STAND. COM. REP. NO. 596________

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 351
                                     H.D. 1

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 351 entitled: 


begs leave to report as follows:

     This measure seeks to encourage frank patient-to-physician
disclosures and to protect individual privacy rights through the
comprehensive regulation of the handling and release of personal
medical information.

     Testimony in support of this bill was received from a number
of state agencies, including the Department of Health, the
Insurance Division of the Department of Commerce and Consumer
Affairs (DCCA), the Regulated Industries Complaints Office of the
DCCA, and the Office of Information Practices (OIP).  Testimony
supporting the measure was also received from many private
medical and other organizations.  Seven private citizens and the
American Council of Life Insurance testified in opposition to the

     Your Committee has assembled the following backdrop to the
measure from the testimony submitted by those in support of the
bill.  Under existing law individuals have a right to privacy of
their personal medical information, although it is one that is
not absolute.  Society currently recognizes supervening state
interests in various areas, for example, to further law
enforcement and health provider regulatory goals.  The problem is

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that existing laws concerning protected personal medical
information are ambiguous and piecemeal.  They also inadequately
protect an individual's privacy rights in the context of group
health care systems, established as a result of public policies
broadening affordable health care to all segments of our society.
These group health plans have altered the traditional doctor-
patient relationship to one that includes a multitude of parties
including employers, health plan insurers and providers, the
government, and quasi governmental accrediting entities, thus
increasing the range of situations in which the individual
privacy interest requires protection.

     Those testifying supported the measure because it provides
clear and comprehensive protection for individual medical
information encompassing all entities with access to this
information.  They stated that the bill results in greater
protections than under current law, and that under the bill,
health plans and providers would have less access to personal
medical information.  Testifiers supported the measure because

     (1)  Clearly sets parameters of acceptable, limited
          disclosure, use, and handling of personal medical

     (2)  Establishes that all other uses require consent of the

     (3)  Requires holders of personal medical information to
          create and maintain information privacy practice
          safeguards, and OIP to adopt rules to implement this

     (4)  Mandates that patients be given notice of a provider's
          medical information privacy practices;

     (5)  Sets clear guidelines for obtaining informed, actual
          patient consent;

     (6)  Supports medical research by allowing appropriate
          access to nonidentifiable health information;

     (7)  Provides significant penalties for violation of an
          individual's privacy rights.

     Your Committee has made changes to the bill as suggested by
several testifiers, by:

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     (1)  Identifying health care data organizations as a member
          of the group of entities that handle personal medical
          information and are thus required to establish
          confidentiality safeguards;

     (2)  Broadening the definition of "insurer" to encompass
          groups that are not employers or insurers subject to
          regulation by the Commissioner, but which purchase
          group insurance and may have access to regulated health

     (3)  Allowing organizations implementing medical information
          privacy safeguards the flexibility to design safeguards
          appropriate to the size of the organization;

     (4)  Facilitating patients' awareness and education
          regarding their privacy rights by requiring health care
          providers and other regulated organizations to make
          every effort to obtain the patient's signature on their
          notice of confidentiality practices;

     (5)  Extending from two years to indefinitely, the
          protection given the health information of the

     (6)  Enabling the Insurance Commissioner (Commissioner), to
          oversee insurers in matters outside the scope of this
          bill, by requiring that OIP give the Commissioner
          notice of investigations or other actions taken against
          persons regulated by the Commissioner;

     (7)  Requiring that OIP report its progress toward
          rulemaking to the 2000 legislature; and

     (8)  Making nonsubstantive amendments to the bill for
          purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 351, as amended herein, and recommends that
it be referred to the Committee on Judiciary and Hawaiian
Affairs, in the form attached hereto as H.B. No. 351, H.D. 1.

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                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,

                                   RON MENOR, Chair