2012 -- S 2325

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LC00738

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO HEALTH AND SAFETY -- HEALTHCARE INFORMATION

TECHNOLOGY AND INFRASTRUCTURE FUND

     Introduced By: Senators Perry, Nesselbush, Miller, DiPalma, and Doyle

     Date Introduced: February 07, 2012

     Referred To: Senate Health & Human Services

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 23-77-1, 23-77-2, 23-77-3 and 23-77-4 of the General Laws in

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Chapter 23-77 entitled "Healthcare Information Technology and Infrastructure Development

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Fund" are hereby amended to read as follows:

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     23-77-1. Legislative findings and purpose. – (a) Research shows that the application of

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information technology such as electronic medical records, computer-based physician order entry

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and electronic data interchange, has significant potential for improving healthcare quality and

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safety and obtaining efficiencies in the healthcare delivery system. The healthcare system has

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been slower than other sectors of the economy to use advances in information technology to

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achieve improvements in efficiencies and quality. Hospitals and healthcare providers face barriers

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in accessing the capital needed to make investments in information technology. Government,

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which pays for about one-third (1/3) of the nation's healthcare cost, has a substantial interest in

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obtaining cost efficiencies by promoting investment in healthcare information technology and

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infrastructure. There is a need for coordination and collaboration among healthcare payers,

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providers, consumers and government in designing and implementing a statewide interoperable

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healthcare information infrastructure that includes standards for administrative data exchange,

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clinical support programs, quality performance measures and the maintenance of the security and

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confidentiality of individual patient data. It is the intent of the legislature to promote the

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implementation of healthcare information technology and the development of an interoperable

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statewide healthcare information infrastructure by creating a special fund to be used to

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supplement any funds which would otherwise be available for these purposes.

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     (b) The financial support and security of the following health information technology

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programs (collectively referred to as the “Program”) are critical to achieving a healthcare delivery

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system with improved quality, safety, and efficiency for all Rhode Islanders. The program

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includes Rhode Island’s American recovery and reinvestment act (ARRA)-funded health

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information exchange (HIE); regional extension center (REC); Beacon communities’ initiative

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and other regional health information organization (RHIO)-administered health information

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infrastructure projects.

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     (c) The Rhode Island HIE is a secure electronic network that will allow authorized

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medical professionals to access patients’ most up-to-date health information enabling them to

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provide the best possible care.

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     (d) A robust HIE will enable physicians, hospitals and other providers to meet the ARRA

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“meaningful use” requirements and as a result, assist them in obtaining electronic health records

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incentive payments under the federal stimulus plan.

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     (e) The REC initiative is focused on assisting providers with the successful

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implementation of electronic health records (EHRs) for the exchange of health information and

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qualifying for incentive payments as a result of meeting “meaningful use” criteria. The Beacon

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communities federal designation (Beacon) is aimed at electronically enabling patient-centered

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medical homes and improving quality reporting statewide to achieve significant, measurable

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improvements in healthcare quality, cost and population health in Rhode Island.

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     (f) The Rhode Island beacon and REC initiatives will leverage and expand upon other

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aspects of the program.

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     23-77-2. Establishment of the healthcare information technology and infrastructure

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development fund Establishment of the healthcare information technology and

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infrastructure fund. -- (a) There is established in the department of health, a dedicated restricted

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receipt fund, the healthcare information technology and infrastructure development fund to be

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administered by the director of the department of health for the sole purpose of promoting the

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development and adoption of healthcare information technologies designed to improve the

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quality, safety and efficiency of healthcare services and the security of individual patient data

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through the financing of programs and other services administered by the RHIO and/or health as

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defined below.

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     (b) Moneys in the fund shall be used for projects authorized by the director of health and

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may be expended by contract, loan, or grant, to develop, maintain, expand, and improve the

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state's healthcare information technology infrastructure and to assist healthcare facilities and

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health service providers in adopting healthcare information technologies shown to improve

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healthcare quality, safety or efficiency. Such projects shall incorporate the goal of maintaining the

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security and confidentiality of individual patient data, and separate projects for that purpose may

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also be authorized from the fund. The director of health shall develop criteria for the selection of

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projects to be funded from the fund in consultation with the healthcare information technology

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and infrastructure advisory committee created in section 23-77-4.

