BILL NUMBER: AB 310	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Ma

                        FEBRUARY 9, 2011

   An act to add Section 1367.225 to the Health and Safety Code, and
to add Section 10123.197 to the Insurance Code, relating to health
care coverage.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 310, as introduced, Ma. Prescription drugs.
   (1) Existing law provides for licensing and regulation of health
care service plans by the Department of Managed Health Care. Existing
law provides that the willful violation of provisions regulating
health care service plans is a crime. Existing law provides for the
licensing and regulation of health insurers by the Insurance
Commissioner. Existing law requires health care service plans and
health insurers to provide certain benefits, but generally does not
require plans and insurers to cover prescription drugs. Existing law
imposes various requirements on plans and insurers if they offer
coverage for prescription drugs.
   This bill would prohibit health care service plans and health
insurers that offer prescription drug coverage from creating
specialty tiers for prescription drugs that require payment by an
enrollee or insured of a percentage cost of the drugs. The bill would
also impose certain limitations on copayments and out-of-pocket
expenses. The bill would make these provisions inoperative upon a
determination by the department and commissioner that these
provisions would result in additional costs to the state as a result
of laws governing federal health care reform.
   Because this bill would impose new requirements on health care
service plans, the willful violation of which would be a crime, it
would thereby impose a state-mandated local program.
   (2) 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.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) California, along with other states, has experienced the
creation of a new cost-sharing mechanism by some health plans known
as prescription drug specialty tiers.
   (b) Specialty tiers include prescription drugs for which some
health care service plans and health insurers are requiring patients
to pay a percentage cost of the drug instead of a copayment. These
drugs are typically new, infusible, or injectible biologics or
plasma-derived therapies produced in lesser quantities than other
drugs and not available as less costly brand name or generic
prescription drugs.
   (c) The specialty drugs found on the fourth tier are used to treat
conditions that affect less than 5 percent of the population, but
that number is expected to grow as new drugs are approved and the
drugs that are already on the market are used to treat an expanding
number of conditions. Many of these specialty drugs are used to treat
conditions such as cancer; autoimmune conditions, such as Crohn's
disease, lupus, multiple sclerosis, myasthenia gravis, myositis,
scleroderma, and rheumatoid arthritis; hemophilia and other bleeding
disorders; hepatitis; primary and secondary immune deficiencies;
neuropathy; and transplant patients. These drugs are used to treat
complex and chronic conditions and require special administration,
handling, and care management.
   (d) Plans and insurers are also increasing prescription drug
copayments to amounts beyond the reach of most patients. The amounts
charged for drug copayments should not have the effect of unfairly
denying access to medicine. This has resulted in some patients paying
more than $3,000 for one month's supply of medication. For example,
currently a person with multiple sclerosis might pay a $55 copayment
for medication. But, if the person's drug plan had specialty tiering
and charged 25 percent to 33 percent in coinsurance, the same
medication would cost between $750 and $990 for one month. In another
example, for cancer patients, in one year the coinsurance increased
for one of the most-used therapies from $854 per month to $1,366 per
month.
   (e) Paying hundreds or even thousands of dollars each month for
prescription drugs would be a strain for any person, but for people
with chronic illnesses and life-threatening conditions, this
unfortunate social policy has the potential to destroy a family's
financial solvency or end the ability to take a necessary medication.

