BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 26 --------------------------------------------------------------- |AUTHOR: |Hernandez | |---------------+-----------------------------------------------| |VERSION: |December 1, 2014 | --------------------------------------------------------------- --------------------------------------------------------------- |HEARING DATE: |April 22, 2015 | | | --------------------------------------------------------------- --------------------------------------------------------------- |CONSULTANT: |Melanie Moreno | --------------------------------------------------------------- SUBJECT : California Health Care Cost and Quality Database SUMMARY : Requires the Secretary of California Health and Human Services Agency to, no later than January 1, 2017, use a competitive process to contract, as specified, with one or more independent, nonprofit organizations in order to administer the California Health Care Cost and Quality Database. Requires the nonprofit organization, no later than January 1, 2019, to make a publicly available, web-based, searchable database, as specified. Requires the information and analysis included in the database to be presented in a way that facilitates comparisons of cost, quality, and patient satisfaction across payers, provider organizations, and other suppliers of health care services. Existing law: 1.Establishes the Office of Statewide Health Planning and Development (OSHPD) as the single state agency responsible for collecting specified health facility and clinic data for use by all agencies. Requires hospitals to make and file with OSHPD certain specified reports, including a Hospital Discharge Abstract Data Record with data elements for each admission, such as diagnoses and disposition of the patient. 2.Requires OSHPD, to publish annually risk-adjusted outcome reports on medical, surgical and obstetric conditions or procedures, and others selected by OSHPD in accordance with specified criteria. 3.Requires OSHPD, to publish a risk-adjusted outcome report for coronary artery bypass graft (CABG) surgery for all CABG surgeries performed in the state. Requires the reports to compare risk-adjusted outcomes by hospital in every year, and by cardiac surgeon in every other year, but permits SB 26 (Hernandez) Page 2 of ? information on individual hospitals and surgeons to be excluded from the reports based upon the recommendation of a clinical panel for statistical and technical considerations. 4.Requires a hospital to make a written or electronic copy of its charge description master available at the hospital location. Requires the hospital to post a notice that the hospital's charge description master is available, and requires any information about charges provided to include information about where to obtain information regarding hospital quality, including hospital outcome studies available from OSHPD and hospital survey information available from the Joint Commission for Accreditation of Healthcare Organizations. 5.Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurers. Requires specified health plans and insurers to submit reports to state and federal regulators on medical loss ratios, rate filings, enrollment data, as specified. 6.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 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. 7.Makes, under federal law, Medicare data 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 to evaluate the performance of providers of services and suppliers on measures of quality, efficiency, effectiveness, and resource use, and applies other requirements to qualified entities as the HHS Secretary may specify, such as ensuring security of data. 8.Prohibits a health plan from releasing any information to an SB 26 (Hernandez) Page 3 of ? 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. 9.Establishes Covered California as a state-based health care benefit exchange in state government to make available selectively contracted qualified health plans (QHPs) for individual and small group purchasers. Requires QHPs to submit data to Covered California. 10.Establishes, under federal law, the Health Insurance Portability and Accountability Act of 1996 (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. 11.Establishes the Confidentiality of Medical Information Act, which prohibits providers of healthcare, health care service plans, their contractors, and any business organized for the purpose of maintaining medical information, from using medical 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. This bill: 1.Creates the California Health Care Cost and Quality Database (database) and requires the Secretary of California Health and Human Services Agency (CHHS) to, no later than January 1, 2017, use a competitive process to contract, as specified, with one or more independent, nonprofit organizations in order to administer it. Requires the competitive process and any requests for proposal to be publicly posted on CHHS' Web site for a minimum of 30 days for public review and comment. 