BILL ANALYSIS Ó
SB 1322
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Date of Hearing: June 24, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 1322 (Ed Hernandez) - As Amended: June 17, 2014
SENATE VOTE : Not relevant.
SUBJECT : California Health Care Cost and Quality Database.
SUMMARY : Creates the California Health Care Cost and Quality
Database (CQDB) to receive and report information from all types
of health care entities. Specifically, this bill :
1)Requires the Secretary of California Health and Human Services
Agency (CHHSA), by January 1, 2016, to use a competitive
process to contract with one or more private, independent,
nonprofit organizations to establish and administer the CQDB.
Exempts this contract from provisions of the Public Contract
Code governing state agencies, as specified, and from review
or approval by the Department of General Services.
2)Requires the contract to include:
a) A requirement that the nonprofit organization(s) do all
of the following:
i) Develop methodologies for the collection,
validation, refinement, analysis, comparison, review,
reporting, and improvement of health care data submitted
by health care entities that are validated, recognized as
reliable, and meet industry and research standards;
ii) Receive information from all types of health care
entities and report that information in a form that
allows valid comparisons across care delivery systems;
and
iii) Comply with the requirements governing provider and
supplier requests for error correction established
pursuant to federal regulations governing qualified
entities for receiving Medicare claims data.
b) A prohibition on using data received for any purpose
other than what is specified in this bill or in the
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contract;
c) A prohibition on receiving funding from outside sources
to accomplish the purposes of this bill; and,
d) A requirement that the nonprofit organization(s)
identify the type of data, purpose of use, and entities and
individuals that report to or have access to the CQDB.
3)Requires health plans and insurers, as specified, including
self-insured employers and multiemployer self-insured plans;
suppliers; and providers, as specified, to provide both of the
following to the CQDB:
a) Utilization data from insurers' medical, dental, and
pharmacy claims and encounter data from entities that do
not use claims data; and,
b) Pricing information for health care items and services
gathered from allowed charges for covered health care items
and services or, in the case of organizations that do not
use or produce individual claims, standard price lists.
4)Requires disclosures of data under this bill to comply with
all applicable state and federal privacy laws, including, the
federal Health Insurance Portability and Accountability Act of
1996 (HIPAA) and the federal Health Information Technology for
Economic and Clinical Health Act.
5)Requires policies and protocols that ensure protection of
privacy, security, and confidentiality of individually
identifiable health information. Prohibits the disclosure of
unaggregated, individually identifiable health information.
6)Requires the CQDB to collect, process, maintain, and analyze:
claims from private and public payers; electronic health
record systems; disease and chronic condition registries;
third-party surveys of quality and patient satisfaction;
reviews by licensing and accrediting bodies; and local and
regional public health data. Requires collection of
aggregated payer and provider performance on validated
measures of clinical quality and patient experience, as
specified.
7)Requires the analysis in 6) above to include population-level
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data on prevention, screening, and wellness utilization;
behavioral and medical risk factors, interventions and
outcomes; chronic conditions, management, and outcomes; and
trends in utilization of procedures for treatment of similar
conditions to evaluate medical appropriateness. Requires the
analysis to include data that permits consideration of
socioeconomic status and disparities, as specified.
8)By 2018, requires the CQDB to make publicly available a
web-based, searchable database that facilitates comparisons of
cost, quality, and satisfaction across payers, provider
organizations, and other suppliers of health care services.
9)Requires the CHHSA Secretary to convene an advisory committee
of health care stakeholders and experts, who receive no per
diem or reimbursement, to research and recommend strategies
for promoting high-quality health care, containing health care
costs, and make recommendations about the CQDB, including a
business plan for sustainability without using moneys from the
General Fund. Creates requirements for the advisory committee
to hold open public meetings.
10)Requires the advisory committee's findings to be reported to
the Legislature and the Governor, and to address a broad array
of health issues.
11)Prohibits the advisory committee from being convened until
the Director of the Department of Finance determines that
sufficient private or federal funds have been received and
appropriated for that purpose.
EXISTING LAW :
1)Regulates health plans under the Knox-Keene Health Care
Service Plan Act of 1975 through the Department of Managed
Health Care and regulates health insurers under the Insurance
Code through the California Department of Insurance (CDI).
