BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1182
                                                                  Page  1

          SENATE THIRD READING
          SB 1182 (Leno)
          As Amended August 27, 2014
          Majority vote

           SENATE VOTE  :21-12  
           
           HEALTH              14-2                                        
           
           -------------------------------- 
          |Ayes:|Pan, Maienschein,         |
          |     |Ammiano, Bonta, Chávez,   |
          |     |Chesbro, Gomez, Gonzalez, |
          |     |Roger Hernández,          |
          |     |Lowenthal, Nazarian,      |
          |     |Nestande, Rodriguez,      |
          |     |Wieckowski                |
          |     |                          |
          |-----+--------------------------|
          |Nays:|Mansoor, Patterson        |
          |     |                          |
           -------------------------------- 
           SUMMARY  :  Requires health plans and insurers to share specified  
          data with purchasers that have 1,000 or more enrollees or that  
          are multiemployer trusts.  Specifically,  this bill  :  

          1)Requires a health plan or insurer annually to provide  
            deidentified claims data at no charge to a large group  
            purchaser upon request, if the purchaser is able to  
            demonstrate its ability to comply with state and federal  
            privacy laws and is either an employer with enrollment of  
            greater than 1,000 covered lives (at least 500 of which are  
            enrolled with the health plan or insurer) or a multiemployer  
            trust with enrollment of greater than 500 lives (at least 250  
            of which are enrolled with the health plan or insurer).   
            Requires health plans and insurers to obtain a determination  
            by a qualified statistician that the claims data do not  
            provide a reasonable basis from which to identify an  
            individual.  Allows a health plan to provide the claims data  
            in an aggregated form as necessary to comply with state and  
            federal privacy laws.

          2)As an alternative to providing claims data under 1) above,  
            requires a health plan or insurer to provide:  deidentified  
            aggregated data sufficient for the purchaser to compare costs  








                                                                  SB 1182
                                                                  Page  2

            of similar services from other health plans or insurers; and  
            deidentified aggregated patient level data that includes  
            demographics and encounter data, including data used to  
            experience rate the group, as specified.  Requires the health  
            plan or insurer, for purposes of this requirement, to obtain a  
            formal determination, documented in writing, from a qualified  
            statistician that the shared data do not provide a reasonable  
            basis from which to identify an individual.  

          3)Provides that data that a statistician is unable to determine  
            has been deidentified shall not be shared under this bill.  

          4)Makes the information shared not subject to public  
            availability, as specified.  Deems data shared under this bill  
            confidential information that shall not be shared by state  
            regulators and is exempt from disclosure under the California  
            Public Records Act.  Prohibits health plans and insurers from  
            disclosing their contracted rates with providers to purchasers  
            under this bill.



           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee:

          1)Enforcement costs of $350,000 for the first two years, and  
            $100,000 ongoing, to address complaints and staff trials  
            regarding alleged violations to the Department of Managed  
            Health Care (Managed Care Fund).

          2)Enforcement costs to the California Department of Insurance  
            are likely to be minor and absorbable (Insurance Fund).

          3)Unknown cost pressure to the California Public Employees'  
            Retirement System, potentially exceeding $100,000, for the  
            provision of health benefits, assuming costs of compliance are  
            passed on to large-group customers in the form of a general  
            increase in administrative costs (General  
            Fund/federal/special/local).

           COMMENTS  :  The author writes the rising cost of health care is a  
          major concern for employers in California, and the lack of  
          transparency in pricing for the large group market has  
          contributed to uncontrolled cost increases for large employers  
          and union trusts.  This bill is intended to bring transparency  








                                                                  SB 1182
                                                                  Page  3

          to this market for purchasers in an effort to control costs.

          According to the Medical Expenditure Panel Survey (MEPS), a  
          survey of employers conducted by the United States Census Bureau  
          that collects information on employer-sponsored health  
          insurance, premiums for employer-based coverage have increased  
          significantly over the past decade.  MEPS data from 2012 show  
          the average annual premium for individual private sector  
          employer coverage in California is $5,422, an 85% increase since  
          2002.  For family coverage, the average premium was $15,898, a  
          90% increase since 2002.  For comparison, prices for goods and  
          services increased 27.6% during this period, according to the  
          Bureau of Labor Statistics' Consumer Price Index.

          The California Labor Federation (Labor Fed), a co-sponsor of  
          this bill, writes that rising health care costs are taking a  
          toll on employers, workers, and union trust funds.  The Labor  
          Fed argues every dollar that large purchasers have to put toward  
          health coverage is a dollar that comes out of workers' pockets,  
          with employers increasingly shifting costs to workers by  
          increasing cost sharing and the use of high-deductible plans.   
          The Labor Fed argues that this bill's requirement for health  
          plans to disclose claims data to large purchasers will help  
          those purchasers understand health care cost drivers, institute  
          cost savings programs, and bargain effectively with health  
          plans.  The California Teachers Association, in support, argues  
          the data provided under this bill will be an essential tool in  
          the bargaining process, one that has the potential to free up  
          funds for use in the classroom.

          There is no opposition on file.


           Analysis Prepared by  :    Ben Russell / HEALTH / (916) 319-2097 


                                                                FN: 0005491