2.Requires CHHS to include, as terms in the contract or contracts: a. A requirement that the nonprofit organization administering the database establish it with parameters as specified in 13) below; develop methodologies for the collection, validation, refinement, analysis, comparison, review, reporting, and improvement of health care data, as specified; SB 26 (Hernandez) Page 4 of ? receive information from health care entities and report that information in a form that allows valid comparisons across care delivery systems, as specified; and, comply with the requirements governing provider and supplier requests for error correction established pursuant specified federal regulations. b. A prohibition on the nonprofit from using data received for any purpose not specified in this bill or in the contract, or receiving funding from any other source to accomplish the same purposes sought under this bill unless that funding is received from another nonprofit or government source and is for the purpose of research or education. c. A requirement that the nonprofit identify the type of data, purpose of use, and entities and individuals that are required to report to, or that may have access to, the database. Prohibits an entity or individual from being required to report to, and from having access to, the database until the review committee established under 13) below has approved the nonprofit determination. 3.Requires, for the purpose of developing information for inclusion in the database, health plans, insurers, self-insured employers, and suppliers and providers, as defined, to provide the nonprofit organization: a. Utilization data from medical, dental, and pharmacy claims. In the case of entities that do not use claims data (including, but not limited to, integrated delivery systems), encounter data consistent with the core set of data elements for data submission proposed by the APCD Council, the University of New Hampshire, and the National Association of Health Data Organizations; and, b. Pricing information for health care items, services, and medical and surgical episodes of care gathered from allowed charges for covered health care items and services. In the case of entities that do not use or produce individual claims, price information that is the best possible proxy to pricing information for health care items, services, and medical and surgical episodes of care available in lieu of actual cost data to allow for meaningful comparisons of provider prices and treatment costs. SB 26 (Hernandez) Page 5 of ? 4.Permits a multiemployer self-insured plan that is responsible for paying for health care services provided to beneficiaries and the trust administrator for a multiemployer self-insured plan to provide the information in 3) above. 5.Permits the nonprofit organization to report an entity's failure to comply with 3) above to the entity's regulating agency. Permits the regulating agency to enforce the requirement in 3) above using its existing enforcement procedures. Requires moneys collected pursuant to the authorization to enforce to be subject to appropriation by the Legislature. Specifies that the failure to comply with 3) above is not a crime. 6.Requires all uses and disclosures of data made pursuant to this bill to comply with all applicable state and federal laws for the protection of the privacy and security of data, including, but not limited to, HIPAA and the federal Health Information Technology for Economic and Clinical Health Act and implementing regulations. 7.Requires all policies and protocols developed in the performance of the contract to ensure that the privacy, security, and confidentiality of individually identifiable health information is protected. Prohibits the nonprofit organization from publicly disclosing any unaggregated, individually identifiable health information, as defined, and requires the nonprofit to develop a protocol for assessing the risk of reidentification stemming from public disclosure of any health information that is aggregated, individually identifiable health information. 8.Requires confidentially negotiated contract terms contained in a contract between a health plan or insurer and a provider or supplier to be protected in any public disclosure of data made pursuant to this bill. Prohibits individually identifiable proprietary contract information included in a contract between a health plan or insurer and a provider or supplier from being disclosed in an unaggregated format. 9.Requires the nonprofit organization to receive, process, maintain, and analyze information from data sources, including, but not limited to, data received pursuant to subdivision #3 above, claims from private and public payers, SB 26 (Hernandez) Page 6 of ? 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 aggregated payer and provider performance on validated measures of clinical quality and patient experience, such as measures from the Healthcare Effectiveness Data and Information Set (HEDIS) and Consumer Assessment of Healthcare Providers and Systems (CAHPS), to be collected from accrediting organizations, including, but not limited to, the National Committee for Quality Assurance (NCQA), URAC, and the Joint Commission. 10.Requires the nonprofit organization to include in an analysis, performed pursuant to 9) above, to include all of the following: a. Population-level data on prevention, screening, and wellness utilization; b. Population-level data on behavioral and medical risk factors, interventions, and outcomes; c. Population-level data on chronic conditions, management, and outcomes; d. Population-level data on trends in utilization of procedures for treatment of similar conditions to evaluate medical appropriateness; e. Facility and physician organization risk adjusted performance information on the quality, efficiency, and outcomes of care that are aligned with national efforts, including, but not limited to, those of the National Quality Forum, related to defining cost and quality measures; and, f. Data that permits consideration of socioeconomic status and disparities in care due to race, ethnicity, gender, sexual orientation, and gender identity. 