BILL ANALYSIS
SB 220
Page 1
Date of Hearing: June 22, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
SB 220 (Yee) - As Amended: May 26, 2010
SENATE VOTE : Not relevant
SUBJECT : Health care coverage: tobacco cessation services.
SUMMARY : Requires certain health care service plan (health
plan) contracts and health insurance policies that provide
outpatient prescription drug benefits to also provide coverage
for specified tobacco cessation services and would prohibit
copayments, coinsurance, or deductibles for those benefits.
Specifically, this bill :
1)Makes specified legislative findings and declarations
regarding the statewide economic and personal costs of tobacco
addiction and the effectiveness of tobacco cessation
counseling and medication.
2)Requires a health plan contract, except a specialized health
plan contract, and every individual or group health insurance
policy that is issued, amended, delivered, or renewed on or
after July 1, 2011, that provides outpatient prescription drug
benefits, to include coverage for tobacco cessation services
that include specified counseling services, and all
medications approved by the federal Food and Drug
Administration (FDA) for the purpose of tobacco cessation,
including all prescription and over-the-counter medications.
3)Requires covered treatment to follow recommendations in the
Public Health Service sponsored 2008 clinical practice
guideline, "Treating Tobacco Use and Dependence: 2008 Update,"
or its successors and prohibits copayments, coinsurances, or
deductibles for benefits in this bill.
4)Authorizes a health plan or health insurer to contract with
qualified local, statewide, or national providers, whether for
profit or nonprofit, for the provision of cessation services.
5)Requires a health plan or health insurer to disclose the
benefits under this section in its evidence of coverage and
disclosure forms and communicate the availability of coverage
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to all enrollees at least once per year.
6)Requires coverage provided in this bill to be available upon
the order of an authorized provider and states that nothing in
this bill shall preclude a health plan from allowing enrollees
to access tobacco cessation services on a self-referral basis.
7)Defines "course of treatment" as at least four sessions of
counseling, each session lasting at least 10 minutes, in
regards to counseling, or the duration of treatment approved
by the FDA for over-the-counter or prescription medications.
8)Prohibits enrollees from being required to enter counseling in
order to receive tobacco cessation medications and that a
health plan shall not impose prior authorization or
stepped-care requirements on tobacco cessation treatment.
9)States that this bill shall not apply to Medicare supplement,
short-term limited duration health insurance, vision-only,
dental-only, or CHAMPUS-supplement insurance, or to hospital
indemnity, hospital-only, accident-only, or specified disease
insurance that does not pay benefits on a fixed benefit, cash
payment only basis.
EXISTING LAW :
1)Provides for regulation of health care service plans by the
Department of Managed Health Care (DMHC) and health insurers
by the Department of Insurance (CDI).
2)Allows health insurers (but not health plans) to subject
treatment for nicotine use to separate deductibles, copays,
and overall cost limitations.
3)Requires, by regulation, health plans (but not health
insurers) to cover all medically necessary services,
applicable to basic health care services and also to
prescription drug benefits, if prescription drugs are covered.
4)Allows, by regulation, health plans covering prescription drug
benefits to require prior authorization and to establish
co-payments or deductibles that are found to be
non-objectionable.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
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COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, smoking
remains one of the most difficult public health issues facing
California, with nearly four million smokers in our state and
32,000 youth becoming smokers each year. Smoking costs
California's economy an estimated $18 billion in a year in the
form of medical care, lost productivity, and worker
absenteeism. Studies show that people who use tobacco
cessation treatment such as counseling, over-the-counter and
prescription medications are more likely to quit and stay
tobacco free for a longer period of time. Additionally,
people with full coverage for medications and counseling
services for tobacco cessation are more likely to use tobacco
cessation medication than those who do not have coverage.
This bill will address these negative impacts by requiring
health plans and health insurance policies that provide
outpatient prescription drug benefits to include coverage for
comprehensive tobacco cessation services.
2)BACKGROUND . Despite significant efforts to reduce smoking in
California, nicotine use remains prevalent, particularly among
ethnic communities. While, overall, 15% of Californians
smoke, Native Americans smoke at twice this rate and one in
five African Americans smoke. Nicotine is highly addictive
and difficult to quit. According to U.S. Department of Health
and Human Services, 70% of smokers attempt to quit each year,
but only 7% remain smoke free for one year after attempting.
Comprehensive tobacco cessation services include telephone,
group, or individual counseling, and all prescription and
over-the-counter medication approved by the FDA. Numerous
studies show that behavioral and pharmacological treatments
and combinations of the two significantly improve quit rates
and increase the likelihood of sustained abstinence from
smoking.
