BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1558
AUTHOR: Hernández
AMENDED: June 5, 2014
HEARING DATE: June 25, 2014
CONSULTANT: Boughton
SUBJECT : California Health Data Organization: all payer claims
database.
SUMMARY : Requests the University of California to establish the
California Health Data Organization, and requires private payers
to regularly submit claims data, including encounter data, as
defined, to the organization on utilization, payment and cost
sharing for services delivered to beneficiaries. Establishes
minimum specifications for the data submitted for each claim or
encounter, as described. Requests the organization to design
and maintain an interactive searchable Internet Web site that is
accessible to the public. Requests the organization to use the
data and produce annual reports so as not to identify individual
physicians.
Existing law:
1.Establishes the University of California (UC) as a public
trust under California's Constitution, and is subject only to
such legislative control as may be necessary to insure the
security of its funds and compliance with the terms of the
endowments of the university and such competitive bidding
procedures as may be made applicable to the university by
statute for the letting of construction contracts, sales of
real property, and purchasing of materials, goods, and
services.
2.Establishes the Office of Statewide Health Planning and
Development (OSHPD) as the single state agency responsible for
collecting specified health facility and clinic data for use
by all agencies.
3.Requires hospitals to make and file with OSHPD certain
specified reports, including a Hospital Discharge Abstract
Data Record with data elements for each admission, such as
diagnoses and disposition of the patient.
4.Requires OSHPD, to publish annually risk-adjusted outcome
Continued---
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reports on medical, surgical and obstetric conditions or
procedures, and selected by OSHPD in accordance with specified
criteria.
5.Requires OSHPD, to publish a risk-adjusted outcome report for
coronary artery bypass graft (CABG) surgery for all CABG
surgeries performed in the state. Requires the reports to
compare risk-adjusted outcomes by hospital in every year, and
by cardiac surgeon in every other year, but permits
information on individual hospitals and surgeons to be
excluded from the reports based upon the recommendation of a
clinical panel for statistical and technical considerations.
6.Requires a hospital to make a written or electronic copy of
its charge description master available at the hospital
location. Requires the hospital to post a notice that the
hospital's charge description master is available, and
requires any information about charges provided to include
information about where to obtain information regarding
hospital quality, including hospital outcome studies available
from OSHPD and hospital survey information available from the
Joint Commission for Accreditation of Healthcare
Organizations.
7.Establishes the Department of Managed Health Care (DMHC) to
regulate health care service plans (health plans) and the
California Department of Insurance (CDI) to regulate health
insurers, among other insurers and insurance agents. Requires
specified health plans and insurers to submit reports to state
and federal regulators on medical loss ratios, rate filings,
enrollment data, as specified.
8.Establishes Covered California as a state-based health care
benefit exchange in state government to make available
selectively contracted qualified health plans (QHPs) for
individual and small group purchasers. Requires QHPs to
submit data to Covered California.
9.Establishes, under federal law, the Health Insurance
Portability and Accountability Act of 1996 (HIPAA), which
among various provisions, mandates industry-wide standards for
health care information on electronic billing and other
processes; and, requires the protection and confidential
handling of protected health information.
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This bill:
1.Requests the UC to establish the California Health Data
Organization (organization), staffed by persons with
demonstrated experience in performing statewide
individual-level data collection, managing and analyzing
complex patient-level data, complying with HIPAA requirements,
and communicating information to the public via a
user-friendly web interface.
2.Requests the organization not be based in a school of medicine
or a UC medical center.
3.Requests UC seek available funding from the federal government
and other private sources to defray the costs associated with
the planning, implementation, and administration of this bill.
