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 Continued--- SB 332 | Page 2 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. SB 332 | Page 3 (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 SB 332 | Page 4 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, SB 332 | Page 5 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 SB 332 | Page 6 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. -- END -- SB 332 | Page 7