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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