SB2788 SD2

SECTION 1. In the National Health Expenditures report published in 2015, the Centers for Medicare and Medicaid Services reported that as a nation the United States expended $3,200,000,000,000, or $9,990 per person, on healthcare, which represents 17.8 per cent of gross domestic product of the United States. The Centers for Medicare and Medicaid Services further projected that national health spending would continue to grow at an average rate of 5.6 per cent per year from 2016 to 2025. Healthcare premium growth has far outpaced inflation and wages, with family health insurance premiums growing one hundred thirty-one per cent from 1999 to 2009, while workers' earnings increased only 38.1 per cent over that same time period.

The Kaiser Family Foundation reported that, in 2014, the total health spending in the State of Hawaii was approximately $10,338,000,000. In Hawaii, according to the department of commerce and consumer affairs' insurance division, health premiums have increased from $1,262,118,865 in 1995 to $6,343,949,857 in 2015, an average increase of twenty per cent each year. Healthcare premiums in Hawaii are an increasing percentage of wages, growing from 2.8 per cent in 1974 with the passage of the Prepaid Health Care Act to 14.7 per cent in 2015. From 2010 to 2015, small group healthcare premiums have increased each year on average six per cent, and increased 7.5 per cent on average from 2013 through 2015.

Medicaid enrollment and spending growth have also increased. The National Association of State Budget Officers' November 2017 State Expenditure Report found that medicaid has grown from about twenty per cent of total state spending to twenty-nine per cent of total state spending for 2017. Excluding federal funds, medicaid accounted for nearly seventeen per cent of state fund expenditures, or a 7.1 per cent increase in state fund spending.

In Hawaii, medicaid accounts for sixteen per cent of total state expenditures and eleven per cent of the State's general fund expenditures. General fund expenditures for the State increased by 7.3 and 8.8 per cent from fiscal years 2015 to 2016 and 2016 to 2017, respectively. Medicaid state expenditures increased by 6.3 per cent and 12.3 per cent during this same period. While this is largely due to increased enrollment, increasing healthcare costs are also part of the increasing trends.

In 2016, the legislature amended section 323D-18.5, Hawaii Revised Statutes, through Act 139, Session Laws of Hawaii 2016, (Act 139), to facilitate greater transparency in the healthcare sector and improve understanding of healthcare costs, healthcare system quality, population health conditions, and healthcare disparities through the development of what is called an "all-payer claims data warehouse". The legislature broadened the scope of health and healthcare data and other information to include requiring certain healthcare services claims and payment information to be submitted to the state health planning and development agency for analysis, requiring dissemination of medical treatment claims and payment information, lending transparency to the healthcare sector, and supporting public policy decision making. The legislature articulated its beliefs that consumers of health care and state decision makers who regulate health care and insurance should have access to health care claims payment data and analytics, that access to this data will benefit members and retirees under the Hawaii employer-union health benefits trust fund, as well as medicaid and medicare recipients, and analysis of claims data will serve other public purposes.

Reports from and analysis of the all-payers claims data would serve the public purpose for use in program planning by the department of human services med-QUEST division, Hawaii employer-union health benefits trust fund, department of health, department of commerce and consumer affairs' insurance division, and department of budget and finance. Also, reports and analytics will assist the efforts to improve the State's healthcare delivery system and the overall long-term health and well-being of the State's workforce, retirees, and medicaid beneficiaries, with the ultimate goal to reduce overall state-funded healthcare costs.

Act 139 also required the Pacific health informatics and data center of the University of Hawaii to provide data stewardship and conduct analysis to further transparency and understanding of healthcare and to provide actionable information to healthcare programs and consumers.

The department of health and the state health planning and development agency are tasked with promoting accessibility to quality healthcare services for residents of the State at a reasonable cost. To implement and operationalize the provisions of Act 139 since its enactment, the department of health and the state health planning and development agency have been working with the department of human services, Hawaii employer-union health benefits trust fund, department of commerce and consumer affairs' insurance division, department of budget and finance, department of accounting and general services' office of enterprise technology services, and University of Hawaii. Data and health analytics have emerged as key aspects in the comprehensive use of the data to be collected.

After careful consideration and to enhance and sustain critical analytics of the State's medical claims data, these entities reached consensus that a health analytics program be established in the med-QUEST division of the department of human services. The med-QUEST division already maintains or has access to the required medical claims and administrative data of the State's medicaid health insurance program, which provides coverage for one in four of Hawaii's residents.

As part of the overall continuous improvement of the administration of the State's medicaid program, the med-QUEST division may be able to access federal matching funds to perform the desired healthcare analytics, which would help sustain the health analytics program. The health analytics program of the med-QUEST division will act as the state health planning and development agency's designee and data center to receive administrative data required to determine health benefits costs from health insurance plans funded by the Hawaii employer-union health benefits trust fund, as contemplated by section 323D-18.5, Hawaii Revised Statutes.

Continuing to work with the department of health, department of commerce and consumer affairs, state health planning and development agency, and University of Hawaii, the health analytics program will provide analytics to achieve the goals of Act 139 of increased transparency, better health, better healthcare, and lower costs for beneficiaries of state funded health insurance plans, including the medicaid program.

