Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 351
                                        H.D. 2
                                        S.D. 1

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committees on Health and Human Services and Judiciary,
to which was referred H.B. No. 351, H.D. 2, entitled: 


beg leave to report as follows:

     The purpose of this bill is to protect individual privacy
rights through comprehensive regulation of the use, handling, and
disclosure of personal health care information by health care
providers and others.

     Your Committees find that with the advances in modern
technology and the systematic changes in health care practices,
the primary relationship between a patient and the doctor has now
been expanded to a multi-party relationship that includes health
plans, employers, consulting physicians and other health care
providers, laboratories and hospitals, researchers and data
organizations, and various governmental and private oversight
agencies.  These multiple relationships have fundamentally
changed the way in which medical information is used, and the
legislature acknowledges that individuals are often unaware of
how their medical information is being used and disclosed in the
modern health care delivery system.  Your Committees find that
current law does not provide any mechanisms for the disclosure of
all medical records.  Thus, an individual's right to privacy with
regards to the individual's health care information is currently

                                   STAND. COM. REP. NO. 1573
                                   Page 2

     However, your Committees recognize that review of medical
information encourages health care quality.  Encouraging
affordable quality health care, facilitating effective medical
research, and prevention of fraud and abuse are necessary to the
health and safety of our citizens.  These are compelling state
interests which require the sharing of medical information for
limited purposes without eliminating confidentiality within the
patient-doctor relationship.

     Your Committees note that the issue of what agency is the
most appropriate and best equipped to enforce these provisions
has not been fully debated during this legislative session.
Therefore, the bill purposely does not designate a specific
agency as the enforcement agency.  It is your Committees' intent
that the Office of Information Practices, which currently has the
authority to administer these provisions and is granted rule-
making authority, be considered as the agency for enforcement.
However, your Committees would like to pursue further
deliberation on this issue during the regular session of the 2000
regular session.

     Testimony in support of this measure was submitted by the
Department of Health, the Insurance Commissioner, Common Cause
Hawaii, the Hawaii Medical Association, and a private citizen.
Testimony in opposition to this measure was submitted by the
American Council of Life Insurance, the Coalition to Protect
Privacy, the Hawaii Insurers Council, the Immigrant Center, the
Multiple Sclerosis Mutual Support Group, the Pharmaceutical
Research and Manufacturers of America, two licensed physicians,
and a licensed attorney.  Your Committees received letters
expressing concerns generally about privacy rights from fifty
private citizens.

     Your Committees drafted a proposed S.D. 1 which was
circulated and also heard at the hearing.  The Department of
Commerce and Consumer Affairs, Kaiser Permanente, the Hawaii
Medical Service Association, the Hawaii Coalition for Health, and
Queen's Health Management submitted testimony in favor of H.B.
351, H.D.2 but opposed the proposed S.D. 1 version of the bill.
The Department of the Attorney General, the Department of the
Prosecuting Attorney for the City and County of Honolulu, and the
Honolulu Police Department submitted testimony in opposition to
only the provisions in the bill relating to the disclosure for
law enforcement purposes.  State Farm Insurance Company and the
Hawaii Health Information Corporation submitted comments on this

     Upon further consideration, your Committee has amended this
bill by:

                                   STAND. COM. REP. NO. 1573
                                   Page 3

     (1)  Adding a findings section that discusses the existing
          practices of health care information disclosures, an
          individual's right to privacy, and the need to balance
          this privacy right with the interests of encouraging
          quality and affordable health care;

     (2)  Deleting the definitions of "director" and "law
          enforcement inquiry";

     (3)  Adding an incomplete definition of "educational

     (4)  Adding the definitions of "entity" and "surrogate";

     (5)  Amending the definitions of "insurer," "nonidentifiable
          health information," "public health authority," and
          "protected health information"

     (6)  Allowing for a two-year exemption from the requirements
          of this Act for life insurers, disability income
          insurers, and long-term care insurers;

     (6)  Requiring that these exempted insurers submit a status
          report to the regular session of 2001, regarding their
          support for or opposition to adopting the National
          Association of Insurance Commissioners Information and
          Privacy Protection Act, which governs the treatment of
          protected health information or substantially similar

     (7)  Requiring that a signed written acknowledgement be
          obtained from individuals indicating that they have
          received the notice regarding the release of their
          medical records and the purposes for which the records
          will be released;

     (8)  Providing that an individual may append the
          individual's medical records and that any response by
          the health care provider to the submitted addition must
          be included in the individual's record;

     (9)  Enumerating the types of information required to be
          included in the notice of an entity's confidentiality

    (10)  Providing that a health plan may decline to cover
          health care services for which an individual has
          refused to allow the release of health care

                                   STAND. COM. REP. NO. 1573
                                   Page 4

    (11)  Providing that the written acknowledgement of notice is
          prospective only;

    (12)  Requiring that the health plans inform individuals that
          the individual is signing on behalf of the individual
          and those for which coverage is provided and that the
          information is to be released for certain purposes;

    (13)  Deleting the provision relating to disclosure of
          protected health information for law enforcement
          purposes; and 

    (14)  Making technical, non-substantive changes for the
          purposes of style and clarity.

     As affirmed by the records of votes of the members of your
Committees on Health and Human Services and Judiciary that are
attached to this report, your Committees are in accord with the
intent and purpose of H.B. No. 351, H.D. 2, as amended herein,
and recommend that it pass Second Reading in the form attached
hereto as H.B. No. 351, H.D. 2, S.D. 1, and be placed on the
calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Health and Human
                                   Services and Judiciary,

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