BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 751|
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UNFINISHED BUSINESS
Bill No: SB 751
Author: Gaines (R), et al
Amended: 7/7/11
Vote: 21
SENATE HEALTH COMMITTEE : 9-0, 5/4/11
AYES: Hernandez, Strickland, Alquist, Anderson, Blakeslee,
De Le�n, DeSaulnier, Rubio, Wolk
SENATE FLOOR : 39-0, 5/23/11
AYES: Alquist, Anderson, Berryhill, Blakeslee, Calderon,
Cannella, Corbett, Correa, De Le�n, DeSaulnier, Dutton,
Emmerson, Evans, Fuller, Gaines, Hancock, Hernandez,
Huff, Kehoe, La Malfa, Leno, Lieu, Liu, Lowenthal,
Negrete McLeod, Padilla, Pavley, Price, Rubio, Runner,
Simitian, Steinberg, Strickland, Vargas, Walters, Wolk,
Wright, Wyland, Yee
NO VOTE RECORDED: Harman
ASSEMBLY FLOOR : 77-0, 7/11/11 - See last page for vote
SUBJECT : Health care coverage: provider contracts
SOURCE : Author
DIGEST : This bill 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
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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
developed and compiled by the carriers, requires risk
adjustment factors for quality data, requires a disclosure
on the carrier's Web site about the data developed and
compiled by the carriers and an opportunity for a hospital
to provide a link where the hospital's response to the data
can be accessed.
Assembly Amendments provide hospitals at least 20 days in
advance to review the methodology and data developed and
compiled by the carriers, require risk adjustment factors
for quality data, requires a disclosure on the carrier's
Web site about the data developed and compiled by the
carriers and an opportunity for a hospital to provide a
link where the hospital's response to the data can be
accessed.
ANALYSIS :
Existing law :
1. Provides for the licensure and regulation of health
plans and insurers by the Department of Managed Health
Care (DMHC) and the California Department of Insurance
(CDI), respectively.
2. Requires hospitals to make a written or electronic copy
of its charge description master (a list of prices for
services) available, either by posting an electronic
copy on the hospital's website, or by making a written
or electronic copy available at the hospital.
3. Requires hospitals to submit their average charges for
25 common outpatient procedures, as specified, annually
to the Office of Statewide Health Planning and
Development (OSHPD), who is required to publish this
information on its website.
4. Requires OSHPD to publish and update on its website, a
list of the 25 inpatient procedures most commonly
performed in California hospitals, along with each
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hospital's average charges for those procedures.
5. Defines "licensed hospital" as an institution, place,
building, or agency that maintains and operates
organized facilities for one or more persons for the
diagnosis, care, and treatment of human illnesses to
which persons may be admitted for overnight stay,
including any institution classified under regulations
issued by the State Department of Public Health (DPH) as
a general or specialized hospital, as a maternity
hospital, or as a tuberculosis hospital, but does not
include a sanitarium, rest home, a nursing or
convalescent home, a maternity home, or an institution
for treating alcoholics.
This bill:
1. Prohibits a contract issued, amended, renewed or
delivered on or after January 1, 2012, by or on behalf
of a health plan or insurer and a licensed hospital, or
any other licensed health care facility owned by a
licensed hospital, to provide inpatient hospital
services or ambulatory care services, from containing a
provision that restricts the ability of the plan or
insurer to furnish information to subscribers or
enrollees concerning the cost range of procedures or the
quality of services performed by the hospital or
facility.
2. Makes any contractual provision that is inconsistent
with this bill void and unenforceable.
3. Defines "licensed hospital," consistent with existing
law.
4. States that a health care service plan shall, at a
minimum, on an annual basis, provide the hospital or
facility a reasonable opportunity to review and validate
data provided to subscribers or enrollees.
5. States that if the information proposed to be furnished
to enrollees and subscribers on the quality of services
performed by a hospital or facility is data that the
plan has developed and compiled, the plan shall utilize
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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.
6. States that the cost range of a procedure shall not
include procedures for enrollees covered by capitated
payments in a contract between a health plan and a
licensed hospital or a licensed health care facility
owned by a licensed hospital.
7. Provides hospitals at least 20 days in advance to review
the methodology and data developed and compiled by the
carriers.
8. Requires risk adjustment factors for quality data.
9. Requires a disclosure on the carrier's Web site about
the data developed and compiled by the carriers and an
opportunity for a hospital to provide a link where the
hospital's response to the data can be accessed.
10.Prohibits specified fines and penalties, established in
existing law, from applying to the provisions in this
bill.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 7/12/11)
Aetna, Inc.
America's Health Insurance Plans
Blue Shield of California
California Association of Health Plans
California Association of Health Underwriters
California Association of Joint Powers Authorities
California Public Employees' Retirement System
California Retailers Association
California School Employees Association
CDF Firefighters
Pacific Business Group on Health
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Service Employees International Union
OPPOSITION : (Verified 7/12/11)
University of California
ARGUMENTS IN SUPPORT : Blue Shield states that people
routinely receive quality and cost data on a variety of
goods and services they purchase, yet that is not the case
with something as important as the health care someone
receives. Blue Shield argues that this bill makes a modest
step in the right direction towards unlocking the mystery
behind rising hospital costs, which represents one of the
biggest cost drivers in the system.
The California Association of Health Plans (CAHP) concurs,
stating that there is a growing recognition at the state
and federal level that the only way to control health care
costs is to focus on the costs and quality of medical
services. CAHP points out that rising hospital costs have
contributed to rising premiums, and that hospitals have
shortfalls in funding for services provided to the
uninsured and government programs. However, that should
not mean that insured patients should be barred from
receiving cost and quality information.
Service Employees International Union (SEIU) asserts that
SEIU members and California consumers are increasingly
being required to pay more for health care as costs
continue to increase. SEIU states that as members are
forced to shoulder the burden of higher co-pays and
deductibles, it is critical that they be personally armed
with data and tools to make informed decisions about the
costs of the services they are receiving and the quality of
those services.
The California Retailers Association supports this bill and
states that when deciding which products and services to
buy, most consumers base their decisions on price and
quality. Health care should be no different, and in fact,
transparency rises to an even more important level for
consumers making what can literally become life-changing
health care decisions.
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ARGUMENTS IN OPPOSITION : The University of California
(UC) states that, while UC endorses the concept of
transparency, it believes that the bill as written will
result in consumers receiving misleading information that
will not assist them in making informed choices about their
medical care. UC argues that a robust risk-adjustment
methodology is necessary to enable meaningful comparisons
across hospitals and providers that have a very different
mix of services and roles in the community. For example,
the cost and quality of complex second and third hip
replacements performed at an academic medical center should
not be compared to a simple first-time hip replacement that
is commonly performed in community hospitals. Although UC
contracts do not contain confidentiality clauses, UC
believes that quality and cost information should be
risk-adjusted or "normalized" to ensure that consumers can
make apples-to-apples comparisons of services across
hospitals.
ASSEMBLY FLOOR : 77-0, 07/11/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, Miller, Monning, Morrell, Nestande, Nielsen,
Norby, Olsen, Pan, Perea, V. Manuel P�rez, Portantino,
Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao,
Wagner, Wieckowski, Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Beall, Gorell, Mitchell
CTW:do 7/12/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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