Existing law establishes health care coverage programs to provide health care to segments of the population meeting specified criteria who are otherwise unable to afford health care coverage and provides for the licensure and regulation of health insurers and health care service plans.

This bill would require the California Health and Human Services Agency to research the options for developing a cost, quality, and equity data atlas. The bill would require the research to include certain topics, including, among others, identification of key data submitters and a comparative analysis of potential models used in other states. The bill would authorize the agency to enter into contracts or agreements to conduct the research and would require the agency to make the results of the research available to the public no later than March 1, 2017, by submitting a report to the Assembly and Senate Committees on Health.

Existing law establishes health care coverage programs to provide health care to segments of the population meeting specified criteria who are otherwise unable to afford health care coverage and provides for the licensure and regulation of health insurers and health care service plans.

This bill would require the California Health and Human Services Agency to research the options for developing a cost, quality, and equity data atlas. The bill would require the research to include certain topics, including, among others, identification of key data submitters and a comparative analysis of potential models used in other states. The bill would authorize the agency to enter into contracts or agreements to conduct the research and would require the agency to make the results of the research available to the public no later than March 1, 2017, by submitting a report to the Assembly and Senate Committees on Health.

Existing law establishes health care coverage programs to provide health care to segments of the population meeting specified criteria who are otherwise unable to afford health care coverage and provides for the licensure and regulation of health insurers and health care service plans.

This bill would require the California Health and Human Services Agency to research the options for developing a cost, quality, and equity transparency database. data atlas. The bill would require the research to include certain topics, including, among others, identification of key data submitters and a comparative analysis of potential models used in other states. The bill would authorize the agency to enter into contracts or agreements to conduct the research and would require the agency to make the results of the research available to the public no later than March 1, 2017, by submitting a report to the Assembly and Senate Committees on Health.

Existing law establishes health care coverage programs to provide health care to segments of the population meeting specified criteria who are otherwise unable to afford health care coverage and provides for the licensure and regulation of health insurers and health care service plans.

Existing law establishes health care coverage programs to provide health care to segments of the population meeting specified criteria who are otherwise unable to afford health care coverage and provides for the licensure and regulation of health insurers and health care service plans.

This bill would require certain health care entities, including health care service plans, to provide specified information to the Secretary of California Health and Human Services. The bill would authorize the secretary to report a health care entity that fails to comply with that requirement to the health care entitys regulating agency and would authorize the regulating agency to enforce that requirement using its existing enforcement procedures.

The bill would require all data disclosures made pursuant to these provisions to comply with all applicable state and federal laws for the protection of the privacy and security privacy, security, and confidentiality of data and would prohibit the public disclosure of any unaggregated, individually identifiable health information. information or medical information. The bill would also require individually identifiable health information and medical information to be protected by security measures including, but not limited to, encryption. The bill would require that certain confidentially negotiated contract terms be protected in data disclosures made pursuant to these provisions and would prohibit certain individually identifiable proprietary contract information from being disclosed in an unaggregated format. The bill would authorize the secretary to enter into contracts or agreements to share the information collected under the bill, under prescribed conditions.

This bill would also require the secretary to convene an advisory committee composed of a broad spectrum of health care stakeholders and experts, as specified, to identify the type of data, purpose of use, and entities and individuals that are required to report to, or that may have access to, a health care cost and quality database. The bill would require the secretary to arrange for the preparation of a report to the Legislature and the Governor, to be submitted by January 1, 2019, that examines and addresses specified issues, including, among others, containing the cost of health care services and coverage. The bill would prohibit members of the committee from receiving a per diem or travel expense reimbursement, or any other expense reimbursement.

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.

This bill would make legislative findings to that effect.

Existing law establishes health care coverage programs to provide health care to segments of the population meeting specified criteria who are otherwise unable to afford health care coverage and provides for the licensure and regulation of health insurers and health care service plans.

This bill would require certain health care entities, including health care service plans, to provide specified information to the Secretary of California Health and Human Services. The bill would authorize the secretary to report a health care entity that fails to comply with that requirement to the health care entitys regulating agency and would authorize the regulating agency to enforce that requirement using its existing enforcement procedures.

The bill would require all data disclosures made pursuant to these provisions to comply with all applicable state and federal laws for the protection of the privacy and security of data and would prohibit the public disclosure of any unaggregated, individually identifiable health information. The bill would require that certain confidentially negotiated contract terms be protected in data disclosures made pursuant to these provisions and would prohibit certain individually identifiable proprietary contract information from being disclosed in an unaggregated format. The bill would authorize the secretary to enter into contracts or agreements to share the information collected under the bill, under prescribed conditions.

This bill would also require the secretary to convene an advisory committee composed of a broad spectrum of health care stakeholders and experts, as specified, to, among other things, develop the parameters for establishing, implementing, and administering to identify the type of data, purpose of use, and entities and individuals that are required to report to, or that may have access to, a health care cost and quality database. The bill would require the secretary to arrange for the preparation of an annual a report to the Legislature and the Governor Governor, to be submitted by January 1, 2019, that examines and addresses specified issues, including, among others, containing the cost of health care services and coverage. The bill would provide that prohibit members of the committee not receive from receiving a per diem or travel expense reimbursement, or any other expense reimbursement.

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.

This bill would make legislative findings to that effect.

Existing law establishes the Office of Patient Advocate within the California Health and Human Services Agency, to provide assistance to, and advocate on behalf of, health care consumers. The duties of the office, include, among other things, compiling an annual publication, to be made available on the offices Internet Web site, of specified information relating to certain publicly operated consumer assistance centers.

This bill would require the office to log, and include in the annual publication, a call centers record of answering calls within 30 seconds, the number of abandoned calls, and the number of busy messages sent to consumers.

 UNFINISHED BUSINESS  

Bill No: SB 1159

Author:

:

Vote:

SENATE HEALTH COMMITTEE: 8-0, 4/6/16

AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Pan, Roth, Wolk

NO VOTE RECORDED: Nielsen

SENATE JUDICIARY COMMITTEE: 5-2, 4/19/16

AYES: Jackson, Hertzberg, Leno, Monning, Wieckowski

NOES: Moorlach, Anderson

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

SENATE FLOOR: 25-12, 6/2/16

AYES: Beall, Block, De León, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Nguyen, Pan, Pavley, Roth, Wieckowski, Wolk

NOES: Anderson, Bates, Berryhill, Cannella, Fuller, Gaines, Huff, Moorlach, Morrell, Nielsen, Stone, Vidak

NO VOTE RECORDED: Allen, Galgiani, Runner

ASSEMBLY FLOOR: 60-19, 8/23/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill requires the California Health and Human Services Agency (CHHSA) to research the options for developing a cost, quality, and equity transparency database that is consistent with the confidentiality of medical information in existing law.

Assembly Amendments (1) delete the requirement that certain health care entities to provide medical claims, cost, and quality information to CHHSA Secretary for the purpose of developing information for inclusion in a health care cost and quality database (and related provisions) and instead require CHHSA to research the options for developing a cost, quality, and equity transparency database that is consistent with the confidentiality of medical information in existing law; (2) require this research to include identification of key data submitters; a comparative analysis of potential models used in other states and an assessment of the extent to which information should be included in the database; an assessment of types of governance structures that incorporate representatives of health care stakeholders and experts; recommendations on potential funding approaches; an assessment on the extent to which the database could be developed in conjunction with existing public or private activities, as specified; and, consultation with a broad spectrum of health care stakeholders and experts, as specified; and (3) permit CHHSA to enter into contracts or agreements to conduct the research described above. Require CHHSA to make public the results of the research described above no later than March 1, 2017, by submitting a report to the Assembly and Senate Committees on Health.

ANALYSIS:

Existing law:

1. 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. 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.
2. Requires OSHPD, to publish annually risk-adjusted outcome reports on medical, surgical and obstetric conditions or procedures, and others selected by OSHPD in accordance with specified criteria.
3. 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.
4. 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.
5. Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurers. Requires specified health plans and insurers to submit reports to state and federal regulators on medical loss ratios, rate filings, enrollment data, as specified.

This bill:

1. Requires CHHSA to research the options for developing a cost, quality, and equity transparency database that is consistent with the confidentiality of medical information in existing law.
2. Requires this research to include all of the following:
   1. Identification of key data submitters, including health care service plans (health plans), health insurers, suppliers, providers, and self-insured employers, as defined;
   2. A comparative analysis of potential models used in other states and an assessment of the extent to which information in addition to the following should be included in the cost, quality, and equity transparency database:
      1. Utilization data from health plan and health insurers' medical, dental, and pharmacy claims. In the case of entities that do not use claims data, including, but not limited to, integrated delivery systems, encounter data consistent with the core set of data elements for data submission proposed by the All-Payer Claims Database Council, the University of New Hampshire, and the National Association of Health Data Organizations;
      2. Pricing information for health care items, services, and medical and surgical episode of care gathered from allowed charges for covered health care items and services. In the case of entities that do not use or produce individual claims, price information that is the best possible proxy to pricing information for health care items, services, and medical and surgical episodes of care available in lieu of actual cost data to allow for meaningful comparisons of provider prices and treatment costs;
      3. Information sufficient to determine the impacts of social determinants of health, including age, gender, race, ethnicity, limited English proficiency, sexual orientation and gender identity, ZIP Code, and any other factors for which there are peer-reviewed evidence; and,
      4. Clinical data from health care service plans, integrated delivery systems, hospitals, and/or clinics that is not included in the core set of data elements for data submission proposed by the All Payer Claims Database Council and the National Association of Health Data Organizations.
   3. An assessment of types of governance structures that incorporate representatives of health care stakeholders and experts, as specified;
   4. Recommendations on potential funding approaches to support the activities of the cost, quality, and equity transparency database that recognize federal and state confidentiality of medical information laws;
   5. An assessment on the extent to which the cost, quality, and equity transparency database could be developed in conjunction with existing public or private activities, as specified; and,
   6. Consultation with a broad spectrum of health care stakeholders and experts, as specified.
3. Permits CHHSA to enter into contracts or agreements to conduct the research described above.
4. Requires CHHSA to make public the results of the research described above no later than March 1, 2017, by submitting a report to the Assembly and Senate Committees on Health.
5. Sunsets the bill on January 1, 2021.

Comments

1. Author’s statement. According to the author, beginning in March 2014, the Senate Committee on Health convened several health care experts to discuss factors that contribute to the growing cost of health care in California and efforts to make care more affordable. At a second hearing in February of this year, the Committee heard testimony related to some major cost drivers in the health care system, including pharmaceuticals, hospital costs, and the effects of geographic location on contracting. The third, held in March of this year, served to educate members and the public about the effect of health care costs on consumers. This series of hearings examined policy solutions to control health care costs as millions of Californians obtain coverage under the Affordable Care Act (ACA). Testimony presented at the hearings illustrated the complexity of the health care market and the array of approaches to containing costs. In addition to expanded coverage, the author believes that, like past health care reform efforts, a long-term, comprehensive action agenda for California policymakers is necessary to ensure that health care costs are appropriate and health care premiums are affordable, especially given that the ACA contains a mandate for individuals to purchase coverage. The author states this bill is intended to help make available valid performance information to promote care that is safe, medically effective, patient-centered, timely, efficient, affordable and equitable. This bill seeks to put provider cost and performance information into the hands of consumers and purchasers so that they are able to understand their financial liability and realize the best quality and value available to them.
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.
3. Existing California initiatives. In California, the California Healthcare Performance Information System (CHPI) is a voluntary physician performance database with statistical analysis that will eventually publish information online. According to the CHPI Web site, starting in 2015, output will be an analysis of claims data aggregated from more than 12 million patients enrolled in CHPI’s three participating California health plans- Blue Shield, Anthem Blue Cross and United Healthcare, as well as Medicare. CHPI was federally certified to include data from Medicare’s five million California beneficiaries, and became the first Qualified Entity to receive Medicare data.

The University of California, San Francisco is working with the California CDI on a medical cost and quality transparency website. According to CDI, the Web site will report average prices paid for episodes of care or annual costs for chronic conditions, as well as quality measures where available. Prices will be aggregated across payers and providers, and shown at the regional level based on the 19 California rating regions (some regions may need to be consolidated pursuant to the terms of the data license agreement). The Web site is expected to provide price information for 95 to 99 episodes of care or conditions. Five to 15 of those episodes or conditions will have both price and quality information as well as consumer education content created by Consumers Union. Quality information will consist of existing performance, appropriateness, and outcome measures.

The Regional Cost and Quality Atlas is an interactive Web site to be released in Summer 2016 that will compare aggregated cost and quality data, by payer/product type (not individual payers), for each of 19 regions (the same regions that had been defined for Covered California). The project is a partnership between the Integrated Healthcare Association (IHA), the California Healthcare Foundation, and CHHSA. Working with large physician organizations and health plans, IHA developed a methodology for calculating risk-adjusted Total Cost of Care to be used as part of the Pay for Performance program. Plans submit detailed data files including claims and enrollment data to Truven Health Systems. Truven uses this detail to calculate actual payments to physician organizations for a set of enrollees divided by number of enrollees. Payments include professional services, pharmacy, hospital care, ancillary services, as well as payments made by consumers to cover cost-sharing amounts.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to Assembly Appropriations Committee:

1. The activities required here are not expected to result in significant additional state costs, as they are largely consistent with existing activities of CHHSA, funded by an existing federal grant. CHHSA will incur minor costs to submit a legislative report by March 1, 2017.
2. It should be noted this bill does not explicitly require a database to be constructed, but it authorizes a study and related activities. Development of a database as contemplated here, if it were to be housed in the state, would result in General Fund cost pressure estimated in the low millions one-time for start-up costs and low millions ongoing, based on an analysis by Manatt Health Solutions of a California-specific database. 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, assuming the database implemented through a contract. This bill requires an analysis of potential funding sources to support the database.

