BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 26 (Hernandez) - California Health Care Cost and Quality Database ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 5, 2015 |Policy Vote: HEALTH 7 - 0, JUD. | | | 6 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 18, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 26 would require the California Health and Human Services Agency to contract with a nonprofit entity to create a health care cost and quality database. Fiscal Impact: The state of Colorado has developed an all payer claims database similar in functionality to the one required in this bill. The following cost estimates are informed by the actual expenditures to develop and operate the Colorado All Payer Claims Database. Due to the size and complexity of the California healthcare marketplace, staff anticipates that the cost to develop and maintain an all payer claims database is likely to be two to five times the cost incurred in Colorado. SB 26 (Hernandez) Page 1 of ? One-time costs between $3 million and $10 million for planning and initial policy development relating to the proposed all payer claims database (unknown fund source). One-time costs between $15 million and $30 million to create the database, including the information technology infrastructure to accept data submissions from payers, review submitted claims data, and analyze claims data (unknown fund source). Ongoing operations and maintenance costs between $5 million and $12 million per year for operations and maintenance of the database, data analysis, and other administrative costs (unknown fund source). Unknown potential fee revenues. The Colorado All Payer Claims Database is supported, in part, by fees charged for access to data or specific reports prepared by the staff. SB 26 does not specifically address whether this would be allowed under the bill. The bill does generally require information in the database to be searchable by the public. It may be possible to meet this requirement for public accessibility, while also developing data sets and analyses for outsider purchasers as a revenue generating mechanism. Background: Several other states have established all payer databases to assist in the analysis of health care markets, to increase transparency and potentially reduce health care spending over the long run. In general, an all payer claims database is used to collect claims data from some or all payers (potentially including private insurers, private health plans, employers, and state and federal health care programs such as Medicare or Medicaid programs). By collecting claims data in a central database, states hope to improve transparency by analyzing the costs for health care services and potentially tying those costs to outcomes. Currently there are two efforts to implement all payer claims databases in California. The California Healthcare Performance Information system is a database that will include data on physician services from three health plans and Medicare. Also, the University of California, San Francisco is developing a SB 26 (Hernandez) Page 2 of ? medical cost and quality database under contract from the Department of Insurance. That database will include information on prices for care for certain chronic conditions. Proposed Law: SB 26 would require the Health and Human Services Agency to contract with a nonprofit entity to create a health care cost and quality database. Specific provisions of the bill would: Require the California Health and Human Services agency, by January 1, 2017, to use a competitive process to contract with one or more nonprofit corporations to develop the California Health Care Cost and Quality Database; Specify the requirements for the contracting nonprofit; Require health plans, health insurers, self-insured employers, and licensed health care providers to provide information for inclusion in the database, including utilization and pricing data; Authorize multiemployer self-insured plans and trust administrators for multiemployer self-insured plans to report similar data; Authorize the nonprofit to report noncompliance with reporting requirements to the appropriate regulating entity; Authorize the regulating entity to enforce compliance; Specify the requirements for protection of confidential information by the nonprofit; Specify the types of data to be collected and analyzed; Require the nonprofit to create a publicly-accessible, searchable database of information on health care costs and quality information; Prohibit the use of General Fund for the development or operations of the system; Require the Agency to convene a review committee to develop plans for the development and administration of the system, including a business plan; Require annual reporting to the Legislature by the Agency; Prohibit the establishment of the review committee until the Director of Finance determines that sufficient private funds or federal funds have been received and have been appropriated for that purpose. Related SB 26 (Hernandez) Page 3 of ? Legislation: SB 1322 (Hernandez, 2014) was substantially similar to this bill. That bill was held on the Assembly Appropriations Committee's Suspense File. AB 1558 (R. Hernandez, 2014) would have requested the University of California to develop a cost and quality database. That bill was held on this Committee's Suspense File. Staff Comments: The California Health and Human Services Agency has developed a State Health Care Innovation Plan, which is a plan to improve the state's health care system. Among the many elements of the plan is a plan for an all payer claims database, similar to what is required in this bill. However, upon applying for federal funding for the Innovation Plan, the state received only a $3 million grant for future planning efforts and no grant funds for implementation of the Innovation Plan. At this time, the federal government has not indicated that there will be additional funds for implementation available to the state. -- END --