Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law provides for the licensure and regulation of health facilities, including general acute care hospitals, acute psychiatric hospitals, and special hospitals, administered by the State Department of Public Health. A violation of these provisions is a crime. Existing law, the Health Care Providers Bill of Rights, prescribes restrictions on the types of contractual provisions that may be included in agreements between health care service plans and health care providers and agreements between health insurers and health care providers.

This bill, the Health Care Market Fairness Act of 2017, 2018, would prohibit contracts between hospitals hospitals, as defined, and contracting agents, health care service plans, or health insurers from containing certain provisions, including, but not limited to, setting payment rates or other terms for nonparticipating affiliates of the hospital, and requiring the contracting agent, plan, or insurer to keep the contracts payment rates confidential from any payor, as defined, that is or may become financially responsible for the payment, and requiring the contracting agent, plan, or insurer to submit to arbitration, or any other alternative dispute resolution program, any claims or causes of action that arise under state or federal antitrust laws after those claims or causes of action arise, except as provided. payment. The bill would make any prohibited contract provision void and unenforceable. The bill would define contracting agent and hospital for those purposes. The bill would enact an identical provision under the health facility licensure and regulation provisions as that provision described above for contracts between hospitals and contracting agents. The bill would provide that its provisions are severable.

Existing law requires every health facility for which a license or special permit has been issued to be periodically inspected by the State Department of Public Health, or by another governmental entity under contract with the department. Existing law requires the department to inspect the facility for compliance with provisions of state law and regulations during a state periodic inspection, or at the same time that a federal periodic inspection is performed.

This bill would provide that the contracts made pursuant to the provisions described above are not subject to those inspection requirements.

Because a willful violation of the provisions relating to health care service plans is a crime, and a violation of those licensure and regulation provisions relating to hospitals is a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law provides for the licensure and regulation of health facilities, including general acute care hospitals, acute psychiatric hospitals, and special hospitals, administered by the State Department of Public Health. A violation of these provisions is a crime. Existing law, the Health Care Providers Bill of Rights, prescribes restrictions on the types of contractual provisions that may be included in agreements between health care service plans and health care providers and agreements between health insurers and health care providers.

This bill, the Health Care Market Fairness Act of 2017, would prohibit contracts between hospitals and contracting agents, health care service plans, or health insurers from containing certain provisions, including, but not limited to, setting payment rates or other terms for nonparticipating affiliates of the hospital, requiring the contracting agent, plan, or insurer to keep the contracts payment rates confidential from any payor, as defined, that is or may become financially responsible for the payment, and requiring the contracting agent, plan, or insurer to submit to arbitration, or any other alternative dispute resolution program, any claims or causes of action that arise under state or federal antitrust laws after those claims or causes of action arise, except as provided. The bill would make any prohibited contract provision void and unenforceable. The bill would define contracting agent and hospital for those purposes. The bill would enact an identical provision under the health facility licensure and regulation provisions as that provision described above for contracts between hospitals and contracting agents. The bill would provide that its provisions are severable.

Because a willful violation of the provisions relating to health care service plans is a crime, and a violation of those licensure and regulation provisions relating to hospitals is a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law provides for the licensure and regulation of health facilities, including general acute care hospitals, acute psychiatric hospitals, and special hospitals, administered by the State Department of Public Health. A violation of these provisions is a crime. Existing law, the Health Care Providers Bill of Rights, prescribes restrictions on the types of contractual provisions that may be included in agreements between health care service plans and health care providers and agreements between health insurers and health care providers.

This bill, the Health Care Market Fairness Act of 2017, would prohibit contracts between hospitals and contracting agents, health care service plans, or health insurers from containing certain provisions, including, but not limited to, setting payment rates or other terms for nonparticipating affiliates of the hospital, requiring the contracting agent, plan, or insurer to keep the contracts payment rates confidential from any payor, as defined, that is or may become financially responsible for the payment, and requiring the contracting agent, plan, or insurer to submit to arbitration, or any other alternative dispute resolution program, any claims or causes of action that arise under state or federal antitrust laws after those claims or causes of action arise, except as provided. The bill would make any prohibited contract provision void and unenforceable. The bill would define contracting agent and hospital for those purposes. The bill would enact an identical provision under the health facility licensure and regulation provisions as that provision described above for contracts between hospitals and contracting agents. The bill would provide that its provisions are severable.

Because a willful violation of the provisions relating to health care service plans is a crime, and a violation of those licensure and regulation provisions relating to hospitals is a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law, the Health Care Providers Bill of Rights, prescribes restrictions on the types of contractual provisions that may be included in agreements between health care service plans and health care providers and agreements between health insurers and health care providers.

This bill bill, the Health Care Market Fairness Act of 2017, would prohibit contracts between hospitals and contracting agents or agents, health care service plans plans, or health insurers from containing certain provisions, including, but not limited to, setting payment rates or other terms for nonparticipating affiliates of the hospital, requiring the contracting agent or plan agent, plan, or insurer to keep the contracts payment rates secret confidential from any payor, as defined, that is or may become financially responsible for the payment, and requiring the contracting agent or plan agent, plan, or insurer to submit to arbitration, or any other alternative dispute resolution program, any claims or causes of action that arise under state or federal antitrust laws after those claims or causes of action arise, except as provided. The bill would make any prohibited contract provision void and unenforceable. The bill would define contracting agent for those purposes. The bill would provide that its provisions are severable.

Because a willful violation of the provisions relating to health care service plans is a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law requires health care service plans to meet certain requirements, including, but not limited to, having the organizational and administrative capacity to provide services to subscribers and enrollees and providing basic health care services, as defined, to those subscribers and enrollees, and having facilities licensed, as specified. Existing law, the Health Care Providers Bill of Rights, prescribes restrictions on the types of contractual provisions that may be included in agreements between health care service plans and health care providers and agreements between health insurers and health care providers.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law requires health care service plans to meet certain requirements, including, but not limited to, having the organizational and administrative capacity to provide services to subscribers and enrollees and providing basic health care services, as defined, to those subscribers and enrollees, and having facilities licensed, as specified.

