BILL ANALYSIS Ó
SB 332
Page 1
Date of Hearing: August 15, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
SB 332 (Emmerson & DeSaulnier) - As Amended: May 16, 2013
SENATE VOTE : 33-0
SUBJECT : California Health Benefit Exchange: PUBLIC records
KEY ISSUE : Should the unusually broad public record Act
exemptions that were granted to the board of "Covered
California" be narrowed, so as to permit greater public access
to its records?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This bill seeks to make the contracts and records of the
California Health Benefits Exchange (Exchange) - which was
authorized by the federal Patient Protection and Affordable Care
Act (ACA) - more accessible to public inspection. In 2010,
shortly after Congress enacted the ACA, the California
Legislature enacted AB 1602 (Chapter 655) and SB 900 (Chapter
659) to establish the state Exchange - also known as "Covered
California." The Exchange, operating as an independent public
entity, will purchase health insurance on behalf of eligible
employees and small employers. That legislation generally set
forth the powers of the board that governs and administers the
Exchange. Among other things, the Exchange will arrange health
insurance coverage for eligible individuals and employers by
contracting with qualified health plans, who will bid to
participate in the Exchange. An apparently less noticed portion
of the legislation creating the Exchange exempted certain
documents, including contracts and communications between the
Exchange and the qualified health plans, from requests under the
California Public Records Act. The intent of these exemptions,
apparently, was not to shield the activities of the board, but
rather to ensure that the release of certain details of the
contracts (especially negotiated rates of payment) would not
undermine the competitive nature of the bidding process.
However, thanks in part to an Associated Press report, it has
become apparent that the enabling legislation provided much
broader public record exemptions than were presumably intended
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by the various stakeholders, or that were necessary to maintain
the integrity of the competitive bidding process. Moreover, the
exemptions are much broader than those given to similar state
agencies that must also withhold certain contract information
where there is a competitive bidding. For example, the public
record exemptions granted to the Exchange were much broader than
those granted to the Managed Risk Medical Insurance Board
(MRMIB) and the contracts that provide health coverage to
eligible children under the Healthy Families Program. This bill
brings the public records exemption into line with those other
exemptions and, it appears, more into line with the widely
understood intent of the enabling legislation. The bill has not
received any negative floor or committee votes. There is no
known opposition to the bill.
SUMMARY : Deletes certain exemptions from the California Public
Records Act (PRA) for contracts, and portions thereof, entered
into by the California Health Benefits Exchange (Exchange), and
generally expands access to the contracts and records of the
Exchange. Specifically, this bill :
1)Deletes a provision in existing law which exempts impressions,
opinions, recommendations, meeting minutes, research, work
product, theories, or strategy of the Exchange board or its
staff, or records that provide instructions, advice, or
training to employees from the PRA.
2)Deletes a provision in existing law which makes Exchange
contracts and amendments, except the rates of payment, open to
inspection one year after their effective date.
3)Requires, three years after a contract with a participating
carrier or amendment is open to inspection, the portion of the
contract or amendment containing the rates of payment to be
open to inspection.
4)Requires, notwithstanding any other law, entire Exchange
contracts with participating carriers or amendments to
contracts with participating carriers to be open to inspection
by the Joint Legislative Audit Committee (JLAC). Requires
JLAC to maintain the confidentiality of the contracts and
amendments until the contracts or amendments to a contract are
open to PRA inspection.
5)Contains an urgency clause to ensure that the provisions of
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this bill go into immediate effect upon enactment.
EXISTING LAW :
1)Establishes the PRA, which makes public records open to
inspection at all times during the office hours of the state
or local agency and every person has a right to inspect any
public record, except as indicated, upon payment of fees
covering direct costs of duplication or a statutory fee if
applicable. Requires any portion that can be reasonably
segregated from a record to be available for inspection by any
person requesting the record after deletion of the portions
that are exempted by law. (Government Code Section 6250 et
seq.)
2)Establishes the California Health Benefits Exchange in state
government as an independent public entity not affiliated with
any state agency governed by a five member board. (Government
Code Section 100500 et seq.)
3)Makes records of the Exchange that reveal any of the following
exempt from disclosure under the PRA:
a) The deliberative processes, discussions, communications,
or any other portion of the negotiations with entities
contracting or seeking to contract with the Exchange,
entities with which the Exchange is considering a contract,
or entities with which the Exchange is considering or
enters into any other arrangement under which the Exchange
provides, receives, or arranges services or reimbursement;
or,
b) The impressions, opinions, recommendations, meeting
minutes, research, work product, theories, or strategy of
the Exchange board or its staff, or records that provide
instructions, advice, or training to employees.
(Government Code Section 100508.)
4)Makes contracts entered into by the Exchange open to
inspection one year after their effective date except for the
portion of a contract that contains the rates of payment.
Requires amendments to be open to public inspection one year
after the effective date of the amendment. (Government Code
Section 100508.)
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5)Establishes the Healthy Families Program (HFP) administered by
the Managed Risk Medical Insurance Board (MRMIB) to make
subsidized health, vision, and dental insurance available to
children with incomes up to 250% of the federal poverty level.
(California Insurance Code Section 12693.20 et seq.)
6)Exempts from public disclosure pursuant to the PRA, records of
MRMIB related to activities governed by HFP and other
specified insurance programs that reveal any of the following:
a) The deliberative processes, discussions, communications,
or any other portion of the negotiations with entities
contracting or seeking to contract with MRMIB, entities
with which MRMIB is considering a contract, or entities
with which MRMIB is considering or enters into any other
arrangement under which MRMIB provides, receives, or
arranges services or reimbursement; or,
b) The impressions, opinions, recommendations, meeting
minutes, research, work product, theories, or strategy of
MRMIB or its staff, or records that provide instructions,
advice, or training to employees. (Government Code Section
6254 (v) (w) and (y).)
