BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1296
Patricia Wiggins, Chair Hearing date: June 25, 2007
AB 1296 (Torrico) as amended 5/31/07 FISCAL: YES
PEMHCA: REQUIRE PARTICIPATING HEALTH PLANS TO PROVIDE
SPECIFIED DATA
HISTORY :
Sponsor: California Public Employees Retirement System
(PERS)
Prior legislation: none
ASSEMBLY VOTES :
PER & SS 5-0 4/18/07
Judiciary 10-0 4/24/07
Appropriations 16-0 5/09/07
Assembly Floor 70-1 6/04/07
SUMMARY :
Would require health benefit plans providing services under
the Public Employees' Medical and Hospital Care Act (PEMHCA)
to provide PERS with claims payment data for each member, and
contract payment amounts for services rendered by hospitals.
BACKGROUND :
1) The committee is advised by PERS, the sponsor, that:
"Current law does not allow CalPERS to obtain claims
payment information between health plans and the hospitals
and physicians that provide care to CalPERS members. As
the nation's third largest purchaser of employee health
benefits, CalPERS will spend approximately $4.9 billion in
2007 to purchase health benefits to cover 1.2 million
active and retired state and local government public
employees and their families. Over the last 5 years,
premiums for the Basic HMO plans have increased by 101
David Felderstein
Date: 6/18/07 Page 1
percent and Basic PPO plans have increased by 78 percent.
As such, the CalPERS Board has a responsibility to its
members and the California taxpayers to make fully informed
decisions during rate negotiations.
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Date: 6/18/07 Page 2
"The ability to obtain actual provider claims payment
information will place CalPERS in a better position to
negotiate the best rates with contracting health plans.
The Bureau of State Audits (BSA) further validated this
point in an audit conducted in 2004, which concluded that,
'the Legislature should consider enacting legislation that
would allow PERS, during its contract negotiation process,
to obtain relevant documentation supporting any analyses it
will use to make decisions that materially affect the
members of the health benefits program.' (emphasis added)
"Consistent with the BSA's recommendation, AB 1296 would
allow CalPERS to obtain the necessary information to enable
staff to more effectively analyze benefit plan designs,
validate the true cost of health care, and reliably
determine health program effectiveness during the health
plan annual rate negotiation process."
ANALYSIS :
1) This bill :
a) requires a health benefit plan or contract, or an
entity offering health benefit plan administration services
under PEMHCA, to disclose to CalPERS the cost, utilization,
and actual claim payments at an individual level for health
care services rendered by hospitals, including the provider
contract allowance amounts,
b) specifies that the information provided will be deemed
confidential and protected in accordance with the federal
Health Insurance Portability and Accountability Act (HIPAA)
of 1996, and requires the information to be provided in a
manner that does not include individual member or annuitant
identifying information, and
c) specifies the information provided will be deemed
confidential trade secret information, will not be made
available to the public, and is exempt from disclosure
under the California Public Records Act.
David Felderstein
Date: 6/18/07 Page 3
FISCAL EFFECT :
According to the Assembly Appropriations Committee, no added
administrative costs to PERS and potential savings, to the
extent that additional claims information enables PERS to
negotiate lower health insurance rates.
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Date: 6/18/07 Page 4
COMMENTS :
1) Arguments in support
Supporters state:
"The skyrocketing cost of health care has become a growing
problem for employees, employers and retirees. One way to
control costs is to improve data collection and evaluate
data to insure that charges are appropriate and fair.
CalPERS is the second largest purchaser of health care in
the United States, yet still is hindered in the collection
of data. Health care providers claim confidentiality or
otherwise refuse to provide the data needed to adequately
evaluate health care costs and insure cost containment. AB
1296 would protect the confidentiality of date, but still
allow CalPERS access to data in order to properly represent
employers and employees and provide quality care at a fair
rate."
2) Arguments in opposition
The California Hospital Association has taken an "Oppose
Unless Amended" position on this bill . Their letter to the
committee states, in part:
"AB 1296 attempts to protect proprietary contract
information from disclosure under the California Public
Records Act request. These protections, however, should be
enhanced by stating clearly and directly that proprietary
information can only be used to achieve CalPERS' stated
goal of internal review. For example, the bill should
specifically state that the information obtained by CalPERS
will only be used to internally analyze benefit plan
designs, validate health insurance costs and determine
health program effectiveness. The bill should also
specifically prohibit CalPERS, either directly or
indirectly, from using this proprietary information to
leverage negotiations with other participants in the health
care marketplace. While the bill states that the
information CalPERS obtains about contracts and prices
between certain health plans and hospitals is not available
to the public, the language should be strengthened to
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Date: 6/18/07 Page 5
ensure that any summaries, compilations or rankings derived
from the data are also not publicly available or
inappropriately shared with competing health plans."
3) This bill is double-referred to the Senate Judiciary
Committee
The committee is advised by the sponsor (PERS) that they are
working with the California Hospital Association (CHA) to
address the CHA's concerns described above.
This bill is double-referred to the Senate Judiciary
Committee, and there will be an opportunity in a policy
committee to take any amendments that are requested by the
author and sponsor to address CHA's concerns.
David Felderstein
Date: 6/18/07 Page 6
4) SUPPORT :
California Public Employees' Retirement System (Sponsor)
Bill Lockyer, California State Treasurer
American Federation of State, County and Municipal
Employees (AFCSME)
Blue Shield of California
California Labor Federation
California Professional Firefighters (CPF)
California School Employees Association
California State Employees Association (CSEA)
Independent Employees of Merced County
Organization of SMUD Employees
Professional Engineers in California Government (PECG)
Riverside Sheriff's Association
San Bernardino Public Employees Association
San Diego County Court Employees Association
San Luis Obispo County Employees Association
Santa Rosa City Employees Association
Service Employees International Union
Service Employees International Union, Local 1000
5) OPPOSITION :
California Hospital Association (CHA) Oppose, unless
amended
David Felderstein
Date: 6/18/07 Page 7
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Date: 6/18/07 Page 8