Legislature(2009 - 2010)HOUSE FINANCE 519

04/17/2009 01:30 PM House FINANCE

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12:30:27 PM Start
12:33:59 PM SB133
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 9:00 pm Today --
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved HCS CSSB 75(FIN) Out of Committee
Moved HCS CSSB 177(FIN) Out of Committee
<Bill Held Over from 8:30 Meeting>
CS FOR SENATE BILL NO. 133(FIN)                                                                                               
     "An Act creating a statewide electronic health                                                                             
     information exchange system; and providing for an                                                                          
     effective date."                                                                                                           
12:35:06 PM                                                                                                                   
SENATOR JOE PASKVAN,  SPONSOR, reported that the  state has a                                                                   
flawed   medical   system   in   that   hospitals,   doctors,                                                                   
pharmacies, and clinics, cannot  communicate with each other.                                                                   
The bill  seeks to correct that  flaw to save  lives, provide                                                                   
better medical care,  and to save money.  The  legislation is                                                                   
designed to develop  a health information exchange  system to                                                                   
connect    labs,    clinics,     individual    practitioners,                                                                   
pharmacists,  and   existing  hospitals  so  that   they  can                                                                   
communicate in order  to provide the best quality  of care to                                                                   
each Alaskan.  The network will allow individual  Alaskans to                                                                   
have their own personal health  record and to authorize their                                                                   
health care providers to exchange  electronic medical records                                                                   
in  a timely  manner.   Most  importantly,  it  will help  to                                                                   
reduce the  risk of drug  interactions and misdiagnosis,  and                                                                   
reduce administrative costs.                                                                                                    
Senator Paskvan  emphasized that  the risk of  delay matters.                                                                   
There is a risk  of fracturing the components  of the medical                                                                   
system.   The  money invested  will be  a prudent  part of  a                                                                   
system that  will be able  to communicate internally.   There                                                                   
are FCC  monies available,  as well as  private grants.   Any                                                                   
delay is a potential risk of loss  of life and loss of money.                                                                   
Senator Paskvan pointed out that  a project like this demands                                                                   
caution  regarding  privacy.   The  bill  protects  Alaskans'                                                                   
privacy rights beyond  those provided in HIPPA.   It includes                                                                   
a  system by  which patients  can  see who  has viewed  their                                                                   
records.  There  are restrictions on how the  information can                                                                   
be used and  on patient consent requirements,  and an ability                                                                   
to  opt  out   of  the  network.    There   are  notification                                                                   
requirements with respect to confidentiality violations.                                                                        
Senator  Paskvan informed  the  Committee  that studies  show                                                                   
that health care  expenditures may be reduced by  5 percent a                                                                   
year  or $250  million annually  in Alaska  with $10  million                                                                   
saved annually in Medicaid costs.                                                                                               
12:38:24 PM                                                                                                                   
Senator Paskvan highlighted the  flaws in the national system                                                                   
as discovered by  the September 11  tragedy.   He stated that                                                                   
those flaws  are being corrected.   The purpose of SB  133 is                                                                   
to  modernize  the communication  system  within  the  Alaska                                                                   
health  care system  and  save  lives.   The  signing of  the                                                                   
American Recovery  and Reinvestment Act (ARRA)  has presented                                                                   
Alaska  an amazing  opportunity to  modernize its  healthcare                                                                   
infrastructure.  Millions of dollars  are available to states                                                                   
that take early action to improve  the quality and efficiency                                                                   
of  care,  which  will  save lives  through  the  use  of  an                                                                   
electronic health information system.                                                                                           
Senator Paskvan  spoke of those who support  the legislation:                                                                   
the Alaska  Veterans Administration  Health Care  System, the                                                                   
Alaska  State Medical  Association, the  Alaska Primary  Care                                                                   
Association,   Alaska  State   Hospital   and  Nursing   Home                                                                   
Association,  Alaska  Native Tribal  Health  Consortium,  the                                                                   
Bristol  Bay  Area  Health  Consortium,  Providence  Hospital                                                                   
Systems,  Alaska   Regional,  Fairbanks  Memorial   Hospital,                                                                   
Norton Sound  Regional, Mat-Su Regional, Premera  Blue Cross,                                                                   
AARP, Commonwealth  North, private practices,  hospitals, and                                                                   
individuals from around the state.                                                                                              
12:40:47 PM                                                                                                                   