4.Requests the organization do all of the following:
a. Establish an all-payer claims database using
the data collected and organized as described in this
bill;
b. Collect data from private payers, as
specified;
c. Collect claims data for private payers from
publicly available data sources;
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 plan or health insurer participating in those
programs;
e. Request and collect data from Covered
California that is related to the quality of care
provided by health plans through Covered California;
f. Organize the data collected in categories such
as: billed charges, total amounts paid by payers and
patients, type of health care services by Common
Procedural Terminology and Diagnosis-Related Group
codes, and information related to risk adjustment, as
specified;
g. Seek to combine existing quality, outcomes and
patient experience and satisfaction data with the
other data collected in order to facilitate
value-based purchasing;
h. Pursue the calculation of quality measures
based on claims data to allow for comparisons among
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facilities and provider groups;
i. Ensure that patient privacy is protected in
compliance with state and federal laws and protected
using encryption and storage of confidential
information on secure servers. Prohibit data that is
made available to the public, including data stored in
a database provided to a person or entity paying a fee
from containing sufficient information to identify an
individual, including but not limited to, an
individual health care provider; and,
j. Keep confidential any proprietary information
the organization obtains, and prohibit it from being
subject to subpoena or discoverable and from being
subject to the Open Records Act, as specified.
Defines proprietary information, as including but not
limited to, any information that supports or provides
any of the clinical rationale used for the purposes of
supporting claims processing decisions.
5.Requires a private payer to regularly submit claims data
(defined as claim or encounter data representing medical,
dental, mental health, and substance use disorder services
financed by payers) to the organization on utilization,
payment and cost sharing for services delivered to
beneficiaries. Establishes minimum specifications for the
data submitted for each claim or encounter, as described.
6.Prohibits a private payer from being required to report the
data required under this bill with respect to Medicare and
Medi-Cal enrollees.
7.Requests the organization establish working groups consisting
of representatives of private payers, physicians and surgeons,
provider groups, state and federal regulators, academia, and
consumer stakeholders. Requests the organization to consider
the recommendations made by the working groups. Requires the
working groups coordinate, to the extent possible, with
existing government transparency and payment reform efforts.
8.Authorizes the organization to receive and accept gifts,
grants or donations, from governmental agencies and private
corporations or foundations in compliance with the existing
conflict-of-interest provisions adopted by UC, charge a
reasonable fee to requestors of the data, not to exceed actual
costs of providing that access, and explore alternative
sources of funding.
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9.Requests the organization refuse gifts or grants from an
entity that may have a vested interest in the decisions of the
organization.
10.Requests the organization to disseminate the information
collected pursuant to this bill to the public in a meaningful
and comprehensive manner.
11.Requests the organization design and maintain an interactive
searchable Internet Web site that is accessible to the public
and in which information on payments for services is easily
searchable by the average consumer, and the format used allows
for the comparison of prices paid by payers per procedure
without identifying the particular price paid by a particular
private payer.
12.Requests the organization investigate how to combine price
with quality information, the most efficient way of presenting
information to the public, and coordinate efforts with the
health care coverage market and provide information by
geographic areas used by payers.
13.Requests the organization aggregate at a high level of detail
the information collected pursuant to this bill and make
available to the public so as not to disclose any proprietary
information.
14.Authorizes the organization to contract with a qualified,
nongovernmental, independent third party for the delivery of
commercially available claims dataset with appropriate level
of detail in term of payments, geocoding, and provider
information, to allow for the development of the Internet Web
site.
15.Requests the organization expand its data storage and
processing capacity internally to house the Internet Web site
and the large data sets gathered from payers under this bill.
16.Requests the organization use the data and produce annual
reports so as not to identify individual physicians.
17.Finds and declares that this bill imposes a limitation on the
public's right of access to the meetings of public bodies or
the writings of public officials and agencies in order to
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protect the confidentiality of proprietary information.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
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 General Fund; a portion
may be offset by federal grant funds or fee revenues):
a. Planning costs: $5 million;
b. Development and implementation costs: $15 million; and,
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 percent
of operating costs through the sale of data products.
3.Potential ongoing, likely minor, workload costs to CDI and
DMHC for technical assistance and coordination, depending on
how the organization implements the law and its data
collection and reporting methodologies.
