Amended in Assembly August 27, 2014

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 amend 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, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 1182, as amended, Leno. Health care coverage:begin delete rate review.end deletebegin insert claims data.end 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.

This bill would require a health care service plan or health insurer to annuallybegin delete disclose additional aggregate claims data for all products sold in the large group market and toend delete 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.

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.

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 ofbegin delete aggregate data for all products sold in the large group market.end deletebegin insert deidentified claims data to a large group purchaser.end 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.

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.

This bill would make legislative findings to that effect.

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.

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

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

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

P3    1

SECTION 1.  

Section 1374.8 of the Health and Safety Code is
2amended to read:

3

1374.8.  

(a) 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
7unless authorized to do so by the employee. An insurer that has,
8pursuant to an agreement, assumed the responsibility to pay
9compensation pursuant to Article 3 (commencing with Section
103750) of Chapter 4 of Part 1 of Division 4 of the Labor Code, shall
11not be considered an employer for the purposes of this section.

12(b) Nothing in this section prohibits a health care service plan
13from releasing relevant information described in this section for
14the purposes set forth in Chapter 12 (commencing with Section
151871) of Part 2 of Division 1 of the Insurance Code.

16(c) Nothing in this section prohibits a health care service plan
17from releasing relevant information described in this section for
18the purposes set forth in Section 1385.10.

19

SEC. 2.  

Section 1385.07 of the Health and Safety Code is
20amended to read:

21

1385.07.  

(a) Notwithstanding Chapter 3.5 (commencing with
22Section 6250) of Division 7 of Title 1 of the Government Code,
23all information submitted under this article shall be made publicly
24available by the department except as provided in subdivision (b).

25(b) (1) The contracted rates between a health care service plan
26and a provider shall be deemed confidential information that shall
27not be made public by the department and are exempt from
P4    1disclosure under the California Public Records Act (Chapter 3.5
2(commencing with Section 6250) of Division 7 of Title 1 of the
3Government Code). The contracted rates between a health care
4service plan and a provider shall not be disclosed by a health care
5service plan to a large group purchaser that receives information
6pursuant to Section 1385.10.

7(2) The contracted rates between a health care service plan and
8a large group shall be deemed confidential information that shall
9not be made public by the department and are exempt from
10disclosure under the California Public Records Act (Chapter 3.5
11(commencing with Section 6250) of Division 7 of Title 1 of the
12 Government Code). Information provided to a large group
13purchaser pursuant to Section 1385.10 shall be deemed confidential
14information that shall not be made public by the department and
15shall be exempt from disclosure under the California Public
16Records Act (Chapter 3.5 (commencing with Section 6250) of
17Division 7 of Title 1 of the Government Code).

18(c) All information submitted to the department under this article
19shall be submitted electronically in order to facilitate review by
20the department and the public.

21(d) In addition, the department and the health care service plan
22shall, at a minimum, make the following information readily
23available to the public on their Internet Web sites, in plain language
24and in a manner and format specified by the department, except
25as provided in subdivision (b). The information shall be made
26public for 60 days prior to the implementation of the rate increase.
27The information shall include:

28(1) Justifications for any unreasonable rate increases, including
29all information and supporting documentation as to why the rate
30increase is justified.

31(2) A plan’s overall annual medical trend factor assumptions in
32each rate filing for all benefits.

33(3) A health plan’s actual costs, by aggregate benefit category
34to include hospital inpatient, hospital outpatient, physician services,
35prescription drugs and other ancillary services, laboratory, and
36radiology.

37(4) The amount of the projected trend attributable to the use of
38services, price inflation, or fees and risk for annual plan contract
39trends by aggregate benefit category, such as hospital inpatient,
40hospital outpatient, physician services, prescription drugs and other
P5    1ancillary services, laboratory, and radiology. A health plan that
2exclusively contracts with no more than two medical groups in the
3state to provide or arrange for professional medical services for
4the enrollees of the plan shall instead disclose the amount of its
5actual trend experience for the prior contract year by aggregate
6benefit category, using benefit categories that are, to the maximum
7extent possible, the same or similar to those used by other plans.

8

SEC. 3.  

Section 1385.10 is added to the Health and Safety
9Code
, to read:

10

1385.10.  

(a) (1) A health care service plan shall annually
11provide claims data at no charge to a large group purchaser if the
12large group purchaser requests the information and otherwise meets
13the requirements of this section.

14(2)  The health care service plan shall provide claims data that
15a qualified statistician has determined are deidentified so that the
16claims data do not identify or do not provide a reasonable basis
17from which to identify an individual. If the statistician is unable
18to determine that the data has been deidentified, then the data that
19cannot be deidentified shall not be provided by the health care
20service plan to the large group purchaser. A health care service
21plan may provide the claims data in an aggregated form as
22necessary to comply with subdivisions (e) and (f).

23(b) (1) As an alternative to providing claims data required
24pursuant to subdivision (a), the plan shall provide, at no charge to
25a large group purchaser, all of the following:

26(A) Deidentified data sufficient for the large group purchaser
27to calculate the cost of obtaining similar services from other health
28plans and evaluate cost-effectiveness by service and disease
29category.

