BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 278| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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, Romero 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 projects 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 stakeholders. CONTINUED AB 278 Page 2 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. AB 278 Page 3 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 specified. C. Implementation issues, if any, encountered by small solo health care providers as a result of exchanging electronic health information. AB 278 Page 4 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 information. 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 AB 278 Page 5 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 regulation. 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 project. 22.Requires CalOHII to review the results of the demonstration projects and report to the Joint AB 278 Page 6 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. Background 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 AB 278 Page 7 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 AB 278 Page 8 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 **** END ****