PRIOR VOTES :
Assembly Health: 19- 0
Assembly Appropriations:16- 0
Assembly Floor: 72- 0
COMMENTS :
1.Author's statement. According to the author, 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 challenging
decision problem for consumers. This bill creates a database
that will help lower the cost paid for medical services by
identifying the discounts that range from 10 percent to 90
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percent which have been assessed for medical services. This
bill addresses the need for price transparency for consumers
on health related expenses by requiring certain private payers
to submit claims data to the organization on utilization,
payment, and cost sharing for services delivered to
beneficiaries. This provides health care consumers with tools
necessary in order to determine average costs for procedures
and will provide greater transparency to California's opaque
health care system.
2.All-Payer Claims Databases. According to the National
Conference of State Legislatures, several states have
established databases that collect health insurance claims
information from all health care payers into a statewide
information repository, referred to as "all-payer claims
databases." An all-payer claims database is designed to
inform cost containment and quality improvement efforts.
Payers include private health insurers, Medicaid, children's
health insurance and state employee health benefit programs,
prescription drug plans, dental insurers, self-insured
employer plans and Medicare. The databases contain eligibility
and claims data (medical, pharmacy and dental) and are used to
report cost, use and quality information. The data consist of
"service-level" information based on valid claims processed by
health payers. Service-level information includes charges and
payments, the provider(s) receiving payment, clinical
diagnosis and procedure codes, and patient demographics. To
mask the identity of patients and ensure privacy, states
usually encrypt, aggregate and suppress patient identifiers.
Colorado, Kansas, Minnesota, Tennessee, Maine, Maryland,
Massachusetts, New Hampshire, Utah and Vermont all have
existing all-payer claims databases.
3.Informational Hearing on Cost Containment. On March 5, 2014,
the Senate Health Committee held an informational hearing on
issues around cost containment. Several current state cost
containment and transparency initiatives were discussed at the
hearing, including the following:
a. State Health Care Innovation Plan- California,
through the California Health and Human Services
Agency (CHHS) and the "Let's Get Healthy California"
Task Force, has developed a State Health Care
Innovation Plan (SHCIP) with the support from a
federal State Innovation Model (SIM) grant. This
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effort is referred to as Cal-SIM. A target has been
set to bring California's health care expenditure
growth rate in line with that of the gross state
product by 2022, along with establishing targets for
38 health indicators. The SHCIP is projected to yield
savings of $1.3 to $1.7 billion over three years - a
return of over 20-fold on the potential $60 million
SIM investment. The plan also suggests six building
blocks to address data, transparency and
accountability issues, including establishing a Cost
and Quality Reporting System, which is a robust
reporting system that promotes transparency and
monitors trends in health care costs and performance.
b. Integrated Healthcare Association - The
Integrated Healthcare Association (IHA) is a
statewide, nonprofit multi-stakeholder leadership
group with a project called the California Payment for
Performance (P4P) program administered on behalf of
eight health plans: Aetna; Anthem Blue Cross; Blue
Shield of California; Cigna Healthcare of California;
Health Net; United Healthcare; Western Health
Advantage; and, Kaiser Permanente (public reporting
only) representing nine million enrollees. Through
this project, quality and, more recently, cost
reporting is being conducted on 35,000 physicians in
nearly 200 physician groups. Total Cost of Care, which
includes professional facility (inpatient and
outpatient), pharmacy, ancillary costs, capitation,
fee-for-service, member cost share, and administrative
adjustments collected from Health Maintenance
Organizations (HMO) and Point of Service (POS) plans
is tracked. The data is adjusted for risk and
geographic variation. Initial results show
risk-adjusted Total Cost of Care, on a per member per
year basis ranges from under $2,300 to approximately
$5,500 for 2012. The physician groups at the high end
are more than twice as costly without strong
correlation to quality.
