BILL ANALYSIS Ó
AB 1558
Page 1
Date of Hearing: May 7, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1558 (Hernandez) - As Introduced: January 28, 2014
Policy Committee: HealthVote:19-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requests the University of California (UC) to
establish the California Health Data Organization (CHDO) to
collect health care pricing data from health plans and insurers,
and organize, analyze, and display health care pricing data for
consumer use, among other specified duties. Specifically, this
bill:
1)Requests UC to establish the CHDO to establish a carrier
claims database, defined as a database that stores data from
health plans and insurers provided pursuant to specified laws.
2)Requests UC to seek funding from the federal government and
other private sources to cover costs associated with the
planning, implementation, and administration.
3)Requires the CHDO to organize data by charges and payments,
including patient cost-sharing, type of health care service,
and other information.
4)Allows the CHDO to receive and accept gifts, grants, or
donations of money from public and private sources, charge a
reasonable fee to each person or entity requesting access to
data stored in the database, and explore alternative sources
of funding.
5)Requires the CHDO to design an interactive searchable Internet
Web site that is accessible to the public, and that allows
consumers to compare prices per procedure and easily find
information on payments for services.
6)Requires the CHDO to provide specified information to make
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price transparency readily available to all purchasers of
health care coverage and to help guide consumers in their
choice between different health plans available through the
California Health Benefit Exchange.
7)Allows CHDO to contract with a qualified, nongovernmental,
independent third party for the delivery of a commercially
available claims dataset that meets the bill's requirements.
FISCAL EFFECT
1)Based on costs incurred by a similar project implemented in
Colorado, and assuming California's system costs 2.5 times as
much to account for increased size and complexity, estimated
costs to UC to support an all-payer claims database in the
following range (all costs are assumed GF; a portion may be
offset by federal grant funds or fee revenues):
a) Planning costs: $5 million;
b) Development and implementation costs: $15 million;
c) Ongoing maintenance costs: $7.5 million.
1)Costs to support other functions, including the development of
a searchable public website and consumer assistance, as well
as data provided for purchasers, could vary greatly based on
the sophistication and level of detail provided, but would
probably exceed $1 million for development. Ongoing staff and
consulting costs would likely be in a similar range.
2)A portion of ongoing costs may be offset by fees for sale of
data products. Colorado, for example, offset about 20% of
operating costs through the sale of data products.
3)Potential ongoing, likely minor, workload costs to the
California Department of Insurance and the Department of
Managed Health Care for technical assistance and coordination,
depending on how the California Health Data Organization (HDO)
implements the law and its data collection and reporting
methodologies.
COMMENTS
1)Purpose . According to the author of this bill, consumer prices
for health care are less transparent than prices in almost
every other market. The necessity of medical procedures
combined with the lack of transparency creates a problem for
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consumers. The author asserts that this bill creates a price
catalog that will help lower the cost paid for medical
services by identifying the discounts that ranging from 10% to
90% which have been assessed for medical services. The author
states that existing law, which mandates the reporting of
provider charges only, has lower value for consumers than paid
amounts, and there is no mechanism to disseminate the
information to the public.
2)Price Transparency Initiatives . Given the high and growing
cost of health care services, there is considerable interest
in transparency and containment of health care costs among
policymakers, payers, purchasers, and the public. Several
initiatives are underway in California. This bill does not
appear to specifically align with any existing initiatives.
a) The California Department of Insurance received a $5.2
million federal grant, a substantial portion of which is
allocated towards services that would collect and analyze
health care cost and quality information, and provide that
information to the public on a hosted website in order to
increase transparency of health care pricing within the
state. They are considering the implementation of an
all-payer claims database (APCD) (discussed further below).
b) The California Health and Human Services Agency has
convened stakeholders to work with common purpose to make
transformational improvements to the health care system
through California's State Innovation Model (CalSIM) grant
proposal to the federal government. The CalSIM effort has
identified both a price and quality transparency system, as
well as public reporting, as two critical building blocks
in this effort. Assuming the state's application is
approved, a potential implementation grant of $60 million
is available.
c) The California Healthcare Performance Initiative (CHPI)
is currently collecting Medicare fee-for-service claims as
well as private health plan claims data, and is in the
process of integrating these claims.
1)All-Payer Claims Databases , or APCDs, are large-scale
databases that systematically collect health care claims as
well as eligibility and provider files from private and public
payers. APCDs can be used to fill in critical information
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gaps for state agencies, support health care and payment
reform initiatives, and create transparency for consumers,
purchasers, and state agencies. According to the National
Conference of State Legislatures, 10 states have existing
all-payer claims databases and more are in some stage of
implementation.
2)Financing . The Robert Wood Johnson Foundation indicates states
have a variety of strategies for funding APCDs and financially
sustaining the databases over the long term. Public APCDs are
typically funded, at least in part, through general
appropriations or industry fee assessments. States have also
identified private grant funding to support the initial phases
of APCD development. Federal grant funding and Medicaid
funding is another potential funding source. New York, for
example, is leveraging federal funding it received for
development of its Health Benefits Exchange to develop an
APCD. Many states also expect a portion of long-term
maintenance funding will come from data product sales.
3)Concerns . The California Hospital Association (CHA) writes
that it supports health care cost and quality transparency,
but suggests that this bill could contribute to an increase in
health care costs. CHA believes this bill should allow for
stakeholder involvement in determining how data will be
collected, who will collect the data, which data elements will
be collected and how the data will be displayed. CHA further
argues that this bill should include safeguards for providers
to ensure quality and accuracy.
4)Staff Comments . APCDs are complex, in terms of technical
implementation, finance, governance, and use of data. A
sampling of critical issues include: who decides what data to
release, to whom, and at what costs; whether it is appropriate
to provide pricing data with no quality data; whether raw data
should be provided, or whether and how data should be
normalized to ensure meaningful comparisons; whether processes
exist for providers to review and comment on data prior to
distribution; and how data is displayed.
In addition, California has a high prevalence of the so-called
"capitated model," where providers are given a lump sum to
provide a set of services to a group of patients, a model of
care that does not naturally generate claims data. The
capitated model is also being promoted by various initiatives
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and becoming more pervasive, raising questions about whether
this significant part of the health care market would be
included, and how best to collect and analyze data about this
model.
In other states that have implemented APCDs, it appears to
have been a lengthy undertaking with significant stakeholder
input. The author may wish to consider more explicit
alignment with existing initiatives in order to implement
health care price data collection in a cost-effective way that
can leverage existing funding, as well as allow for discussion
about the significant and numerous issues such an effort would
raise.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081