This bill would make technical, nonsubstantive changes to those provisions.

 THIRD READING  

Bill No: SB 538

Author:

:

Vote:

SENATE HEALTH COMMITTEE: 9-0, 4/26/17

AYES: Hernandez, Nguyen, Atkins, Leyva, Mitchell, Monning, Newman, Nielsen, Roth

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/25/17

AYES: Lara, Beall, Bradford, Hill, Nielsen, Wiener

NO VOTE RECORDED: Bates

SUBJECT:

SOURCE: Author

DIGEST:

This bill prohibits contracts between hospitals or any affiliate of a hospital and certain types of third-party administrators, health plans or health insurers from containing provisions that set payment rates or terms for nonparticipating providers, requiring contracts with one or more affiliated providers, requiring payors to attest to the contract terms, requiring arbitration for antitrust claims, requiring same cost-sharing for out-of-network hospitals, or keeping payment rates secret, as specified. Makes any of these contract provisions void and unenforceable.

ANALYSIS:

Existing law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health care service plans (health plans), the California Department of Insurance (CDI) to regulate insurers, including health insurers, the Department of Public Health (DPH) to regulate general acute care hospitals, and the Department of Justice and Attorney General (AG) to bring civil and criminal legal actions against individuals and businesses acting in restraint of trade.
2. Requires when a contracting agent sells, leases, or transfers a health provider’s contract to a payor, the rights and obligations of the provider to be governed by the underlying contract between the health care provider and the contracting agent. Defines payor as a health care service plan, including a specialized plan, an insurer licensed to provide disability insurance that covers hospital, medical, or surgical benefits, automobile insurance, workers’ compensation insurance, or a self-insured employer that is responsible to pay for health care service provided to beneficiaries.
3. Establishes, under the Federal Arbitration Act, that arbitration agreements must be enforced except upon such grounds as exist at law or in equity for the revocation of any contract (such as fraud, duress, or unconscionability).

This bill:

1. Prohibits a contract between a hospital or any affiliate of a hospital and a contracting agent, health plan, or insurer from directly or indirectly doing any of the following:
   1. Setting payment rates or other terms for nonparticipating affiliates of the hospital;
   2. Requiring the contracting agent to contract with any one or more of the hospital’s affiliates. States that this bill does not prohibit a contract from requiring that the contracting agent contract with the medical group with which the hospital’s medical staff is affiliated;
   3. Requiring a payor to certify, attest, or otherwise confirm in writing that the payor is bound by the terms of the contract between the hospital and the contracting agent and requiring a contracting agent to be responsible for including and disclosing relevant terms of the provider contract in its contract with a payor;
   4. Requiring the contracting agent, as a condition to entering into the contract with the hospital or continuing the contract on its then current terms, to submit to arbitration, or any other alternative dispute resolution program, any claims or causes of action that arise under state or federal antitrust laws. States this paragraph does not prohibit a hospital or any affiliate or a hospital and a contracting agent from entering into a consensual agreement to submit those claims or causes of action to arbitration or any other alternative dispute resolution program, other than as a condition to entering into the contract or continuing the contract on its then current terms;
   5. Requiring the contracting agent to impose the same cost-sharing obligations on beneficiaries when the hospital is in-network but at a different cost-sharing tier than any other in-network hospitals. Includes as “cost-sharing” copayment, coinsurance, deductible, or any other cost-sharing provision for covered benefits other than share of premium; and,
   6. Requiring the contracting agent to keep the contract’s payment rates confidential from any existing or potential payor that is or may become financially responsible for the payments. States that this bill does not prohibit a requirement that any communication of the contract’s payment rates to an existing or potential payor be subject to reasonable nondisclosure agreement.
2. Makes any contract provision described above void and unenforceable.
3. Makes the inspection requirements on hospitals, as specified, related to contracts made pursuant to this bill inapplicable.
4. Defines multiple terms including “affiliate”, “control”, “contracting agent”, and “payor”.
5. States legislative intent about hospital consolidations and concentration of hospitals and the impacts on health insurance premiums; and that because they tend to lessen competition, increase prices, and reduce the affordability and availability of insurance coverage, and for the protection of other important state interests, the hospital contract provisions described in this bill are deemed to be unfair, and against public policy, both of which are grounds for the revocation of any contract of any contract under the laws of this state.
6. States that this bill regulates the business of insurance, as the term is defined for purposes of the federal law, as specified. States that nothing in this act be construed to impose the regulatory requirements of existing state law on network vendors, as specified.

