Amended in Senate June 5, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1558

Introduced by Assembly Member Roger Hernández

January 28, 2014

An act to add Title 22.5 (commencing with Section 100800) to the Government Code, begin delete to amend Sections 1375.7 and 1395.6 of the Health and Safety Code, and to amend Sections 10178.3 and 10178.4 of the Insurance Code, end delete relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 1558, as amended, Roger Hernández. California Health Data begin delete Organization. end delete begin insert Organization: all-payer claims database. end insert

Existing law establishes the Office of Statewide Health Planning and Development (OSHPD) to perform various functions and duties with respect to health facilities, health professions development, and health policy and planning, including, but not limited to, consulting with the Insurance Commissioner, the Director of the Department of Managed Health Care, and others to adopt a California uniform billing form format for professional health care services and a California uniform billing form format for institutional provider services. Existing law requires organizations that operate or own a health facility to file specified reports with OSHPD containing various financial and patient data.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans begin delete and makes a willful violation of the act a crime end delete . Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires health care service plans and health insurers to provide an explanation of benefits or explanation of review that identifies the name of the network that has a written agreement signed by the provider whereby the payor is entitled, directly or indirectly, to pay a preferred rate for the services rendered.

This bill would request the University of California to establish the California Health Data Organization and would begin delete require health care service plans and health insurers to provide the explanations of benefits or explanations of review to that organization to the extent permitted by federal law end delete begin insert request the organization to collect data from payers, as specified, and establish an all-payer claims database. The bill would require certain private payers to submit claims data to the organization on utilization, payment, and cost sharing for services delivered to beneficiaries. The bill would request the organization to establish working groups consisting of specified representatives to coordinate with existing stakeholder processes related to federal and state price transparency and payment reform and would request the organization to consider the recommendations of those working groups, as specified end insert . The bill would begin delete require end delete begin insert request end insert the organization to organize the data begin delete provided in those documents end delete begin insert collected pursuant to the bill’s provisions end insert and to design and maintain an Internet Web site that allows consumers to compare the prices paid by begin delete carriers end delete begin insert payers end insert for procedures, as specified. begin insert The bill would prohibit data made available to the public from containing sufficient information to identify an individual and would require the organization to keep confidential any proprietary information it obtains. end insert The bill would request the University of California to seek begin insert available end insert funding from the federal government and other private sources to cover the costs associated with these provisions and would authorize the organization to charge a fee to each person or entity requesting access to data begin insert stored end insert in the database it creates.

begin insert

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

end insert begin insert

This bill would make legislative findings to that effect.

end insert begin delete

Because a willful violation of the bill’s requirement for a health care service plan to provide an explanation of benefits or explanation of review to the organization would be a crime, the bill would impose a state-mandated local program.

end delete begin delete

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end delete begin delete

This bill would provide that no reimbursement is required by this act for a specified reason.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete yes end delete begin insert no end insert .

The people of the State of California do enact as follows:

SECTION 1.  

Title 22.5 (commencing with Section 100800)
is added to the Government Code, to read:

 

Title 22.5.  California Health Data
Organization

 

100800.  

For purposes of this title, the following definitions
shall apply:

begin insert

(a) “All-payer claims database” or “database” means a
database that receives and stores claims data from payers.

end insert begin insert

(b) For purposes of this section, “beneficiary” means one of
the following:

end insert begin insert

(1) With respect to a health care service plan, a subscriber or
enrollee.

end insert begin insert

(2) With respect to a health insurer, a policyholder or insured.

end insert begin insert

(3) With respect to a self-insured employee welfare benefit plan,
an employee or dependent of an employee.

end insert begin insert

(c) “Claims data” means claim or encounter data representing
medical, dental, mental health, and substance use disorder services
financed by payers.

end insert begin insert

(d) “Claim” means a submitted claim that was processed and
adjudicated by a payer, representing the paid amount and any
adjustments that occurred after the original submission.

end insert begin insert

(e) “Encounter” means a submitted record of a visit, a service
delivered, a procedure, or other activity, reported by a provider
to a payer when payment is not issued on a fee-for-service basis.

end insert begin insert

(f) “Exchange” means the California Health Benefit Exchange
established by Section 100500 of the Government Code.

end insert begin delete

(a) “Organization” means the California Health Data
Organization established pursuant to Section 100801.

