BILL ANALYSIS Ó SB 1340 Page 1 SENATE THIRD READING SB 1340 (Ed Hernandez) As Amended March 24, 2014 Majority vote SENATE VOTE :33-0 HEALTH 17-0 ----------------------------------------------------------------- |Ayes:|Pan, Maienschein, | | | | |Bonilla, Bonta, Chávez, | | | | |Chesbro, Gomez, Gonzalez, | | | | |Roger Hernández, | | | | |Lowenthal, Mansoor, | | | | |Nazarian, Nestande, | | | | |Patterson, Rodriguez, | | | | |Wagner, Wieckowski | | | | | | | | ----------------------------------------------------------------- SUMMARY : Expands provisions related to gag clauses in contracts between health plans or insurers and providers. Specifically, this bill : 1)Expands the prohibition on any provision that restricts the ability of a health plan or insurer to furnish cost and quality information to enrollees or insureds, which currently applies to hospitals and certain facilities owned by hospitals, to include any provider or supplier, and to allow sharing with beneficiaries of a self-funded plan or other persons entitled to access services through a network established by the plan or insurer. 2)Clarifies that such gag clauses are prohibited on the cost of a procedure or a full course of treatment, including facility, professional, and diagnostic services, prescription drugs, durable medical equipment, and other items and services related to the treatment. 3)Increases from 20 to 30 days the amount of time a health plan or insurer must give a provider or supplier to review data to be shared by a health plan or insurer. FISCAL EFFECT : None SB 1340 Page 2 COMMENTS : According to the author of this bill, health care costs continue to outpace inflation and more costs are being shifted to consumers. The author writes that recent legislation, SB 751 (Gaines), Chapter 244, Statutes of 2011, prohibits clauses in a contract between a health plan and hospital that bar the plan from sharing cost and quality information regarding the hospital with that plan's members, with a process for hospitals to review the information for accuracy. According to the author, virtually all large health plans now provide hospital cost and quality information to their members. However, several problems with the current transparency requirements have emerged: 1)SB 751 only applies to a health plan's own members, not to members of a self-funded plan administered by the health plan. As a result, members of self-funded plans do not have access to the same cost and quality information that health plan members do. 2)SB 751 applies only to hospitals, excluding other types of providers. As a result, plans are unable to share cost and quality information regarding some providers and it is unclear whether SB 751 protects their ability to provide to consumers the complete costs for a given procedure, including both facility and provider costs. 3)SB 751 did not set a maximum on the period of time plans are required to allow for provider review of data before it is disclosed to consumers. As a result, some providers have insisted on significantly longer than 20 days, and this makes it more difficult for plans to make timely information available to consumers. SEIU California, in support, writes that its members are impacted and actively involved in shaping policy as it relates to health care transparency: as purchasers of health care, in health benefits bargaining for represented workers, as California Public Employees' Retirement System members, as Medi-Cal beneficiaries, as state and county workers administering public health coverage programs, as part of the health care delivery system workforce, and as advocates for patients. CALPIRG, also in support, argues that consumers increasingly have insurance plans with deductible and SB 1340 Page 3 coinsurance that encourage them to shop around; this bill will help provide consumers with meaningful information to inform their shopping. The California Association of Health Plans, in support, states that this bill will provide pricing transparency without significantly increasing any administrative burden on health plans. This bill has no opposition. Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097 FN: 0004028