BILL ANALYSIS Ó
SB 332
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Date of Hearing: August 20, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 332 (Emmerson and DeSaulnier) - As Amended: May 16, 2013
SENATE VOTE : 33-0
SUBJECT : California Health Benefit Exchange: records.
SUMMARY : Eliminates an exemption from the California Public
Records Act (PRA) for contracts entered into by the California
Health Benefit Exchange (Exchange, also known as Covered
California); and instead requires contracts between health plans
or insurers (collectively carriers) and Covered California to be
open to inspection one year after the effective date and payment
rates to be open three years after a contract or amendment is
open to inspection. Also deletes a provision which exempts
impressions, opinions, strategy, training, and other Covered
California business from the PRA. 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. Instead,
requires contracts between carriers and the Exchange, except
rates of payment, to be 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
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open to PRA inspection.
5)Contains an urgency clause to ensure that the provisions of
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 provides that 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 reasonably segregable portion
of a record to be available for inspection by any person
requesting the record after deletion of the portions that are
exempted by law.
2)Defines "public records," for purposes of the PRA, to include
any writing containing information relating to the conduct of
the public's business prepared, owned, used, or retained by
any state or local agency regardless of physical form or
characteristics. Exempts certain types of records from
disclosure under the PRA.
3)Establishes the Exchange in state government as an independent
public entity not affiliated with any state agency governed by
a five member board.
4)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.
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5)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 contracts to be open to public
inspection one year after the effective date of the amendment.
6)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 family income up to 250% of the federal poverty
level (FPL). Transfers HFP-eligible children to the Medi-Cal
program beginning in 2013.
7)Protects from public disclosure pursuant to the PRA, records
of MRMIB related to activities governed by HFP or the County
Health Initiative Matching Fund program (CHIM) and 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 for 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.
8)Requires, except for the portion of a contract that contains
the rates of payment, contracts entered into pursuant to HFP
or CHIM, on or after January 1, 1998, to be open to inspection
one year after their effective dates, and amendments to
contracts open to inspection one year after the effective date
of the amendment.
9)Requires three years after a HFP or CHIM contract or amendment
is open to inspection, the portion of the contract or
amendment containing the rates of payment to be open to
inspection.
10)Makes, notwithstanding any other law, the entire HFP or CHIM
contract or amendments to a contract open to inspection by
JLAC. Requires JLAC to maintain the confidentiality of the
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contract and amendments thereto until the contract or
amendments to a contract are open to inspection.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill
seeks to ensure that Covered California is properly subject to
the PRA, and brings the Exchange in line with other state
agencies. The author states that although Covered
California's current practice is consistent with the PRA, it's
in the public's best interest to guarantee transparency in
upcoming years. The author indicates a reporter discovered
that the law establishing the Exchange permits Covered
California to keep all contracts private for a year and the
rates of pay to companies and individuals receiving contracts
secret indefinitely. The author asserts that 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 closely resembles, with
few exceptions, MRMIB and its contracting of services and
coverage under HFP. Further, this bill allows for health
insurer and health plan contracts and amendments to those
contracts to be held private for an additional three years
before being available for public inspection. Finally, this
bill restores authority for JLAC to audit the Exchange, which
was not explicitly permitted under the Exchange's authorizing
legislation.
2)BACKGROUND . On March 23, 2010, the federal government enacted
the Patient Protection and Affordable Care Act (ACA).
Beginning in 2014, the ACA gives states the option to expand
Medicaid (Medi-Cal in California) eligibility and requires the
restructuring of the individual and small group health
insurance markets, sets minimum standards for health coverage,
provides financial assistance to individuals with income below
400% of FPL through Advanceable Premium Tax Credits and
provides tax credits for small employers, establishes Health
Benefit Exchanges, and an essential health benefits package as
required to be offered by Qualified Health Plans (QHP).
Covered California was established as California's Exchange
and it is an independent public agency governed by a five
member board of directors.
