BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 196|
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THIRD READING
Bill No: SB 196
Author: Corbett (D)
Amended: 4/14/09
Vote: 21
SENATE HEALTH COMMITTEE : 7-4, 4/1/09
AYES: Alquist, Cedillo, DeSaulnier, Leno, Negrete McLeod,
Pavley, Wolk
NOES: Strickland, Aanestad, Cox, Maldonado
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Health care coverage: provider contracts
SOURCE : Author
DIGEST : This bill prohibits a contract between a health
care provider and a health care service plan or health
insurer from containing a provision that restricts the
ability of the health plan or health insurer to furnish
information on the cost of procedures or health care
quality information to its enrollees or insureds, requires
health plans and health insurers to meet specified
requirements when providing health care quality information
it has compiled, and exempts dental plans contracts and
policies from these provisions.
ANALYSIS :
Existing law provides for the licensure and regulation of
CONTINUED
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health care facilities by the Department of Public Health
(DPH). Existing law also provides for the licensure of
health care professionals by various licensing boards.
Existing law provides for the licensure and regulation of
health care service plans (health plans) by the Department
of Managed Health Care (DMHC) and health insurers by the
California Department of Insurance (CDI).
Existing law establishes the Office of the Patient Advocate
(OPA) within DMHC, and requires the OPA to prepare and make
available a quality of care report card that includes a
rating of health care service plans.
Existing law requires each hospital to make a written or
electronic copy of its charge description master (CDM - a
list of prices for services) available, either by posting
an electronic copy on the hospital's web site, or by making
a written or electronic copy available at the hospital.
Existing law also requires hospitals to submit a copy of
their CDM to the Office of Statewide Health Planning and
Development (OSHPD) and allows OSHPD to post this
information on the agency's web site.
Existing law requires hospitals to submit their average
charges for 25 common outpatient procedures, as specified,
annually to OSHPD, which is required to publish this
information on its web site. Existing law also requires
OSHPD to publish and update on its web site, a list of the
25 inpatient procedures most commonly performed in
California hospitals, along with each hospital's average
charges for those procedures. Existing law further
requires OSHPD to publish risk-adjusted outcome reports for
medical, surgical, and obstetric conditions or procedures,
as specified.
Existing law requires hospitals to provide to a person who
has no health coverage, upon request, a written estimate of
the amount the hospital will charge for the health care
services, procedures, and supplies that are reasonably
expected to be provided to the person by the hospital, as
well as information about its financial assistance and
charity care policies, as specified.
This bill prohibits a contract between a health care
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provider and a health care service plan or health insurer
(collectively carriers) from containing a provision that
restricts the ability of the carrier to furnish information
on the cost of procedures or health care quality
information to health carrier enrollees or insureds.
If a carrier proposes to disclose health care quality
information that the carrier has compiled, the bill
requires the carrier to satisfy the following requirements:
The carrier must base the quality information on nationally
recognized evidence-based or consensus-based clinical
recommendations or guidelines, and, when available, use
measures endorsed by the National Quality Forum or other
entities whose work in the area of quality performance is
generally accepted in the health care industry.
The carrier must utilize risk adjustment factors, with
appropriate and transparent statistical techniques, to
account for differences in the use of health care resources
among individual health care providers.
The carrier must update the information at appropriate
intervals.
The carrier must, prior to furnishing the information to
its enrollees or insureds, involve health care providers in
the development of the information and provide to any
affected health care provider: (1) a minimum of 45 days
written notice to review the information, (2) the criteria
used in the development and evaluation of quality
measurements, and (3) an explanation to the provider that
he/she has the right to correct errors and seek review of
the data and that he/she may submit any additional
information for consideration.
The carrier must ensure that a criteria used in the
development of quality measurements is sufficiently
detailed and reasonably understandable to allow the
provider to verify the data against his or her records.
The carrier must provide a reasonable, prompt, and
transparent appeal process, and make no changes to its
current information about the provider until the appeal is
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completed, if a provider makes a timely appeal.
The bill prohibits a health care service plan or health
care provider from disclosing negotiated capitation rates
or other prepaid arrangements to subscribers or enrollees
of the plan.
The bill requires carriers, to the extent possible, to
display inpatient facility treatment costs that are
associated with a given episode of care, including, but not
limited to, diagnostic tests, prescription drugs, hospital
days, and physician fees.
The bill excludes specialized health care service plans
covering dental benefits and dental insurers from these
provisions. The bill provides that any contractual
provision inconsistent with these provisions is void and
unenforceable.
The bill defines, for the purposes of meeting these
provisions, "information on the cost of procedures" to mean
information that an enrollee or insured of a carrier may
use to make comparisons among individual health care
providers or health care facilities concerning the cost to
the enrollee or insured of health care treatment options.