11.Requires the nonprofit organization, no later than January 1, 2019, to make publicly available a web-based, searchable database, as specified. Requires the information and analysis included in the database to be presented in a way that facilitates comparisons of cost, quality, and satisfaction across payers, provider organizations, and other suppliers of health care services. Requires the database to be regularly updated to reflect new data submissions. SB 26 (Hernandez) Page 7 of ? 12.Prohibits the implementation and ongoing administration costs of the database from being paid using General Fund (GF) moneys. 13.Requires CHHS to convene a review committee, composed of a broad spectrum of health care stakeholders and experts, including, but not limited to, representatives of the entities that are required to provide information pursuant to 3) above and representatives of purchasers, including, but not limited to, businesses, organized labor, and consumers, to develop the parameters for the establishment, implementation, and ongoing administration of the database, including a business plan for sustainability without using GF moneys, as specified. Requires the review committee to hold public meetings with stakeholders, solicit input, and set its own meeting agendas. Makes review committee meetings subject to the Bagley-Keene Open Meeting Act. 14.Requires CHHS to arrange for the preparation of an annual report to the Legislature and the Governor, as specified, based on the findings of the review committee, including input from the public meetings, that shall, at a minimum, examine and address the following issues: a. Assessing California health care needs and available resources; b. Containing the cost of health care services and coverage; c. Improving the quality and medical appropriateness of health care; d. Increasing the transparency of health care costs and the relative efficiency with which care is delivered; e. Use of disease management, wellness, prevention, and other innovative programs to keep people healthy and reduce disparities and costs and improving health outcomes for all populations; f. Efficient utilization of prescription drugs and technology; g. Reducing unnecessary, inappropriate, and wasteful health care; h. Educating consumers in the use of health care information; and, i. Using existing data sources to build the database. SB 26 (Hernandez) Page 8 of ? 15.Prohibits the review committee from being convened until the Director of Finance (DOF) has determined that sufficient private or federal funds have been received and that the funds have been appropriated for that purpose. Requires the review committee to continue to function for as long as DOF has determined that the database is established and is being administered. 16.Prohibits the members of the review committee from receiving per diem or travel expense reimbursement, or any other expense reimbursement. FISCAL EFFECT : This bill has not been analyzed by a fiscal committee. COMMENTS : 1.Author's statement. According to the author, beginning in March 2014, the Senate Committee on Health convened several health care experts to discuss factors that contribute to the growing cost of health care in California and efforts to make care more affordable. At a second hearing in February of this year, the Committee heard testimony related to some major cost drivers in the health care system, including pharmaceuticals, hospital costs, and the effects of geographic location on contracting. The third, held in March of this year, served to educate members and the public about the effect of health care costs on consumers. This series of hearings 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 hearings 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. 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 SB 26 (Hernandez) Page 9 of ? financial liability and realize the best quality and value available to them. 2.All-Payer Claims Databases. According to the National Conference of State Legislatures, several states have established databases that collect health insurance claims information from all health care payers into a statewide information repository, referred to as "all-payer claims databases." An all-payer claims database is designed to inform cost containment and quality improvement efforts. Payers include private health insurers, Medicaid, children's health insurance and state employee health benefit programs, prescription drug plans, dental insurers, self-insured employer plans and Medicare. The databases contain eligibility and claims data (medical, pharmacy and dental) and are used to report cost, use and quality information. The data consist of "service-level" information based on valid claims processed by health payers. Service-level information includes charges and payments, the provider(s) receiving payment, clinical diagnosis and procedure codes, and patient demographics. To mask the identity of patients and ensure privacy, states usually encrypt, aggregate and suppress patient identifiers. Colorado, Kansas, Minnesota, Tennessee, Maine, Maryland, Massachusetts, New Hampshire, Utah and Vermont all have APCDs. 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. 