30(B) Deidentified aggregated patient-level data on demographics,
31prescribing, encounters, inpatient services, outpatient services, and
32any other data that is comparable to what is required of the health
33plan to comply with risk adjustment, reinsurance, or risk corridors
34pursuant to the federal Patient Protection and Affordable Care Act
35(Public Law 111-148), as amended by the federal Health Care and
36Education Reconciliation Act of 2010 (Public Law 111-152), and
37any rules, regulations, or guidance issued thereunder.

38(C) Deidentified aggregated patient-level data used to experience
39rate the large group, including diagnostic and procedure coding
40and costs assigned to each service that the plan has available.

P6    1(2) The health care service plan shall obtain a formal
2determination from a qualified statistician that the data provided
3pursuant to this subdivision have been deidentified so that the data
4do not identify or do not provide a reasonable basis from which
5to identify an individual.begin insert If the statistician is unable to determine
6that the data has been deidentified, the health care service plan
7shall not provide the data that cannot be deidentified to the large
8group purchaser.end insert
The statistician shallbegin delete certifyend deletebegin insert documentend insert the formal
9determination in writing and shall, upon request, provide the
10protocol used for deidentification to the department.

11(c) Data provided pursuant to this section shall only be provided
12to a large group purchaser that meets both of the following
13conditions:

14(1) Is able to demonstrate its ability to comply with state and
15federal privacy laws.

16(2) Is a large group purchaser that is either an employer with
17an enrollment of greater than 1,000 covered livesbegin insert and at least 500
18covered lives enrolled with the health care service plan providing
19the informationend insert
or a multiemployerbegin delete trust.end deletebegin insert trust with an enrollment
20of greater than 500 covered lives and at least 250 covered lives
21enrolled with the health care service plan providing the
22information.end insert

23(d) Nothing in this section shall be construed to prohibit a plan
24and purchaser from negotiating the release of additional
25information not described in this section.

26(e) All disclosures of data to the large group purchaser made
27pursuant to this section shall comply with the federal Health
28Insurance Portability and Accountability Act of 1996 (Public Law
29104-191) and the federal Health Information Technology for
30Economic and Clinical Health Act, Title XIII of the federal
31American Recovery and Reinvestment Act of 2009 (Public Law
32111-5), and implementing regulations.

33(f) All disclosures of data to the large group purchaser made
34pursuant to this section shall comply with the Confidentiality of
35Medical Information Act (Chapter 1 (commencing with Section
3656) of Part 2.6 of Division 1 of the Civil Code).

37

SEC. 4.  

Section 791.27 of the Insurance Code is amended to
38read:

39

791.27.  

(a) A disability insurer that provides coverage for
40hospital, medical, or surgical expenses shall not release any
P7    1information to an employer that would directly or indirectly
2indicate to the employer that an employee is receiving or has
3received services from a health care provider covered by the plan
4unless authorized to do so by the employee. An insurer that has,
5pursuant to an agreement, assumed the responsibility to pay
6compensation pursuant to Article 3 (commencing with Section
73750) of Chapter 4 of Part 1 of Division 4 of the Labor Code, shall
8not be considered an employer for the purposes of this section.

9(b) Nothing in this section prohibits a disability insurer from
10releasing relevant information described in this section for the
11purposes set forth in Chapter 12 (commencing with Section 1871)
12of Part 2 of Division 1.

13(c) Nothing in this section prohibits a disability insurer from
14releasing relevant information described in this section for the
15purposes set forth in Section 10181.10.

16

SEC. 5.  

Section 10181.7 of the Insurance Code is amended to
17read:

18

10181.7.  

(a) Notwithstanding Chapter 3.5 (commencing with
19Section 6250) of Division 7 of Title 1 of the Government Code,
20all information submitted under this article shall be made publicly
21available by the department except as provided in subdivision (b).

22(b) (1) Any contracted rates between a health insurer and a
23provider shall be deemed confidential information that shall not
24be made public by the department and are exempt from disclosure
25under the California Public Records Act (Chapter 3.5 (commencing
26with Section 6250) of Division 7 of Title 1 of the Government
27Code). The contracted rates between a health insurer and a provider
28shall not be disclosed by a health insurer to a large group purchaser
29that receives information pursuant to Section 10181.10.

30(2) The contracted rates between a health insurer and a large
31group shall be deemed confidential information that shall not be
32made public by the department and are exempt from disclosure
33under the California Public Records Act (Chapter 3.5 (commencing
34with Section 6250) of Division 7 of Title 1 of the Government
35Code). Information provided to a large group purchaser pursuant
36to Section 10181.10 shall be deemed confidential information that
37shall not be made public by the department and shall be exempt
38from disclosure under the California Public Records Act (Chapter
393.5 (commencing with Section 6250) of Division 7 of Title 1 of
40the Government Code).