   (f) The practice of specialty tiers violates the basic principle
of insurance whereby individuals and employers purchase health
insurance plans so that they are protected from the risk of needing
to pay for highly expensive medical treatments. Specialty tier
coinsurance rates can change unpredictably, which makes it impossible
for patients to anticipate and budget for health care costs. Those
rate changes also impede patients from having informed discussions
with their doctors about containing the cost of their treatment.
   (g) Where the practice of specialty tiering is allowed, the
out-of-pocket costs for medications are high enough to preclude
patients from complying with the treatment protocols prescribed by
their doctors and force patients to choose between paying for basic
living expenses or taking their medications. As patients forgo
treatment because of cost concerns, their health deteriorates, often
necessitating more expensive emergency care.
   (h) Many patients who cannot afford their copayments have been
forced to go on disability, resulting in additional costs to the
state.
   (i) Specialty tiers are contrary to the original purpose of
insurance, which was the spreading of costs. Specialty tiers create a
structure where those who are sickest pay more, and those who are
healthy pay less. Additionally, this type of cost-sharing arrangement
will not keep health care costs down because there are no generic
alternatives available for the biologic treatments that make up the
vast majority of drugs placed on specialty tiers. Therefore, the
creation of specialty tiers is a discriminatory practice.
  SEC. 2.  Section 1367.225 is added to the Health and Safety Code,
to read:
   1367.225.  (a) A health care service plan contract issued,
amended, or renewed on or after January 1, 2012, that covers
prescription drugs shall not provide for specialty tiers that require
payment of a percentage cost of prescription drugs by enrollees.
   (b) A health care service plan contract issued, amended, or
renewed on or after January 1, 2012, shall not require an enrollee to
pay a copayment for prescription drugs in excess of 500 percent of
the lowest copayment required by the plan for prescription drugs in
the plan's formulary.
   (c) If a health care service plan provides a limit for
out-of-pocket expenses for benefits other than prescription drugs,
the plan shall include one of the following provisions in the plan
that would result in the lowest out-of-pocket prescription drug cost
to the enrollee:
   (1) Out-of-pocket expenses for prescription drugs shall be
included under the plan's total limit for out-of-pocket expenses for
all benefits provided under the plan.
   (2) Out-of-pocket expenses for prescription drugs per contract
year shall not exceed one thousand dollars ($1,000) per enrollee or,
in the case of covered dependents, two thousand dollars ($2,000)
including dependents of the enrollee, as adjusted for inflation.
   (d) For purposes of this section, "copayment" means a flat dollar
amount an enrollee pays, out of pocket, at the time of receiving a
health care service or when paying for a prescription drug, after any
applicable deductible. The term shall not be construed to include
any other forms of cost sharing.
   (e) Nothing in this section shall be construed to require a health
care service plan contract to provide coverage not otherwise
required by law for any prescription drug.
   (f) This section shall become inoperative upon a determination by
the department that the requirements of this section would result in
the assumption by the state of additional costs pursuant to Section
1311(d)(3)(B) of the federal Patient Protection and Affordable Care
Act (Public Law 111-148), as amended by Section 10104(e) of Title X
of that act, relative to benefits required by the state to be offered
by qualified plans in the California Health Benefit Exchange that
exceed the requirements imposed by federal law.
  SEC. 3.  Section 10123.197 is added to the Insurance Code, to read:

   10123.197.  (a) A health insurance policy issued, amended, or
renewed on or after January 1, 2012, that covers prescription drugs
shall not provide for specialty tiers that require payment of a
percentage cost of prescription drugs by insureds.
   (b) A health insurance policy issued, amended, or renewed on or
after January 1, 2012, shall not require an insured to pay a
copayment for prescription drugs in excess of 500 percent of the
lowest copayment required by the policy for prescription drugs in the
policy's formulary.
   (c) If a health insurance policy provides a limit for
out-of-pocket expenses for benefits other than prescription drugs,
the policy shall include one of the following provisions in the
policy that would result in the lowest out-of-pocket prescription
drug cost to the insured:
   (1) Out-of-pocket expenses for prescription drugs shall be
included under the policy's total limit for out-of-pocket expenses
for all benefits provided under the policy.
   (2) Out-of-pocket expenses for prescription drugs per contract
year shall not exceed one thousand dollars ($1,000) per insured or,
in the case of covered dependents, two thousand dollars ($2,000)
including dependents of the insured, as adjusted for inflation.
   (d) For purposes of this section, "copayment" means a flat dollar
amount an insured pays, out of pocket, at the time of receiving a
health care service or when paying for a prescription drug, after any
applicable deductible. The term shall not be construed to include
any other forms of cost sharing.
   (e) Nothing in this section shall be construed to require a health
insurance policy to provide coverage not otherwise required by law
for any prescription drug.
   (f) This section shall become inoperative upon a determination by
the commissioner that the requirements of this section would result
in the assumption by the state of additional costs pursuant to
Section 1311(d)(3)(B) of the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by Section 10104
(e) of Title X of that act, relative to benefits required by the
state to be offered by qualified plans in the California Health
Benefit Exchange that exceed the requirements imposed by federal law.

  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.