Representative   Kelly  requested   that  his  questions   be                                                                   
answered when he returns.                                                                                                       
LARRY PERSILY, STAFF, CO-CHAIR  HAWKER, shared information as                                                                   
it  relates to  the economic  stimulus funds  - HB  199.   He                                                                   
related  that HB 199  contains money  for electronic  medical                                                                   
records.  A more detailed estimate  about the amount of money                                                                   
required  and  the amount  of  stimulus funds  available  has                                                                   
since been obtained,  which is reflected in  the fiscal note.                                                                   
If this  legislation were  to pass, the  state is  looking at                                                                   
about $25  million in federal  stimulus funds to help  set up                                                                   
the health information  electronic exchange.   There are also                                                                   
funds  available  to  health   care  providers  statewide  to                                                                   
convert offices to electronic medical records.                                                                                  
Co-Chair Stoltze  noted that the  funds are front-loaded  and                                                                   
time is of the  essence.  Mr. Persily agreed  that the sooner                                                                   
the  state moves,  the  higher the  federal  match.   Waiting                                                                   
would cost the state money.                                                                                                     
12:43:18 PM                                                                                                                   
Representative  Fairclough  requested information  about  the                                                                   
penalties for  violating security measures.   Senator Paskvan                                                                   
replied that there were privacy regulations under (ARRA).                                                                       
Representative  Fairclough  read from  the  bill  on page  5,                                                                   
lines 14 and 15, "meet the most  stringent applicable federal                                                                   
or  state  privacy  law  governing   the  protection  of  the                                                                   
information  contained in  the system."   She inquired  about                                                                   
the specifics in state or federal  law that protects people's                                                                   
information.   Senator Paskvan  spoke of federal  protections                                                                   
such as Health  Insurance Portability and  Accountability Act                                                                   
(HIPAA).  This  bill provides additional protections  such as                                                                   
the patient being  able to see who has viewed  their records,                                                                   
restrictions on the use of information,  and the inclusion of                                                                   
patient consent.  There is also an opt-out provision.                                                                           
12:46:07 PM                                                                                                                   
Mr.  Persily added  that  accepting  the Stimulus  Act  funds                                                                   
connects  the state  with  penalties and  tight  restrictions                                                                   
under the act  itself.  Representative  Fairclough emphasized                                                                   
that  it was  important  to understand  the  penalties.   She                                                                   
requested  to  know if  the  penalties were  misdemeanors  or                                                                   
felonies,  and  what  the consequences  were.    Mr.  Persily                                                                   
offered to provide that information.                                                                                            
12:47:56 PM                                                                                                                   
Senator   Paskvan   reported   on  HIPAA   consequences   and                                                                   
   Clarification of Penalties under the HIPAA Privacy and                                                                       
                    Security Regulations                                                                                        
Section 13410 of the Stimulus  provides for a tiered increase                                                                   
of Civil  Monetary  Penalties (CMP)  up to  a maximum of  1.5                                                                   
million  dollars   depending  on  aggravating   factors.  The                                                                   
Stimulus also provides for the  enforcement of HIPAA by State                                                                   
Attorney Generals.                                                                                                              
A  wrongful  disclosure  under  HIPAA  (as  modified  by  the                                                                   
Stimulus)  occurs  when a  person  obtains or  discloses  PHI                                                                   
maintained by a  covered entity and the disclosing  party has                                                                   
not  obtained an  authorization for  the disclosure  (Section                                                                   
Standard         of Penalty               Maximum Penalty                                                                     
Did not know of the  Corrective   action  No    penalty     -                                                                   
violation and by without penalty          however, subject to                                                                   
exercising                                discretion       of                                                                   
reasonable                                Secretary.                                                                          
diligence would not                                                                                                             
have    known    of                                                                                                             
Unknowing            At least $100 per Not       to    exceed                                                                   
Violations           violation            $25,000    in     a                                                                   
                                          calendar year                                                                       
Unknowing            At least $100 per Not       to    exceed                                                                   
