BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 332
AUTHOR: Emmerson and DeSaulnier
AMENDED: May 16, 2013
HEARING DATE: June 19, 2013
CONSULTANT: Bain
SUBJECT : California Health Benefit Exchange: records.
SUMMARY : Makes contracts and rates of payment under those
contracts of the California Health Benefit Exchange (known as
Covered California) open to public inspection under the
California Public Records Act except for health plan contracts
and their rates, which are made public in three and four years
respectively. Makes the impressions, opinions, recommendations,
meeting minutes, research, work product, theories, strategy of
the board or the staff of Covered California, or records that
provide instructions, advice, or training to employees subject
to the Public Records Act by deleting an exemption from
disclosure for these items.
Existing law:
1.Establishes Covered California in state government, and
specifies the duties and authority of Covered California.
Requires Covered California be governed by a board that
includes the Secretary of the California Health and Human
Services Agency (Agency) and four members with specified
expertise who are appointed by the Governor and the
Legislature.
2.Requires the Covered California board, in the course of
selectively contracting for health care coverage offered to
individuals and small employers through Covered California, to
seek to contract with health plans and insurers so as to
provide health care coverage choices that offer the optimal
combination of choice, value, quality, and service.
3.Requires, under the California Public Records Act (PRA),
public records of state and local agencies be made open to
public inspection, as specified, unless a record is exempt
from disclosure.
4.Exempts the following records of Covered California from
disclosure under the PRA that reveal any of the following
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a. The deliberative processes, discussions,
communications, or any other portion of the
negotiations with entities contracting or seeking to
contract with Covered California, entities with which
Covered California is considering a contract, or
entities with which Covered California is considering
or enters into any other arrangement under which
Covered California provides, receives, or arranges
services or reimbursement; and,
b. The impressions, opinions, recommendations,
meeting minutes, research, work product, theories, or
strategy of the board of Covered California or its
staff, or records that provide instructions, advice,
or training to employees.
5.Requires contracts entered into by Covered California to be
open to inspection one year after their effective dates,
except for the portion of a contract that contains the rates
of payment. Requires, if a contract entered into is amended,
the amendment to be open to inspection one year after the
effective date of the amendment.
This bill:
1.Requires Covered California to make public contracts it enters
into by deleting an exemption in existing law that only allows
contracts to be open to inspection one year after the
effective date of the contract.
2.Continues the existing exemption from public disclosure for
health plan contracts for one year, except for the portion of
health plan contracts that contain the rates of payment.
Requires the portion of the contract with a carrier containing
the rate of payment to be open to inspection three years after
the contract is open to inspection.
3.Makes the records that reveal the impressions, opinions,
recommendations, meeting minutes, research, work product,
theories, or strategy of the board or its staff, or records
that provide instructions, advice, or training to employees
subject to the PRA by deleting the exemption in current law.
4.Makes the entire contract with Covered California and its
participating carriers, or amendments to those contracts, open
to inspection by the Joint Legislative Audit Committee.
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(JLAC). Requires JLAC to maintain the confidentiality of the
contracts and amendments until the contracts or amendments to
a contract are open to inspection under the provisions of this
bill.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1.Author's statement. SB 332 seeks to ensure that Covered
California, the independent state agency charged with
enrolling eligible Californian's for health care coverage, is
properly subject to the PRA, and brings Covered California in
line with other state agencies. California was the first state
to enact legislation complying with the federal Patient
Protection and Affordable Care Act (ACA). In October 2013,
Covered California will open its online marketplace for
Californians to purchase health insurance as required by the
ACA. As this date quickly approaches, it was discovered that
the law establishing Covered California permits Covered
California to keep all contracts private for a year and the
rates of pay to companies and individuals receiving contracts
secret indefinitely. This lack of transparency is unique
compared to other state agencies within California and among
other states that have established their health insurance
exchanges. This bill simply fixes this oversight, making
Covered California subject to the PRA and modeled after the
Managed Risk Medical Insurance Board (MRMIB) and its
contracting of services and coverage under the Healthy
Families Program (HFP). Furthermore, as with the HFP, this
bill allows for contracts and amendments to contracts to be
held private for one year and the rates of payment to
individuals or participating carriers to be held private for
an additional three years before being available upon request
for public inspection. Finally, this bill grants the authority
for JLAC to audit Covered California, which was not explicitly
permitted under the Covered California's authorizing
legislation.
2.Background. The ACA, (Public Law 111-148), as amended by the
(Public Law 111-152), requires each state, by January 1, 2014,
to establish an American Health Benefit Exchange that makes
qualified health plans available to qualified individuals and
qualified employers through the establishment of a Small
Business Health Options Program (SHOP Exchange) that is
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designed to assist small employers in facilitating the
enrollment of their employees in qualified health plans
offered in the small group market in the state. If a state
does not establish an Exchange, the federal government is
required to administer the Exchange.