7)Requires, except for the portion of a contract that contains
the rates of payment, that MRMIB contracts entered into
pursuant to HFP or other insurance programs to be open to
inspection one year after their effective dates, and
amendments open to inspection one year after the effective
date of the amendment. (Government Code Section 6254 (v) (w)
and (y).)
8)Requires rate of payment portion of MRMIB contracts entered
into pursuant to HFP or other insurance programs to be open
inspection after three years. (Government Code Section 6254
(v) (w) and (y).)
9)Makes the entire MRMIB program contracts (including
amendments) open to inspection by Joint Legislative Audit
Committee (JLAC). Requires JLAC to maintain the
confidentiality of the contracts and amendments until they are
open to inspection after the specified one or three year
period. (Government Code Section 6254 (v)(4), (w)(3),
(y)(4).)
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COMMENT : On March 23, 2010, the federal government launched the
Patient Protection and Affordable Care Act (ACA). Beginning in
2014, the ACA will give states the option to expand Medicaid
eligibility and restructure the individual and small group
health insurance markets, by setting minimum standards for
health coverage, providing financial assistance to low income
individuals, allowing tax credits to small businesses, and
establishing Health Benefit Exchanges that will arrange coverage
for individuals and small employers who are otherwise priced out
of the health insurance market. In response to this federal
enabling legislation, the California Legislature enacted AB 1602
(Chapter 655, Statutes of 2010) and SB 900 (Chapter 659,
Statutes of 2010). This legislation established the California
Health Benefits Exchange, also known as "Covered California," as
an independent government entity. Among other things, the
Exchange will arrange health insurance coverage for covered
individuals and small employers by negotiating contracts with
qualified health plans. The legislation that established the
Exchange also exempted certain documents, including contracts
and communications between the Exchange and the qualified health
plans, from the California Public Records Act. The intent of
these exemptions, apparently, was not to shield the activities
of the board, but rather to ensure that the release of certain
information about the details of contracts and rates of payment
would not undermine the competitive bidding process.
However, the public record exemptions granted to the Exchange
apparently went far beyond what stakeholders intended, and far
beyond what existing law granted to other state agencies that
similarly negotiated contracts through a competitive bidding
process. For example, earlier this year the Associated Press
(AP) published a story entitled "California Exchange Granted
Secrecy," pointing out that the implementing legislation gave
Covered California the authority to keep all contracts private
for a year and to keep the rate of payment portion of the
contract secret indefinitely. By contrast, contracts that
provide coverage under the Healthy Families Program (HFP), which
is administered by the Managed Risk Medical Insurance Board
(MRMIB), are exempt from the PRA for one year, but the "rate of
payment" portion is only exempt for three years, not
permanently.
Bill Expands Access to Records of the Board of Covered
California in Several Ways : Although much of the language
relating to records exemptions in the original legislation was
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clearly modeled after the exemptions granted to
MRMIB-administered programs like HFP, the original legislation
also nonetheless departed from that language in various and
significant ways. The reasons for these departures are not
readily apparent in the legislative history. At any rate, this
bill will increase access to the records in the following three
ways, and in so doing will bring the exemptions for the Exchange
into line with exemptions for similar agencies and programs.
1) Existing law generally exempts Covered California
contracts from the PRA for one year, but the "rate of
payment" portion of the contract is permanently exempt from
public record requests. This bill would also make the
contracts exempt for one year, but it would provide that
the "rate of payment" portion of a contract would be exempt
for three years, not permanently.
2) Existing law exempts from public record requests "the
impressions, opinions, recommendations, meeting minutes,
research, work product, theories, or strategy of the board"
of Covered California or its staff, along with any records
that provide instructions, advice, or training to
employees. This bill would eliminate this exemption
entirely, so that all of this information would be
available under a public record request.
3) This bill would make the entire contract, including the
rate of payment portion, open to inspection by the Joint
Legislative Audit Committee (JLAC). JLAC would maintain
the confidentiality of those contracts and the rate of
payment portion until such time as they became available
under the PRA . Existing law contains no such requirement
for the Exchange, although there is such a requirement for
MRMIB.
Bill Appears to Appropriately Balance a Policy Favoring
Transparency with a Policy Protecting the Integrity of the
Competitive Bidding Process : In short, this bill will make the
contracting process used by the Exchange more open and
transparent by bringing the public records exemptions granted to
the Exchange more into line with similar state agencies.
Moreover, it appears to do this without compromising the
integrity of the competitive bidding process. For example, both
under existing law and under this bill, the board's deliberative
processes, discussions, and communications, or any other portion
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of the negotiations with entities contracting or seeking to
contract with the Exchange will continue to be exempt from
public record requests. This exemption is also granted to MRMIB
and indeed to most state agencies that use a competitive bidding
process.
ARGUMENTS IN SUPPORT: According to California Common Cause,
this bill promotes transparency and ensures that California, the
first state to comply with the ACA, remains a leader as the
scheduled October implementation date quickly approaches.
California Common Cause believes the Exchange is a state agency
and should be held to the same disclosure and transparency
standards as similar agencies, such as HFP.
Health Access California (HAC), one of the principle supporters
of the legislation establishing the Exchange, also supports this
bill, writing that the original understanding of most
stakeholders was that the public records exemptions granted to
the Exchange would be more or less the same as those granted to
MRMIB.
REGISTERED SUPPORT / OPPOSITION :
Support
California Chronic Care Coalition
California Common Cause
Health Access California
Opposition
None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334