3)MASSACHUSETTS TOBACCO CESSATION COVERAGE . In July 2006,
Massachusetts passed a comprehensive health reform law that
mandated tobacco cessation coverage for its Medicaid
population. The coverage, which included behavioral
counseling and all FDA approved medications was utilized by
over 70,000 Medicaid users, or 37% of all Medicaid smokers.
In a recent report entitled, "Medicaid Coverage for Tobacco
Dependence Treatments in Massachusetts and Associated
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Decreases in Smoking Prevalence" researchers sought to
determine if smoking prevalence decreased as a result of
coverage by measuring smoking prevalence pre- and
post-benefit. The study found that smoking rates decreased
from 38% in the pre-benefit period to 28% in the post-benefit
period, representing a decline of 26%. The authors concluded
that providing access to tobacco cessation coverage, combined
with broad promotion, can significantly reduce smoking
prevalence. In 2004, U.S. Medicaid expenditures for
smoking-related conditions totaled $22 billion. Tobacco
cessation treatment is cost-effective and should be made
available to all smokers via health insurance benefits.
4)FEDERAL HEALTH REFORM . On March 23, 2010, the federal
government enacted the Patient Protection and Affordable Care
Act (PPACA) (Public Law 111-148), which was further amended by
the Health Care Education Reconciliation Act (H.R.4872).
Under PPACA, Medicaid would now cover tobacco cessation
counseling and pharmacotherapy for pregnant women, including
the removal of cost-sharing between Medicaid and
beneficiaries. While the provisions of PPACA that go into
effect on 2014 will change California's health insurance
market and regulatory framework, PPACA would also require
tobacco cessation treatments to be provided by qualified
health plans providing coverage in small-group and individual
markets through the state-based insurance exchanges. Tobacco
cessation will also be considered part of the "essential
health benefits package" to be provided, effective in 2014.
5)CALIFORNIA HEALTH BENEFITS REVIEW PROGRAM . AB 1996 (Thomson),
Chapter 795, Statutes of 2002, requests the University of
California to assess legislation proposing a mandated benefit
or service, and prepare a written analysis with relevant data
on the medical, economic, and public health impacts of
proposed health plan and health insurance benefit mandate
legislation. The California Health Benefits Review Program
(CHBRP) was created in response to AB 1996 and extended for
four additional years in SB 1704 (Kuehl), Chapter 684,
Statutes of 2006. In its analysis of this bill, CHBRP notes
that, any effects of this bill might be diminished by the
PPACA requirements following 2014 as tobacco cessation will be
considered an essential benefit for all health plans. While
the analysis acknowledged several short-term provisions of
PPACA that would go into effect in six months, such as the
temporary high-risk pool, the temporary effects of these
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short-term changes are not taken into account in the report.
a) Analytic Approach . CHBRP considered two factors for
this analysis: level of benefit coverage and type of
tobacco cessation use. The estimated impact of the bill is
based on data and literature that demonstrates the total
number of people attempting to quit will not increase
post-mandate. Instead, this population will be more likely
to use cessation services rather than attempting to quite
"cold turkey," and as a result, a higher percentage will
quit successfully. Additionally, CHBRP excluded
adolescents aged 12 to 17 from the analysis because this
group is typically in the initiation phase rather than the
cessation phase.
b) Medical Effectiveness . According to CHBRP, the
literature on the effectiveness of tobacco cessation
treatments is clear and convincing that it improves quit
rates and increases the likelihood of sustained abstinence
from smoking. These conclusions about the efficacy of
smoking cessation interventions are unlikely to change
because of the large quantity of literature available on
this topic.
c) Coverage Impacts . Nearly 19.5 million Californians are
currently enrolled in health plan insurance policies. The
report anticipated the coverage increase in 2011 would
immediately affect the 97% of enrollees that have coverage
for prescription drugs, or 18.89 million individuals. The
report focuses on the impact of increasing premium costs of
all 19.5 million enrollees with plans or policies subject
to the mandate, and on the estimated increase of
utilization of smoking cessation treatment among 1.83
million adult smokers with current prescription drug
coverage because this population will be likely to use
cessation services covered by this new mandate. The report
estimated that 81.7% of enrollees already have full or
partial coverage for smoking cessation-related counseling;
57.4% have full or partial coverage for over-the-counter
smoking cessation treatment; and, 77.8% have full or
partial coverage for prescription smoking cessation
treatment. This bill would require smoking cessation
services for 100% of insured adults. Medi-Cal already
provides comprehensive smoking cessation benefits and would
not be subject to the mandate.