The advantage to individuals of purchasing health insurance
coverage through the Exchange is the ACA provides eligible
individual taxpayers, whose household income is between 100
and 400 percent of the Federal Poverty Level (FPL) inclusive,
an advanceable and refundable premium tax credit based on the
individual's income for coverage. The ACA also requires a
reduction in cost-sharing for individuals with incomes below
250 percent of the FPL, and a lower maximum limit on
out-of-pocket expenses for individuals whose incomes are
between 100 and 400 percent of the FPL. These tax credits and
premium reductions are not available to individuals purchasing
coverage outside of state exchanges.
In May 2013, the Associated Press (AP) published a story
entitled "California Exchange Granted Secrecy" stating the
implementing legislation gave Covered California the authority
to keep all contracts private for a year and the amounts paid
secret indefinitely, potentially shielding the public from
seeing how hundreds of millions of dollars are spent. The
story stated the indefinite ban on releasing rates of pay to
companies and individuals receiving contracts also goes beyond
exemptions for other state health programs, such as Healthy
Families, which withholds rates of pay from disclosure for up
to four years, but not permanently. According to the story, in
response to an AP PRA request, the agency released information
on a dozen competitively bid contracts issued since early
2011, which included $14 million for a 19-month contract with
Ogilvy Public Relations for marketing and other services;
$400,000 for PriceWaterhouse Coopers for a four-month deal
developing a small business program; and $327 million for a
five-year deal with consulting giant Accenture to develop a
web portal and enrollment system for those who will seek
coverage. Those contracts also are accessible on the agency's
website, along with about two dozen requests for services the
agency has published. But the AP story states it's not clear
how many contracts the agency has executed, for how much or
with whom.
3.Prior legislation.
a. SB 900 (Alquist), Chapter 659, Statutes of 2010,
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establishes Covered California as an independent public
entity within state government, and requires Covered
California to be governed by a board composed of the
Secretary of California Health and Human Services Agency,
or his or her designee, and four other members appointed by
the Governor and the Legislature who meet specified
criteria.
b. AB 1602 (John A. Pérez), Chapter 655, Statutes of 2010,
specifies the powers and duties of Covered California
relative to determining eligibility for enrollment in the
Covered California and arranging for coverage under health
plans.
4.Support. Health Access California (HAC) writes in support of
this bill to narrow the circumstances under which Covered
California would be permitted to exclude from public scrutiny
various contracts. HAC writes that it supported the Covered
California implementing legislation, but at that time, it
understood the provisions of AB 1602 to provide that the
health plans contracts would be exempt from PRA, and it did
not envision the heavy reliance Covered California on
contracts, particularly during these start-up years. HAC
states that, in reviewing the enabling statute for Covered
California, it was surprised to discover that the enabling
statute thus excluded from public scrutiny numerous contracts
that would have been public if another state agency had been
involved. HAC states its view and recollection is that this is
inadvertent, and this bill rightly corrects the drafting error
by narrowly specifying the circumstances under which Covered
California contracts, including health contracts and rates,
can be excluded from public scrutiny.
California Common Cause writes in support that this bill
promotes transparency and states the California Health Benefit
Exchange should be held to the same disclosure and
transparency standards as similar agencies, such as the
Healthy Families Program.
5.Policy issues. The PRA is intended to provide access to
information concerning the conduct of the people's business as
a fundamental and necessary right of every person in
California. The PRA requires public records be open to
inspection at all times during the office hours of the state
or local agency and grants every person the right to inspect
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any public record, unless otherwise exempt from disclosure.
The author's purpose in enacting this bill is to conform Covered
California policy to that of MRMIB, which administers HFP.
However, this bill is different from the PRA provisions that
apply to MRMIB in several instances. For example, this bill
would require Covered California to release all contracts and
their rates (except health plan contracts and the rates, which
would be released in one to four years respectively), while
MRMIB is not required to release any of its contracts for one
year, and the contract rates in the fourth year. This would
effectively require Covered California to release contracts it
enters into for outreach and marketing, administrative
vendors, outside consultants earlier than MRMIB is required to
by law. Covered California staff indicates this codifies its
current practice.
In addition, this bill deletes an exception from the PRA that
allows the Covered California to keep confidential the records
that reveal the impressions, opinions, recommendations,
meeting minutes, research, work product, theories, or strategy
of the Covered California board or its staff, or records that
provide instructions, advice, or training to employees (page
3, lines 4-7). MRMIB currently has this same exemption, and it
is unclear why this provision is being deleted in its entirety
when some of the items exempt from disclosure (such as the
strategy of the Covered California board or its staff) should
be made public when Covered California is negotiating with
plans and vendors seeking to contract with it. In discussions
with Covered California, their staff indicate the items in the
list that are proposed to be made public by the bill would
continue to remain exempt from disclosure if they deal with
contracting under the "deliberative process" exemption in
subdivision (a) and other parts of the PRA and case law.
SUPPORT AND OPPOSITION :
Support: California Chronic Care Coalition
California Common Cause
Health Access California
Oppose: None received.
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