Amended in Assembly August 22, 2014

Amended in Assembly August 18, 2014

Amended in Assembly June 30, 2014

Amended in Senate April 10, 2014

Senate BillNo. 1182


Introduced by Senator Leno

February 20, 2014


An act to amendbegin delete Sections 1374.8, 1385.03, and 1385.04 of the Health and Safety Code, and to amend Sections 791.27 and 10181.4 of the Insurance Code,end deletebegin insert Sections 1374.8 and 1385.07 of, and to add Section 1385.10 to, the Health and Safety Code, and to amend Sections 791.27 and 10181.7 of, and to add Section 10181.10 to, the Insurance Code,end insert relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 1182, as amended, Leno. Health care coverage: rate review.

begin insert

Existing law, the federal Patient Protection and Affordable Care Act (PPACA), requires the United States Secretary of Health and Human Services to establish a process for the annual review of unreasonable increases in premiums for health insurance coverage in which health insurance issuers submit to the secretary and the relevant state, a justification for an unreasonable premium increase prior to implementation of the increase. Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. For large group plan contracts and policies, existing law requires a plan or insurer to file rate information with the appropriate department at least 60 days prior to implementing an unreasonable rate increase, as defined in PPACA. Existing law requires the plan or insurer to also disclose specified aggregate data with that rate filing.

end insert
begin insert

This bill would require a health care service plan or health insurer to annually disclose additional aggregate claims data for all products sold in the large group market and to provide deidentified claims data at no charge to a large group purchaser that requests the information and meets specified conditions. The bill would specify that all disclosures of data to the large group purchaser made pursuant to these provisions is required to comply with the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), the federal Health Information Technology for Economic and Clinical Health Act, and the Confidentiality of Medical Information Act or the Insurance Information and Privacy Protection Act, as specified. The bill would prohibit a health care service plan or a health insurer from disclosing the contracted rates between the health care service plan or health insurer and a provider to a large group purchaser. This bill would specify that additional aggregate claims data disclosed to a large group purchaser by a health care service plan or health insurer is confidential and is prohibited from being made public by the department and exempt from disclosure under the California Public Records Act.

end insert
begin insert

Existing law prohibits, with exceptions, a health care service plan or health insurer from releasing any information to an employer that would directly or indirectly indicate to the employer that an employee is receiving or has received services from a health care provider covered by the plan unless authorized to do so by the employee.

end insert
begin insert

This bill would exempt from the prohibition the release of relevant information for the purposes set forth in these provisions regarding a plan’s or insurer’s annual disclosure of aggregate data for all products sold in the large group market.

end insert
begin insert

Because a willful violation of the bill’s requirements by a health care services plan would be a crime, the bill would impose a state-mandated local program.

end insert
begin insert

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

end insert
begin insert

This bill would make legislative findings to that effect.

end insert
begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert
begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert
begin delete

Existing law, the federal Patient Protection and Affordable Care Act (PPACA), requires the United States Secretary of Health and Human Services to establish a process for the annual review of unreasonable increases in premiums for health insurance coverage in which health insurance issuers submit to the secretary and the relevant state a justification for an unreasonable premium increase prior to implementation of the increase. Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan or health insurer in the individual, small group, or large group markets to file rate information with the Department of Managed Health Care or the Department of Insurance. For individual and small group contracts and policies, existing law requires a plan or insurer to file rate information at least 60 days prior to implementing a rate change and requires a plan or insurer to disclose with each filing specified information by aggregate benefit category. Existing law allows a health care service plan that exclusively contracts with no more than 2 medical groups to provide or arrange for professional medical services for enrollees of the plan to meet this requirement by disclosing its actual trend experience for the prior year using benefit categories that are the same or similar to those used by other plans.

end delete
begin delete

This bill would specify the benefit categories to be used for that purpose and would make other related changes.

end delete
begin delete

For large group plan contracts and policies, existing law requires a plan or insurer to file rate information with the department at least 60 days prior to implementing an unreasonable rate increase, as defined in PPACA. Existing law requires the plan or insurer to also disclose specified aggregate data with that rate filing.

