BILL ANALYSIS �
SB 509
Page 1
Date of Hearing: June 4, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 509 (DeSaulnier) - As Amended: May 24, 2013
SENATE VOTE : 39-0
SUBJECT : California Health Benefit Exchange: background checks.
SUMMARY : Requires the Executive Board (Board) of the California
Health Benefit Exchange (Exchange), known as Covered California,
to require fingerprint images and related information of all
employees, prospective employees, contractors, subcontractors,
volunteers, or vendors whose duties include or would include
access to confidential information, personal identifying
information (PII), personal health information (PHI), federal
tax information (FTI), financial information, as required by
federal law or guidance, for the purposes of obtaining
information of the existence and content of a record of state or
federal criminal history and information as to the existence and
content of pending state or federal arrests, as specified.
Contains an urgency clause in order to become effective
immediately upon enactment. Specifically, this bill :
1)Requires Covered California, consistent with applicable
federal guidance, to require employees, prospective employees,
contractors, subcontractors, volunteers, or vendors whose
duties include or would include access to confidential
information, PII, PHI, FTI, financial information, or any
information as required by federal law or guidance applicable
to state exchanges to submit fingerprint images to be
submitted to the state Department of Justice (DOJ) in order to
obtain information as to the existence of a record of
convictions or for state or federal crimes or pending charges.
2)Requires the Board to require services contracts, interagency
agreements, or public entity agreements, entered into or
renewed after the effective date of this bill which include
access to confidential, personal, or financial information as
described in 1) above to include provisions requiring
employees, agents, or contractors or subcontractors who have
access to the specified information as part of the agreement
or contract to agree to criminal background checks on its
employees, contractors, agents, or subcontractors.
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3)Requires DOJ to forward requests for federal summary criminal
history information from Covered California to the Federal
Bureau of Investigation (FBI) and to compile and disseminate
the response to the Board.
4)Requires DOJ to provide to the Exchange a report that includes
state and federal criminal history information.
5)Requires the Board to request that DOJ also provide subsequent
arrest or disposition information on any person who whose
fingerprints remains on file as a result of an initial request
for criminal history information.
6)Authorizes DOJ to charge a fee sufficient to cover the cost of
processing requests for criminal history information.
EXISTING LAW :
1)Requires, effective January 1, 2014, under federal law, an
individual to have the option to apply for state subsidy
programs, which includes the state Medicaid program, the state
Children's Health Insurance Program (CHIP), enrollment in a
qualified health plan (QHP) and a Basic Health Plan, if there
is one, through a state exchange either in person, by mail,
online, by telephone, or other commonly available electronic
means.
2)Permits Covered California to adopt rules and regulations, as
necessary, and permits Covered California to adopt any
necessary rules and regulations as emergency regulations in
accordance with the Administrative Procedure Act until January
1, 2016.
3)Requires, under federal law, any person who receives
information provided by an applicant for coverage or receives
information from a federal agency, to use the information only
for the purposes of ensuring the efficient operation of the
Exchange, including verifying the eligibility of an individual
to enroll in the Exchange or to claim a premium tax credit or
cost-sharing reduction, and to not disclose the information to
any other person except as provided.
4)Makes any person authorized by law to receive state summary
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criminal history information records or information obtained
from a record who knowingly furnishes the record or
information to a person who is not authorized by law to
receive the record or information guilty of a misdemeanor.
5)Requires DOJ to furnish summary criminal history information
to specified agencies or employers to be used for the purpose
of employment, licensing, or certification purposes.
FISCAL EFFECT : According to the Senate Appropriations
Committee, one-time costs of about $60,000 and ongoing costs of
about $40,000 to perform background checks on Exchange employees
(federal funds); one-time costs of about $1.2 million to perform
background checks for volunteer "assistors" (federal funds).
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, in order to
provide eligibility and enrollment assistance, the Exchange
service center employees as well as assisters who provide
in-person assistance will need to ask consumers for a variety
of highly sensitive and confidential personal information.
This includes an enrollees' name, address, contact
information, Social Security Number (SSN), employer, annual
income, number of dependents, and more. To receive the
authorization from the federal government to operate a
state-based exchange, federal guidelines require state
exchanges to perform criminal history checks prior to hiring
any person whose position will have access to the PII and FTI
of Exchange applicants and enrollees.
Based on federal guidance, Covered California has determined the
Exchange must meet Minimum Acceptable Risk Standards for
Exchanges (MARS-E), one of three on Exchange privacy and
security standards. According to documents provided by
Covered California, the MARS-E requires all individuals
associated with the Exchange who would have access to
sensitive information such as PII, PHI, and FTI to be screened
before they may be authorized to obtain access to the
information system and devices containing such information.
