BILL ANALYSIS                                                                                                                                                                                                    

                                                                     SB 435  

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          Date of Hearing:  August 19, 2015


                                 Jimmy Gomez, Chair

          SB 435  
          (Pan) - As Amended July 7, 2015

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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          This bill requires the Secretary of the California Health and  
          Human Services Agency (CHHSA) to convene a working group of  
          public payers, private health insurance carriers, third-party  
          purchasers, health care providers, and health care consumer  


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          representatives to identify appropriate payment methods to align  
          incentives in support of patient-centered medical homes (PCMHs).

          It also states intent to exempt from state antitrust laws, and  
          to provide immunity from federal antitrust laws pursuant to the  
          State Action Doctrine for, any activities undertaken pursuant to  
          this bill that otherwise might be constrained by those laws.  

          FISCAL EFFECT:

          1)Costs of $20,000 to CHHSA to convene a workgroup. 

          2)This bill includes intent to exempt from applicable antitrust  
            laws, but does not do so. Specifically, it does not include a  
            process by which the state can manage the requirements of  
            immunity from federal antitrust laws under the State Action  
            Doctrine.  This liability poses GF risk.  The California  
            Department of Justice notes that in light of recent Supreme  
            Court case law, it is likely that the antitrust immunity  
            provisions contained in this bill would not comply with the  
            State Action Doctrine.  DOJ indicates enactment of this bill  
            will expose the state to liability and damages for  
            collaborations formed under the statute.  DOJ costs as a  
            result of these liabilities are impossible to predict but  
            potentially significant.


          1)Purpose. According to the author, the state should support  
            care that is patient-centered, cost-efficient, continuous,  
            focused on prevention, and built on sound, evidence-based  
            medicine rather than episodic, illness-oriented care.  The  
            author believes the outcome of this bill will be the best PCMH  


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            model for California. The bill is sponsored by the California  
            Academy of Family Physicians. 

          2)PCMH. According to the federal Agency for Healthcare Research  
            and Quality, a PCMH delivery model improves health by  
            transforming the way primary care is organized and delivered.   
             It includes five features: comprehensive care, patient  
            orientation, coordinated care, improved primary care  
            accessibility, and a commitment to quality and safety.  It is  
            designed to improve quality of care through team-based  
            coordination, and to empower the patient to be a partner in  
            their own care.  

          3)Anti-trust concerns.  In July 2013, the Commonwealth Fund  
            published an issue brief titled, "State Strategies to Avoid  
            Antitrust Concerns in Multipayer PCMH Initiatives."  According  
            to this issue brief, convening multiple payers distributes the  
            costs associated with creating a PCMH and results in greater  
            alignment around payment, reporting, and infrastructure  
            investments.  However, it also notes states that promote  
            collaboration among payers to reach agreement on common or  
            aligned payments for their PCMH initiatives risk antitrust  
            liability for their participating payers.  The cooperation and  
            collaboration to set prices and payments among a group of  
            otherwise competitive payers would be seen as illegal  
            restraint of trade under the Sherman Act, a federal antitrust  
            law.  Immunity from federal antitrust laws is available under  
            the "state action doctrine" if the policy in place meets  
            specific criteria: that the state has a clear policy that  
            justifies the anticompetitive behavior, and that the state has  
            committed to active supervision of anticompetitive activities.  
             Some states with PCMH initiatives have passed legislation  
            that explicitly addresses antitrust concerns.  


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          4)Prior Legislation. 
             a)   ACR 152 (Pan), Resolution Chapter 143, Statutes of 2014,  
               states the Legislature supports and encourages the  
               development and expansion of a California health care  
               delivery system that identifies PCMHs and is based upon  
               certain principles of coordination of patient care.

             b)   AB 1208 (Pan) of 2013 was similar to SB 393 from 2012.  
               AB 1208 was later amended on the Senate Floor to address a  
               different subject matter.

             c)   SB 393 (Ed Hernandez) established a definition for a  
               PCMH based upon specified standards.  SB 393 was vetoed by  
               the Governor.  In his veto message, the Governor stated  
               that he commended the author for trying to improve the  
               delivery of health care by encouraging the greater use of  
               "patient-centered medical homes" but because the concept is  
               still evolving, he thought more work was needed before the  
               definition was codified.

          Analysis Prepared by:Lisa Murawski / APPR. / (916)  


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