SUPPORT: (Verified 8/23/16)

California Labor Federation

California Pan-Ethnic Health Network

Consumers Union

Health Access California

OPPOSITION: (Verified 8/23/16)

None received

ASSEMBLY FLOOR: 60-19, 8/23/16

AYES: Alejo, Arambula, Atkins, Baker, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Roger Hernández, Holden, Irwin, Jones-Sawyer, Kim, Levine, Linder, Lopez, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Waldron, Weber, Wilk, Williams, Wood, Rendon

NOES: Achadjian, Travis Allen, Bigelow, Brough, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Lackey, Mathis, Mayes, Melendez, Patterson, Steinorth, Wagner

NO VOTE RECORDED: Gray

Prepared by:

8/23/16 20:19:27

**** END ****

SENATE THIRD READING

STR Bill Id:SB 1159

Author:(Hernandez)

As Amended Ver:August 19, 2016

Majority vote

SENATE VOTE: 25-12

SUMMARY: Establishes the California Health Care Cost, Quality, and Equity Data Atlas. Specifically, this bill:

1. Requires the California Health and Human Services Agency (CHHSA) to research the options for developing a cost, quality, and equity transparency database that is consistent with the confidentiality of medical information in existing law.
2. Requires this research to include all of the following:
   1. Identification of key data submitters, including health care service plans (health plans), health insurers, suppliers, providers, and self-insured employers, as defined;
   2. A comparative analysis of potential models used in other states and an assessment of the extent to which information in addition to the following should be included in the cost, quality, and equity transparency database:
      1. Utilization data from health plan and health insurers' medical, dental, and pharmacy claims. In the case of entities that do not use claims data, including, but not limited to, integrated delivery systems, encounter data consistent with the core set of data elements for data submission proposed by the All-Payer Claims Database Council, the University of New Hampshire, and the National Association of Health Data Organizations;
      2. Pricing information for health care items, services, and medical and surgical episode of care gathered from allowed charges for covered health care items and services. In the case of entities that do not use or produce individual claims, price information that is the best possible proxy to pricing information for health care items, services, and medical and surgical episodes of care available in lieu of actual cost data to allow for meaningful comparisons of provider prices and treatment costs;
      3. Information sufficient to determine the impacts of social determinants of health, including age, gender, race, ethnicity, limited English proficiency, sexual orientation and gender identity, ZIP Code, and any other factors for which there are peer-reviewed evidence; and,
      4. Clinical data from health care service plans, integrated delivery systems, hospitals, and/or clinics that is not included in the core set of data elements for data submission proposed by the All Payer Claims Database Council and the National Association of Health Data Organizations.
   3. An assessment of types of governance structures that incorporate representatives of health care stakeholders and experts, as specified;
   4. Recommendations on potential funding approaches to support the activities of the cost, quality, and equity transparency database that recognize federal and state confidentiality of medical information laws;
   5. An assessment on the extent to which the cost, quality, and equity transparency database could be developed in conjunction with existing public or private activities, as specified; and,
   6. Consultation with a broad spectrum of health care stakeholders and experts, as specified.
3. Permits CHHSA to enter into contracts or agreements to conduct the research described above.
4. Requires CHHSA to make public the results of the research described above no later than March 1, 2017, by submitting a report to the Assembly and Senate Committees on Health.
5. Sunsets on January 1, 2021.
6. Permits the CHHSA to use federal funds.

FISCAL IMPACT: According to the Assembly Appropriations Committee:

1. The activities required here are not expected to result in significant additional state costs, as they are largely consistent with existing activities of CHHSA, funded by an existing federal grant. CHHSA will incur minor costs to submit a legislative report by March 1, 2017.
2. It should be noted this bill does not explicitly require a database to be constructed, but it authorizes a study and related activities. Development of a database as contemplated here, if it were to be housed in the state, would result in General Fund cost pressure estimated in the low millions one-time for start-up costs and low millions ongoing, based on an analysis by Manatt Health Solutions of a California-specific database. 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, assuming the database implemented through a contract. This bill requires an analysis of potential funding sources to support the database.

COMMENTS: According to the author, beginning in March 2014, the Senate Committee on Health convened several health care experts to discuss factors that contribute to the growing cost of health care in California and efforts to make care more affordable. At a second hearing in February of this year, the Senate Health Committee heard testimony related to some major cost drivers in the health care system, including pharmaceuticals, hospital costs, and the effects of geographic location on contracting. The third, held in March of this year, served to educate members and the public about the effect of health care costs on consumers. This series of hearings examined policy solutions to control health care costs as millions of Californians obtain coverage under the federal Patient Protection and Affordable Care Act. The author states this bill is intended to help make available valid performance information to promote care that is safe, medically effective, patient-centered, timely, efficient, affordable, and equitable.

All-Payer claims databases. In 2007, the Regional All-Payer Healthcare Information Counsel (Counsel) began as a convening organization to bring together several Northeast states that had, or were developing, All-Payer Claims Database (APCD) systems. The Counsel's vision was to support cross-state data harmonization and analytic activities. In 2010, the Counsel changed its name to the APCD Council to reflect the expanded reach. The APCD Council is a learning collaborative with a multi-fold purpose of serving an information sharing capacity for those states that have developed, or are developing APCD; providing technical assistance to states; and, catalyzing states to achieve mutual goals. Some of APCD Council's current activities include harmonizing the data collection and data release rules across the multiple state databases; developing a strategy for integrating Medicare data into the all payer databases; sharing reporting applications being developed by states; policy analysis; and, supporting other states developing all-payer claims databases.

By January 2016, at least 18 states had enacted APCDs while more than a dozen others considered such a law or program. They are designed to inform cost containment and quality improvement efforts. 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.

Analysis Prepared by: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0004605

SENATE THIRD READING

STR Bill Id:SB 1159

Author:(Hernandez)

As Amended Ver:August 15, 2016

Majority vote

SENATE VOTE: 25-12

SUMMARY: Establishes the California Health Care Cost, Quality, and Equity Transparency Database. Specifically, this bill:

1. Requires the California Health and Human Services Agency (CHHSA) to research the options for developing a cost, quality, and equity transparency database that is consistent with the confidentiality of medical information in existing law.
2. Requires this research to include all of the following:
   1. Identification of key data submitters, including health care service plans (health plans), health insurers, suppliers, providers, and self-insured employers, as defined;
   2. A comparative analysis of potential models used in other states and an assessment of the extent to which information in addition to the following should be included in the cost, quality, and equity transparency database:
      1. Utilization data from health plan and health insurers' medical, dental, and pharmacy claims. In the case of entities that do not use claims data, including, but not limited to, integrated delivery systems, encounter data consistent with the core set of data elements for data submission proposed by the All-Payer Claims Database Council, the University of New Hampshire, and the National Association of Health Data Organizations;
      2. Pricing information for health care items, services, and medical and surgical episode of care gathered from allowed charges for covered health care items and services. In the case of entities that do not use or produce individual claims, price information that is the best possible proxy to pricing information for health care items, services, and medical and surgical episodes of care available in lieu of actual cost data to allow for meaningful comparisons of provider prices and treatment costs; and,
      3. Information sufficient to determine the impacts of social determinants of health, including age, gender, race, ethnicity, limited English proficiency, sexual orientation and gender identity, ZIP Code, and any other factors for which there are peer-reviewed evidence;
   3. An assessment of types of governance structures that incorporate representatives of health care stakeholders and experts, as specified;
   4. Recommendations on potential funding approaches to support the activities of the cost, quality, and equity transparency database that recognize federal and state confidentiality of medical information laws;
   5. An assessment on the extent to which the cost, quality, and equity transparency database could be developed in conjunction with existing public or private activities, as specified; and,
   6. Consultation with a broad spectrum of health care stakeholders and experts, as specified.
3. Permits CHHSA to enter into contracts or agreements to conduct the research described above.
4. Requires CHHSA to make public the results of the research described above no later than March 1, 2017 by submitting a report to the Assembly and Senate Committees on Health.
5. Sunsets on January 1, 2021.
6. Permits the CHHSA to use federal funds.

FISCAL IMPACT: According to the Assembly Appropriations Committee:

1. The activities required here are not expected to result in significant additional state costs, as they are largely consistent with existing activities of the agency, funded by an existing federal grant. CHHSA will incur minor costs to submit a legislative report by March 1, 2017.
2. It should be noted this bill does not explicitly require a database to be constructed, but it authorizes a study and related activities. Development of a database as contemplated here, if it were to be housed in the state, would result in General Fund cost pressure estimated in the low millions one-time for start-up costs and low millions ongoing, based on an analysis by Manatt Health Solutions of a California-specific database. 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, assuming the database implemented through a contract. This bill requires an analysis of potential funding sources to support the database.

COMMENTS: According to the author, beginning in March 2014, the Senate Committee on Health convened several health care experts to discuss factors that contribute to the growing cost of health care in California and efforts to make care more affordable. At a second hearing in February of this year, the Senate Health Committee heard testimony related to some major cost drivers in the health care system, including pharmaceuticals, hospital costs, and the effects of geographic location on contracting. The third, held in March of this year, served to educate members and the public about the effect of health care costs on consumers. This series of hearings examined policy solutions to control health care costs as millions of Californians obtain coverage under the federal Patient Protection and Affordable Care Act. The author states this bill is intended to help make available valid performance information to promote care that is safe, medically effective, patient-centered, timely, efficient, affordable, and equitable.

All-Payer claims databases. In 2007, the Regional All-Payer Healthcare Information Counsel (Counsel) began as a convening organization to bring together several Northeast states that had, or were developing, All-Payer Claims Database (APCD) systems. The Counsel's vision was to support cross-state data harmonization and analytic activities. In 2010, the Counsel changed its name to the APCD Council to reflect the expanded reach. The APCD Council is a learning collaborative with a multi-fold purpose of serving an information sharing capacity for those states that have developed, or are developing APCD; providing technical assistance to states; and, catalyzing states to achieve mutual goals. Some of APCD Council's current activities include harmonizing the data collection and data release rules across the multiple state databases; developing a strategy for integrating Medicare data into the all payer databases; sharing reporting applications being developed by states; policy analysis; and, supporting other states developing all-payer claims databases.

By January 2016, at least 18 states had enacted APCDs while more than a dozen others considered such a law or program. They are designed to inform cost containment and quality improvement efforts. 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.

Analysis Prepared by: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0004125

Date of Hearing: August 3, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 1159

Author:(Hernandez) – As Amended Ver:June 30, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires data reporting by health care entities to the California Health and Human Services Agency (CHSSA), for purposes of developing a California Health Care Cost and Quality Database. Specifically, this bill:

1. Requires reporting by the following entities:
2. Health plans and health insurers (self-insured employers and multiemployer self-insured plans are authorized, but not required, to report data).
3. Providers, defined as hospitals, skilled nursing facilities, comprehensive outpatient rehabilitation facilities, home health agencies, hospices, clinics, and rehabilitation agencies.
4. Suppliers defined a physicians or other health care practitioners, or entities that furnish health care services other than a provider.
5. Specified reports must include utilization data, pricing data, and information related to the social determinants of health.
6. Establishes an advisory committee to identify the type of data, purpose of use, and entities and individuals that are required to report to, or that may have access to, a health care cost and quality database.
7. Requires the advisory committee to issue a report addressing specified issues related to health care cost, quality, efficiency, and transparency, as well as health disparities and wellness.
8. Includes a number or privacy provisions that intend to protect consumers from unauthorized information disclosure, as well as provisions that protect confidentiality of negotiated contracts between health plans and providers or suppliers.

FISCAL EFFECT:

1. One-time GF costs of $40,000 to CHHSA to provide staff support to the required advisory committee and to develop the report on health care utilization and financing issues. Ongoing costs are expected to be minor.
2. A number of state health care regulators are likely to incur costs to enforce data reporting requirements. Enforcement costs are inherently difficult to project; in this case costs would depend on the ultimate scope of data collection requirements, which is to be decided by the advisory committee, and the level of compliance. Enforcement costs are estimated as follows:
   1. Potential ongoing costs of about $100,000 per year for Department of Insurance enforcement of the requirement to report data by insurers (Insurance Fund) and indeterminate costs for Department of Managed Health Care enforcement of the requirement to report data by health plans (Managed Care Fund.)
   2. Potential, likely minor and absorbable, enforcement costs to other regulatory entities including the California Department of Public Health, which oversees health facilities, and regulatory boards within the Department of Consumer Affairs, such as the Medical Board of California.
3. GF cost pressure to develop and maintain a database, estimated in the low millions one-time for start-up costs and low millions ongoing, based on an analysis by Manatt Health Solutions of a California-specific database. 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, assuming the database implemented through a contract. It should be noted this bill does not explicitly require the database to be constructed, but it authorizes related activities.

COMMENTS:

1. Purpose. The author states this bill is intended to help make available valid performance information to promote care that is safe, medically effective, patient-centered, timely, efficient, affordable, and equitable. This bill seeks to put provider cost and performance information into the hands of consumers and purchasers so that they are able to understand their financial liability and realize the best quality and value. This bill is supported by consumer and health care advocates, and has no opposition.
2. Background.  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.  Indeed, there has been a significant amount of discussion in California about the creation of a cost and quality database. A failed federal grant application for a project entitled California State Innovation Model (CalSIM), submitted by the CHHSA in 2014, included the creation of such a database. The CalSIM effort identified a price and quality transparency system as a critical building block in the effort to transform and improve the health care system.

Other projects are underway as well. The California Healthcare Performance Initiative is a private non-profit initiative currently collecting Medicare fee-for-service claims data, as well as private health plan claims data, and is in the process of integrating these data sources. In addition, a recent federal grant received by CDI supported a consumer-facing website called California Healthcare Compare, which launched last year to provide consumer-friendly information on health care costs and quality for various common procedures. Finally, the Regional Cost and Quality Atlas is an interactive Website to be released this summer that will compare aggregated cost and quality data, by payer and product type, for each of 19 California regions.

