BILL ANALYSIS Ó
AB 1453
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Date of Hearing: April 10, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1453 (Monning) - As Amended: March 29, 2012
SUBJECT : Essential health benefits.
SUMMARY : Establishes the Kaiser Small Group Health Maintenance
Organization (HMO) plan contract as California's Essential
Health Benefits (EHB) benchmark plan. Specifically, this bill :
1)Requires an individual or small group health plan contract or
health insurance policy issued, amended, or renewed on or
after January 1, 2014 to, at a minimum, include coverage for
EHBs, which means all of the following:
a) The benefits and services covered by the Kaiser Small
Group HMO plan contract as of December 31, 2011, including,
but not limited to, all of the following:
i) The items and services covered by the plan contract
within the categories identified in the Patient
Protection and Affordable Care Act (ACA), including but
not limited to, ambulatory patient services, emergency
services, hospitalization, maternity and newborn care,
mental health and substance use disorder services,
including behavioral health treatment, prescription
drugs, rehabilitative and habilitative services and
devices, laboratory services, preventive and wellness
services and chronic disease management and pediatric
vision care; and,
ii) The items and services covered by the plan contract
within the following categories: acupuncture services;
chiropractic services; skilled nursing facility services;
hospice care; bariatric; surgery; nonsevere mental
illness services; substance abuse services; smoking
cessation counseling; alcoholism treatment; applied
behavior analysis therapy for autism; smoking cessation
drugs; pain medication for terminally ill patients;
rehabilitative services; habilitative, physical, and
occupational therapy; speech therapy; orthotics and
prosthetics; prosthetic devices for laryngectomy; special
footwear for persons suffering from foot disfigurement;
surgically implanted hearing devices; home health
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services; HIV/AIDS services; osteoporosis services; and,
diabetes education.
b) The service and benefits to be covered to the extent
they are medically necessary. Scope and duration limits
imposed on the services and benefits shall be no greater
than the scope and duration limits imposed on those
services and benefits by the plan contract identified in 1)
a) above.
c) Habilitative services to be covered under the same terms
and conditions applied to rehabilitative services
identified in the plan contract identified in 1) above.
Defines "habilitative services" as health care services
that help a person keep, learn, or improve skills and
functioning for daily living.
d) The same services and benefits for pediatric oral care
covered under the federal Blue Cross and Blue Shield
Standard Option Service Benefit Plan available to enrollees
through the Federal Employees Health Benefit Plan (FEHB) as
of December 31, 2011. Makes scope and duration limits
imposed on the services and benefits no greater than the
scope and duration limitations imposed on those benefits by
the federal Blue Cross and Blue Shield Standard Options
Service Benefit Plan available to enrollees through the
FEHB.
e) Any other benefits required to be covered by health
plans and disability insurers.
2)Prohibits a health plan or health insurer from indicating or
implying that the health plan contract or health insurance
policy covers EHBs when offering, issuing, selling, or
marketing a health plan contract or health insurance policy
unless the plan contract or policy covers EHBs.
3)Applies the provisions of this bill regardless of whether the
plan contract or policy is offered inside or outside the
California Health Benefit Exchange (Exchange).
4)States that a plan contract or health insurance policy subject
to this bill shall also comply with state and federal
requirements with regard to annual and lifetime limits on the
dollar value of benefits.
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5)States that this bill shall not be construed to prohibit a
plan contract or policy from covering additional benefits,
including, but not limited to, spiritual care services that
are tax deductible under the Internal Revenue Service Code, as
specified.
6)Exempts a plan contract or health insurance policy that
provides excepted benefits under the Public Health Service
Act, and a plan contract or health insurance policy that
qualifies as a grandfathered plan from some provisions of this
bill.
7)States that this bill shall be implemented only to the extent
that federal law or policy does not require the state to
defray the costs of benefits included within the definition of
EHBs.
EXISTING LAW :
1)Regulates health plans pursuant to the Knox-Keene Health
Services Act of 1975 (Knox-Keene) at the Department of Managed
Health Care (DMHC) and health insurers pursuant to the
insurance code at the California Department of Insurance
(CDI).