Comments

1. Author’s statement. According to the author, since 2002, health insurance premiums for family coverage in California have increased by 234%, nearly six times the state’s overall inflation rate increase. Workers and consumers are also paying more out-of-pocket for co-pays, coinsurance, high deductibles and the share of premium. Rate filings by health plans show that hospital services are the largest spending category and that price inflation is driving up costs. High hospital prices are driving up health care spending by employers, consumers and taxpayers. Increasing consolidation of hospitals into mega-chains has decreased competition and that market power is a major driver of price increase and health care spending. Empirical studies demonstrate that dominant providers in California are using their market power to engage in unfair contracting practices that result in higher-than-competitive prices. This bill seeks to prohibit anti-competitive contract provisions that dominant hospital systems impose to maintain market power and to inflate prices charged to consumers, workers and employers.
2. Provider market power. A study on the impact of health care market power on premiums for products available in 2014 through Covered California conducted by researchers at the University of California, Berkeley found that the concentration of medical groups and hospitals had an impact on premium rates in California’s 19 health insurance rating regions. The researchers found that the concentration of health plans did not have an impact on premiums. They found that reducing hospital concentration to levels that would exist in moderately competitive markets could reduce overall premiums of more than 2% and in three regions by more than 10%. A June 2015 issue brief from the California HealthCare Foundation (CHFC) indicates that in California there are eight large systems which comprise 40% of the state’s hospitals and general acute care hospital beds. A 2014 article published in the Journal of the American Medical Association found between 2009 and 2012 hospital-owned physician organizations in California incurred higher expenditures for commercial HMO enrollees for professional, hospital, laboratory, pharmaceutical, and ancillary services than physician-owned organizations. The authors found that organizations in California that are owned by local hospitals or multihospital systems incur significantly higher expenditures per patient than integrated medical groups and Independent Practice Associations owned by participating physicians. In the study period, the total expenditures for care per patient were 10% higher in physician organizations that were owned by a local hospital and 20% higher in organizations owned by multihospital systems than in organizations owned by participating physicians, after adjusting for patient disease severity and other factors.
3. Self-funding. Self-insurance is when an employer retains the risk of paying medical claims within the employee benefit plan. Self-insurance is not when the employer purchases insurance from a state-licensed insurer or managed care organization. ERISA prohibits states from enforcing laws relating to private-sector employee health benefit plans. However, health plans contracting with ERISA plans can be regulated through state health insurance laws. Many times an ERISA plan will contract with a state-regulated health plan in a limited capacity for the use of the health plan’s network of providers and other claims management functions. According to the Kaiser Family Foundation based on the 2016 Employer Health Insurance Survey, 13% of covered workers in small firms and 82% in large firms are enrolled in plans that are either partially or completely self-funded, similar to 2015. Overall, 61% of covered workers are enrolled in a plan that is either partially or completely self-funded. According to a September 2016 CHCF Almanac Reference Guide based on 2015 enrollment, there are 6.6 million Californians (1.1 million under DMHC and 5.5 million under CDI) reported as Administrative Service Only by health plans and insurers who are regulated in California. There was an overall increase of 4% from 2014 to 2015.
4. Binding a payor to contract terms. This bill has a provision that a payor cannot be required to certify, attest, or otherwise confirm in writing that the payor is bound by the terms of the contract between the hospital and contracting agent. Providers take issue with this provision because they want to ensure that payors are bound by contract terms included in their contracts with contracting agents (and health plans and insurers), such as prompt pay requirements, dispute resolution processes for payment disputes, and arbitration. Additionally, providers raise concerns that this is in conflict with existing law that states when a contracting agent sells, leases, or transfers a health provider’s contract to a payor, the rights and obligations of the provider shall be governed by the underlying contract between the provider and the contracting agent. However, the Court of Appeal in UFCW & Employers Benefit Trust v. Sutter Health held that a group of health care providers could not compel a self-funded payor to arbitrate its antitrust and unfair competition claims against them because the payor had not signed the provider contract between the providers and a health plan containing an arbitration clause, and because existing law did not bind the payer to the terms of the provider contract. The self-funded payor was not equitably estopped to avoid arbitration. The plan did not serve as the self-funded payor’s agent and did not agree to arbitration on the payor’s behalf. The providers had not shown that the self-funded payor had subsequently ratified the plan’s agency by presenting evidence that a claims adjustor for the payor was silent after receiving an incomplete reference to the mere existence of an arbitration agreement. Because of this decision, Sutter is requiring self-funded customers of contracting agents to agree in writing to comply with dispute resolution, claims payment, utilization management, coordination of benefits, network development, and other items. Customers who do not sign the form will no longer have access to Sutter’s contracted rates. An amendment was taken in Senate Health Committee to require a contracting agent to be responsible for including and disclosing relevant terms of the provider contract in its contract with a payor.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Likely minor enforcement costs by the Department of Public Health (Licensing and Certification Fund).
• Ongoing costs of $20,000 per year for enforcement by CDI (Insurance Fund).
• Minor costs for enforcement by DMHC (Managed Care Fund).
• Unknown potential future reduction in state health care costs (various funds).

SUPPORT: (Verified 5/24/17)

Anthem Blue Cross

Association of California Life & Health Insurance Companies

Blue Shield of California

California Association of Health Plans

California Labor Federation

California Retailers Association

California Nurses Association

Carpenter Funds Administrative Office of Northern California, Inc.

Consumers Union

Health Access California

National Nurses United

Northern California Carpenters Regional Council

Pacific Business Group on Health

San Diego Electrical Health & Welfare Trust

Silicon Valley Employers Forum

Small Business California

One Individual

OPPOSITION: (Verified 5/30/17)

Alliance of Catholic Health Care

Association of California Healthcare Districts

California Association of Physician Groups

California Chamber of Commerce

California Children’s Hospital Association

California Hospital Association

California Medical Association

District Hospital Leadership Forum

El Camino Hospital

O’Connor Hospital

Private Essential Access Community Hospitals

Scripps Health Public Affairs

Southwest California Legislative Council

Tenet Health

ARGUMENTS IN SUPPORT: The California Labor Federation writes the rising cost of health care is increasingly unsustainable and taking money away from wages and job creation. Unions and employers have taken action to control health care costs by developing effective, value-based benefit design strategies to increase quality and lower cost. This bill allows purchasers to effectively control cost by prohibiting certain contracting provisions that give dominant hospital systems an unfair competitive advantage. Consumers Union writes that provider consolidation is a key reason for higher hospital prices and health insurance premiums in Northern California contrasted to Southern California. The Sacramento market has shrunk from 15 independent hospitals in the 1990s to four dominant systems. Increased consolidation of hospitals and market dominance allows hospitals to charge inflated prices. Hospitals with greater market power can, and do, use the contracting process to impose onerous contract terms on purchasers. This bill will put a stop to many such practices, thereby redressing the imbalance in bargaining power and allowing purchasers to more effectively control costs. The Pacific Business Group on Health and Silicon Valley Employers Forum write that a robust body of academic research demonstrates that dominant providers are using their market power to engage in unfair contracting practices and negotiate higher-than-competitive prices. Large systems are requiring purchasers to include every facility in a provider’s network, regardless of performance. Groups are prohibiting employers and vendors from proactively disclosing the cost of a test or procedure before an employee receives care, undercutting efforts to help consumers make fully informed decisions.

