The formation of a new health information exchange was recently announced in California that would make the medical records of nine million patients, representing more than a quarter of the state’s population, available to network physicians and hospitals. Blue Shield of California and WellPoint’s Anthem Blue Cross will invest $80 million to form the state HIE, California Integrated Data exchange (CAL Index), as reported in the Wall Street Journal, and hope to be online and operational by the end of 2014.

CAL Index will be set up as a nonprofit, independent organization and its initial funding will cover the first three years of the exchange’s operations.  

Since 2009, when the federal government made $550 million available to encourage the development of HIEs, hundreds of patient-data exchanges have been established by states, hospital systems and public-private hybrids. More than 300 are currently operating, but dozens more have closed due to funding and logistical problems, the Journal reports.

With government funding set to end this year, financial challenges are likely to grow. “We are really at a crossroads now,” Jennifer Covich Bordenick, chief executive of eHealth Initiative, a nonprofit that observes HIE activity, told theJournal. “It’s up to the private sector to step in and take over where the federal government left off.”

The payors will contribute claims data to the exchange, including diagnoses, hospital and physician visits, procedures and lab tests. For the exchange to be useful clinically, however, hospitals and providers must contribute the more granular clinical data included in a patient’s EHR.

According to the Journal, the secretary of the California Health and Human Services Diana S. Dooley, said she is “willing to explore” the possibility of contributing information on the state’s Medicaid beneficiaries. Nonprofit Dignity Health was the first to commit to contributing data from its 32 hospitals in California. The UCLA Health System will conduct due diligence, but David T. Feinberg, president and chair of the Cal Index board, said he was certain that UCLA will participate and likely that the others will participate as well.

Individual patients will be able to block their information from being shared, the article notes, and user fees from providers and insurers will support the new exchange.