BILL ANALYSIS Ó
SB 1159
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Date of Hearing: June 28, 2016
ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION
Ed Chau, 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) for the
purpose of developing information for inclusion in a health care
cost and quality database, and further 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)Establishes the California Health Care Cost and Quality
Database.
2)Requires health care service plans, health insurers,
suppliers, providers, and self-insured employers and plans, as
defined, (health plans) to provide to CHHSA for the sole
purpose of creating a health care cost and quality database,
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all of the following:
a) Utilization data from health plan and health insurers'
medical, dental, and pharmacy claims, or (for entities that
do not use claims data) encounter data consistent with the
core set of data elements for data submission proposed by
the All-Payer Claims Database Council (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 episodes of care gathered from allowed
charges for covered health care items and services, or (for
entities that do not 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 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 is peer-reviewed evidence.
3)Permits CHHSA to report an entity's failure to comply with
these provisions to the entity's regulating agency, authorizes
the regulating agency to enforce these provisions using
existing enforcement procedures, requires moneys collected
from enforcement to be subject to appropriation by the
Legislature, and specifies that failure to comply with these
provisions is not a crime.
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4)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 of 1977 (IPA), the
federal Health Insurance Portability and Accountability Act of
1996 (HIPAA), the federal Health Information Technology for
Economic and Clinical Health Act, and all implementing
regulations.
5)Requires all policies and protocols developed for this bill to
ensure that the privacy, security, and confidentiality of
individually identifiable health information are protected.
6)Prohibits CHHSA from publicly disclosing any unaggregated,
individually identifiable health information, and requires
CHHSA to develop a protocol for assessing the risk of
reidentification stemming from public disclosure of any health
information that is aggregated.
7)Defines individually identifiable health information
consistent with federal law.
8)Protects from public disclosure any confidentially negotiated
contract terms contained in a contract between a health plan
or health insurer and a provider or supplier.
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9)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.
10)Authorizes CHHSA 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.
11)Requires CHHSA to convene an advisory committee, composed as
specified, 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.
12)Requires the advisory committee to hold public meetings,
subject to the Bagley-Keene Open Meeting Act, with
stakeholders, solicit input, and set its own meeting agendas.
.
13)Requires CHHSA to submit a report to the Legislature and the
Governor on or before January 1, 2019, based on the advisory
committee's findings, including input from public meetings,
and requires the report to address, at a minimum, the
following topics:
a) Assessing California health care needs and available
resources;
b) Containing the cost of health care services and
coverage;
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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.
14)Repeals the bill's reporting requirement on July 1, 2022.
15)Prohibits advisory committee members from receiving per diem
or travel expense reimbursement, or any other expense
reimbursement.
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16)Makes findings and declarations that the public's right of
access to meetings or writings of public bodies, officials,
or agencies must be limited because certain information must
remain confidential in order to protect confidential and
proprietary information submitted to CHHSA.
17)States that the intent of the bill is to make cost and
quality data available and encourage health care service
plans, health insurers, and providers to develop innovative
approaches, services, and programs that are cost effective and
responsive, recognizing the diversity of California and the
impact of social determinants of health.
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;
and 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. (Welfare and Institutions Code (WIC)
Section 16906 et seq.)
2)Establishes the Department of Managed Health Care (DMHC) to
regulate health plans and the California Department of
Insurance (CDI) to regulate health insurers. Requires
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specified health plans and health insurers to submit reports
to state and federal regulators on medical loss ratios, rate
filings, enrollment data, as specified. (Health and Safety
Code Section 1341 et seq. and Insurance Code Section 12900 et
seq.)
3)Establishes the federal Patient Protection and Affordable Care
Act (ACA), which includes comprehensive health care insurance
reforms that aim to increase access to health care, improve
quality and lower health care costs, and provide new consumer
protections. (42 U.S.C. Section 18001 et seq.)
4)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. (Public Law 104-191)
5)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.
(Civil Code 56 et seq.)
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
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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 . This bill seeks to put health care
provider cost and performance information into a statewide
database, so that it can be analyzed by the state and by
academic researchers for the purpose of determining areas
where health care costs and the quality of services can be
improved in California. This bill is author-sponsored.
2)Author's statement . According to the author, "In 2014 and
2015, 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 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 in the series 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 federal Patient Protection and Affordable Care Act
(ACA). Testimony presented at the hearings illustrated the
complexity of the health care market and the array of
approaches to containing costs. In addition to expanded
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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.
"[T]his 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. Additionally, 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."
3)Creating a new comprehensive statewide health care cost and
service database . The California Healthcare Performance
Information System (CHPI) is a voluntary physician performance
database with statistical analyses 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, and Medicare
fee-for-service. CHPI was federally certified to include data
from Medicare's five 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
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episodes of care. The information will be made available
online. According to CDI, it reports 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). CDI's website is 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.
The author contends that this bill is needed - despite these
existing projects on physician performance and health care
prices and quality - in order to comprehensively study health
care price and performance information and find ways to
promote care that is safe, medically effective,
patient-centered, timely, efficient, affordable, and
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equitable.
4)Privacy law and privacy concerns . California's
Confidentiality of Medical Information Act (CMIA) generally
restricts the sharing or disclosure of a person's medical
information without first obtaining their written consent.
