BILL ANALYSIS �
SB 1182
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Date of Hearing: August 26, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 1182 (Leno) - As Amended: August 22, 2014
SENATE VOTE : 21-12
SUBJECT : Health care coverage: rate review.
SUMMARY : Requires health plans and insurers to share specified
data with large group purchasers that have 1,000 or more
enrollees or that are multiemployer trusts. Specifically, this
bill:
1)Requires a health plan or insurer annually to provide
de-identified claims data at no charge to a large group
purchaser upon request, if the purchaser is able to
demonstrate its ability to comply with state and federal
privacy laws and is either an employer with enrollment of
greater than 1,000 covered lives or a multiemployer trust.
2)Requires health plans and insurers to obtain a determination
by a qualified statistician that the claims data do not
provide a reasonable basis from which to identify an
individual. Prohibits data that a statistician is unable to
determine has been de-identified to be shared under this bill.
Allows a health plan to provide the claims data in an
aggregated form as necessary to comply with state and federal
privacy laws.
3)Requires a health plan or insurer, as an alternative to
providing claims data under 1) above, to provide:
de-identified aggregated data sufficient for the purchaser to
compare costs of similar services from other health plans or
insurers; and de-identified aggregated patient level data that
include demographics and encounter data, including data used
to experience rate the group, as specified. Requires the
health plan or insurer, for purposes of this requirement, to
obtain a formal determination, in writing, from a qualified
statistician that the shared data do not provide a reasonable
basis from which to identify an individual.
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4)Prohibits health plans and insurers from disclosing their
contracted rates with providers to purchasers under this bill.
5)Makes the information shared not subject to public
availability, as specified. Deems data shared under this bill
confidential information that shall not be shared by state
regulators and is exempt from disclosure under the California
Public Records Act.
6)Requires all disclosures of data under this bill to comply
with the federal Health Insurance Portability and
Accountability Act of 1996 (HIPAA), the federal Health
Information Technology for Economic and Clinical Health Act,
and the California Confidentiality of Medical Information Act
(CMIA).
EXISTING LAW :
1)Establishes regulation of health plans by the Department of
Managed Health Care and health insurers by the California
Department of Insurance.
2)Prohibits a health plan from releasing any information to an
employer that would directly or indirectly indicate to the
employer that an employee is receiving or has received
services from a health care provider covered by the plan
unless authorized to do so by the employee. Prohibits an
insurer that has, pursuant to an agreement, assumed the
responsibility to pay compensation, as specified, from being
considered an employer. States that nothing in this provision
prohibits a health plan from releasing relevant information
for the purposes of fraud prevention, as specified.
3)Establishes HIPAA under federal law, 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.
4)Establishes CMIA under state law, which governs the disclosure
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of medical information by health care providers, regulated
plans, health care clearinghouses, and employers.
FISCAL EFFECT : This bill, as amended, has not been analyzed by a
fiscal committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author writes the rising cost of
health care is a major concern for employers in California,
and the lack of transparency in pricing for the large group
market has contributed to uncontrolled cost increases for
large employers and union trusts. According to the 2014
California Employer Health Benefits Survey, health premiums in
California rose by 185% since 2002, more than five times the
state's overall inflation rate. In addition, one in four
California employers reported that they reduced benefits or
increased employee cost sharing in the last year because of
the rising cost of health care. This bill is intended to
further transparency efforts and protect large employers and
their employees and dependents from unjustifiable rate
increases through transparency.
2)BACKGROUND .
a) Health care premiums in the group market. The Medical
Expenditure Panel Survey (MEPS) insurance component is a
survey of business establishments and governments that
collects information on employer-sponsored health
insurance, such as whether insurance is offered,
enrollments, types of plans, and premiums. The survey is
conducted annually by the U.S. Census Bureau under the
sponsorship of the Agency for Healthcare Research and
Quality (AHRQ). MEPS data tables from 2012 show average
annual premiums for private sector employer coverage in
California of $5,422, compared with premiums of $2,936 in
2002, an 85% increase, or an average 6.3% yearly increase.
For family coverage, premiums increased from $8,380 in 2002
to $15,898 in 2012, a 90% increase, or an average 6.6%
yearly increase. For comparison, prices for goods and
services increased 27.6%, an average yearly rate of about
2.5%, between 2002 and 2012, according to the Bureau of
Labor Statistics' Consumer Price Index.