P8    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 insurer shall, at
5a minimum, make the following information readily available to
6the public on their Internet Web sites, in plain language and in a
7manner and format specified by the department, except as provided
8in subdivision (b). The information shall be made public for 60
9days prior to the implementation of the rate increase. The
10information 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) An insurer’s overall annual medical trend factor assumptions
15in each rate filing for all benefits.

16(3) An insurer’s actual costs, by aggregate benefit category to
17include, 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 policy trends
22by aggregate benefit category, such as hospital inpatient, hospital
23outpatient, physician services, prescription drugs and other
24ancillary services, laboratory, and radiology.

25

SEC. 6.  

Section 10181.10 is added to the Insurance Code, to
26read:

27

10181.10.  

(a) (1) A health insurer shall annually provide
28claims data at no charge to a large group purchaser if the large
29group purchaser requests the information and otherwise meets the
30requirements of this section.

31(2) The health insurer shall provide claims data that a qualified
32statistician has determined are deidentified so that the claims data
33do not identify or do not provide a reasonable basis from which
34to identify an individual. If the statistician is unable to determine
35that the data has been deidentified, then the data that cannot be
36deidentified shall not be provided by the health insurer to the large
37group purchaser. A health insurer may provide the claims data in
38an aggregated form as necessary to comply with subdivisions (e)
39and (f).

P9    1(b) (1) As an alternative to providing claims data required
2pursuant to subdivision (a), the insurer shall provide, at no charge
3to a large group purchaser, all of the following:

4(A) Deidentified data sufficient for the large group purchaser
5to calculate the cost of obtaining similar services from other health
6 insurers and plans and evaluate cost-effectiveness by service and
7disease category.

8(B) Deidentified aggregated patient-level data on demographics,
9prescribing, encounters, inpatient services, outpatient services, and
10any other data that is comparable to what is required of the health
11 insurer to comply with risk adjustment, reinsurance, or risk
12corridors pursuant to the federal Patient Protection and Affordable
13Care Act (Public Law 111-148), as amended by the federal Health
14Care and Education Reconciliation Act of 2010 (Public Law
15111-152), and any rules, regulations, or guidance issued thereunder.

16(C) Deidentified aggregated patient-level data used to experience
17rate the large group, including diagnostic and procedure coding
18and costs assigned to each service that the insurer has available.

19(2) The health insurer shall obtain a formal determination from
20a qualified statistician that the data provided pursuant to this
21subdivision have been deidentified so that the data do not identify
22or do not provide a reasonable basis from which to identify an
23individual.begin insert If the statistician is unable to determine that the data
24has been deidentified, the health insurer shall not provide the data
25that cannot be deidentified to the large group purchaser.end insert
The
26statistician shallbegin delete certifyend deletebegin insert documentend insert the formal determination in
27writing and shall, upon request, provide the protocol used for
28deidentification to the department.

29(c) Data provided pursuant to this section shall only be provided
30to a large group purchaser that meets both of the following
31conditions:

32(1) Is able to demonstrate its ability to comply with state and
33federal privacy laws.

34(2) Is a large group purchaser that is either an employer with
35an enrollment of greater than 1,000 covered livesbegin insert and at least 500
36covered lives enrolled with the health insurer providing the
37informationend insert
or a multiemployerbegin delete trust.end deletebegin insert trust with an enrollment of
38greater than 500 covered lives and at least 250 covered lives
39enrolled with the health insurer providing the information.end insert

P10   1(d) Nothing in this section shall be construed to prohibit an
2insurer and 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 Insurance
13Information and Privacy Protection Act (Chapter 1 (commencing
14with Section 791) of Part 2 of Division 1 of the Insurance Code).

15

SEC. 7.  

The Legislature finds and declares that Section 2 of
16this act, which amends Section 1385.07 of the Health and Safety
17Code, and Section 5 of this act, which amends Section 10181.07
18of the Insurance Code, imposes a limitation on the public’s right
19of access to the meetings of public bodies or the writings of public
20officials and agencies within the meaning of Section 3 of Article
21I of the California Constitution. Pursuant to that constitutional
22provision, the Legislature makes the following findings to
23demonstrate the interest protected by this limitation and the need
24for protecting that interest:

25In order to protect the public’s interest in access to high-quality
26health care coverage in the most efficient, cost-effective manner
27for those individuals who receivebegin delete his or herend deletebegin insert theirend insert health care
28coverage through a large employer or multi-employer trust, it is
29necessary that additional aggregate data disclosed by a health care
30service plan or health insurer to a large group purchaser remain
31confidential.

32

SEC. 8.  

No reimbursement is required by this act pursuant to
33Section 6 of Article XIII B of the California Constitution because
34the only costs that may be incurred by a local agency or school
35district will be incurred because this act creates a new crime or
36infraction, eliminates a crime or infraction, or changes the penalty
37for a crime or infraction, within the meaning of Section 17556 of
38the Government Code, or changes the definition of a crime within
P11   1the meaning of Section 6 of Article XIII B of the California
2Constitution.



O

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