end delete
begin delete

This bill would revise the aggregate information required to be provided with the rate filing described above, including, among other things, total earned premiums, total incurred claims, and average rate of increase for the rate year. The bill would require a plan or insurer to disclose the methodologies used to develop base rates and other specified information, including, among other things, all of the base rates used for groups in the large group market and all of the factors used to adjust the base rates. The bill would also require a plan or insurer to provide additional aggregate information regarding rate changes for the large group market, including, among other things, the average monthly rate implemented during the prior year and the average rate change initially requested, as specified. The bill would require a plan or insurer, under certain circumstances, to annually disclose additional aggregate data for the large group market and to provide deidentified claims data at no charge to a large group purchaser that requests the information and meets specified conditions.

end delete
begin delete

Existing law prohibits, with exceptions, a health care service plan or health insurer from releasing any information to an employer that would directly or indirectly indicate to the employer that an employee is receiving or has received services from a health care provider covered by the plan unless authorized to do so by the employee.

end delete
begin delete

This bill would exempt from the prohibition the release of relevant information for the purposes set forth in the provisions regarding the review of rate changes.

end delete
begin delete

Because a willful violation of the bill’s requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

end delete
begin delete

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end delete
begin delete

This bill would provide that no reimbursement is required by this act for a specified reason.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P4    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 1374.8 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
2amended to read:end insert

3

1374.8.  

begin insert(a)end insertbegin insertend insert A health care service plan shall not release any
4information to an employer that would directly or indirectly
5indicate to the employer that an employee is receiving or has
6received services from a health care provider covered by the plan
P5    1unless authorized to do so by the employee. An insurer that has,
2pursuant to an agreement, assumed the responsibility to pay
3compensation pursuant to Article 3 (commencing with Section
43750) of Chapter 4 of Part 1 of Division 4 of the Labor Code, shall
5not be considered an employer for the purposes of this section.
6begin delete Nothingend delete

7begin insert(b)end insertbegin insertend insertbegin insertNothingend insert in this section prohibits a health care service plan
8from releasing relevant information described in this section for
9the purposes set forth in Chapter 12 (commencing with Section
101871) of Part 2 of Division 1 of the Insurance Code.

begin insert

11(c) Nothing in this section prohibits a health care service plan
12from releasing relevant information described in this section for
13the purposes set forth in Section 1385.10.

end insert
14begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 1385.07 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
15amended to read:end insert

16

1385.07.  

(a) Notwithstanding Chapter 3.5 (commencing with
17Section 6250) of Division 7 of Title 1 of the Government Code,
18all information submitted under this article shall be made publicly
19available by the department except as provided in subdivision (b).

20(b) begin insert(1)end insertbegin insertend insert The contracted rates between a health care service plan
21and a provider shall be deemed confidential information that shall
22not be made public by the department and are exempt from
23disclosure under the California Public Records Act (Chapter 3.5
24(commencing with Section 6250) of Division 7 of Title 1 of the
25Government Code). The contracted rates between a health care
26service plan and abegin delete largeend deletebegin insert provider shall not be disclosed by a health
27care service plan to a large group purchaser that receives
28information pursuant to Section 1385.10.end insert

29begin insert(2)end insertbegin insertend insertbegin insertThe contracted rates between a health care service plan and
30a largeend insert
group shall be deemed confidential information that shall
31not be made public by the department and are exempt from
32disclosure under the California Public Records Act (Chapter 3.5
33(commencing with Section 6250) of Division 7 of Title 1 of the
34 Government Code).begin insert Information provided to a large group
35purchaser pursuant to Section 1385.10 shall be deemed
36confidential information that shall not be made public by the
37department and shall be exempt from disclosure under the
38California Public Records Act (Chapter 3.5 (commencing with
39Section 6250) of Division 7 of Title 1 of the Government Codeend insert
begin insert).end insert

P6    1(c) All information submitted to the department under this article
2shall be submitted electronically in order to facilitate review by
3the department and the public.

4(d) In addition, the department and the health care service plan
5shall, at a minimum, make the following information readily
6available to the public on their Internet Web sites, in plain language
7and in a manner and format specified by the department, except
8as provided in subdivision (b). The information shall be made
9public for 60 days prior to the implementation of the rate increase.
10The information shall include:

11(1) Justifications for any unreasonable rate increases, including
12all information and supporting documentation as to why the rate
13increase is justified.

