BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 514
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|AUTHOR: |Anderson |
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|VERSION: |April 20, 2015 |
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|HEARING DATE: |January 16, | | |
| |2016 | | |
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|CONSULTANT: |Teri Boughton |
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SUBJECT : California Health Benefit Exchange
SUMMARY :1. Requires the California Health Benefit Exchange, known as
Covered California, to allow an applicant to indicate in an
application for health care coverage whether or not the
applicant would like assistance with completing the application
from a Covered California certified insurance agent or certified
enrollment counselor and prohibits the release of personally
identifiable information without permission. Contains an urgency
clause that will make this bill effective upon enactment.
Existing law:
1)Establishes the Covered California in state government as a
state-based marketplace where individuals and small businesses
can purchase qualified health plans.
2)Establishes the Information Practices Act of 1977 (IPA), which
prohibits every state office, officer, department, division,
bureau, board, commission or other state agency from
disclosing personal information unless the information is
disclosed according to one of a specified list of provisions,
such as:
a) With prior voluntary written consent, not
more than 30 days in advance of the disclosure, or in
the time limit agreed to by the individual; or,
b) To those officers, employees, attorneys,
agents, or volunteers of the agency that has custody
of the information if the disclosure is relevant and
necessary in the ordinary course of the performance
of their official duties and is related to the
purpose for which the information was acquired.
SB 514 (Anderson) Page 2 of ?
3)Defines, under the IPA, "personal information" as any
information that is maintained by an agency that identifies or
describes an individual, including, but not limited to, his or
her name, social security number, physical description, home
address, home telephone number, education, financial matters,
and medical or employment history.
4)Makes, under the IPA, any person who willfully requests or
obtains any record containing personal information from an
agency under false pretenses guilty of a misdemeanor and fined
not more than $5,000, or imprisoned not more than one year, or
both, and also under the IPA subject to civil action for
invasion of privacy, in addition to any special or general
damages awarded, awarded a minimum of $2,500 in exemplary
damages as well as attorney's fees and other litigation costs
reasonably incurred in the suit.
5)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.
6)Establishes, under the federal Affordable Care Act, (ACA), the
procedures for determining eligibility requirements for
participation in an exchange, premium tax credits, cost
sharing reductions, and the individual responsibility
exemption. Requires an applicant for coverage or for a
premium tax credit or cost sharing reduction to be required to
provide only the information strictly necessary to
authenticate identity, determine eligibility, and determine
the amount of the credit or reduction.
7)Requires under the ACA any person who receives information
provided by an applicant for insurance coverage to use the
information only for the purposes of, and to the extent
necessary in, ensuring the efficient operation of the
exchange, including verifying eligibility of an individual to
enroll through an exchange or to claim a premium tax credit or
cost sharing reduction or the amount of the credit or
reduction, and not disclose the information to any other
person except as provided.
SB 514 (Anderson) Page 3 of ?
8)Authorizes under federal regulations an exchange to only use
or disclose such personally identifiable information for the
purposes of determining eligibility in a qualified health
plan, for other insurance affordability programs, or for
exemptions from the individual responsibility provisions, as
specified, to the extent such information is necessary to
carry out the functions of the exchange, as specified. For
other uses which the Secretary of Health and Human Services
(HHS) determines are in compliance with the ACA but are not to
carry out the exchange functions, requires individual consent.
To carry out other functions, requires consent and
substantive and procedural requirements, as specified.
This bill:
1)Requires Covered California to allow an applicant to indicate
in an application for health care coverage whether or not the
applicant would like assistance with completing the
application from a Covered California certified insurance
agent or certified enrollment counselor.
2)Prohibits Covered California from disclosing any personal
information, as defined in existing law, that was obtained
from the application for health care coverage to a certified
insurance agent or certified enrollment counselor until
Covered California has complied with 1) above.
3)Prohibits Covered California from disclosing any personal
information, as defined in existing law that was obtained from
the application for health care coverage to a certified
insurance agent or certified enrollment counselor if the
applicant indicates that the applicant does not want
assistance from a Covered California certified insurance agent
or certified enrollment counselor.
