BILL ANALYSIS �
SB 746
Page 1
SENATE THIRD READING
SB 746 (Leno)
As Amended September 4, 2013
Majority vote
SENATE VOTE :24-15
HEALTH 12-6 APPROPRIATIONS 12-5
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|Ayes:|Pan, Ammiano, Atkins, |Ayes:|Gatto, Bocanegra, |
| |Bonilla, Bonta, Chesbro, | |Bradford, |
| |Gomez, | |Ian Calderon, Campos, |
| |Roger Hern�ndez, | |Eggman, Gomez, Hall, |
| |Lowenthal, Mitchell, | |Holden, Pan, Quirk, Weber |
| |Nazarian, V. Manuel P�rez | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Maienschein, |Nays:|Harkey, Bigelow, |
| |Mansoor, Nestande, | |Donnelly, Linder, Wagner |
| |Wagner, Wilk | | |
| | | | |
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SUMMARY : Establishes new data reporting requirements on health
plans and health insurers sold in the large group market and
establishes new specific data reporting requirements related to
annual medical trend factors by service category, as well as
claims data or deidentified patient-level data, as specified,
for a health care service plan (health plan) or health insurer
that exclusively contracts with no more than two medical groups
in the state to provide or arrange for professional medical
services for the enrollees of the plan (referring to Kaiser
Permanente (KP)). Specifically, this bill :
1)Requires annual disclosures of certain data elements already
required of large group health plans and insurers subject to
review for unreasonable rate increases and adds the following
two new elements: the average rate increase by benefit
category and number of covered lives affected.
2)Requires a health plan or health insurer to disclose annually
certain aggregate data for all products sold in the large
group market, including a year trend attributable to cost and
trend attributable to utilization by benefit category.
Establishes requirements if a health plan or insurer is unable
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to provide information on benefit categories or trend
attributable to cost or utilization by benefit category.
3)Requires a health plan or insurer that exclusively contracts
with not more than two medical groups in the state to provide
or arrange for professional medical services for the enrollees
of the plan to disclose annually certain aggregate data for
its large group health plan contracts/health insurance
policies, including the overall annual medical trend factor
assumptions in the aggregate for large group rates by major
service category. Requires the plan or insurer to distinguish
between trend ascribed to the volume of services provided and
the trend ascribed to the cost of services provided.
4)Requires a health plan or insurer described in 3) above to
provide claims data at no charge to a large group purchaser
annually if the large group purchaser requests the
information. Requires the health plan or insurer to provide
claims data that a qualified statistician has determined is
deidentified so that the deidentified health information
neither identifies nor provides a reasonable basis to identify
an individual. Provides that this information is not to be
subject to the public disclosure requirements, as specified.
5)Requires, if claims data are not available pursuant to 4)
above, the health plan or insurer to provide, at no charge,
all of the following:
a) Deidentified data sufficient for the large group
purchaser to calculate the cost of obtaining similar
services from other health plans or health insurers and
evaluate cost-effectiveness by services and disease
category;
b) Deidentified patient-level data on demographics,
prescribing, encounters, inpatient services, outpatient
services, and any other data as may be required of the
health plan or health insurer to comply with risk
adjustment, reinsurance, or risk corridors as required by
the Patient Protection and Affordable Care Act; and,
c) Deidentified patient-level data used to experience rate
the large group, including diagnostic and procedure coding
and costs assigned to each service.
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6)Requires the health plan to obtain a formal determination of a
qualified statistician that the data in 5) above have been
deidentified so that the deidentified health information
neither identifies nor provides a reasonable basis to identify
an individual. Requires the statistician to certify the
formal determination in writing and to upon request, provide
the protocol used for deidentification to the Department of
Managed Health Care (DMHC) or the California Department of
Insurance (CDI).
7)Requires data provided pursuant to 5) above to only be
provided to a large group purchaser that is both of the
following:
a) Able to demonstrate its ability to comply with state and
federal privacy laws; and,
b) A large group purchaser that is either an
employer-sponsored plan with enrollment of more than 1,000
covered lives or a multi-employer trust.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, costs to DMHC as follows (Managed Care Fund): minor
costs to specify reporting templates; receive in the range of
15-20 new reports on aggregate data relevant to the large-group
market; and, make reports publicly available. Costs to DMHC of
approximately $165,000 over two years to issue guidance and
adopt regulations of a controversial and complex nature.
