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)

        |COMMITTEE VOTE:  |18-0 |(August 24, 2010)   |RECOMMENDATION: |concur    |
        |                 |     |                    |                |          |

        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  

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

        3)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.


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        4)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. 

        5)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.

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

        7)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.

        8)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.

        9)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  


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          the appropriate section of this bill and any other applicable  
          state or federal laws.

        10)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.

        11)Specify 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.

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

        13)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, 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.

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

        15)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 sources.

        16)Repeal the provisions of the bill on the date the Director of  
          CalOHII executes a declaration stating that the grant period for  


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          the State Cooperative Grant Agreement for HIE has ended.

        17)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,
        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.

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

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