3.Existing California initiatives. In California, the California Healthcare Performance Information System (CHPI) is a voluntary physician performance database with statistical analysis that will eventually publish information online. According to the CHPI website, starting in 2015, output will be an analysis of claims data aggregated from more than 12 million patients enrolled in CHPI's three participating California health plans- Blue Shield, Anthem Blue Cross and United Healthcare, as well as Medicare. CHPI was federally certified to include data from Medicare's five million SB 26 (Hernandez) Page 10 of ? California beneficiaries, and became the first Qualified Entity to receive Medicare data. The University of California, San Francisco is working with the California Department of Insurance (CDI) on a medical cost and quality transparency website. According to CDI, the website will report average prices paid for episodes of care or annual costs for chronic conditions, as well as quality measures where available. Prices will be aggregated across payers and providers, and shown at the regional level based on the 19 California rating regions (some regions may need to be consolidated pursuant to the terms of the data license agreement). The website is expected to provide price information for 95 to 99 episodes of care or conditions. Five to 15 of those episodes or conditions will have both price and quality information as well as consumer education content created by Consumers Union. Quality information will consist of existing performance, appropriateness, and outcome measures. 4.Double referral. This bill has been double referred. Should it pass out of this Committee, it will be referred to the Senate Judiciary Committee. 5.Related legislation. SB 275 (Hernandez), requires OSHPD to adopt a regulation that adds physician identifiers to the patient level data elements that are required to be collected and reported by hospitals and surgical clinics. SB 275 passed out of the Senate Health Committee by a vote of 7-0. SB 546 (Leno), establishes a rate approval process for large group health insurance products prior to the implementation of any rate change that equals or exceeds certain triggers, or at the request of a large group purchaser. Establishes a rate review process of a health plan's or insurer's entire aggregated large group market products and requires DMHC and CDI to conduct a public meeting regarding large group rate changes for each plan or insurer that offers coverage in the large group market on or before November 1, 2016 and annually thereafter. SB 546 is set to be heard in this Committee on April 22, 2015. 6.Prior legislation. SB 1322 (Hernandez), of 2014, was substantially similar to this bill. SB 1322 was held on the Assembly Appropriations Committee suspense file. SB 26 (Hernandez) Page 11 of ? SB 1182 (Leno) Chapter 577, Statutes of 2014, requires health plans and insurers to share specified data with purchasers that have 1,000 or more enrollees or that are multiemployer trusts. SB 1340 (Hernandez), Chapter 83, Statutes of 2014, expands provisions related to gag clauses in contracts between health plans or insurers and providers. AB 1558 (Roger Hernández), of 2014, would have created 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 was held on the Senate Appropriations Committee suspense file. 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 more transparent. SB 1196 (Hernandez), Chapter 869, Statutes of 2011, prohibits a contract between a health plan insurer and a provider or supplier, from prohibiting, conditioning, or in any way restricting the disclosure of claims data related to health care services provided to an enrollee or subscriber of the health plan or carrier, or beneficiaries of any self-funded health coverage arrangement administered by the carrier to a qualified entity, as defined. SB 751 (Gaines and 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. SB 26 (Hernandez) Page 12 of ? 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. AB 2967 (Lieber), of 2008, would have established a Health Care Cost and Quality Transparency Committee to develop and recommend to the CHHS 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. SB 1300 (Corbett), of 2008, would have prohibited a 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. 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. 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. 7.Support. The California Primary Care Association writes that stakeholders across California begin to work together to develop the framework of this new and improved delivery system, it has become increasingly clear that a single trustworthy, accurate clearinghouse of claims and quality data is necessary to move us in the direction we seek. The National Multiple Sclerosis Society - California Action Network states that there is no cure for MS and therefore, individuals living with the disease manage it through medical care and a myriad of prescription medications. This bill will SB 26 (Hernandez) Page 13 of ? provide an important resource for people living with a chronic condition such as MS as it will address price transparency and education consumers about health related expenses. AARP states that information about the performance of our health care system should be collected, analyzed, and made publicly available, addressing safety, effectiveness, patient-centered responsiveness, timeliness, equity, and efficiency. The California Teachers Association states that making better health care decisions requires a level of transparency that has been a challenge within an industry that systematically opposes transparency. Kaiser Permanente writes that as a growing proportion of care is paid for through capitated, bundled and value-based arrangements, health care data that is based only on claims will provide an increasingly incomplete and inaccurate picture of statewide costs and quality. Kaiser believes that this bill will advance the critical conversation in California about the best way to collect, measure, and