BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 2533
A
AUTHOR: Fuentes
B
AMENDED: June 23, 2010
HEARING DATE: June 30, 2010
2
CONSULTANT:
5
Chan-Sawin/cjt
3
3
SUBJECT
Health care coverage: quality rating
SUMMARY
Expands the reporting requirements required of health care
service plans (health plans) and health insurers, as
specified, related to economic profiling of physicians,
providers, medical groups, or individual practice
associations (IPAs) to also apply to quality rating, as
defined. Requires health plans and insurers to make such
filings with their respective departments immediately upon
adoption, or within 30 days of making any changes.
Modifies the required content of such filings, as
specified. Requires a health plan or insurer that
submitted a filing prior to January 1, 2011, to update the
filing by March 31, 2011, to comply with the bill's
requirements, and to reflect the health plan or insurer's
current policies and procedures.
CHANGES TO EXISTING LAW
Existing law:
Provides for the regulation of health plans and insurers by
the Department of Managed Health Care (DMHC) and the
California Department of Insurance (CDI), respectively.
Continued---
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
2
Requires every plan and insurer, on or before July 1, 1999,
to file with their respective departments, a description of
the policies and procedures related to economic profiling
used by the plan or insurer and its medical groups and
IPAs. Also requires changes to these policies and
procedures to be filed with DMHC and CDI.
Defines "economic profiling" as any evaluation of a
particular physician, provider, medical group, or IPA,
based in whole or in part on the economic costs or
utilization of services associated with medical care
provided or authorized by the physician, provider, medical
group, or IPA.
Defines "provider" to mean any professional person,
organization, health facility, or other person or
institution licensed by the state to deliver or furnish
health care services.
Requires the Director of DMHC and the Insurance
Commissioner to make these filings available to the public
upon request, with certain exceptions.
Requires health plans and insurers, or its contracting
medical group or IPA (as a condition of contract), to
provide, upon request, a copy of economic profiling
information to the profiled individual provider, group, or
association.
Requires the filing with DMHC and CDI, respectively, to
describe how these policies and procedures are used for
utilization review, peer review, incentive and penalty
programs, and in provider retention and termination
decisions.
Requires the filing to indicate in what manner, if any, the
economic profiling system being used takes into
consideration risk adjustments that reflect case mix, type
and severity of patient illness, age of patients, and other
enrollee characteristics that may account for higher- or
lower-than-expected costs or utilization of services.
This bill:
Expands the reporting requirements required of health care
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
3
service plans (health plans) and health insurers, as
specified, related to economic profiling of physicians,
providers, medical groups, or IPAs to also apply to quality
rating, as defined.
Defines "quality rating" as any effort by a health plan or
insurer, or by an entity contracted by a health plan or
insurer, to develop, evaluate, rate, or designate a
particular physician, provider, medical group, or IPA
based, in whole or in part, on quality measurements and
claims data.
Requires filings of the policies and procedures related to
economic profiling or quality rating to be made to the
respective department immediately upon adoption of the
policies and procedures, and within 30 days of adopting any
changes.
Requires a plan or insurer that has made such a filing
prior to January 1, 2011 to update their filing by March
31, 2011, in order to meet requirements of this section and
to reflect its current policies and procedures.
Specifies that such filings should include a description of
how the policies and procedures are used to: 1) designate
or rate a particular physician, provider, medical group, or
IPAs within the plan or insurer's existing network, and 2)
to encourage patients to see only designated or rated
physician, provider, medical group, or IPA within the
existing network.
Requires such filings to include a description of the
manner and methodology used to share results from economic
profiling and quality rating with patients.
Requires such filings to indicate in what manner, if any,
the economic profiling or quality rating system being used
takes into consideration risk adjustments to also reflect
the accuracy and reliability of data relied upon, and
patient compliance that may account for higher- or
lower-than-expected cost, utilization, and quality of
services.
Makes other technical and clarifying changes.