c. California Healthcare Performance Information
System (CHPI)- According to CHPI, its mission is to
measure the quality and cost of care, report
performance ratings, educate the public about
healthcare value, and help drive improvements in
healthcare in California. CHPI administers the state's
only Multi-Payer Claims Database, which consists of
claims from the state's three largest health plans
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(Anthem Blue Cross, Blue Shield of California, and
UnitedHealthcare) and the Medicare fee-for-service
program, representing approximately 60 percent of
commercial non-Kaiser enrollment. These data provide
information on services provided by hospitals,
emergency departments, ambulatory surgery centers,
ancillary providers, pharmacies, and physicians. It
combines data on the healthcare experiences of more
than 12 million people to evaluate the quality and
efficiency of medical services. In February 2013, CHPI
was designated as a Qualified Entity through the
Medicare Data Sharing Program and received Medicare
fee-for-service claims representing over five million
California beneficiaries. CHPI will aggregate
administrative claims and eligibility data for
approximately 12 million lives across California to
create physician performance ratings.
4. Related legislation. SB 1322 (Hernandez), would require
the Secretary of California Health and Human Services to,
no later than January 1, 2016, enter into a contract with
one or more private, independent, nonprofit organizations
to establish and administer the California Health Care Cost
and Quality Database to develop methodologies relating to
the submission of health care data by health care entities,
and to collect, process, maintain, and analyze information
from specified data sources including, among others,
electronic health record systems and disease and chronic
condition registries. Requires, no later than January 1,
2018, the nonprofit organization or organizations to
publicly make available a web-based, searchable database
and would require that database to be updated regularly.SB
1322 is set for hearing on June 24, 2014 in Assembly Health
Committee.
SB 1182 (Leno), would require health plans and insurers to
submit to regulators for rate review any large group plan
contract or policy rate increases that exceed five percent
of the prior year's rate. Establishes new data reporting
requirements on all health plans and insurers applicable to
products sold in the large group market and establishes new
specific data reporting requirements related to annual
medical trend factors by service category, as well as
claims data or de-identified patient-level data, as
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specified, for a purchaser, at no cost, when requested, and
if the purchaser can demonstrate its ability to comply with
state and federal privacy laws, and is either an
employer-sponsored plan with an enrollment of greater than
1,000 covered lives or multiemployer trust. SB 1182 is set
for hearing on June 24, 2014 in Assembly Health Committee.
SB 1340 (Hernandez), would make a number of changes to
existing law that prohibits contracts between health plans
or insurers and hospitals from restricting the ability of
the health plan/insurer from furnishing information
concerning the cost range of procedures at the hospital or
facility or the quality of services performed by the
hospital or facility to subscribers or enrollees. Includes
self-funded health coverage or other persons entitled to
access services through a network established by the health
care service plan in the prohibition of a contract gag
clause. Requires health plan/insurers to give a provider or
supplier an advance opportunity of 30 days (rather than at
least 20 days) to review the methodology and data developed
and compiled by the health plan/insurer. SB 1340 is pending
on the Assembly Floor.
5. Prior legislation. SB 746 (Leno), of 2013, would have
established new data reporting requirements on all health
plans applicable to products sold in the large group market
and establishes new specific data reporting requirements
related to annual medical trend factors by service
category, as well as claims data or de-identified
patient-level data, as specified, for a health plan that
exclusively contracts with no more than two medical groups
in the state to provide or arrange for professional medical
services for the enrollees of the plan (referring to Kaiser
Permanente). SB 746 was vetoed by the Governor.
AB 2967 (Lieber), of 2007, would have established a Health
Care Cost and Quality Transparency Committee to develop and
recommend to the Secretary of HHS Agency a health care cost
and quality transparency plan, and would have made the
Secretary responsible for the timely implementation of the
transparency plan. AB 2967 died in the Senate
Appropriations Committee on the inactive file.
AB 1045 (Frommer), Chapter 532, Statutes of 2005, revises
the Payers' Bill of Rights in order to make information
available about the hospital charges for the 25 most common
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outpatient services or procedures, and requires, upon
request, a person to be provided with a written estimate of
charges for the health care services that are reasonably
expected to be provided and billed to the person if the
person does not have health coverage.
