BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 751|
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                              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 
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          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 

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             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 

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             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

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          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.  


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           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

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