BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 751| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 751 Author: Gaines (R), et al Amended: 7/7/11 Vote: 21 SENATE HEALTH COMMITTEE : 9-0, 5/4/11 AYES: Hernandez, Strickland, Alquist, Anderson, Blakeslee, De León, DeSaulnier, Rubio, Wolk SENATE FLOOR : 39-0, 5/23/11 AYES: Alquist, Anderson, Berryhill, Blakeslee, Calderon, Cannella, Corbett, Correa, De León, DeSaulnier, Dutton, Emmerson, Evans, Fuller, Gaines, Hancock, Hernandez, Huff, Kehoe, La Malfa, Leno, Lieu, Liu, Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio, Runner, Simitian, Steinberg, Strickland, Vargas, Walters, Wolk, Wright, Wyland, Yee NO VOTE RECORDED: Harman ASSEMBLY FLOOR : 77-0, 7/11/11 - See last page for vote SUBJECT : Health care coverage: provider contracts SOURCE : Author DIGEST : This bill prohibits contracts between health care service plans and health insurers (carriers) and a licensed hospital or health care facility owned by a licensed hospital from containing any provision that restricts the ability of the carrier from furnishing CONTINUED SB 751 Page 2 information to subscribers, enrollees, policyholders, or insureds (members) concerning cost range of procedures or the quality of services. Provides hospitals at least 20 days in advance to review the methodology and data developed and compiled by the carriers, requires risk adjustment factors for quality data, requires a disclosure on the carrier's Web site about the data developed and compiled by the carriers and an opportunity for a hospital to provide a link where the hospital's response to the data can be accessed. Assembly Amendments provide hospitals at least 20 days in advance to review the methodology and data developed and compiled by the carriers, require risk adjustment factors for quality data, requires a disclosure on the carrier's Web site about the data developed and compiled by the carriers and an opportunity for a hospital to provide a link where the hospital's response to the data can be accessed. ANALYSIS : Existing law : 1. Provides for the licensure and regulation of health plans and insurers by the Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI), respectively. 2. Requires hospitals to make a written or electronic copy of its charge description master (a list of prices for services) available, either by posting an electronic copy on the hospital's website, or by making a written or electronic copy available at the hospital. 3. Requires hospitals to submit their average charges for 25 common outpatient procedures, as specified, annually to the Office of Statewide Health Planning and Development (OSHPD), who is required to publish this information on its website. 4. Requires OSHPD to publish and update on its website, a list of the 25 inpatient procedures most commonly performed in California hospitals, along with each CONTINUED SB 751 Page 3 hospital's average charges for those procedures. 5. Defines "licensed hospital" as an institution, place, building, or agency that maintains and operates organized facilities for one or more persons for the diagnosis, care, and treatment of human illnesses to which persons may be admitted for overnight stay, including any institution classified under regulations issued by the State Department of Public Health (DPH) as a general or specialized hospital, as a maternity hospital, or as a tuberculosis hospital, but does not include a sanitarium, rest home, a nursing or convalescent home, a maternity home, or an institution for treating alcoholics. This bill: 1. Prohibits a contract issued, amended, renewed or delivered on or after January 1, 2012, by or on behalf of a health plan or insurer and a licensed hospital, or any other licensed health care facility owned by a licensed hospital, to provide inpatient hospital services or ambulatory care services, from containing a provision that restricts the ability of the plan or insurer to furnish information to subscribers or enrollees concerning the cost range of procedures or the quality of services performed by the hospital or facility. 2. Makes any contractual provision that is inconsistent with this bill void and unenforceable. 3. Defines "licensed hospital," consistent with existing law. 4. States that a health care service plan shall, at a minimum, on an annual basis, provide the hospital or facility a reasonable opportunity to review and validate data provided to subscribers or enrollees. 5. States that if the information proposed to be furnished to enrollees and subscribers on the quality of services performed by a hospital or facility is data that the plan has developed and compiled, the plan shall utilize CONTINUED SB 751 Page 4 appropriate risk adjustment factors to account for different characteristics of the population, such as case mix, severity of patient's condition, comorbidities, outlier episodes, and other factors to account for differences in the use of health care resources among hospitals and facilities. 6. States that the cost range of a procedure shall not include procedures for enrollees covered by capitated payments in a contract between a health plan and a licensed hospital or a licensed health care facility owned by a licensed hospital. 7. Provides hospitals at least 20 days in advance to review the methodology and data developed and compiled by the carriers. 8. Requires risk adjustment factors for quality data. 9. Requires a disclosure on the carrier's Web site about the data developed and compiled by the carriers and an opportunity for a hospital to provide a link where the hospital's response to the data can be accessed. 10.Prohibits specified fines and penalties, established in existing law, from applying to the provisions in this bill. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 7/12/11) Aetna, Inc. America's Health Insurance Plans Blue Shield of California California Association of Health Plans California Association of Health Underwriters California Association of Joint Powers Authorities California Public Employees' Retirement System California Retailers Association California School Employees Association CDF Firefighters Pacific Business Group on Health CONTINUED SB 751 Page 5 Service Employees International Union OPPOSITION : (Verified 7/12/11) University of California ARGUMENTS IN SUPPORT : Blue Shield states that people routinely receive quality and cost data on a variety of goods and services they purchase, yet that is not the case with something as important as the health care someone receives. Blue Shield argues that this bill makes a modest step in the right direction towards unlocking the mystery behind rising hospital costs, which represents one of the biggest cost drivers in the system. The California Association of Health Plans (CAHP) concurs, stating that there is a growing recognition at the state and federal level that the only way to control health care costs is to focus on the costs and quality of medical services. CAHP points out that rising hospital costs have contributed to rising premiums, and that hospitals have shortfalls in funding for services provided to the uninsured and government programs. However, that should not mean that insured patients should be barred from receiving cost and quality information. Service Employees International Union (SEIU) asserts that SEIU members and California consumers are increasingly being required to pay more for health care as costs continue to increase. SEIU states that as members are forced to shoulder the burden of higher co-pays and deductibles, it is critical that they be personally armed with data and tools to make informed decisions about the costs of the services they are receiving and the quality of those services. The California Retailers Association supports this bill and states that when deciding which products and services to buy, most consumers base their decisions on price and quality. Health care should be no different, and in fact, transparency rises to an even more important level for consumers making what can literally become life-changing health care decisions. CONTINUED SB 751 Page 6 ARGUMENTS IN OPPOSITION : The University of California (UC) states that, while UC endorses the concept of transparency, it believes that the bill as written will result in consumers receiving misleading information that will not assist them in making informed choices about their medical care. UC argues that a robust risk-adjustment methodology is necessary to enable meaningful comparisons across hospitals and providers that have a very different mix of services and roles in the community. For example, the cost and quality of complex second and third hip replacements performed at an academic medical center should not be compared to a simple first-time hip replacement that is commonly performed in community hospitals. Although UC contracts do not contain confidentiality clauses, UC believes that quality and cost information should be risk-adjusted or "normalized" to ensure that consumers can make apples-to-apples comparisons of services across hospitals. ASSEMBLY FLOOR : 77-0, 07/11/11 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino, Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Beall, Gorell, Mitchell CTW:do 7/12/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED SB 751 Page 7 CONTINUED