BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 278
A
AUTHOR: Monning
B
AMENDED: June 21, 2010
HEARING DATE: June 30, 2010
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CONSULTANT:
7
Chan-Sawin
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SUBJECT
Health information exchange: demonstration projects
SUMMARY
Authorizes the California Office of Health Information
Integrity (CalOHII) to establish and administer
demonstration projects to evaluate potential solutions to
facilitate health information exchange (HIE), as specified.
Authorizes California-based health care entities, as
defined, to submit an application with CalOHII to be
approved as demonstration project participants, as defined.
Authorizes CalOHII to approve up to four demonstration
projects annually. Requires any 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. Repeals the
provisions of the bill on the date the Director of CalOHII
executes a declaration stating that the grant period for
the State Cooperative Grant Agreement for HIE has ended.
CHANGES TO EXISTING LAW
Existing federal law:
Establishes the Health Information Technology for Economic
and Clinical Health Act (HITECH Act), within the federal
American Recovery and Reinvestment Act of 2009 (ARRA), to,
among other things, provide funding related to health
Continued---
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information technology (HIT) and HIE, including funding to
states to establish HIE and to local communities to conduct
health information exchange demonstration projects.
Existing state law:
Establishes CalOHII within the California Health and Human
Services Agency (Agency) to ensure enforcement of state law
mandating confidentiality of medical information, and to
impose administrative fines for the unauthorized use of
medical information.
Authorizes the Agency, or one of the departments under its
jurisdiction, to apply for federal funds made available
through ARRA for health information technology and
exchange.
Requires Agency or a state-designated entity to facilitate
and expand the use of electronic health information
according to nationally recognized standards and
specifications, and execute tasks related to accessing ARRA
funds while protecting the privacy and confidentiality of
medical records to the greatest extent possible.
This bill:
Authorizes the Agency, through CalOHII, to establish and
administer demonstration projects, as defined, to evaluate
potential solutions to facilitate HIE that promote quality
of care, respect the privacy and security of personal
health information, and enhance the trust of the
stakeholders.
Defines "demonstration project" as a project approved and
administered by CalOHII in accordance to this division and
the State Cooperative Grant Agreement for health
information exchange, or any other similar grant or grants.
Defines "State Cooperative Agreement" as the grant
agreement between the federal government and the state, in
which the federal government awarded the state with grant
money pursuant to the HITECH Act in February 2010.
Authorizes California-based health care entities, as
defined, to submit an application to CalOHII to be approved
as a demonstration project participant, as defined.
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Defines "California-based health care entity" as a health
care entity based primarily in California.
Defines "demonstration project participant" as a
California-based health care entity that is approved by
CalOHII to participate in a demonstration project.
Requires CalOHII, upon receiving a demonstration project
application, to: 1) assist applicants in soliciting federal
funds for the demonstration project; and, 2) work with
applicants to define the scope of the demonstration
project.
Authorizes the Director of CalOHII to approve demonstration
projects to test for, but not limited to, the following
areas: 1) patient consent and informing policies and
practices; 2) new technologies and applications that enable
the transmission of protected health information, as
specified; and, 3) implementation issues encountered by
small solo health care providers as a result of higher
privacy and security requirements.
Requires that the selection of demonstration projects be
based on, but not limited to, the following criteria: 1)
areas critical to building consumer trust and confidence in
the HIE system; 2) projects that help support the exchange
of information critical to meeting the federal meaningful
use provisions, as defined; and, 3) areas recommended by
the California HIE consumer and industry stakeholder
advisory process.
Defines "meaningful use" to mean the term as defined in the
HITECH Act, and in regulations promulgated under the HITECH
Act.
Requires CalOHII to engage with stakeholders to evaluate
issues identified by the demonstration projects, comment
upon proposed regulations, and discuss HIE solutions.
Authorizes CalOHII to administer up to four demonstration
projects a year.
Requires CalOHII to 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.
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Authorizes 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, that are consistent for the
exchange of information.
Defines "health information exchange service participants"
as a California-based health care entity that has
voluntarily agreed to use the HIE services developed in
accordance with this bill.
Exempts 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 (OAL), and filing and
publication requirements that specify an effective date
that is 30 days after the date of filing with the Secretary
of State.
