BILL ANALYSIS �
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THIRD READING
Bill No: SB 945
Author: Senate Health Committee
Amended: 5/31/11
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE : 9-0, 5/4/11
AYES: Hernandez, Strickland, Alquist, Anderson, Blakeslee,
De Le�n, DeSaulnier, Rubio, Wolk
SENATE APPROPRIATIONS COMMITTEE : 8-0, 5/26/11
AYES: Kehoe, Walters, Alquist, Lieu, Pavley, Price,
Runner, Steinberg
NO VOTE RECORDED: Emmerson
SUBJECT : Medi-Cal: electronic records
SOURCE : Author
DIGEST : This bill directs the California Department of
Health Care Services, until July 1, 2021 and only to the
extent that federal financial participation is available,
to establish and administer the Medi-Cal Electronic Health
Records (EHR) Program for the purposes of providing federal
incentive payments to Medi-Cal providers for the
implementation and use of EHR systems, as specified. This
bill prohibits the use of General Fund money.
ANALYSIS :
Existing federal law:
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1. Establishes the federal Medicaid program to provide
comprehensive health benefits to low-income persons.
2. Authorizes, under the federal American Recovery and
Reinvestment Act of 2009 (ARRA), the outlay of federal
money for, among other things, Medicaid incentive
payments to qualified health care providers who adopt
and use EHRs in accordance with specified provisions in
the ARRA, which are referenced to as meaningful use
provisions and which include use of electronic
prescribing, submission of information on clinical
quality measures, reporting to immunization and disease
registries, and exchanging health information to improve
the quality of care.
Existing state law:
1. Establishes the Medi-Cal program, the state's Medicaid
program, administered by Department of Health Care
Services (DHCS), under which basic health care services
are provided to qualified low-income persons.
2. Authorizes the California Health and Human Services
Agency (CHHSA), or one of its departments, to apply for
federal health information technology (HIT) grants, as
specified. Also requires CHHSA or a state-designated
entity to facilitate and expand the use of electronic
health information according to nationally recognized
standards and specifications, as specified.
This bill:
1. Directs DHCS to establish and administer the Medi-Cal
EHR Incentive Program (Program) in accordance with the
State Medicaid HIT Plan, as developed by DHCS and
approved by the federal Centers for Medicare and
Medicaid Services.
2. Directs DHCS to accept applications from, and make
incentive payments to, eligible providers and
facilities.
3. Requires eligible providers and facilities seeking
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incentive payments to meet all standards for the federal
EHR Technology Program established in federal law and
regulations, as specified.
4. Provides for an appeals process.
5. Allows DHCS to contract with public or private entities
to implement this program, including utilizing existing
provider enrollment and payment mechanisms.
6. Allows contracts entered into by DHCS to implement the
program to be exempt from established competitive
bidding requirements in state law and, instead, provides
for an alternative competitive bidding process, as
specified.
7. Allows DHCS to implement the program through provider
bulletins or similar instruction without regulatory
action.
8. Establishes reporting requirements to the appropriate
fiscal and policy committees of the Legislature and to
the Legislative Analyst's Office, as specified.
9. Specifies that this program be implemented only to the
extent federal financial participation is available.
Further specifies legislative intent that this program
be funded solely through federal funds and private
contributions identified by DHCS.
10.Sunsets the program on June 30, 2021.
11.Makes various legislative findings and declarations.
Background
In January 2009, President Obama challenged the nation with
a goal to computerize health records for all Americans by
2014 through the implementation and use EHR systems. To
support the needs of providers and states, the federal
economic stimulus bill, ARRA, was enacted in February of
2009, which includes more than $36 billion for HIT over the
next several years.
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The majority of these funds ($34 billion) are incentive
payments that will go to Medicaid and Medicare providers
who are able to meet prescribed "meaningful use" criteria.
Under these provisions, California providers could receive
upwards of $3.4 billion in direct incentive payments.
Specifically, providers are eligible for:
Up to $64,000 per Medi-Cal provider (non-hospital) over
four years. In total, California's Medi-Cal providers
are estimated to draw down $1.4 billion in ARRA funds.
Up to $44,000 per Medicare provider (non-hospital) over
four years, beginning October 2010. In total,
California's Medicare providers are estimated to draw
down $2 billion in ARRA funds.
Between $2 and $8 million per hospital in Medicare and
Medicaid incentives, depending on size, over 4 years.
Hospitals are expected to deploy HIT systems on behalf of
their providers. As such, hospital-based physicians are
ineligible to apply on their own for Medicare or Medi-Cal
incentives.
Eligible providers for federal incentive payments under
ARRA . According to December 2009 interim regulations
released by the federal Centers for Medicare and Medicaid
Services, eligible providers include physicians, dentists,
nurse practitioners, certified nurse-midwives and physician
assistants that practice in a federally qualified health
center or a regional health center.
Federal rules specify that non-hospital providers will
qualify for incentive payments if at least 30 percent of
their total encounters are with Medicaid beneficiaries.
There are some exceptions to this patient volume threshold
criterion, including:
Pediatricians are eligible for an incentive if at least
20 percent of their total encounters are with Medi-Cal
beneficiaries.
Providers practicing in federally qualified health
centers and regional health centers can include "needy
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individuals" who are not eligible for Medi-Cal to reach
the 30 percent threshold.
By 2015, Medicare providers who are not meaningful users
will have their Medicare reimbursement rate decreased by
one percent per year, up to a potential maximum penalty of
five percent. Recipients of Medicaid incentives will have
one year to meet the meaningful use criteria after
receiving the first incentive payment. There are no
federal penalties for failure to adopt EMRs for Medicaid
providers.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
EHRI payments to Up to $1,400,000 FY 2011-12Federal
Medi-Cal providers through FY 2020-21
State administrative costs $2,200 ongoing
through FY 2020-21 Federal/
Private
This bill prohibits the use of General Fund money.
SUPPORT : (Verified 5/26/11)
Healdsburg District Hospital
Seneca Healthcare District
ARGUMENTS IN SUPPORT : The author points out that ARRA
included significant funding to implement wide-scale use
and sharing of EHRs and patient health information. This
bill directs DHCS to establish and administer the Medi-Cal
EHR Incentive Program to distribute these federal funds.
The author states that this bill is needed to ensure DHCS
may distribute federal incentive payments to Medi-Cal
providers in an expedited manner, which will help many
California health care providers change their practices and
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utilize electronic tools. This may result in significant
improvements in health care quality and efficiency that
should benefit all Californians.
CTW:kc 5/27/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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