BILL ANALYSIS Ó AB 154 Page 1 ASSEMBLY THIRD READING AB 154 (Beall) As Amended January 23, 2012 Majority vote HEALTH 12-5 APPROPRIATIONS 11-6 ----------------------------------------------------------------- |Ayes:|Monning, Ammiano, Atkins, |Ayes:|Fuentes, Blumenfield, | | |Bonilla, Eng, Gordon, | |Bradford, Charles | | |Hayashi, | |Calderon, Campos, | | |Roger Hernández, Bonnie | |Chesbro, Hall, Hill, | | |Lowenthal, Mitchell, Pan, | |Ammiano, Mitchell, | | |Williams | |Solorio | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Logue, Garrick, Mansoor, |Nays:|Harkey, Donnelly, Gatto, | | |Silva, Knight | |Nielsen, Norby, Wagner | | | | | | ----------------------------------------------------------------- SUMMARY : Requires health plans and health insurers to cover the diagnosis and medically necessary treatment of a mental illness, as defined, of a person of any age, with specified exceptions, and not limited to coverage for severe mental illness (SMI) as in existing law. Specifically, this bill : 1)Requires health plans and those health insurance policies that provide coverage for hospital, medical, or surgical expenses, to provide coverage for the diagnosis and medically necessary treatment of a mental illness of a person of any age, including a child, under the same terms and conditions applied to other medical conditions, including but not limited to maximum lifetime benefits, copayments, and individual and family deductibles. Existing law only requires such coverage for SMIs, as defined. 2)Defines mental illness as a mental disorder classified in the Diagnostic and Statistical Manual IV (DSM-IV) and includes coverage for substance abuse. Requires the benefits provided under this bill to include outpatient services; inpatient hospital services; partial hospital services; and, prescription drugs, if the plan contract already includes coverage for prescription drugs. AB 154 Page 2 3)Excludes treatment of nicotine addiction and certain illnesses under the "V" code designation in the DSM-IV, such as adult antisocial behavior and bereavement, among others, from the definition in 2) above. 4)Requires, following publication of each subsequent volume of the DSM-IV, the definition of "mental illness" to be subject to revision to conform to, in whole or in part, the list of mental disorders defined in the then-current volume of the DSM-IV. 5)Requires any revision to the definition of "mental illness" pursuant to 4) above to be established by regulation promulgated jointly by the Department of Managed Health Care (DMHC) and the Department of Insurance. 6)Allows a health plan or health insurer to provide coverage for all or part of the mental health coverage required by this bill through a specialized health care service plan or mental health plan and prohibits the health plan or health insurer from being required to obtain an additional or specialized license for this purpose. 7)Requires a health plan or health insurer to provide the mental health coverage required by this bill in its entire service area and in emergency situations, as specified. 8)Permits a health plan and health insurer to utilize case management, network providers, utilization review techniques, prior authorization, copayments, or other share-of-cost requirements, to the extent allowed by law or regulation, in the provision of benefits required by this bill. 9)Clarifies that nothing in this bill shall be construed to deny or restrict in any way DMHC's authority to ensure a health plan's compliance with this bill when the plan provides prescription drug coverage. 10)Clarifies that, with regard to health insurance policies, any action a health insurer takes to implement this bill, including, but not limited to, contracting with preferred provider organizations, shall not be deemed as an action that would otherwise require licensure as a health care service plan, as specified. AB 154 Page 3 11)Exempts contracts between the Department of Health Care Services and a health plan for enrolled Medi-Cal beneficiaries and plans administered by Managed Risk Medical Insurance Board from the provisions of this bill. 12)Prohibits a health care benefit plan, contract, or health insurance policy with the Board of Administration of the Public Employees' Retirement System from applying to this bill unless board elects to purchase a plan, contract, or policy that provides mental health benefits mandated under this bill. 13)Exempts accident-only, specified disease, hospital indemnity, Medicare supplement, dental-only, or vision-only plans or insurance policies, except behavioral health-only policies, from the provisions of this bill. 14)Prohibits this bill from being deemed to require a qualified health plan that participates in the California Health Benefit Exchange to provide any greater coverage than is required under the minimum essential benefits package set forth in the federal Patient Protection and Affordable Care Act (PPACA). FISCAL EFFECT : According to the Assembly Appropriations Committee: 1)Annual increased premium costs in the private insurance market of $60 million. These costs reflect increased premiums by employers for group insurance and premiums paid in the individual health insurance market. These increased costs are partially offset by reduced out-of-pocket costs of $26 million due to reduced co-payments and deductibles. 