ARGUMENTS IN OPPOSITION: The California Hospital Association (CHA) writes that this bill is vast in scale and would severely disrupt healthcare services and increase costs for millions of Californians. Allowing market dominant health plans to negotiate with hospitals in a manner that disrupts their healthcare delivery systems will ultimately harm consumers. CHA states the unfair advantages given to health plans under this bill will result in the loss of critical healthcare services in underserved communities; the discontinuation of new healthcare services; increased healthcare costs because of unnecessary litigation; and a new surge in out-of-pocket expenses for patients. CHA writes that the policy questions raised by this bill demonstrate serious gaps in the regulation of leased networks and the potential avoidance of certain consumer protections in existing law. The existing problems of health plans being unable to demonstrate compliance with timely access requirements is further aggravated because when a health plan leases its network to a self-funded third-party payor stress is placed on its network of providers to care for additional patients. The California Children’s Hospital Association writes that this bill ignores some of the key reasons hospital systems form, and the interrelatedness of hospitals within systems and with other community health organizations, effectively seeking to undo the ability of hospital system administrators to negotiate contracts with the interests of the whole system in mind. The Association of California Healthcare Districts writes that the contract provisions that this bill seeks to prohibit are legitimate tools used by hospitals to negotiate fair contracts, achieve certainty that contractual relationships will be honored, and avoid confusion and harm of consumers. The California Association of Physician Groups (CAPG) writes this bill will provide no benefit to consumers and enables an unregulated segment of the California healthcare coverage market to continue practices that negatively impact fully-insured Knox Keene health plan enrollees. The California Chamber of Commerce has identified this bill as a Job Killer. The Chamber believes it unfairly discriminates against arbitration agreements and subjects businesses to costly litigation. The April 17, 2017 amendments do not relieve the bill from preemption by the Federal Arbitration Act as the Supreme Court has already addressed such attempts at circumvention. This bill, if enacted, will likely lead to many legal challenges regarding its validity, which only result in more litigation tying up the court system and driving up litigation cost.

Prepared by:

5/30/17 11:09:58

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 538 (Monning) - Hospital contracts

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

The following information is revised to reflect amendments

adopted by the committee on May 25, 2017

Bill Summary:

SB 538 would prohibit contracts between hospitals and contacting agents from including specified provisions.

Fiscal Impact:

• Likely minor enforcement costs by the Department of Public Health (Licensing and Certification Fund).
• Ongoing costs of $20,000 per year for enforcement by the Department of Insurance (Insurance Fund).
• Minor costs for enforcement by the Department of Managed Health Care (Managed Care Fund).
• Unknown potential future reduction in state health care costs (various funds).

Author Amendments:

specify that the Department of Public Health is not required to inspect hospital contracts as part of its ongoing licensing survey process.

-- END --

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 538 (Monning) - Hospital contracts

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

Bill Summary:

SB 538 would prohibit contracts between hospitals and contacting agents from including specified provisions.

Fiscal Impact:

• Likely ongoing costs in the millions per year for review of contracts between hospitals and contracting agents by the Department of Public Health (Licensing and Certification Fund). The bill puts restriction on hospital contracting activity in the body of law regulating hospitals which is enforced by the Department of Public Health as a licensing agency. To the extent that the Department reviews hospital contracts as part of its regular licensing surveys, the Department would incur additional staff costs. The number of contracts per hospital that will need to be reviewed could be substantial, depending on how many contracts per contracting agent a hospital has.
• Ongoing costs of $20,000 per year for enforcement by the Department of Insurance (Insurance Fund).
• Minor costs for enforcement by the Department of Managed Health Care (Managed Care Fund).
• Unknown potential future reduction in state health care costs (various funds). See below.

Background:

Under current law, health insurers are regulated by the Department of Insurance and health plans are regulated by the Department of Managed Health Care. Under current practice, health insurers and health plans contract with a wide range of primary care and specialty care providers as well as facilities such as hospitals and pharmacies.

For most consumers who have health care coverage in the individual market or small group markets, their health plan or health insurance company is the risk bearing entity (and is therefore the “payor” for health care services). In this case, the individual and/or his or her employer pays a monthly premium to the health plan or insurer, who is then responsible for paying for health care services. For many individuals who get their health insurance through their employer in the large group market, however, the employer often retains the risk (and is therefore considered the “payor”). The employer may contract with a health plan or health insurer, so that beneficiaries can access health care services through the network developed by the health plan or health insurer and the employer can make use of the health plan or insurer’s claims processing system. In those cases, the health plan or insurer is a contracting agent on behalf of the employer.

Hospitals and many other health facilities are licensed by the Department of Public Health. As part of the Department’s licensing program, the Department usually performs on-site inspections every three years to ensure that hospitals are complying with existing regulatory requirements.

Proposed Law:

SB 538 would prohibit contracts between hospitals and contacting agents from including specified provisions.

Specific provisions of the bill would:

• Prohibit a contract between a hospital or any affiliate of a hospital and a contracting agent from doing any of the following:
  • Setting payment rates for nonparticipating affiliates of the hospital;
  • Requiring the contracting agent to contract with any one or more of the hospital’s affiliates;
  • Requiring payors to confirm that the payor is bound by the terms of the contract between the hospital and the contracting agent;
  • Requiring a contracting agent, as a condition of the contract, to submit to arbitration;
  • Requiring the contracting agent to impose the same cost-sharing obligations on beneficiaries when the hospital is in-network, but at a different cost-sharing tier than other in-network hospitals;
  • Requiring the contracting agent to keep the contract’s rates confidential from payors that are financially responsible for the payments;
• Make any contract provisions that violates the above prohibitions void and unenforceable.

The bill would add the above requirements to the Business and Professions Code, the Health and Safety Code (in both the area of law applying to licensed hospitals and the area of law applying to licensed health care service plans), and the Insurance Code.

