DRAFT

CABINET FOR HEALTH AND FAMILY SERVICES

Office of the Secretary

(New Administrative Regulation)

900 KAR 7:020. Kentucky e-Health Corporation.

RELATES TO: KRS 216.261, 216.263, 216.265, 216.267

STATUTORY AUTHORITY: KRS 216.267

NECESSITY, FUNCTION, AND CONFORMITY: KRS 216.267 allows the e-Health board to establish a public or nonprofit e-Health Corporation to facilitate public-private collaboration in the implementation and development of the Kentucky health network. This administrative regulation establishes membership, terms, organization, and duties for the Kentucky e-Health Corporation.

Section 1. Organization. (1) The Kentucky e-Health Corporation (corporation) is created as a nonprofit organization and is attached to the Kentucky e-Health Network Board for oversight and governance purposes.

(2) State funding shall come through the Kentucky e-Health Network Board and the Cabinet for Health and Family Services to the nonprofit Kentucky e-Health Corporation.

(3) The Kentucky e-Health Corporation may receive:

(a) Public funding;

(b) Private funding;

(d) Federal grants and contracts; and

(e) Foundation grants.

(4) All existing duties, responsibilities, functions, personnel, programs, funds, obligations, records, and real and personal property of the Kentucky e-Health Corporation shall be under the authority and control of the Kentucky e-Health Network Board and the Cabinet for Health and Family Services should the Kentucky e-Health Corporation dissolve.

Section 2. Board of Directors Membership. (1) The Kentucky e-Health Network Board shall appoint the e-Health Corporation Board of Directors from a list of candidates forwarded by stakeholders.

(2) The corporation’s Board of Directors shall consist of fourteen (14) voting members from public and private sectors including:

(a) Kentucky e-Health Network Board cochair, or a designee, from the University of Kentucky, who initially shall serve as cochair of the corporation;

(b) Kentucky e-Health Network Board co-chair, or a designee, from the University of Louisville, who initially shall serve as cochair of the corporation;

(d) One (1) members from the Cabinet for Health and Family Services representing the Department for Medicaid Services;

(e) One (1) member from the Cabinet for Health and Family Services representing the Department for Public Health;

(f) Two (2) members representing physicians or other health care practitioners in active practice in the Commonwealth;

(g) Two (2) members representing payors of health care;

(h) One (1) member representing employers who purchase health care benefits for employees;

(i) Two (2) members representing hospitals or other health care facilities;

(j) One (1) member representing consumers of health care; and

(k) One (1) member representing local or regional health information exchange organizations providing services to residents of the Commonwealth.

(3) The appointed members of the e-Health Corporation Board of Directors shall hold their offices for a term of two (2) years and may be reappointed to one (1) additional term.

(4) Vacancies, when they occur during a term of office, shall be filled for the unexpired term in the manner prescribed for original appointment.

(5) If any member misses more than two (2) consecutive meetings of the board, then that position shall be declared vacant and filled in accordance with this section.

Section 3. Board Chairperson. (1) Cochairs of the Kentucky e-Health Network shall serve as corporation board chairs for one (1) year, with a new chair elected by the Kentucky e-Health Corporation Board of Directors for a term of one (1) year. A chairperson may be re-elected to a second consecutive term.

(2) The board chair shall:

(a) Oversee preparation of all minutes, records, and orders of the Kentucky e-Health Corporation;

(b) Be responsible for the preservation of all documents; and

Section 4. Quorum. (1) Eight (8) members of the board shall constitute a quorum.

(2) A quorum shall be present in order for the board to take action, other than adjourn.

Section 5. Voting. (1) Decisions of the e-Health Corporation shall be made by majority vote of the members of its Board of Directors, except where sixty (60) percent approval is needed.

(2) A sixty (60) percent majority is required for matters relating to:

(a) Incurring debt;

(b) Initiating new lines of business or capital projects; or

(c) Changing the bylaws of the corporation. The e-Health Corporation shall submit all bylaws changes to the Kentucky e-Health Network Board for review and approval.

Section 6. Reimbursement. (1) Members of the corporation shall serve without compensation, but shall be reimbursed for actual and necessary travel expenses incurred in the performance of their duties.

(2) Reimbursement shall be consistent with rules established by the Finance and Administration Cabinet for public board members.

