BILL ANALYSIS Ó
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 945
S
AUTHOR: Committee on Health
B
AMENDED: As Introduced
HEARING DATE: May 4, 2011
9
CONSULTANT:
4
Chan-Sawin
5
SUBJECT
Medi-Cal: electronic records
SUMMARY
Directs the California Department of Health Care Services
(DHCS), until July 1, 2021 and only to the extent that
federal financial participation is available, to establish
and administer the Medi-Cal Electronic Health Records (EHR)
Program for the purposes of providing federal incentive
payments to Medi-Cal providers for the implementation and
use of EHR systems, as specified.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the federal Medicaid program to provide
comprehensive health benefits to low-income persons.
Authorizes, under the federal American Recovery and
Reinvestment Act of 2009 (ARRA), the outlay of federal
money for, among other things, Medicaid incentive payments
to qualified health care providers who adopt and use EHRs
in accordance with specified provisions in the Act, which
are referenced to as meaningful use provisions and which
include use of electronic prescribing, submission of
Continued---
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information on clinical quality measures, reporting to
immunization and disease registries, and exchanging health
information to improve the quality of care.
Existing state law:
Establishes the Medi-Cal program, the state's Medicaid
program, administered by DHCS, under which basic health
care services are provided to qualified low-income persons.
Authorizes the California Health and Human Services Agency
(CHHSA), or one of its departments, to apply for federal
health information technology (HIT) grants, as specified.
Also requires CHHSA or a state-designated entity to
facilitate and expand the use of electronic health
information according to nationally recognized standards
and specifications, as specified.
This bill:
Directs DHCS to establish and administer the Medi-Cal EHR
Incentive Program (Program) in accordance with the State
Medicaid HIT Plan, as developed by DHCS and approved by the
federal Centers for Medicare and Medicaid Services (CMS).
Directs DHCS to accept applications from, and make
incentive payments to, eligible providers and facilities.
Requires eligible providers and facilities seeking
incentive payments to meet all standards for the federal
EHR Technology Program established in federal law and
regulations, as specified.
Provides for an appeals process.
Allows DHCS to contract with public or private entities to
implement this program, including utilizing existing
provider enrollment and payment mechanisms.
Allows contracts entered into by DHCS to implement the
program to be exempt from established competitive bidding
requirements in state law and, instead, provides for an
alternative competitive bidding process, as specified.
Allows DHCS to implement the program through provider
bulletins or similar instruction without regulatory action.
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Establishes reporting requirements to the appropriate
fiscal and policy committees of the Legislature and to the
Legislative Analyst's Office, as specified.
Specifies that this program be implemented only to the
extent federal financial participation is available.
Further specifies legislative intent that this program be
funded solely through federal funds and private
contributions identified by DHCS.
Sunsets the program on June 30, 2021.
Contains under an urgency clause.
Makes various legislative findings and declarations.
FISCAL IMPACT
This bill has not been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
EHRs have the potential to improve the delivery and
coordination of care by allowing authorized providers to
access critical health information needed to improve health
care decision-making, cut waste and eliminate unnecessary
medical tests, and save lives by reducing medical errors.
The authors cite research by the federal Agency for
Healthcare Research and Quality, which found that
physicians using computerized decision support systems
reported lower incidence of serious medication errors due
to their access to better information about
contraindications, complications and drug interactions.
The authors point out that ARRA included significant
funding to implement wide-scale use and sharing of EHRs and
patient health information. SB 945 directs DHCS to
establish and administer the Medi-Cal EHR Incentive Program
to distribute these federal funds. The authors state that
STAFF ANALYSIS OF SENATE BILL 945 (Committee on Health)
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this bill is needed to ensure DHCS may distribute federal
incentive payments to Medi-Cal providers in an expedited
manner, which will help many California health care
providers change their practices and utilize electronic
tools. This may result in significant improvements in
health care quality and efficiency that should benefit all
Californians.
Provider adoption of electronic health record systems
A 2007 California HealthCare Foundation study that relied
on 2005 data found that the overall EHR adoption rate by
providers in California is quite low (14 percent). The
rate of adoption varies based on practice characteristics,
such as practice type (e.g., private practice versus
community health centers), and practice size. Only 25
percent of small- to mid-sized physician groups (2 to 9
physicians) had adopted EHRs into their practice, compared
to 57 percent of large physician groups (10 or more
physicians). The rate of EHR adoption is even lower in
solo practice settings (13 percent) and community health
clinics (3 percent).
American Recovery and Reinvestment Act of 2009
In January 2009, the President challenged the nation with a
goal to computerize health records for all Americans by
2014 through the implementation and use EHR systems. To
support the needs of providers and states, the federal
economic stimulus bill, ARRA, was enacted in February of
2009, which includes more than $36 billion for HIT over the
next several years.
The majority of these funds ($34 billion) are incentive
payments that will go to Medicaid and Medicare providers
who are able to meet prescribed "meaningful use" criteria.
Under these provisions, California providers could receive
upwards of $3.4 billion in direct incentive payments.
Specifically, providers are eligible for:
o Up to $64,000 per Medi-Cal provider (non-hospital)
over 4 years. In total, California's Medi-Cal
providers are estimated to draw down $1.4 billion in
ARRA funds.
o Up to $44,000 per Medicare provider (non-hospital)
over 4 years, beginning October 2010. In total,
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California's Medicare providers are estimated to draw
down $2 billion in ARRA funds.
o Between $2 and $8 million per hospital in Medicare
and Medicaid incentives, depending on size, over 4
years. Hospitals are expected to deploy HIT systems
on behalf of their providers. As such, hospital-based
physicians are ineligible to apply on their own for
Medicare or Medi-Cal incentives. .