The bill defines "health care provider" to mean any
professional person, medical group, independent practice
association, organization, health facility, other than a
long-term health care facility, as defined, or other person
or institution licensed or authorized by the state to
deliver or furnish health care services.
Background
Government, health carriers, and employers have increased
their interest in price transparency in an effort to slow
the growth rate of health care expenditures. The idea
behind price transparency is to make comparative
information on the prices charged by health care providers
for specific services available to consumers. One of the
goals of transparency is to encourage consumers and others
who make decisions on their behalf (employers, health
carriers, and referring practitioners) to consider price
and quality in deciding among providers and services.
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According to a February 2008 issue brief published by the
California HealthCare Foundation (CHCF), consumers are
paying more attention to the cost of their health care
because they have greater responsibility for paying for it.
Since 2000, California workers have experienced increases
in deductibles for Preferred Provider Organization (PPO)
coverage. The percentage of single workers with a PPO
deductible of $500-$999 increased from nine percent in 2000
to 21 percent in 2007. Overall, nine percent of
Californians with individual or employment-based coverage
from a state-licensed health plan or health insurer are in
high deductible products (carriers with a deductible in
excess of $1,050). In addition to higher deductibles, the
use of health savings accounts and increasing rates of
uninsured are also driving the need for greater price
transparency.
CHCF's 2008 issue brief indicates that price information
that is useful or actionable for consumers must enable
comparisons among different providers and different
treatment options; be clearly written and formatted and
customized for the user's language preference and
comprehension level; cover all the costs associated with a
given episode of care (such as treatment for a heart
condition), including diagnostic tests, prescription drugs,
hospital days, and physician fees before, during, and after
hospitalization; and be linked to quality information.
CHCF advises that information should also be tailored to
the financial liability that consumers bear for their
health care, whether it is information that focuses on
copays, deductibles, and exclusions for the insured, or how
to negotiate assistance for the uninsured. CHCF notes that
higher prices should not be mistaken for higher quality,
and a strategy for considering both quality and price
starts with information on quality.
Existing law does not prohibit or prevent health carriers
from furnishing information on the cost of procedures, and
at least one health plan provides its enrollees with
information so they can evaluate cost and quality.
However, contractual agreements between health carriers and
providers can prevent this information from being released,
particularly when a large provider has market power.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 4/27/09)
Aetna
American Federation of State, County and Municipal
Employees, AFL-CIO
Association of California Life and Health Insurance
Companies
California Association of Health Plans
California Association of Health Underwriters
California School Employees Association
California Teachers Association
Health Access California
National Federation of Independent Business
OPPOSITION : (Verified 4/27/09)
California Hospital Association
California Medical Association
ARGUMENTS IN SUPPORT : Supporters, such as the
Association of California Life and Health Insurance
Companies, California Association of Health Plans, and
California School Employees Association, believe that this
bill encourages consumers to be more involved in decisions
surrounding their health care, empowers them to make
well-informed choices, and ultimately keeps the cost of
health care down.
The National Federation of Independent Business (NFIB)
states that only about 40 percent of small businesses can
afford to provide health care coverage for their employees,
leaving almost two-thirds of small businesses at a
competitive disadvantage to large employers in attracting
qualified employees. NFIB writes that this bill will
potentially reduce rising premiums and provide more
affordable coverage options for many uninsured
Californians.
The California Association of Health Underwriters (CAHU)
writes that transparency is one of the critical elements of
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successful health care reform. CAHU states that the
information barriers removed by this bill will help
consumers find products that better fit their needs.
ARGUMENTS IN OPPOSITION : Taking an oppose unless amended
position, the California Medical Association (CMA) writes
that it supports the goal of providing information to
patients to assist in health care decisions, but believes
the process established by this bill is flawed. CMA
contends that this bill allows health maintenance
organizations (HMOs) and insurers to unilaterally decide
what constitutes quality healthcare information. CMA
highlights the experience of the California Cooperative
Healthcare Reporting Initiative (CCHRI), a project that CMA
is currently participating in, as evidence of the
challenges in providing fair and accurate information.
CMA states that, in the first attempts at quality reporting
by the CCHRI, physicians found that insurance claims data
is often inaccurate. CMA reports that physicians were
credited with treating patients they never saw and not
credited with patients they did see. CMA further reports
that physicians were criticized for not performing invasive
procedures that the insurers' data called for, when the
procedure actually was performed by other members of the
same physician group, and that physicians were downgraded
for not duplicating care that was performed by the another
physician. CMA states that inaccuracies in information
will disadvantage patients, such as when a patient may
think he/she is choosing to receive care from the
preeminent provider in the area, only to find that the
physician rarely performs the needed care, or when
inaccurate risk-adjustment causes patients to discount a
physician that takes the most complicated and difficult
cases because more adverse outcomes are reported.
CTW:do 4/27/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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