BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 270
S
AUTHOR: Alquist
B
AMENDED: April 23, 2009
HEARING DATE: April 29, 2009
2
CONSULTANT:
7
Park/sh
0
SUBJECT
Health information technology
SUMMARY
Establishes the Health Information Technology Advisory
panel to advise the Governor and Legislature on health
information technology implementation, and provides for the
appointment and duties of the panel, as specified.
CHANGES TO EXISTING LAW
Existing federal law:
Existing law, under the federal American Recovery and
Reinvestment Act of 2009, allows certain medical providers
to receive payments for meaningful use of health
information technology, as specified, and provides other
funding related to health information technology.
This bill:
This bill would create a health information technology
advisory panel to advise the Governor and the Legislature
on health information technology implementation in
California. The bill would require the panel to be composed
of the following voting members:
Continued---
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 2
Two representatives of consumers, one of whom shall
have expertise in privacy and security of health
information.
One representative from a hospital.
One representative from a primary care clinic.
One representative from a health plan or health
insurer.
Two representatives from a medical group, one of
whom shall represent a group of specialists.
Two representatives from health care professions
who are not physicians.
One representative who is a solo or small group
physician.
One representative who is a physician who is part
of an independent physician association.
One representative who has expertise in
telemedicine or telehealth.
Two representatives from institutions of higher
education that offer medical or clinical education or
health informatics, one of whom represents a public
institution.
One representative from the California Council on
Science and Technology.
One representative from a nonprofit entity who has
demonstrated expertise in health information
technology.
One representative with expertise in the use of
health information technology to manage chronic
disease.
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 3
The bill would require voting members to have demonstrated
expertise in the provision, use, or deployment of health
information technologies to providers, provider groups,
provider facilities, consumers, patients, or communities.
The bill would require panel members to be appointed by the
Governor, the Senate Committee on Rules, and the Speaker of
the Assembly, but does not yet specify the number or type
of appointments to be made by each of the three appointing
entities. The bill would require initial terms of voting
members to be staggered, with eight members being appointed
for a two-year term and nine members being appointed for a
four-year term, and provide that, upon the expiration of
the initial term, all voting members shall be appointed for
a four-year term.
The bill would require participation from the following as
ex officio, nonvoting members:
The Secretary of Business, Transportation and
Housing, or his or her designee.
The Secretary of Health and Human Services, or his
or her designee.
The Chair of the Senate Committee on Health, or his
or her designee.
The Chair of the Assembly Committee on Health, or
his or her designee.
The bill would require the panel to do all of the
following:
Make recommendations to maximize the state's
eligibility and award of federal stimulus funds,
authorized by the American Recovery and Reinvestment
Act of 2009 (ARRA) (Public Law 111-5), related to the
use of health information technology.
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 4
Advise the Governor and the Legislature on a
mechanism for designating a nonstate entity, and
whether such a nonstate entity is desirable, for
executing tasks related to accessing federal stimulus
funds made available through ARRA.
Make recommendations to ensure that safety net
providers have access to federal stimulus funds for
which they are eligible.
Make recommendations for sources necessary to match
federal dollars in the award of funds made available
through ARRA.
Make recommendations for working with higher
education entities to incorporate medical informatics
and health care information enterprise integration
into the higher education curriculum, and information
technology into clinical education.
Make recommendations for standards and
certification to federal policy makers and the Office
of the National Coordinator for Health Information
Technology in the federal Department of Health and
Human Services.
Make recommendations on qualifications for centers
in the state that may provide technical assistance and
best practices related to health information
technology.
Make recommendations to ensure that providers have
access to information on federal incentive payments
available under ARRA, including understanding of
"meaningful use" as defined in federal law.
Meet at least monthly in the first year, and,
thereafter, as deemed necessary by the chair.
The bill would require the panel to elect, from among its
members, a chair who shall regularly report to the Governor
and the Legislature on behalf of the panel, and would
require the panel to make a recommendation in 2014 whether
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 5
continued need for the advisory panel exists beyond 2016.
The bill would provide that all members of the advisory
panel shall serve without compensation, but would provide
for reimbursement to members all necessary travel expenses
associated with the activities of the panel. The bill would
provide that consumer representatives on the panel may
receive per diem compensation if they are otherwise
economically unable to attend and participate in panel
activities.
FISCAL IMPACT
Unknown.