(b) “Carrier claims database” or “database” means a database
that receives and stores data from carriers reported to the
organization pursuant to Section 1395.6 of the Health and Safety
Code and Section 10178.3 of the Insurance Code.

(c) “Carrier” means either a private health insurer holding a
valid outstanding certificate of authority from the Insurance
Commissioner or a health care service plan licensed by the
Department of Managed Health Care.

(d)

end delete

begin insert (g) end insert  “Health care service plan” has the same meaning as that
term is defined in subdivision (f) of Section 1345 of the Health
and Safety Code.

begin delete

(e)

end delete

begin insert (h) end insert  “Health insurer” means an insurer admitted to transact health
insurance business in this state. For purposes of this subdivision,
“health insurance” has the meaning used in Section 106 of the
Insurance Code.

begin delete

(f)

end delete

begin insert (i) end insert  “Individually identifiable information” means information
that includes or contains any element of personal identifying
information sufficient to allow identification of the individual,
including the person’s name, address, electronic mail address,
telephone number, or social security number, or other information
that, alone or in combination with other publicly available
information, reveals the individual’s identity.

begin insert

(j) “Organization” means the California Health Data
Organization established pursuant to Section 100801.

end insert begin insert

(k) “Payer” means a private payer, the Medi-Cal program, or
the Medicare program.

end insert begin insert

(l) “Private payer” means any of the following:

end insert begin insert

(1) A health care service plan.

end insert begin insert

(2) A health insurer.

end insert begin insert

(3) A third-party administrator processing claims on behalf of
a self-insured employee welfare benefit plan that provides coverage
for health care expenses to at least 200 beneficiaries.

end insert begin insert

(m) “Proprietary information” includes, but is not limited to,
any information that supports or provides any of the clinical
rationale used for the purposes of supporting claims processing
decisions.

end insert

100801.  

(a) The Legislature hereby requests the University of
California to establish the California Health Data Organization.

(b) The begin delete organization shall end delete begin insert Legislature requests that the
organization end insert be staffed by persons with demonstrated experience
in all of the following:

(1) Performing statewide individual-level data collection.

(2) Managing and analyzing complex patient-level data.

(3) Complying with HIPAA requirements.

(4) Communicating information to the public via a user-friendly
web interface.

begin insert

(c) In order to avoid potential conflicts of interest within the
University of California between providers of health care services
and individuals working within the organization, the Legislature
hereby requests that the organization not be based in a school of
medicine or a University of California medical center.

end insert begin delete

(c)

end delete

begin insert (d) end insert  The Legislature hereby requests the University of California
to seek begin insert available end insert funding from the federal government and other
private sources to begin delete cover end delete begin insert defray the end insert costs associated with the
planning, implementation, and administration of this title.

100803.  

The begin delete organization shall end delete begin insert Legislature requests the
organization to end insert do all of the following:

(a) Establish begin delete a carrier end delete begin insert an all-payer end insert claims database using the
data collected and organized as described in this title.

(b) Collect data from begin delete carriers reported pursuant to Section
1395.6 of the Health and Safety Code and Section 10178.3 of the
Insurance Code end delete begin insert private payers submitted pursuant to Section
100804 end insert .

begin insert

(c) Until data is collected as described in subdivision (b), collect
claims data for private payers from publicly available data sources.

end insert begin insert

(d) Request and collect available claims data from the Medi-Cal
program and the Medicare program, including claims data
reported to those programs by a health care service plan or health
insurer participating in those programs.

end insert begin insert

(e) Request and collect data from the Exchange that is related
to the quality of care provided by health plans through the
Exchange.

end insert begin delete

(c)

end delete

begin insert (f) end insert  Organize begin delete data reported by carriers pursuant to Section 1395.6
of the Health and Safety Code and Section 10178.3 of the Insurance
Code end delete begin insert the data collected pursuant to this section end insert into the following
categories:

(1) Charges begin insert billed end insert and total amounts paid by begin delete carriers end delete begin insert payers end insert
and patients, including, but not limited to, charge amount, paid
amount, prepaid amount, copayment, coinsurance, deductible, and
allowed amount.

(2) Type of health care service, including, but not limited to,
ambulatory care procedures and services and inpatient physician
services reported by Common Procedural Terminology (CPT)
codes, and inpatient hospital services reported by
Diagnosis-Related Group (DRG) codes.

