(a) The California Health and Human Services Agency or one of the departments under its jurisdiction may apply for federal funds made available through the federal American Recovery and Reinvestment Act of 2009 (Public Law 111-5) for health information technology and exchange. If the California Health and Human Services Agency or one of the departments under its jurisdiction submits an application pursuant to this subdivision, and later chooses to subgrant, in whole or in part, a portion of the federal grant to a qualified nonprofit entity for the purposes of establishing health information exchange, that entity shall be designated as the state governance entity.

(b) In the event that the California Health and Human Services Agency or one of the departments under its jurisdiction elects not to submit an application described in subdivision (a), the Governor shall designate a qualified nonprofit entity to be the state-designated entity for the purposes of health information exchange, pursuant to the requirements set forth in the federal American Reinvestment and Recovery Act of 2009.

(c) In addition to existing requirements applicable to nonprofit entities, the state governance entity may be held to additional requirements under federal and state law, and directives from the California Health and Human Services Agency.

(d) The agency or state-designated entity shall execute tasks related to accessing federal stimulus funds made available through ARRA, and facilitate and expand the use and disclosure of health information electronically among organizations according to nationally recognized standards and implementation specifications while protecting, to the greatest extent possible, individual privacy and the confidentiality of electronic medical records.

(e) The agency or state-designated entity shall develop strategic and operational plans to ensure that health information exchange capabilities are available, adopted, and utilized statewide so that patients do not experience disparities in access to the benefits of this technology by age, race, ethnicity, language, income, insurance status, geography, or otherwise.

(f) The agency, state-designated entity, or state governance entity shall create a plan for a self-sustaining funding mechanism that does not include use of General Fund moneys that shall cover all reasonable costs of the administration of health information exchange when federal ARRA funds expire or are exhausted. A detailed business plan and sustainability model shall be submitted to the Governor and the Legislature by April 1, 2011. The plan may include a combination of approaches to create viable revenue streams, and shall take into account the needs of safety net institutions and providers.

(g) The state-designated entity or state governance entity shall continually meet any conditions for being so designated as determined by the Secretary of California Health and Human Services. Failure to comply with this subdivision may result in the applicable entity losing its contract for state designation or subgrant agreement.

(h) As a condition of receiving the contract for state designation or subgrant agreement, the state-designated entity or state governance entity shall comply with all of the following requirements:

(1) It shall be subject to oversight by the California Health and Human Services Agency.

(2) (A) It shall be governed by an initial board with a diverse composition from multiple types of organizations from multiple regions throughout the state. The initial governing board shall include all of the following:

(i) The Secretary of California Health and Human Services or his or her designee.

(ii) The Chair of the Senate Committee on Health or his or her designee.

(iii) The Chair of the Assembly Committee on Health or his or her designee.

(iv) One administrator from a state department under the jurisdiction of the California Health and Human Services Agency responsible for a statewide health program.

(v) At least two consumer representatives, one of whom shall have expertise in privacy and security of health information.

(vi) One licensed physician and surgeon, representing a solo or small group practice.

(vii) One licensed physician and surgeon, representing a medical group or independent practice association.

(viii) One representative from a safety net clinic.

(ix) Two representatives of hospitals, one of whom shall represent a public hospital.

(x) Two representatives of health plans or health insurers, one of whom shall represent a publicly run health plan or insurer.

(xi) One local public health officer.

(xii) Two representatives of health information exchange organizations, one from northern California, and one from southern California.

(xiii) One representative of the medical informatics industry or who has experience in medical informatics.

(xiv) One representative of an employer who provides employees with health care coverage, or a group purchaser of health care coverage.

(xv) One representative from labor.

(xvi) The chief executive officer of the nonprofit entity.

(xvii) Two at-large cochairs of the nonprofit entity.

(B) The majority of the board shall be comprised of nongovernmental employees.

(3) If the governing board convenes workgroups or subcommittees, the workgroups or subcommittees shall be comprised of representatives from multiple types of organizations from multiple regions throughout the state, and meetings of any workgroup or subcommittee shall be held in an open, public, and transparent way.

(4) The state-designated entity or state governance entity shall have nondiscrimination and conflict-of-interest policies that demonstrate a commitment to open, fair, and nondiscriminatory participation by stakeholders.

(i) The California Health and Human Services Agency, in consultation with the initial governing board, may modify the composition of the initial governing board. If a modification is made to the composition of the initial governing board pursuant to this subdivision, the agency shall inform the Legislature of, and the reason for, the change implemented.

(j) Upon the completion of the initial one-year term of the two at-large cochairs of the state-designated entity or state governance entity, the board shall select a chair or two cochairs from its membership.

(Amended by Stats. 2010, Ch. 717, Sec. 17. (SB 853) Effective October 19, 2010.)