14(2) A plan’s overall annual medical trend factor assumptions in
15each rate filing for all benefits.

16(3) A health plan’s actual costs, by aggregate benefit category
17to include hospital inpatient, hospital outpatient, physician services,
18prescription drugs and other ancillary services, laboratory, and
19radiology.

20(4) The amount of the projected trend attributable to the use of
21services, price inflation, or fees and risk for annual plan contract
22trends by aggregate benefit category, such as hospital inpatient,
23hospital outpatient, physician services, prescription drugs and other
24ancillary services, laboratory, and radiology. A health plan that
25exclusively contracts with no more than two medical groups in the
26state to provide or arrange for professional medical services for
27the enrollees of the plan shall instead disclose the amount of its
28actual trend experience for the prior contract year by aggregate
29benefit category, using benefit categories that are, to the maximum
30extent possible, the same or similar to those used by other plans.

31begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 1385.10 is added to the end insertbegin insertHealth and Safety
32Code
end insert
begin insert, to read:end insert

begin insert
33

begin insert1385.10.end insert  

(a) (1) A health care service plan shall annually
34provide claims data at no charge to a large group purchaser if the
35large group purchaser requests the information and otherwise
36meets the requirements of this section.

37(2)  The health care service plan shall provide claims data that
38a qualified statistician has determined are deidentified so that the
39claims data do not identify or do not provide a reasonable basis
40from which to identify an individual. If the statistician is unable
P7    1to determine that the data has been deidentified, then the data that
2cannot be deidentified shall not be provided by the health care
3service plan to the large group purchaser. A health care service
4plan may provide the claims data in an aggregated form as
5necessary to comply with subdivisions (e) and (f).

6(b) (1) As an alternative to providing claims data required
7pursuant to subdivision (a), the plan shall provide, at no charge
8to a large group purchaser, all of the following:

9(A) Deidentified data sufficient for the large group purchaser
10to calculate the cost of obtaining similar services from other health
11plans and evaluate cost-effectiveness by service and disease
12category.

13(B) Deidentified aggregated patient-level data on demographics,
14prescribing, encounters, inpatient services, outpatient services,
15and any other data that is comparable to what is required of the
16health plan to comply with risk adjustment, reinsurance, or risk
17corridors pursuant to the federal Patient Protection and Affordable
18Care Act (Public Law 111-148), as amended by the federal Health
19Care and Education Reconciliation Act of 2010 (Public Law
20111-152), and any rules, regulations, or guidance issued
21thereunder.

22(C) Deidentified aggregated patient-level data used to
23experience rate the large group, including diagnostic and
24procedure coding and costs assigned to each service that the plan
25has available.

26(2) The health care service plan shall obtain a formal
27determination from a qualified statistician that the data provided
28pursuant to this subdivision have been deidentified so that the data
29do not identify or do not provide a reasonable basis from which
30to identify an individual. The statistician shall certify the formal
31determination in writing and shall, upon request, provide the
32protocol used for deidentification to the department.

33(c) Data provided pursuant to this section shall only be provided
34to a large group purchaser that meets both of the following
35conditions:

36(1) Is able to demonstrate its ability to comply with state and
37federal privacy laws.

38(2) Is a large group purchaser that is either an employer with
39an enrollment of greater than 1,000 covered lives or a
40multiemployer trust.

P8    1(d) Nothing in this section shall be construed to prohibit a plan
2and purchaser from negotiating the release of additional
3information not described in this section.

4(e) All disclosures of data to the large group purchaser made
5pursuant to this section shall comply with the federal Health
6Insurance Portability and Accountability Act of 1996 (Public Law
7104-191) and the federal Health Information Technology for
8Economic and Clinical Health Act, Title XIII of the federal
9American Recovery and Reinvestment Act of 2009 (Public Law
10111-5), and implementing regulations.