FISCAL IMPACT
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
4
According to the Assembly Appropriations Committee analysis
of a prior version of this bill, minor and absorbable
workload to state regulators to continue oversight of
health plan and health insurer reporting.
BACKGROUND AND DISCUSSION
According to the author, AB 2533 is necessary to extend
requirements relating to health plan and insurer disclosure
requirements regarding economic profiling to physician
quality rating in order to improve transparency on how
quality rating of providers is performed. The author
asserts that many health plans and insurers are attempting
to rate physicians based on quality or cost measures
without the consent of physicians. In addition, although
health plans and insurers are required to file the policies
and procedures regarding economic profiling with their
state regulatory agencies, it is unclear if changes to such
policies and procedures after the initial filing are also
provided to the respective state agency. This bill would
not only require health plans and insurers to file policies
and procedures related to economic profiling and quality
rating of providers and provider groups, it would also
require health plans and insurers to maintain and update
such filings.
The author states that quality rating programs, such as the
California Physician Performance Initiative (CPPI), are
fraught with multiple problems, including incompleteness of
claims data, and statistically invalid patient sample size,
and can be misleading to patients due to inaccurate
information. Given that there are many concerns about the
accuracy of the claims data used by health plans and
insurers, and the irreparable harm such ratings may bring
to a physician's personal and professional reputation, the
author contends that health plans, insurers, or any
third-party entity contracted to conduct a quality rating
program should be required to disclose, to patients and
providers, a description of the policies and procedures
related to the rating.
Physician rating programs
Programs to rate, grade, rank or tier physicians based on
cost, quality or other measures are becoming more prevalent
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
5
as the demand for greater transparency and accountability
in the nation's health care system intensifies. Physicians
may be rated in a variety of ways by health plans, payers,
hospitals or other entities that have some control over
their practices or payments. Rating may be used to reward
high-quality or low-cost care, or to discourage patients
from seeing poor performers. According to a March 2010 New
England Journal of Medicine article on the related topic of
physician cost profiling, health plans have limited the
number of physicians who receive in-network contracts,
offered patients differential copayments to encourage them
to visit "high-performance physicians" (i.e., those
providing higher-quality, lower-cost services), paid
bonuses to physicians whose patterns of resource use are
lower than average, and publicly reported the relative
costs of physicians' services. In more and more
communities and settings, mechanisms to evaluate and
differentiate physicians are under development as a way to
promote clinical and economic value in health care
expenditures.
As health plans and other entities have begun to publicly
report information about physician quality and cost
efficiency, physicians are expressing greater concern about
the accuracy of the public information and the methods that
are used to create and disseminate this information. In
order to safeguard the interests of both patients and
physicians, policymakers have begun to regulate how
physicians are rated and how that information is presented
to consumers. Advocates of consumer-driven health care
hope that when consumers have solid data comparing
providers' quality of care and cost effectiveness, they
will make sound choices that will bring U.S. health care
costs down. On the other hand, physician ranking systems
built on inaccurate and incomplete data offer no benefit to
consumers, and unfairly penalize physicians who are
inappropriately placed in a lower tier.
The California Physician Performance Initiative (CPPI)
Established in 2006, the California Physician Performance
Initiative (CPPI) is a physician rating project aimed at
measuring and reporting the quality of patient care
provided by individual Californian physicians. The project
is administered by the California Cooperative Health Care
Reporting Initiative (CCHRI), a group that collaborates on
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
6
quality issues, and whose members include employer,
consumer, health plan, and physician groups. Start-up
funding for CPPI was provided by the federal Centers for
Medicare and Medicaid Services, the California HealthCare
Foundation, the Pacific Business Group on Health, and the
pharmaceutical company, Merck.
The CPPI has mainly focused on measuring primary care
physicians and internists, but continues to expand to other
specialties, such as cardiologists, endocrinologists,
pulmonologists, gastroenterologists, and rheumatologists.