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b) Market segments and employer-based coverage. According
to estimates by the California Health Benefits Review
Program (CHBRP), the large group health insurance market in
California includes 11.8 million enrollees, compared to the
small and individual groups, which, combined, include 6.6
million. However, there are indications that the group
market is eroding. A recent survey by the California
HealthCare Foundation indicates the proportion of
California employers offering coverage has declined
significantly over the last decade, from 69% in 2000 to 61%
in 2013. Coverage is offered to employees at a higher rate
at larger firms, firms with higher wages, and firms with
some union workers. California workers paid an average of
22% of the total premium for single coverage and 33% for
family coverage in 2013, significantly higher shares than
in the previous year. California's HMO premiums have been
higher than the national average since 2010, a shift from
the previous decade. Nearly one-third of covered workers
in small firms had a deductible of $1,000 or more for
single coverage in 2013, up from just 7% in 2006. In large
firms, only 9% had a deductible of $1,000 or more. One in
four California firms reported that they reduced benefits
or increased cost sharing in the last year. California
employers viewed consumer directed health plans, disease
management, and changes in care delivery and payment as the
most effective at controlling health care costs.
c) De-identification of health information under HIPAA.
Federal HIPAA regulations lay out standards for the
de-identification of protected health information, which
involves removing identifiers from health information to
protect individual privacy and allow for the use of health
information for other purposes. The federal standards
provide two ways for health information to be
de-identified, known as the "expert determination" method
and the "safe harbor" method. Under the expert
determination method, information may be considered
de-identified if an expert with knowledge of statistical
and scientific methods of de-identification determines and
documents that the risk is very small that information
about an individual could be used to identify the
individual. Under the safe harbor method, information may
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be considered de-identified if a specified set of
identifiers is removed, including: names, geographic
locations (except state, and, in certain cases, the initial
three digits of a zip code), dates (except year), telephone
numbers, social security numbers, medical record numbers,
and numerous other identifiers.
This bill creates a stronger requirement for
de-identification by requiring a qualified statistician to
certify that data has been de-identified. This requirement
is in addition to the requirement that sharing of
information comply with HIPAA. This creates a higher
standard of de-identification to ensure that individuals
are protected from any potential adverse actions by an
employer based on their health status.
3)SUPPORT . The California Labor Federation (Labor Fed), a
cosponsor of this bill, writes that rising health care costs
are taking a toll on employers, workers, and union trust
funds. The Labor Fed contends that premiums for employer
health insurance plans have risen 185% since 2002, more than
five times the increase in the state's overall inflation. The
Labor Fed argues every dollar that large purchasers have to
put toward health coverage is a dollar that comes out of
workers' pockets. The Labor Fed argues that this bill's
requirement for health plans to disclose claims data to large
purchasers will help those purchasers understand health care
cost drivers, institute cost savings programs, and bargain
effectively with health plans.
UNITE HERE, AFL-CIO, also a cosponsor, describes programs in Las
Vegas, Atlantic City, and New York City that have met the
triple aim of slowing cost increases, improving care quality,
and improving the health of members. UNITE HERE states this
goal was achieved by intense management of the care of members
and careful design of benefits to meet low wage workers'
needs. In Las Vegas, health care costs were reduced by $67
million over 18 months while outcomes were improved by
eliminating copays for diabetes care, working with casinos to
provide healthy meals, and intense diabetes care management.
The result, according to UNITE HERE, was a wage increase for
its members, a strike avoided, and better health for workers.
UNITE HERE argues that its attempts to implement similar
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strategies in California have been stymied by Kaiser
Permanente and other HMOs, which would not provide robust and
timely patient-level data needed to design care management
programs. UNITE HERE further states it has worked with the
American Civil Liberties Union to assure the data sharing
requirements in this bill protect the privacy of workers,
creating patient privacy protections that are stronger than
federal requirements.
Numerous unions, in support, attest that some of their trust
funds spend more per hour on health benefits than the San
Francisco minimum wage, a situation that is outrageous and
unsustainable. These supporters write this bill will help
them determine whether health plans are shifting costs from
the individual and small employer markets to large purchasers.
These supporters further state that, contrary to Governor
Brown's exhortation in his veto of SB 746 (Leno) of 2013, they
have not yet received the data necessary to analyze health
care costs.
4)OPPOSITION (PRIOR VERSION) . Kaiser Permanente, in opposition
to a prior version of this bill, argues that it currently
provides very robust information to its large group
purchasers, and suggests this bill inappropriately inserts the
Legislature into private and voluntary contractual discussions
between plans and purchasers. The California Association of
Health Underwriters (CAHU), also in opposition to a prior
version, argues that health plans currently go to great
lengths to provide as much information as possible to all size
group purchasers to help them evaluate coverage options for
their workers in the highly competitive group market. CAHU
argues this bill's data sharing requirements are not necessary
and that, by creating new administrative costs, this bill has
the potential to raise premium costs.
