BILL ANALYSIS Ó
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Date of Hearing: June 21, 2016
ASSEMBLY COMMITTEE ON HEALTH
Jim Wood, Chair
SB
1159 (Hernandez) - As Amended May 31, 2016
SENATE VOTE: 25-12
SUBJECT: California Health Care Cost and Quality Database.
SUMMARY: Requires certain health care entities to provide
medical claims, cost, and quality information to the Secretary
of California Health and Human Services Agency (CHHSA Secretary)
for the purpose of developing information for inclusion in a
health care cost and quality database. Requires all data
disclosures to comply with applicable state and federal laws for
the protection of the privacy and security of data and prohibits
the public disclosure of any unaggregated, individually
identifiable health information. Specifically, this bill:
1)Requires health care service plans (health plans), health
insurers, suppliers, providers, and self-insured employers,
as defined, to provide all of the following to the CHHSA
Secretary for the sole purpose of developing information for
inclusion in a health care cost and quality database:
a) Utilization data from health plan and health insurers'
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
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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;
b) Pricing information for health care items, services, and
medical and surgical episode 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; and,
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 are peer-reviewed evidence.
2)Permits the CHHSA Secretary to report an entity's failure to
comply with 1) above to its regulating agency. Permits the
regulating agency to enforce 1) above using its existing
enforcement procedures. Requires moneys collected pursuant to
the enforcement authorization to be subject to appropriation
by the Legislature and provides that the failure to comply
with 1) above is not a crime.
3)Requires all uses and disclosures of data 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, the Confidentiality of Medical Information
Act (CMIA), the Information Practices Act, the federal Health
Insurance Portability and Accountability Act of 1996 (HIPAA),
the federal Health Information Technology for Economic and
Clinical Health Act, and implementing regulations.
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4)Requires all policies and protocols developed to ensure that
the privacy, security, and confidentiality of individually
identifiable health information are protected. Prohibits the
CHHSA Secretary from publicly disclosing any unaggregated,
individually identifiable health information. Requires the
CHHSA Secretary to develop a protocol for assessing the risk
of reidentification stemming from public disclosure of any
health information that is aggregate, individually
identifiable health information. Defines individually
identifiable health information consistent with federal law.
5)Protects from any public disclosure confidentially negotiated
contract terms contained in a contract between a health plan
or health insurer and a provider or supplier. Prohibits
disclosure in an unaggregated format of individually
identifiable proprietary contract information included in a
contract between a health plan or health insurer and a
provider or supplier.
6)Authorizes the CHHSA Secretary to enter into contracts or
agreements to share the information collected in this bill so
long as the use of that information complies with the
requirements of this bill.
7)Requires the CHHSA Secretary to convene an advisory committee,
composed of a broad spectrum of health care stakeholders and
experts, including, but not limited to, representatives that
are required to provide information pursuant to 1) above, 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 may have access to, a
health care cost and quality database. Requires the advisory
committee to hold public meetings with stakeholders, solicit
input, and set its own meeting agendas. Provides that the
advisory committee meetings are subject to the Bagley-Keene
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Open Meeting Act.
8)Requires the CHHSA Secretary to arrange for the preparation of
a report, to be submitted to the Legislature and the Governor
on or before January 1, 2019, based on the advisory committee
findings, including input from public meetings, to examine and
address, at a minimum, the following issues:
a) Assessing California's 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) Reducing health disparities and addressing the social
determinants of health;
e) Increasing the transparency of health care costs and the
relative efficiency with which care is delivered;
f) 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;
g) Efficient utilization of prescription drugs and
technology;
h) Reducing unnecessary, inappropriate, and wasteful health
care; and,
i) Educating consumers in the use of health care
information.
9)Repeals reporting requirement in 8) above on July 1, 2022.
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10)Prohibits advisory committee members from receiving per diem
or travel expense reimbursement, or any other expense
reimbursement.
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
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
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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 health insurers to submit reports
to state and federal regulators on medical loss ratios, rate
filings, enrollment data, as specified.
6)Prohibits contracts between health plans or health insurers
and a licensed hospital or health care facility owned by a
licensed hospital from containing any provision that restricts
the ability of the health plan or health insurer 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 health plan or insurer'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 U.S. Department of Health and Human Services
(HHS Secretary), 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
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 health
plan unless authorized to do so by the employee.
