BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
718 (Emmerson)
Hearing Date: 8/27/2009 Amended: 7/8/2009
Consultant: Katie Johnson Policy Vote: Health 9-0
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BILL SUMMARY: AB 718 would create the Inland Empire Health Plan
E-Prescribing Pilot Program.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Contract to administer unknown, but in the
hundreds of Federal/*
the program thousands to
millions of dollars annually General
Cost pressure to unknown, but
potentially in the hundreds General/**
Implement pilot statewide of millions of
dollars annually Federal
*Funds made available by the American Recovery and Reinvestment
Act of 2009 (ARRA); General Fund pressure in the event that ARRA
funding is unavailable.
**Medi-Cal costs are generally shared 50 percent federal funds
and 50 percent General Fund
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STAFF COMMENTS: SUSPENSE FILE.
Existing law, the Pharmacy Law, regulates the dispensing of
prescription drugs and authorizes the electronic transmission of
prescriptions, as specified.
Existing law establishes the Medi-Cal program, which provides
health care services to low-income Californians and is
administered by the Department of Health Care Services (DHCS).
It also authorizes the Board of Supervisors of San Bernardino
County to establish a commission to negotiate a contract with
the California Medical Assistance Commission (CMAC). The Inland
Empire Health Plan (IEHP) is a joint power agency, or a
not-for-profit public entity, that was established in 1994 to be
the local initiative Medi-Cal managed care plan for Riverside
and San Bernardino counties. It has an enrollment of
approximately 400,000 individuals in the Healthy Families
Program, Healthy Kids, Medicare, and Medi-Cal and its funding is
nearly all state General Fund and federal funds. Approximately
83 percent of its enrollees are Medi-Cal beneficiaries.
This bill would establish the Inland Empire Health Plan
E-Prescribing Pilot Program (program) and would require that it
be administered by an entity that would be selected by the IEHP
through a competitive bidding process. This bill would require
that the selected entity offer a product that has been certified
by the Certification Commission for Health Information
Technology (CCHIT) or another certifying entity authorized by
the federal Department of Health and Human Services (HHS).
Page 2
AB 718 (Emmerson)
This bill would require the program to include specified
components, including electronic prescribing consistent with
applicable state and federal law.
On or before January 1, 2012, the entity administering the
program would be required to submit a report to the Legislature
on the goals and results of the program and whether or not the
program should be extended. This program would sunset January 1,
2013, unless the Legislature chooses to extend it through means
of another statute.
This bill would require that the program be funded by funds made
available by the federal American Recovery and Reinvestment Act
of 2009 (ARRA). Expenditures would include a contract with the
third party administering entity, support to participating
physician offices and pharmacies, and electronic transaction
fees which together would cost hundreds of thousands or millions
of dollars depending on how many providers of the 750 in the
IEHP network participate in the program. If ARRA funds are not
available for this purpose, there would be pressure on the
General Fund and potentially on federal funds to the extent that
they could match state funds to fund the program in its full
amount since this is a state-mandated local program.
Additionally, if the Legislature were to extend this pilot
program beyond 2013, there would be significant General Fund and
federal funds pressure to fund the program since any ARRA
funding would likely be one-time grant funds.
If the pilot program were expanded statewide, it could cost in
the hundreds of millions of dollars to implement and administer
and would create significant pressure on the General Fund and
federal funds.
According to a California Health Care Foundation (CHCF) report,
ARRA provides approximately $36 billion over 6 years in
incentives to Medicare and Medicaid providers to adopt
electronic health records. $2 billion of that funding is
authorized to be used in infrastructure outlays through grants,
loans, and demonstration programs. It is unknown whether or not
IEHP would be eligible to utilize these funds to finance the
program created by this bill. Additionally, start-up and request
for proposal (RFP) costs to IEHP would be minor and absorbable
since the health plan regularly produces RFPs.
Recent federal legislation, the Medicare Improvements for
Patients and Providers Act (MIPPA) of 2008, contains incentive
payments for the implementation of electronic prescribing from
2009 through 2013 in the form of an increased Medicare
reimbursement of 2 percent in 2009, 1 percent in 2011, and 0.5
percent in 2013. If providers do not implement electronic
prescribing by 2012, MIPPA provides for a decrease in Medicare
payments as follows: decreased reimbursement by 1 percent in
2012, 1.5 percent in 2013, and 2 percent in 2014 and beyond.