1. All-Payer Claims Databases, or APCDs, are large-scale databases that systematically collect health care claims (itemized statements of health care services and costs and/or payments) 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 National Conference of State Legislatures, by January 2016 at least 18 states had enacted APCDs while more than a dozen others considered such a law or program. Though the data envisioned to be collected by this bill is slightly broader than simply claims, the concept is very similar to an APCD.
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. Many states also expect a portion of ongoing funding will come from data product sales.  
3. Prior Legislation.
   1. SB 26 (Hernandez) of 2015 and SB 1322 (Hernandez) of 2014 were similar to this bill. SB 26 was held on the Senate Appropriations Committee suspense file, and SB 1322 was held on the suspense file of this committee.
   2. AB 1558 (Roger Hernández) of 2014, would have created 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.
4. Staff Comments. This bill does not identify a funding source. 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. Other states have demonstrated 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.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: June 28, 2016

ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION

Ed Chau, Chair

SBPCA Bill Id:SB 1159

Author:(Hernandez) – As Amended Ver:May 31, 2016

SENATE VOTE: 25-12

SUBJECT: California Health Care Cost and Quality Database

SUMMARY: Requires certain health care entities to provide medical claims, cost, and quality information to the Secretary of California Health and Human Services Agency (CHHSA) for the purpose of developing information for inclusion in a health care cost and quality database, and further requires all data disclosures to comply with applicable state and federal laws for the protection of the privacy and security of data, and prohibits the public disclosure of any unaggregated, individually identifiable health information. Specifically, this bill:

1. Establishes the California Health Care Cost and Quality Database.
   
2. Requires health care service plans, health insurers, suppliers, providers, and self-insured employers and plans, as defined, (health plans) to provide to CHHSA for the sole purpose of creating a health care cost and quality database, all of the following:
   
   1. Utilization data from health plan and health insurers’ medical, dental, and pharmacy claims, or (for entities that do not use claims data) encounter data consistent with the core set of data elements for data submission proposed by the All-Payer Claims Database Council (APCD Council), the University of New Hampshire, and the National Association of Health Data Organizations;
      
   2. Pricing information for health care items, services, and medical and surgical episodes of care gathered from allowed charges for covered health care items and services, or (for entities that do not produce individual claims) price information that is the best possible proxy to pricing information for health care items, services, and medical and surgical episodes of care available to allow for meaningful comparisons of provider prices and treatment costs; and
      
   3. Information sufficient to determine the impacts of social determinants of health, including age, gender, race, ethnicity, limited English proficiency, sexual orientation and gender identity, ZIP Code, and any other factors for which there is peer-reviewed evidence.
      
3. Permits CHHSA to report an entity’s failure to comply with these provisions to the entity’s regulating agency, authorizes the regulating agency to enforce these provisions using existing enforcement procedures, requires moneys collected from enforcement to be subject to appropriation by the Legislature, and specifies that failure to comply with these provisions is not a crime.
   
4. Requires all uses and disclosures of data pursuant to this bill to comply with all applicable state and federal laws for the protection of the privacy and security of data, including, but not limited to, the Confidentiality of Medical Information Act (CMIA), the Information Practices Act of 1977 (IPA), the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), the federal Health Information Technology for Economic and Clinical Health Act, and all implementing regulations.
   
5. Requires all policies and protocols developed for this bill to ensure that the privacy, security, and confidentiality of individually identifiable health information are protected.
   
6. Prohibits CHHSA from publicly disclosing any unaggregated, individually identifiable health information, and requires CHHSA to develop a protocol for assessing the risk of reidentification stemming from public disclosure of any health information that is aggregated.
   
7. Defines individually identifiable health information consistent with federal law.
   
8. Protects from public disclosure any confidentially negotiated contract terms contained in a contract between a health plan or health insurer and a provider or supplier.
9. Prohibits disclosure in an unaggregated format of individually identifiable proprietary contract information included in a contract between a health plan or health insurer and a provider or supplier.
   
10. Authorizes CHHSA to enter into contracts or agreements to share the information collected in this bill so long as the use of that information complies with the requirements of this bill.
    
11. Requires CHHSA to convene an advisory committee, composed as specified, to identify the type of data, purpose of use, and entities and individuals that are required to report to, or may have access to, a health care cost and quality database.
12. Requires the advisory committee to hold public meetings, subject to the Bagley-Keene Open Meeting Act, with stakeholders, solicit input, and set its own meeting agendas. .
    
13. Requires CHHSA to submit a report to the Legislature and the Governor on or before January 1, 2019, based on the advisory committee’s findings, including input from public meetings, and requires the report to address, at a minimum, the following topics:
    
    1. Assessing California health care needs and available resources;
    2. Containing the cost of health care services and coverage;
    3. Improving the quality and medical appropriateness of health care;
    4. Reducing health disparities and addressing the social determinants of health;
    5. Increasing the transparency of health care costs and the relative efficiency with which care is delivered;
    6. Use of disease management, wellness, prevention, and other innovative programs to keep people healthy, reduce disparities and costs, and improve health outcomes for all populations;
    7. Efficient utilization of prescription drugs and technology;
    8. Reducing unnecessary, inappropriate, and wasteful health care; and,
    9. Educating consumers in the use of health care information.
       
14. Repeals the bill’s reporting requirement on July 1, 2022.
    
15. Prohibits advisory committee members from receiving per diem or travel expense reimbursement, or any other expense reimbursement.
    
16. Makes findings and declarations that the public's right of access to meetings or writings of public bodies, officials, or agencies must be limited because certain information must remain confidential in order to protect confidential and proprietary information submitted to CHHSA.
    
17. States that the intent of the bill is to make cost and quality data available and encourage health care service plans, health insurers, and providers to develop innovative approaches, services, and programs that are cost effective and responsive, recognizing the diversity of California and the impact of social determinants of health.
    

EXISTING LAW:

1. 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; 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; and requires OSHPD to publish annually risk-adjusted outcome reports on medical, surgical and obstetric conditions or procedures, and others selected by OSHPD in accordance with specified criteria. (Welfare and Institutions Code (WIC) Section 16906 et seq.)
2. Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurers. Requires specified health plans and health insurers to submit reports to state and federal regulators on medical loss ratios, rate filings, enrollment data, as specified. (Health and Safety Code Section 1341 et seq. and Insurance Code Section 12900 et seq.)
3. Establishes the federal Patient Protection and Affordable Care Act (ACA), which includes comprehensive health care insurance reforms that aim to increase access to health care, improve quality and lower health care costs, and provide new consumer protections. (42 U.S.C. Section 18001 et seq.)
4. Establishes 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. (Public Law 104-191)
5. Establishes the CMIA, which prohibits providers of healthcare, health care service plans, their contractors, and any business organized for the purpose of maintaining medical information, from using medical information for any purpose other than providing health care services, except as expressly authorized by the patient or as otherwise required or authorized by law. (Civil Code 56 et seq.)

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. Likely ongoing costs in the hundreds of thousands per year to provide staff support to the required advisory committee and to develop the report on health care utilization and financing issues (General Fund).
2. Ongoing costs of about $100,000 per year for CDI enforcement of the requirement to report data by insurers (Insurance Fund).
3. Likely ongoing costs up $100,000 per year for DMHC enforcement of the requirement to report data by health plans (Managed Care Fund).

COMMENTS:

1. Purpose of this bill. This bill seeks to put health care provider cost and performance information into a statewide database, so that it can be analyzed by the state and by academic researchers for the purpose of determining areas where health care costs and the quality of services can be improved in California. This bill is author-sponsored.
2. Author’s statement. According to the author, "In 2014 and 2015, the Senate Committee on Health convened several health care experts to discuss factors that contribute to the growing cost of health care in California and efforts to make care more affordable. At a second hearing in February of this year, the Committee heard testimony related to some major cost drivers in the health care system, including pharmaceuticals, hospital costs, and the effects of geographic location on contracting. The third in the series served to educate members and the public about the effect of health care costs on consumers.
   
   "This series of hearings examined policy solutions to control health care costs as millions of Californians obtain coverage under the federal Patient Protection and Affordable Care Act (ACA). Testimony presented at the hearings illustrated the complexity of the health care market and the array of approaches to containing costs. In addition to expanded coverage, the author believes that, like past health care reform efforts, a long-term, comprehensive action agenda for California policymakers is necessary to ensure that health care costs are appropriate and health care premiums are affordable, especially given that the ACA contains a mandate for individuals to purchase coverage.
   
   "[T]his bill is intended to help make available valid performance information to promote care that is safe, medically effective, patient-centered, timely, efficient, affordable and equitable. Additionally, this bill seeks to put provider cost and performance information into the hands of consumers and purchasers so that they are able to understand their financial liability and realize the best quality and value available to them.”
3. Creating a new comprehensive statewide health care cost and service database. The California Healthcare Performance Information System (CHPI) is a voluntary physician performance database with statistical analyses that will eventually publish information online. According to the CHPI Website, starting in 2015, output will be an analysis of claims data aggregated from more than 12 million patients enrolled in CHPI’s three participating California health plans: Blue Shield, Anthem Blue Cross, and United Healthcare, and Medicare fee-for-service. CHPI was federally certified to include data from Medicare’s five million California beneficiaries, and became the first qualified entity to receive Medicare data.
   
   In 2014, CDI announced an agreement with the University of California, San Francisco (UCSF) to provide meaningful information to consumers about healthcare prices and quality. The health care pricing and quality transparency project is funded by a federal Cycle III Rate Review Grant from the HHS that was awarded to CDI as part of an initiative under the ACA. Under the agreement with the CDI, researchers at the Philip R. Lee Institute for Health Policy Studies at UCSF will collect and analyze data to develop price and quality information for a number of common medical procedures and episodes of care. The information will be made available online. According to CDI, it reports average prices paid for episodes of care or annual costs for chronic conditions, as well as quality measures where available. Prices will be aggregated across payers and providers, and shown at the regional level based on the 19 California rating regions (some regions may need to be consolidated pursuant to the terms of the data license agreement). CDI’s website is expected to provide price information for 95 to 99 episodes of care or conditions. Five to 15 of those episodes or conditions will have both price and quality information as well as consumer education content created by Consumers Union. Quality information will consist of existing performance, appropriateness, and outcome measures.
   
   The Regional Cost and Quality Atlas is an interactive website to be released in Summer 2016 that will compare aggregated cost and quality data, by payer/product type (not individual payers), for each of 19 regions (the same regions that had been defined for Covered California). The project is a partnership between the Integrated Healthcare Association (IHA), the California HealthCare Foundation, and CHHSA. Working with large physician organizations and health plans, IHA developed a methodology for calculating risk-adjusted Total Cost of Care to be used as part of the Pay for Performance program. Health plans submit detailed data files including claims and enrollment data to Truven Health Systems (Truven). Truven uses this detail to calculate actual payments to physician organizations for a set of enrollees divided by number of enrollees. Payments include professional services, pharmacy, hospital care, ancillary services, as well as payments made by consumers to cover cost-sharing amounts.

The author contends that this bill is needed – despite these existing projects on physician performance and health care prices and quality – in order to comprehensively study health care price and performance information and find ways to promote care that is safe, medically effective, patient-centered, timely, efficient, affordable, and equitable.

1. Privacy law and privacy concerns. California’s Confidentiality of Medical Information Act (CMIA) generally restricts the sharing or disclosure of a person’s medical information without first obtaining their written consent. The act states that “a provider of health care, health care service plan, or contractor shall not disclose medical information regarding a patient of the provider of health care or an enrollee or subscriber of a health care service plan without first obtaining an authorization,” unless a particular exception allows the disclosure. HIPAA contains similar provisions requiring patient consent before patient information is shared, with certain exceptions.

Included in the exceptions for which no prior authorization is required are when disclosure is “otherwise specifically required by law,” and when information is disclosed “to public agencies, clinical investigators, health care research organizations, and accredited public or private nonprofit educational or health care institutions for bona fide research purposes” as long as the identity of a patient is not further disclosed.

This bill states that all “applicable” privacy and data security laws, including the IPA, CMIA and HIPAA, would govern all uses and disclosures of data made under this bill. But as currently drafted, CMIA and HIPAA would in fact not apply to disclosures of data from the database to be created under this bill, because state agencies are not “covered entities” under the CMIA or HIPAA.

State agencies are, however, subject to the IPA, which places some limits on the disclosure of personal information held by governmental agencies in order to protect the privacy of affected individuals. In general, the Information Practices Act prohibits the disclosure of personal information to another party without first obtaining the permission of the affected individual. While state agencies have a duty to protect the confidentiality of that information, the protections under IPA are not as strong as those under the CMIA and HIPAA. For example, in certain circumstances, disclosure may be authorized without permission from the affected individual, when the information may be necessary for an agency “to perform its constitutional or statutory duties.” (Civil Code Sec. 1798.24.)

For this reason, the ACLU and Consumer Federation have proposed a number of amendments to ensure that the same confidentiality rules in CMIA and HIPAA would apply to the release of data from the health care cost and quality database to be created under this bill and to ensure the data is secure.

1. Author’s amendments. The following are several amendments negotiated and agreed to between the Committee, the author and stakeholders involved in the bill. Given the approaching legislative deadline, the author has agreed to accept these amendments as author’s amendments in Committee, and with these amendments the organizations that had prior concerns with the bill are now neutral on the bill. The amendments ensure that CHHSA follows CMIA and HIPAA privacy requirements, in addition to IPA privacy requirements, when releasing data from the database and also ensure that the data in the database is encrypted for security purposes:

On page 3, between lines 32 and 33 insert:
“consistent with Civil Code Section 56.10(b)(9)”

On page 4, between lines 7 and 8 insert:
“All-Payer Claims Database”

On page 4, line 31, strike “All” and insert:
“(A) Subject to Civil Code Section 56.10(b)(9), all”

On page 5, strike lines 5 through 12, inclusive, and insert:
“(B) Use and disclosure of data pursuant to this section shall be consistent with privacy and security protections for individually identifiable health information and medical information  under state and federal law, including any applicable exceptions to the requirement to obtain patient authorization, including but not limited to, Civil Code Section 56.10(b)(9) and 56.10(c)(7).

(2)(A) All policies and protocols developed pursuant to this section shall ensure that the privacy, security, and confidentiality of individually identifiable health information and medical information is protected. The secretary shall not disclose any unaggregated, individually identifiable health information or medical information and shall develop a protocol for assessing the risk of reidentification stemming from disclosure of any health information and medical information that is aggregated, individually identifiable health information or medical information. This paragraph does not preclude sharing unaggregated, individually identifiable health information with researchers for research purposes, consistent with Civil Code Section 56.10(c)(7).

On page 5, between lines 15 and 16 insert:
“Medical information” has the same meaning as in Section 56.05(j) of the Confidentiality of Medical Information Act (Part 302.6, commencing with Section 56, of Division 1 of the Civil Code).