BACKGROUND AND DISCUSSION
Author's statement
The author states that the American Recovery and
Reinvestment Act of 2009, signed on February 17, created
the opportunity for California to receive billions of
dollars in funding for health information technology, with
some estimates ranging between $3 and $4 billion for
California. The author states that while much of this
funding, in the form of incentive payments to physicians
for "meaningful use" of health information technology,
won't be available for at least another year, some funding
will be available in the form of grants and other start-up
costs related to planning, implementation, and the
development of health information exchanges (HIE) and
regional extension centers that provide technical
assistance.
The author believes that the state needs to think
strategically about how to maximize federal funds and put
that funding to the best use possible. The author notes
that the Administration recently announced the creation of
an Advisory Board to look into these issues of stimulus
implementation, including health information exchange, and
how that is to be executed, and how the state should go
about undertaking such efforts or designating a nonprofit
entity to undertake these efforts.
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 6
The author states that this measure reflects the
Administration's effort to look into issues of stimulus
implementation that need to be undertaken, but also
anticipates an ongoing need for an advisory board, as
stimulus funding will be available for five years,
definitions of meaningful use may change, and funding of
health information technology may have other ramifications
in the delivery of health care.
The author also notes that, given the timing of additional
federal guidance in relation to when funds may become
available, the language of SB 270 may contain other needed
implementation language to maximize California's
competitiveness for grants related to planning,
implementation, development of health information exchanges
and regional extension centers, as well as to authorize the
state to provide incentive payments through Medi-Cal as
soon as they are available.
American Recovery and Reinvestment Act of 2009
On February 17, 2009, President Barack Obama signed the
American Recovery and Reinvestment Act of 2009 (ARRA),
which invests more than $787 billion in an economic
recovery package that includes more than $36 billion for
health information technology over the next several years.
The majority of these funds are incentive payments that
will go to Medicaid and Medicare providers who are able to
demonstrate "meaningful use" of health information
technology.
Medicaid providers are eligible for incentive payments of
approximately $64,000 over a 5 to 6 year period, while
Medicare providers are eligible for up to $44,000 in
incentive payments. Providers who serve both Medicare and
Medicaid must choose one source of reimbursement only.
Hospitals are eligible to receive a base funding of $2
million, with additional funds provided according to a
statutorily prescribed formula related to discharge data.
ARRA also creates a penalty system under Medicare, which
begins in 2015.
In addition to incentive payments that flow through these
programs, ARRA provides for $2 billion in discretionary
funding for the newly codified Office of the National
Coordinator for Health Information Technology (ONCHIT) to
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 7
carry out provisions of the bill related to HIT promotion,
such as planning and implementation grants, workforce
training grants, grants for the creation of regional
extension centers, and grants to create state loan programs
for EHR. The National Coordinator will award, on a
competitive basis, grants to states or tribal entities for
creating loan programs for "health care providers" (as
defined below). Most, if not all, of these grants require
in-kind matches to draw down federal dollars.
Apart from these funding sources, ARRA also provides
roughly $1.5 billion through the Health Resources and
Services Administration to community health centers to be
used solely for construction, renovation, and equipment,
part of which may be used to acquire HIT systems; and $400
million through the Health and Human Services Agency (HHS)
to accelerate the development and dissemination of research
assessing the comparative effectiveness of health care
treatments and strategies, which may involve clinical
registries, clinical data networks, and other forms of
electronic health data that can be used to generate or
obtain outcomes data. Finally, ARRA provides for new
technology research and development grants and broadband
opportunity grants, which may create further opportunities
to expand the use of health information technologies.
In addition to financial support and incentives related to
HIT, the Act also institutes several changes in the role of
the federal government, including the codification of
ONCHIT within HHS, which will review and endorse HIT
standards and coordinate the HIT policy and programs of HHS
and other relevant agencies. ARRA requires ONCHIT to adopt
initial standards by December 31, 2009, (through the
rulemaking process) and the National Coordinator is also
charged with developing health record technology, unless it
is determined that the marketplace is substantially and
adequately meeting the needs of providers.
ARRA calls for a HIT Policy Committee to make
recommendations to the National Coordinator regarding the
implementation of a nationwide HIT infrastructure, and a
HIT Standards Committee to make recommendations on
standards, implementation specifications, and certification
criteria for the electronic exchange and use of health
information.
