BILL ANALYSIS Ó SB 1159 Page 1 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, SB 1159 Page 2 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. SB 1159 Page 3 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. SB 1159 Page 4 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; SB 1159 Page 5 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. SB 1159 Page 6 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 SB 1159 Page 7 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 SB 1159 Page 8 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 SB 1159 Page 9 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 SB 1159 Page 10 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 SB 1159 Page 11 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 SB 1159 Page 12 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" SB 1159 Page 13 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: SB 1159 Page 14 "(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." SB 1159 Page 15 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 SB 1159 Page 16 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. SB 1159 Page 17 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) SB 1159 Page 18 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 SB 1159 Page 19 Western Center on Law and Poverty Opposition None on file. Analysis Prepared by:Jennie Bretschneider / P. & C.P. / (916) 319-2200