BILL ANALYSIS                                                                                                                                                                                                    


          |SENATE RULES COMMITTEE            |                   AB 278|
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                                 THIRD READING

          Bill No:  AB 278
          Author:   Monning (D)
          Amended:  8/17/10 in Senate
          Vote:     21

           SENATE HEALTH COMMITTEE  :  6-2, 6/30/10
          AYES:  Alquist, Cedillo, Leno, Negrete McLeod, Pavley,  
          NOES:  Strickland, Aanestad
          NO VOTE RECORDED:  Cox

           SENATE APPROPRIATIONS COMMITTEE  :  7-4, 8/12/10
          AYES:  Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
          NOES:  Ashburn, Emmerson, Walters, Wyland

           ASSEMBLY FLOOR  :  Not available 

           SUBJECT :    Health information exchange:  demonstration  

           SOURCE  :     Author

           DIGEST  :    This bill permits 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  



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           ANALYSIS  :    Existing federal law establishes the Health  
          Information Technology for Economic and Clinical Health Act  
          (HITECH Act), within the federal American Recovery and  
          Reinvestment Act of 2009 (ARRA), to, among other things,  
          provide funding related to health information technology  
          (HIT) and HIE, including funding to states to establish HIE  
          and to local communities to conduct health information  
          exchange demonstration projects. 

          Existing state law:

          1. Establishes CalOHII within the California Health and  
             Human Services Agency (Agency) to ensure enforcement of  
             state law mandating confidentiality of medical  
             information, and to impose administrative fines for the  
             unauthorized use of medical information.

          2. Authorizes the Agency, or one of the departments under  
             its jurisdiction, to apply for federal funds made  
             available through ARRA for health information technology  
             and exchange.  

          3. Requires Agency or a state-designated entity to  
             facilitate and expand the use of electronic health  
             information according to nationally recognized standards  
             and specifications, and execute tasks related to  
             accessing ARRA funds while protecting the privacy and  
             confidentiality of medical records to the greatest  
             extent possible. 

          This bill:

          1. Authorizes the Agency, through CalOHII, to establish and  
             administer demonstration projects, as defined, to  
             evaluate potential solutions to facilitate HIE that  
             promote quality of care, respect the privacy and  
             security of personal health information, and enhance the  
             trust of the stakeholders.

          2. Defines "demonstration project" as a project approved  
             and administered by CalOHII in accordance to this  
             division and the State Cooperative Grant Agreement for  
             health information exchange, or any other similar grant  
             or grants.


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          3. Defines "State Cooperative Agreement" as the grant  
             agreement between the federal government and the state,  
             in which the federal government awarded the state with  
             grant money pursuant to the HITECH Act in February 2010.

          4. Authorizes health care entities, as defined, to submit  
             an application to CalOHII to be approved as a  
             demonstration project participant, as defined.

          5. Defines "Governmental authority" to mean any municipal,  
             county, state, or other governmental entity that has  
             jurisdiction and control over the provision of, or  
             payment for, medical services or that routinely receives  
             medical information to complete its designated  
             governmental function.

          6. Defines "demonstration project participant" as a  
             California-based health care entity that is approved by  
             CalOHII to participate in a demonstration project.

          7. Requires CalOHII, upon receiving a demonstration project  
             application, to:

              A.    Assist applicants in soliciting federal funds for  
                the demonstration project.

              B.    Work with applicants to define the scope of the  
                demonstration project.

          8. Authorizes the Director of CalOHII to approve  
             demonstration projects to test for, but not limited to,  
             the following areas:

              A.    Policies and practices related to patient  
                consent, information, and notification.

              B.    New technologies and applications that enable the  
                transmission of protected health information, as  

              C.    Implementation issues, if any, encountered by  
                small solo health care providers as a result of  
                exchanging electronic health information. 


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          9. Requires that the selection of demonstration projects be  
             based on, but not limited to, the following criteria:

              A.    Areas critical to building consumer trust and  
                confidence in the HIE system.

              B.    Projects that help support the exchange of  
                information critical to meeting the federal  
                meaningful use provisions, as defined.

              C.    Areas recommended by the California HIE consumer  
                and industry stakeholder advisory process.

          10.Defines "meaningful use" to mean the term as defined in  
             the HITECH Act, and in regulations promulgated under the  
             HITECH Act.

          11.Requires CalOHII to engage with stakeholders to evaluate  
             issues identified by the demonstration projects, comment  
             upon proposed regulations, and discuss HIE solutions.

          12.Authorizes CalOHII to administer up to four  
             demonstration projects a year.

          13.Requires CalOHII to work collaboratively with approved  
             demonstration project participants to identify a set of  
             common data elements that will be used to collect,  
             analyze, and measure performance.

          14.Authorizes the Director of CalOHII to adopt regulations  
             to ensure all approved HIE service participants, as  
             defined, and demonstration project participants follow  
             rules, and work within parameters, as defined by the  
             office, that are consistent for the exchange of  

          15.Defines "health information exchange service  
             participants" as a health care entity that has  
             voluntarily agreed to use the HIE services developed in  
             accordance with this bill.

          16.Exempts adoption of, and changes to, such regulations  
             from provisions in existing law related to procedures  


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             for public participation, the review of proposed  
             regulations by the Office of Administrative Law, and  
             filing and publication requirements that specify an  
             effective date that is 30 days after the date of filing  
             with the Secretary of State.