To meet these requirements, Covered California must perform a
background check for all persons prior to authorizing access
and require appropriate personnel to obtain and hold a
moderate-risk security clearance as defined in the federal
Department of Health and Human Services (DHHS) Personnel
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Security/Suitability Handbook.
The MARS-E also requires periodic rescreening of individuals,
consistent with the criticality or sensitivity rating of the
position. Furthermore, according to Covered California, the
Internal Revenue Service (IRS) Publication 1075, Tax
Information Security Guidelines requires screening and
consideration of an individual's background and security
clearance when designating personnel who are authorized to
access FTI.
The Board and staff have determined that Covered California must
have explicit statutory authority in order to receive criminal
record information from DOJ and the FBI, and subsequent
criminal arrest and conviction information from DOJ. Covered
California will then promulgate emergency regulations to
further specify background check requirements including
disqualifying crimes and affected positions. At the May 23,
2013, Board meeting, the Board approved for submission to the
Office of Administrative Law, Draft Covered California
Fingerprinting Implementation Regulations (Draft Regulations),
to require fingerprint images and associated criminal history
information from individuals whose duties include or would
include any of the following: a) access to FTI; b) access to
PII; c) access to PHI; d) access to confidential or sensitive
information provided by a member of the public including, but
not limited to, a credit card account number or SSN; e) access
to cash, checks, or other forms of payment and accountable
items; f) responsibility for the development or maintenance of
the California Healthcare Eligibility, Enrollment, and
Retention System (CalHEERS) and other critical automated
systems of the Exchange; g) access to information technology
systems of the Exchange. The Draft Regulations further
provide that if the state or federal level criminal records
contain a conviction of a felony, misdemeanor, or pending
criminal charge related to a crime of moral turpitude that is
substantially related to the qualifications, functions, or
duties of the specific employment sought by the applicant or
employee, it shall be justification for denial to an
individual to serve in an Exchange role that requires
fingerprinting.
2)BACKGROUND . On March 23, 2010, the Patient Protection and
Affordable Care Act (ACA) was passed and signed into law. A
key component is the establishment of exchanges to serve as a
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marketplace that allows consumer to apply for Medicaid
(Medi-Cal in California), CHIP, or advanced premium tax
credits (APTC) and cost sharing reductions to be used to
purchase QHP coverage for persons in a household with income
up to 400% of the federal poverty level (FPL). Beginning in
2014, the ACA expands Medicaid eligibility to a new "adult
group" and collapses most existing eligibility categories into
three broad groups: parents, pregnant women, and children
under age 19. The "adult group" includes all non-pregnant
individuals ages 19 to 65 with household incomes at or below
133% FPL.
The ACA provides for a coordinated, streamlined enrollment
process for these programs to promote maximum enrollment and
facilitate a smooth process beginning with the use of a
single, streamlined application and seamless renewal. As
required by the ACA, financial eligibility for most groups
will be based on modified adjusted gross income (MAGI), as
defined in the Internal Revenue Code. The rule generally
adopts MAGI household income counting methods, eliminating
various income disregards currently used by states to
determine Medicaid eligibility. The Medicaid eligibility
determination process will begin with a MAGI screen. If an
individual is not found eligible for a MAGI group, the state
must collect necessary information and determine eligibility
under all other Medicaid eligibility categories (i.e.,
MAGI-exempt groups, such as disability) and potential
eligibility for APTC in the Exchange. States are required, to
the maximum extent possible; to rely on electronic data
matches with trusted third party sources to verify information
provided by applicants.
In order to verify eligibility, applicants will be providing
personal identifying and personal financial information such
as SSNs, state and federal income tax information, date of
birth, wage and income information, residency, and citizenship
information. Verification will require that many Covered
California employees, prospective employees, contractors,
subcontractors, volunteers and vendors will have access to
applicant or enrollee PII, PHI, and/or FTI as defined in the
Health Insurance Portability and Accountability Act, the
California Information Practices Act, and IRS regulations.
For example, Covered California will request tax return data
regarding MAGI and family size from DHHS for whom they have a
SSN or Taxpayer Identification Number and will use it to
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verify information provided by the applicant. Federal
guidance requires that Covered California protect and
safeguard customers from unauthorized and illegal access to or
disclosure of this information. To comply with federal
guidance, Covered California has determined that it must
implement criminal records background checks to identify, and
exclude from accessing personal information, applicants with a
demonstrated history of abuse of personal information or other
offenses that may indicate potential propensity to abuse such
information. According to Covered California, background
checks and security screening are required by the Centers for
Medicare and Medicaid Services (CMS) and the IRS for any
employee who is authorized to have access to PII or FTI,
respectively. Many state agencies in health, education and
financial areas, including the Department of Managed Health
Care and the California Department of Insurance, also require
background checks.