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 8
Finally, ARRA expands federal patient privacy and
information security requirements beyond the current
requirements of the Health Insurance Portability and
Accountability Act (HIPAA). Expansions include applying
HIPAA security provisions and penalties directly to the
business associates of covered entities; requiring
notification of patients if the security of their personal
health information has been breached; requiring an
accounting of disclosures of personal health information
made through HIT systems; prohibiting the sale of a
patient's personal health information without the patient's
permission and prohibiting covered entities from being paid
to use patients' medical information for marketing
purposes; and providing for enforcement by State Attorneys
General.
Recent actions in response to ARRA
On April 20, 2009, the Health and Human Services Agency, in
partnership with the State Chief Information Officer, and
the Business Transportation and Housing Agency, announced
it would initiate a collaborative, time-limited effort to
strengthen California's ability to maximize federal
stimulus funding for health information exchange and health
information technology. The product of the collaborative
effort will be a final project report that will help
determine whether, for the purposes of ARRA, it is
appropriate for the state to play the lead role in
providing technical services related to HIE or whether this
role is best suited to a state designated entity (SDE),
and, if necessary develop procurement documents/processes
to select a state designated entity. In addition to the
proposed governance structure of a state or SDE supported
HIE, the final report will address the current landscape,
summary of known federal requirements, EHR advancement
principles, architectural principles, data exchange
requirements, clinical requirements, and a high level
implementation plan, and will include recommendations to
the state regarding the use of EHRs and HIE by state
institutions, including state Mental Hospitals, Veterans
Homes, and Developmental Centers. The final report will be
submitted to the Advisory Board, which will hold a public
meeting to discuss the final report. Initial anticipation
for project completion is four months.
Additionally, the Governor appointed a deputy secretary of
HIT in April 2009, a position that had been established in
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 9
January 2007, but had remained unfilled.
In February 2009, the California HealthCare Foundation, a
nonprofit foundation, published a document with the support
of Manatt Health Solutions and Robert Mittman, entitled "An
Unprecedented Opportunity: Using Federal Stimulus Funds to
Advance Health IT in California," which contained 24
recommendations on what California should do to benefit
from the federal stimulus, including facilitating incentive
payments to Medi-Cal providers, finding matching funds to
draw down federal dollars, getting a seat at the federal
table for important policy decisions on things like
standards and meaningful use, and providing technical
guidance and direction to interested parties across the
state.
The California HIT landscape
In the adoption of health IT, California leads the national
average, but use is segmented largely according to provider
type. According to the California Association of Physician
Groups, approximately 11.1 million patients are under the
care of large medical groups with EMRs, primarily under the
HMO model. Competition and quality have been important
drivers of EMR/EHR adoption by larger groups and systems.
According to a May 2008 California HealthCare Foundation
(CHCF) report, 79 percent of Kaiser physicians and 57
percent of large group practices (defined as having at
least 10 physicians in the group) used EHRs in 2007. In
comparison, only 2 percent of independent practice
associations and 3 percent of community clinics have fully
installed EHRs. The CHCF report highlighted that, "nearly
all physicians who use EHRs said such use helps their
practice provide better care."
Payers in California have participated in the funding of
HIT through the Integrated Healthcare Association's
pay-for-performance initiative, which last year included an
incentive for purchasing HIT, and this year will include an
incentive for using HIT. Additionally, hospitals and
independent physician associations (IPAs) have supported
HIT use among their providers.
In addition to private efforts, several non-profit grants
have funded HIT in the clinic setting. Between 1999 and
2006, the Community Clinics Initiative provided $41 million
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 10
in grants to 82 percent of clinics in California to improve
the information technology capacity of community health
centers. According to a report published by the California
Endowment and Tides, most clinics have built a solid
technology infrastructure and automated core business
functions as a result of the funding.
Additionally, California has several regional health
information organizations (RHIOs) or health information
exchanges (HIEs) involved in supporting the development of
secure methods of health information exchange within a
particular geographic area among various health care
providers.
While not a conventional RHIO or HIE, Joint Venture Silicon
Valley Network, a 15-year-old public benefit corporation,
undertook an effort to overcome barriers in applying
information technology to health care by convening health
care providers, employers, and insurers on specified
projects, such as establishing a claims transmission
network, and developing a health data warehouse and
exchange. Joint Venture ceased its "Smart Health" project
after more than two years, concluding that, "while
individual stakeholders are making significant internal
progress toward this goal, Valley-wide solutions cannot
move forward within the current environment."
