BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 1826 (Huffman) Hearing Date: 8/2/2010 Amended: 5/28/2010 Consultant: Katie Johnson Policy Vote: Health 5-2 _________________________________________________________________ ____ BILL SUMMARY: AB 1826 would require health care service plans and health insurers that cover outpatient prescription drug benefits to provide coverage for a drug that has been prescribed for the treatment of pain. The bill would prohibit health plans and insurers from requiring the subscriber or enrollee to first use an alternative prescription drug or an over-the-counter drug, as specified. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund MRMIB programs $1,050 $2,100 $2,100General/* increased costs Federal/ Special Medi-Cal increased costs $4,050 $8,100 $8,100General/** Federal *Healthy Families: 35 percent General Fund; 65 percent federal funds AIM: 35 percent Proposition 99 tobacco taxes and premiums; 65 percent federal funds MRMIP: 40 percent Proposition 99 tobacco taxes; 60 percent subscriber premiums **Medi-Cal: 50 percent General Fund; 50 percent federal funds _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. This bill would require health care service plans and health insurers that cover outpatient prescription drug benefits to provide coverage for a drug that has been prescribed for the treatment of pain and would prohibit health plans and insurers from requiring an individual to first use an alternative prescription drug or over-the-counter drug, as specified. Costs to the California Department of Insurance and the Department of Managed Health Care to continue to provide oversight of the insurance industry would be minor and absorbable. According to an analysis performed by the California Health Benefits Review Program (CHBRP) on this bill, there would be annual costs of up to $2.1 million to the Healthy Families Program (Healthy Families), the Access for Infants and Mothers (AIM) program, and the Major Risk Medical Insurance Program (MRMIP). Since Healthy Families has roughly 800,000 enrollees to AIM and MRMIP's 7,000 enrollees each, the majority of the costs would be Healthy Families'. CHBRP estimated an annual cost of $8.1 million to Medi-Cal managed care plans. Amendments were made to the bill after the publication of the CHBRP analysis to address cost concerns relating to the bill being construed to prohibit generic drug substitutions. However, costs to both the Healthy Families Program and Medi-Cal would remain largely unchanged. This bill would exempt the California Public Employees Retirement System (CalPERS).