1. Implementing HIPAA State Budgets, Elections, and Policy Priorities National Association of Health Data Organizations 17 th Annual Meeting Atlanta, GA December 2-3, 2002 Presented by Robert J. Burns NGA Center for Best Practices

2. © 2002 National Governors Association State Budget Overview States closed $37.2 billion budget gap during FY2002 –46 states reported budget deficits –Revenues 1.2 percent less than expected –Spending 1.8 percent more than expected States face $49.1 billion budget gap going into FY2003 (projections) –3.7 percent revenue growth (projected) –1.6 percent spending growth (projected) –Year-end balance will decline 3.7 percent (projected) Source: National Conference of State Legislatures, August 2002

3. © 2002 National Governors Association Revenue Enhancements During FY2002 IntoFY2003 Budget cuts 29 states 26 states Other state reserves 20 states 23 states Tobacco settlement funds 12 states 16 states Taxes Rainy day funds 19 states 12 states Other fees 13 states 10 states Source: National Conference of State Legislatures, August 2002

4. © 2002 National Governors Association Gubernatorial Elections 2002 36 governorships up for election –14 term limited –6 voluntary withdrawals –16 incumbent challenges 11 incumbents returning 24 new Governors assuming office –Party changes in 20 states

5. © 2002 National Governors Association Gubernatorial Changeovers (even years only) 200225 20007 199814 19965 199421 199211 199018 19886 198622 198411 198218 Source: National Governors Association, November 2002

6. © 2002 National Governors Association “The chief executive of a state today holds more power and sway over the public purse and policy—and likely presents more of a leadership profile in the state than any other office holder other than the President.” “The chief executive of a state today holds more power and sway over the public purse and policy—and likely presents more of a leadership profile in the state than any other office holder other than the President.” Ray Sheppach Executive Director National Governors Association

7. © 2002 National Governors Association Gubernatorial Powers (that do not require legislative approval) Submit the state budget –Establish policy priorities –Set spending targets Veto components of legislative budget –Appropriations –Selected words –Change meaning –Line item Cut the budget Reorganize departments Spend unanticipated federal funds

8. © 2002 National Governors Association Implications New priorities Energy, enthusiasm, personality –Relationship with the public –Relationship with legislature New appointees –Commissioners, deputies, senior staffers –Administer the Governor’s policies –Advance the Governor’s issues

9. © 2002 National Governors Association Top Campaign Priorities (Governors-Elect) Fostering economic recovery (balancing state budgets) Bolstering homeland security Maintaining education initiatives Containing health care costs

10. © 2002 National Governors Association Top Health Priorities (Governors-Elect) Containing pharmaceutical costs Leveraging Medicaid and SCHIP Bolstering the health care workforce Financing long-term care

11. © 2002 National Governors Association Why Still “Emerging?” Legally Complex –Privacy –New terms and interpretations Technically Complex –Electronic transactions –Electronic data interchange Poor Guidance –Staggered rule making –No arbitration process –No validation

12. © 2002 National Governors Association Regulation Status ProposedRuleFinalRule Compliance Deadline † Privacy11/99 8/02 ‡ 4/03 Security8/98—— Transactions and Codes 5/9810/00 10/02 * National Provider Identifier 5/98—— Health Plan Identifier ——— Employer Identifier 6/987/027/04 Enforcement——— † Small health plans have one additional year following this date to be compliant. ‡ HHS proposed modifications to the privacy rule on March 27, 2002. The modifications were finalized on August 14, 2002. The compliance deadline will not change. * The compliance deadline may be extended by one year if a compliance plan is submitted to HHS before October 16, 2002. Small health plans are not eligible for the conditional extension.

13. © 2002 National Governors Association Community-based providers (“safety net”) Public hospitals/clinics Mental health facilities Substance abuse treatment centers State/local health departments Academic medical/research centers Organ donation programs Law enforcement and corrections (coroners, medical examiners) TANF-funded programs MCH programs (Title V) School-based health programs (immunizations, dental) HIV/AIDS (“Ryan White”) State employee benefits Worker’s compensation State technology authorities Health policy offices The Ripple Effect (Covered Entities vs. Affected Entities)

14. © 2002 National Governors Association Prioritizing HIPAA What does a Governor really need to know about HIPAA implementation? Worsening the budget situation Impeding access to health care Affecting the quality of care Threatening provider solvency Impairing state-level program administration Hindering ability to make good policy decisions

15. © 2002 National Governors Association Recommendations Get to know the new Governor’s staff Get to know the new Governor’s priorities Offer solutions –Be practical (political, fiscal reality) –Build consensus –Identify resources Learn to speak the language

16. © 2002 National Governors Association NGA Center for Best Practices (http://www.nga.org/center) Robert J. Burns Policy Analyst Health Policy Studies Division National Governors Association Center for Best Practices Hall of States, Suite 267 444 North Capitol Street, NW Washington, DC 20001-1512 (202) 624-7729 fax: (202) 624-5313 email: rburns@nga.org