4)Permits Covered California to share the information of current
enrollees or applicants with the same certified enrollment
counselor or certified insurance agent of record that provided
the applicant assistance with an existing application, or
their successor or authorized staff, as otherwise permitted by
federal and state laws and regulations.
5)Contains an urgency clause that will make this bill effective
upon enactment.
FISCAL
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EFFECT : This bill has not been analyzed by a fiscal committee.
COMMENTS :
1)Author's statement. According to the author, the ACA has directed
states to provide marketplaces, or exchanges, for consumers
seeking health insurance. Covered California, the health benefit
exchange in California, has provided this platform for individuals
shopping for a plan. Unfortunately, due to a security loophole in
the law, shoppers on the website have suffered a disclosure of
their data to outside companies without having given their
permission. This bill is an effort to close that loophole, so that
consumers may shop free from fear of losing their privacy to
unknown, outside entities.
2)Covered California Launch. Covered California opened for
enrollment October 1, 2013. While the California launch was a
success, it was not without issues. Many found the overall
enrollment process difficult to complete. Covered California
identified challenges and opportunities for improvement. Due to
technical system issues, Covered California allowed people who
started applications to complete those applications until April
15th. According to Covered California, to follow-up on
applications started to ensure coverage effective January 1, 2014,
Covered California enlisted the help of roughly 2,100 of its
Certified Insurance Agent subcontractors to offer additional
assistance to roughly 41,000 households. The basic contact
information (name, telephone number, etc.) was securely
transmitted to Certified Insurance Agents by General Agent
partners, with instructions to quickly touch as many of these
consumers as possible to ensure that they were offered additional
assistance to complete their enrollments. Consumer information was
carefully protected: each Certified Insurance Agent who
participated in the program was given only a small batch of
"leads" at a time, according to their capacity to reach consumers,
and results were reported back to the General Agents. The program
was put on hold when some consumers were surprised to be contacted
by someone they did not realize was calling on behalf of Covered
California.
3)Covered California Privacy Practices. Covered California
Notice of Privacy Practices, Use and Disclosure explain that
Covered California may use and disclose a consumer's personal
information with contractors to help with enrollment and
contact the consumer when necessary. Additionally, all
contractors with whom Covered California shares information
SB 514 (Anderson) Page 5 of ?
for these purposes undergo a fingerprint and background check,
receive specialized training on keeping information
confidential, and must sign confidentiality agreements that
require contractors to follow the safeguards applicable to
Covered California and prohibit the use of the information for
any purposes outside the scope of the contract.
According to Covered California, both the paper and online
application include disclosures about Covered California's
privacy policy and require the consumer to agree that they are
aware of those privacy policies and practices, which is
required under the IPA and the ACA. On the paper
application, the privacy policy is described immediately above
the "rights and responsibilities" section of the application,
and is referenced in the declaration and signature which are
submitted under penalty of perjury. Specifically, the paper
application states, "We will share your information with other
state, federal and local agencies, contractors, health plans,
and programs only to enroll you in a plan or program or to
administer programs, and with other state and federal agencies
as required by law." For the web-based application, in order
to initially set up an online application a user is first
presented with two separate links: one for Covered
California's Terms and Conditions, and the other to Covered
California's privacy policy. In order to continue, a consumer
must actively consent by clicking a box to agree to the Terms
of Conditions and the privacy policy. The privacy policy
discloses that Covered California maintains administrative,
physical, technical, electronic and procedural safeguards to
protect the confidentiality and security of the personal
information. It allows links to additional information about
how data is collected online and used, and how to request
restrictions on the use and disclosure of information, among
other information.
4)California Healthcare Eligibility, Enrollment and Retention
System (CalHEERS). CalHEERS is a web-based system that
streamlines the eligibility and enrollment process for all
products and programs available through Covered California.