On page 5, between lines 26 and 27 insert:

“(d) (1) The agency administering the California Health Care Cost and Quality Database shall adopt rigorous standards of security protection to ensure as nearly as possible that the information contained in and collected for the purposes of the California Health Care Cost and Quality Database is not compromised. This shall include, but is not limited to, encryption.

(2) For purposes of this section, the term encryption (A) means the protection of data in electronic form, in storage or in transit, using an encryption technology that has been generally accepted by experts in the field of information security that renders such data indecipherable in the absence of associated cryptographic keys necessary to enable decryption of such data; and (B) includes appropriate management and safeguards of such cryptographic keys so as to protect the integrity of the encryption.

(e) For the purposes of this section, the California Health and Human Services Agency shall be considered any agency subject to the provisions of Chapter 1 (commencing with Section 1798) of Title 1.8 of Part 4 of Division 3 of the Civil Code.”

1. Arguments in support. Health Access California states that a cost and quality database, with the addition of data on the social determinants of health, “could improve transparency and allow policymakers, purchasers, and others to pursue the quadruple aim of lower health care costs, improved health outcomes, improved health system, and improved health equity. The Western Center on Law and Poverty requests that this bill include cost information in negotiated contracts between health plans and providers.”
2. Double referral. This bill passed the Assembly Health Committee on a 14-3 vote on June 21, 2016.
3. Prior legislation. SB 26 (Hernandez) of 2015 would have required the CHHSA Secretary to, no later than January 1, 2017, use a competitive process to contract, as specified, with one or more independent, nonprofit organizations in order to administer the California Health Care Cost and Quality Database. It would have required the nonprofit organization, no later than January 1, 2019, to make a publicly available, Web-based, searchable database, as specified. The bill would also have required the information and analysis included in the database to be presented in a way that facilitates comparisons of cost, quality, and patient satisfaction across payers, provider organizations, and other suppliers of health care services. SB 1322 was held on the Senate Appropriations Committee suspense file.
   

SB 1182 (Leno), Chapter 577, Statutes of 2014, requires health plans and insurers to share specified data with purchasers that have 1,000 or more enrollees or that are multiemployer trusts.

SB 1340 (Hernandez), Chapter 83, Statutes of 2014, expands provisions related to gag clauses in contracts between health plans or insurers and providers.

AB 1558 (Roger Hernández) of 2014, would have created 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.

SB 1322 (Hernandez) of 2014, was substantially similar to SB 26. SB 1322 was held on the Assembly Appropriations Committee suspense file.

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 established 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, who urged all parties to work together in the effort to make health care costs more transparent.

SB 1196 (Hernandez), Chapter 869, Statutes of 2011, prohibits a contract between a health plan insurer and a provider or supplier, from prohibiting, conditioning, or in any way restricting the disclosure of claims data related to health care services provided to an enrollee or subscriber of the health plan or carrier, or beneficiaries of any self-funded health coverage arrangement administered by the carrier to a qualified entity, as defined.

SB 751 (Gaines and Hernandez), Chapter 244, Statutes of 2011, prohibits contracts between health plans or insurers and hospitals from containing any provision that restricts the ability of the health plans or insurers from furnishing information to enrollees or insureds concerning cost range of procedures or the quality of services.

AB 2389 (Gaines) of 2009, would have prohibited a contract between a health facility and a health plan or insurer from containing a provision that restricts the ability of the health plan or insurer to furnish information on the cost of procedures or health care quality information to enrollees or insureds. AB 2389 died in the Assembly on Concurrence.

AB 2967 (Lieber) of 2008, would have established a Health Care Cost and Quality Transparency Committee to develop and recommend to the CHHSA Secretary a health care cost and quality transparency plan, and would have made the CHHSA Secretary responsible for the timely implementation of the transparency plan. AB 2967 died on the Senate Inactive File.

SB 1300 (Corbett) of 2008, would have prohibited a contract between a health care provider and a health plan from containing a provision that restricts the ability of the health plan to furnish information on the cost of procedures or health care quality information to plan enrollees. SB 1300 died on the Senate Floor.

AB 1296 (Torrico), Chapter 698 Statutes of 2007, requires a health plan or contractor offering health benefits to California Public Employees’ Retirement System (CalPERS) members and annuitants to disclose to CalPERS the cost, utilization, actual claim payments, and contract allowance amounts for health care services rendered by participating hospitals to each member and annuitant.

ABX1 1 (Nuñez) of 2007, among many other provisions relating to health care reform, contained nearly identical language as that contained in AB 2967. ABX1 1 failed passage in the Senate Health Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

AARP

CAPG The Voice of Accountable Physician Groups

Consumers Union

California Pan Ethnic Health Network (CPEHN)

Health Access

SEIU

Western Center on Law and Poverty

Opposition

None on file.

Analysis Prepared by: Jennie Bretschneider / P. & C.P. / (916) 319-2200

Date of Hearing: June 21, 2016

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

SBPCA Bill Id:SB 1159

Author:(Hernandez) – As Amended Ver:May 31, 2016

SENATE VOTE: 25-12

SUBJECT: California Health Care Cost and Quality Database.

SUMMARY: Requires certain health care entities to provide medical claims, cost, and quality information to the Secretary of California Health and Human Services Agency (CHHSA Secretary) for the purpose of developing information for inclusion in a health care cost and quality database. Requires all data disclosures to comply with applicable state and federal laws for the protection of the privacy and security of data and prohibits the public disclosure of any unaggregated, individually identifiable health information. Specifically, this bill:

1. Requires health care service plans (health plans), health insurers, suppliers, providers, and self-insured employers, as defined, to provide all of the following to the CHHSA Secretary for the sole purpose of developing information for inclusion in a health care cost and quality database:
   1. Utilization data from health plan and health insurers’ medical, dental, and pharmacy claims. In the case of entities that do not use claims data, including, but not limited to, integrated delivery systems, encounter data consistent with the core set of data elements for data submission proposed by the APCD Council, the University of New Hampshire, and the National Association of Health Data Organizations;
   2. Pricing information for health care items, services, and medical and surgical episode of care gathered from allowed charges for covered health care items and services. In the case of entities that do not use or produce individual claims, price information that is the best possible proxy to pricing information for health care items, services, and medical and surgical episodes of care available in lieu of actual cost data to allow for meaningful comparisons of provider prices and treatment costs; and,
   3. Information sufficient to determine the impacts of social determinants of health, including age, gender, race, ethnicity, limited English proficiency, sexual orientation and gender identity, ZIP Code, and any other factors for which there are peer-reviewed evidence.
2. Permits the CHHSA Secretary to report an entity’s failure to comply with 1) above to its regulating agency. Permits the regulating agency to enforce 1) above using its existing enforcement procedures. Requires moneys collected pursuant to the enforcement authorization to be subject to appropriation by the Legislature and provides that the failure to comply with 1) above is not a crime.
3. Requires all uses and disclosures of data pursuant to this bill to comply with all applicable state and federal laws for the protection of the privacy and security of data, including, but not limited to, the Confidentiality of Medical Information Act (CMIA), the Information Practices Act, the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), the federal Health Information Technology for Economic and Clinical Health Act, and implementing regulations.
4. Requires all policies and protocols developed to ensure that the privacy, security, and confidentiality of individually identifiable health information are protected. Prohibits the CHHSA Secretary from publicly disclosing any unaggregated, individually identifiable health information. Requires the CHHSA Secretary to develop a protocol for assessing the risk of reidentification stemming from public disclosure of any health information that is aggregate, individually identifiable health information. Defines individually identifiable health information consistent with federal law.
5. Protects from any public disclosure confidentially negotiated contract terms contained in a contract between a health plan or health insurer and a provider or supplier. Prohibits disclosure in an unaggregated format of individually identifiable proprietary contract information included in a contract between a health plan or health insurer and a provider or supplier.
6. Authorizes the CHHSA Secretary to enter into contracts or agreements to share the information collected in this bill so long as the use of that information complies with the requirements of this bill.
7. Requires the CHHSA Secretary to convene an advisory committee, composed of a broad spectrum of health care stakeholders and experts, including, but not limited to, representatives that are required to provide information pursuant to 1) above, and representatives of purchasers, including, but not limited to, businesses, organized labor, and consumers, to identify the type of data, purpose of use, and entities and individuals that are required to report to, or may have access to, a health care cost and quality database. Requires the advisory committee to hold public meetings with stakeholders, solicit input, and set its own meeting agendas. Provides that the advisory committee meetings are subject to the Bagley-Keene Open Meeting Act.
8. Requires the CHHSA Secretary to arrange for the preparation of a report, to be submitted to the Legislature and the Governor on or before January 1, 2019, based on the advisory committee findings, including input from public meetings, to examine and address, at a minimum, the following issues:
   1. Assessing California’s health care needs and available resources;
   2. Containing the cost of health care services and coverage;
   3. Improving the quality and medical appropriateness of health care;
   4. Reducing health disparities and addressing the social determinants of health;
   5. Increasing the transparency of health care costs and the relative efficiency with which care is delivered;
   6. Use of disease management, wellness, prevention, and other innovative programs to keep people healthy, reduce disparities and costs, and improve health outcomes for all populations;
   7. Efficient utilization of prescription drugs and technology;
   8. Reducing unnecessary, inappropriate, and wasteful health care; and,
   9. Educating consumers in the use of health care information.
9. Repeals reporting requirement in 8) above on July 1, 2022.
10. Prohibits advisory committee members from receiving per diem or travel expense reimbursement, or any other expense reimbursement.

EXISTING LAW:

1. 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. 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.
2. Requires OSHPD to publish annually risk-adjusted outcome reports on medical, surgical and obstetric conditions or procedures, and others selected by OSHPD in accordance with specified criteria.
3. 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.
4. 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.
5. Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurers. Requires specified health plans and health insurers to submit reports to state and federal regulators on medical loss ratios, rate filings, enrollment data, as specified.
6. Prohibits contracts between health plans or health insurers and a licensed hospital or health care facility owned by a licensed hospital from containing any provision that restricts the ability of the health plan or health insurer from furnishing information to enrollees or insureds concerning the cost range of procedures or the quality of services. Provides hospitals at least 20 days in advance to review the methodology and data, requires risk adjustment factors for quality data, and requires an opportunity for a hospital to provide a link on the health plan or insurer’s Website where the hospital’s response to the data can be accessed.
   
7. Makes, under federal law, Medicare data available for the evaluation of the performance of providers of services and suppliers, to qualified entities, defined as a public or private entity that is qualified as determined by the Secretary of the U.S. Department of Health and Human Services (HHS Secretary), to use to evaluate the performance of providers of services and suppliers on measures of quality, efficiency, effectiveness, and resource use, and applies other requirements to qualified entities as the HHS Secretary may specify, such as ensuring security of data.
8. 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 health plan unless authorized to do so by the employee.
9. Establishes the federal Patient Protection and Affordable Care Act (ACA), which includes comprehensive health care insurance reforms that aim to increase access to health care, improve quality and lower health care costs, and provide new consumer protections.
10. Establishes the Exchange (now referred to as Covered California) within state government, as an independent public entity not affiliated with an agency or department, and requires the Exchange to compare and make available through selective contracting health insurance for individual and small business purchasers as authorized under the ACA. Specifies the powers and duties of the board governing the Exchange, and requires the board to facilitate the purchase of qualified health plans (QHPs) though the Exchange by qualified individuals and small employers. Requires QHPs to submit data to Covered California.
11. Establishes 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.
12. Establishes the CMIA, which prohibits providers of healthcare, health care service plans, their contractors, and any business organized for the purpose of maintaining medical information, from using medical information for any purpose other than providing health care services, except as expressly authorized by the patient or as otherwise required or authorized by law.
13. Establishes the Health Information Technology for Economic and Clinical Health Act which provides the federal HHS with the authority to establish programs to improve health care quality, safety, and efficiency through the promotion of health information technology, including electronic health records and private and secure electronic health information exchange.

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. Likely ongoing costs in the hundreds of thousands per year to provide staff support to the required advisory committee and to develop the report on health care utilization and financing issues (General Fund).
2. Ongoing costs of about $100,000 per year for CDI enforcement of the requirement to report data by insurers (Insurance Fund).
3. Likely ongoing costs up $100,000 per year for DMHC enforcement of the requirement to report data by health plans (Managed Care Fund).

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, beginning in March 2014, the Senate Committee on Health convened several health care experts to discuss factors that contribute to the growing cost of health care in California and efforts to make care more affordable. At a second hearing in February of this year, the Senate Health Committee heard testimony related to some major cost drivers in the health care system, including pharmaceuticals, hospital costs, and the effects of geographic location on contracting. The third, held in March of this year, served to educate members and the public about the effect of health care costs on consumers. This series of hearings examined policy solutions to control health care costs as millions of Californians obtain coverage under the ACA. Testimony presented at the hearings illustrated the complexity of the health care market and the array of approaches to containing costs. In addition to expanded coverage, the author believes that, like past health care reform efforts, a long-term, comprehensive action agenda for California policymakers is necessary to ensure that health care costs are appropriate and health care premiums are affordable, especially given that the ACA contains a mandate for individuals to purchase coverage. The author states this bill is intended to help make available valid performance information to promote care that is safe, medically effective, patient-centered, timely, efficient, affordable, and equitable. This bill seeks to put provider cost and performance information into the hands of consumers and purchasers so that they are able to understand their financial liability and realize the best quality and value available to them.
   
2. BACKGROUND.
   1. All-Payer claims databases. In 2007, the Regional All-Payer Healthcare Information Counsel (Counsel) began as a convening organization to bring together several Northeast states that had, or were developing, All-Payer Claims Database (APCD) systems. The Counsel’s vision was to support cross-state data harmonization and analytic activities. The Counsel quickly expanded to include participation from states across the country to a broader set of learning network activities. In 2010, the Counsel changed its name to the APCD Council to reflect the expanded reach. Since the 2007 initial meeting, the APCD Council has helped states across the country with a variety of activities related to APCD development, including: stakeholder meetings; legislation review; rule development; vendor selection; analytics support; linking states to one another to find common solutions; and, leveraging state resources to achieve common objectives. The APCD Council is a learning collaborative with a multi-fold purpose of serving in an information sharing capacity for those states that have developed, or are developing APCD; providing technical assistance to states; and, catalyzing states to achieve mutual goals. Some of APCD Council’s current activities include harmonizing the data collection and data release rules across the multiple state databases; developing a strategy for integrating Medicare data into the all payer databases; sharing reporting applications being developed by states; policy analysis; and, supporting other states developing all-payer claims databases. The APCD Council is convened by the University of New Hampshire, and the National Association of Health Data Organization.
      