2)Prohibits contracts between carriers and a licensed hospital
or health care facility owned by a licensed hospital from
containing any provision that restricts the ability of the
carrier from furnishing information to enrollees or insureds
concerning the cost range of procedures or the quality of
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services. Provides hospitals at least 20 days in advance to
review the methodology and data, requires risk adjustment
factors for quality data, and requires an opportunity for a
hospital to provide a link on the carrier's Website where the
hospital's response to the data can be accessed.
3)Makes Medicare data, under federal law, available for the
evaluation of the performance of providers of services and
suppliers, to qualified entities, defined as a public or
private entity that is qualified as determined by the
Secretary of the federal Department of Health and Human
Services (HHS), to use claims data to evaluate the performance
of providers of services and suppliers on measures of quality,
efficiency, effectiveness, and resource use, and agrees to
meet specified requirements and other requirements as the HHS
Secretary may specify, such as ensuring security of data.
4)Prohibits a health plan 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.
5)Establishes under federal law, HIPAA, which among various
provisions, mandates industry-wide standards for health care
information on electronic billing and other processes; and
requires the protection and confidential handling of protected
health information.
6)Under HIPAA, provides protections for individually
identifiable health information held by covered entities and
their business associates and gives patients an array of
rights with respect to that information. Permits, under
HIPAA, the disclosure of certain health information as needed
for patient care and certain other purposes, including:
public health activities, research, prevention of a serious
threat to health or safety, law enforcement purposes, and
judicial and administrative proceedings. Covered entities
under the HIPAA Privacy Rule are health care providers, health
plans, and health care clearinghouses.
7)Under the Confidentiality of Medical Information Act,
prohibits providers of healthcare, health care service plans,
their contractors, and any business organized for the purpose
of maintaining medical information, from using medical
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information for any purpose other than providing health care
services, except as expressly authorized by the patient or as
otherwise required or authorized by law.
FISCAL EFFECT : This bill, as amended, has not yet been analyzed
by a fiscal committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author of this bill writes, in
March 2014, the Senate Committee on Health convened health
care experts to discuss initiatives underway in California
directed at controlling the growth of health care costs. The
informational hearing examined policy solutions to control
health care costs as millions of Californians obtain coverage
under the federal Patient Protection and Affordable Care Act
(ACA). Testimony presented at the hearing illustrated the
complexity of the health care market and the array of
approaches to containing costs. In addition to expanded
coverage, the author believes that, like past health care
reform efforts, a long-term, comprehensive action agenda for
California policymakers is necessary to ensure that health
care costs are appropriate and health care premiums are
affordable, especially given that the ACA contains a mandate
for individuals to purchase coverage. The author states this
bill is intended to help make available valid performance
information to promote care that is safe, medically effective,
patient-centered, timely, efficient, affordable and equitable.
Additionally, this bill seeks to put provider cost and
performance information into the hands of consumers and
purchasers so that they are able to understand their financial
liability and realize the best quality and value available to
them.
2)BACKGROUND . The Office of the Actuary in the Centers for
Medicare and Medicaid Services annually produces projections
of health care spending for categories within the National
Health Expenditure Accounts, which track health spending by
source of funds (for example, private health insurance,
Medicare, Medicaid), by type of service (hospital, physician,
prescription drugs, etc.), and by sponsor or payer
(businesses, households, governments). Among the findings for
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National Health Expenditures in 2012-22 is a projection that
average annual growth in health spending will be 6.2% per year
for 2015 through 2022, largely as a result of the continued
implementation of the coverage expansions under the ACA,
faster projected economic growth, and the aging of the
population. Health spending is projected to be 19.9% of gross
domestic product by 2022. Per capita out of pocket spending
is projected to be $1,016 in 2014, rising to $1,341 in 2022.
Out of pocket spending is projected to make up 10.5% of the
$3.1 trillion in national health expenditures in 2014,
decreasing as a percentage of total expenditures to 9.1% by
2022.