Related Legislation:

SB 932 (Hernandez, 2016) contained provisions relating to hospital contracts similar to the language in this bill. That bill was held on this committee’s Suspense File.

Staff Comments:

Studies have indicated that concentration of providers (such as hospitals) in the health care market has increased costs, due to reduced competition and greater bargaining power by providers when negotiating reimbursement rates with health plans and health insurers. For example, a study conducted by researchers at the University of California, Berkeley found that market concentration of hospitals and physician groups increased health care premiums for coverage sold through Covered California.

The intention of the bill is to limit cost increases by reducing the market power of providers such as hospitals when negotiating with contracting agents. For example, the bill would prohibiting a hospital from requiring all the hospital’s affiliated hospitals in a health plan network when contracting for services with that hospital. The intention of this provision is to reduce the incentive for hospitals to affiliate with one another and require health plans to include all affiliated hospitals within a network, which often reduces price competition between hospitals.

Given the complexity of the health care market, it is difficult to anticipate the extent to which the bill would be successful in reducing health care costs in the future by reducing the ability of providers to engage in anticompetitive behavior. To the extent that the bill is successful in preventing contracting practices or transactions in the health care market that do lead to higher prices, the bill could reduce future health care spending. The extent to which that would occur is unknown.

The rates paid by the Medi-Cal program are generally set by the state and are considered to be significantly below market rates. Given the unique system for setting Medi-Cal reimbursement rates, any reduction in overall health care costs attributable to the bill is not likely to significantly impact Medi-Cal expenditures. However, to the extent that the bill does result in lower health care costs, health care coverage provided by CalPERS to state and local government agencies could have lower future costs.

The only costs that may be incurred by a local agency relate to crimes and infractions. Under the California Constitution, such costs are not reimbursable by the state.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 538

SUBJECT: Hospital contracts

SUMMARY:

Prohibits contracts between hospitals or any affiliate of a hospital and certain types of third-party administrators, health plans or health insurers from containing provisions that set payment rates or terms for nonparticipating providers, require contracts with one or more affiliated providers, require payors to attest to the contract terms, require arbitration for antitrust claims, require same cost-sharing for out-of-network affiliates, or keep payment rates secret, as specified. Makes any of these contract provisions void and unenforceable.

Existing federal law:

1. Establishes, under the Sherman Act, prohibitions against agreements and conduct that restrict trade; and monopolization, attempted monopolization, and conspiracies to monopolize.
   
2. Establishes, under the Clayton Act, prohibitions of mergers and acquisitions where the effect may be to substantially lessen competition or tend to create a monopoly.
   
3. Establishes, under the Federal Trade Commission Act, prohibitions on unfair methods of competition and unfair or deceptive acts or practices.
   
4. Establishes, under the Employee Retirement Income Security Act of 1974 (ERISA), a prohibition on states from enforcing laws related to private-sector employee health benefit plans.
   
5. Establishes, under the McCarran-Ferguson Act, that the business of insurance is exempt from antitrust enforcement to the extent that the particular insurance activities are regulated by state law.
   
6. Establishes, under the Federal Arbitration Act, that arbitration agreements must be enforced except upon such grounds as exist at law or in equity for the revocation of any contract (such as fraud, duress, or unconscionability).
   

Existing state law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health care service plans (health plans), the California Department of Insurance (CDI) to regulate insurers, including health insurers, the Department of Public Health (DPH) to regulate general acute care hospitals, and the Department of Justice and Attorney General (AG) to bring civil and criminal legal actions against individuals and businesses acting in restraint of trade.
   
2. Prohibits contracts and policies on behalf of a health plan or health insurer and a provider or supplier from containing any provision that restricts the ability of the health plan or health insurer to furnish consumers or purchasers information concerning cost and quality of services, as specified.
3. Establishes the Health Care Provider’s Bill of Rights which governs contracts between health care providers and health plans as well as health care providers and health insurers and, among other provisions, prohibits specified terms such as a provision that requires a health care provider to accept additional patients beyond the contracted number or in the absence of a number if, in the reasonable professional judgment of the provider, accepting additional patients would endanger patients’ access to, or continuity of, care.
   
4. Expresses legislative intent that in order to prevent the improper selling, leasing, or transferring of a health care provider’s contract, every arrangement that results in a payor paying a health care provider a reduced rate for health care services based on the health care provider’s participation in a network or panel to be disclosed to the provider in advance and that the payor must actively encourage beneficiaries to use the network, unless the health care provider agrees to provide discounts without that active encouragement.
   
5. Requires when a contracting agent sells, leases, or transfers a health provider’s contract to a payor, the rights and obligations of the provider to be governed by the underlying contract between the health care provider and the contracting agent. Defines payor as a health care service plan, including a specialized plan, an insurer licensed to provide disability insurance that covers hospital, medical, or surgical benefits, automobile insurance, workers’ compensation insurance, or a self-insured employer that is responsible to pay for health care service provided to beneficiaries.
   
6. Defines “contracting agent” as a third-party administrator or trust not licensed under specified existing law, a self-insured employer, a preferred provider organization, or an independent practice association, while engaged, for monetary or other consideration, in the act of selling, leasing, transferring, assigning, or conveying, a provider or provider panel to provide health care service to beneficiaries. States that a contracting agent does not include a health plan, health insurer, or worker’s compensation insurance, or a self-insured employer.
   
7. Defines “health care provider” as any professional person, medical group, independent practice association, organization, health care facility, or other person or institution licensed or authorized by the state to deliver or furnish health services.