      According to the National Conference of State Legislatures, in recent years, a growing number of states have established databases that collect health insurance claims information from all health care payers into a statewide information repository. By January 2016, at least 18 states had enacted APCDs while more than a dozen others considered such a law or program. They are 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 (where it is available to a state). 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, Rhode Island, Utah, and Vermont have had APCDs in operation since 2010. States that have been implementing APCDs more recently include Connecticut, Nebraska, New York, Virginia, and West Virginia. States that have had existing voluntary efforts to maintain an APCD include Virginia, Washington and Wisconsin.
   2. Existing California initiatives. In California, the California Healthcare Performance Information System (CHPI) is a voluntary physician performance database with statistical analysis that will eventually publish information online. According to the CHPI Website, starting in 2015, output will be an analysis of claims data aggregated from more than 12 million patients enrolled in CHPI’s three participating California health plans- Blue Shield, Anthem Blue Cross, and United Healthcare, as well as Medicare fee-for-service. CHPI was federally certified to include data from Medicare’s 5 million California beneficiaries, and became the first qualified entity to receive Medicare data.
      
      In 2014, CDI announced an agreement with the University of California, San Francisco (UCSF) to provide meaningful information to consumers about healthcare prices and quality. The health care pricing and quality transparency project is funded by a federal Cycle III Rate Review Grant from the HHS that was awarded to CDI as part of an initiative under the ACA. Under the agreement with the CDI, researchers at the Philip R. Lee Institute for Health Policy Studies at UCSF will collect and analyze data to develop price and quality information for a number of common medical procedures and episodes of care. The information will be made available online. According to CDI, the Website will report average prices paid for episodes of care or annual costs for chronic conditions, as well as quality measures where available. Prices will be aggregated across payers and providers, and shown at the regional level based on the 19 California rating regions (some regions may need to be consolidated pursuant to the terms of the data license agreement). The Website is expected to provide price information for 95 to 99 episodes of care or conditions. Five to 15 of those episodes or conditions will have both price and quality information as well as consumer education content created by Consumers Union. Quality information will consist of existing performance, appropriateness, and outcome measures.
      
      The Regional Cost and Quality Atlas is an interactive Website to be released in Summer 2016 that will compare aggregated cost and quality data, by payer/product type (not individual payers), for each of 19 regions (the same regions that had been defined for Covered California). The project is a partnership between the Integrated Healthcare Association (IHA), the California HealthCare Foundation, and CHHSA. Working with large physician organizations and health plans, IHA developed a methodology for calculating risk-adjusted Total Cost of Care to be used as part of the Pay for Performance program. Health plans submit detailed data files including claims and enrollment data to Truven Health Systems (Truven). Truven uses this detail to calculate actual payments to physician organizations for a set of enrollees divided by number of enrollees. Payments include professional services, pharmacy, hospital care, ancillary services, as well as payments made by consumers to cover cost-sharing amounts.
3. SUPPORT. Health Access California states that a cost and quality database, with the addition of data on the social determinants of health, could improve transparency and allow policymakers, purchasers, and others to pursue the quadruple aim of lower health care costs, improved health outcomes, improved health system, and improved health equity. The Western Center on Law and Poverty requests that this bill include cost information in negotiated contracts between health plans and providers.
4. OPPOSE UNLESS AMENDED. The Consumer Federation of California (CFC) states that this bill provides no privacy protections for the medical data being analyzed because the CHHSA Secretary and the database itself are not covered entities under these laws. Furthermore, while this bill defines “individually identifiable health information” as it is defined in HIPAA, it does not define it according to CMIA, which uses a more protective and expansive definition. Further, CFC contends that this bill prohibits publicly disclosing individually identifiable health information, however, this restriction, in the absence of any prohibition against private disclosure of this information, implies no limit to the private disclosure of unaggregated, individually identifiable information. CFC suggests making existing breach notification law explicitly applicable to the database.
5. DOUBLE-REFERRAL. This bill is double referred; upon passage in this Committee, this bill will be referred to the Assembly Privacy and Consumer Protection Committee.
6. PREVIOUS LEGISLATION.
   1. SB 26 (Hernandez) of 2015 would have required the CHHSA Secretary to, no later than January 1, 2017, use a competitive process to contract, as specified, with one or more independent, nonprofit organizations in order to administer the California Health Care Cost and Quality Database. Would have required the nonprofit organization, no later than January 1, 2019, to make a publicly available, Web-based, searchable database, as specified. Would have required the information and analysis included in the database to be presented in a way that facilitates comparisons of cost, quality, and patient satisfaction across payers, provider organizations, and other suppliers of health care services. SB 1322 was held on the Senate Appropriations Committee suspense file.
   2. SB 1322 (Hernandez) of 2014, was substantially similar to SB 26. SB 1322 was held on the Assembly Appropriations Committee suspense file.
   3. SB 1182 (Leno), Chapter 577, Statutes of 2014, requires health plans and insurers to share specified data with purchasers that have 1,000 or more enrollees or that are multiemployer trusts.
   4. SB 1340 (Hernandez), Chapter 83, Statutes of 2014, expands provisions related to gag clauses in contracts between health plans or insurers and providers.
   5. AB 1558 (Roger Hernández) of 2014, would have created 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.
   6. 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 established 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, who urged all parties to work together in the effort to make health care costs more transparent.
   7. SB 1196 (Hernandez), Chapter 869, Statutes of 2011, prohibits a contract between a health plan insurer and a provider or supplier, from prohibiting, conditioning, or in any way restricting the disclosure of claims data related to health care services provided to an enrollee or subscriber of the health plan or carrier, or beneficiaries of any self-funded health coverage arrangement administered by the carrier to a qualified entity, as defined.
   8. SB 751 (Gaines and Hernandez), Chapter 244, Statutes of 2011, prohibits contracts between health plans or insurers and hospitals from containing any provision that restricts the ability of the health plans or insurers from furnishing information to enrollees or insureds concerning cost range of procedures or the quality of services.
   9. AB 2389 (Gaines) of 2009, would have prohibited a contract between a health facility and a health plan or insurer from containing a provision that restricts the ability of the health plan or insurer to furnish information on the cost of procedures or health care quality information to enrollees or insureds. AB 2389 died in the Assembly on Concurrence.
   10. AB 2967 (Lieber) of 2008, would have established a Health Care Cost and Quality Transparency Committee to develop and recommend to the CHHSA Secretary a health care cost and quality transparency plan, and would have made the CHHSA Secretary responsible for the timely implementation of the transparency plan. AB 2967 died on the Senate Inactive File.
   11. SB 1300 (Corbett) of 2008, would have prohibited a contract between a health care provider and a health plan from containing a provision that restricts the ability of the health plan to furnish information on the cost of procedures or health care quality information to plan enrollees. SB 1300 died on the Senate Floor.
   12. AB 1296 (Torrico), Chapter 698 Statutes of 2007, requires a health plan or contractor offering health benefits to California Public Employees’ Retirement System (CalPERS) members and annuitants to disclose to CalPERS the cost, utilization, actual claim payments, and contract allowance amounts for health care services rendered by participating hospitals to each member and annuitant.
   13. ABX1 1 (Nuñez) of 2007, among many other provisions relating to health care reform, contained nearly identical language as that contained in AB 2967. ABX1 1 failed passage in the Senate Health Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

AARP

California State Council of the Service Employees International Union

CAPG
Health Access California

Western Center on Law and Poverty

Opposition
American Civil Liberties Union of California
Consumer Federation of California

Analysis Prepared by: Kristene Mapile / HEALTH / (916) 319-2097

 THIRD READING  

Bill No: SB 1159

Author: Hernandez (D)

Amended: 5/31/16

Vote: 21

SENATE HEALTH COMMITTEE: 8-0, 4/6/16

AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Pan, Roth, Wolk

NO VOTE RECORDED: Nielsen

SENATE JUDICIARY COMMITTEE: 5-2, 4/19/16

AYES: Jackson, Hertzberg, Leno, Monning, Wieckowski

NOES: Moorlach, Anderson

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

SUBJECT: California Health Care Cost and Quality Database

SOURCE: Author

DIGEST: This bill requires, for the purpose of developing information for inclusion in a cost and quality database, health plans, insurers, self-insured employers, and suppliers and providers, as defined, to provide to the California Health and Human Services (CHHS) Secretary specified utilization data and pricing information.

ANALYSIS:

Existing law:

1. 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. 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.
2. Requires OSHPD, to publish annually risk-adjusted outcome reports on medical, surgical and obstetric conditions or procedures, and others selected by OSHPD in accordance with specified criteria.
3. 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.
4. 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.
5. Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurers. Requires specified health plans and insurers to submit reports to state and federal regulators on medical loss ratios, rate filings, enrollment data, as specified.

This bill:

1. Requires, for the purpose of developing information for inclusion in a cost and quality database, health plans, insurers, self-insured employers, and suppliers and providers, as defined, to provide to the CHHS Secretary:
   1. Utilization data from medical, dental, and pharmacy claims. In the case of entities that do not use claims data (including, but not limited to, integrated delivery systems), encounter data consistent with the core set of data elements for data submission proposed by the APCD Council, the University of New Hampshire, and the National Association of Health Data Organizations; and,
   2. Pricing information for health care items, services, and medical and surgical episodes of care gathered from allowed charges for covered health care items and services. In the case of entities that do not use or produce individual claims, price information that is the best possible proxy to pricing information for health care items, services, and medical and surgical episodes of care available in lieu of actual cost data to allow for meaningful comparisons of provider prices and treatment costs.
2. Permits a multiemployer self-insured plan that is responsible for paying for health care services provided to beneficiaries and the trust administrator for a multiemployer self-insured plan to provide the information in 1) above.
3. Permits the CHHS Secretary to report an entity’s failure to comply with 1) above to the entity’s regulating agency. Permits the regulating agency to enforce the requirement in 1) above using its existing enforcement procedures. Requires moneys collected pursuant to the authorization to enforce to be subject to appropriation by the Legislature. Specifies that the failure to comply with 1) above is not a crime.
4. Requires all uses and disclosures of data made pursuant to this bill to comply with all applicable state and federal laws for the protection of the privacy and security of data, including, but not limited to, the Health Insurance Portability and Accountability Act (HIPPA) and the federal Health Information Technology for Economic and Clinical Health Act and implementing regulations.
5. Requires all policies and protocols developed in the performance of the contract to ensure that the privacy, security, and confidentiality of individually identifiable health information is protected. Prohibits the nonprofit organization from publicly disclosing any unaggregated, individually identifiable health information, as defined, and requires the nonprofit to develop a protocol for assessing the risk of reidentification stemming from public disclosure of any health information that is aggregated, individually identifiable health information.
6. Requires confidentially negotiated contract terms contained in a contract between a health plan or insurer and a provider or supplier to be protected in any public disclosure of data made pursuant to this bill. Prohibits individually identifiable proprietary contract information included in a contract between a health plan or insurer and a provider or supplier from being disclosed in an unaggregated format.
7. Requires the CHHS Secretary to convene an advisory committee, composed of a broad spectrum of health care stakeholders and experts, including, but not limited to, representatives of the entities that are required to provide information pursuant to 1) above and representatives of purchasers, including, but not limited to, businesses, organized labor, and consumers. Requires the advisory committee to hold public meetings with stakeholders, solicit input, and set its own meeting agendas. Makes advisory committee meetings subject to the Bagley-Keene Open Meeting Act.
8. Requires CHHS to arrange for the preparation of a report to the Legislature and the Governor, by January 1, 2019 and as specified, based on the findings of the review committee, including input from the public meetings, that shall, at a minimum, examine and address the following issues:
   1. Assessing California health care needs and available resources;
   2. Containing the cost of health care services and coverage;
   3. Improving the quality and medical appropriateness of health care;
   4. Increasing the transparency of health care costs and the relative efficiency with which care is delivered;
   5. Use of disease management, wellness, prevention, and other innovative programs to keep people healthy and reduce disparities and costs and improving health outcomes for all populations;
   6. Efficient utilization of prescription drugs and technology;
   7. Reducing unnecessary, inappropriate, and wasteful health care; and,
   8. Educating consumers in the use of health care information.
9. Prohibits the members of the advisory committee from receiving per diem or travel expense reimbursement, or any other expense reimbursement.

Comments

1. Author’s statement. According to the author, beginning in March 2014, the Senate Committee on Health convened several health care experts to discuss factors that contribute to the growing cost of health care in California and efforts to make care more affordable. At a second hearing in February of this year, the Committee heard testimony related to some major cost drivers in the health care system, including pharmaceuticals, hospital costs, and the effects of geographic location on contracting. The third, held in March of this year, served to educate members and the public about the effect of health care costs on consumers. This series of hearings examined policy solutions to control health care costs as millions of Californians obtain coverage under the Affordable Care Act (ACA). Testimony presented at the hearings illustrated the complexity of the health care market and the array of approaches to containing costs. In addition to expanded coverage, the author believes that, like past health care reform efforts, a long-term, comprehensive action agenda for California policymakers is necessary to ensure that health care costs are appropriate and health care premiums are affordable, especially given that the ACA contains a mandate for individuals to purchase coverage. The author states this bill is intended to help make available valid performance information to promote care that is safe, medically effective, patient-centered, timely, efficient, affordable and equitable. This bill seeks to put provider cost and performance information into the hands of consumers and purchasers so that they are able to understand their financial liability and realize the best quality and value available to them.
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.
3. Existing California initiatives. In California, the California Healthcare Performance Information System (CHPI) is a voluntary physician performance database with statistical analysis that will eventually publish information online. According to the CHPI Web site, starting in 2015, output will be an analysis of claims data aggregated from more than 12 million patients enrolled in CHPI’s three participating California health plans- Blue Shield, Anthem Blue Cross and United Healthcare, as well as Medicare. CHPI was federally certified to include data from Medicare’s five million California beneficiaries, and became the first Qualified Entity to receive Medicare data.