In 2011, the Government Accountability Office (GAO) published
a report entitled "Health Care Price Transparency: Meaningful
Price Information Is Difficult for Consumers to Obtain Prior
to Receiving Care." The report found that several health care
and legal factors may make it difficult for consumers to
obtain price information for the health care services they
receive, particularly estimates of what their complete costs
will be. The health care factors include the difficulty of
predicting health care services in advance, billing from
multiple providers, and the variety of insurance benefit
structures. For example, when GAO contacted physicians'
offices to obtain information on the price of a diabetes
screening, several representatives said the patient needs to
be seen by a physician before the physician could determine
which screening tests the patient would need. According to
provider association officials, consumers may have difficulty
obtaining complete cost estimates from providers because
providers have to know the status of insured consumers' cost
sharing under health benefit plans, such as how much consumers
have spent towards their deductible at any given time.
Pricing transparency means different things to different
people. A 2008 issue brief published by the National Quality
Forum (NQF) set out three different types of pricing
transparency, and their relevance for various parties in the
health care arena. Consumers (patients and their families),
purchasers (employers and health plans), and providers
(physicians, hospitals, and other facilities) all are
potential audiences for price transparency, but relevant
information might be different for each audience. Pricing
information might be retail prices (list prices for services
that are charged by providers to patients who are not covered
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by insurance or otherwise eligible for discounts); negotiated
prices (the price a provider agrees to charge for patients
covered by a specific health plan) and patient out-of-pocket
payments (i.e., coinsurance, deductibles, and exclusions - the
share of the health plan's negotiated price that a patient is
responsible for paying). The NQF issue brief suggests this is
the price tag of most interest to patients and their families.
3)ALL-PAYER CLAIMS DATABASES , or APCDs, are large-scale
databases that systematically collect medical claims, pharmacy
claims, dental claims (typically, but not always), and
eligibility and provider files from private and public payers.
In January 2014, the Robert Wood Johnson Foundation published
a pair of papers (one written by APCD Council, and one by
Freedman Healthcare) with the intent to guide states in
crafting all-payer claims database policies. The papers lay
out various possible benefits of APCDs: filling critical
information gaps for state agencies, supporting health care
and payment reform initiatives, and creating transparency for
consumers, purchasers, and state agencies. APCDs have been
established in Maine, Kansas, Maryland, Massachusetts, New
Hampshire, Minnesota, Tennessee, Utah, and Vermont. Most of
these states have chosen to house their APCDs at a state
agency (either an existing agency or a newly created entity);
one state (Colorado) has its APCD run by a nonprofit
organization. The papers emphasize the importance of engaging
key stakeholders early and often, including payers, health
care providers, employers, state agencies, and consumers. The
papers note that for most states, legislation creating an APCD
usually articulates broad reporting goals which are further
refined in rules or regulations for data collection or data
use.
4)EXISTING TRANSPARENCY INITIATIVES .
a) OSHPD Hospital Chargemaster Program. AB 1045 (Frommer),
Chapter 532, Statutes of 2005, and AB 1627 (Frommer),
Chapter 582, Statutes of 2003, (known as the Payers' Bill
of Rights) require all licensed general acute care
hospitals, psychiatric acute hospitals, and special
hospitals in California to make certain pricing information
available to the public and to submit this information
annually to the Office of Statewide Health Planning and
Development (OSHPD). A hospital charge description master,
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also known as a chargemaster, is a file that contains the
prices of all services, goods, and procedures and is used
to generate a patient's bill. The Payers' Bill of Rights
requires each hospital to submit a copy of its
chargemaster, a list of average charges for 25 common
outpatient procedures, and the estimated percentage change
in gross revenue due to price changes each July 1. These
chargemaster files are posted on OSHPD's website.
In 2007, the Congressional Research Service (CRS) issued a
report entitled "Does Price Transparency Improve Market
Efficiency? Implications of Empirical Evidence in Other
Markets for the Health Sector." The report investigated
the question of whether better price information might
allow patients, either directly or through their
physicians, to obtain better value for health care services
and subsequently change their behavior. The CRS report
examines pricing information released as a result of AB
1045 and AB 1627 and finds that California hospitals that
had increased average daily charges for normal vaginal
birth over the study period, on average, did not lose
patients. Indeed, there was a slight positive correlation
between changes in normal vaginal birth charges and the
percentage change in discharges over the study period,
rather than the negative correlation that would be expected
if the availability of prices was influencing patient
behavior by making patients more price-sensitive.