3)CalHEERS . The ACA requires states to have a single
streamlined application for Exchange subsidies, their Medicaid
programs and their CHIP programs. Covered California and the
Department of Health Care Services are joint program sponsors
of CalHEERS which is the Information Technology system running
both the online application for the Exchange, Medi-Cal, and
Access for Infants and Mothers programs and also the phone
service center functions. CalHEERS will serve as the
consolidated system support for eligibility, enrollment, and
retention for the Exchange and Medi-Cal and is scheduled to
take live applications October 1, 2013 for the new coverage to
begin on January 1, 2014. CalHEERS is a Web-based portal
designed to be the single streamlined resource for
Californians to find out what health program they are eligible
for and to make buying health insurance as easy as possible.
This state of-the-art system will allow Californians to
compare health plans to make the purchase that best meets
their individual or small business needs and receive federal
subsidies if eligible. CalHEERS Program Design Goals call
for: a) A "No Wrong Door" service system that provides
consistent consumer experiences for all entry points; b)
Culturally and linguistically appropriate oral and written
communications which also ensure access for persons with
disabilities; c) Seamless and timely transition between health
programs; and, d) Minimizing the burden of establishing and
maintaining eligibility. Accenture, LLP was awarded a
contract for over $325 million for the development of
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CalHEERS.
In addition there will be three state of the art call centers
that will handle questions from and help applicants understand
the new health benefits available through the ACA. Almost 500
staff will be hired and trained at the Fresno call center to
assist consumers with online purchasing of Covered California
health insurance products. The center will open in the fall,
with the location to be announced soon. Other Covered
California call centers will be located in Contra Costa
County, and in Rancho Cordova in Sacramento County. Using
state-of-the art technology, the three centers will offer
comprehensive, integrated and streamlined services. Call
center staff will speak English and Spanish, along with
languages common in California such as Mandarin, Cantonese,
Vietnamese and Armenian. Federal dollars fund the creation of
the call centers and their initial staffing.
4)ASSISTERS PROGRAM . Covered California is in the process of
establishing an Assisters Program that will include assister
enrollment entities (AEE) and individual entities. AEEs are
entities and organizations eligible to be trained and
registered to provide in-person assistance to consumers and
help them apply for Covered California programs, particularly
entities that have access to Covered California's targeted
population. Individual AEEs are individuals who are employed,
trained, certified, and linked to AEEs to provide in-person
assistance to consumers and help them apply for Covered
California programs and are individuals who can provide
assistance in a culturally and linguistically appropriate
manner to consumers. The proposed compensation for AEEs is
$58.00 per new enrollment into Covered California, including a
person who was a MAGI-eligible Medi-Cal enrollee but upon
redetermination qualifies for Covered California and when a
currently enrolled person adds a new dependent. Compensation
for annual renewal is $25.00. The funding source for the
initial application is the federal funding from the Level II
Establishment Federal Grant and renewals will be funded as
operating costs from self-sustainability funds. There is no
compensation for an enrollment into Medi-Cal.
The Board is expected to address Regulations regarding AEE
fingerprinting and records checks at the June 20, 2013
meeting. The Regulations applying to AEEs will provide for
notification to the applicant of disqualifying information and
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allow for an appeal. These Regulations will also provide for
an opportunity to correct inaccurate or incomplete information
and request a new determination of fitness for employment.
5)IMPLEMENTATION . According to a Board Recommendation Brief
presented to the Exchange Board at the March 21, 2013 Board
meeting, in analyzing options for conducting background
checks, Covered California staff considered two standard types
of clearances: a) non-fingerprint-based background check; and,
b) fingerprint-based background check. A
non-fingerprint-based background check is conducted using the
applicant's identifying information, such as SSN, to check
county data sources. The fingerprinting-based background
check allows for a broader search including state and federal
crime databases maintained by DOJ and the FBI, respectively,
and allows for subsequent arrest notifications. The staff
determined that fingerprint-based background checks are
necessary to comply with federal requirements for initial
security clearance and ongoing monitoring. They noted that
fingerprint-based background checks will identify convictions
and any arrests for which charges are still pending and will
not identify any arrests that did not result in conviction.
Covered California explored the possibility of using existing
fingerprint checks previously undergone by prospective Covered
California personnel to satisfy Covered California's
background check requirement. This approach was determined
not to meet federal requirements because it will not provide a
positive identification of the individual being screened and
will not allow Covered California to receive required
subsequent arrest notifications.
On March 19, 2013, Insurance Commissioner (IC) Dave Jones sent a
letter to Covered California regarding this issue. He stated
that he supported the staff proposal on fingerprinting and
background checks, but that in his opinion, it fell short with
regard to Assisters. He further recommended a process and
standards to certify that persons seeking to become assisters
meet some minimum qualifications including that they not be
known as criminals with a history of felony or misdemeanor
convictions that indicate a history or dishonesty or breach of
trust. The IC further recommended that applicants be excluded
if convicted of a felony or certain types of crimes of
dishonesty or moral turpitude and that applicants be required
to disclose all criminal convictions and administrative
actions. The IC also recommended that the list of
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disqualifying crimes be the same as those that apply to those
seeking an insurance agent license and suggested guidelines on
how these crimes and acts are to be weighed when decisions are
made to issue or revoke a license and recommended that Covered
California use the CDI list of crime and other administrative
standards.