The University of California, San Francisco is working with the California CDI on a medical cost and quality transparency website. According to CDI, the Web site will report average prices paid for episodes of care or annual costs for chronic conditions, as well as quality measures where available. Prices will be aggregated across payers and providers, and shown at the regional level based on the 19 California rating regions (some regions may need to be consolidated pursuant to the terms of the data license agreement). The Web site is expected to provide price information for 95 to 99 episodes of care or conditions. Five to 15 of those episodes or conditions will have both price and quality information as well as consumer education content created by Consumers Union. Quality information will consist of existing performance, appropriateness, and outcome measures.

The Regional Cost and Quality Atlas is an interactive Web site to be released in Summer 2016 that will compare aggregated cost and quality data, by payer/product type (not individual payers), for each of 19 regions (the same regions that had been defined for Covered California). The project is a partnership between the Integrated Healthcare Association (IHA), the California Healthcare Foundation, and CHHS. Working with large physician organizations and health plans, IHA developed a methodology for calculating risk-adjusted Total Cost of Care to be used as part of the Pay for Performance program. Plans submit detailed data files including claims and enrollment data to Truven Health Systems. Truven uses this detail to calculate actual payments to physician organizations for a set of enrollees divided by number of enrollees. Payments include professional services, pharmacy, hospital care, ancillary services, as well as payments made by consumers to cover cost-sharing amounts.

1. Consumer and provider group letters. A number of groups submitted letters related to this bill stating that the bill would provide the public and policymakers with critical information, but request a number of amendments related to how to house and disseminate the data.   These groups state that the proposed advisory committee does not go far enough to ensure that the database meets the goals envisioned by the bill.  The California Association of Physician Groups writes that they support policy measures that encourage the implementation of the Triple Aim (decreased costs, improved patient experience and development of population health management), appreciates the stakeholder meetings conducted by the author, and look forward to working together on the creation of such a database in the Golden State.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

1. Likely ongoing costs in the hundreds of thousands per year to provide staff support to the required advisory committee and to develop the report on health care utilization and financing issues (General Fund).
2. Ongoing costs of about $100,000 per year for CDI enforcement of the requirement to report data by insurers (Insurance Fund.)
3. Likely ongoing costs up $100,000 per year for DMHC enforcement of the requirement to report data by health plans (Managed Care Fund.)

SUPPORT: (Verified 5/31/16)

AARP

CAPG

OPPOSITION: (Verified 5/31/16)

Consumer Federation of California

American Civil Liberties Union of California

ARGUMENTS IN SUPPORT: AARP states that information about the performance of our health care system should be collected, analyzed, and made publicly available, addressing safety, effectiveness, patient-centered responsiveness, timeliness, equity, and efficiency.

ARGUMENTS IN OPPOSITION: The Consumer Federation of California (CFC) writes that while this bill states that all uses and disclosures of data shall comply with all applicable state and federal laws for the protection of the privacy and security of data, including CMIA and HIPAA, this assurance actually provides no privacy protections for the medical data being analyzed because the CHHS Secretary and the database itself are not covered entities under these laws. CFC further writes that though this bill prohibits publicly disclosing individually identifiable health information, this restriction, in the absence of any prohibition against private disclosure of this information, implies no limit to the private disclosure of unaggregated, individually identifiable information. The American Civil Liberties Union of California suggests amendments to extend existing medical privacy protections to the database and its administrators, to place limits on the private disclosure of unaggregated, individually identifiable health information, to require encryption, and to explicitly extend data breach notice and remedies to the CHCCQB and its administrating agency.

Prepared by: Melanie Moreno / HEALTH / (916) 651-4111

5/31/16 21:42:46

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 1159 (Hernandez) - California Health Care Cost and Quality Database

Bill Summary:

SB 1159 would require the Secretary of Health and Human Services to convene an advisory committee to develop the parameters for the establishment and implementation of a health care cost and quality database. The bill would require health insurers and health plans to provide specified health care utilization and cost information to the Secretary for inclusion in a health care cost and quality database.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 27, 2016

Fiscal Impact:

• Likely ongoing costs in the hundreds of thousands per year to provide staff support to the required advisory committee and to develop the report on health care utilization and financing issues (General Fund).
• Ongoing costs of about $100,000 per year for Department of Insurance enforcement of the requirement to report data by insurers (Insurance Fund.)
• Likely ongoing costs up $100,000 per year for Department of Managed Health Care enforcement of the requirement to report data by health plans (Managed Care Fund.)

Committee Amendments:

Delete the requirement to study the development of a health care cost and quality database, authorize the Secretary to enter into contracts to use the information received under the bill, and make the report one-time.

-- END --

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 1159 (Hernandez) - California Health Care Cost and Quality Database

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 1159 would require the Secretary of Health and Human Services to convene an advisory committee to develop the parameters for the establishment and implementation of a health care cost and quality database. The bill would require health insurers and health plans to provide specified health care utilization and cost information to the Secretary for inclusion in a health care cost and quality database.

Fiscal Impact:

• Likely ongoing costs in the hundreds of thousands per year to provide staff support to the required advisory committee, develop the parameters for a health care cost and quality database, develop a business plan for the database, and to develop an annual report on health care utilization and financing issues (General Fund).
• To the extent that the state does develop and implement a health care cost and quality database as envisioned in the bill, costs would be as follows:
  • One-time costs between $3 million and $10 million for planning and initial policy development relating to the proposed database (unknown fund source).
  • One-time costs between $15 million and $30 million to create the database, including the information technology infrastructure to accept data submissions from payers, review submitted claims data, and analyze claims data (unknown fund source).
  • Ongoing operations and maintenance costs between $5 million and $12 million per year for operations and maintenance of the database, data analysis, and other administrative costs (unknown fund source).
  • Unknown potential fee revenues. The bill does not specifically address whether charging fees for access to the database would be allowed. It may be possible to develop data sets and analyses for outside purchasers as a revenue generating mechanism.

Background:

Several other states have established all payer databases to assist in the analysis of health care markets, to increase transparency, and potentially reduce health care spending over the long run. In general, an all payer claims database is used to collect claims data from some or all payers (including private insurers, private health plans, employers, and state and federal health care programs such as Medicare or Medicaid programs). By collecting claims data in a central database, states hope to improve transparency by analyzing the costs for health care services and potentially tying those costs to health outcomes.

There are several efforts underway in the state to compile health care utilization, cost, and/or quality data in a central repositories for analysis. The California Healthcare Performance Information system is a database that will include data on physician services from three health plans (Anthem, Blue Cross, and United Health Care) and Medicare. Also, the University of California, San Francisco is developing a medical cost and quality database under contract from the Department of Insurance. That database will include information on prices for care for certain chronic conditions. Finally, the Regional Cost and Quality Atlas will compare aggregated cost and quality data by payer and product type (not individual payers). That effort is a partnership between the Integrated Health Care Association and the state Health and Human Services Agency

Proposed Law:

SB 1159 would require the Secretary of Health and Human Services to convene an advisory committee to develop the parameters for the establishment and implementation of a health care cost and quality database. The bill would require health insurers and health plans to provide specified health care utilization and cost information to the Secretary for inclusion in a health care cost and quality database.

Specific provisions of the bill would:

• Require health insurers and health plans to provide specified information on health care utilization, pricing information, and patient/enrollee demographic information to the Secretary of Health and Human Services, for inclusion in a health care cost and quality database;
• Authorize self-insured employers, multiemployer self-insured plans, and trust administrators for multi-employer self-insured plans to provide the information described above;
• Authorize regulatory agencies to enforce the requirement that health insurers and health plans provide the required information;
• Require information disclosures to comply with specified federal and state privacy protection laws and regulations;
• Require the Secretary to convene an advisory committee to develop the parameters for the establishment, implementation, and ongoing administration of a health care cost and quality database;
• Require the plan to address ongoing funding of the database (without using state General Fund monies), data requirements, who would have access to the database, and other issues;
• Require the Secretary to provide an annual report to the Legislature and the Governor, based on findings from the advisory committee, that addresses a variety of issues relating to health care needs, utilization, costs, and quality.

Related Legislation:

• SB 26 (Hernandez) would have required the California Health and Human Services Agency to contract with a nonprofit entity to create a health care cost and quality database. That bill was held on this committee’s Suspense File.
• SB 1322 (Hernandez, 2014) was substantially similar to SB 26. That bill was held on the Assembly Appropriations Committee’s Suspense File.
• AB 1558 (R. Hernandez, 2014) would have requested the University of California to develop a cost and quality database. That bill was held on this Committee’s Suspense File.

Staff Comments:

The state of Colorado has developed an all payer claims database similar in functionality to the one envisioned in this bill. The cost estimates above are informed by the actual expenditures to develop and operate the Colorado All Payer Claims Database. Due to the size and complexity of the California healthcare marketplace, staff anticipates that the cost to develop and maintain an all payer claims database is likely to be two to five times the cost incurred in Colorado.

The California Health and Human Services Agency developed a State Health Care Innovation Plan, which is a plan to improve the state’s health care system. Among the many elements of the plan is a plan for an all payer claims database, similar to what is envisioned in this bill. However, upon applying for federal funding for the Innovation Plan, the state received only a $3 million grant for future planning efforts and no grant funds for implementation of the Innovation Plan. At this time, the federal government has not indicated that there will be additional funds for implementation available to the state.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2015-2016 Regular Session

Bill No: SB 1159 (Author:Hernandez)

Version: March 28, 2016

Hearing Date: April 19, 2016

Fiscal: Yes

Urgency: No

Consultant: TH

SUBJECT

California Health Care Cost and Quality Database

DESCRIPTION

This bill would require certain health care entities, including health care service plans, to provide medical claims, cost, and quality information to the Secretary of the California Health and Human Services Agency solely for the purpose of developing information for inclusion in a health care cost and quality database. The bill would require all use and disclosure of data obtained to comply with applicable state and federal laws for the protection of the privacy and security of data, and would prohibit the public disclosure of any unaggregated, individually identifiable health information. This bill would also require the Secretary to convene an advisory committee to, among other things, develop parameters for implementing and administering a health care cost and quality database.

BACKGROUND

The Health Insurance Portability and Accountability Act (HIPAA), enacted in 1996, guarantees privacy protection for individuals with regards to specific health information in the possession of covered entities. (See Pub. L. 104–191, 110 Stat. 1936.) Generally, protected health information (PHI) is any information held by a covered entity that concerns health status, provision of health care, or payment for health care that can be connected to an individual. HIPAA privacy regulations require health care providers and organizations to develop and follow procedures that ensure the confidentiality and security of PHI when it is transferred, received, handled, or shared. HIPAA further requires reasonable efforts when using, disclosing, or requesting PHI, to limit disclosure of that information to the minimum amount necessary to accomplish the intended purpose.

The California Confidentiality of Medical Information Act (CMIA) also protects PHI and restricts the disclosure of medical information by health care providers and health care service plans, as specified. Under existing law, a corporation organized for the purpose of maintaining medical information in order to make that information available to the patient, or a provider at the request of the patient for purposes of diagnosis or treatment, is deemed to be a provider of health care subject to the requirements of the CMIA. The CMIA empowers adult patients in California to keep

PHI confidential and decide whether and when to share that information with others.

This bill would direct certain health care entities to provide medical claims, cost, and quality information to the Secretary of California Health and Human Services solely for the purpose of developing information for inclusion in a health care cost and quality database. This bill states that, through this database, the Legislature intends to establish a system to provide valid, timely, and comprehensive health care performance information that is publicly available and can be used to improve the safety, appropriateness, and medical effectiveness of health care, and to provide care that is patient-centered, timely, affordable, and equitable.

This bill was approved by the Senate Health Committee on April 6, 2016, by a vote of 8-0.

CHANGES TO EXISTING LAW

Existing law, the California Constitution, provides that all people have inalienable rights, including the right to pursue and obtain privacy. (Cal. Const, art. I, Sec. 1.)

Existing federal law, the Health Insurance Portability and Accountability Act (HIPAA), specifies privacy protections for patients’ protected health information and generally provides that a covered entity, as defined (health plan, health care provider, and health care clearing house), may not use or disclose protected health information except as specified or as authorized by the patient in writing. (45 C.F.R. Sec. 164.500 et seq.)

Existing law prohibits, under the State Confidentiality of Medical Information Act (CMIA), providers of health care, health care service plans, or contractors, as defined, from sharing medical information without a patient’s written authorization, subject to certain exceptions. (Civ. Code Sec. 56 et seq.)

Existing law defines “medical information” to mean any individually identifiable information, in electronic or physical form, in possession of or derived from a provider of health care, health care service plan, pharmaceutical company, or contractor regarding a patient’s medical history, mental or physical condition, or treatment. Existing law defines “individually identifiable” to mean medical information that includes or contains any element of personal identifying information sufficient to allow identification of the individual, such as the patient’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. (Civ. Code Sec. 56.05(g).)

Existing law provides that a provider of health care, health care service plan, pharmaceutical company, or contractor who negligently creates, maintains, preserves, stores, abandons, destroys, or disposes of written or electronic medical records shall be subject to damages in a civil action or an administrative fine, as specified. (Civ. Code Sec. 56.101.)

Existing law provides that a plaintiff may bring an action against any person or entity that negligently releases his or her confidential information or records in violation of the CMIA. Existing law provides, in addition to any other available remedies, a plaintiff may receive as damages for a violation of the CMIA both nominal damages of $1,000 and the amount of actual damages. Existing law provides that any violation of the CMIA that results in economic loss or personal injury to a patient is punishable as a misdemeanor. (Civ. Code Sec. 56.36.)

This bill would, for the sole purpose of developing information for inclusion in a health care cost and quality database, require health care service plans and providers, as specified, to provide the following information to the Secretary of the California Health and Human Services Agency (Secretary):

• utilization data from the health care service plans’ and insurers’ medical, dental, and pharmacy claims or encounters, as specified;
• pricing information for health care items, services, and medical and surgical episodes of care gathered from allowed charges for covered health care items and services, or, in the case of entities that do not use or produce individual claims, price information that is the best possible proxy, so as to allow for meaningful comparisons of provider prices and treatment costs; and
• information sufficient to determine the impacts of social determinants of health, including age, gender, race, ethnicity, limited English proficiency, sexual orientation, gender identity, ZIP Code, and any other factors for which there is peer-reviewed evidence.