(3) Information relating to risk adjustment, including begin delete other
diagnoses, length of stay, and discharge. end delete begin insert diagnosis codes, dates
of service, monthly enrollment, age, gender, length of stay,
modifiers, and discharge disposition. end insert

begin insert

(g) Seek to combine existing quality, outcomes, and patient
experience and satisfaction data with the other data collected
pursuant to this section in order to facilitate value-based
purchasing of health care coverage in the state.

end insert begin insert

(h) Pursue the calculation of quality measures based on claims
data submitted by payers to allow for comparisons among facilities
and provider groups.

end insert begin delete

(d)

end delete

begin insert (i) end insert  Ensure that patient privacy is protected in compliance with
state and federal laws. begin delete Patient end delete begin insert In collecting, managing, and
analyzing claims data, patient end insert privacy shall be protected using
encryption and storage of begin delete the end delete begin insert confidential end insert information on secure
servers. begin insert Data that is made available to the public by the
organization, including, but not limited to, data made available
pursuant to a request for access described in paragraph (3) of
subdivision (a) of Section 100805, shall not contain sufficient
information to identify an individual, including, but not limited to,
an individual health care provider. end insert

begin insert

(j) Keep confidential any proprietary information the
organization obtains pursuant to this title. Proprietary information
obtained by the organization shall not be made available to the
public, shall not be subject to subpoena or discovery, and shall
not be subject to the California Open Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code).

end insert

begin insert

begin insert 100804. end insert   

(a) Commencing on the date that the organization is
established, a private payer shall regularly submit claims data to
the organization on utilization, payment, and cost sharing for
services delivered to beneficiaries. The data submitted shall, at a
minimum, include the following for each claim or encounter:

(1) A linkable patient identifier that can be mapped across all
claims or encounters.

(2) Date of service.

(3) Date of payment.

(4) Adjustment flag.

(5) Claim identification number.

(6) At least two diagnosis codes related to the claim or
encounter based on current coding standards.

(7) Any procedure codes associated with the claim or encounter
based on current coding standards.

(8) National Drug Code for prescription drugs.

(9) Revenue codes.

(10) Allowed amount.

(11) Patient billed share of cost, including amounts billed prior
to the patient satisfying any applicable deductible requirements.

(12) Total charge.

(13) Patient demographics, including, but not limited to, age,
gender, race, ethnicity, and language, if available.

(14) Product type (HMO, PPO, POS, EPO, or FFS).

(15) Whether the claim or encounter is billed or reported under
a health plan covering a single individual or a family and whether
that plan is an individual market plan, a group market plan, or a
self-insured employee welfare benefit plan.

(16) Type of payment to which claim or encounter is related
(capitated, diagnosis related group, bundled, per diem, or other
negotiated rate).

(17) Procedure modifiers based on current coding standards.

(18) Setting of service, including, but not limited to, hospital,
outpatient primary care, outpatient specialty care, freestanding
clinic, freestanding federally qualified health center, or ambulatory
surgery center.

(19) National provider identification information for the
provider billing for the service, including name, federal tax
identification number, and address.

(20) National provider identification information for the
provider rendering the service, including name, federal tax
identification number, and address.

(21) Monthly enrollment flags for the time period of the claims
or encounter file indicating if the individual was covered by the
payer for any given month in the year.

(b) A private payer may, with approval of the organization,
modify the information required to be submitted under this section
as necessary to comply with applicable federal and state privacy
laws.

(c) A private payer shall not be required to report to the
organization the data required under this section with respect to
beneficiaries enrolled in the Medi-Cal or Medicare program.

end insert begin insert

begin insert 100804.5. end insert   

(a) The Legislature requests the organization to
establish working groups consisting of representatives of private
payers, physicians and surgeons, provider groups, state and federal
regulators, academia, and consumer stakeholders.

(b) The Legislature requests the working groups established by
the organization to coordinate, to the extent possible, with existing
stakeholder processes related to federal and state price
transparency and payment reform. The organization is requested
to consider the recommendations made by the working groups in
providing updates to the desired data fields for claims data
reporting, collecting and displaying price, quality, and value
information for consumers, making comparisons by geographic
region, provider type, and individual health care facilities, and
conducting additional analyses to inform consumer decisions on
price, quality, and value.

(c) The Legislature requests that the working groups established
by the organization provide guidance on additional data that would
be important for consumers and stakeholders in making price,
quality, and value comparisons and the appropriate information
to be displayed by variables, including, but not limited to,
geographic region, provider type, facility, and provider group.

end insert

100805.  

