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 SB 332 Page 2 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 SB 332 Page 3 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.) SB 332 Page 4 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).) SB 332 Page 5 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 SB 332 Page 6 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 SB 332 Page 7 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