The act states that "a provider of health care, health care
service plan, or contractor shall not disclose medical
information regarding a patient of the provider of health care
or an enrollee or subscriber of a health care service plan
without first obtaining an authorization," unless a particular
exception allows the disclosure. HIPAA contains similar
provisions requiring patient consent before patient
information is shared, with certain exceptions.
Included in the exceptions for which no prior authorization is
required are when disclosure is "otherwise specifically
required by law," and when information is disclosed "to public
agencies, clinical investigators, health care research
organizations, and accredited public or private nonprofit
educational or health care institutions for bona fide research
purposes" as long as the identity of a patient is not further
disclosed.
This bill states that all "applicable" privacy and data
security laws, including the IPA, CMIA and HIPAA, would govern
all uses and disclosures of data made under this bill. But as
currently drafted, CMIA and HIPAA would in fact not apply to
disclosures of data from the database to be created under this
bill, because state agencies are not "covered entities" under
the CMIA or HIPAA.
State agencies are, however, subject to the IPA, which places
some limits on the disclosure of personal information held by
governmental agencies in order to protect the privacy of
affected individuals. In general, the Information Practices
Act prohibits the disclosure of personal information to
another party without first obtaining the permission of the
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affected individual. While state agencies have a duty to
protect the confidentiality of that information, the
protections under IPA are not as strong as those under the
CMIA and HIPAA. For example, in certain circumstances,
disclosure may be authorized without permission from the
affected individual, when the information may be necessary for
an agency "to perform its constitutional or statutory duties."
(Civil Code Sec. 1798.24.)
For this reason, the ACLU and Consumer Federation have
proposed a number of amendments to ensure that the same
confidentiality rules in CMIA and HIPAA would apply to the
release of data from the health care cost and quality database
to be created under this bill and to ensure the data is
secure.
5)Author's amendments . The following are several amendments
negotiated and agreed to between the Committee, the author and
stakeholders involved in the bill. Given the approaching
legislative deadline, the author has agreed to accept these
amendments as author's amendments in Committee, and with these
amendments the organizations that had prior concerns with the
bill are now neutral on the bill. The amendments ensure that
CHHSA follows CMIA and HIPAA privacy requirements, in addition
to IPA privacy requirements, when releasing data from the
database and also ensure that the data in the database is
encrypted for security purposes:
On page 3, between lines 32 and 33 insert:
"consistent with Civil Code Section 56.10(b)(9)"
On page 4, between lines 7 and 8 insert:
"All-Payer Claims Database"
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On page 4, line 31, strike "All" and insert:
"(A) Subject to Civil Code Section 56.10(b)(9), all"
On page 5, strike lines 5 through 12, inclusive, and insert:
"(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, Civil Code
Section 56.10(b)(9) and 56.10(c)(7).
(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
unaggregated, individually identifiable health information
with researchers for research purposes, consistent with Civil
Code Section 56.10(c)(7).
On page 5, between lines 15 and 16 insert:
"Medical information" has the same meaning as in Section
56.05(j) of the Confidentiality of Medical Information Act
(Part 302.6, commencing with Section 56, of Division 1 of the
Civil Code).
On page 5, between lines 26 and 27 insert:
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"(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,
encryption.
(2) For purposes of this section, the term encryption (A)
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 such data indecipherable in the absence
of associated cryptographic keys necessary to enable
decryption of such data; and (B) includes appropriate
management and safeguards of such cryptographic keys so as to
protect the integrity of the encryption.
(e) For the purposes of this section, the California Health
and Human Services Agency shall be considered any agency
subject to the provisions of Chapter 1 (commencing with
Section 1798) of Title 1.8 of Part 4 of Division 3 of the
Civil Code."
6)Arguments in 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."
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7)Double referral . This bill passed the Assembly Health
Committee on a 14-3 vote on June 21, 2016.
8)Prior legislation . 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. It would have required the nonprofit organization,
no later than January 1, 2019, to make a publicly available,
Web-based, searchable database, as specified. The bill would
also 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.
SB 1182 (Leno), Chapter 577, Statutes of 2014, requires health
plans and insurers to share specified data with purchasers
that have 1,000 or more enrollees or that are multiemployer
trusts.
SB 1340 (Hernandez), Chapter 83, Statutes of 2014, expands
provisions related to gag clauses in contracts between health
plans or insurers and providers.
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
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paid for procedures, as specified. AB 1558 was held on the
Senate Appropriations Committee suspense file.
SB 1322 (Hernandez) of 2014, was substantially similar to SB
26. SB 1322 was held on the Assembly Appropriations Committee
suspense file.
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.
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.
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SB 751 (Gaines and Hernandez), Chapter 244, Statutes of 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.
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.
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.
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.
AB 1296 (Torrico), Chapter 698 Statutes of 2007, requires a
health plan or contractor offering health benefits to
California Public Employees' Retirement System (CalPERS)
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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.
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 passage in the
Senate Health Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
AARP
CAPG The Voice of Accountable Physician Groups
Consumers Union
California Pan Ethnic Health Network (CPEHN)
Health Access
SEIU
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Western Center on Law and Poverty
Opposition
None on file.
Analysis Prepared by:Jennie Bretschneider / P. & C.P. / (916)
319-2200