Section 7. Duties. (1) The Kentucky e-Health Corporation shall serve as the operational arm of the Kentucky e-Health Board responsible for managing the development and operations of the Kentucky e-Health Network. The corporation may:

(a) Hire staff;

(b) Purchase:

1. Software;

2. Hardware;

3. Equipment; and

4. Supplies;

(d) Issue Requests for Proposal and execute contracts with vendors for the partnership;

(e) Hold governing board and advisory body meetings periodically with members from each of the partners and affected stakeholders;

(f) Partner with:

1. For-profit entities;

2. Nonprofit entities; and

3. Governmental entities;

(g) Enter into business agreements with partnering organizations;

(h) Accept and collect funds to carry out the responsibilities given to it by the Kentucky e-Health Network Board; and

(i) Manage development and implementation of the Kentucky Health Information Partnership project.

(2) The corporation is required to provide quarterly financial and programmatic reports to the Kentucky e-Health Network Board and the Cabinet for Health and Family Services no later than sixty (60) days after the end of a quarter.

(3) The corporation shall adopt bylaws providing for the call of its meeting and operating procedures. Bylaws may be amended at any regular or special meeting of the board, provided that the amendment has been submitted in writing in advance of the meeting at which it is to be considered.

(4) The corporation shall submit, in a format prescribed by the e-Health Network Board, an annual report by September 30 following the end of each state fiscal year to the:

(a) Governor;

(b) Secretaries of the Finance and Administration Cabinet and Cabinet for Health and Family Services;

(d) Interim Joint Health and Welfare Committee;

(e) Legislative Research Commission; and

(f) Kentucky e-Health Network Board.

Section 8. Advisory Subcommittees. (1) The e-Health Corporation may establish one (1) or more advisory subcommittees for large, multi-year e-health projects.

(2) Advisory subcommittees shall be charged with advising the e-Health Corporation Board of Directors and Kentucky e-Health Network Board on the direction, design, and implementation of designated technology projects and services for providers, clinicians, and consumers.

(3) Advisory subcommittees shall consist of variety of stakeholders, including data suppliers and users that will advise on the functionality, development, and design of technology and services.

(4) Advisory subcommittees will bring recommendations and report to the corporation Board of Directors. The board chair shall appoint one (1) member of the advisory subcommittee to serve as the subcommittee chair who shall serve as the voting member on the e-Health Corporation Board of Directors

(5) The Kentucky e-Health Corporation Board of Directors shall appoint six (6) to ten (10) advisory board members including:

(a) Up to six (6) members from data suppliers, with a minimum of one (1) member representing each organization supplying data for the technology project; and

(b) Up to four (4) members representing data users.

TRUDI L. MATTHEWS, Senior Policy Advisor

MARK D. BIRDWHISTELL, Secretary

APPROVED BY AGENCY: September 17, 2007

FILED WITH LRC: September 18, 2007 at 9 a.m.

PUBLIC HEARING AND PUBLIC COMMENT PERIOD: A public hearing on this administrative regulation shall, if requested, be held on November 21, 2007 at 9 a.m. in the Cafeteria Meeting Room on the first floor of the CHR Building, 275 East Main Street, Frankfort, Kentucky. Individuals interested in attending this hearing shall notify this agency in writing by November 14, five (5) workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be canceled. The hearing is open to the public. Any person who attends will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to attend the public hearing, you may submit written comments on the proposed administrative regulation. You may submit written comments regarding this proposed administrative regulation until close of business on November 30. Send written notification of intent to attend the public hearing or written comments on the proposed administrative regulation to:

CONTACT PERSON: Jill Brown, Office of Legal Services, 275 East Main Street 5 W-B, Frankfort, Kentucky 40601, phone (502) 564-7905, fax (502) 564-7573.

REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT

Contact Person: Trudi Matthews

(1) Provide a brief summary of:

(a) What this administrative regulation does: This administrative regulation establishes membership, terms, organization, and duties for the Kentucky e-Health Corporation. The Kentucky e-Health Corporation will be a public-private nonprofit corporation operating under the. auspices of the Kentucky e-Health Network Board

(b) The necessity of this administrative regulation: The Kentucky e-Health Corporation will be a public-private, nonprofit corporation in Kentucky responsible for facilitating and implementing public-private partnerships needed to develop and implement the Kentucky e-Health network and the functions defined in 216.267.

(c) How this administrative regulation conforms to the content of the authorizing statutes: 216.267 authorizes the Kentucky e-Health Board to review and select a business model to be used to implement the Kentucky e-Health Network. A nonprofit corporation model was selected to facilitate public-private collaboration. The Kentucky e-Health Corporation is created as a nonprofit organization and is attached to the Kentucky e-Health Network Board for oversight and governance purposes. This action is consistent with the language found in HB 185 from the 2007 legislative session.