Requires the Director of CalOHII to file any regulation
adopted pursuant to this bill with OAL, for filing with the
Secretary of State and publication in the California Code
of Regulations. Requires such filings to cite the
appropriate section of this bill and any other applicable
state or federal laws.
Requires CalOHII, prior to adopting a regulation or
changing an existing regulation pursuant to this bill, to
adopt the standards requiring CalOHII to: 1) post the
proposed regulation on its website at least 45 days prior
to adoption; 2) accept public comments for at least 30 days
after the proposed regulation has been posted online; and,
3) 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.
Specifies 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.
Requires regulations adopted to expire upon repeal of the
authorizing statute.
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Requires 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.
Requires CalOHII to review the results of the demonstration
projects and report to the Legislature no later than six
months after the end of the project.
Specifies that demonstration projects carried out utilizing
federal grant funds may be subject to federal auditing
requirements.
Requires 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.
Repeals the provisions of the bill on the date the Director
of CalOHII executes a declaration stating that the grant
period for the State Cooperative Grant Agreement for HIE
has ended.
Makes various legislative findings and declarations.
FISCAL IMPACT
This bill has not been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
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.
The author points out that the imminent implementation of
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widespread HIE systems has raised many new issues among
stakeholders with strong and often opposing viewpoints.
While these issues generate strong and often opposing
viewpoints, there is growing consensus on two points: 1)
electronic HIE is such a new area that it raises new
privacy issues on which there is very little empirical
information that can alter the debate; and, 2)
demonstration projects can provide valuable new insights
into these complex issues and can help lead to resolution
on issues.
According to the author, providing explicit legislative
authority for the demonstration projects will allow the
Director of CalOHII to issue specific and standardized
requirements to participants in approved demonstration
projects. This authority will ensure a uniform application
of the laws, thus providing health care entities that
participate in the approved demonstrations guidance to
minimize the risk of practices that may be inconsistent
with state medical privacy law. Additionally, this
authority will help CalOHII harmonize state and federal law
wherever possible to support the demonstration.
The author believes that these demonstration projects will
supply the state with the tools to identify successful and
problematic rules, gaps in state law, and inform state
policymakers of potential viable solutions to enabling safe
and secure exchange of personal health information.
According to the author, the future policy recommendations
informed by these demonstration projects will be critical
to the successful implementation of HIE in California.
Health information exchange
Realizing the benefits of HIT requires a pervasive
underlying infrastructure that supports the use of
patient-focused electronic health information. This
requires wide-scale systemic, state and nationwide
infrastructure that incorporates protections for patient
privacy and confidentiality. The building blocks for this
infrastructure include electronic medical records (EMRs)
used by providers to manage patient information, personal
health records (PHRs) for individual access of their own
records, and health information exchange (HIE) to
facilitate the electronic exchange of EMRs and PHRs.
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HIE is the capability to electronically move health
information among disparate health care information systems
while maintaining the meaning of the information being
exchanged. In many instances, HIE is used to describe both
the process of exchanging health information
electronically, and the entity overseeing and governing the
exchange. The goal of HIE is to facilitate access to, and
retrieval of, clinical data to provide safer, more timely,
efficient, effective, equitable, patient-centered care.
HIE Readiness and Extent of HIE Adoption in California
According to Agency's HIE strategic plan, health care
services are delivered to Californians through 400
hospitals, over 60,000 active physicians, 100 federally
qualified health centers and 263 rural health clinics.
Nationally, it is estimated that only 7.6 percent of
non-federal hospitals and 13 percent of ambulatory
providers have implemented "basic" EMRs that include
certain clinical documentation, but not clinical decision
support. California providers rank above the national
estimate with 20 percent of medical groups and 13 percent
of physician groups estimated to be using EMRs. Similarly,
among individual physicians, California physicians reported
greater use of EMRs than the national average, with 37
percent of physicians reporting EMR use in comparison to 28
percent nationally. This uptake may, in part, be explained
by the presence of large medical practices (10 or more
physicians) in California, as 57 percent of physicians in
large practices report using EMRs, compared to 25 percent
of physicians in small/medium practices and 13 percent of
solo practitioners. However, two-thirds of physicians work
in small and solo practices. Virtually all Kaiser
Permanente physicians now use EMRs.