State government efforts
In July 2005, Governor Schwarzenegger issued the first of
two Executive Orders directing his administration to
establish an "eHealth Action Forum" to develop a state
policy agenda for implementation of a comprehensive HIT
program by July 2007. The order also directed
administration officials to devise financing strategies to
allocate at least $200 million in investment funds and $40
million in grant monies, both derived from California
health plan mergers to benefit the diverse needs of rural
communities, medical groups, and safety net providers. The
order also directed state agencies to oversee
public/private financing alternatives to facilitate rapid
adoption and sustainability of health information
technology for hospitals, physician groups, physicians, and
other health care providers, and to develop a model for
connecting rural health clinics to medical centers using
telemedicine and other technology.
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 11
In January 2007, the Governor announced, as part of his
health insurance reform proposal, a number of initiatives
related to HIT, such as establishing a Deputy Secretary of
HIT, and a state HIT Financing Advisory Committee to
coordinate the state's HIT efforts and develop financing
mechanisms; implementing universal e-prescribing by 2010;
developing standardized personal health records (PHR)
within the public and private sectors; and implementing a
county-level pilot electronic medical record system for
mental health patients within the requirements of
Proposition 63, the Mental Health Services Act.
In January 2007, following the eHealth Action Forum, the
consulting firm Accenture released a report containing
findings and recommendations regarding HIT expansion in
California and a roadmap to achieving the goals outlined in
the Executive Order. Accenture sought information from
state agencies and the state chief information officer, and
more than 130 public and private health leaders, including
some from other states and the federal government in
preparing its California Health Information Technology
Study.
The study highlighted five key action areas for the state,
including:
Establishing of statewide HIT leadership,
consisting of a designated leader and a strong
advisory group to provide public-private collaboration
on HIT issues.
Structuring incentives and identifying financing
methods, especially for clinical systems for poorly
automated care delivery in sites with low access to
capital, and the "last mile" of broadband
establishment. Primary investment structures discussed
in the HIT roadmap include grants and loans; contracts
and purchases; and financial incentives built into
ongoing fee schedules.
Investing in HIT that would allow providers and
entities of all types to link to a secure, "operating
core connecting infrastructure" (technology and
communications) to achieve 100 percent health data
exchange (HDE) in ten years, including efforts to
enable digitized data at the point of care and
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 12
connection to the core infrastructure.
Augmenting privacy and security protection.
Engaging consumers in these changes.
Accenture also recommended near-term steps including
appointment of a state HIT czar and an advisory board,
establishing a foundation for financing, especially
involving the grants and loans efforts; drafting a health
data exchange blueprint; appointing a patient panel;
organizing current privacy and security efforts, and laws
and regulations; and developing pilot efforts based on
priority patient populations.
In March 2007, the Governor issued a second Executive Order
directing his administration to convene a workgroup to
solicit input and participation in the development of a
comprehensive strategy to increase quality, strengthen
health care transparency and increase accountability in
public and private health care delivery systems. The order
identified key actions for the state to pursue, including
providing state leadership to accomplish 100 percent
electronic health data exchange, leveraging state
purchasing power, developing a quality reporting mechanism
through the Office of the Patient Advocate, and
strengthening the ability of the Office of Statewide Health
Planning and Development to collect, integrate and
distribute data on health outcomes, costs, utilization and
pricing for use by purchasers, health plans, providers and
consumers.
In December 2008, the state HIT Financing Advisory
Committee submitted a report, which was made publicly
available in early February 2009, containing five near-term
and long-term priority recommendations, among others. The
recommendations were to:
Create a Public-Private Partnership to consolidate future
public and private health IT resources (dollars and
expertise) and coordinate grants and loans. (Near-Term)
Finance EHRs through medium-term financing, rather than
the more typical short-term clinical information systems
loan, and determine ways to finance "operating" losses
that are a continuation of the original EHR investment
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 13
and investigate ways to reduce transaction costs;
determine the feasibility of using the California Health
Facilities Financing Authority to issue bonds for this
financing. (Near-Term)
Evaluate the feasibility of new organizations for
implementing and providing EHR services. Investigate the
possibility of creating support service organizations
that either act as application service providers and/or
provide support for EHR implementation and development of
templates. (Mid-Term)
Determine the feasibility of establishing a state grant
program. (Long-Term)
Encourage Medi-Cal to consider demonstration projects
that incorporate new reimbursement models that require
health IT (e.g., investigate Medi-Cal pay-for-performance
fee-for-service incentives for medical homes services).