9)Establishes the federal Patient Protection and Affordable Care
Act (ACA), which includes comprehensive health care insurance
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reforms that aim to increase access to health care, improve
quality and lower health care costs, and provide new consumer
protections.
10)Establishes the Exchange (now referred to as Covered
California) within state government, as an independent public
entity not affiliated with an agency or department, and
requires the Exchange to compare and make available through
selective contracting health insurance for individual and
small business purchasers as authorized under the ACA.
Specifies the powers and duties of the board governing the
Exchange, and requires the board to facilitate the purchase of
qualified health plans (QHPs) though the Exchange by qualified
individuals and small employers. Requires QHPs to submit data
to Covered California.
11)Establishes 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.
12)Establishes the CMIA, 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.
13)Establishes the Health Information Technology for Economic
and Clinical Health Act which provides the federal HHS with
the authority to establish programs to improve health care
quality, safety, and efficiency through the promotion of
health information technology, including electronic health
records and private and secure electronic health information
exchange.
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FISCAL EFFECT: According to the Senate Appropriations
Committee:
1)Likely ongoing costs in the hundreds of thousands per year to
provide staff support to the required advisory committee and
to develop the report on health care utilization and financing
issues (General Fund).
2)Ongoing costs of about $100,000 per year for CDI enforcement
of the requirement to report data by insurers (Insurance
Fund).
3)Likely ongoing costs up $100,000 per year for DMHC enforcement
of the requirement to report data by health plans (Managed
Care Fund).
COMMENTS:
1)PURPOSE OF THIS BILL. 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 Senate Health 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
ACA. Testimony presented at the hearings illustrated the
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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 financial
liability and realize the best quality and value available to
them.
2)BACKGROUND.
a) All-Payer claims databases. In 2007, the Regional
All-Payer Healthcare Information Counsel (Counsel) began as
a convening organization to bring together several
Northeast states that had, or were developing, All-Payer
Claims Database (APCD) systems. The Counsel's vision was
to support cross-state data harmonization and analytic
activities. The Counsel quickly expanded to include
participation from states across the country to a broader
set of learning network activities. In 2010, the Counsel
changed its name to the APCD Council to reflect the
expanded reach. Since the 2007 initial meeting, the APCD
Council has helped states across the country with a variety
of activities related to APCD development, including:
stakeholder meetings; legislation review; rule development;
vendor selection; analytics support; linking states to one
another to find common solutions; and, leveraging state
resources to achieve common objectives. The APCD Council
is a learning collaborative with a multi-fold purpose of
serving in an information sharing capacity for those states
that have developed, or are developing APCD; providing
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technical assistance to states; and, catalyzing states to
achieve mutual goals. Some of APCD Council's current
activities include harmonizing the data collection and data
release rules across the multiple state databases;
developing a strategy for integrating Medicare data into
the all payer databases; sharing reporting applications
being developed by states; policy analysis; and, supporting
other states developing all-payer claims databases. The
APCD Council is convened by the University of New
Hampshire, and the National Association of Health Data
Organization.
According to the National Conference of State Legislatures,
in recent years, a growing number of states have
established databases that collect health insurance claims
information from all health care payers into a statewide
information repository. By January 2016, at least 18
states had enacted APCDs while more than a dozen others
considered such a law or program. They are 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 (where it is
available to a state). 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, Rhode Island, Utah, and
Vermont have had APCDs in operation since 2010. States
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that have been implementing APCDs more recently include
Connecticut, Nebraska, New York, Virginia, and West
Virginia. States that have had existing voluntary efforts
to maintain an APCD include Virginia, Washington and
Wisconsin.
b) 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 fee-for-service. CHPI was federally certified
to include data from Medicare's 5 million California
beneficiaries, and became the first qualified entity to
receive Medicare data.
In 2014, CDI announced an agreement with the University of
California, San Francisco (UCSF) to provide meaningful
information to consumers about healthcare prices and
quality. The health care pricing and quality transparency
project is funded by a federal Cycle III Rate Review Grant
from the HHS that was awarded to CDI as part of an
initiative under the ACA. Under the agreement with the
CDI, researchers at the Philip R. Lee Institute for Health
Policy Studies at UCSF will collect and analyze data to
develop price and quality information for a number of
common medical procedures and episodes of care. The
information will be made available online. 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
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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.