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     (b) Moneys in the fund shall be used for projects which shall include, but not be limited

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to:

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     (1) Support for the state designated regional health information organization (RHIO), as

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defined in subsection 5-37.7-3(u), to build, operate and maintain a statewide HIE as defined in

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subsection 5-37.7-3(n);

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     (2) The costs and fees associated with the administration, operation and management of

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the program;

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     (3) Consulting services and professional fees for the installation, integration and clinical

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process re-engineering relating to the implementation and utilization of electronic health records

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in conjunction with the HIE and Beacon initiatives;

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     (4) The development of materials and outreach efforts conducted to educate citizens and

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medical service providers about the benefits of participating in and to recruit citizens and

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healthcare providers to participate in the program;

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     (5) The development and maintenance of an all-payer claims database.

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     (c) Any moneys provided by loan shall be disbursed for periods not exceeding twenty-

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five (25) years and at an annual rate of interest not exceeding five percent (5%).

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      (d) The director of the department of health, in consultation with the state healthcare

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information technology advisory committee, shall establish criteria for eligible healthcare

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information technology and infrastructure projects to be funded under this chapter.

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     (e) The fund revenues shall be derived from an assessment imposed upon health

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insurance claims in accordance with section 23-77-3 of this chapter.

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     (f) All revenue so collected may be invested as provided by law and all interest received

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on such investment shall be credited to the fund and used solely for fund purposes.

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     (g) The RHIO shall develop a detailed annual budget of proposed expenditures from the

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fund for each fiscal year. The annual budget shall include all revenue and expenditures for the

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upcoming fiscal year. The annual budget shall be submitted to the healthcare information

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technology and infrastructure advisory committee, established pursuant to section 23-77-4 for its

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review.

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     (h) The RHIO shall submit quarterly expenditure reports to the general assembly, the

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director of health and the fund advisory committee (defined in section 23-77-3), including a year-

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end report by August 1 of each fiscal year. The year-end report will include, but not be limited to,

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a listing of all receipts, expenditures, and balances of the fund, and a statement of outcomes

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achieved.

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     23-77-3. Funds received from insurers or others Health information infrastructure

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fund assessment. – (a) Definitions as used in this chapter:

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     (1) “Healthcare services” means any services included in the furnishing to any individual

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of medical, podiatric, or dental care, or hospitalization, or incident to the furnishing of that care or

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hospitalization, and the furnishing to any person of any and all other services for the purpose of

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preventing, alleviating, curing or healing human illness, injury or physical disability.

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     (2) “Health insurance” means any group or individual healthcare benefit policy, contract,

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or plan offered, issued, renewed or administered to a Rhode Island resident or an out-of-state

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resident who receives healthcare services in Rhode Island, including any healthcare benefit plan

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offered, issued, renewed or administered by any health insurance company, any nonprofit hospital

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and medical service corporation, or any health maintenance organization as defined in section 27-

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41-1. It does not include any business related to the administration of programs under Title XIX

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of the Social Security Act, 42 U.S.C., nor any state healthcare assistance program financed in

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whole or in part through a federal program, unless authorized by federal law and approved by the

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general assembly.

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     (3) “Health insurer” means any domestic, foreign, or alien insurance company, mutual

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association, organization or other insurer, including a health maintenance organization and third-

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party administrator, or any person who offers, issues, renews, or administers a health insurance

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policy, contract, or plan, or pays a claim for healthcare services provided in the state of Rhode

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Island. The term shall not include a healthcare insurer with a quarterly average of less than two

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hundred fifty (250) Rhode Island insured lives.

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     (b) Monthly, beginning January 15, 2013, every health insurer shall pay a fee into the

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fund. The fee shall be equal to thirteen hundredths percent (0.13%) of all medical claims paid by

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the health insurer for its Rhode Island members and out-of-state members (whether fully insured

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or self-insured) who received health services in the state in the previous month as verified by

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reporting to the national association of insurance commissioners. Said fee shall not be considered

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an administrative expense, but rather a claims expense and be billed as such in premiums or self-

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insured claims expense as well as considered as such for all reporting and/or filing purposes. The

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fee shall be paid into the fund in monthly installments and shall include an oath or affirmation

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signed by a duly authorized officer or agent of the health insurer that the amount is true and

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correct and containing information that may be deemed necessary for the determination of the

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amount of the fee imposed by this chapter. Monthly fees received into the fund account in excess

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of the monthly amount shall be designated for: (1) The development and maintenance of all payer

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claims database; and (2) The remainder shall be forwarded to the RHIO on a monthly basis, set

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forth in regulations promulgated by the department of health.