California's health care safety-net facilities and
providers in underserved communities generally face
significant fiscal and resource challenges, and these
challenges impact their ability to implement EMRs. While
less than a third of community clinics report they are
actively pursuing EMRs, the majority of community clinics
have some form of health IT in place, most commonly in the
form of diabetes and immunization registries.
California's current HIE efforts fall broadly into two
categories: 1) large health systems, affiliated providers
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and ancillary services implementing integrated EMRs, and,
2) community-driven efforts that aim to ensure ubiquitous
availability of data within a region or across the state.
Community HIE Efforts
California's HIE activity is characterized by a wide range
of local initiatives that have remained largely
independent. There are over 20 self-characterized HIEs
throughout the state with informal jurisdictions largely
based on a regional or geographic boundary. The efforts are
predominantly overseen by Boards of Directors comprised of
local stakeholders, health care leaders, and
representatives of organizations who are, or plan to be,
participating in the HIE. Community HIE efforts have
historically been driven and motivated by the perceived
health care needs of their local communities. These efforts
are often closely linked with the predominant provider
organizations in the community who pay special attention to
the community's unique health needs (e.g. diabetes,
behavioral health, etc.). While community HIE efforts
often share a common mission to improve health care in
their communities through HIE and health IT, the efforts do
not all share a common technical approach and are in
various stages of technical development.
Efforts in integrated health systems and in organized
provider groups
Several of California's integrated health systems currently
exchange data between and among their affiliated physicians
and hospitals. Many of these systems have multiple
locations and facilities spread across Northern and
Southern California, with some systems extending into
neighboring states. While many of these systems offer a
suite of HIT applications and modalities to their
hospital-based clinicians, health systems vary in their
provision of HIT outside of the hospital walls. Over the
past decade, these health systems have made significant
investments in their HIT infrastructure and staff. While
technical approaches and vendors vary among health systems,
all of the health systems follow national standards and
many participate in technical workgroups at the state and
national levels. Today health systems vary in their
interactions with and participation in community HIE
efforts, ranging from no involvement to participation in
collaborative activities. Health systems largely operate
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as closed networks and their information will largely
remain proprietary and locked within those networks unless
addressed through statewide collaboration.
Of California's approximately 400 IPAs and medical groups,
as many as 70 have begun to implement an EMR infrastructure
and adoption program. With few exceptions, EMR adoption
has been incremental with only a portion of an IPA or
medical group's affiliated physicians fully operational on
a system.
The Health Information Technology for Economic and Clinical
Health Act
On February 17, 2009, President Barack Obama signed the
federal economic stimulus bill, ARRA, which includes more
than $36 billion for HIT and HIE 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 demonstrate "meaningful use" of
HIT. California is expected to receive more than $3
billion in provider incentive payments. In addition, ARRA
provides $2 billion in discretionary funding for HIT
promotion, including $564 million in planning and
implementation grants of which California was awarded,
beginning in fiscal year 2009-2010, to establish statewide
HIE.
Under this grant, the state is required to coordinate, plan
and implement an HIT and HIE program that enables health
care providers to be able to share electronic health
records, when appropriate, in order to improve treatment
and health care outcomes. In addition to this grant
funding, the federal government expects to make incentive
payments to health care providers who convert to electronic
records and demonstrate they can use the electronic record
in a meaningful manner. California expects to begin
capturing between $2 and $3 billion dollars in provider
incentive funds beginning in 2011. This infrastructure is
a critical piece necessary for California's health care
providers to be able to capture the full amount of
incentive payments over the next four years.
In addition to the State HIE Cooperative Grants, HITECH
also provides for the following grants:
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Beacon Community Cooperative Grants to local
communities to build and strengthen their HIT
infrastructure and exchange capabilities, including
strong privacy and security measures for data
exchange, so they can demonstrate the vision of the
future where hospitals, clinicians and patients are
meaningful users of health IT. The goal of these
grants is to develop models for communities to achieve
measurable improvements in health care quality,
safety, efficiency, and population health. A total of
$220 million in federal funding is available, with
each community chosen expected to receive $10-20
million.
