BILL ANALYSIS                                                                                                                                                                                                    

           AB 278
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          AB 278 (Monning)
          As Amended  August 17, 2010
          Majority vote
          |ASSEMBLY:  |     |(May 18, 2009)  |SENATE: |23-12|(August 19,    |
          |           |     |                |        |     |2010)          |
                    (vote not relevant)

          Original Committee Reference:    REV. & TAX.  

           SUMMARY  :  Permits the California Office of Health Information  
          Integrity (CalOHII) 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.

           The Senate amendments  delete the Assembly approved version of  
          this bill and instead:

          1)Authorize CalOHII to establish and administer up to four  
            demonstration projects a year, as defined, to evaluate  
            potential solutions to facilitate health information exchange  
            (HIE) that promote quality of care, respect the privacy and  
            security of personal health information, and enhance the trust  
            of the stakeholders.

          2)Authorize health care entities, as defined, to submit an  
            application to CalOHII to be approved as a demonstration  
            project participant, as defined.

          3)For purposes of this bill define the following:

             a)   "Demonstration project" means a project approved and  
               administered by CalOHII in accordance to specified  

             b)   "Demonstration project participant" means a health care  
               entity that is approved by CalOHII to participate in a  
               demonstration project;


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             c)   "Governmental authority" means 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;

             d)   "Meaningful use" means the term as defined in the Health  
               Information Technology for Economic and Clinical Health  
               (HITECH) Act, and in regulations promulgated under the  
               HITECH Act; and,

             e)   "State Cooperative Agreement" means 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.

          4)Require CalOHII, upon receiving a demonstration project  
            application, to assist applicants in soliciting federal funds  
            for the demonstration project and work with applicants to  
            define the scope of the demonstration project.

          5)Authorize the Director of CalOHII to approve demonstration  
            projects to test for, but not limited to policies and  
            practices related to patient consent, information, and  
            notification, new technologies and applications that enable  
            the transmission of protected health information, as  
            specified; and implementation issues, if any, encountered by  
            small solo health care providers as a result of exchanging  
            electronic health information. 

          6)Require 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; and,

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

          7)Require CalOHII to engage with stakeholders to evaluate issues  


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            identified by the demonstration projects, comment upon  
            proposed regulations, and discuss HIE solutions.

          8)Require 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.

          9)Authorize 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.

          10)Exempt adoption of, and changes to, such regulations from  
            provisions in existing law related to procedures 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.

          11)Require 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.

          12)Require 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; and,

             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.

          13)Specify that any regulation adopted shall become effective on  
            the date it is filed with the Secretary of State unless the  


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            director prescribes a later date in the regulation, or in a  
            written instrument filed with the regulation.

          14)Require regulations adopted to expire upon repeal of the  
            authorizing statute.

          15)Require 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.  

          16)Require CalOHII to review the results of the demonstration  
            projects and report to the Joint 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.

          17)Specify that demonstration projects carried out utilizing  
            federal grant funds may be subject to federal auditing  

          18)Require costs associated with the support, assistance and  
            evaluation of approved demonstration projects to be funded  
            exclusively by federal funds or other non-General Fund  

          19)Repeal 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.

          20)Make various legislative findings and declarations.

           AS PASSED BY THE ASSEMBLY  , this bill deleted an erroneous  
          reference in Revenue and Taxation Code (R&TC) Section 18639 to  
          non-existing Title 15 of the Internal Revenue Code (IRC).

           FISCAL EFFECT  :  According to Senate Appropriations Committee:

                            Fiscal Impact (in thousands)

           Major Provisions                2010-11     2011-12     2012-13  Fund  
          Demonstration project         $360      $360      $360Special*
          procurement, administration,


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          and oversight

          * California Health Information Technology and Exchange Fund  
            (federal HITECH funds)

           COMMENTS  :   According to the author, current state privacy laws,  
          while extensive, are problematic when it comes to electronic  
          HIE.  For example, current state law does not specifically  
          address widespread HIE, which results in ambiguity of some state  
          rules in an electronic environment.  Additionally, the current  
          health privacy framework is built upon an interaction of state  
          and federal requirements, and it is not easily determined which  
          requirements apply.  Last of all, no agency or office at the  
          state level is authorized to establish requirements, or  
          interpret California medical privacy law, when it is applied to  
          health information exchanged electronically.

          The author points out that the imminent implementation of  
          widespread HIE systems has raised many new issues among  
          stakeholders with strong and often opposing viewpoints.  While  
          these issues generate strong and often opposing viewpoints,  
          there is growing consensus on two points:  1) electronic HIE is  
          such a new area that it raises new privacy issues on which there  
          is very little empirical information that can alter the debate;  
          and, 2) demonstration projects can provide valuable new insights  
          into these complex issues and can help lead to resolution on  

          This bill was substantially amended in the Senate and the  
          Assembly-approved version of this bill was deleted.  This bill,  
          as amended in the Senate, is inconsistent with Assembly actions.

           Analysis Prepared by  :    Martin Radosevich / HEALTH / (916)  

          FN: 0006286