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     (a)(c) The director of health is authorized to accept any grant, devise, bequest, donation,

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gift, services in kind, assignment of money, bonds of other valuable securities, moneys

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appropriated by the general assembly or received from insurers, for deposit in and credit of the

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fund.

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      (b) The director of health is authorized to expend from the healthcare information

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technology and infrastructure development fund any moneys deposited into the fund for the

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purposes set forth in section 23-77-2.

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      (c)(d) Notwithstanding any provision of their articles of incorporation, by-laws, or other

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enabling documents or laws to the contrary, a health insurer or health plan is authorized to

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allocate sums of money, derived from the collections of premiums the claims assessment, to the

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healthcare information technology and infrastructure development fund.

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      (d) Notwithstanding any provision of their articles of incorporation, by-laws, or other

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enabling documents or law to the contrary, an insurer is further authorized to expend on an annual

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basis a sum of moneys equal to not more than five percent (5%) of its previous year's premium

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income for a project approved by the director of health, with the concurrence of the director of

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business regulation. The director of health is authorized to approve projects which are in

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conformance with the purposes of section 23-77-2.

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     (e) It is the intent of the general assembly that health insurers shall contribute equally to

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the health information infrastructure fund established in section 72-2 of this chapter. In the event

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that the fee established in subsection (b) of this section is found not to be enforceable as applied

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to third-party administrators or other entities, the fee amounts owed by all other health insurers

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shall remain at existing levels, and the general assembly shall consider alternative funding

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mechanisms that would be enforceable as to all health insurers.

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     (f) In the event a health insurer fails to comply with the imposed fee after two (2)

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consecutive quarters, such health insurer shall be delinquent, and therefore, interest in the amount

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of six percent (6%) per annum may be assessed against the health insurer for the non-payment.

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The office of the health insurance commissioner may impose penalties against a delinquent

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insurer pursuant to Rhode Island general laws, section 42-14.5-3 and has the authority to validate

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any payments made into the fund.

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     23-77-4. Creation of the Rhode Island healthcare information technology advisory

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committee. -- (a) The director of health shall establish a healthcare information technology and

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infrastructure advisory committee to advise which shall consist of five (5) members or their

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designees, namely the chairperson of the permanent joint legislative committee on healthcare

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oversight, the director of health, one at-large member appointed by the director of health, and one

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member of the HIE commission as established pursuant to Rhode Island general laws, section 5-

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37.7-5. The committee shall meet at least quarterly in order to review the budget and reports filed

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in accordance with section 23-77-2. The state-designated RHIO may request that the commission

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meet on an as-needed basis more frequently than quarterly. The committee may also advise the

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director of health in the following matters:

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      (1) Assessment of use of healthcare information technology by the state's licensed

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healthcare providers and facilities;

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      (2) Recommendations for implementing a statewide interoperable healthcare information

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infrastructure to include estimates of necessary resources and for determining standards for

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administrative data exchange, clinical support programs, and the maintenance of the security and

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confidentiality of individual patient data;

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      (3)(2) Criteria for selection of projects to be funded with moneys from the fund;

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      (4)(3) Other related issues as requested by the director of health.

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      (b) The members of the healthcare information technology and infrastructure advisory

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committee shall include the director or director's designees of the departments of health and

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human services and additional members to be appointed by the director of the department of

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health to include persons representing Rhode Island licensed hospitals and other licensed

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facilities/providers, the medical and nursing professions, health insurers and health plans, the

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state quality improvement organization and other parties, such as consumer advisory

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organizations, with an interest and expertise in health care information technology. The director

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may designate an existing state nonprofit organization whose primary purpose is to improve

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healthcare quality to fulfill the responsibilities of the Rhode Island Healthcare Information

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Technology Advisory Committee.

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     SECTION 2. Chapter 23-77 of the General Laws entitled "Healthcare Information

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Technology and Infrastructure Development Fund" is hereby amended by adding thereto the

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following sections:

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     23-77-7. Rules and regulations. – The director of the department of health shall

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implement rules and regulations pertaining to this chapter.

