BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 945| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 945 Author: Senate Health Committee Amended: 5/31/11 Vote: 27 - Urgency SENATE HEALTH COMMITTEE : 9-0, 5/4/11 AYES: Hernandez, Strickland, Alquist, Anderson, Blakeslee, De León, DeSaulnier, Rubio, Wolk SENATE APPROPRIATIONS COMMITTEE : 8-0, 5/26/11 AYES: Kehoe, Walters, Alquist, Lieu, Pavley, Price, Runner, Steinberg NO VOTE RECORDED: Emmerson SUBJECT : Medi-Cal: electronic records SOURCE : Author DIGEST : This bill directs the California Department of Health Care Services, 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. This bill prohibits the use of General Fund money. ANALYSIS : Existing federal law: CONTINUED SB 945 Page 2 1. Establishes the federal Medicaid program to provide comprehensive health benefits to low-income persons. 2. 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 ARRA, which are referenced to as meaningful use provisions and which include use of electronic prescribing, submission of information on clinical quality measures, reporting to immunization and disease registries, and exchanging health information to improve the quality of care. Existing state law: 1. Establishes the Medi-Cal program, the state's Medicaid program, administered by Department of Health Care Services (DHCS), under which basic health care services are provided to qualified low-income persons. 2. 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: 1. 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. 2. Directs DHCS to accept applications from, and make incentive payments to, eligible providers and facilities. 3. Requires eligible providers and facilities seeking CONTINUED SB 945 Page 3 incentive payments to meet all standards for the federal EHR Technology Program established in federal law and regulations, as specified. 4. Provides for an appeals process. 5. Allows DHCS to contract with public or private entities to implement this program, including utilizing existing provider enrollment and payment mechanisms. 6. 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. 7. Allows DHCS to implement the program through provider bulletins or similar instruction without regulatory action. 8. Establishes reporting requirements to the appropriate fiscal and policy committees of the Legislature and to the Legislative Analyst's Office, as specified. 9. 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. 10.Sunsets the program on June 30, 2021. 11.Makes various legislative findings and declarations. Background In January 2009, President Obama 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. CONTINUED SB 945 Page 4 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: Up to $64,000 per Medi-Cal provider (non-hospital) over four years. In total, California's Medi-Cal providers are estimated to draw down $1.4 billion in ARRA funds. Up to $44,000 per Medicare provider (non-hospital) over four years, beginning October 2010. In total, California's Medicare providers are estimated to draw down $2 billion in ARRA funds. 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 the federal Centers for Medicare and Medicaid Services, eligible providers include physicians, dentists, nurse practitioners, certified nurse-midwives and physician assistants that practice in a federally qualified health center or a regional health center. 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: Pediatricians are eligible for an incentive if at least 20 percent of their total encounters are with Medi-Cal beneficiaries. Providers practicing in federally qualified health centers and regional health centers can include "needy CONTINUED SB 945 Page 5 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee: Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund EHRI payments to Up to $1,400,000 FY 2011-12Federal Medi-Cal providers through FY 2020-21 State administrative costs $2,200 ongoing through FY 2020-21 Federal/ Private This bill prohibits the use of General Fund money. SUPPORT : (Verified 5/26/11) Healdsburg District Hospital Seneca Healthcare District ARGUMENTS IN SUPPORT : The author points out that ARRA included significant funding to implement wide-scale use and sharing of EHRs and patient health information. This bill directs DHCS to establish and administer the Medi-Cal EHR Incentive Program to distribute these federal funds. The author states that 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 CONTINUED SB 945 Page 6 utilize electronic tools. This may result in significant improvements in health care quality and efficiency that should benefit all Californians. CTW:kc 5/27/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED