BILL ANALYSIS �
SB 1322
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Date of Hearing: August 6, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1322 (Hernandez) - As Amended: June 30, 2014
Policy Committee: HealthVote:13-3
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires the Secretary of California Health and Human
Services (CHSS) to contract with one or more private,
independent, nonprofit organizations to establish and administer
the California Health Care Cost and Quality Database.
Specifically, this bill:
1)Specifies contract terms, including that the non-profit
organization(s):
a. Develop methodologies for collection, validation,
refinement, analysis, comparison, review, reporting, and
improvement of health care data.
b. Report information in a form that allows valid
comparisons across care delivery systems.
c. Comply with requests for error correction.
d. Identify the type of data, purpose of use, and
entities and individuals that are required to report to,
or that may have access to the database.
e. Is prohibited from using data for any purpose not
specified in law or in the contract, and may not receive
funding from other source to accomplish the enumerated
purposes, unless funding is received from another
nonprofit or government source and is for the purpose of
research or education.
2)Requires health plans, self-insured plans, suppliers, and
providers, as specified, to provide data to the non-profit(s),
including claims and encounter data, as well as pricing
information from allowed charges for covered health care items
and services or standard price lists, as specified.
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3)Requires the non-profit(s), by January 1, 2018, to make
publicly available a web-based, searchable database that
presents information that facilitates comparisons of cost,
quality, and satisfaction across payers, provider
organizations, and other suppliers of health care services.
4)Specifies analysis the non-profit(s) must perform, and data the
non-profit(s) must collect, maintain, and analyze, including:
a. Claims from private and public payers.
b. Disease and chronic condition registries.
c. Third-party surveys of quality and patient
satisfaction.
d. Reviews by licensing and accrediting bodies.
e. Local and regional public health data.
f. Payer and provider performance on validated measures
of clinical quality and patient experience.
5)Requires the Secretary to convene an advisory committee and
arrange for the preparation of a report based on the findings
of the advisory committee that addresses numerous issues
related to health care costs and quality, as well as develop a
plan for sustainability without using moneys from the General
Fund.
6)Specifies the advisory committee shall not be convened until
the Director of the Department of Finance has determined that
sufficient private or federal funds have been received, and
have been appropriated for this purpose.
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 support an all-payer claims database and searchable
website are in the following range (all costs are assumed GF in
absence of specification of another fund source; 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.
A federal grant is available for states to make improvements to
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health systems (discussed in more detail below). As such, this
project may be eligible for federal funding for planning and
development. This funding would be contingent on federal
approval of the state's competitive grant proposal, but it
appears likely federal funds would be available for planning
and development. Actual costs would be subject to numerous
decisions about the business requirements of such a system, and
could vary significantly depending upon existing capabilities
of bidders.
1)$400,000 to convene an advisory committee and issue the
required report, assuming sufficient private or federal funds
are received (federal/special).
2)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 Database and its data collection and
reporting methodologies are implemented (special funds).
3)Unknown, potentially significant costs would be incurred by
state departments and other state entities listed below.
Actual costs would depend on the frequency and format of
required data, which the bill allows to be specified by the
non-profit.
a) Costs to the Department of Health Care Services
(GF/federal) and the University of California (special
funds) medical centers to provide claims and utilization
data.
b) Costs to the Department of Public Health (DPH) and the
Department of Consumer Affairs (special funds) to provide
reviews by licensing and accrediting bodies. DPH could also
incur costs to provide data from disease and chronic
condition registries, as well as local and regional public
health data (GF/federal/special funds).
c) Other potential state reporting costs, to the extent the
nonprofit organization or organizations establishing and
administering the California Health Care Cost and Quality
Database identify additional state entities that must
report. The bill currently gives the nonprofit(s) the
ability to identify the entities and individuals that are
required to report data.
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COMMENTS
1)Purpose . The author states this bill is intended to help make
available valid performance and cost information to promote
care that is safe, medically effective, patient-centered,
timely, efficient, affordable and equitable. Additionally,
this bill seeks to provide consumers and purchasers information
so they can choose the best quality and value available to
them.
2)Price Transparency and Quality 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:
a) The federal State Innovation Models Initiative (SIM) is
providing support to states for the development and testing
of state-based models for multi-payer payment and health
care delivery system transformation, with the aim of
improving health system performance. Nearly $300 million has
been awarded to 25 states to date. The Centers for Medicare
and Medicaid Services (CMS) is currently launching Round Two
of the SIM initiative to provide up to $730 million for
continued support for this program. The CHSS Agency has
convened a stakeholder group to inform California's SIM
(CalSIM) grant proposal. California received a SIM Design
grant in March 2013, and submitted an implementation grant
proposal on July 18, 2014. The CalSIM effort has identified
a price and quality transparency system, as well as public
reporting, as two critical building blocks in this effort.
Their plans appear similar to the requirements of this bill.
Assuming the state's application is approved, a potential
implementation grant of up to $100 million is available.
b) The California Department of Insurance received a $5.2
million federal grant, a substantial portion of which is
allocated towards collecting and analyzing health care cost
and quality information, and providing that information to
the public on a hosted website in order to increase
transparency of health care pricing within the state. CDI
entered into an interagency agreement with the University of
California, San Francisco (UCSF), effective June 23, 2014,
to implement this project. According to CDI, the agreement
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will extend through 9/30/2015, with the possibility of a
12-month no cost extension. Pursuant to the agreement, UCSF
will collect and aggregate claims and quality data from
publicly and commercially available data sources pertaining
to private payers and public programs (such as Medicare).
UCSF will analyze the data to develop and update a list of
average prices for a number of medical procedures and
episodes of care, as well as research and develop quality
measures and clinical content pertaining to clinical
effectiveness, patient safety, and appropriateness of care.
The information will be published on a public website by
July 2015. UCSF and CDI indicate they have met with the
CHSS Agency to discuss coordination of their initiative with
the CalSIM initiative.
c) The California Healthcare Performance Initiative (CHPI)
is a private non-profit initiative currently collecting
Medicare fee-for-service claims as well as private health
plan claims data, and is in the process of integrating these
data sources.
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 gaps for
state agencies, support health care and payment reform
initiatives, and create transparency for consumers, purchasers,
and state agencies. According to the non-profit APCD Council,
11 states have existing all-payer claims databases and more are
in some stage of implementation, including New York.
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 ongoing funding will come from data product
sales.
3)Related Legislation . AB 1558 (Hern�ndez) is similar to this
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bill. It 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.
4)Staff Comments . This bill requires the CHHS Secretary to
convene an advisory committee to make recommendations regarding
the Database, including a business plan for sustainability
without using moneys from the GF.
Staff suggests costs to support a Database should accrue to
beneficiaries of Database activities. If the state, as a
payer, purchaser, and regulator of health care, is the prime
beneficiary, the state has the responsibility to be the primary
funder of Database operations, whether through the GF, federal
funds, existing special funds whose purposes are sufficiently
aligned with the bill's intent, or, as other states have
established, a special assessment to support the Database. An
investment to establish and maintain such data has significant
potential to pay dividends for the state, in terms of health
care cost savings and quality improvement, fraud prevention,
monitoring and oversight, and identification of trends, among
other things.
If the intent is also to serve other interests, these other
beneficiaries should also pay to support the Database, through
data product sales, for example. Staff notes generating non-GF
support may require the Database to pursue activities that
serve the interest of entities willing to pay for data, which
could in some cases run counter to the intent of the bill to
improve health care delivery broadly. The bill states intent
to benefit consumers, purchasers, and providers. Although
there are almost innumerous use cases for a robust Database, it
is unclear precisely how and to what extent each type of entity
may benefit from the Database's activities, other than the via
the public website function. The bill also leaves a great deal
of discretion to the non-profit(s), allowing them to identify
the type of data, purpose of use, and entities and individuals
that are required to report, or that may have access to the
data. Given this lack of clarity with respect to the specific
activities of the Database that may benefit various entities,
it is difficult to assess the sources and relative magnitude of
funding that would be most appropriate. More clearly defining
who will benefit from the Database operations would inform
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decisions about ongoing funding.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081