11(f) All disclosures of data to the large group purchaser made
12pursuant to this section shall comply with the Confidentiality of
13Medical Information Act (Chapter 1 (commencing with Section
1456) of Part 2.6 of Division 1 of the Civil Code).

end insert
15begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 791.27 of the end insertbegin insertInsurance Codeend insertbegin insert is amended to
16read:end insert

17

791.27.  

begin insert(a)end insertbegin insertend insert A disability insurer that provides coverage for
18hospital, medical, or surgical expenses shall not release any
19information to an employer that would directly or indirectly
20indicate to the employer that an employee is receiving or has
21received services from a health care provider covered by the plan
22unless authorized to do so by the employee. An insurer that has,
23pursuant to an agreement, assumed the responsibility to pay
24compensation pursuant to Article 3 (commencing with Section
253750) of Chapter 4 of Part 1 of Division 4 of the Labor Code, shall
26not be considered an employer for the purposes of this section.
27begin delete Nothingend delete

28begin insert(b)end insertbegin insertend insertbegin insertNothingend insert in this section prohibits a disability insurer from
29releasing relevant information described in this section for the
30purposes set forth in Chapter 12 (commencing with Section 1871)
31of Part 2 of Division 1.

begin insert

32(c) Nothing in this section prohibits a disability insurer from
33releasing relevant information described in this section for the
34purposes set forth in Section 10181.10.

end insert
35begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 10181.7 of the end insertbegin insertInsurance Codeend insertbegin insert is amended to
36read:end insert

37

10181.7.  

(a) Notwithstanding Chapter 3.5 (commencing with
38Section 6250) of Division 7 of Title 1 of the Government Code,
39all information submitted under this article shall be made publicly
40available by the department except as provided in subdivision (b).

P9    1(b) begin insert(1)end insertbegin insertend insert Any contracted rates between a health insurer and a
2provider shall be deemed confidential information that shall not
3be made public by the department and are exempt from disclosure
4under the California Public Records Act (Chapter 3.5 (commencing
5with Section 6250) of Division 7 of Title 1 of the Government
6Code). The contracted rates between a health insurer and abegin delete largeend delete
7begin insert provider shall not be disclosed by a health insurer to a large group
8purchaser that receives information pursuant to Section 10181.10.end insert

9begin insert(2)end insertbegin insertend insertbegin insertThe contracted rates between a health insurer and a largeend insert
10 group shall be deemed confidential information that shall not be
11made public by the department and are exempt from disclosure
12under the California Public Records Act (Chapter 3.5 (commencing
13with Section 6250) of Division 7 of Title 1 of the Government
14 Code).begin insert Information provided to a large group purchaser pursuant
15to Section 10181.10 shall be deemed confidential information that
16shall not be made public by the department and shall be exempt
17from disclosure under the California Public Records Act (Chapter
183.5 (commencing with Section 6250) of Division 7 of Title 1 of the
19Government Code).end insert

20(c) All information submitted to the department under this article
21shall be submitted electronically in order to facilitate review by
22the department and the public.

23(d) In addition, the department and the health insurer shall, at
24a minimum, make the following information readily available to
25the public on their Internet Web sites, in plain language and in a
26manner and format specified by the department, except as provided
27in subdivision (b). The information shall be made public for 60
28days prior to the implementation of the rate increase. The
29information shall include:

30(1) Justifications for any unreasonable rate increases, including
31all information and supporting documentation as to why the rate
32increase is justified.

33(2) An insurer’s overall annual medical trend factor assumptions
34in each rate filing for all benefits.

35(3) An insurer’s actual costs, by aggregate benefit category to
36include, hospital inpatient, hospital outpatient, physician services,
37prescription drugs and other ancillary services, laboratory, and
38radiology.

39(4) The amount of the projected trend attributable to the use of
40services, price inflation, or fees and risk for annual policy trends
P10   1by aggregate benefit category, such as hospital inpatient, hospital
2outpatient, physician services, prescription drugs and other
3ancillary services, laboratory, and radiology.

4begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 10181.10 is added to the end insertbegin insertInsurance Codeend insertbegin insert, to
5read:end insert

begin insert
6

begin insert10181.10.end insert  

(a) (1) A health insurer shall annually provide
7claims data at no charge to a large group purchaser if the large
8group purchaser requests the information and otherwise meets the
9requirements of this section.