Covered California has a CalHEERS change request with the
title, "Consumer Consent to Share Personally Identifiable
Information with Covered California Certified Representative."
According to the document, Covered California needs to obtain
more explicit consumer consent before it shares any personally
identifiable information (namely, contact information) to any
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of its certified representatives. The goal of this change
request is to implement a business policy that allows
consumers the opportunity to opt in or out of having their
information shared for program purposes. The background
associated with this change request indicates that most
consumers appreciated the help from certified representatives
but a few consumers were surprised that they were being
contacted by an agent since they had not delegated their
application. According to the document, while this use of
consumer information was legally authorized, Covered
California wants to make sure consumers always have a clear
expectation about how their information may be shared. If the
change request is implemented there will be two boxes for
consumers to consent to Covered California's privacy policies
and information sharing practices. The first for the consumer
to agree to the privacy policy and the second to agree to have
information shared with the certified representative for
follow-up assistance. Consumer advocates have requested that
this change allow for an opt-in not an opt-out of having their
information shared.
According to Covered California, the change request is under
consideration for their next batch of changes, to be
implemented in September 2016. Currently, that batch still
needs to be prioritized. The prioritization process is under
way and will be finalized around April. Additionally, Covered
California has determined that changing the application as
called for in this bill is a costly, time-intensive process.
As such, Covered California has been looking at ways that
express consumer consent without changing the application.
Covered California is considering options that might be more
cost-effective and have the added benefit of being a system
that can actively check in with consumers, even existing ones
who may not be coming back to the application any time soon to
update their preferences. Covered California indicates that if
this bill were to become effective as is they would be
strictly limited to amending the application as indicated in
this bill. Furthermore, Covered California indicates that
this bill is duplicative of federal requirements and actually
less rigorous, as a check box would not be sufficient consent
as required by federal requirements.
5)Prior legislation. SB 974 (Anderson of 2014), would have
required Covered California to allow consumers to indicate
whether they would like assistance from an agent or enrollment
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counselor, and prohibit Covered California from disclosing
personal information if applicants indicate they do not want
assistance. SB 974 was held in the Assembly Appropriations
Committee.
AB 1560 (Gorell of 2014), would have prohibited Covered
California from disclosing an individual's personal
information, as defined, to third parties for the purpose of
determining eligibility for, or enrolling the individual in,
health care coverage unless, prior to the disclosure, and
would have required Covered California to immediately notify
the public of any breach of the security of personal
information created, collected, or maintained by Covered
California, regardless of the severity of the breach and
regardless of whether personal information was acquired by an
unauthorized person during the breach. AB 1560 failed passage
in the Assembly Health Committee.
SB 900 (Alquist, Chapter 659, Statutes of 2010), and AB 1602
(Perez, Chapter 655, Statutes of 2010), established the
California Health Benefit Exchange.
6)Support. According to the California Association of Health
Underwriters, the National Association of Insurance and
Financial Advisors of California, and the Independent
Insurance Agents and Brokers of California indicate that
licensed health insurance agents are already mandated to
comply with extensive privacy laws, undergo substantial
education on handling of consumer information and ethics, plus
annual continuing education. These proponents support this
bill because it provides a simple, tailored approach to permit
individuals needing assistance in the Covered California
enrollment process to affirmatively indicate they need
additional help with their applications.
7)Policy Comment. The author and Committee may wish to keep the
pressure on Covered California to maintain as a priority a
technological solution which allows an applicant or renewing
enrollee to consent to sharing information with contractors to
assist with enrollment and eligibility assistance, but may not
want to limit Covered California's ability to develop a
solution that is cost-effective and more beneficial to
enrollees. If this is the case, amendments may be needed to
provide Covered California some flexibility in developing the
specific solution to the identified problem. Amendments could
SB 514 (Anderson) Page 8 of ?
also include a timeline for implementation.
SUPPORT AND OPPOSITION :
Support: California Association of Health Underwriters
Independent Insurance Agents and Brokers of California
National Association of Insurance and Financial
Advisors of California
Oppose: None received
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