BILL ANALYSIS Ó SB 1159 Page 1 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 SB 1159 Page 2 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. SB 1159 Page 3 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 SB 1159 Page 4 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. SB 1159 Page 5 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 SB 1159 Page 6 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 SB 1159 Page 7 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. SB 1159 Page 8 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 SB 1159 Page 9 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 SB 1159 Page 10 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 SB 1159 Page 11 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 SB 1159 Page 12 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 SB 1159 Page 13 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 SB 1159 Page 14 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 SB 1159 Page 15 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 SB 1159 Page 16 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 SB 1159 Page 17