Its goal is to improve patient care and affordability by:
1. Reporting results to physicians to help them gauge
how well the care their patients receive meet national
standards of care;
2. Applying the performance results in ways to help
consumers and purchasers get better value when they
choose providers and use health care services; and,
3. Adopting performance measures and reporting methods
using the best available science to set performance
standards.
The CPPI assesses physician performance using
evidence-based, clinical quality measures endorsed by
national standard-setting bodies, such as the National
Quality Forum (NQF) and the American Medical Association's
Physician Consortium on Performance Improvement. According
to CCHRI, the measures for 2008 and 2009 were related to
preventive care and chronic condition management, and were
based on medical claims data aggregated across California's
three largest commercial PPO health plans (Anthem Blue
Cross, Blue Shield of California, and United Healthcare)
and the Anthem Blue Cross and Blue Shield of California
commercial HMO health plans. Individual reports were sent
to over 13,000 physicians annually, and each physician was
asked to review and provide corrections to the data used in
their rating. In 2009, nearly 1,200 physicians submitted
corrections. CCHRI states that the initial data used to
produce the CPPI quality measures was found to be 93
percent complete and accurate, and physicians with
insufficient data for a particular performance measure were
not reported and scored for that measure.
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
7
According to the CCHRI website, Blue Shield of California
has notified its network physicians of the plan's intent to
use CPPI quality results to recognize top performing
physicians. This recognition is displayed in the plan
physician directory that is provided to health plan
members. Physicians are recognized for results that affirm
that a threshold number of patients have received the
designated service for a given quality measure. The
performance recognition is measure-specific - a physician
can merit recognition for any of the CPPI measures for
which they have reliable results. The other two CPPI
participating plans, Anthem Blue Cross and United
Healthcare, have not announced any plans to use CPPI
results at this time.
Physician profiling nationally and in other states
In 2006, a physician-rating initiative by a health plan in
Washington prompted the first lawsuit challenging insurance
companies' physician rating programs, alleging defamation
of physicians and violation of consumer-protection laws as
a result of the publication of inaccurate information.
Since then, similar lawsuits have been filed in
Connecticut, Massachusetts, and New York.
In 2007, the New York State Attorney General commenced an
industry-wide investigation into insurers' "doctor-ranking"
programs. As a result, settlement agreements were reached
with several health insurance companies, and out of those
agreements, the Patient Charter for Physician Performance
Measurement, Reporting and Tiering Programs (Patient
Charter) was created.
The Patient Charter, which is endorsed by the AARP, the
National Partnership for Women & Families, the AFL-CIO, the
Leapfrog Group, the Pacific Business Group on Health, the
National Business Coalition, and several physician groups
(including the American Medical Association) creates a
national set of principles to guide the measurement and
reporting of physician performance. The Patient Charter
calls for:
1. Reliance on National Quality Foundation measures as
a first choice, and then measures approved by national
accrediting bodies, such as the National Committee for
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
8
Quality Assurance (NCQA) and the Joint Commission on
Accreditation of Healthcare Organizations (JCAHO);
2. Provider and consumer input on supplemental
measures, if any are to be used;
3. A transparent provider rating method; and,
4. Coordinated data collection by independent third
parties.
According to the Consumer-Purchaser Disclosure Project, an
initiative funded by the Robert Woods Johnson Foundation,
health plans and insurers that adopt the Patient Charter
agree to retain, at their own expense, the services of a
nationally recognized, independent health care quality
standard-setting organization, such as NCQA, to review the
plan's programs for consumers that measure, report, and
tier physicians based on their performance. This review
should include a comparison to national standards and a
report detailing the measures and methodologies used by the
health plan. Health plans and insurers must also adhere to
the specified criteria for physician performance
measurement, reporting and tiering, and must make this
adherence known to their enrollees and the public.