Covered California will use the judicially created standard of
crimes of moral turpitude to guide potentially disqualifying
offenses which could include theft, dishonesty, or fraud, as
well as the manufacture or distribution of drugs and certain
violent or property offenses, such as assault with a deadly
weapon, murder, and arson, which are performed with an evil
intent. According to the Board Brief, this standard is used by
many other state departments and is simple shorthand as
compared to enumerating each disqualifying crime. Other
crimes not likely to impact an individual's fitness for
employment, such as driving under the influence, drug
possession, and petty vandalism, will not be considered
disqualifying.
Background Checks are proposed to be performed as follows:
a) Prospective Covered California employees : As a condition
of employment, Covered California will require background
checks of all prospective employees whose duties include
access to PII, PHI, or FTI. Hiring offers will be made
contingent on an acceptable background criminal record
check, and prospective employees will not begin employment
until the criminal record check is completed and approved.
b) Prospective Covered California contractors,
subcontractors, volunteers, and vendors : Covered California
will require background checks of all prospective
contractors, subcontractors, volunteers and vendors whose
duties include access to PII, PHI or FTI. AEEs would be
considered volunteers or vendors depending on their
compensation terms. For AEEs, acceptance to training will
be contingent on an acceptable background criminal record
check, and prospective AEEs will not begin training until
the criminal record check is completed and approved.
c) Current Covered California employees and contractors,
subcontractors, volunteers and vendors : CMS requires all
Covered California employees, contractors, subcontractors,
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volunteers, and vendors to have a criminal record check
before hire. Because some individuals in these positions
have already been hired and more will be hired before
legislation can be obtained to authorize access to criminal
records, the treatment of existing personnel will need to
be discussed with federal oversight agencies.
d) Periodic rescreening of employees, contractors,
subcontractors, volunteers, and vendors : Once an employee,
contractor, subcontractor, volunteer, or vendor has been
fingerprinted and approved for access to personal
information, Covered California will receive any subsequent
arrest and conviction information from DOJ for California
offenses. There is no additional charge for this
information, and no further action will be required of the
employee, contractor, subcontractor, volunteer, or vendor.
6)COST . The estimated cost for an individual criminal
background check is approximately $65 which includes the cost
of fingerprinting and fees charged by DOJ and the FBI. For
employees or prospective employees and individuals who have
successfully completed the training and certification process
to be an AEE, the Exchange staff recommend that Covered
California pay the cost for the background checks for year
one. The policy to pay for background checks for certified
Assisters will be specified in forthcoming Assister program
recommendations. Covered California's other contactors,
subcontractors, volunteers, and vendors that are not AEEs
would pay for the cost of background checks for employees and
prospective employees who would be required to undergo a
background check. Covered California is planning to engage in
negotiations to receive a state-wide discount rate through a
company such as LiveScan and offer the services to
contractors, subcontractors, volunteers, and vendors to reduce
costs.
7)SUPPORT . California Coverage & Health Initiatives (CCHI)
writes in support that federal law requires Covered California
to set standards and establish safeguards for protecting the
privacy of highly sensitive and confidential personal
information that will be needed for applying for health
insurance programs. CCHI further supports this bill because
it grants authority to the Board to require fingerprint images
for employees, contractors, volunteers or vendors, navigators,
and assisters from DOJ. CCHI further points out the January
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1, 2014 date for the Exchange to be open is only seven months
away and the open enrollment begins in October. CCHI states
that it is crucial to train and hire employees, navigators,
and assisters immediately in order to maximize enrollment and
guarantee not only coverage, but success.
8)RELATED LEGISLATION . SB 4 X1 (Emmerson), AB 3 X1 (Conway),
and AB 1428 (Conway) would require all employees, vendors, who
would have access to financial or medical information to be
subject to background checks and prohibit any person convicted
of specified crimes from being employed by or to enter into a
contract with the Exchange.
9)PREVIOUS LEGISLATION . AB 1602 (P�rez), Chapter 655, Statutes
of 2010, and SB 900 (Alquist), Chapter 659, Statutes of 2010,
establishes the Exchange, now called Covered California, to
screen low-income persons for Medi-Cal eligibility and as a
market place for people with family incomes up to 400% FPL to
purchase QHPs and to obtain APTCs and other cost sharing
reductions.
REGISTERED SUPPORT / OPPOSITION :
Support
California Coverage & Health Initiatives
United Ways of California
Opposition
None on file.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097