Violations           violation            $25,000    in     a                                                                   
                                          calendar year                                                                       
Violation   due  to  At least $1,000 per  Not    to    exceed                                                                   
reasonable   cause, violation             $100,000    in    a                                                                   
not willful neglect                       calendar year                                                                       
Violation   due  to  At  least   $10,000  Not    to    exceed                                                                   
willful neglect      per violation        $250,000    in    a                                                                   
                                          calendar year                                                                       
Violation is due to  At  least   $50,000  Not    to    exceed                                                                   
willful neglect and per violation         $1,500,000                                                                          
the   violation  is                                                                                                             
not       corrected                                                                                                             
within  30  days of                                                                                                             
the first  date the                                                                                                             
person  liable  for                                                                                                             
the penalty knew or                                                                                                             
should  have  known                                                                                                             
that  the violation                                                                                                             
State attorneys general now have  the authority to bring suit                                                                   
in federal  district court against  any person  violating the                                                                   
rules  on  behalf  of  state   residents  to  enjoin  further                                                                   
violation or to obtain damages on behalf of such residents.                                                                     
Representative Fairclough requested a copy.                                                                                     
Co-Chair Stoltze referred to page  4 of the bill and wondered                                                                   
where  the  "small  players"  were  on  the  advisory  board.                                                                   
Senator  Paskvan  responded  that  the  board has  to  be  of                                                                   
sufficient  size  to manage  health  care issues.    Co-Chair                                                                   
Stoltze commented  that it is sometimes hard  to find members                                                                   
without huge financial interests to serve on boards.                                                                            
12:52:00 PM                                                                                                                   
Representative  Gara asked  how many  other states have  done                                                                   
this.  Senator  Paskvan replied that between 15  and 25 other                                                                   
states  had.   Representative  Gara observed  that  it was  a                                                                   
"good  effort"  bill  and  would  be  effective  if  everyone                                                                   
12:53:38 PM                                                                                                                   
Mr. Persily pointed  out that the electronic  medical records                                                                   
requirement  is a federal  requirement.   President Bush  had                                                                   
set a deadline  for 2009, which he pushed back  to 2014.  The                                                                   
money that is available to healthcare  providers continues to                                                                   
2014 under  the assumption  that  it will take  that long  to                                                                   
Representative  Fairclough asked if  there would be  a method                                                                   
to track narcotics use.  Senator  Paskvan thought abuse would                                                                   
be obvious  under the tracking  system.  Mr.  Persily thought                                                                   
the drug addict would use the opt-out provision.                                                                                
12:55:55 PM                                                                                                                   
Senator  Paskvan  stated  that  a  primary  reason  for  this                                                                   
legislation is  for use during  emergency treatment.   Having                                                                   
access to medical records would  be important at that time in                                                                   
order to do no harm.                                                                                                            
Representative Fairclough  expressed concern  about security.                                                                   
She wondered  if insurers would  receive the data and  use it                                                                   
against  the patient.   She asked  if there  was a  provision                                                                   
that  would  allow  an override  of  the  opt-out  provision.                                                                   
Senator  Paskvan thought  that patients  would control  their                                                                   
own   information.   Representative   Fairclough   reiterated                                                                   
concern about the breaching of electronic information.                                                                          
12:58:18 PM                                                                                                                   
Representative  Foster referred  to page  1, item  2, on  the                                                                   
question  and answer  sheet  and said  it  should say  Norton                                                                   
Sound.   Senator  Paskvan  said  Norton Sound  does  strongly                                                                   
support  this legislation  as a  member of  the Alaska  State                                                                   
Hospital and Nursing Home Association.                                                                                          
Senator Paskvan added, in response  to a previous question by                                                                   
Representative  Keller, that the  patient's record  will stay                                                                   