Eligible providers for federal incentive payments under
ARRA
According to December 2009 interim regulations released by
CMS, eligible providers include physicians, dentists, nurse
practitioners, certified nurse-midwives and physician
assistants that practice in a federally qualified health
center (FQHC) or a regional health center (RHC).
Federal rules specify that non-hospital providers will
qualify for incentive payments if at least 30 percent of
their total encounters are with Medicaid beneficiaries.
There are some exceptions to this patient volume threshold
criterion, including:
o Pediatricians are eligible for an incentive if at
least 20 percent of their total encounters are with
Medi-Cal beneficiaries.
o Providers practicing in FQHCs and RHCs can include
"needy individuals" who are not eligible for Medi-Cal
to reach the 30 percent threshold.
By 2015, Medicare providers who are not meaningful users
will have their Medicare reimbursement rate decreased by
one percent per year, up to a potential maximum penalty of
five percent. Recipients of Medicaid incentives will have
one year to meet the meaningful use criteria after
receiving the first incentive payment. There are no
federal penalties for failure to adopt EMRs for Medicaid
providers.
DHCS actions
DHCS is responsible for establishing the state's Medicaid
EHR incentive program for providers. The department has
completed an assessment to determine how many and which
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providers would be eligible for the incentive program. The
recently released assessment found that 12 percent of
California providers meet the threshold necessary to be
eligible for Medi-Cal incentive payments. It is estimated
that the program may issue payments to more than 10,000
medical providers and 435 hospitals. DHCS anticipates that
if all eligible Medi-Cal providers in California take
advantage of this opportunity, $1.4 billion will be
distributed to Medi-Cal providers over the next ten years.
In addition, the state is eligible to receive federal funds
for administrative purposes during this period at a 90/10
state match.
As of September 2010, DHCS has been awarded a total of $2.4
million by CMS for HIT planning and implementation costs
and has expended $1.4 million. These funds have been used
to:
Develop an implementation plan and outreach
campaign to providers. The Lewin Group and McKinsey &
Company were contracted to develop strategic, campaign
and implementation plans for the program that provide
the basis for the DHCS activities in promoting HIT and
health information exchange (HIE); educating
beneficiaries about the benefits of EHR; and
coordinating outreach and education activities with
Regional Extension Centers, managed care plans,
independent physicians associations and other trade
associations.
Develop a state health information technology plan.
CMS requires states to develop a State Medicaid HIT
Plan, a five-year HIT roadmap, and an Implementation
Advanced Planning Document to operationalize the
program. On June 23, 2010, DHCS submitted a request to
CMS for approval to fund the work necessary to
complete the required documents. The request for
$2,979,881, at 90 percent federal financial
participation, was approved by CMS on September 3,
2010.
Make necessary state IT changes. DHCS is working
with Affiliated Computer Services, Inc. for the
development of a provider portal for eligible
professionals and hospitals, which will be operational
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January 1, 2011 for enrollment in the Program and
April 1, 2011, for distribution of incentive payments.
Related bills
AB 174 (Monning) requires the EHR systems developed based
on demonstration projects established and administered by
the California Office of Health Information Integrity
(CalOHII) to be implemented with the full participation of
health consumers and organizations concerned with
protecting the privacy and security of patient information
in the development of policies. Requires CalOHII to ensure
that there are opportunities for public comment and input
on the development of those policies. Hearing set for May
3, 2011 in Assembly Health Committee.
Prior legislation
SB 337 (Alquist), Chapter 180, Statutes of 2009, among
other things, authorizes CHHSA to apply for federal HIT and
HIE grant funds.
SB 320 (Alquist) of 2007 would have required the California
Office of HIPAA Implementation, in consultation with other
state agencies, to develop a plan for implementation of the
California Health Care Information Infrastructure Program
no later than March 1, 2009, which would seek to provide
the opportunity for every resident of the state to have an
EHR. Vetoed by the Governor.
SB 1338 (Alquist) of 2006 would have required CHHSA, in
conjunction with certain other state departments, to
develop a strategic plan to foster the adoption of HIT.
This plan would have included, among other provisions, HIT
standards, and identified incentives to promote the use of
EHRs and personal health records. Held in the Assembly
Appropriations Committee.
SB 1672 (Maldonado) of 2006 would have required the
California Health Facilities Financing Authority to
establish a low-interest loan program to provide financing
for the purchase of HIT systems to participating health
care institutions, providers, and provider organizations,
as specified. Held in the Senate Appropriations Committee.
AB 1672 (Nation, Richman) of 2005, in an early version,
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would have established deadlines for various health care
entities to adopt EHRs, provided enhanced Medi-Cal
reimbursement for EHR adoption, and provided state funding
to promote HIT development. These provisions were amended
out of the bill.
COMMENTS
1. Need for the bill. This bill contains an urgency
clause to implement this federal program immediately. DHCS
has already received federal approval to disburse hospital
incentive payments and anticipates receiving federal
approval to implement provider incentive payments in the
next few months. Given that the federal matching rate for
this program increases over time, DHCS needs the authority
to enact this program immediately to ensure that providers
receive these funds as soon as they are available.
2. Suggested technical amendment:
(a) On page 4, strike out lines 17-18 inclusive
and insert:
"milestones and objectives."
POSITIONS
Support: Healdsburg District Hospital
Seneca Healthcare District
Oppose: None on file.
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