(a) The organization may do all of the following:

(1) Receive and accept gifts, grants, or donations of moneys
from any agency of the United States, any agency of the state, any
municipality, county, or other political subdivision of the state.

(2) Receive and accept gifts, grants, or donations from
individuals, associations, private foundations, or corporations, in
compliance with the begin insert existing end insert conflict-of-interest provisions begin delete to be end delete
adopted by the begin delete board at a public meeting end delete begin insert University of California end insert .

(3) Charge a reasonable fee to each person or entity requesting
access to data stored in the database, not to exceed the actual costs
of providing that access.

(4) Explore alternative sources of funding, to the extent
permitted by law, to ensure the begin delete sustainabilty end delete begin insert sustainability end insert of the
organization.

(b) The begin delete organization shall not accept end delete begin insert Legislature requests that
the organization refuse end insert gifts or grants from an entity that may have
a vested interest in the decisions of the organization.

100809.  

(a) The begin delete organization shall end delete begin insert Legislature requests the
organization to end insert disseminate the information collected pursuant to
this title to the public in a meaningful and comprehensive manner.

(b) For purposes of this section, the organization begin delete shall end delete begin insert is
requested to end insert do all of the following:

(1) Design and maintain an interactive searchable Internet Web
site that is accessible to the public and in which both of the
following requirements are satisfied:

(A) Information on payments for services is easily searchable
by the average consumer.

(B) The format used allows for the comparison of prices paid
by begin delete carriers end delete begin insert payers end insert per procedure begin insert without identifying the particular
price paid by a particular private payer end insert .

(2) Investigate how to combine price information with quality
information, either within the database or by linkage to other
searchable databases.

(3) Investigate the most efficient way of presenting information
to the public, including, but not limited to, reporting on price
information for the average severity of the condition or for different
tiers of severity.

(4) Coordinate efforts with the health care coverage market and
provide information to the public using the geographic areas used
by begin delete carriers end delete begin insert payers end insert in order to do both of the following:

(A) Make price transparency readily available to all purchasers
of health care coverage.

(B) Help guide consumers in their choice between different
health plans available through the begin delete California Health Benefit end delete
Exchange begin delete established by Section 100500 end delete .

begin insert

(5) Aggregate at a high level of detail the information collected
pursuant to this title and made available to the public so as not to
disclose any propriety information.

end insert

(c) Information disclosed pursuant to this section shall begin delete not
contain any individually identifiable information end delete begin insert comply with
subdivision (g) of Section 100803 end insert .

(d) To allow for the development of the Internet Web site
described in this section without delay, the organization may
contract with a qualified, nongovernmental, independent third
party for the delivery of a commercially available claims dataset
with the appropriate level of detail in term of payments, geocoding,
and provider information. begin delete This information shall end delete begin insert The Legislature
requests that this information end insert be replaced begin insert or supplemented end insert with
information directly collected by the organization once the first
set of data directly collected from begin delete carriers end delete begin insert payers end insert has been cleaned
and analyzed.

begin insert

(e) In order to ensure the confidentiality, security, and
affordability of maintaining the organization, the Legislature
requests that the organization expand its data storage and
processing capacity internally to house the Internet Web site
described in this section and the large data sets gathered from
payers under this title.

end insert

100811.  

The begin delete organization shall end delete begin insert Legislature requests the
organization to end insert use the data collected pursuant to this title and
produce annual reports on the cost of specific ambulatory care
procedures and services and inpatient physician services aggregated
within geographic market areas in this state, as determined by the
organization, so as not to identify individual physicians.

begin insert

begin insert SEC. 2. end insert   

end insert begin insert

The Legislature finds and declares that Section 1 of
this act, which adds Section 100803 to the Government Code,
imposes a limitation on the public’s right of access to the meetings
of public bodies or the writings of public officials and agencies
within the meaning of Section 3 of Article I of the California
Constitution. Pursuant to that constitutional provision, the
Legislature makes the following findings to demonstrate the interest
protected by this limitation and the need for protecting that
interest:

end insert begin insert

In order to protect the confidentiality of proprietary information
collected pursuant to this act, it is necessary that this act limit the
public’s right of access to that information.

end insert

matter omitted in this version of the bill appears in the bill as introduced in the Assembly, January 28, 2014. (JR11)