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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 HFP, 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 Exchange 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 PriceWaterhouseCoopers for a four-month deal developing a
small business program; and, $327 million for a five-year deal
with the consulting firm Accenture to develop a Web portal and
enrollment system for those who will seek coverage. Those
contracts are also accessible on the Exchange's Website, along
with about two dozen requests for services the Exchange has
published. But the AP story states it's not clear how many
contracts the Exchange has executed, for how much, or with
whom.
3)CALIFORNIA STATE AUDIT . In July 2013, the California State
Auditor (Auditor) released a report on the creation of Covered
California's establishment of a health insurance exchange. In
the report, the Auditor indicates that Covered California has
unique statutory authority to keep details of all of its
contracts confidential. Despite this authority, Covered
California has publicly released many of its contracts,
including their associated dollar amounts. Recently, Covered
California developed a written policy, which the board has yet
to adopt, limiting its use of its authority to withhold
contract details only to certain contracts and bids.
According to state law, Covered California must release a
contract for public inspection one year after the contract is
signed; however, it may keep the rates of payment in a
contract and the contract amounts confidential indefinitely.
In addition, state law specifies that the deliberative
processes-discussions and communications Covered California
has related to the contracting process-are exempt from
disclosure. The varied contracts that Covered California has
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selected to disclose include contracts for legal and
consulting services and for information technology development
services. In May 2013, Covered California drafted a policy
concerning contract disclosure that would have Covered
California essentially mirroring the requirements found in the
PRA and only using the statutory exemption for QHP contracts
and bids. According to its general counsel, the policy has
not been formally adopted by the board. However, the general
counsel explained that Covered California has, for the last
few months, been releasing all contracts, including their
rates, in response to PRA requests, with appropriate
redactions based on exemptions available to all public
entities under the PRA. The general counsel stated that
Covered California may make use of its statutory exemption so
it will not be at a negotiating disadvantage in future
contracting efforts. This bill was introduced to change
Covered California's statutory exemption from contract
disclosure. The Auditor indicates that whether or not this
legislation is enacted, Covered California will continue to
face difficult decisions regarding the disclosure of its
contracts. For this reason, and to provide as much public
transparency as possible, the Auditor recommends Covered
California's board should formally adopt a policy to retain
confidentiality only for contracts, contract amendments, and
payment rates that are necessary for limiting negotiating
disadvantages with future contracts.
4)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 for HFP.
5)RELATED LEGISLATION .
a) AB 804 (Lowenthal) requires pharmacy invoice information
that is submitted to the Department of Health Care Services
or a designated vendor for the purpose of establishing
average acquisition cost to be confidential and exempt from
disclosure under the PRA. AB 804 is pending in the Senate
Health Committee.
b) SCA 3 (Leno and Steinberg) places a measure on the
ballot to amend the California Constitution to require
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local agencies to comply with the PRA and the Ralph M.
Brown Act, California's open meetings law, and any
subsequent amendments that further the constitutional
provisions on public access to public agency meetings and
records. SCA 3 exempts compliance with PRA and the Brown
Act from state mandate claims. SCA 3 is pending in the
Assembly Local Government Committee.
6)PREVIOUS LEGISLATION .
a) AB 1602 (John A. Pérez), Chapter 655, Statutes of 2010,
and SB 900 (Alquist), Chapter 659, Statutes of 2010,
establish the Exchange as an independent public entity to
purchase health insurance on behalf of Californians with
incomes of between 100% and 400% FPL and employees of small
businesses. Clarifies the powers and duties of the board
governing the Exchange relative to the administration of
the Exchange, determining eligibility and enrollment in the
Exchange, and arranging for coverage under qualified
carriers.
b) AB 1381 (Bagley), Chapter 1473, Statutes of 1968,
creates the PRA which establishes standards for public
agencies' open and public meetings and public access to the
agencies' records.
7)DOUBLE REFERRAL . This bill has been double referred and
passed the Assembly Committee on Judiciary on August 15, 2013
with a consent vote of 10-0.
REGISTERED SUPPORT / OPPOSITION :
Support
California Common Cause
Opposition
None on file.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
SB 332
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