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     23-77-8. Sunset provision. – This chapter shall be and is hereby repealed effective July

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1, 2018.

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     SECTION 3. Section 35-4-27 of the General Laws in Chapter 35-4 entitled "State Funds"

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is hereby amended to read as follows:

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     35-4-27. Indirect cost recoveries on restricted receipt accounts. -- Indirect cost

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recoveries of ten percent (10%) of cash receipts shall be transferred from all restricted receipt

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accounts, to be recorded as general revenues in the general fund. However, there shall be no

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transfer from cash receipts with restrictions received exclusively: (1) from contributions from

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non-profit charitable organizations; (2) from the assessment of indirect cost recovery rates on

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federal grant funds; or (3) through transfers from state agencies to the department of

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administration for the payment of debt service. These indirect cost recoveries shall be applied to

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all accounts, unless prohibited by federal law or regulation, court order, or court settlement. The

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following restricted receipt accounts shall not be subject to the provisions of this section:

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      Department of Human Services

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      Veterans' home -- Restricted account

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      Veterans' home -- Resident benefits

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      Organ transplant fund

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      Veteran's Cemetery Memorial Fund

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      Department of Health

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      Pandemic medications and equipment account

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      Department of Mental Health, Retardation and Hospitals

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      Eleanor Slater non-Medicaid third-party payor account

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      Hospital Medicare Part D Receipts

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      RICLAS Group Home Operations

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      Vigneron Memorial Fund Grant

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      Department of Environmental Management

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      National heritage revolving fund

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      Environmental response fund II

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      Underground storage tanks registration fees

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      Rhode Island Council on the Arts

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      Art for public facilities fund

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      Rhode Island Foundation Grant

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      Rhode Island Historical Preservation and Heritage Commission

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      Historic preservation revolving loan fund

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      Historic Preservation loan fund -- Interest revenue

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      Department of Public Safety

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      Forfeited property -- Retained

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      Forfeitures -- Federal

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      Forfeited property -- Gambling

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      Donation -- Polygraph and Law Enforcement Training

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      Rhode Island State Firefighter's League Training Account

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      Fire Academy Training Fees Account

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      Attorney General

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      Forfeiture of property

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      Federal forfeitures

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      Attorney General multi-state account

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      Department of Administration

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      Restore and replacement -- Insurance coverage

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      Convention Center Authority rental payments

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      Investment Receipts -- TANS

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      Car Rental Tax/Surcharge-Warwick Share

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      OPEB System Restricted Receipt Account

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      ARRA Administrative Expenses - Bureau of Audits

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      ARRA Administrative Expenses - Purchasing

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      Legislature

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      Audit of federal assisted programs

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      Department of Elderly Affairs

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      Pharmaceutical Rebates Account

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      Department of Children Youth and Families

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      Children's Trust Accounts -- SSI

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      Military Staff

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      RI Military Family Relief Fund

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      Treasury

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      Admin. Expenses -- State Retirement System

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      Retirement -- Treasury Investment Options

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      Business Regulation

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      Banking Division Reimbursement Account

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      Office of the Health Insurance Commissioner Reimbursement Account

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      Securities Division Reimbursement Account

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      Commercial Licensing and Racing and Athletics Division Reimbursement Account

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      Insurance Division Reimbursement Account

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      Historic Preservation Tax Credit Account.

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      Judiciary

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      Arbitration Fund Restricted Receipt Account

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      Department of Elementary and Secondary Education

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      Statewide Student Transportation Services Account

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      School for the Deaf Fee for Service Account

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      Davies Career and Technical School Local Education Aid Account

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      Office of the Governor

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      ARRA Administrative Expenses -- Office of Economic Recovery and ReInvestment

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      Department of Labor and Training

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      Job Development Fund -- Title XII loans principal and interest

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     The Rhode Island Health Information Infrastructure Fund established pursuant to chapter

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23-77

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     SECTION 4. This act shall take effect upon passage.

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LC00738

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO HEALTH AND SAFETY -- HEALTHCARE INFORMATION

TECHNOLOGY AND INFRASTRUCTURE FUND

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     This act would modify aspects of the Rhode Island healthcare information technology

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and infrastructure fund. It would also identify specific programs and projects to be financed by

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the fund.

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     This act would take effect upon passage.

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LC00738

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