AB 1627 (Frommer), Chapter 582, Statutes of 2003, requires
hospitals to make public their charge description masters
(chargemaster). Requires hospitals to file chargemasters
with OSHPD.
6. Support. Health Access California writes that while a
database that reports claims fails to capture the important
and growing segment of the California health care market
that is capitated such as HMOs and the physician element of
the delegated medical model, a claims database would be
useful in analyzing the prices of a substantial share of
the California market. Health Access California hopes that
the California Health Information Survey would serve as a
model for the consumer website proposed under this bill.
The California Labor Federation believes this bill is an
important first step toward increased transparency on cost
and quality, though more needs to be done. The Coalition
for a Healthy California states that without price
transparency, consumers face significant higher
out-of-pocket expenses for health care services because
they have no reliable, ready available data. The
California Teachers Association indicates that consumers
need access to data in order to compare plan choices and
make informed decisions. The American Federation of State,
County and Municipal Employees believes this bill will
accomplish the goals of making data publicly available,
bring transparency to the often complex pricing of health
care services and allow consumers to make smarter choices
in a cost-efficient manner that respects patients' privacy.
7. Opposition. The California Association of Health Plans
(CAHP) states it is not clear that this bill provides the
best method for achieving transparency and believes there
are many unanswered questions about how the database would
work considering California's market and its reliance on
capitation and delegated risk. The Association of
California Life and Health Insurance Companies writes a
specific funding source is not identified and the database
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is duplicative of CHPI. America's Health Insurance Plans
(AHIP) raises concerns about protection of proprietary
financial data and that information identified in this bill
may not be useful to consumers if it isn't the actual price
a consumer will have to pay. Additionally, AHIP writes
that the current provisions are not adequate in addressing
the many privacy concerns. The California Association of
Provider Groups indicates the bill lacks structure and
vision and a viable business model for sustainability.
Additionally, CAPG writes that no one has figured out how
to collect and report capitated payment data against
fee-for-service claims data. The California Hospital
Association (CHA) believes a comprehensive stakeholder
process should be the first step, that there is a potential
conflict of interest since the UC includes multiple medical
centers and schools of medicine, and that the bill is too
prescriptive and the requirements are unreasonable.
8. Oppose unless amended. The UC believes a third party is
better positioned to serve as the data collector for the
purposes of AB 1558 because UC, as a major health care
provider, would be collecting information about itself
along with other providers, which may be perceived as a
conflict of interest. The UC writes that others in the
healthcare market would threaten litigation and claim that
UC had an unfair competitive advantage. UC is also
concerned that it will be disadvantaged by a perceived
conflict of interest because safeguards and protections
would likely be so stringent that UC medical centers would
be excluded from participating in the process of developing
and commenting on policies, procedures and functions of the
database. Because UC has been vocal on the development and
function of all payer claims database development and
dissemination of pricing information to consumers, they are
concerned that this bill would have a chilling effect on
UC's ability to participate in this very important
conversation because of concerns about perceived conflicts.
In addition, perceived conflict and suspicion surrounding
the collection and display of data for consumers would hurt
the credibility of the data and effort to display
meaningful information to consumers. The California
Optometric Association writes that this bill does not
provide any means to assure that fair play is enforced in
the methods used in reporting prices so consumers have
accurate information, and there needs to be a mechanism for
providers to correct outdated or incorrect information.
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9. Is UC the right entity to host the organization? Many
have raised concerns about a potential conflict of interest
if UC houses the organization. The bill has been amended
to create a firewall to address this concern but even UC
raises concerns about negative consequences based on
perceived conflicts. Furthermore, UC as the host
organization raises an oversight concern. The UC is a
public trust under California's Constitution, and is
subject only to such legislative control as may be
necessary to insure the security of its funds and
compliance with the terms of the endowments of the
university and such competitive bidding procedures as may
be made applicable to the university by statute for the
letting of construction contracts, sales of real property,
and purchasing of materials, goods, and services. As such,
this bill make requests of UC and cannot establish
legislative or executive authority over the data under UC's
control should this bill be enacted.