5)RELATED LEGISLATION .
a) AB 1558 (Roger Hern�ndez) creates the California Health
Data Organization within the University of California to
organize data provided by health plans and insurers on a
website to allow consumers to compare the prices paid for
procedures, as specified. AB 1558 was held on the Senate
Appropriations Committee suspense file.
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b) SB 746 (Leno) would have established new data reporting
requirements on all health plans applicable to products
sold in the large group market and established new specific
data reporting requirements, 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. In his veto message, the Governor stated:
This bill would require all health plans and
insurers to disclose every year broad data
relating to services used by large employer
groups, including aggregate rate increases by
benefit category. The bill also requires that
one health plan additionally provide anonymous
claims data or patient level data upon request
and without charge to large purchasers. I
support efforts to make health care costs more
transparent, and my administration is moving
forward to establish transparency programs that
will cover all health plans and systems. I urge
all parties to work together in this effort. If
these voluntary efforts fail, I will seriously
consider stronger actions.
c) SB 1322 (Ed Hernandez) creates the California Health
Care Cost and Quality Database to receive and report
information from all types of health care entities. SB
1322 was held on the Assembly Appropriations Committee
suspense file.
d) SB 1340 (Ed Hernandez), Chapter 83, Statutes of 2014,
expands provisions related to gag clauses in contracts
between health plans or insurers and providers.
6)AUTHOR'S AMENDMENTS . The author has offered amendments to
address concerns raised by this bill's opponents.
a) This bill currently provides that, if claims data cannot
be de-identified by a qualified statistician, the data
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shall not be shared. However, there is no similar
requirement for aggregated data that may be shared as an
alternative to the sharing of claims data. The author has
proposed to amend this bill to clarify that, if aggregated
data cannot be de-identified by a qualified statistician,
that data shall not be shared.
b) This bill currently includes a minimum threshold of
1,000 covered lives for employers that may receive data
under this bill and no minimum threshold for multiemployer
trusts that may receive data. The author has proposed to
amend this bill to provide that data must be disclosed to
employers with at least 1,000 covered lives (at least 500
of which are covered under the disclosing health plan or
insurer) and multiemployer trusts with at least 500 covered
lives (at least 250 of which are covered under the
disclosing plan or insurer).
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation (cosponsor)
California Teamsters Public Affairs Council (cosponsor)
UNITE HERE (cosponsor)
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 State, County, and Municipal Employees,
Council 57
American Federation of Teachers, Local 2121
B.A.C., Local 3
Berkeley Federation of Teachers
California Alliance of Retired Americans
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Federation of Teachers, AFT, AFL-CIO
California National Organization for Women
California Nurses Association
California Physical Therapy Association
California Professional Firefighters
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California Retired Teachers Association
California School Employees Association
California Teachers Association
California Teamsters Public Affairs Council
CALPIRG
Campaign for a Health California
Communications Workers of America, AFL-CIO, District 9
Communications 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
Health Access California
Health Care for All California
Health Care for All, Nevada Chapter
Health Care for All, Santa Clara Chapter
International Brotherhood of Electrical Workers, Local 332
International Longshore and Warehouse Union
International Longshore Workers and Warehouse Union Pensioners,
San Francisco/Bay Area
Ironworkers Local 377
Job with Justice, San Francisco
Labor United for Universal Healthcare
Laborers Local 261
Los Rios College of Federation of Teachers
Napa/Solano CLC
National Nurses United
National Union of Healthcare Workers
Office and Professional Employees International Union Local 3
Olallieberry Inn Bed and Breakfast, Cambria, California
Older Women's League
Portrero Hill Democratic Club
Professional and Technical Engineers, IFPTE Local 21, AFL-CIO
Progressive Democrats of America
Progressive Voices
Public Citizen
Sacramento Central Labor Council
San Diego Electrical Health and Welfare Trust
San Francisco Building and Construction Trades
San Francisco Central Labor Council
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San Francisco 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
Service Employees International Union 521 Retirees
Services Employees International Union California
Sheet Metal Workers' International Association, Local 104
South Bay Labor Council
State Building and Construction Trades Council of California
UA Local 393
UAW Local 5810
UC/AFT
UNITE/HERE, Local 2
United Educators, San Francisco
UPTE/CWA
Utility Workers Union of America, Local 132
Opposition
America's Health Insurance Plans (prior version)
Anthem Blue Cross (prior version)
Association of California Life & Health Insurance Companies
(prior version)
California Association of Health Plans (prior version)
California Association of Health Underwriters (prior version)
California Chamber of Commerce (prior version)
Kaiser Permanente (prior version)
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097