As of March 10, 2010, six national health insurers have
committed to fulfilling the Patient Charter. Of these six,
only Cigna has received the NCQA certification for
physician quality rating for insurance products in
California. Aetna has received provisional certification
for products in the Los Angeles and San Diego areas. The
CPPI complies with the methodological requirements of the
Patient Charter model.
Citing the potential for unfair or inaccurate physician
profiling, as well as the need for greater transparency of
information about health care quality and costs, Colorado
enacted a law in 2008 requiring minimum standards and
specific procedures for health-plan physician-rating
systems. While the New York agreements and the Patient
Charter apply only to those health plans that agree to
abide by their terms, Colorado's law establishes procedures
that must be followed by every health plan in the state.
Similar legislation was introduced in the Oklahoma
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
9
legislature in 2008, and in the Maryland and Texas
Legislatures in February 2009.
Physician rating and federal health reform
The recently enacted federal health reform act, the Patient
Protection and Affordable Care Act (PPACA), contains
significant and sweeping changes to the health care and
health insurance industry in the United States. These
changes include a number of provisions relating to
performance measurement and quality improvement, including:
1. Identifying gaps in quality measurement and
developing missing quality measures;
2. Promoting standardization of quality measures,
including convening a multi-stakeholder process to
develop a list of quality measures for use in public
reporting or payment;
3. Providing grants for the collection and aggregation
of data on quality and resource use measures for
public reporting;
4. Developing of a core set of quality measures and
requiring the reporting of those requirements for
state Medicaid programs; and,
5. Requiring public reporting of physician performance
for physicians, including outcomes, patient experience
and other important indicators.
Arguments in support
The California Medical Association (CMA), the sponsor of
this bill, asserts that this bill will help patients from
being misled by health plans and insurers whose current
methods to rate physicians, with respect to quality, are
fraught with inaccuracy. CMA states that shortcomings of
such quality measurement programs, like the CPPI, include,
but are not limited to, incompleteness of claims data, and
statistically invalid patient sample size. CMA further
points out that many insurers and plans, and other
third-party entities, are conducting physician quality
ratings without the knowledge or consent of physicians, who
should be provided an opportunity to review the data and
methodology used to rate them.
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
10
The Network of Ethnic Physician Organizations (NEPO), a
collaborative of over 50 ethnic physician organizations in
California, and the Osteopathic Physicians & Surgeons of
California (OPSC) support this bill, stating that, although
well intended, the CPPI is misleading to the public. NEPO
and OPSC asserts that several researchers from across the
nation have found that the majority of physicians do not
have cost profiles that meet common thresholds of
reliability. By requiring measurement and reporting
information to undergo more scrutiny before becoming
available to the public, NEPO and OPSC believes this bill
will result in the availability of more accurate and useful
physician practice information.
The American Congress of Obstetricians and Gynecologists,
District IX (ACOG) states that, in the rush to make quality
and economic accountability decisions in a field where
there can be great differences in what each patient needs,
one size fits all is not an appropriate approach. ACOG
asserts that AB 2533 tempers and modulates the efforts by
plans and insurers to use strict economic credentialing
criteria and quality indicators to rate physicians, so as
to provide for an opportunity for regulatory input.
The California Chiropractic Association (CCA) also writes
in support, stating that CCA has received several
complaints from its members that claims information used to
develop quality ratings for providers is often incorrect or
misleading. Since a low-quality rating can have tremendous
impact on a doctor's ability to practice, and may cause
irreparable harm to a physician's personal and professional
reputation, any health plan that develops a quality rating
program should be required to disclose a description for
the policies and procedures related to that rating.
Related bills
SB 196 (Corbett) of 2009 as introduced, 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. Substantively changed to another subject
area before the first policy hearing.
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
11
AB 2389 (Gaines) of 2009 prohibits a contract by, or on
behalf of, a licensed hospital or health care facility and
a health plan or insurer from containing a provision that
restricts the ability of the plan or insurer to furnish
information to enrollees on the cost range of procedures or
quality of services performed by the hospital or facility,
as specified. Provides an appeals process for quality of
care data, as specified. Pending hearing in the Senate
Appropriations Committee.