(Long-Term)
Prior legislation
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
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
California Health and Human Services 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 EHRs and PHRs. 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
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 14
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 EHRs, provided enhanced Medi-Cal
reimbursement for EHR adoption, and provided state funding
to promote
HIT development. These provisions were amended out of the
bill.
COMMENTS
1.Recent amendments. The bill was amended on April 23, 2009.
These amendments struck all of the bill's prior provisions
related to health information technology, and replaced
these provisions with the establishment of the advisory
panel, its composition, and its duties. Given the bill's
recent amendment date, stakeholders may not have had an
adequate opportunity to review the bill's new provisions.
2.Author's amendments. The author would like to provide a few
clarifying amendments, and one addition to the panel's
nonvoting members.
130250. (a) There is hereby created a health information
technology advisory panel to advise the Governor and the
Legislature on health information technology
implementation in California. The panel shall be composed
of the following voting members:
(1) Two representatives of consumers, one of whom
shall have expertise in privacy and security of health
information.
(2) One representative from a hospital.
(3) One representative from a primary care clinic.
(4) One representative from a health plan or health
insurer.
(5) Two representatives from a medical group, one of
whom shall represent a group of specialists.
(6) Two representatives from health care professions
who are not physicians.
(7) One representative who is a solo or small group
physician (defined as a group of five physicians or
fewer), representing primary care.
(8) One representative who is a solo or small group
physician (defined as a group of five physicians or
fewer) representing specialty care. physician who is
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 15
part of an independent physician association .
(9) One representative who has expertise in
telemedicine or telehealth.
(10) Two representatives from institutions of higher
education that offer medical or clinical education or
health informatics, one of whom represents a public
institution.
(11) One representative from the California Council on
Science and Technology.
(12) One representative from a nonprofit entity who
has demonstrated expertise in health information
technology.
(13) One representative with expertise in the use of
health information technology to manage chronic
disease.
(b) Of the panel members as provided for in subdivision
(a) the Governor shall appoint __ members, the Senate
Committee on Rules shall appoint __ members, and the
Speaker of the Assembly shall appoint __ members.
(c) The following shall also participate in the panel as
ex officio, nonvoting members:
(1) The Secretary of Business, Transportation and
Housing, or his or her designee.
(2) The Secretary of Health and Human Services, or his
or her designee.
(3) The chair of the Senate Committee on Health, or
his or her designee.
(4) The chair of the Assembly Committee on Health, or
his or her designee.
(5) The State Chief Information Office, or his or her
designee.
130252. (a) The panel shall do all of the following:
(1) Make recommendations to maximize the state's
eligibility and award of federal stimulus funds,
authorized by the American Recovery and Reinvestment
Act of 2009 (ARRA) (Public Law 111-5), related to the
use of health information technology.
(2) Advise the Governor and the Legislature on a
mechanism for designating a nonstate entity, and
whether such a nonstate entity is desirable, for
executing tasks related to accessing federal stimulus
STAFF ANALYSIS OF SENATE BILL SB 270 (Alquist)Page 16
funds made available through ARRA.
(3) Make recommendations to ensure that safety net
providers have access to federal stimulus funds for
which they are eligible.
(4) Make recommendations for sources necessary to
match federal dollars in the award of funds made
available through ARRA.
(5) Make recommendations for working with higher
education entities to incorporate medical informatics
and health care information enterprise integration
into the higher education curriculum, and information
technology into clinical education.
(6) Make recommendations for standards and
certification to federal policy makers and the Office
of the National Coordinator for Health Information
Technology in the federal Department of Health and
Human Services.
(7) Make recommendations on qualifications for centers
in the state that may provide technical assistance and
best practices related to health information
technology, and meaningful assistance on its
implementation.
(8) Make recommendations to ensure that providers have
access to information on federal incentive payments
available under ARRA that will help them maximize
their eligibility under ARRA, including understanding
of "meaningful use" as defined in federal law.
(9) Meet at least monthly in the first year, and,
thereafter, as deemed necessary by the chair.
POSITIONS
Support: None received
Oppose: None received
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