BILL ANALYSIS Ó SB 1159 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1159 (Hernandez) - As Amended June 30, 2016 ----------------------------------------------------------------- |Policy |Health |Vote:|14 - 3 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Privacy and Consumer | |11 - 0 | | |Protection | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 SB 1159 Page 2 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 SB 1159 Page 3 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. SB 1159 Page 4 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. SB 1159 Page 5 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. SB 1159 Page 6 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 SB 1159 Page 7