The report notes that several explanations are possible for
this lack of a relationship between changes in average
charges and changes in hospital volume. Differences in
perceived quality or care or amenity levels may matter more
than price for many patients, especially if insurance
coverage insulates them from prices (insurers and patients
paid hospitals about 38% of the "sticker price" charges
found in chargemasters in 2004). Alternatively, patients
may care about prices, but might be unable, unwilling, or
disinclined to examine online price data, which is not
presented in a user friendly way: for each hospital, data
is typically available in the form of a spreadsheet that
lists the prices for thousands of procedures. Moreover,
the chargemasters are currently not required to be provided
in a standardized format, making it impossible to generate
an aggregate statewide chargemaster that could serve as a
baseline for comparison. Finally, the report posits that
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changes in prices might correlate to offsetting changes in
quality or amenity levels. Nonetheless, the report
concludes that this preliminary evidence suggests that the
California price transparency initiative so far has had
little observable effect where it might have been expected
to have the greatest effect.
b) California Healthcare Performance Initiative (CHPI).
CHPI claims to be building the most robust healthcare
database in the State of California. It combines data on
the healthcare experiences of more than 12 million people
from health plans and Medicare to evaluate the quality and
efficiency of medical services. CHPI's current activities
build upon six years of performance measurement conducted
through the California Physician Performance Initiative
(CPPI).
CHPI claims to administer the only Multi-Payer Claims
Database currently in operation in California, which
consists of claims voluntarily reported by Anthem Blue
Cross, Blue Shield of California, United Healthcare, and
the Medicare fee-for-service program. These data provide
information on services provided by hospitals, emergency
departments, ambulatory surgery centers, ancillary
providers, pharmacies, and physicians. CHPI was designated
as a qualified entity (QE) in the Medicare data sharing
program in February 2013. The QE certification program was
created under the ACA to allow public reporting of
physician-level quality measurements based on Medicare
claims data combined with other payers' data. States and
data organizations may apply for QE certification, which is
the only avenue for public reporting of Medicare quality
data at the provider level. CHPI indicates it has received
Medicare fee-for-service claims representing over 5 million
California beneficiaries, and is in the process of
integrating these claims with its private health plan
claims data.
According to a September 13, 2010 California Healthline
article, the California Medical Association (CMA) filed a
class-action lawsuit in 2010 claiming that Blue Shield of
California created an online physician rating program that
could harm doctors and their patients by promoting
inaccurate information. The article states that Blue
Shield worked with the Pacific Business Group on Health to
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evaluate the doctors using data collected by the CPPI,
which is CHPI's predecessor. The CMA sought a court order
to stop the program and inform state residents about
problems with the data. The case was dismissed by an
Alameda County court.
c) CDI grant. The ACA has made available $250 million
through the Health Insurance Premium Review Grants Program
over five years to fund states' review of proposed health
insurance premium increases. As part of the grant program,
the ACA also provides funding to establish data centers to
enhance health pricing transparency. These data centers
are designed to allow consumers and businesses to better
understand the comparative price of procedures in a given
region or for a specific hospital, insurer, or provider.
This data can then be used to drive decision-making,
ideally rewarding cost-effective provision of care. In
addition, medical claims data can be used to better
understand cost drivers, evaluate quality improvement
initiatives, and better understand utilization of services.
In September 2013, CDI received a grant under this program
for $5.2 million. Under the terms of the grant, CDI will
use these funds to contract with an academic institution or
other nonprofit organization to establish a database of
medical claims data. The dataset will incorporate claims
data from private issuers, public payers, and potentially,
self-funded plans. In June 2014, CDI announced an
agreement with the University of California, San Francisco
(UCSF) to collect and analyze the data and make the
information available online. In the initial stage of the
project, UCSF's analysis will provide average prices for
geographic regions within the state using a number of data
sources, including private commercial health insurance and
public health programs such as Medicare.
According to the author of this bill, the CDI-led project
will use existing data that is publicly available, whereas
this bill is contemplating a broader, more comprehensive
database that includes plans, insurers, and provider data,
as well as considering fee-for-service and capitated
sources. The author's office indicates the data used by
the CDI-led project will complement the CQDB.
5)SUPPORT . The California Association of Physician Groups
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(CAPG), in support, writes that an APCD can provide
transparency for payers and the public on cost and quality of
health care services if it is universally applied across all
provider types, all product types, and all payer sources.
CAPG further argues, because 41% of provider payments in
California are capitated, it will be very difficult to
implement an effective APCD without first deploying technology
that allows the entire market to be captured in one data pool.
