What must a notice of privacy practices include?

The notice of privacy practices is a crucial document that must communicate essential information about how a covered entity handles protected health information (PHI) and the rights of individuals regarding their health information. The correct answer addresses two primary components that are mandated by the Health Insurance Portability and Accountability Act (HIPAA).

Firstly, the notice must outline the various ways PHI may be used and disclosed by the entity. This includes details about treatment, payment, healthcare operations, and situations in which patient consent is necessary. It ensures that individuals are informed about the potential sharing of their health information.

Secondly, the notice must specify patients' rights concerning their PHI. This includes rights such as the right to access their health records, the right to request amendments to their information, and the right to receive an accounting of disclosures. By including this information, the notice empowers individuals with knowledge about how they can manage their personal health information.

The other options, while they may include relevant information in their contexts, do not address the specific legal requirements set forth by HIPAA for a notice of privacy practices. Thus, the emphasis on both the usage of PHI and the rights of patients is what makes the correct answer comprehensive and aligned with HIPAA regulations.