Amended in Assembly August 15, 2016

Amended in Assembly June 30, 2016

Amended in Senate May 31, 2016

Amended in Senate March 28, 2016

Senate Bill No. 1159

Introduced by Senator Hernandez

February 18, 2016

An act to add Chapter 8 (commencing with Section 127670) to Part 2 of Division 107 of, and to repeal the heading of Chapter 8 (formerly commencing with Section 127670) of Part 2 of Division 107 of, the Health and Safety Code, relating to health care.

LEGISLATIVE COUNSEL’S DIGEST

SB 1159, as amended, Hernandez. California Health Care begin delete Cost and Quality end delete begin insert Cost, Quality, and Equity Transparency end insert Database.

Existing law establishes health care coverage programs to provide health care to segments of the population meeting specified criteria who are otherwise unable to afford health care coverage and provides for the licensure and regulation of health insurers and health care service plans.

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This bill would require certain health care entities, including health care service plans, to provide specified information to the Secretary of California Health and Human Services. The bill would authorize the secretary to report a health care entity that fails to comply with that requirement to the health care entity’s regulating agency and would authorize the regulating agency to enforce that requirement using its existing enforcement procedures.

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The bill would require all data disclosures made pursuant to these provisions to comply with all applicable state and federal laws for the protection of the privacy, security, and confidentiality of data and would prohibit the disclosure of any unaggregated, individually identifiable health information or medical information. The bill would also require individually identifiable health information and medical information to be protected by security measures including, but not limited to, encryption. The bill would require that certain confidentially negotiated contract terms be protected in data disclosures made pursuant to these provisions and would prohibit certain individually identifiable proprietary contract information from being disclosed in an unaggregated format. The bill would authorize the secretary to enter into contracts or agreements to share the information collected under the bill, under prescribed conditions.

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This bill would also require the secretary to convene an advisory committee composed of a broad spectrum of health care stakeholders and experts, as specified, to identify the type of data, purpose of use, and entities and individuals that are required to report to, or that may have access to, a health care cost and quality database. The bill would require the secretary to arrange for the preparation of a report to the Legislature and the Governor, to be submitted by January 1, 2019, that examines and addresses specified issues, including, among others, containing the cost of health care services and coverage. The bill would prohibit members of the committee from receiving a per diem or travel expense reimbursement, or any other expense reimbursement.

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Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

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This bill would make legislative findings to that effect.

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This bill would require the California Health and Human Services Agency to research the options for developing a cost, quality, and equity transparency database. The bill would require the research to include certain topics, including, among others, identification of key data submitters and a comparative analysis of potential models used in other states. The bill would authorize the agency to enter into contracts or agreements to conduct the research and would require the agency to make the results of the research available to the public no later than March 1, 2017, by submitting a report to the Assembly and Senate Committees on Health.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

begin insert (a) end insert begin insert   end insert It is the intent of the Legislature in enacting
this act begin delete to make end delete begin insert that end insert cost and quality data begin insert be made end insert available and
to encourage health care service plans, health insurers, and
providers to develop innovative approaches, services, and programs
that may have the potential to deliver health care that is both cost
effective and responsive to the needs of enrollees, including
recognizing the diversity of California and the impact of social
determinants of health.

begin insert

(b) It is further the intent of the Legislature that a cost, quality,
and equity transparency database be utilized in California to
inform efforts to:

end insert begin insert

(1) Assess California health care needs and available resources.

end insert begin insert

(2) Contain the cost of health care services and coverage.

end insert begin insert

(3) Improve the quality and medical appropriateness of health
care.

end insert begin insert

(4) Eliminate or reduce health disparities and address the social
determinants of health.

end insert begin insert

(5) Increase the transparency of health care costs and the
relative efficiency with which care is delivered.

end insert begin insert

(6) Promote the use of disease management, wellness,
prevention, and other innovative programs to keep people healthy,
reduce disparities and costs, and improve health outcomes for all
populations.

end insert begin insert

(7) Assess the value and encourage the efficient utilization of
prescription drugs and technology.

end insert begin insert

(8) Reduce unnecessary, inappropriate, and wasteful health
care.

end insert begin insert

(9) Educate consumers in the use of health care information.

end insert

SEC. 2.  

The heading of Chapter 8 (formerly commencing with
Section 127670) of Part 2 of Division 107 of the Health and Safety
Code, as amended by Section 230 of Chapter 183 of the Statutes
of 2004, is repealed.

SEC. 3.  

Chapter 8 (commencing with Section 127670) is added
to Part 2 of Division 107 of the Health and Safety Code, to read:

 

Chapter  8. California Health Care begin delete Cost and Quality end delete
begin insert Cost, Quality, and Equity Transparency end insert Database

 

127670.  

