and document them, but your compliance officer and counsel decide whether a use of PHI is acceptable. Nothing here is legal advice.