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d) Utilization Impacts . Pre-mandate, CHBRP found that
268,344 of the 1.83 million adult smokers used one or more
tobacco cessation treatments, with 203,845 using treatments
covered through insurance and 64,500 using treatments for
which they were uninsured. CHBRP estimated that this bill
would increase utilization by 34.3% for counseling; 54.2%
for over-the-counter treatments; and, 37.2% for
prescription treatments for an overall increase 44.2% or
118,482 additional smokers receiving treatment.
e) Cost Impacts . CHBRP found that increases in premiums
per member per month (PMPM) varied by type of plan with
DMHC regulated Medi-Cal HMO plans experiencing no increases
and CDI regulated individual insurance policies
experiencing an increase of .37%. Total increases range
from $0.00 to $0.67 PMPM. The total net annual health
expenditures are projected to increase by $52.7 million or
0.07%, which is due to an $83.7 million increase in health
insurance premiums partially offset by reductions in both
enrollee copayments ($10 million) and out-of-pocket
expenditures ($20.6 million). However, the analysis
projects potential savings of $1.04 million in health
savings as a result of less than ten fewer low-birth weight
deliveries and hospitalizations. The analysis also
anticipates measurable long-term improvements in health,
which are not accounted for because the cost estimates are
for one year only. Numerous studies suggest that smoking
cessation is cost-effective as quitters gain an average 7.1
years of life at a net cost of $3,417 per year of life
saved, or $24,261 per quitter.
f) Public Health Impacts . CHBRP found that the bill would
likely have a positive impact on public health in
California, based on scientific evidence of the medical
effectiveness of smoking cessation treatments. In
California, 14.2% of the insured adult population smokes,
which results in 34,492 deaths annually. Evidence suggests
that this bill would increase utilization of smoking
cessation treatments, with approximately 118,482 insured
adult smokers shifting from self-help to obtaining some
form of tobacco cessation services. CHBRP estimates an
increase in utilization, at an additional 8,081 smokers
successfully quitting smoking annually. There is
significant evidence that this bill would contribute to the
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reduction in premature death from long-term smoking-related
diseases such as cancer and cardiovascular and respiratory
diseases. When the estimates of increased longevity for
quitters are applied to the projected 8,081 additional
smokers who successfully quit each year attributable to the
mandate in this bill, approximately 56,567 to 100,204 years
of potential life may be gained in the state each year.
Smoking-related productivity loss in California in 2004 was
about $8.5 billion. Both direct costs and indirect costs
are reduced by smoking cessation. There is sufficient
evidence to conclude that this bill would reduce smoking
and its concomitant economic loss. Overall, smoking
cessation treatment is cost-effective, which is supported
by over two decades of health economics literature and is
supported by America's Health Insurance Plans, a trade
group representing health insurers, which recommends
coverage of clinical treatments for smoking cessation as a
cost-effective business investment.
6)SUPPORT . This bill is jointly sponsored by the American Lung
Association, the American Cancer Society, and the American
Heart Association who state that health plans have an
obligation to fully over smoking cessation services for their
members. The sponsors state that a person's chances of
successfully quitting more than doubles when an evidence-based
tobacco cessation service or treatment is used. Additionally,
the vast majority of smokers want to quit and 75% try to quit
each year. Providing comprehensive tobacco cessation services
and treatments not only will improve the health of smokers and
save lives, it will provide economic benefits to insurers,
employers, government, taxpayers, and smokers themselves.
7)OPPOSITION . Health Net opposes this bill, which create an
expensive new mandate to cover over-the-counter drugs and
counseling for tobacco cessation. The opponents believe that
the benefit mandates in this bill are too broad as they
include coverage for over-the-counter medications. The
opponents state that while this bill is well intentioned,
mandating a new benefit into all health insurance policies is
counterproductive to the efforts of making health insurance
more affordable.
8)PREVIOUS LEGISLATION . SB 576 (Ortiz) of 2005 would have
required health plans and health insurers to provide coverage
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for two courses of tobacco cessation treatments per year,
including counseling and prescription and over-the-counter
medications, and would have prohibited plans and insurers from
applying deductibles but allow specified co-payments for those
benefits. SB 576 was vetoed by Governor Schwarzenegger, who
stated that the bill would impose costs on employers, plans,
and individuals and not increase utilization of the benefit.
REGISTERED SUPPORT / OPPOSITION :
Support
American Heart Association (cosponsor)
American Cancer Society (cosponsor)
American Lung Association (cosponsor)
American Bone Health
American Cancer Society, California Division
American Stroke Association
Association of Northern California Oncologists
Breathe California
California Academy of Family Physicians
California Association of Physician Groups
California Medical Association
California State Firefighters' Association
California Tobacco Control Alliance
Foundation for Osteoporosis Research and Education
Medical Oncology Association of Southern California, Inc.
National Kidney Foundation
State Building and Construction Trades Council of California
Opposition
Association of California Life & Health Insurance Companies
California Association of Health Plans
Health Net
Molina Healthcare of California
Analysis Prepared by : Martin Radosevich / HEALTH / (916)
319-2097