(a)  begin delete (1) end delete begin delete   end delete begin delete Solely for the purpose of developing
information for inclusion in a health care cost and quality database,
and consistent end delete begin insert The California Health and Human Services Agency
shall research the options for developing a cost, quality, and equity
transparency database that is consistent end insert with paragraph (9) of
subdivision (b) of Section 56.10 of the Civil begin delete Code, a health end delete begin insert Code.
This research shall include all of the following: end insert

begin insert (1) end insert begin insert   end insert begin insert Identification of key data submitters, including health end insert care
service begin delete plan, including a end delete begin insert plans, end insert specialized health care service
begin delete plan, an insurer end delete begin insert plans, insurers end insert licensed to provide health insurance,
as defined in Section 106 of the Insurance Code, begin delete a supplier, end delete
begin insert suppliers, end insert as defined in paragraph (3) of subdivision (b) of Section
1367.50, begin delete or a provider, end delete begin insert providers, end insert as defined in paragraph (2) of
subdivision (b) of Section 1367.50, begin delete shall, and a end delete self-insured
begin delete employer, a end delete begin insert employers, end insert multiemployer self-insured begin delete plan that is end delete
begin insert plans that are end insert responsible for paying for health care services
provided to beneficiaries, and begin delete the trust administrator end delete begin insert trust
administrators end insert for begin delete a end delete multiemployer self-insured begin delete plan may, provide
all of the following to the Secretary of California Health and
Human Services: end delete begin insert plans. end insert

begin insert

(2) A comparative analysis of potential models used in other
states and an assessment of the extent to which information in
addition to the following should be included in the cost, quality,
and equity transparency database:

end insert

(A) Utilization data from the health care service plans’ and
insurers’ medical, dental, and pharmacy claims or, 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
All-Payer Claims Database Council, the University of New
Hampshire, and the National Association of Health Data
Organizations.

(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 or, 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.

(C) Information sufficient to determine the impacts of social
determinants of health, including age, gender, race, ethnicity,
limited English proficiency, sexual orientation and gender identity,
ZIP Code, and any other factors for which there is peer-reviewed
evidence.

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(2) (A) The secretary may report an entity’s failure to comply
with paragraph (1) to the entity’s regulating agency.

(B) The regulating agency of an entity described in paragraph
(1) may enforce paragraph (1) using its existing enforcement
procedures. Notwithstanding any other law, moneys collected
pursuant to this authorization shall be subject to appropriation by
the Legislature, and the failure to comply with paragraph (1) is
not a crime.

(b) (1) (A)  Subject to paragraph (9) of subdivision (b) of
Section 56.10 of the Civil Code, all uses and disclosures of data
made pursuant to this section shall comply with all applicable state
and federal laws for the protection of the privacy and security of
data, including, but not limited to, the Confidentiality of Medical
Information Act (Part 2.6 (commencing with Section 56) of
Division 1 of the Civil Code), the Information Practices Act of
1977 (Chapter 1 (commencing with Section 1798) of Title 1.8 of
Part 4 of Division 3 of the Civil Code), Title 1.81 (commencing
with Section 1798.80) of Part 4 of Division 3 of the Civil Code,
and the federal Health Insurance Portability and Accountability
Act of 1996 (Public Law 104-191), and the federal Health
Information Technology for Economic and Clinical Health Act,
Title XIII of the federal American Recovery and Reinvestment
Act of 2009 (Public Law 111-5), and implementing regulations.

(B) Use and disclosure of data pursuant to this section shall be
consistent with privacy and security protections for individually
identifiable health information and medical information under state
and federal law, including any applicable exceptions to the
requirement to obtain patient authorization, including, but not
limited to, paragraph (9) of subdivision (b) of, and paragraph (7)
of subdivision (c) of, Section 56.10 of the Civil Code.

(2) (A) All policies and protocols developed pursuant to this
section shall ensure that the privacy, security, and confidentiality
of individually identifiable health information and medical
information is protected. The secretary shall not disclose any
unaggregated, individually identifiable health information or
medical information and shall develop a protocol for assessing the
risk of reidentification stemming from disclosure of any health
information and medical information that is aggregated,
individually identifiable health information, or medical information.
This paragraph does not preclude sharing individually identifiable
health information that is not aggregated with researchers for
research purposes, consistent with paragraph (7) of subdivision
(c) of Section 56.10 of the Civil Code.

(B) For the purposes of this paragraph, the following terms have
the following meanings:

(i) “Individually identifiable health information” has the same
meaning as in Section 160.103 of Title 45 of the Code of Federal
Regulations.

(ii) “Medical information” has the same meaning as in Section
56.05 of the Civil Code.

(3) Confidentially negotiated contract terms contained in a
contract between a health care service plan or insurer and a provider
or supplier shall be protected in any public disclosure of data made
pursuant to this section. Individually identifiable proprietary
contract information included in a contract between a health care
service plan or insurer and a provider or supplier shall not be
disclosed in an unaggregated format.