(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes: These regulations establish the governance structure of the Kentucky e-Health Corporation with oversight of the Kentucky e-Health Network Board, the Cabinet for Health and Family Services, Finance and Administration Cabinet and the General Assembly in accordance with 216.267. The Kentucky e-Health Network Board cochairs will serve as the initial cochairs of the Kentucky e-Health Corporation. The makeup of the directors of the Kentucky e-Health Corporation mirrors closely the makeup of the e-Health Network Board and there is a regular accountability mechanism through quarterly and annual reporting required under the statute.

(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:

(a) How the amendment will change this existing administrative regulation: This is a new administrative regulation.

(b) The necessity of the amendment to this administrative regulation: This is a new administrative regulation.

(d) How the amendment will assist in the effective administration of the statutes: This is a new administrative regulation.

(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation: This administrative regulation will directly affect the Kentucky e-Health Network Board and the Cabinet for Health and Family Services. Indirectly, it potentially will have an impact on the health delivery system across the Commonwealth.

(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:

(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment: None.

(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): There will be a minimal cost, approximately $30,000 to the cabinet to provide administrative support for the e-Health Corporation.

(c) As a result of compliance, what benefits will accrue to the entities identified in question (3): The Kentucky e-Health Network (KeHN) Board was created to lead the development and implementation of an e-Health Network in Kentucky. The KeHN Board, which is attached to the Cabinet for Health and Family Services, quickly ascertained the need to establish a public-private nonprofit entity to facilitate partnerships between private health care entities and public organizations such as state government and the universities. As nearly every other state has recognized, a nonprofit corporation is a necessary agent for affecting change, bringing consensus from diverse groups, financing jointly large technology projects and ensuring the efficient management and operation of the Kentucky e-Health Network. The formation of the Kentucky e-Health Corporation is a minimal cost to CHFS, but the benefits are enormous in the greater efficiency and effectiveness of operations and funding for e-health activities in Kentucky.

(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:

(a) Initially: Initially, it is anticipated that staffing and meeting expenses will cost CHFS about $30,000. The cabinet will use funds from the federal Medicaid Transformation Grant that CHFS received in February 2007 to cover these costs, in accordance with the approved grant proposal.

(b) On a continuing basis: Over time, the e-Health Corporation will be able to sustain its operational costs by offering e-Health related services to the state and private sector companies as needed.

(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: Funding to implement this regulation is from the Federal Medicaid Transformation Grant awarded to Kentucky in February 2007.

(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment: There is no increase in fees or funding needed to implement this regulation.

(8) State whether or not this administrative regulation established any fees or directly or indirectly increased any fees: There are no fees established either directly or indirectly in this regulation or the authorizing statutes.

(9) TIERING: Is tiering applied? Tiering was not appropriate in this administrative regulation because it applies only to the e-Health Corporation.

FISCAL NOTE ON STATE OR LOCAL GOVERNMENT

1. Does this administrative regulation relate to any program, service, or requirements of a state or local government (including cities, counties, fire departments, or school districts)? Yes

2. What units, parts or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation? The Kentucky e-Health Network Board and Cabinet for Health and Family Services will be directly impacted. Indirectly, it potentially will affect the health delivery system across the Commonwealth.

3. Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation. KRS 216.267

4. Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.

(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year? There will be no additional revenue generated for state or local government for the first year that this administrative regulation is in effect. However, because the e-Health Corporation will eventually generate revenue through e-Health related services, this regulation will ensure that the public share of expenses for creating a statewide e-Health Network will be lower than if the Kentucky e-Health Corporation did not exist.

(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years? There will be no additional revenue generated for state or local government for the first year that this administrative regulation is in effect. It is possible that the revenues generated by the Kentucky e-Health Corporation from its services can be used to sustain and expand the Kentucky e-Health Network faster and more effectively.

(c) How much will it cost to administer this program for the first year? In the first year, it is estimated that $30,000 in staffing costs and meeting expenses will be required, which will be covered by the federal Medicaid Transformation Grant Funding.

(d) How much will it cost to administer this program for subsequent years? Basic operating costs will increase in subsequent years, but the e-Health corporation will become a self-sustaining, nonprofit entity.

Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.

Revenues (+/-):

Expenditures (+/-):

Other Explanation: