LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              April 25, 2001
  
  
          TO:  Honorable Patricia Gray, Chair, House Committee on Public
               Health
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB1221  by Maxey (Relating to protecting the privacy of
               medical records; providing penalties.), As Introduced
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB1221, As Introduced:  negative impact of $(33,371,687) through      *
*  the biennium ending August 31, 2003.                                  *
*                                                                        *
*  The bill would make no appropriation but could provide the legal      *
*  basis for an appropriation of funds to implement the provisions of    *
*  the bill.                                                             *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Net Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2002                        $(18,326,032)  *
          *       2003                         (15,045,655)  *
          *       2004                          (8,838,869)  *
          *       2005                          (8,867,765)  *
          *       2006                          (8,879,107)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
***********************************************************************
*Fiscal    Probable    Probable    Probable    Probable   Change in    *
* Year     Savings/    Savings/    Savings/    Savings/   Number of    *
*        (Cost) from (Cost) from (Cost) from (Cost) from    State      *
*          General     GR Match    Federal      Local     Employees    *
*          Revenue       for       Funds -   Institutio- from FY 2001  *
*            Fund      Medicaid    Federal    nal Funds                *
*            0001        0758        0555                              *
*  2002                  $(2,500)   $(24,855)                   228.0  *
*           $(18,323,                           $(13,622,              *
*                532)                                352)              *
*  2003                     (898) (1,046,499)                   245.0  *
*        (15,044,757)                        (10,755,035)              *
*  2004   (8,838,117)       (752)   (940,729) (9,281,462)       246.1  *
*  2005   (8,867,010)       (755)   (956,700) (9,197,912)       246.3  *
*  2006   (8,878,350)       (757)   (972,995) (8,865,869)       246.3  *
***********************************************************************
  
         *****************************************************
         * Fiscal Year    Probable Revenue Gain/(Loss) from   *
         *                    Local Institutional Funds       *
         *      2002                                $(80,000) *
         *      2003                                 (80,000) *
         *      2004                                 (80,000) *
         *      2005                                 (80,000) *
         *      2006                                 (80,000) *
         *****************************************************
  
Technology Impact
  
Estimated technology impact for FYs 2002-06 would be $33.8 million for
new or modified hardware, software, personal computers, printers, and
programming, $22.7 million of which would occur in the 2002-03 biennium.
  
  
Fiscal Analysis
  
The bill defines information that must be protected.  The bill would
require covered entities, as defined in the bill, to meet various
requirements related to the privacy of medical records such as allow
patients to inspect or copy protected health information, allow patients
to amend or append health records upon written request, maintain an
"audit trail" system to track use and disclosure of protected medical
information, and provide written notice of the entity's practices with
respect to protected health information.

The bill would require the Attorney General to appoint a lawyer to serve
as the medical records privacy ombudsman, and lists eight specific
duties of the ombudsman including the issuance of advisory opinions to
governmental units about compliance with the chapter and the mediation of
disputes relating to the release of protected health information.

The bill would require the Ethics Commission to establish a privacy board
for health research projects to review the effect of research protocol
on patients' privacy rights.  The bill also sets criteria and procedures
the privacy board would use to grant a waiver of consent for use of
protected health information. The privacy board would be required to
provide documentation of the board's findings in regard to a waiver of
consent on request to the Texas Ethics Commission, the Office of the
Attorney General, the ombudsman, and the patient.

The bill would also authorize the Office of Attorney General to seek
injunctive relief and civil penalties for certain violations and set
forth criminal penalties for each violation or a pattern or practice of
violations.  The bill would add professional and facility licensing
sanctions for violations by covered entities subject to the provisions of
the bill and repeal sections of the Education Code authorizing school
officials to access student medical records.

The bill would take effect September 1, 2002.
  
  
Methodology
  
Entities indicating costs would be incurred through implementation of the
bill were Texas Tech University Health Sciences Center, the Health Care
Information Council, the Department of Health, the University of Texas
System, and Office of the Attorney General.  According to these
agencies, 228 FTEs in FY 2002, and 245 FTEs in FY 2003 would be needed
to handle the additional workload that would be created by
implementation of the bill.  Estimated salary and benefits for the
2002-03 biennium would be $23,210,885.  Other expenses for the 2002-03
biennium include $850,023 in medical administrative costs for WIC, and
expenses for general startup and day-to-day operation.
  
  
Local Government Impact
  
No significant fiscal implication to units of local government is
anticipated.
  
  
Source Agencies:   364   Health Professions Council, 503   Texas State
                   Board of Medical Examiners, 356   Texas Ethics
                   Commission, 50B   Texas Health Care Information
                   Council, 739   Texas Tech University Health Sciences
                   Center, 709   Texas A&M University System Health
                   Science Center, 720   The University of Texas
                   System, 763   UNT Health Science Center , 501
                   Texas Department of Health, 302   Office of the
                   Attorney General
LBB Staff:         JK, HD, KF, RM