This bill would specify that all uses and disclosures of data shall comply with all applicable state and federal laws for the protection of the privacy and security of data, including, but not limited to, the federal Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191), the federal Health Information Technology for Economic and Clinical Health Act, Title XIII of the federal American Recovery and Reinvestment Act of 2009 (Public Law 111-5), and implementing regulations, the State Confidentiality of Medical Information Act (Civ. Code Sec. 56 et seq.), the Information Practices Act of 1977 (Civ. Code Sec. 1798 et seq.), and the data breach notification law (Civ. Code Sec. 1798.80 et seq.).

This bill would specify that all policies and protocols created in the development of the database shall ensure that the privacy, security, and confidentiality of individually identifiable health information is protected.

This bill would specify that the Secretary shall not publicly disclose any unaggregated, individually identifiable health information and shall develop a protocol for assessing the risk of reidentification stemming from public disclosure of any health information that is aggregated, individually identifiable health information.

This bill would direct the Secretary of California Health and Human Services to convene an advisory committee composed of a broad spectrum of health care stakeholders and experts to develop the parameters for the establishment, implementation, and ongoing administration of a health care cost and quality database.

This bill would make related legislative findings and declarations.

COMMENT

1. Stated need for the bill

According to the author:

While reports indicate that health care costs are increasing at a slower pace in recent years, health care still accounts for over 17 percent of the U.S. Gross Domestic Product and health care costs continue to consume significantly large percentages of federal, state and personal budgets. Whereas most sectors keep pace with the overall economy, health care continues to grow at higher rates than inflation. According to a 2013 Health Care Almanac report on health care costs published by the California Health Care Foundation (CHCF), the average annual growth rate has declined since 1981 and has remained flat over the last three years at a historic low of 3.9 percent. Health spending in 2011 was only slightly higher than inflation. Annual average health care spending has been in the single digits (as compared to double digits) for the last two decades, influenced recently by the recession. However, some provisions of the [Affordable Care Act] are expected to cause a one-time spike in growth. According to a May 2012 Primer published by the Kaiser Family Foundation, the U.S. spends substantially more on health care than other developed countries. In 2009, U.S. spending was 90 percent higher than many other industrialized countries. Some researchers believe the U.S. pays more for health care because prices are higher, technology is more readily available, and Americans have greater rates of chronic disease.

This bill will help make available valid performance information to encourage health care providers and facilities to provide care that is safe, medically effective, patient-centered, timely, efficient, affordable and equitable. Additionally, it will put provider cost and performance information into the hands of consumers and purchasers so that they can understand their financial liability and realize the best quality and value available to them.

1. Improving Healthcare Cost Transparency

According to the Western Center on Law and Poverty:

Today it is incredibly difficult for health care consumers to access clear, reliable information about the cost of a given health care service or product, or the level of quality of providers offering that care, and there is broad variation in both cost and quality. While the Affordable [C]are Act has been transformative in providing coverage to millions of additional Californians who were previously uninsured, consumers with commercial coverage still have grave concerns with the affordability of health care. Many plans have deductibles of more than $6,000 for individuals so health care consumers are paying for a significant portion of their care out-of-pocket. They need to be able to access trustworthy cost information. In addition to allowing consumers to make more informed decisions about both the cost and quality of the care they are receiving, transparency of cost and quality data also encourages improved quality of care and applies market pressures on cost.

This bill is intended to increase cost and quality transparency in California’s healthcare marketplace. By requiring plans and providers to submit cost, usage, and outcome data to the Secretary of California Health and Human Services, this bill would enable the Secretary to construct a statewide cost and quality database that could equip consumers with comparative cost and outcome data when choosing health care plans and providers.

1. Ensuring Confidentiality of Personal Information

California’s Confidentiality of Medical Information Act (CMIA) generally restricts the sharing or disclosure of a person’s medical information without first obtaining their written consent. The act states that “a provider of health care, health care service plan, or contractor shall not disclose medical information regarding a patient of the provider of health care or an enrollee or subscriber of a health care service plan without first obtaining an authorization,” unless a particular exception allows the disclosure. (Civ. Code Sec. 56.10.) Some exceptions that do not require prior authorization include when information disclosure is “otherwise specifically required by law” (Civ. Code Sec. 56.10(b)(9).), or when information is “disclosed to a third party for purposes of encoding, encrypting, or otherwise anonymizing data“(Civ. Code Sec. 56.10(c)(16).).

Without such an exception, any person or entity that wishes to obtain medical information must first obtain a valid authorization, which must be either handwritten by the person who signs it or in a typeface no smaller than 14-point type; be clearly separate from any other language present on the same page and executed by a signature which serves no other purpose than to execute the authorization; and be signed and dated by an authorized person. Additionally, in order to be valid, an authorization must also:

• state the specific uses and limitations on the types of medical information to be disclosed;
• state the name or functions of the provider of health care, health care service plan, pharmaceutical company, or contractor that may disclose the medical information;
• state the name or functions of the persons or entities authorized to receive the medical information;
• state the specific uses and limitations on the use of the medical information by the persons or entities authorized to receive the medical information;
• state a specific date after which the provider of health care, health care service plan, pharmaceutical company, or contractor is no longer authorized to disclose the medical information; and
• advise the person signing the authorization of the right to receive a copy of the authorization. (Civ. Code Sec. 56.11.)

This bill explicitly states that the CMIA, in addition to other privacy and data security laws, shall govern all uses and disclosures of data made pursuant to the bill.

The American Civil Liberties Union, writing in opposition, opines that the CMIA would not provide “privacy protections for the medical data being analyzed because [the] Secretary of California Health and Human Services and the database itself are not covered entities under CMIA.” Whether or not this statement about the scope of entities covered by the CMIA is accurate, the Secretary, as well as any data collected by him or her pursuant to this bill, would be subject to restrictions in the Information Practices Act of 1977, which, like the CMIA, limits the disclosure of personal information held by governmental agencies in order to protect the privacy of affected individuals.

In general, the Information Practices Act prohibits the disclosure of personal information to another party without first obtaining the permission of the affected individual. In certain circumstances, disclosure may be authorized without such permission when, as here, the information may be necessary for an agency “to perform its constitutional or statutory duties.” (Civ. Code Sec. 1798.24.) Even when permission from an affected individual is not obtained, the Information Practices Act requires governmental agencies to “establish appropriate and reasonable administrative, technical, and physical safeguards to ensure compliance with the [act], to ensure the security and confidentiality of records, and to protect against anticipated threats or hazards to their security or integrity which could result in any injury.” (Civ. Code Sec. 1798.21.) Consequently, whether or not the CMIA applies to information obtained by the Secretary pursuant to this bill, he or she would nonetheless be duty bound to protect the confidentiality of that information under the Information Practices Act, and would be legally required to limit any disclosure of those records as required by the act, whether to the public in the form of a healthcare cost and quality database, or privately within the Health and Human Services Agency.

1. Data Security

The American Civil Liberties Union (ACLU), in opposition, states, “[i]f the state wishes to compile a database containing such sensitive [health] information, it should adopt the most rigorous standards of security protection to ensure as nearly as possible that this information is not compromised,” and requests that the bill require information collected for, or contained within, a health care cost and quality database to be encrypted. As noted above, the Information Practices Act already requires state agencies to protect personal information, including health information, in their possession with “reasonable administrative, technical, and physical safeguards.” (Civ. Code Sec. 1798.21.) To date, the Legislature has not explicitly required data encryption to be one of those safeguards. When the Legislature amended the Information Practices Act in 2002 to create California’s data breach notification law (SB 1386, Peace, Ch. 915, Stats. 2002), it included a safe harbor that generally exempted the exposure of encrypted personal information from the law’s notification provisions. The inclusion of an encryption safe harbor was meant to incentivize organizations to encrypt personal information under their control.

However, recent data breaches have revealed instances where encrypted information was breached along with the encryption key. For example, the ride-hailing company Uber reported in late 2014 that “[t]housands of Uber driver names and driver’s license numbers may be in the hands of an unauthorized third party due to a data breach,” and that “one of its many databases could have potentially been accessed because one of the encryption keys required to unlock it had been compromised.” (Tracey Lien, Uber Security Breach May Have Affected up to 50,000 Drivers, Los Angeles Times (Feb. 27, 2015) <http://www.latimes.com/business/technology/la-fi-tn-uber-data-breach-20150227-story.html > [as of Apr. 10, 2016].) In breaches such as this where an encryption key is taken along with encrypted information, the compromised information has lost the effectiveness of its encryption protection.

While it may be beyond the scope of this bill, the Committee may wish to consider the data breach notification law’s encryption safe harbor and how best to address the problem of compromised encryption keys in future legislation.

1. Other Stakeholder Concerns

A number of stakeholders not officially supporting or opposing this bill have raised concerns about the advisory committee this bill would establish to help develop parameters for the creation, implementation, and ongoing administration of a health care cost and quality database. Representative of these concerns, the Service Employees International Union, California State Council (SEIU), writes:

[This bill] as currently drafted would grant the Secretary of the California Health and Human Services Agency with the sole discretion to act unilaterally in the formation of the database with guidance from a multi-stakeholder review committee which would include plans, providers, purchasers . . . and consumers. Past health care transparency efforts in California have shown that influence by the industry groups over the analysis and use of provider-specific performance information results in far more limited data analysis and reporting than is needed or desired, and could greatly limit the value of the state’s investment in a cost and quality database. . . . SEIU would like to see SB 1159 amended to include a more robust public governance structure which brings consumers, labor, and purchasers together with the state to oversee the rules and administration of the database informed by recommendations and input from a separate group of those entities required to submit data to the database.

Stakeholders also raise concerns with a provision of the bill excluding confidentially negotiated contract terms and proprietary contract information from disclosure. Also representative of these concerns, SEIU writes:

As currently drafted, SB 1159 would protect confidentially negotiated contract terms, which includes prices, between commercial health plans and providers. SEIU believes that this protection of prices is unnecessary and should be removed to ensure that health care purchasers and consumers can access information on the prices paid for health care services.

Support: AARP California; California Association of Physician Groups; California Pan-Ethnic Health Network; League of California Cities; National Multiple Sclerosis Society; Western Center on Law and Poverty

Opposition: American Civil Liberties Union of California; Consumer Federation of California

HISTORY

Source: Author

Related Pending Legislation: None Known

Prior Legislation:

SB 26 (Hernandez, 2015) would have required the Secretary of Health and Human Services to enter into a contract with one or more independent, nonprofit organizations to develop and administer the California Health Care Cost and Quality Database. This bill would have required certain health care entities, including health care service plans, to provide medical claims, cost, and quality information to the California Health Care Cost and Quality Database in order to create a publicly available web-based, searchable database. This bill would have required all data disclosures involving the database to comply with applicable state and federal laws for the protection of the privacy and security of data, and would have prohibited public disclosure of any unaggregated, individually identifiable health information. This bill was held on suspense in the Senate Appropriations Committee.

SB 1322 (Hernandez, 2014) was substantially similar to SB 26 (Hernandez, 2015). This bill was held on suspense in the Assembly Appropriations Committee.

AB 1558 (Hernandez, 2014) would have requested the University of California to establish the California Health Data Organization to collect data from payers and establish an all-payer claims database. This bill would have required certain private payers to submit claims data to the organization on utilization, payment, and cost sharing for services delivered to beneficiaries, and would have requested the organization to design and maintain an Internet Web site that allowed consumers to compare the prices paid by payers for procedures. This bill was held on suspense in the Senate Appropriations Committee.

SB 746 (Leno, 2013) would have required health care service plans and insurers to disclose specified aggregate data for products and for rate filings, as specified, in the large group market on an annual basis. The bill also would have required a health plan or health insurer that exclusively contracts with no more than two medical groups in the state to provide claims or other data to large group purchasers that request the data and demonstrate the ability to comply with privacy laws, as specified, and would have required the health care service plan or health insurer to use only deidentified data in that disclosure to protect the privacy rights of individuals. This bill was vetoed by Governor Brown.

Prior Vote: Senate Health Committee (Ayes 8, Noes 0)

**************

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 1159

SUBJECT: California Health Care Cost and Quality Database

SUMMARY:

Requires the Secretary of California Health and Human Services Agency to, no later than January 1, 2017, use a competitive process to contract, as specified, with one or more independent, nonprofit organizations in order to administer the California Health Care Cost and Quality Database. Requires the nonprofit organization, no later than January 1, 2019, to make a publicly available, web-based, searchable database, as specified. Requires the information and analysis included in the database to be presented in a way that facilitates comparisons of cost, quality, and patient satisfaction across payers, provider organizations, and other suppliers of health care services.

Existing law:

1. 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. 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.
2. Requires OSHPD, to publish annually risk-adjusted outcome reports on medical, surgical and obstetric conditions or procedures, and others selected by OSHPD in accordance with specified criteria.
3. 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.
4. 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.
5. Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurers. Requires specified health plans and insurers to submit reports to state and federal regulators on medical loss ratios, rate filings, enrollment data, as specified.
6. Prohibits contracts between carriers and a licensed hospital or health care facility owned by a licensed hospital from containing any provision that restricts the ability of the carrier from furnishing information to enrollees or insureds concerning the cost range of procedures or the quality of services. Provides hospitals at least 20 days in advance to review the methodology and data, requires risk adjustment factors for quality data, and requires an opportunity for a hospital to provide a link on the carrier’s Website where the hospital’s response to the data can be accessed.

1. Makes, under federal law, Medicare data available for the evaluation of the performance of providers of services and suppliers, to qualified entities, defined as a public or private entity that is qualified as determined by the Secretary of the federal Department of Health and Human Services (HHS), to use to evaluate the performance of providers of services and suppliers on measures of quality, efficiency, effectiveness, and resource use, and applies other requirements to qualified entities as the HHS Secretary may specify, such as ensuring security of data.

1. 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.
2. 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.
3. 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.
4. Establishes the Confidentiality of Medical Information Act, which prohibits providers of healthcare, health care service plans, their contractors, and any business organized for the purpose of maintaining medical information, from using medical information for any purpose other than providing health care services, except as expressly authorized by the patient or as otherwise required or authorized by law.

This bill:

1. Requires, for the purpose of developing information for inclusion in a cost and quality database, health plans, insurers, self-insured employers, and suppliers and providers, as defined, to provide to the CHHS Secretary:
   1. Utilization data from medical, dental, and pharmacy claims. In the case of entities that do not use claims data (including, but not limited to, integrated delivery systems), encounter data consistent with the core set of data elements for data submission proposed by the APCD Council, the University of New Hampshire, and the National Association of Health Data Organizations; and,
   2. Pricing information for health care items, services, and medical and surgical episodes of care gathered from allowed charges for covered health care items and services. In the case of entities that do not use or produce individual claims, price information that is the best possible proxy to pricing information for health care items, services, and medical and surgical episodes of care available in lieu of actual cost data to allow for meaningful comparisons of provider prices and treatment costs.
2. Permits a multiemployer self-insured plan that is responsible for paying for health care services provided to beneficiaries and the trust administrator for a multiemployer self-insured plan to provide the information in 1) above.
3. Permits the CHHS Secretary to report an entity’s failure to comply with 1) above to the entity’s regulating agency. Permits the regulating agency to enforce the requirement in 1) above using its existing enforcement procedures. Requires moneys collected pursuant to the authorization to enforce to be subject to appropriation by the Legislature. Specifies that the failure to comply with 1) above is not a crime.
4. Requires all uses and disclosures of data made pursuant to this bill to comply with all applicable state and federal laws for the protection of the privacy and security of data, including, but not limited to, HIPAA and the federal Health Information Technology for Economic and Clinical Health Act and implementing regulations.
5. Requires all policies and protocols developed in the performance of the contract to ensure that the privacy, security, and confidentiality of individually identifiable health information is protected. Prohibits the nonprofit organization from publicly disclosing any unaggregated, individually identifiable health information, as defined, and requires the nonprofit to develop a protocol for assessing the risk of reidentification stemming from public disclosure of any health information that is aggregated, individually identifiable health information.
6. Requires confidentially negotiated contract terms contained in a contract between a health plan or insurer and a provider or supplier to be protected in any public disclosure of data made pursuant to this bill. Prohibits individually identifiable proprietary contract information included in a contract between a health plan or insurer and a provider or supplier from being disclosed in an unaggregated format.
7. Requires the CHHS Secretary to convene an advisory committee, composed of a broad spectrum of health care stakeholders and experts, including, but not limited to, representatives of the entities that are required to provide information pursuant to 1) above and representatives of purchasers, including, but not limited to, businesses, organized labor, and consumers, to develop the parameters for the establishment, implementation, and ongoing administration of the database, including a business plan for sustainability without using GF moneys, as specified. Requires the advisory committee to hold public meetings with stakeholders, solicit input, and set its own meeting agendas. Makes advisory committee meetings subject to the Bagley-Keene Open Meeting Act.
8. Requires CHHS to arrange for the preparation of an annual report to the Legislature and the Governor, as specified, based on the findings of the review committee, including input from the public meetings, that shall, at a minimum, examine and address the following issues:
   1. Assessing California health care needs and available resources;
   2. Containing the cost of health care services and coverage;
   3. Improving the quality and medical appropriateness of health care;
   4. Increasing the transparency of health care costs and the relative efficiency with which care is delivered;
   5. Use of disease management, wellness, prevention, and other innovative programs to keep people healthy and reduce disparities and costs and improving health outcomes for all populations;
   6. Efficient utilization of prescription drugs and technology;
   7. Reducing unnecessary, inappropriate, and wasteful health care;
   8. Educating consumers in the use of health care information; and,
   9. Using existing data sources to build a cost and quality database.
9. Prohibits the members of the advisory committee from receiving per diem or travel expense reimbursement, or any other expense reimbursement.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, beginning in March 2014, the Senate Committee on Health convened several health care experts to discuss factors that contribute to the growing cost of health care in California and efforts to make care more affordable. At a second hearing in February of this year, the Committee heard testimony related to some major cost drivers in the health care system, including pharmaceuticals, hospital costs, and the effects of geographic location on contracting. The third, held in March of this year, served to educate members and the public about the effect of health care costs on consumers. This series of hearings examined policy solutions to control health care costs as millions of Californians obtain coverage under the Affordable Care Act (ACA). Testimony presented at the hearings illustrated the complexity of the health care market and the array of approaches to containing costs. In addition to expanded coverage, the author believes that, like past health care reform efforts, a long-term, comprehensive action agenda for California policymakers is necessary to ensure that health care costs are appropriate and health care premiums are affordable, especially given that the ACA contains a mandate for individuals to purchase coverage. The author states this bill is intended to help make available valid performance information to promote care that is safe, medically effective, patient-centered, timely, efficient, affordable and equitable. This bill seeks to put provider cost and performance information into the hands of consumers and purchasers so that they are able to understand their financial liability and realize the best quality and value available to them.

1. 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 APCDs. Most of these states have chosen to house their APCDs at a state agency (either an existing agency or a newly created entity); one state (Colorado) has its APCD run by a nonprofit organization. The papers emphasize the importance of engaging key stakeholders early and often, including payers, health care providers, employers, state agencies, and consumers. The papers note that for most states, legislation creating an APCD usually articulates broad reporting goals which are further refined in rules or regulations for data collection or data use.
   
2. Existing California initiatives. In California, the California Healthcare Performance Information System (CHPI) is a voluntary physician performance database with statistical analysis that will eventually publish information online. According to the CHPI website, starting in 2015, output will be an analysis of claims data aggregated from more than 12 million patients enrolled in CHPI’s three participating California health plans- Blue Shield, Anthem Blue Cross and United Healthcare, as well as Medicare. CHPI was federally certified to include data from Medicare’s five million California beneficiaries, and became the first Qualified Entity to receive Medicare data.

The University of California, San Francisco is working with the California Department of Insurance (CDI) on a medical cost and quality transparency website. According to CDI, the website will report average prices paid for episodes of care or annual costs for chronic conditions, as well as quality measures where available. Prices will be aggregated across payers and providers, and shown at the regional level based on the 19 California rating regions (some regions may need to be consolidated pursuant to the terms of the data license agreement). The website is expected to provide price information for 95 to 99 episodes of care or conditions. Five to 15 of those episodes or conditions will have both price and quality information as well as consumer education content created by Consumers Union. Quality information will consist of existing performance, appropriateness, and outcome measures.

The Regional Cost and Quality Atlas is an interactive website to be released in Summer 2016 that will compare aggregated cost and quality data, by payer/product type (not individual payers), for each of 19 regions (the same regions that had been defined for Covered California). The project is a partnership between the Integrated Healthcare Association (IHA), the California Healthcare Foundation, and CHHS. Working with large physician organizations and health plans, IHA developed a methodology for calculating risk-adjusted Total Cost of Care to be used as part of the Pay for Performance program. Plans submit detailed data files including claims and enrollment data to Truven Health Systems. Truven uses this detail to calculate actual payments to physician organizations for a set of enrollees divided by number of enrollees. Payments include professional services, pharmacy, hospital care, ancillary services, as well as payments made by consumers to cover cost-sharing amounts.

Prior legislation. SB 26 (Hernandez of 2015) would have required the CHHS Secretary to, no later than January 1, 2017, use a competitive process to contract, as specified, with one or more independent, nonprofit organizations in order to administer the California Health Care Cost and Quality Database. Would have required the nonprofit organization, no later than January 1, 2019, to make a publicly available, web-based, searchable database, as specified. Requires the information and analysis included in the database to be presented in a way that facilitates comparisons of cost, quality, and patient satisfaction across payers, provider organizations, and other suppliers of health care services. SB 1322 was held on the Senate Appropriations Committee suspense file.

SB 1322 (Hernandez of 2014), was substantially similar to SB 26. SB 1322 was held on the Assembly Appropriations Committee suspense file.

SB 1182 (Leno, Chapter 577, Statutes of 2014), requires health plans and insurers to share specified data with purchasers that have 1,000 or more enrollees or that are multiemployer trusts.

SB 1340 (Hernandez, Chapter 83, Statutes of 2014), expands provisions related to gag clauses in contracts between health plans or insurers and providers.

AB 1558 (Roger Hernández of 2014), would have created 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.

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 established 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, who urged all parties to work together in the effort to make health care costs more transparent.

SB 1196 (Hernandez, Chapter 869, Statutes of 2011), prohibits a contract between a health plan insurer and a provider or supplier, from prohibiting, conditioning, or in any way restricting the disclosure of claims data related to health care services provided to an enrollee or subscriber of the health plan or carrier, or beneficiaries of any self-funded health coverage arrangement administered by the carrier to a qualified entity, as defined.

SB 751 (Gaines and Hernandez), Chapter 244, Statutes of 2011, prohibits contracts between carriers and hospitals from containing any provision that restricts the ability of the carrier from furnishing information to enrollees or insureds concerning cost range of procedures or the quality of services.

AB 2389 (Gaines of 2009), would have prohibited a contract between a health facility and a carrier from containing a provision that restricts the ability of the carrier to furnish information on the cost of procedures or health care quality information to carrier enrollees. AB 2389 died in the Assembly on Concurrence.

AB 2967 (Lieber of 2008), would have established a Health Care Cost and Quality Transparency Committee to develop and recommend to the CHHS Secretary 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 on the Senate Inactive File.

SB 1300 (Corbett of 2008), would have prohibited a contract between a health care provider and a health plan from containing a provision that restricts the ability of the health plan to furnish information on the cost of procedures or health care quality information to plan enrollees. SB 1300 died on the Senate Floor.

AB 1296 (Torrico, Chapter 698 Statutes of 2007), requires a health plan or contractor offering health benefits to California Public Employees’ Retirement System (CalPERS) members and annuitants to disclose to CalPERS the cost, utilization, actual claim payments, and contract allowance amounts for health care services rendered by participating hospitals to each member and annuitant.

AB 1 X1 (Nuñez of 2007), among many other provisions relating to health care reform, contained nearly identical language as that contained in AB 2967. AB1 X1 failed passage in the Senate Health Committee.

1. Support. AARP states that information about the performance of our health care system should be collected, analyzed, and made publicly available, addressing safety, effectiveness, patient-centered responsiveness, timeliness, equity, and efficiency.
2. Support if amended. Consumers Union and Health Access California suggest amendments to create a public governance body with a spectrum of viewpoints (including consumer advocates, labor, and other purchasers) that would be responsible for developing a plan to ensure comprehensive and efficient collection of data from physicians, hospitals and other sources. These groups state that the proposed advisory committee does not go far enough to ensure that the database meets the goals envisioned by the bill. Finally, these groups urge closing a loophole that would prevent full transparency by allowing providers to broadly deem contract information “proprietary” and to require contract language that would allow information required in other sections of the bill to be kept confidential.

Western Center on Law and Poverty appreciates that the bill calls for the creation of a database with critical information, but request an amendment deleting the exclusion of negotiated contract price information.

California Pan-Ethnic Health Network (CPEHN) asks that the bill be amended to refer to the database as the “California Health Care Cost, Quality and Equity Database” as quality interventions without explicit attention to disparities reduction run the risk of leaving current disparities in place or even worsening them. Including “health equity” affirmatively in the title of the database will help to ensure that future stewards of the database prioritize health equity as part of all quality improvement efforts so disparities are not ignored or potentially worsened. CPEHN also seeks amendments to ensure that the governance of the database is responsive to the needs of consumers. The proposed advisory committee could be more responsive to consumer interests, as both individuals and purchasers. A model that might be more effective is that used by CalPERS, which has a governance structure dominated by those it serves. Finally, CPEHN believes that this protection of prices is overly broad and could unnecessarily hinder consumers from accessing important information on the prices paid for health care services.

1. Support in concept. CAPG writes that they support policy measures that encourage the implementation of the Triple Aim (decreased costs, improved patient experience and development of population health management), appreciates the stakeholder meetings conducted by the author, and look forward to working together on the creation of such a database in the Golden State.
2. Concerns. The California Association of Health Plans (CAHP) are concerned that the database should be “searchable” by the public when confidential and proprietary information is included in the data submitted. CAHP states that a neutral third party should be responsible for the database; however, recommends that the organization convene a technical workgroup tasked with developing the data elements to be collected rather than specifying what should be initially included in the database in statute. CAHP recommends that a prudent approach for identifying elements for inclusion in the database is necessary, and for the purposes of the initial implementation it is recommended to use a phased-in plan approach based on enrollment size. Claims data should begin with medical and pharmacy data. CAHP states that if Medicare data is to be included, then the database administer should apply to the federal Centers for Medicare and Medicaid Services to be a Medicare Data Sharing for Performance Program. CAHP further states that this bill needs to take into consideration the impact of the United States Supreme Court decision (Gobeille v. Liberty Mutual Insurance Co.), Case No. 14-181) that determined ERISA plans were protected from state laws that interfere with central matters of plan administration, such as the collection and reporting of data required for an all payers claims database. Finally, CAHP agrees that the use of existing informational sources such as HEDIS, OSHPD, and DHCS should be included to avoid the repetitious reporting of data. These items could be identified in the technical workgroup mentioned above and the workgroup could be responsible for extracting the data from these sources or could ensure that the database is capable of receiving the data as currently extracted for these systems. There are concerns with the enrollee demographics included in the bill; particularly if plans do not currently collect this information from enrollees.
3. Oppose unless amended. The Consumer Federation of California (CFC) writes that while this bill states that all uses and disclosures of data shall comply with all applicable state and federal laws for the protection of the privacy and security of data, including CMIA and HIPAA, this assurance actually provides no privacy protections for the medical data being analyzed because the CHHS Secretary and the database itself are not covered entities under these laws. CFC further writes that though this bill prohibits publicly disclosing individually identifiable health information, this restriction, in the absence of any prohibition against private disclosure of this information, implies no limit to the private disclosure of unaggregated, individually identifiable information. The American Civil Liberties Union of California suggests amendments to extend existing medical privacy protections to the database and its administrators, to place limits on the private disclosure of unaggregated, individually identifiable health information, to require encryption, and to explicitly extend data breach notice and remedies to the CHCCQB and its administrating agency.

SUPPORT AND OPPOSITION:

Support: AARP

Oppose: Consumer Federation of California (unless amended)

American Civil Liberties Union of California (unless amended)

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