10. Medi-Cal data. This bill requests data from Medi-Cal
and does not require Medi-Cal managed care plans to report
data under this bill. It is unclear to what extent the
organization will have data on the Medi-Cal program to
analyze and publish.
11. Proprietary information definition. The definition of
proprietary information is too broad and could potentially
be used to keep confidential a wide range of data to the
contrary of the intent of this bill. A narrower
alternative should be developed.
12. Technical and drafting issues.
a. Section 100803 (e) should refer to QHPs and a
definition of QHP should be included. In section
100809 (c) references (g) of 100803 but the correct
cross reference should be (i) of 100803. Section
100809 (b)(5) propriety should be proprietary. Section
100804 (15) needs to include "or health insurer" after
health plan.
b. Section 100809(b)(1)(A) is unclear about what
information will provided in a searchable manner by
the average consumer.
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c. Provisions of this bill lump together
encounter data and claims data. Encounter data may
not lend itself to some of the requirements in this
bill, such as Section 100809 (10), (11) and (12). The
reporting requirements should be revised to take into
account the differences in these data types and the
challenges in making comparisons using these data.
SUPPORT AND OPPOSITION :
Support: Alameda Labor Council
Allen Temple Baptist Church
American Federation of Musicians, Local 6
American Federation of State, County and Municipal
Employees, AFL-CIO
American Federation of Teachers, Local 2121
BAC Local 3
Berkeley Federation of Teachers
California Alliance for Retired Americans
California Conference Board of the Amalgamated Transit
Union
California Conference of Machinists
California Federation of Teachers
California Labor Federation
California National Organization for Women
California Nurses Association
California Pan-Ethnic Health Network
California Professional Firefighters
California School Employees Association
California Teachers Association
California Teamsters Public Affairs Council
Communication Workers of America, District Council 9
Communication Workers of America, Retired Member Club,
Local 9423
Congress of California Seniors
Consumer Federation of California
Courage Campaign
Democracy for America
Engineers and Scientists of California, IFPTE Local
20, AFL-CIO
Gray Panthers, San Francisco Chapter
Grey Panthers, Long Beach Chapter
Health Access California
International Brotherhood of Electrical Workers, Local
332
International Longshore and Warehouse Union
Ironworkers Local 377
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Jobs with Justice, San Francisco
Labor United for Universal Healthcare
Laborers Local 261
Los Rios College Federation of Teachers
Low Income Self Help Center
Napa/Solano CLC
National Multiple Sclerosis Society
National Nurses United
National Union of Healthcare Workers
Nevada County Chapter, Health Care for All
North Bay Labor Council
Office and Professional Employees International Union
Local 3
Olallieberry Inn Bed and Breakfast, Cambria,
California
Older Women's League
Professional and Technical Engineers, IFPTE Local 20,
AFL-CIO
Progressive Caucus of the California Democratic Party
Progressive Democrats of America
Progressive Voices
Public Citizen
Sacramento Central Labor Council
San Francisco Building and Construction Trades
San Francisco Central Labor Council
San Mateo Building and Construction Trades
San Mateo Community College Federation of Teachers,
AFT Local 1493
San Mateo County Central Labor Council
Service Employees International Union 1021
Sheet Metal Workers' International Association, Local
104
South Bay Labor Council
UA Local 393
UC/AFT
United Educators, San Francisco
UNITE-HERE, AFL-CIO
University of California Student Association
USW, Local 675
Utility Workers Union of America, Local 132, AFL-CIO
Oppose: America's Health Insurance Plans
Association of California Life and Health Insurance
Companies
California Association of Health Plans
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California Association of Physician Group
California Hospital Association
California Optometric Association (unless amended)
University of California (unless amended)
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