This bill:

1. Prohibits a contract between a hospital or any affiliate of a hospital and a contracting agent, health plan, or insurer from directly or indirectly doing any of the following:
   1. Setting payment rates or other terms for nonparticipating affiliates of the hospital;
   2. Requiring the contracting agent to contract with any one or more of the hospital’s affiliates. States that this bill does not prohibit a contract from requiring that the contracting agent contract with the medical group with which the hospital’s medical staff is affiliated;
   3. Requiring a payor to certify, attest, or otherwise confirm in writing that the payor is bound by the terms of the contract between the hospital and the contracting agent;
   4. Requiring the contracting agent, as a condition to entering into the contract with the hospital or continuing the contract on its then current terms, to submit to arbitration, or any other alternative dispute resolution program, any claims or causes of action that arise under state or federal antitrust laws. States this paragraph does not prohibit a hospital or any affiliate or a hospital and a contracting agent from entering into a consensual agreement to submit those claims or causes of action to arbitration or any other alternative dispute resolution program, other than as a condition to entering into the contract or continuing the contract on its then current terms;
   5. Requiring the contracting agent to provide coverage to beneficiaries for services rendered by the hospital and any of its affiliates at the same level of copayment, coinsurance, deductible, or any similar cost-sharing provision, for services rendered by other in-network hospitals and any of their affiliates; and,
   6. Requiring the contracting agent to keep the contract’s payment rates confidential from any existing or potential payor that is or may become financially responsible for the payments. States that this bill does not prohibit a requirement that any communication of the contract’s payment rates to an existing or potential payor be subject to reasonable nondisclosure agreement.
2. Makes any contract provision described above void and unenforceable.
   
3. Defines multiple terms including:
   
   1. Affiliate – with respect to any person, any other person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, that person;
   2. Control – the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, membership rights, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto;
   3. Contracting agent – a third-party administrator or trust not licensed under the Health and Safety Code, the Insurance Code, or the Labor Code, a self-insured employer, a preferred provider organization, or an independent practice association, while engaged, for monetary or other consideration, in the act of selling, leasing, transferring, assigning, or conveying, a provider or provider panel to provide health care services to beneficiaries. Contracting agent is not a health care service plan, including a specialized health care service plan, an insurer licensed under the Insurance Code to provide disability insurance that covers hospital, medical, or surgical benefits, automobile insurance, or workers’ compensation insurance, or a self-insured employer; and,
   4. Payor – a person who is financially responsible, in whole or in part, for paying or reimbursing the cost of health care services received by beneficiaries of a health care welfare benefit plan sponsored or arranged by that person. This definition includes, but is not limited to, the health care welfare benefit plan itself.
      
4. States legislative intent about hospital consolidations and concentration of hospitals and the impacts on health insurance premiums; and that because they tend to lessen competition, increase prices, and reduce the affordability and availability of insurance coverage, and for the protection of other important state interests, the hospital contract provisions described in this bill are deemed to be unfair, and against public policy, both of which are grounds for the revocation of any contract of any contract under the laws of this state.
   
5. States that this bill regulates the business of insurance, as the term is defined for purposes of the federal law, as specified. States that nothing in this act be construed to impose the regulatory requirements of existing state law on network vendors, as specified.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, since 2002, health insurance premiums for family coverage in California have increased by 234%, nearly six times the state’s overall inflation rate increase. Workers and consumers are also paying more out-of-pocket for co-pays, coinsurance, high deductibles and the share of premium. Rate filings by health plans show that hospital services are the largest spending category and that price inflation is driving up costs. High hospital prices are driving up health care spending by employers, consumers and taxpayers. Increasing consolidation of hospitals into mega-chains has decreased competition and that market power is a major driver of price increase and health care spending. Empirical studies demonstrate that dominant providers in California are using their market power to engage in unfair contracting practices that result in higher-than-competitive prices. This bill seeks to prohibit anti-competitive contract provisions that dominant hospital systems impose to maintain market power and to inflate prices charged to consumers, workers and employers.
2. Examples of restraints of trade. Among the types of activities that are often described that cause unreasonable restraints on trade are the following: Price fixing (the setting of prices or terms of sale cooperatively by two or more businesses that do not involve sharing substantial risk in a common business enterprise); exclusive dealing (requiring that a person deal exclusively with an enterprise so that competitors are foreclosed or otherwise disadvantaged in the marketplace) and tying arrangements (a firm with market power selling one product on the condition that the buyer buy a second product form it). Another contract provision that has gained considerable attention is referred to as most favored nations (MFNs) clauses where that the buyer will not pay the seller any more than the lowest discounted price the seller gives to any other buyer. MFNs essentially raise rivals costs and could facilitate collusion by eliminating the dynamic mechanisms whereby prices are effectively ratcheted down through competition.
   
3. Informational hearing. On March 16, 2016 the Senate Health Committee held an informational hearing to explore policy options to minimize the negative impact on cost, quality and access to care for Californians when there is a lack of competition in the health care marketplace. At the hearing, experts suggested states should address restrictions on anti-competitive practices such as anti-tiering restrictions, all-or-none contracting restrictions, most favored nation clauses, and regulate network adequacy wisely in order to foster competition in consolidated markets. In addition it was stated that these anticompetitive agreements are the leading cause of the high cost of healthcare in Northern California and the primary challenge for fixing our broken healthcare system.
   
4. Provider market power. A study on the impact of health care market power on premiums for products available in 2014 through Covered California conducted by researchers at the University of California, Berkeley found that the concentration of medical groups and hospitals had an impact on premium rates in California’s 19 health insurance rating regions. The researchers found that the concentration of health plans did not have an impact on premiums. They did find that reducing hospital concentration to levels that would exist in moderately competitive markets could reduce overall premiums of more than 2% and in three regions by more than 10%. The study authors found that while increasing concentration in hospital markets is occurring nationally, medical group concentration is more specific to California. The authors recommend that policy makers monitor and promote competition to ensure Covered California consumers have access to affordable health plans. A June 2015 issue brief from the California HealthCare Foundation (CHFC) indicates that in California there are eight large systems which comprise 40% of the state’s hospitals and general acute care hospital beds. The brief indicates that integration and strategic alliances, rather than traditional mergers, seem to be on the rise. Another CHCF paper indicates that contrary to claims by dominant providers that ability to command higher reimbursements results in savings for consumers and improved outcomes, the absence of competitive pressures tends instead to produce organizational slack, weaker accountability for performance, and lower-quality of care.
   