the patient's record.                                                                                                           
Mr. Persily reiterated  that the privacy issue  was addressed                                                                   
by state  and federal laws, as  well as by provisions  in the                                                                   
stimulus bill.                                                                                                                  
WILLIAM STREUR,  DEPUTY COMMISSIONER, MEDICAID  & HEALTH CARE                                                                   
POLICY,  DEPARTMENT OF  HEALTH AND  SOCIAL SERVICES,  related                                                                   
that the administration's  position is concern  about overall                                                                   
cost and  the long-term affect  to the state.   He emphasized                                                                   
that  currently  funds are  limited.    He pointed  out  that                                                                   
bringing  on an  electronic  health information  exchange  is                                                                   
inevitable  by 2014.   After  2015 a  Medicare provider  will                                                                   
have to bill  electronically.  He noted that  with $5 billion                                                                   
available  nationwide, there  is  a lot  of  support for  the                                                                   
Co-Chair Hawker questioned  if there would be  a $100 billion                                                                   
deficit  next year.   Mr.  Streur  corrected that  he said  a                                                                   
billion dollar deficit.                                                                                                         
Mr.  Persily  pointed out,  in  reference  to a  question  by                                                                   
Representative  Keller, that  patients' rights  to their  own                                                                   
records would  not change.   The stimulus act  clearly states                                                                   
the patients' rights to their own records would remain.                                                                         
Representative  Kelly inquired  about the  membership on  the                                                                   
board.   Senator Paskvan reiterated  the need for  a workable                                                                   
number of members on the board.   The meetings are public and                                                                   
open  to public  participation.   Senator  Paskvan wished  to                                                                   
promote the legislation as currently drafted.                                                                                   
1:06:28 PM                                                                                                                    
Representative   Austerman    wanted   to    understand   the                                                                   
administration's  position.  He  asked if the  administration                                                                   
supports  accepting the  stimulus money.   Mr. Streur  stated                                                                   
that  the  administration  supports  the  concept  of  health                                                                   
information   exchange  and   technology,   but  is   neutral                                                                   
regarding the bill.                                                                                                             
Vice-Chair Thomas thought the  legislation was a good vehicle                                                                   
to public health  and safety and contradicted  the governor's                                                                   
earlier stance.  He wondered if the cost was the issue.                                                                         
Mr. Streur thought it had more  to do with what is attainable                                                                   
and available in the budget.                                                                                                    
1:09:01 PM                                                                                                                    
Vice-Chair Thomas asked for the  administration's explanation                                                                   
of the  fiscal note.   Mr.  Streur reported  that the  fiscal                                                                   
note  was prepared  by the  Department of  Health and  Social                                                                   
Services for the administration.                                                                                                
Vice-Chair  Thomas  thought  the  legislation  was  important                                                                   
because  it  would  stop doctor  shopping  and  addiction  to                                                                   
prescription drugs.                                                                                                             
Representative  Joule  asked  about  the  fiscal  note  which                                                                   
assumes  90 percent federal  funding.   Mr. Persily  reported                                                                   
that it would bring $25 million  federal dollars to the state                                                                   
in FY 10.                                                                                                                       
1:11:34 PM                                                                                                                    
Representative  Fairclough asked  about the  fiscal note  and                                                                   
whether there  were figures on  user fees or discussion  of a                                                                   
commitment of  a year or  two to offset  costs.   Mr. Persily                                                                   
had not looked  at user fee analysis.  He offered  to provide                                                                   
that information.                                                                                                               
1:12:47 PM                                                                                                                    
Representative   Austerman   questioned   the   term   "self-                                                                   
sustaining"  in the fiscal  note because  of the required  $1                                                                   
million each year  in general funds.  Senator  Paskvan called                                                                   
that amount the state's user fee.   Mr. Streur clarified that                                                                   
it was a user fee for Medicaid recipients.                                                                                      
Co-Chair  Hawker   understood  that  there  would   be  money                                                                   
available to develop  the system for five years,  after which                                                                   
it would be self-sustaining.  Mr. Streur agreed.                                                                                
Representative  Fairclough asked  if  the federal  government                                                                   