2)Federal regulations implementing the PPACA are likely to reduce the fiscal impact of this bill beginning in 2014. The PPACA requires mental health and substance abuse treatment to be covered as a basic benefit in state-run health insurance exchanges that will provide health coverage to millions of individuals. COMMENTS : According to the author, individuals struggling with mental illness quickly exhaust limited coverage and personal savings and become dependent upon taxpayer-supported benefits. The author notes that annual national costs for mental illness are an estimated $23 billion in lost work days to employers and AB 154 Page 4 another $150 billion in treatment, social services, and lost productivity. The author maintains that many people in our society with mental illness and substance abuse problems are unable to obtain treatment and, as a result, wind up in counties' indigent health care pool, emergency rooms, and state and county jails. This bill is intended to end discrimination against patients with mental health/substance abuse (MH/SA) issues by requiring treatment and coverage of these illnesses that is equitable to coverage provided for other medical illnesses. Since SMI services are already covered under current law, this bill focuses on the incremental effect of extending parity to non-SMI and substance abuse disorders, with certain exceptions. On December 16, 2011, the federal Center for Consumer Information and Insurance Oversight (CCIIO) issued a bulletin proposing that essential health benefits (EHBs) be defined using a benchmark approach. Under the CCIIO intended approach, states would have the flexibility to select a benchmark plan that reflects the scope of services offered by a "typical employer plan." This approach would give states the flexibility to select a plan that would best meet the needs of their residents. In accordance with the bulletin, the benchmark options include: 1)One of the three largest small group plans in the state by enrollment. 2)One of the three largest state employee health plans by enrollment. 3)One of the three largest federal employee health plan options by enrollment. 4)The largest HMO plan offered in the state's commercial market by enrollment. The benefits and services included in the benchmark plan selected by the state would be the EHB package. To meet the EHB coverage standard, a health plan or health insurer would offer benefits that are "substantially equal" to the benchmark plan selected by the state and modified as necessary to reflect the 10 coverage categories. The bulletin AB 154 Page 5 indicates that states must select their benchmark plan in the third quarter two years prior to the coverage year (by September 2012). The PPACA requires states to defray the cost of any benefits required by state law to be covered by health plans and health insurers beyond the EHBs. The federal bulletin implies that existing state mandates could be incorporated in EHBs to the extent they are included in a benchmark plan existing in 2012. However, the federal rules are not final or entirely clear on this point. Comments on the federal bulletin are due by January 31, 2012. Further evaluation of individual state mandates pending this year will need to be considered in the context of a broader discussion about California's benchmark plan. Supporters, including the California Mental Health Directors Association, the California Hospital Association, the California Medical Association, and the County Alcohol & Drug Program Administrators Association of California, note that numerous studies have shown that mental illness is treatable, and that appropriate and timely treatment of mental health conditions reduces costly hospitalizations, incarcerations, homelessness, and, most importantly, human suffering. They state that this is a long-overdue bill that aims to end insurance discrimination faced by too many people seeking help and still struggling with mental illness or the disease of addiction to alcohol and other drugs. Health plans and health insurers object to this bill, stating that it is the wrong time for the Legislature to consider enacting new benefit mandates since, starting in 2014, many Californians can enroll in health coverage through the state-run health insurance exchanges. Opponents contend benefit mandates eliminate the ability of health insurers and HMOs to provide unique benefit packages in response to the needs of consumers by requiring individuals and consumers to purchase benefits prescribed by the Legislature, not driven by consumer choice. Lastly, they assert that carving out certain exemptions from this bill unfairly raises costs for employers and individuals in only certain market segments, thereby creating uneven playing fields. Analysis Prepared by : Cassie Royce / HEALTH / (916) 319-2097 FN: 0003068 AB 154 Page 6