The health analytics program and the all-payers claims data warehouse are key for administering state-run health programs, including medicaid. For example, improving and expanding health informatics and analytics capabilities are critical for the State and the med-QUEST division to respond to the current congressional and federal administration's proposals to undermine Affordable Care Act health insurance coverage, including the medicaid program. Also, as indicated above, the State is facing rapidly increasing costs for healthcare in both the private and public sector, especially in medicaid and the Hawaii employer-union health benefits trust fund, that may slow or stagnate economic growth and take up an increasing share of limited state general funds that may be invested in other sectors to promote overall community health and well-being.

Finally, the all-payers claims data warehouse is a needed tool for medicaid to administer the program. In addition to essential basic functions of analyzing standardized comparative quality indicators, cost trends and cost drivers, several federal medicaid mandates can only be met by utilizing a functioning all-payers claim data warehouse. For example, new federal rules regarding medicaid managed care and network adequacy require examining community standards for accessing care. This standard-setting activity is only possible for med-QUEST to accomplish via readily accessible datasets and informatics capability provided by the all-payers claims data warehouse. This work will require four permanent exempt full-time positions: a health analytics and informatics program administrator, senior healthcare analytics and research coordinator, program and contracts financial coordinator, and healthcare statistician. The highly specialized technical, analytic, statistical and programmatic skills required, the limited applicant pool of individuals with these specialized skills, and the large demand in the private and public healthcare sector for such individuals necessitate the positions to be exempt from civil service provisions of chapter 76, Hawaii Revised Statutes. There is the potential of the availability of federal medicaid matching funds for an appropriation of general funds for these positions.

The purpose of this Act is to:

(1) Establish the health analytics program in the med-QUEST division of the department of human services;

(2) Require the health analytics program to maintain an all-claims, all-payer database;

(3) Establish and appropriate general funds for four positions, exempt from civil service, to be known as the health analytics and informatics program administrator, senior healthcare analytics and research coordinator, program and contracts financial coordinator, and healthcare statistician; and

(4) Appropriate federal funds for the health analytics program.

SECTION 2. Chapter 346, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . HEALTH ANALYTICS

§346- Definitions. As used in this part, unless the context requires others, "analytics administrator" means the health analytics and informatics program administrator.

§346- Health analytics program; appointments. (a) There is established within the department the health analytics program.

(b) The head of this program shall be known as the health analytics and informatics program administrator. The analytics administrator shall have professional training in the field of health analytics or a related field, and recent experience in a supervisory, consultative, or administrative position. The analytics administrator shall be appointed by the director.

(c) The director may make further necessary position appointments to the health analytics program to conduct data analytics, informatics product development to support health care services programs, and any other necessary services including administrative services, required to perform the duties of the program.

(d) The health analytics program shall develop, design, or implement databases, primarily an all-claims, all-payer database, and an encompassing data center to collect and analyze healthcare data. The health analytics program may provide, in consultation with the state health planning and development agency, department of health, department of commerce and consumer affairs, Hawaii employer-union health benefits trust fund, and University of Hawaii, comparative cost and quality information about the State's healthcare systems and health plan networks to consumers, providers, and purchasers of healthcare in order to provide comparative information to government policy makers and the public.

(e) The health analytics program may procure services in consultation with the department of health and perform technical tasks including but not limited to data management, data cleansing, data quality, data analytics, and related activities that the program finds necessary to produce reports. The program and all associated technical vendors shall be required to make use of the best available privacy and security measures as required by law to protect access to electronic protected health information, and shall provide for further analysis data that is in limited datasets or de-identified formats, within the confines of the established data governance framework as provided in rules adopted pursuant to chapter 91. All data sharing, use, and research shall be done in accordance with all applicable laws, including laws regarding privacy, confidentiality, and research.

(f) Subject to available funding, the health analytics program is authorized to serve as the contracting and data center designee of the state health planning and development agency.

(g) The health analytics program may contract with the TASI-Pacific health informatics and data center of the University of Hawaii, as a data analytics partner to the State. The University of Hawaii may conduct core or additional analytics functions and produce reports for the program and the state health planning and development agency in this capacity.

(h) The health analytics program shall develop a plan for the analysis, maintenance, and publication of data, in consultation with the department of health, Hawaii employer-union health benefits trust fund, office of enterprise technology services, department of commerce and consumer affairs' insurance division, and University of Hawaii. The plan shall be updated annually.

(i) The department of human services shall adopt rules pursuant to chapter 91, to implement this part."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2018-2019 for the department of human services to establish the health analytics program and carry out the purposes of the health analytics program pursuant to this Act, including the establishment and hiring of four full-time equivalent (4.0 FTE) positions exempt from chapter 76, Hawaii Revised Statutes, and any other administrative staff as may be required and any operating expenses. Notwithstanding section 76-16(b)(17), Hawaii Revised Statutes, to the contrary, the civil service exemption for these positions shall not expire in three years.

The sum appropriated shall be expended by the department of human services for the purposes of this Act.

SECTION 4. There is appropriated from moneys in the state treasury received from federal funds the sum of $ or so much thereof as may be necessary for fiscal year 2018-2019 to carry out the purposes of the health analytics program established pursuant to this Act.

The sum appropriated shall be expended by the department of human services for the purposes of this Act.

SECTION 5. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 6. This Act shall take effect on July 1, 2050; provided that sections 3 and 4 shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	2788
TWENTY-NINTH LEGISLATURE, 2018		S.D. 2
STATE OF HAWAII