has set a user  fee.  Mr. Streur replied that  they have not.                                                                   
Representative  Fairclough  asked  if  the  user  fee  is  an                                                                   
estimation  of what  the federal  government might  establish                                                                   
for Medicaid.   Mr. Streur reported that the  state estimated                                                                   
how much it would need to support the system.                                                                                   
Representative  Fairclough  suggested   that  the  number  of                                                                   
patients  who  would  access the  system  and  frequency  was                                                                   
known.   Mr. Streur  explained that  that information  is not                                                                   
known  at  this  time.    He   said,  "We  backed  into  it."                                                                   
1:15:52 PM                                                                                                                    
Co-Chair Stoltze opened public testimony.                                                                                       
PAUL  SHERRY,   ALASKA  NATIVE   TRIBAL  HEALTH   CONSORTIUM,                                                                   
FAIRBANKS,  testified via  teleconference.   He spoke  of his                                                                   
role as  president of the  Alaska eHealth Network,  which has                                                                   
been  working  with  Senator Paskvan  to  develop  the  bill.                                                                   
Alaska eHealth Network  hopes to be the entity  designated by                                                                   
the state  to develop  the health  information exchange.   He                                                                   
referred  to   a  handout   provided,  "Deploying   a  Health                                                                   
Information Exchange for Alaskans" (copy on file).                                                                              
Mr.   Sherry  spoke   of  a   partnership   of  the   various                                                                   
stakeholders working  to move  the initiative forward.   They                                                                   
looked  at other  states' networks.   Most  states have  some                                                                   
sort  of  health  information   exchange.    The  partnership                                                                   
believes  that  in  Alaska  there  should  be  one  statewide                                                                   
exchange system.                                                                                                                
Mr. Sherry addressed the work  done on privacy standards.  He                                                                   
clarified  that they are  not creating  a central  depository                                                                   
for records.  He  spoke of long-term savings to  the state of                                                                   
about 20 percent  annually, a major reason for  bringing this                                                                   
project forward.                                                                                                                
1:20:59 PM                                                                                                                    
Co-Chair Stoltze closed public testimony.                                                                                       
1:22:01 PM                                                                                                                    
Representative Kelly MOVED to adopt Conceptual Amendment 1:                                                                     
     Page 4, line 21                                                                                                            
     Insert (3) two non-voting liaison members to enhance                                                                       
     communication and collaboration between the designee                                                                       
     and the;                                                                                                                   
     (A) Alaska Healthcare Policy Commission;                                                                                   
     (B) University of Alaska                                                                                                   
Co-Chair Stoltze OBJECTED.                                                                                                      
Representative Kelly explained  the amendment.  It requests a                                                                   
communication  path be  created  with the  Alaska  Healthcare                                                                   
Policy Commission and the University of Alaska.                                                                                 
1:22:55 PM                                                                                                                    
Representative  Austerman  questioned  which version  of  the                                                                   
bill  the amendment  addressed.   Co-Chair  Hawker  clarified                                                                   
where the amendment would be located.                                                                                           
Senator Paskvan  thought the amendment  was not  harmful, but                                                                   
was not necessary.                                                                                                              
Representative Kelly encouraged support of the amendment.                                                                       
Co-Chair  Stoltze WITHDREW  his  objection.   There being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
1:25:56 PM                                                                                                                    
Co-Chair  Stoltze  noted  that   the  fiscal  note  had  been                                                                   
Representative Joule  MOVED to report  CSSB 133 (FIN)  out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal note.                                                                                                       
Representative Joule WITHDREW his motion.                                                                                       
AT-EASE:       1:26:38 PM                                                                                                     
RECONVENED:    1:27:50 PM                                                                                                     
Representative Joule  MOVED to report  CSSB 133 (FIN)  out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
HCS CSSB 133 (FIN)  was REPORTED out of Committee  with a "do                                                                   
pass"  recommendation   and  with  fiscal  note   #2  by  the                                                                   
Department of Health and Social Services.                                                                                       
1:29:28 PM                                                                                                                    

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