BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  August 3, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 1159  
          (Hernandez) - As Amended June 30, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill requires data reporting by health care entities to the  
          California Health and Human Services Agency (CHSSA), for  
          purposes of developing a California Health Care Cost and Quality  








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          Database.  Specifically, this bill:


          1)Requires reporting by the following entities:


             a)   Health plans and health insurers (self-insured employers  
               and multiemployer self-insured plans are authorized, but  
               not required, to report data). 


             b)   Providers, defined as hospitals, skilled nursing  
               facilities, comprehensive outpatient rehabilitation  
               facilities, home health agencies, hospices, clinics, and  
               rehabilitation agencies.


             c)   Suppliers defined a physicians or other health care  
               practitioners, or entities that furnish health care  
               services other than a provider. 


          1)Specified reports must include utilization data, pricing data,  
            and information related to the social determinants of health.


          2)Establishes an advisory committee to identify the type of  
            data, purpose of use, and entities and individuals that are  
            required to report to, or that may have access to, a health  
            care cost and quality database.


          3)Requires the advisory committee to issue a report addressing  
            specified issues related to health care cost, quality,  
            efficiency, and transparency, as well as health disparities  
            and wellness.


          4)Includes a number or privacy provisions that intend to protect  








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            consumers from unauthorized information disclosure, as well as  
            provisions that protect confidentiality of negotiated  
            contracts between health plans and providers or suppliers. 


          FISCAL EFFECT:


          1)One-time GF costs of $40,000 to CHHSA to provide staff support  
            to the required advisory committee and to develop the report  
            on health care utilization and financing issues.  Ongoing  
            costs are expected to be minor.



          2)A number of state health care regulators are likely to incur  
            costs to enforce data reporting requirements.  Enforcement  
            costs are inherently difficult to project; in this case costs  
            would depend on the ultimate scope of data collection  
            requirements, which is to be decided by the advisory  
            committee, and the level of compliance. Enforcement costs are  
            estimated as follows:

             a)   Potential ongoing costs of about $100,000 per year for  
               Department of Insurance enforcement of the requirement to  
               report data by insurers (Insurance Fund) and indeterminate  
               costs for Department of Managed Health Care enforcement of  
               the requirement to report data by health plans (Managed  
               Care Fund.)



             b)   Potential, likely minor and absorbable, enforcement  
               costs to other regulatory entities including the California  
               Department of Public Health, which oversees health  
               facilities, and regulatory boards within the Department of  
               Consumer Affairs, such as the Medical Board of California.   










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          3)GF cost pressure to develop and maintain a database, estimated  
            in the low millions one-time for start-up costs and low  
            millions ongoing, based on an analysis by Manatt Health  
            Solutions of a California-specific database.  Actual costs  
            would be subject to numerous decisions about the business  
            requirements of such a system, and could vary significantly  
            depending upon existing capabilities of bidders, assuming the  
            database implemented through a contract.  It should be noted  
            this bill does not explicitly require the database to be  
            constructed, but it authorizes related activities.           



          COMMENTS:


          1)Purpose. 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.  This bill is supported by consumer and health care  
            advocates, and has no opposition. 

          2)Background.  Given the high and growing cost of health care  
            services, there is considerable interest in transparency and  
            containment of health care costs among policymakers, payers,  
            purchasers, and the public.  Indeed, there has been a  
            significant amount of discussion in California about the  
            creation of a cost and quality database.  A failed federal  
            grant application for a project entitled California State  
            Innovation Model (CalSIM), submitted by the CHHSA in 2014,  
            included the creation of such a database.   The CalSIM effort  
            identified a price and quality transparency system as a  
            critical building block in the effort to transform and improve  
            the health care system. 









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            Other projects are underway as well.  The California  
            Healthcare Performance Initiative is a private non-profit  
            initiative currently collecting Medicare fee-for-service  
            claims data, as well as private health plan claims data, and  
            is in the process of integrating these data sources.  In  
            addition, a recent federal grant received by CDI supported a  
            consumer-facing website called California Healthcare Compare,  
            which launched last year to provide consumer-friendly  
            information on health care costs and quality for various  
            common procedures.  Finally, the Regional Cost and Quality  
            Atlas is an interactive Website to be released this summer  
            that will compare aggregated cost and quality data, by payer  
            and product type, for each of 19 California regions.

          3)All-Payer Claims Databases, or APCDs, are large-scale  
            databases that systematically collect health care claims  
            (itemized statements of health care services and costs and/or  
            payments) as well as eligibility and provider files from  
            private and public payers.  APCDs can be used to fill in  
            critical information gaps for state agencies, support health  
            care and payment reform initiatives, and create transparency  
            for consumers, purchasers, and state agencies.  According to  
            the National Conference of State Legislatures, by January 2016  
            at least 18 states had enacted APCDs while more than a dozen  
            others considered such a law or program.  Though the data  
            envisioned to be collected by this bill is slightly broader  
            than simply claims, the concept is very similar to an APCD.
          
          4)Financing. The Robert Wood Johnson Foundation indicates states  
            have a variety of strategies for funding APCDs and financially  
            sustaining the databases over the long term. Public APCDs are  
            typically funded, at least in part, through general  
            appropriations or industry fee assessments. States have also  
            identified private grant funding to support the initial phases  
            of APCD development. Federal grant funding and Medicaid  
            funding is another potential funding source. Many states also  
            expect a portion of ongoing funding will come from data  
            product sales.   









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          5)Prior Legislation. 

               a)     SB 26 (Hernandez) of 2015 and SB 1322 (Hernandez) of  
                 2014 were similar to this bill.  SB 26 was held on the  
                 Senate Appropriations Committee suspense file, and SB  
                 1322 was held on the suspense file of this committee.

               b)     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.

          6)Staff Comments. This bill does not identify a funding source.  
            Staff suggests costs to support a database should accrue to  
            beneficiaries of database activities.  If the state, as a  
            payer, purchaser, and regulator of health care, is the prime  
            beneficiary, the state has the responsibility to be the  
            primary funder of database operations, whether through the GF,  
            federal funds, existing special funds whose purposes are  
            sufficiently aligned with the bill's intent, or, as other  
            states have established, a special assessment to support the  
            Database.  Other states have demonstrated such data has  
            significant potential to pay dividends for the state, in terms  
            of health care cost savings and quality improvement, fraud  
            prevention, monitoring and oversight, and identification of  
            trends, among other things.   If the intent is also to serve  
            other interests, these other beneficiaries should also pay to  
            support the Database, through data product sales, for example.
          


          Analysis Prepared by:Lisa Murawski / APPR. / (916)  
          319-2081











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