Potential minor enforcement costs for violations of this bill or
arbitration between parties, or costs of approximately $70,000,
if a trial is required. Any trial costs would likely be
one-time or sporadic.
Cost pressure to the state of up to $300,000 annually for
California Public Employees' Retirement System (CalPERS) health
plans associated with the provision specific to KP requiring
patient-level data to be provided to large-group purchasers.
This estimate assumes costs of compliance are passed on to
large-group customers in the form of a general increase in
administrative costs. This bill would require significant
administrative work for KP to provide patient-level data
sufficient to comply with its provisions, given requirements to
comply with privacy standards. This bill also expressly
prohibits KP from charging large-group purchasers for this data.
A CalPERS analysis indicates to the extent KP is unable to pass
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on increased costs to its other large group customers, this bill
could translate into increased costs for CalPERS in the form of
increased premiums and cost-sharing for CalPERS KP members. KP
estimates the cost of complying with this section at $7 million
annually. The proportionate share of this administrative cost
increase to CalPERS is approximately $500,000. Based on the
proportion of CalPERS health plan enrollees that are state
employees and dependents, $300,000 of this cost is estimated to
be a state cost, split between GF, federal, and special funds.
Cost pressure could be lower if fewer groups request data or if
compliance is simpler than KP estimates.
COMMENTS : The author asserts that it is well known that cost
trends for health coverage are putting a severe strain on
California. What is less commonly known is that these trends
are especially severe in the large group market. According to a
study by the Commonwealth Fund, in 2003, California ranked 28th
in the nation for employer-sponsored health care premiums (large
firms). In 2011, California had risen to seventh place. These
firms saw a 76% increase in costs over an eight year period. At
the current pace, the Commonwealth Fund study estimated, family
premiums for employer sponsored care would exceed $26,000 per
year by 2020. The cost of health insurance has headed straight
up for the last decade while wages have climbed more slowly.
Employers who offer benefits to their employees face higher and
higher costs for health benefits while working families find
that their share of premium keeps climbing and so does what they
spend on copays, deductibles, and other out-of-pocket costs.
According to the author, the so-called "integrated health plans"
are a major and valued part of California's health care system.
These are organizations that incorporate hospitals, physicians,
and other health services under one umbrella. The best-known of
these is KP, which makes up 42% of the group health insurance
market in California and provides services to almost six million
California residents. Despite being such an important part of
our state's health care system, integrated plans are not
disclosing the same kinds of information required of other
health insurers. Without this critical data, many large
employers and union trust funds find that they have very little
bargaining power when facing integrated health plans such as KP,
the largest integrated health plan in California.
The sponsors of this bill, UNITE HERE and United Food and
Commercial Workers Union, Western States Council, indicate that
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this bill would give their trust funds the information they need
to bargain with KP and to better manage the care of their
members. When their health care strategists tried to design
programs that manage the care of their of highest cost patients,
taking into account the realities of working in the hospitality
industry, they were unable to do so. UNITE HERE recognizes that
KP doesn't have claims data but believes KP has other comparable
data. UNITE HERE believes the programs offered by KP are mostly
designed for white collar employees who spend all day sitting at
a desk. AARP supports this bill because it will improve price
transparency in the large group market. The Campaign for a
Healthy California believes this bill will clarify what
information is required of integrated health plans which do not
report cost drivers the same way as other health plans. Health
Access California indicates they have been disappointed that
DMHC has failed to implement rate review for large employer
coverage, and that integrated health plans have not provided the
same level of detail about how rate increases were determined as
other health plans.
Opponents argue that this bill sets a disturbing precedent as it
would interfere and essentially control private contracts
between customers and business, and that these reports will have
little value other than to the sponsors of this bill who would
like to use them as a comparison. The Service Employees
International Union - United Healthcare Workers West (SEIU-UHW)
is concerned that this bill unwittingly will place KP at a
market disadvantage when compared to its competitors. SEIU-UHW
also raises questions about why the disclosures in this bill are
superior to those already required by DMHC for the small group
market. KP writes in opposition that this bill is over reaching
and is an attack on the integrated model of care delivery. KP
asserts that this bill attempts to insert legislative process
into a private, voluntary contract discussion between KP and one
of their large group purchasers. KP believes this bill is
divisive and will erect unnecessary administrative barriers.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
FN: 0002319
SB 746
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