Two big health insurance rivals in California are jointly betting $80 million that they can significantly accelerate health information exchange in the nation’s most populous state.

Anthem Blue Cross and Blue Shield of California are funding development of the California Integrated Data Exchange, known as Cal INDEX, with the goal of having it operational by the end of 2014. Part of the $80 million investment will cover operating the exchange at no cost to providers and payers for three years, after which a “nominal” per member subscription fee will be instituted.

However, Cal INDEX will spend much of the first three years focusing on connecting with the 30 largest providers in the state to gain momentum and critical mass and show value. Consequently, the degree to which smaller organizations will in large part be able to participate during the first three years of free services isn’t yet clear, acknowledges Ken Park, vice president of payer and provider solutions at Anthem Blue Cross. But just as electrification and other utilities initially were offered to larger entities to gain momentum so the utilities survived, Cal INDEX must do the same.

That said, Anthem and Blue Shield have been working on the project for close to two years with technology partners on board for a good chunk of that time, so hopefully linking the top 30 will go quicker, says Mark Morgan, president and CEO of Anthem Blue Cross.The technology partners for the project are HIE platform vendor Orion Health, and HealthCore, a research, data management and analytics vendor. Claims, inpatient/outpatient EHR, pharmacy and lab data will be among the initial available information with more functions to come.

When Cal INDEX is operational, patients will receive information about the HIE to make an informed choice on whether to participate, according to information on the organization’s Web site. “If a patients’ health care provider or health plan is participating in Cal INDEX, that patient will likely be enrolled in Cal INDEX and eligible for the benefits it provides,” according to the site. “Any patient of a participating provider or member of a participating health plan who does not want their health information shared with health providers or health plans on the exchange can choose not to participate in Cal INDEX. No healthcare provider participating in Cal INDEX will deny medical care to a patient who chooses not to participate, and insurance eligibility will not be affected by the choice to participate or not participate.”

Patients will have access to their data. Use of a patient portal is plausible but it is too early to really know how the access will be done, Morgan of Anthem Blue Cross says.

The state has about 15 regional health information exchanges that have had preliminary conversations with Cal INDEX, which will now go back and seek commitments from the regional HIEs, says Paul Markovich, President and CEO at Blue Shield of California.

The question of whether the regional HIEs will work with Cal INDEX likely is mute, says Rim Cothren, executive director of the California Association of Health Information Exchanges. “Members are committed to exchanging data with others, so I certainly don’t see a barrier to working with Cal INDEX,” he says, once the regionals understand the services being offered and believe it will succeed.

That said, there likely will be some mixed feelings among the regional HIEs, Cothren acknowledges. They all compete with each other, but ultimately see more benefits than risks.

This is not the first time that stakeholders in California have attempted to build a statewide HIE. CalRHIO folded in early 2010 following five years of effort after the HIE and another organization could not cooperate to receive federal HIE building grants under the HITECH Act. And CalRHIO never got far, offering limited services to emergency departments in one county. Eventually, a new entity called Cal eConnect was formed to be the administrator of HITECH funds to the regional HIEs.

Several factors make Cal INDEX very likely to be successful, Anthem’s Morgan says, starting with nine million payer lives served among Anthem and Blue Shield and an $80 million investment. In the era of population health management, providers value HIE far higher than previously, the technology is better and the intention of collecting payer and provider data is also enticing, he notes. “We know the interest is there, it’s not just casual interest.”

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