BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 945 (Committee on Health)
Hearing Date: 5/26/2011 Amended: As Introduced
Consultant: Katie Johnson Policy Vote: Health 9-0
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BILL SUMMARY: SB 945, an urgency measure, would require the
Department of Health Care Services to establish and administer
the Medi-Cal Electronic Health Records Incentive Program for the
purposes of providing federal incentive payments to Medi-Cal
providers for the implementation and use of electronic health
records systems.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
EHRI payments to up to
$1,400,000 FY 2011-12 Federal
Medi-Cal providers through FY
2020-21
State administrative costs $2,200 ongoing
through FY 2020-21 Federal/*
Private
*90 percent federal funds, 10 percent state match. See Staff
Comments.
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
This bill would require the Department of Health Care Services
(DHCS) to establish and administer the Medi-Cal Electronic
Health Records Incentive Program (EHRI) for the purposes of
providing federal incentive payments to Medi-Cal providers for
the implementation and use of electronic health records systems
SB 945 (Committee on Health)
Page 1
in accordance with the State Medicaid Health Information
Technology Plan (Plan), as developed by DHCS and approved by the
Centers for Medicare and Medicaid Services (CMS). These
provisions would sunset June 30, 2021. Upon CMS approval, the
department would be required to accept applications from and
make incentive payments to eligible professionals and
facilities. The department would be required to report to the
Legislature on this program, as specified, each fiscal year
commencing July 1, 2012.
This bill would require the Plan to identify and establish the
planning, policies, and procedures required to operationalize
the program, specify criteria for enrollment, eligibility, and
data collection, specify timeframes for technology
modifications, specify the process for provider outreach,
establish an appeals process, and to participate in the National
Level Registry. This bill would require eligible professionals
and facilities applying for these funds to meet all of the
standards of the federal Electronic Health Record Technology
Program, including criteria for meaningful use pursuant to Part
495 of Title 42 of the Code of Federal Regulations.
This bill would exempt any contracts entered into by DHCS for
the purposes of implementing this program from the provisions of
the Public Contract Code and from review by the Department of
General Services. Additionally, this bill would exempt DHCS from
the Administrative Procedure Act and permit the department to
implement these provisions through provider bulletins.
DHCS Action to Date
Existing federal law, the American Recovery and Reinvestment Act
(ARRA) provided up to $36 billion in Medicaid incentive payments
to qualified health care providers who adopt and use electronic
health records in accordance with meaningful use requirements
set forth in the act. DHCS' Plan requested $2,979,881, at 90
percent federal financial participation and 10 percent state
match; the department is awaiting official CMS approval. As of
September 2010, DHCS had been awarded $2.4 million by CMS and
has spent $1.4 million.
According to a DHCS study, approximately 12 percent of
California's providers are eligible for these payments-more than
10,000 medical providers and 435 hospitals. If all eligible
California providers and facilities took advantage of these
SB 945 (Committee on Health)
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federal incentive payments, then approximately $1.4 billion
would be distributed over the 10 period of this program.
Specified hospitals and providers may receive payments. All
incentive payments would be 100 percent federally funded.
State Administrative Expenses
Additionally, state administrative costs related to this program
are eligible for 90 percent federal financial participation.
This means that the state would pay 10 percent of the
administrative costs and the federal government would pay the
other 90 percent. The California HealthCare Foundation (CHCF)
has committed for providing the state match for administration
of this program for the first two years of operation. This bill
would state that it is the intent of the Legislature that the
activities associated with health information exchange be funded
solely through federal and private contributions identified by
the department. It is unknown whether ongoing private funds
would be secured for ongoing administration or if an
appropriation from the General Fund would be necessary. Ongoing
administrative costs are estimated to be $2.2 million annually
through the end of the program at the 90/10 funding arrangement.
DHCS will continue to submit a request for funding from CHCF at
six-month grant intervals.
DHCS submitted a budget change proposal requesting 16
2-year-limited term positions at a cost of $2.2 million
annually, shared 90 percent federal funds and 10 percent private
funds from CHCF, for funding for a contract for the planning and
implementation of the plan. The positions were approved, but the
trailer bill was sent to policy committee because it establishes
a new program. Additionally, the budget reflects an increase of
$634.8 million federal funds in Medi-Cal for this program, about
half of the anticipated incentives payments.
The author's proposed amendments would prohibit the use of
General Fund monies for the purposes of these provisions.