   A 2014 article published in the Journal of the American Medical Association found between 2009 and 2012 hospital-owned physician organizations in California incurred higher expenditures for commercial HMO enrollees for professional, hospital, laboratory, pharmaceutical, and ancillary services than physician-owned organizations. The authors found that organizations in California that are owned by local hospitals or multihospital systems incur significantly higher expenditures per patient than integrated medical groups and Independent Practice Associations owned by participating physicians. In the study period, the total expenditures for care per patient were 10% higher in physician organizations that were owned by a local hospital and 20% higher in organizations owned by multihospital systems than in organizations owned by participating physicians, after adjusting for patient disease severity and other factors.
   
5. Other state laws. The National Academy of Social Insurance and the Catalyst for Payment Reform published a report on state efforts to enhance the competitiveness of health care markets and reduce the ability of providers to use market power in way that creates negative consequences for those who use and pay for health care. The report describes laws and regulations encouraging competitive behavior in health plan contracting such as limiting most favored nation agreements, removing restrictions on plan’s ability to offer tiered products, limiting “all or none” contracting for hospitals systems, and limiting rating increases by providers to health plans. Texas has enacted legislation that requires review of the impact on market competition during the development and implementation of Accountable Care Organizations. A growing number of states are forming regulatory bodies to monitor health care prices. Delaware, Maryland, Massachusetts, New York, Pennsylvania, and West Virginia have established health care commissions to monitor and review health care prices. Connecticut recently passed a law requiring a pre-acquisition market analysis and review by the AG and that establishes a state health care cabinet to study health care cost containment models in other states.
   
6. Self-funding. According to the Kaiser Family Foundation based on the 2016 Employer Health Insurance Survey, 13% of covered workers in small firms and 82% in large firms are enrolled in plans that are either partially or completely self-funded, similar to 2015. Overall, 61% of covered workers are enrolled in a plan that is either partially or completely self-funded. According to a September 2016 CHCF Almanac Reference Guide based on 2015 enrollment, there are 6.6 million Californians (1.1 million under DMHC and 5.5 million under CDI) reported as Administrative Service Only by health plans and insurers who are regulated in California. There was an overall increase of 4% from 2014 to 2015.
   
7. Related legislation. SB 647 (Pan) requires DMHC and CDI to submit annually to the Legislature and post on the departments’ internet website, a record of all complaints it receives from consumers regarding employee welfare benefit plans, as defined under federal law. SB 647 is pending in Senate Health Committee.
   
8. Prior legislation. SB 932 (Hernandez of 2015) would have banned seven specified provisions from contracts between health care providers and payors and required prior approval from DMHC for mergers and other transactions between health plans, risk-based and other organizations. SB 932 was held at the request of the author in the Senate Appropriations Committee.

SB 1340 (Hernandez, Chapter 83, Statutes of 2014) makes a number of technical and clarifying changes to existing law prohibiting contracts between health plans or insurers and hospitals restricting the ability of the health plan/insurer from furnishing information concerning the cost range of procedures at the hospital or facility or the quality of services performed by the hospital or facility to subscribers or enrollees.

SB 1196 (Hernandez, Chapter 869, Statutes of 2012) prohibits a contract in existence or issued, amended, or renewed on or after January 1, 2013, between a health plan, or health 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 (Gains and Hernandez, Chapter 244, Statutes of 2011) prohibits contracts between health plans and 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 carrier from furnishing information to subscribers, enrollees, policyholders, or insureds concerning cost range of procedures or the quality of services. Provides hospitals at least 20 days in advance to review the methodology and data developed and compiled by the carriers, requires risk adjustment factors for quality data, requires a disclosure on the carrier's Web site about the data developed and compiled by the carriers and an opportunity for a hospital to provide a link where the hospital's response to the data can be accessed.

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.

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.

SB 559 (Brulte, Chapter 545, Statutes of 2000) and SB 1732 (Burton, Chapter 1069, Statutes of 2000) prohibits health insurers from reimbursing providers at a discounted or "preferred" rate unless the insurer has a pre-existing agreement with the provider governing such reimbursement.

1. Support. The California Labor Federation writes that unions negotiate and purchase health benefits for two million union members and their families in California. The rising cost of health care is increasingly unsustainable and taking money away from wages and job creation. Hospital consolidations exacerbate the problem of unreasonably high prices. Unions and employers have taken action to control health care costs by developing effective, value-based benefit design strategies to increase quality and lower cost. This bill allows purchasers to effectively control cost by prohibiting certain contracting provisions that give dominant hospital systems an unfair competitive advantage. Consumers Union writes that provider consolidation is a key reason for higher hospital prices and health insurance premiums in Northern California contrasted to Southern California. The Sacramento market has shrunk from 15 independent hospitals in the 1990’s to four dominant systems. Increased consolidation of hospitals and market dominance allows hospitals to charge inflated prices. Hospitals with greater market power can, and do, use the contracting process to impose onerous contract terms on purchasers. This bill would put a stop to many such practices, thereby redressing the imbalance in bargaining power and allowing purchasers to more effectively control costs. The Pacific Business Group on Health and Silicon Valley Employers Forum write that a robust body of academic research demonstrates that dominant providers are using their market power to engage in unfair contracting practices and negotiate higher-than-competitive prices. Large systems are requiring purchasers to include every facility in a provider’s network, regardless of performance. Groups are prohibiting employers and vendors from proactively disclosing the cost of a test or procedure before an employee receives care, undercutting efforts to help consumers make fully informed decisions. Small Business California writes that the presence of monopoly power in California market drives up prices for small businesses and consumers without concurrent increases in quality and value. These price increases strain budgets and limit economic growth in the state. This bill would enable small businesses and unions to fairly contract for high-quality, high value care on behalf of employees and their families. This bill prohibits monopolistic practices while protecting the ability of provider groups to deliver coordinated care.
   