10(2) The health insurer shall provide claims data that a qualified
11statistician has determined are deidentified so that the claims data
12do not identify or do not provide a reasonable basis from which
13to identify an individual. If the statistician is unable to determine
14that the data has been deidentified, then the data that cannot be
15deidentified shall not be provided by the health insurer to the large
16group purchaser. A health insurer may provide the claims data in
17an aggregated form as necessary to comply with subdivisions (e)
18and (f).

19(b) (1) As an alternative to providing claims data required
20pursuant to subdivision (a), the insurer shall provide, at no charge
21to a large group purchaser, all of the following:

22(A) Deidentified data sufficient for the large group purchaser
23to calculate the cost of obtaining similar services from other health
24insurers and plans and evaluate cost-effectiveness by service and
25disease category.

26(B) Deidentified aggregated patient-level data on demographics,
27prescribing, encounters, inpatient services, outpatient services,
28and any other data that is comparable to what is required of the
29health insurer to comply with risk adjustment, reinsurance, or risk
30corridors pursuant to the federal Patient Protection and Affordable
31Care Act (Public Law 111-148), as amended by the federal Health
32Care and Education Reconciliation Act of 2010 (Public Law
33111-152), and any rules, regulations, or guidance issued
34thereunder.

35(C) Deidentified aggregated patient-level data used to
36experience rate the large group, including diagnostic and
37procedure coding and costs assigned to each service that the
38insurer has available.

39(2) The health insurer shall obtain a formal determination from
40a qualified statistician that the data provided pursuant to this
P11   1subdivision have been deidentified so that the data do not identify
2or do not provide a reasonable basis from which to identify an
3individual. The statistician shall certify the formal determination
4in writing and shall, upon request, provide the protocol used for
5deidentification to the department.

6(c) Data provided pursuant to this section shall only be provided
7to a large group purchaser that meets both of the following
8conditions:

9(1) Is able to demonstrate its ability to comply with state and
10federal privacy laws.

11(2) Is a large group purchaser that is either an employer with
12an enrollment of greater than 1,000 covered lives or a
13multiemployer trust.

14(d) Nothing in this section shall be construed to prohibit an
15insurer and purchaser from negotiating the release of additional
16information not described in this section.

17(e) All disclosures of data to the large group purchaser made
18pursuant to this section shall comply with the federal Health
19Insurance Portability and Accountability Act of 1996 (Public Law
20104-191) and the federal Health Information Technology for
21Economic and Clinical Health Act, Title XIII of the federal
22American Recovery and Reinvestment Act of 2009 (Public Law
23111-5), and implementing regulations.

24(f) All disclosures of data to the large group purchaser made
25pursuant to this section shall comply with the Insurance
26Information and Privacy Protection Act (Chapter 1 (commencing
27with Section 791) of Part 2 of Division 1 of the Insurance Code).

end insert
28begin insert

begin insertSEC. 7.end insert  

end insert
begin insert

The Legislature finds and declares that Section 2 of
29this act, which amends Section 1385.07 of the Health and Safety
30Code, and Section 5 of this act, which amends Section 10181.07
31of the Insurance Code, imposes a limitation on the public’s right
32of access to the meetings of public bodies or the writings of public
33officials and agencies within the meaning of Section 3 of Article
34I of the California Constitution. Pursuant to that constitutional
35provision, the Legislature makes the following findings to
36demonstrate the interest protected by this limitation and the need
37for protecting that interest:

end insert
begin insert

38In order to protect the public’s interest in access to high-quality
39health care coverage in the most efficient, cost-effective manner
40for those individuals who receive his or her health care coverage
P12   1through a large employer or multi-employer trust, it is necessary
2that additional aggregate data disclosed by a health care service
3plan or health insurer to a large group purchaser remain
4confidential.

end insert
5begin insert

begin insertSEC. 8.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
6Section 6 of Article XIII B of the California Constitution because
7the only costs that may be incurred by a local agency or school
8district will be incurred because this act creates a new crime or
9infraction, eliminates a crime or infraction, or changes the penalty
10for a crime or infraction, within the meaning of Section 17556 of
11the Government Code, or changes the definition of a crime within
12the meaning of Section 6 of Article XIII B of the California
13Constitution.

end insert

All matter omitted in this version of the bill appears in the bill as amended in the Assembly, August 18, 2014. (JR11)



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