The Regional Cost and Quality Atlas is an interactive Website
to be released in Summer 2016 that will compare aggregated
cost and quality data, by payer/product type (not
individual payers), for each of 19 regions (the same
regions that had been defined for Covered California). The
project is a partnership between the Integrated Healthcare
Association (IHA), the California HealthCare Foundation,
and CHHSA. Working with large physician organizations and
health plans, IHA developed a methodology for calculating
risk-adjusted Total Cost of Care to be used as part of the
Pay for Performance program. Health plans submit detailed
data files including claims and enrollment data to Truven
Health Systems (Truven). Truven uses this detail to
calculate actual payments to physician organizations for a
set of enrollees divided by number of enrollees. Payments
include professional services, pharmacy, hospital care,
ancillary services, as well as payments made by consumers
to cover cost-sharing amounts.
3)SUPPORT. Health Access California states that a cost and
quality database, with the addition of data on the social
determinants of health, could improve transparency and allow
policymakers, purchasers, and others to pursue the quadruple
aim of lower health care costs, improved health outcomes,
improved health system, and improved health equity. The
Western Center on Law and Poverty requests that this bill
include cost information in negotiated contracts between
health plans and providers.
4)OPPOSE UNLESS AMENDED. The Consumer Federation of California
(CFC) states that this bill provides no privacy protections
for the medical data being analyzed because the CHHSA
Secretary and the database itself are not covered entities
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under these laws. Furthermore, while this bill defines
"individually identifiable health information" as it is
defined in HIPAA, it does not define it according to CMIA,
which uses a more protective and expansive definition.
Further, CFC contends that this bill prohibits publicly
disclosing individually identifiable health information,
however, this restriction, in the absence of any prohibition
against private disclosure of this information, implies no
limit to the private disclosure of unaggregated, individually
identifiable information. CFC suggests making existing breach
notification law explicitly applicable to the database.
5)DOUBLE-REFERRAL. This bill is double referred; upon passage
in this Committee, this bill will be referred to the Assembly
Privacy and Consumer Protection Committee.
6)PREVIOUS LEGISLATION.
a) SB 26 (Hernandez) of 2015 would have required the CHHSA
Secretary 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. Would have required the nonprofit organization,
no later than January 1, 2019, to make a publicly
available, Web-based, searchable database, as specified.
Would have required 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. SB 1322 was held on the Senate
Appropriations Committee suspense file.
b) SB 1322 (Hernandez) of 2014, was substantially similar
to SB 26. SB 1322 was held on the Assembly Appropriations
Committee suspense file.
c) SB 1182 (Leno), Chapter 577, Statutes of 2014, requires
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health plans and insurers to share specified data with
purchasers that have 1,000 or more enrollees or that are
multiemployer trusts.
d) SB 1340 (Hernandez), Chapter 83, Statutes of 2014,
expands provisions related to gag clauses in contracts
between health plans or insurers and providers.
e) 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.
f) 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.
g) 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.
h) SB 751 (Gaines and Hernandez), Chapter 244, Statutes of
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2011, prohibits contracts between health plans or insurers
and hospitals from containing any provision that restricts
the ability of the health plans or insurers from furnishing
information to enrollees or insureds concerning cost range
of procedures or the quality of services.
i) AB 2389 (Gaines) of 2009, would have prohibited a
contract between a health facility and a health plan or
insurer from containing a provision that restricts the
ability of the health plan or insurer to furnish
information on the cost of procedures or health care
quality information to enrollees or insureds. AB 2389 died
in the Assembly on Concurrence.
j) AB 2967 (Lieber) of 2008, would have established a
Health Care Cost and Quality Transparency Committee to
develop and recommend to the CHHSA Secretary a health care
cost and quality transparency plan, and would have made the
CHHSA Secretary responsible for the timely implementation
of the transparency plan. AB 2967 died on the Senate
Inactive File.
aa) 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.
bb) 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.
cc) ABX1 1 (Nuñez) of 2007, among many other provisions
relating to health care reform, contained nearly identical
language as that contained in AB 2967. ABX1 1 failed
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passage in the Senate Health Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
AARP
California State Council of the Service Employees International
Union
CAPG
Health Access California
Western Center on Law and Poverty
Opposition
American Civil Liberties Union of California
Consumer Federation of California
Analysis Prepared by:Kristene Mapile / HEALTH / (916)
319-2097
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