04/13/2009 09:00 AM Senate FINANCE

SENATE BILL NO. 133                                                                                                           
                                                                                                                                
     "An Act creating a statewide electronic health                                                                             
     information exchange system; and providing for an                                                                          
     effective date."                                                                                                           
                                                                                                                                
10:00:16 AM                                                                                                                   
                                                                                                                                
Senator Thomas MOVED to ADOPT Amendment 1.                                                                                      
                                                                                                                                
Co-Chair Stedman OBJECTED for discussion purposes.                                                                              
                                                                                                                                
Senator Thomas explained that  Amendment 1 deleted references                                                                   
to the state  as the one that  heads up the operation  of the                                                                   
Health Information  Exchange (HIE).  Amendment 1  deletes the                                                                   
designation of the state as an  option for fully implementing                                                                   
and  operating the  HIE  system.  He stated  that  it is  not                                                                   
necessary  to have a  big government  operation when  private                                                                   
sector options exist,  with the state acting  in an oversight                                                                   
role. The  amendment puts  in statute  the expectations  that                                                                   
the designated  entity must become self sustaining  through a                                                                   
combination  of  user  fees  and  other  private  and  public                                                                   
funding sources.                                                                                                                
                                                                                                                                
Senator  Paskvan  stated that  he  supports  Amendment 1.  He                                                                   
explained that the  fiscal note does reflect  the change from                                                                   
the state as  a potential operator of the program.  He stated                                                                   
that once the  federal stimulus dollars are  gone this entity                                                                   
will  be self  sustaining  operated  through  user fees.  The                                                                   
state's  involvement would  then  be as  another supplier  of                                                                   
user fees.  He opined  that the  solution was  modern and  in                                                                   
response  to   Alaska's  growth   in  healthcare   needs.  He                                                                   
expressed full support of the Amendment.                                                                                        
                                                                                                                                
Co-Chair Stedman explained the  fiscal note reduced operating                                                                   
costs by $389.4  million as a result of four  fewer full time                                                                   
employees.                                                                                                                      
                                                                                                                                
Senator  Paskvan clarified  that  the plan  reduced six  full                                                                   
time  employees to  two full  time  employees. He  understood                                                                   
that the  fiscal note  is a worst  case scenario.  The actual                                                                   
expenditures are less.                                                                                                          
                                                                                                                                
Co-Chair  Stedman  removed  his objection.  Amendment  1  was                                                                   
ADOPTED.                                                                                                                        
                                                                                                                                
10:04:24 AM                                                                                                                   
                                                                                                                                
Senator  Huggins  asked  for  further  clarification  of  the                                                                   
administration's position on this  bill as it pertains to the                                                                   
federal stimulus funds.                                                                                                         
                                                                                                                                
Co-Chair   Stedman   asked  for   representation   from   the                                                                   
administration to address Senator Huggins' question.                                                                            
                                                                                                                                
Senator Paskvan  understood that the administration  remained                                                                   
neutral regarding the bill.                                                                                                     
                                                                                                                                
WILLIAM STREUR,  DEPUTY COMMISSIONER, MEDICAID  & HEALTH CARE                                                                   
POLICY, DEPARTMENT OF HEALTH AND  SOCIAL SERVICES, introduced                                                                   
himself.                                                                                                                        
                                                                                                                                
Senator Huggins asked about available  stimulus funds and the                                                                   
intended use.                                                                                                                   
                                                                                                                                
Mr. Streur  answered that the  total money available  through                                                                   
the  federal stimulus  was  $19.2  billion. Each  state  must                                                                   
submit their particular  needs. He stated that  $17.2 billion                                                                   
of  the $19.2  billion is  for the  providers submitting  for                                                                   
assistance  for electronic  health record  deeds and  related                                                                   
efforts  as part  of a  health  information exchange  system.                                                                   
This  includes 100  percent funding  for the  next two  years                                                                   
with the future ratio yet unstated.                                                                                             
                                                                                                                                
Senator Huggins asked for an estimate  of one hundred percent                                                                   
funding for two years. Mr. Streur  answered $17.2 billion for                                                                   
two years. For Alaska, the amount  is yet unknown and depends                                                                   
on what the state submits.                                                                                                      
                                                                                                                                
Senator Huggins asked for an estimate  of the cost to operate                                                                   
under this provision. Mr. Streur  answered that the costs are                                                                   
anticipated at  $27 million about  $25 million of  which will                                                                   
be  federally  funded.  The cost  for  ongoing  operation  is                                                                   
lessened considerably after the first two years.                                                                                
                                                                                                                                
10:07:25 AM                                                                                                                   
                                                                                                                                
Senator Huggins  asked about the continuing  operating costs?                                                                   
He understood  that a user fee  existed to defray  a majority                                                                   
of the operating  costs. Mr. Streur responded  that following                                                                   
the first  five years, the  projection is for  the collection                                                                   
of user  fees. The process  prohibits the collection  of user                                                                   
fees at the onset  of the program. The state  must absorb the                                                                   
cost  provided by  user  fees  until the  program  is up  and                                                                   
running with  enough depth and  spread across Alaska  to deem                                                                   
the program usable.                                                                                                             
                                                                                                                                
Co-Chair  Stedman informed  that  the fiscal  note has  $24.8                                                                   
million in  federal receipts for  FY10 and $2.7 million  in a                                                                   
General  Fund match  from the  state. He  continued that  $26                                                                   
million in  general fund match  is also required in  2011. In                                                                   
2012 $1,760,000  is the  anticipated general  fund match.  He                                                                   
stated  that  $1,080,000  is  the  approximate  general  fund                                                                   
impact on the treasury.                                                                                                         
                                                                                                                                
10:09:16 AM                                                                                                                   
                                                                                                                                
Senator Huggins  intended to pass  the legislation.  The year                                                                   
the change  takes place is  the only question.  He understood                                                                   
that  alterations to  the state's  health information  system                                                                   
are inevitable  and mandatory.  The efficiency of  delivering                                                                   
medical  maintenance  is  beneficial  for  the  patient.  Mr.                                                                   
Streur agreed  with Senator  Huggins. Medicare providers  are                                                                   
required to have electronic health records by 2015.                                                                             
                                                                                                                                
Senator  Huggins stated  that  his constituents  communicated                                                                   
that  he  ought  to  vote  affirmative  for  funds  available                                                                   
through the federal government  for the cost of transitioning                                                                   
to electronic health records by  2015. Mr. Streur agreed with                                                                   
Senator Huggins.                                                                                                                
                                                                                                                                
10:11:16 AM                                                                                                                   
                                                                                                                                
Senator Olson  discussed the rapid advancement  of technology                                                                   
for  electronic   communication.  He   asked  if   the  state                                                                   
subscribes now with possible advancement prior to 2015.                                                                         
                                                                                                                                
Mr. Streur  explained that much  of the new technology  comes                                                                   
with built in updates. Updates  for the state are provided as                                                                   
part  of the  core  system for  the  next ten  years.  Health                                                                   
information exchange technology contains built in updates.                                                                      
                                                                                                                                
Co-Chair Stedman asked the bill sponsor to testify.                                                                             
                                                                                                                                
10:13:01 AM                                                                                                                   
                                                                                                                                
Senator Paskvan thanked the committee for hearing the bill.                                                                     
                                                                                                                                
Co-Chair Hoffman MOVED that the  committee report out SB 133,                                                                   
as amended with attached fiscal note.                                                                                           
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
SB  133  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and  a  new  fiscal   impact  note  from  the                                                                   
Department of Health and Social Services.