2. Support if Amended. Health Access California requests two amendments. The first would apply the bill’s provisions to hospitals as state licensed entities, and the second would clarify the provisions regarding variation in consumer cost sharing. Health Access believes applying these provisions to hospitals would not be pre-empted by ERISA. Additionally, as currently drafted the provision on consumer cost sharing lacks clarity. Health Access prefers that it be deleted or revised to say the following:

(a)(5)Require the payer to impose the same cost-sharing obligations on beneficiaries when the hospital or its affiliate is in-network but at a different cost-sharing tier than any other affiliate of the hospital. For purposes of this section, cost sharing includes copayment, coinsurance, deductible or any other cost sharing provision for covered benefits other than share of premium.

1. Opposition. The California Hospital Association writes that this bill is vast in scale and would severely disrupt healthcare services and increase costs for millions of Californians. Allowing market dominant health plans to negotiate with hospitals in a manner that disrupts their healthcare delivery systems will ultimately harm consumers. CHA states the unfair advantages given to health plans under this bill will result in the loss of critical healthcare services in underserved communities; the discontinuation of new healthcare services; increased healthcare costs because of unnecessary litigation; and a new surge in out-of-pocket expenses for patients. CHA writes that the policy questions raised by this bill demonstrate serious gaps in the regulation of leased networks and the potential avoidance of certain consumer protections in existing law. The existing problems of health plans being unable to demonstrate compliance with timely access requirements is further aggravated because when a health plan leases its network to a self-funded third-party payor stress is placed on its network of providers to care for additional patients. The California Children’s Hospital Association writes that this bill ignores some of the key reasons hospital systems form, and the interrelatedness of hospitals within systems and with other community health organizations, effectively seeking to undo the ability of hospital system administrators to negotiate contracts with the interests of the whole system in mind. The Association of California Healthcare Districts writes that the contract provisions that this bill seeks to prohibit are legitimate tools used by hospitals to negotiate fair contracts, achieve certainty that contractual relationships will be honored, and avoid confusion and harm of consumers. The California Association of Physician Groups (CAPG) writes this bill would provide no benefit to consumers and enables an unregulated segment of the California healthcare coverage market to continue practices that negatively impact fully-insured Knox Keene health plan enrollees. Third-party payers contract to lease the networks developed by fully-insured and regulated Knox-Keene health plans. These payers access these networks without any California regulatory oversight. The California Chamber of Commerce (Chamber) has identified this bill as a Job Killer. The Chamber believes it unfairly discriminates against arbitration agreements and subjects businesses to costly litigation. The April 17, 2017 amendments do not relieve the bill from preemption by the Federal Arbitration Act as the Supreme Court has already addressed such attempts at circumvention. This bill, if enacted, would likely lead to many legal challenges regarding its validity, which only result in more

litigation tying up the court system and driving up litigation cost.

1. Differences from SB 932.
2. SB 932 applied to an agreement between a general acute care hospital that is a contracting provider and a network vendor or payer.
3. This bill applies to a contract between a hospital or any affiliates of a hospital and a contracting agent.
4. SB 932 had a provision prohibiting the setting of rates for emergency services obtained at an affiliated non-contracting facility. SB 538 prohibits setting payment rates or other terms for nonparticipating affiliates.
5. SB 932 has a provision prohibiting the offering of a tiered network plan. SB 538 prohibits a requirement that services rendered by a hospital and any of its affiliates at the same level of cost sharing.
6. This bill has a provision that a payor cannot be required to certify, attest, or otherwise confirm in writing that the payor is bound by the terms of the contract between the hospital and contracting agent. Providers take issue with this provision because they want to ensure that payors are bound by contract terms included in their contracts with contracting agents (and health plans and insurers), such as prompt pay requirements, dispute resolution processes for payment disputes, and arbitration. Additionally, providers raise concerns that this is in conflict with existing law that states when a contracting agent sells, leases, or transfers a health provider’s contract to a payor, the rights and obligations of the provider shall be governed by the underlying contract between the provider and the contracting agent. However, the Court of Appeal in UFCW & Employers Benefit Trust v. Sutter Health held that a group of health care providers could not compel a self-funded payor to arbitrate its antitrust and unfair competition claims against them because the payor had not signed the provider contract between the providers and a health care service plan containing an arbitration clause, and because existing law did not bind the payer to the terms of the provider contract. The self-funded payor was not equitably estopped to avoid arbitration. The plan did not serve as the self-funded payor’s agent and did not agree to arbitration on the payor’s behalf. The providers had not shown that the self-funded payor had subsequently ratified the plan’s agency by presenting evidence that a claims adjustor for the payor was silent after receiving an incomplete reference to the mere existence of an arbitration agreement. Because of this decision, Sutter is requiring self-funded customers of contracting agents to agree in writing to comply with dispute resolution, claims payment, utilization management, coordination of benefits, network development, and other items. Customers who do not sign the form will no longer have access to Sutter’s contracted rates.
7. SB 932 contained provisions which required prior approval from DMHC for mergers and other transactions between health plans, risk-based and other organizations.
   

SUPPORT AND OPPOSITION:

Support: Anthem Blue Cross

Association of California Life & Health Insurance Companies

California Association of Health Plans

California Labor Federation

California Nurses Association

Carpenter Funds Administrative Office of Northern California, Inc.

Consumers Union

National Nurses United

Northern California Carpenters Regional Council

Pacific Business Group on Health

San Diego Electrical Health & Welfare Trust

Silicon Valley Employers Forum

Small Business California

One Individual

Oppose: Alliance of Catholic Health Care

Association of California Healthcare Districts

California Association of Physician Groups

California Chamber of Commerce

California Children’s Hospital Association

California Hospital Association

District Hospital Leadership Forum

Scripps Health

Sierra Vista Regional Medical Center

Tenet Healthcare

Twin Cities Community Hospital

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