BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 332
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          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