CAPG recommends further amending this bill to specifically
require CQDB to solve this problem.
6)CONCERNS . The California Department of Insurance (CDI) has a
number of concerns with this bill. CDI argues that this
bill's goals closely align with CDI's goals under its
transparency project currently being implemented by UCSF with
the aid of federal grant funding. CDI is concerned, however,
that this bill would create needless inefficiencies and
barriers to sustainability. First, by limiting eligibility
for CQDB contracts to private nonprofit organizations, this
bill would exclude UC, which is currently working in this
area. Second, because this bill prohibits the database from
receiving funding from other sources to accomplish the
purposes of this bill, precluding the use of existing federal
grants to support the database's activities. CDI is also
concerned about restricting the use of data for any purpose
other than what is specified in this bill, which could
preclude the database from serving as a public resource.
Finally, CDI identifies language that it believes could
exclude hospitals from the information the database publishes
online.
7)RELATED LEGISLATION .
a) SB 746 (Leno) of 2013 would have established new data
reporting requirements on all health plans applicable to
products sold in the large group market and established new
specific data reporting requirements related to annual
medical trend factors by service category, as well as
claims data or de-identified patient-level data, as
specified, for a health plan 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).
SB 746 was vetoed by the Governor, who urged all parties
to work together in the effort to make health care costs
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more transparent.
b) SB 1182 (Leno) requires health plans and insurers to
submit to regulators for rate review any large group plan
contract or policy rate increases that exceed 5% of the
prior year's rate and establishes new data reporting
requirements for products sold in the large group market.
SB 1182 is pending in this Committee.
c) SB 1340 (Ed Hernandez) expands provisions related to gag
clauses in contracts between health plans or insurers and
providers. SB 1340 is pending on the Assembly Floor.
d) AB 1558 (Roger Hernández) creates the California Health
Data Organization within the University of California to
organize data provided by health plans and insurers on a
website to allow consumers to compare the prices paid for
procedures, as specified. AB 1558 is pending in the Senate
Health Committee.
8)PREVIOUS LEGISLATION .
a) SB 751 (Gaines and Ed Hernandez), Chapter 244, Statutes
of 2011, prohibits contracts between carriers and hospitals
from containing any provision that restricts the ability of
the carrier from furnishing information to enrollees or
insureds concerning cost range of procedures or the quality
of services.
b) AB 2389 (Gaines) of 2009 would have prohibited a
contract between a health facility and a carrier from
containing a provision that restricts the ability of the
carrier to furnish information on the cost of procedures or
health care quality information to carrier enrollees. AB
2389 died in the Assembly on Concurrence.
c) AB 2967 (Lieber) of 2008 would have established a Health
Care Cost and Quality Transparency Committee to develop and
recommend to the CHHSA Secretary a health care cost and
quality transparency plan, and would have made the
Secretary responsible for the timely implementation of the
transparency plan. AB 2967 died on the Senate Inactive
File.
d) SB 1300 (Corbett) of 2008 would have prohibited a
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contract between a health care provider and a health plan
from containing a provision that restricts the ability of
the health plan to furnish information on the cost of
procedures or health care quality information to plan
enrollees. SB 1300 died on the Senate Floor.
e) AB 1296 (Torrico), Chapter 698, Statutes of 2007,
requires a health plan or contractor offering health
benefits to California Public Employees' Retirement System
(CalPERS) members and annuitants to disclose to CalPERS the
cost, utilization, actual claim payments, and contract
allowance amounts for health care services rendered by
participating hospitals to each member and annuitant.
f) AB 1 X1 (Nuñez) of 2007, among many other provisions
relating to health care reform, contained nearly identical
language as that contained in AB 2967. AB1 X1 failed
passage in the Senate Health Committee.
9)POLICY COMMENTS . This bill requires health plans and
insurers, including self-insured employers and multiemployer
self-insured plans; suppliers; and providers to provide
utilization data and pricing information to the CQDB. While
health plans and insurers have access to claims and other data
that would allow them to share this information with CQDB, it
is not clear that providers and suppliers have this data.
Therefore, the Committee may wish to consider amending this
bill to clarify what data providers and suppliers are required
to report to CQDB.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Physician Groups
Kaiser Permanente
Opposition
None on file.
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097
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