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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