BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
278 (Monning)
Hearing Date: 8/12/2010 Amended: 7/15/2010
Consultant: Katie Johnson Policy Vote: Health 6-2
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BILL SUMMARY: AB 278 would permit the California Office of
Health Information Integrity to establish and administer up to
four demonstration projects annually to evaluate potential
solutions to facilitate health information exchange that promote
quality of care, respect the privacy of personal health
information, and enhance the trust of stakeholders.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Demonstration project $360 $360 $360 Special*
procurement, administration,
and oversight
* California Health Information Technology and Exchange Fund
(federal HITECH funds)
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
This bill would permit the California Office of Health
Information Integrity (CalOHII) to establish up to four
demonstration projects annually to identify barriers to
implementing health information exchanges in California, test
potential security and privacy policies for the secure exchange
of health information, and to identify and address differences
in state and federal laws regarding privacy of health
information. California-based health care entities would be
permitted to submit applications to CalOHII to be approved as
demonstration project participants. CalOHII is not expected to
directly fund the projects. Instead, this bill would require
CalOHII to assist applicants in soliciting federal funds for the
demonstration projects and to work with the applicants to define
the scope of the projects, which could include exploring
policies and practices related to patient consent, new
technologies and applications, and implementation issues that
could be encountered by small solo health care providers.
This bill would permit CalOHII to adopt regulations through a
public, modified rulemaking process and would specify that the
regulations would expire on the date the Director of CalOHII
executes a declaration that would state that the grant period
for the State Cooperative Grant Agreement for health information
exchange has ended.
Any costs associated with the support, assistance, and
evaluation of approved demonstration projects would be required
to be funded exclusively by federal funds or other non-General
Fund sources. CalOHII would be required to review the results of
a demonstration project, the timelines of which are estimated to
be between 6 months and
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AB 278 (Monning)
2 years depending on the terms of the project, and to report the
results to the Legislature no later than six months after the
end of a project. Staff recommends that
the bill be amended to specify that CalOHII would report those
results to the relevant fiscal and policy committees of the
Legislature.
Background
As part of the American Recovery and Reinvestment Act (ARRA),
Congress enacted the Health Information Technology for Economic
and Clinical Health Act (HITECH Act). This new Act authorizes
the federal Health and Human Services Department (HHS) to enter
into cooperative agreements with states in order to fund efforts
to achieve widespread HIE. It includes direct subsidies to
Medicare and Medicaid physicians who demonstrate meaningful use
of HIE and grants to states. The Department of Health Care
Services (DHCS) is currently in the process of drafting a
"Planning-Advance Planning Document" to guide its implementation
of "meaningful use" and incentive payments to Medi-Cal providers
through the DHCS Medi-Cal Electronic Health Records Incentive
Program.
SB 337 (Alquist), Statutes of 2009, requires CHHS to develop a
plan to ensure that HIT technologies are available and utilized
statewide and establishes the California Health Information
Technology and Exchange Fund into which federal grant funds are
deposited. CHHS is tasked with identifying future funding,
independent of the General Fund and in addition to federal
funds. Since the California Health and Human Services Agency
(CHHS) established it in October 2007, the California Privacy
and Security Advisory Board (CalPSAB), a group comprised of
health care providers, insurers, research institutions, and
consumer advocates, has advised CHHS on the implementation of
health information technology (HIT) and health information
exchange (HIE). This bill would grant CalOHII authority to
partner with interested parties to pilot some of CalPSAB's
policy recommendations.
Funding
In February 2010, California was awarded $38.7 million to be
used over four years to support the establishment of HIE
capacity throughout the state's health care system through a
State Cooperative Grant Agreement. In FY 2009-10, CalOHII was
allocated $2.2 million of grant funds through an April 2010
Section 28 letter and the office has requested, and been
approved for, the use of $17.2 million of these federal funds in
FY 2010-2011 through the budget subcommittee process, although
the Governor has yet to sign a final budget. $16.5 million of
the $17.2 million would be used to contract with Cal eConnect
(CeC), California's non-profit "governance entity" selected
through a Request for Information process, to meet the
requirements of the grant. CeC is generally responsible for
establishing rules by which health information would be
exchanged throughout California. This bill would serve as a
testing ground for the policies to be implemented. Depending on
the results of the pilots, there could be future cost pressure
on various funds for California to adopt certain policies to
effectively implement HIE.
$724,000 would be used for 6 positions to support grant and
other administrative activities over the life of the grant and
would need to be allocated in each subsequent
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budget. These staff would also work in varying degrees on the
demonstration projects. Thus, about 50 percent of the personnel
costs could be associated with this bill.
The proposed author's amendments would make minor semantic
changes and specify that the reports to the Legislature would be
made to the relevant policy and fiscal committees and the Joint
Legislative Budget Committee. They would have no fiscal effect
on the bill.