          17.Requires the Director of CalOHII to file any regulation  
             adopted pursuant to this bill with the Office of  
             Administrative Law, for filing with the Secretary of  
             State and publication in the California Code of  
             Regulations.  Requires such filings to cite the  
             appropriate section of this bill and any other  
             applicable state or federal laws.

          18.Requires CalOHII, prior to adopting a regulation or  
             changing an existing regulation pursuant to this bill,  
             to adopt the standards requiring CalOHII to:

              A.    Post the proposed regulation on its website at  
                least 45 days prior to adoption.

              B.    Accept public comments for at least 30 days after  
                the proposed regulation has been posted online.

              C.    Hold a hearing prior to adoption of the  
                regulation if a member of the public requests a  
                public hearing during the 30-day review period.

          19.Specifies that any regulation adopted shall become  
             effective on the date it is filed with the Secretary of  
             State unless the director prescribes a later date in the  
             regulation, or in a written instrument filed with the  

          20.Requires regulations adopted to expire upon repeal of  
             the authorizing statute.

          21.Requires CalOHII to receive reports from demonstration  
             project participants on the outcome of the demonstration  
             project no later than 60 days after the end of the  

          22.Requires CalOHII to review the results of the  
             demonstration projects and report to the Joint  


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             Legislative Budget Committee, the Senate Committee on  
             Appropriations, the Senate Committee on Budget and  
             Fiscal Review, the Senate Committee on Health, the  
             Assembly Committee on Appropriations, the Assembly  
             Committee on Budget, and the Assembly Committee on  
             Health, within six months after the end of the project.

          23.Specifies that demonstration projects carried out  
             utilizing federal grant funds may be subject to federal  
             auditing requirements.

          24.Requires costs associated with the support, assistance  
             and evaluation of approved demonstration projects to be  
             funded exclusively by federal funds or other non-General  
             Fund sources.

          25.Repeals the provisions of the bill on the date the  
             Director of CalOHII executes a declaration stating that  
             the grant period for the State Cooperative Grant  
             Agreement for HIE has ended.

          26.Makes various legislative findings and declarations.

           Health information exchange  .  Realizing the benefits of HIT  
          requires a pervasive underlying infrastructure that  
          supports the use of patient-focused electronic health  
          information.  This requires wide-scale systemic, state and  
          nationwide infrastructure that incorporates protections for  
          patient privacy and confidentiality.  The building blocks  
          for this infrastructure include electronic medical records  
          (EMRs) used by providers to manage patient information,  
          personal health records for individual access of their own  
          records, and health information exchange (HIE) to  
          facilitate the electronic exchange of EMRs and personal  
          health records. 

          HIE is the capability to electronically move health  
          information among disparate health care information systems  
          while maintaining the meaning of the information being  
          exchanged.  In many instances, HIE is used to describe both  
          the process of exchanging health information  
          electronically, and the entity overseeing and governing the  


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          exchange.  The goal of HIE is to facilitate access to, and  
          retrieval of, clinical data to provide safer, more timely,  
          efficient, effective, equitable, patient-centered care.  

           HIE Readiness and Extent of HIE Adoption in California  .   
          According to Agency's HIE strategic plan, health care  
          services are delivered to Californians through 400  
          hospitals, over 60,000 active physicians, 100 federally  
          qualified health centers and 263 rural health clinics.   
          Nationally, it is estimated that only 7.6 percent of  
          non-federal hospitals and 13 percent of ambulatory  
          providers have implemented "basic" EMRs that include  
          certain clinical documentation, but not clinical decision  
          support.  California providers rank above the national  
          estimate with 20 percent of medical groups and 13 percent  
          of physician groups estimated to be using EMRs.  Similarly,  
          among individual physicians, California physicians reported  
          greater use of EMRs than the national average, with 37  
          percent of physicians reporting EMR use in comparison to 28  
          percent nationally.  This uptake may, in part, be explained  
          by the presence of large medical practices (10 or more  
          physicians) in California, as 57 percent of physicians in  
          large practices report using EMRs, compared to 25 percent  
          of physicians in small/medium practices and 13 percent of  
          solo practitioners.  However, two-thirds of physicians work  
          in small and solo practices. Virtually all Kaiser  
          Permanente physicians now use EMRs.

          California's health care safety-net facilities and  
          providers in underserved communities generally face  
          significant fiscal and resource challenges, and these  
          challenges impact their ability to implement EMRs.  While  
          less than a third of community clinics report they are  
          actively pursuing EMRs, the majority of community clinics  
          have some form of health IT in place, most commonly in the  
          form of diabetes and immunization registries.

          California's current HIE efforts fall broadly into two  
          categories:  1) large health systems, affiliated providers  
          and ancillary services implementing integrated EMRs, and,  
          2) community-driven efforts that aim to ensure ubiquitous  
          availability of data within a region or across the state.  

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    


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          Local:  No

          According to the Senate Appropriations Committee: 

                          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)

           SUPPORT  :   (Verified  8/16/10)

          California Office of Health Information Integrity

           ARGUMENTS IN SUPPORT  :    The California Office of Health  
          Information Integrity writes in support, stating that this  
          bill would test policies and rules, and better inform the  
          state and health care stakeholders while they attempt to  
          define HIE infrastructure over the next several years.  By  
          allowing for various HIE demonstration projects, it would  
          be possible to determine how best to protect privacy in  
          accordance with state and federal laws, while enabling  
          electronic health information exchange.  

          CTW:nl  8/17/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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