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.