compare health care data toward achieving key policy goas of improving health and the quality of care and reducing cost trends over the long term. 8.Support if amended. Consumers Union (CU), Health Access California, SEIU California, California Labor Federation, and CALPIRG suggest amendments to create a public governance body with a spectrum of viewpoints (including consumer advocates, labor, and other purchasers) that would be responsible for developing a plan to ensure comprehensive and efficient collection of data from physicians, hospitals and other sources. CU states that these provisions would ensure greater public accountability for the design, implementation, and oversight of the database and better ensure it develops the information consumers want to choose the best-value care and give providers the information and incentives they need to improve their performance. CU contends that contracting out certain data collection functions could still be undertaken, but the parameters and prioritization would remain in the public domain in a fully transparent way. Such a body should have participation from diverse and varying points of view, including consumer advocates, labor and other purchasers. These groups urge a greater focus on health equity to be added to the bill, so that disparities among different communities can be monitored and ultimately reduced. Categories of data elements need to be specified (such as race, ethnicity, primary language spoken, ZIP code, and sexual orientation). SB 26 (Hernandez) Page 14 of ? Integrating stronger, more explicit health equity provisions would make the database a more accurate and meaningful tool for the critical task of reducing disparities and improving community health. Finally, these groups urge closing a loophole in section 127672(d)(3) that would prevent full transparency by allowing providers to broadly deem contract information "proprietary" and to require contract language that would allow information required in other sections of the bill to be kept confidential. California Pan-Ethnic Health Network (CPEHN) also urges inclusion of language to ensure a greater focus on health equity and to ensure that the governance is responsive to the needs of consumers. In addition, CPEHN proposes amendments that would require the database to include the capability to map data on mortality and morbidity rates as well as other relevant data on the social and environmental factors that impact health to better pinpoint areas with disparities and highlight potential problems or incongruities in access and quality of care. 9.Support in concept. CAPG writes that they support policy measures that encourage the implementation of the Triple Aim (decreased costs, improved patient experience and development of population health management), appreciates the stakeholder meetings conducted by the author, and look forward to working together on the creation of such a database in the Golden State. 10.Concerns. The California Association of Health Plans (CAHP) are concerned that the database should be "searchable" by the public when confidential and proprietary information is included in the data submitted because it is unclear what will be made public and how the information will be shared. CAHP believes it is critical that specific contractual payment arrangements remain confidential as proprietary information. CAHP agrees that a neutral third party should be responsible for the database; however, they recommend that the organization convene a technical workgroup tasked with developing the data elements to be collected rather than specifying what should be initially included in the database in statute. CAHP states that for the purposes of the initial implementation it is recommended to use a phased-in plan SB 26 (Hernandez) Page 15 of ? approach based on enrollment size and that claims data should begin with medical and pharmacy data, which would help to identify coding and other data issues prior to including the smaller and specialty plans that could be added after implementation. If Medicare data is to be included, then the database administer should apply to the federal Centers for Medicare and Medicaid Services to be a Medicare Data Sharing for Performance Program. Finally, CAHP writes that the use of existing informational sources such HEDIS, OSHPD, and the Department of Health Care Services should be included to avoid the repetitious reporting of data and that these items could be identified in the technical workgroup mentioned above and the workgroup could be responsible for extracting the data from these sources or could ensure that the database is capable of receiving the data as currently extracted for these systems. 11.Oppose. The California Right to Life Committee (CRLC) states that heath care data will include patients requiring end of life care and various groups are actively promoting end of life plans, and they assume that one of these groups would be involved in the process as a non-profit agency. CRLC also states that these groups could be invited to the review committee created under this bill and it foresees these groups working in tandem with any statewide POLST registry or similar end of life mandated health care form that removes the patient from the decision making. SUPPORT AND OPPOSITION : Support: AARP American Federation of State, County, and Municipal Employees California Primary Care Association California Teachers Association Kaiser Permanente National Multiple Sclerosis Society - California Action Network Oppose: California Right to Life Committee, Inc. -- END -- SB 26 (Hernandez) Page 16 of ?