(c) The secretary may enter into contracts or agreements to share
the information collected under this section for the purposes of
this chapter, provided that any use of that information complies
with the requirements of this section.

(d) (1) The agency administering the California Health Care
Cost and Quality Database shall adopt rigorous standards of
security protection to ensure as nearly as possible that the
information contained in and collected for the purposes of the
California Health Care Cost and Quality Database is not
compromised. This shall include, but is not limited to, requiring
encryption.

(2) For the purposes of paragraph (1), the term “encryption”
means the protection of data in electronic form, in storage or in
transit, using an encryption technology that has been generally
accepted by experts in the field of information security that renders
data indecipherable in the absence of associated cryptographic
keys necessary to enable decryption of the data. “Encryption”
includes appropriate management and safeguards of cryptographic
keys to protect the integrity of the encryption.

(e) For purposes of this section, the California Health and
Human Services Agency is an agency subject to Chapter 1
(commencing with Section 1798) of Title 1.8 of Part 4 of Division
3 of the Civil Code.

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(3) An assessment of types of governance structures that
incorporate representatives of health care stakeholders and
experts, including, but not limited to, representatives of data
submitters and representatives of purchasers, such as businesses,
organized labor, and consumers.

end insert begin insert

(4) Recommendations on potential funding approaches to
support the activities of the cost, quality, and equity transparency
database that recognize federal and state confidentiality of medical
information laws.

end insert begin insert

(5) An assessment on the extent to which the cost, quality, and
equity transparency database could be developed in conjunction
with existing public or private activities, including an assessment
of the trade-offs associated with housing the database inside or
outside of state government.

end insert begin insert

(6) Consultation with a broad spectrum of health care
stakeholders and experts, including, but not limited to,
representatives of purchasers, such as organized labor, consumers,
and businesses.

end insert begin insert

(b) The agency may enter into contracts or agreements to
conduct the research described in subdivision (a).

end insert begin insert

(c) (1) The agency shall make the results of the research
described in subdivision (a) available to the public no later than
March 1, 2017, by submitting a report to the Assembly and Senate
Committees on Health.

end insert begin insert

(2) Pursuant to Section 10231.5 of the Government Code, this
subdivision shall become inoperative on January 1, 2021.

end insert begin insert

(d) The agency may use federal funds for the purpose of this
section.

end insert

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127672.  

(a) The secretary shall convene an advisory
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 subdivision (a) of Section 127670 and
representatives of purchasers, including, but not limited to,
businesses, organized labor, and consumers, to identify the type
of data, purpose of use, and entities and individuals that are
required to report to, or that may have access to, a health care cost
and quality database. The advisory committee shall hold public
meetings with stakeholders, solicit input, and set its own meeting
agendas. Meetings of the advisory committee are subject to the
Bagley-Keene Open Meeting Act (Article 9 (commencing with
Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of
the Government Code).

(b) The secretary shall arrange for the preparation of a report,
which shall be submitted to the Legislature and the Governor, on
or before January 1, 2019, based on the findings of the advisory
committee, including input from the public meetings, that shall,
at a minimum, examine and address the following issues:

(1) Assessing California health care needs and available
resources.

(2) Containing the cost of health care services and coverage.

(3) Improving the quality and medical appropriateness of health
care.

(4) Reducing health disparities and addressing the social
determinants of health.

(5) Increasing the transparency of health care costs and the
relative efficiency with which care is delivered.

(6) Use of disease management, wellness, prevention, and other
innovative programs to keep people healthy, reduce disparities
and costs, and improve health outcomes for all populations.

(7) Efficient utilization of prescription drugs and technology.

(8) Reducing unnecessary, inappropriate, and wasteful health
care.

(9) Educating consumers in the use of health care information.

(c) (1) A report submitted under subdivision (b) shall be
submitted in compliance with Section 9795 of the Government
Code.

(2) The requirement for submitting a report pursuant to
subdivision (b) is inoperative on July 1, 2022, pursuant to Section
10231.5 of the Government Code.

(d) Notwithstanding any other law, the members of the advisory
committee shall not receive per diem or travel expense
reimbursement, or any other expense reimbursement.

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SEC. 4.  

The Legislature finds and declares that Section 3 of
this act, which adds Section 127670 to the Health and Safety Code,
imposes a limitation on the public’s right of access to the meetings
of public bodies or the writings of public officials and agencies
within the meaning of Section 3 of Article I of the California
Constitution. Pursuant to that constitutional provision, the
Legislature makes the following findings to demonstrate the interest
protected by this limitation and the need for protecting that interest:

In order to protect confidential and proprietary information
submitted to the secretary, it is necessary for that information to
remain confidential.

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