HIT Technology and Infrastructure Research Grants
to researchers focused on solving current and expected
future challenges that represent barriers to adoption
and meaningful use of HIT, through the proliferation
of new methods and advanced technologies. These
projects focus on areas where "breakthrough" advances
are needed. A total of $60 million is available.
Privacy and security in the context of HIE
Both federal and state law currently regulates medical and
health privacy and security. The electronic health
information capabilities raise new consumer privacy and
provider liability concerns that existing laws were never
originally created to address. Failure to effectively
address these critical concerns could lead to poor consumer
and vendor participation into newly created systems, costly
legal conflicts, and a regression back to inefficient and
costly paper based information systems. In order for the
state to develop a privacy and security framework that can
effectively support the transition to electronic health
information exchange the state must identify and address
necessary changes in state privacy and security laws.
The California Office of Health Information Integrity
CalOHII, also known as the California Office of HIPAA
Implementation (CalOHI), oversees a number of vital state
functions related to medical information privacy. Among
its duties, CalOHI is responsible for overseeing the
federal HIT infrastructure grants, including the federal
HIE grant, and serves as the primary resource for state
entities on health information privacy and the
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implementation of federal HIPAA regulations.
CalOHII is also responsible for working with a wide
spectrum of health care stakeholders including
representatives from the health care industry, consumers,
and privacy and security advocates to develop new privacy
and security standards to enable the adoption and
application of health information exchange in California.
In addition, CalOHII is working on a number of HIT issues
on behalf of the state, including the expansion of
broadband throughout California, the implementation of
telehealth, and support to the Health Information
Technology Financing study.
Arguments in support
The California Office of Health Information Integrity
writes in support, stating that AB 278 would test policies
and rules, and better inform the state and health care
stakeholders while they attempt to define HIE
infrastructure over the next several years. By allowing
for various HIE demonstration projects, it would be
possible to determine how best to protect privacy in
accordance with state and federal laws, while enabling
electronic health information exchange.
Related bills
SB 337 (Alquist), Chapter 180, Statutes of 2009, among
other things, authorizes the Agency to apply for federal
health information technology and health information
exchange grants.
Prior legislation
AB 211 (Jones) Chapter 602, Statutes of 2008, establishes
OHII to ensure the enforcement of state confidentiality of
medical information, to impose administrative fines for the
unauthorized use of medical information upon referral from
DPH, and require providers of health care to establish and
implement appropriate administrative, technical, and
physical safeguards to protect the privacy of patient's
medical information.
SB 320 (Alquist) of 2007 would have required the California
Office of HIPAA Implementation, in consultation with the
others, to develop a plan for implementation of the
California Health Care Information Infrastructure Program
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no later than March 1, 2009, that would seek to provide the
opportunity for every resident of the state to have an
electronic health record. Vetoed by the Governor.
SB 1338 (Alquist) of 2006 would have required the Agency,
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
electronic health records (EMRs) 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 health care information technology
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,
would have established deadlines for various health care
entities to adopt EMRs, provided enhanced Medi-Cal
reimbursement for EMR adoption, and provided state funding
to promote HIT development. These provisions were amended
out of the bill.
PRIOR ACTIONS
No longer applicable.
COMMENTS
1. Health information exchange is a new, complex, and
rapidly evolving area. The use of electronic systems to
manage and share health information is a new phenomenon in
the health care industry, even though the technology itself
is not new. Due to the sensitive nature of personal health
information and the portable nature of electronic records,
new concerns regarding privacy and security have emerged
that were not applicable with paper records. The ability
to test new models and technologies may provide state
policymakers the necessary information to make informed
choices regarding the necessary changes to current state
laws related to medical privacy.
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2. Suggested technical amendments:
(a) On page 3, line 33, before the period,
insert:
, including issues related to access to, and
storage of, individual health information.
(b) On page 4 , after "parameters" and before the
comma, insert :
as defined by the office
(c) On page 5, delete line 32 and replace with:
(1) Policies and practices related to patient
consent, informing, and notification.
(d) On page 5, line 38, after "Implementation
issues" insert:
, if any,
POSITIONS
Support: California Office of Health Information Integrity
(CalOHII)
Oppose: None received
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