BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 945
                                                                  Page  1

          Date of Hearing:   August 17, 2011

                                Felipe Fuentes, Chair

              SB 945 (Committee on Health) - As Amended:  May 31, 2011 

          Policy Committee:                             HealthVote:18-0

          Urgency:     Yes                  State Mandated Local Program: 
          No     Reimbursable:              No


          This bill authorizes the Department of Health Care Services to 
          implement a largely federally funded program that provides 
          monetary incentives to eligible Medi-Cal providers who install 
          and use certified Electronic Health Records (EHRs). 
          Specifically, this bill:

          1)Requires DHCS to establish and administer the Medi-Cal EHR 
            Program in accordance with the State Medicaid Health 
            Information Technology Plan.

          2)Requires DHCS to accept applications from and make incentive 
            payments to eligible professionals and facilities, upon 
            federal approval.

          3)Allows contracts entered into by DHCS to implement the program 
            to be exempt from established competitive bidding requirements 
            in state law.

          4)Allows DHCS to implement the program through provider 
            bulletins or similar instruction without regulatory action.

          5)Establishes reporting requirements to the appropriate fiscal 
            and policy committees of the Legislature and to the 
            Legislative Analyst's Office.

          6)Specifies the program would only be implemented to the extent 
            that federal financial participation is available and that 
            General Fund moneys shall not be used.

          7)Provides a program sunset date of June 30, 2021.


                                                                  SB 945
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           FISCAL EFFECT  

          This bill would provide statutory authority for the Medi-Cal EHR 
          Program that is currently ongoing, so it would likely not result 
          in new state costs beyond what is already approved through the 
          budget process.  Current program funding is approximately $2.2 
          million annually (90% federal/10% private funding).  

          Administrative funding for the EHR incentive program is provided 
          through a 90% federal-10% state match, and the California Health 
          Care Foundation, an independent philanthropy, has agreed to 
          provide the 10% state match for the life of this program.  


           1)Rationale  . This bill would provide statutory authority for the 
            Medi-Cal EHR Program, a program that will provide incentive 
            payments to the state's Medi-Cal providers for implementing 
            EHRs.  This bill is needed to authorize DHCS to administer 
            this ongoing program efficiently and in a manner that meets 
            aggressive federal implementation timelines.  As noted in the 
            explanation of the bill's urgency clause, this bill is 
            necessary "in order to authorize the state to disburse 
            incentive payments to eligible professionals and hospitals, 
            issue provider bulletins or similar instructions without 
            regulatory action, and administer an appeals process at the 
            earliest possible time."    

           2)Background  .  Many health care providers are in the process of 
            transitioning from paper-based medical record systems to 
            electronic systems, but uptake among safety net providers has 
            been slow due to limited financial resources to invest in 
            technological upgrades.   A program to award monetary 
            incentives to encourage Medicaid and Medicare providers to 
            install EHRs was enacted as part of the Health Information 
            Technology for Economic and Clinical Health (HITECH) Act, a 
            component of the 2009 federal American Recovery Reinvestment 
            Act (ARRA)(federal stimulus package).  Specifically, the 
            HITECH Act included an option for states to administer 
            incentive programs to eligible hospitals and Medicaid 
            providers.    Eligible providers can receive up to $63,750 
            over the six years that they choose to participate in the 
            program.  The incentive payments to providers are 100% 
            federally funded, while the cost of administering the program 


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            is 90% federally funded and 10% state funded. 
            3)Medi-Cal EHR Program  .  The Medi-Cal EHR program is intended to 
            incentivize Medi-Cal providers to adopt and use electronic 
            health records in a meaningful way and by doing so advance 
            patient safety and quality of care. This program is estimated 
            to provide incentive payments of approximately $1.4 billion to 
            435 hospitals and 10,000 Medi-Cal providers. 

           Analysis Prepared by  :    Lisa Murawski / APPR. / (916) 319-2081