Prior legislation
SB 1300 (Corbett) of 2007 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. Failed passage on the Senate Floor.
ABX1 1 (Nunez) of 2007 would have established a committee
to develop a plan to improve and expand public reporting of
health care safety, quality, and cost information, as
specified. Would additionally have required Office of
Statewide Health Planning & Development (OSHPD), beginning
January 1, 2010, to publish risk-adjusted outcome reports
for percutaneous coronary interventions (for example,
angioplasty and stents) conducted in hospitals, and to
compare risk-adjusted outcomes by hospital and physician.
Failed passage in the Senate Health Committee.
AB 8 (Nunez) of 2007 would have established a commission to
develop a plan to improve and expand public reporting of
health care safety, quality, and cost information, as
specified. Would also have required its commission to
publicly report certain patient safety and quality
indicators, and health care associated infection rates, for
each acute care hospital licensed in California. Vetoed by
the Governor.
AB 1296 (Torrico), Chapter 698, Statutes of 2007, requires
a health plan or contractor offering health benefits to
PERS members and annuitants to disclose to PERS the cost,
utilization, actual claim payments, and contract allowance
amounts for health care services rendered by participating
hospitals to each member and annuitant. Requires this
information to be deemed confidential information.
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
12
AB 2967 (Lieber) of 2007 would have established a Health
Care Cost and Quality Transparency Committee to develop and
recommend to the Secretary of the Health and Human Services
Agency a health care cost and quality transparency plan,
and makes the Secretary responsible for the timely
implementation of the transparency plan. Failed passage on
the Senate Floor.
AB 1045 (Frommer), Chapter 532, Statutes of 2005, requires
each hospital to submit to OSHPD its average charges for 25
common outpatient procedures and requires OSHPD to post the
information on its website, requires OSHPD to publish and
update on its website a list of the 25 most commonly
performed inpatient procedures in California hospitals
along with each hospital's average charges for those
procedures, and requires hospitals, upon request, to
provide a person without health coverage a written estimate
of the amount the hospital will charge for services,
procedures, and supplies that are expected to be provided
to the person by the hospital, as specified.
AB 1627 (Frommer), Chapter 582, Statutes of 2003, requires
hospitals to make available to the public their charge
description masters and to file them with OSHPD; requires
hospitals to compile and make available lists of charges
for commonly performed procedures and authorizes OSHPD to
compile a list of the 10 most common Medicare "diagnosis
related groups," a system to group similar hospital cases,
and the average charges.
AB 78 (Gallegos), Chapter 525, Statutes of 1999, among
other things, established filing requirements regarding
economic profiling policies and procedures used by health
plans and its medical groups and IPAs.
SB 984 (Rosenthal), Chapter 893, Statutes of 1998, requires
health plans and insurers to file with regulators a
description of any economic profiling and associated
policies and procedures employed by the health plan, its
medical groups, and IPAs.
PRIOR ACTIONS
Assembly Health Committee: 19-0
STAFF ANALYSIS OF ASSEMBLY BILL 2533 (Fuentes) Page
13
Assembly Appropriations Committee:17-0
Assembly Floor: 77-0
COMMENTS
1. Measuring physician performance is a relatively new,
complex, and rapidly evolving area. Currently, physician
performance and quality ratings are often based on analyses
of a single insurer's claims and enrollment data, which
have limitations in measurement reliability. Broader
implementation of electronic medical records that are
expressly designed to generate more robust performance
measures, and can capture a larger sample size that spans
across insurers, will help considerably with quality rating
accuracy.
POSITIONS
Support: California Medical Association (sponsor)
American Congress of Obstetricians and
Gynecologists, District IX
California Chiropractic Association
Network of Ethnic Physician Organizations (NEPO)
Osteopathic Physicians & Surgeons of California
Oppose: None received
-- END --