BILL ANALYSIS �
SB 751
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SENATE THIRD READING
SB 751 (Gaines and Hernandez)
As Amended June 20, 2011
Majority vote
SENATE VOTE :39-0
HEALTH 19-0
-----------------------------------
|Ayes:|Monning, Logue, Ammiano, |
| |Atkins, Bonilla, Eng, |
| |Garrick, Gordon, Hayashi, |
| |Roger Hern�ndez, Bonnie |
| |Lowenthal, Mansoor, |
| |Mitchell, Nestande, Pan, |
| |V. Manuel P�rez, Silva, |
| |Smyth, Williams |
| | |
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SUMMARY : Prohibits contracts between health care service plans
and health insurers (carriers) and a licensed hospital or health
care facility owned by a licensed hospital from containing any
provision that restricts the ability of the carrier from
furnishing information to subscribers, enrollees, policyholders,
or insureds (members) concerning cost range of procedures or the
quality of services. Provides hospitals at least 20 days in
advance to review the methodology and data, requires risk
adjustment factors for quality data, requires a disclosure on
the carrier's Web site about the data and an opportunity for a
hospital to provide a link where the hospital's response to the
data can be accessed. Specifically, this bill :
1) Prohibits a contract issued, amended, renewed, or delivered
on or after January 1, 2012, by or on behalf of a carrier and
a licensed hospital or any other licensed health care
facility owned by a licensed hospital to provide inpatient
hospital or ambulatory care services to members from
containing any provision that restricts the ability of the
carrier to furnish information to members concerning the cost
range of procedures at the hospital or facility or the
quality of services performed by the hospital or facility.
2) Requires the carrier to provide the hospital or facility an
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advance opportunity of at least 20 days to review the
methodology and data used before cost or quality information
is provided, including material revisions or the addition of
new information.
3) Requires data developed and compiled by the carrier on the
quality of services performed by a hospital or facility to
utilize appropriate risk adjustment factors to account for
different characteristics of the population, such as case
mix, severity of patient's condition, comorbidities, outlier
episodes, and other factors to account for differences in the
use of health care resources among hospitals and facilities.
4) Requires a carrier's Web site to include a disclosure that
individual hospitals may disagree with the methodology, and
that many factors may influence cost or quality, as
specified.
5) Requires the carrier to notify the hospital or facility in
writing of their opportunity to provide a Web site link where
a response to the carrier's posting may be found.
FISCAL EFFECT : None
COMMENTS : The authors have introduced this bill to prohibit a
carrier contract with a provider for hospital services from
containing a provision that would block the dissemination and
disclosure of cost and quality data to members of the health
plan or insurer, but not to the general public. The authors
state that contractual agreements between carriers and providers
can prevent this information from being released, particularly
when a large provider has market power. The authors believe
this bill is needed to ensure that carriers are not restricted
in their ability to provide cost and quality information to
their members because some hospitals are turning to "gag
clauses" in contracts with carriers that preclude carriers from
sharing cost and quality information about hospitals with
members of the plan. The authors state that a majority of
hospitals in this state already allow this information to be
shared.
With increasing emphasis on controlling the growth of health
care costs, health plans and purchasers are shifting more of the
cost of health care to patients. Many health plans are turning
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to quality, and in particular price, transparency efforts to
inform individual decisionmaking and rein in spending. A 2011
article published in the New England Journal of Medicine (NEJM)
on price transparency refers to the wide variation in medical
prices within the United States. According to the NEJM article,
publishing price information could narrow the range and lower
the level of prices, by permitting consumers to engage
cost-conscience shopping and stimulate price competition on the
supply side, forcing high-priced providers to lower their prices
to remain competitive. The NEJM article authors add that
patients are also concerned about quality, but that comparative
quality information is not always available, so price is used as
a proxy. According to this NEJM article, successful
price-transparency initiatives should provide episode level
costs (including all related doctor's visits, tests, facility
charges, etc.), meaningful information about quality must also
be provided, and most fundamentally, consumers must be engaged
in considering price information in their decisions to use
medical care.
Proponents argue that this bill is needed to prevent contractual
agreements between health carriers and providers, in particular
hospitals with dominate market power that interferes with the
dissemination and disclosure of cost and quality data to health
insurance members. Many proponents suggest that transparency of
price and quality information about health care providers will
allow health insurance members to make informed decisions about
their health care. Proponents point out that the data will not
be made public.
The University of California (UC) does not have contracts that
contain confidentiality provisions that bar member access to
pricing data, but is concerned that information regarding
relative value of services is accurate and meaningful in order
to enable consumers to make informed choices. UC requests an
amendment that would apply risk adjustment to cost information.
Amendments were adopted in the Assembly Health Committee to
address concerns of the California Hospital Association and
Aetna.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
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FN: 0001318