LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                               May 26, 2001
  
  
          TO:  Honorable Bill Ratliff, Lieutenant Governor
               Honorable James E. "Pete" Laney, Speaker of the House
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB11  by Nelson (Relating to protecting the privacy of
               medical records; providing penalties.), Conference
               Committee Report
  
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*  No significant fiscal implication to the State is anticipated.        *
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The bill would reference the federal Health Insurance Portability and
Accountability Act (HIPAA) and define terms as per HIPAA with the
exception of the following terms: "covered entity," "marketing," and
"protected health information."  "Covered entity" would include
governmental units that possess, transmit, obtain, or store protected
health information.  The bill would exempt "covered entities" as defined
by HIPAA from the bill's Health and Safety Code provisions except those
related to marketing and reidentified information.  Thus, programs such
as the Medicaid, Children with Special Health Care Needs, Medical
Transportation, and the Children's Health Insurance Program would be
exempted.  According to the Department of Health (TDH), the Special
Supplemental Nutrition Program for Women, Infants, and Children, the
Genetics Program, the Family Planning Program, Vital Records, Health Care
Quality and Standards, and the Newborn Hearing Screening Program would
not be exempted and must comply with the following provisions:
(1) An individual's access to his or her protected health information;
(2) Amendment of protected health information;
(3) Uses and disclosures of such information, including consent *; and
(4) Notice of privacy practices.
* Consent would not be required for disclosure to public health
authorities or any state agency in conjunction with a federal or state
health benefit program.
Based on TDH's estimates, the costs associated with these provisions are
not significant and could be reasonably absorbed within existing
resources.

Employee benefit plans, worker's compensation programs, ERISA programs,
certain educational records, financial institutions, and covered entities
engaging in activities of financial institutions are excluded. The bill
would provide for injunctive relief and penalties.

The above provisions would be effective on September 1, 2001, and require
compliance by September 1, 2003.

The bill would authorize the Department of Insurance to investigate
violations and impose fines.  Insurance Code provisions would take
effect January 1, 2002.
  
Local Government Impact
  
No significant fiscal implication to units of local government is
anticipated.
  
  
Source Agencies:   501   Texas Department of Health, 529   Health and
                   Human Services Commission
LBB Staff:         JK, HD, SW, AJ