2)Defines "basic health care services" under Knox-Keene as:
a) Physician services, including consultation and referral;
b) Hospital inpatient services and ambulatory care
services;
c) Diagnostic laboratory and diagnostic and therapeutic
radiologic services;
d) Home health services;
e) Preventive health services;
f) Emergency health care services, including ambulance and
ambulance transport services and out-of-area coverage,
including services through the 911 emergency response
system; and,
g) Hospice care, as specified.
3)Establishes a variety of covered mandated benefits applicable
to health plans and health insurers including benefits
relating to breast cancer testing and treatment, cancer
screening tests, cervical cancer screening, mammography,
mastectomy and lymph node dissection length of stay, cancer
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clinical trials, prostate cancer screening, diabetes
management and treatment, HIV/AIDS, Osteoporosis,
Phenylketonuria, health parity for severe mental illness, and
behavioral health treatment for autism and related disorders.
4)Establishes the Exchange to compare and make available through
selective contracting health coverage to individuals and small
businesses as authorized under the ACA.
5)Requires, under the ACA, a health insurance issuer that offers
health insurance coverage in the individual or small group
market to ensure that such coverage includes the EHB package,
as specified.
6)Requires the federal Secretary of Health and Human Services
(HHS) to define EHBs, except that such benefits are required
to include at least the following general categories and the
items and services covered within the categories:
a) Ambulatory patient services;
b) Emergency services;
c) Hospitalization;
d) Maternity and newborn care;
e) Mental health and substance use disorder services,
including behavioral health treatment;
f) Prescription drugs;
g) Rehabilitative and habilitative services and devices;
h) Laboratory services;
i) Preventive and wellness services and chronic disease
management; and,
j) Pediatric services, including oral and vision care.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, a bulletin
issued by the Center for Consumer Information and Insurance
Oversight (CCIIO) suggests that states are permitted to select
a single benchmark to serve as the EHB standard for qualified
health plans operating inside the state exchange and plans
offered in the individual and small group markets, with an
exception for grandfathered plans. For 2014 and 2015, states
have been given the choice among 10 options. If a state does
not choose a benchmark plan, CCIIO will use the largest
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product in the state's small group market as the default. The
author states CCIIO believes this approach will give states
time to provide a transition period to coordinate their
benefit mandates while minimizing the likelihood that the
state would be required to defray the costs of mandates in
excess of the EHB. The federal HHS Agency intends to assess
the benchmark process for the year 2016 and beyond.
The author asserts that with this guidance in mind, the choice
of the benchmark plan is based on the following principles:
a) Recognition of the importance of existing state mandated
benefits and incorporation of as many state mandates as
possible; b) Protection of California's commitment to
reproductive services; c) Embracing the consumer oriented
regulatory framework in place at the DMHC; and, d) Maintaining
affordability for consumers. Through a process of comparison
to these principles other plans were eliminated and the Kaiser
Small Group HMO was chosen. The author believes, based on the
information available, the Kaiser Small Group HMO represents
the best benchmark plan choice for Californians. The Kaiser
Small Group HMO covers all of California's mandates and
includes vision exams. The contract covers reproductive
services, is licensed at DMHC as a Knox-Keene plan and
complies with all of the consumer rights and protections that
go along with that, and while the cost differentials among all
of the options are not significant, this plan falls in the
middle.
2)BACKGROUND . On December 16, 2011, the HHS CCIIO released an
EHB Bulletin proposing that EHBs be defined using a benchmark
approach. This gives states the flexibility to select a
benchmark plan that reflects the scope of services offered by
a "typical employer plan." If a state does not choose a
benchmark health plan, the default benchmark plan for the
state would be the largest plan by enrollment in the largest
product in the small group market, which is also the Kaiser
HMO. EHBs must include coverage of services and items in all
10 statutory categories, but states can choose among the
following benchmark health insurance plans:
a) One of the three largest small group plans in the state
by enrollment, in California these options are Anthem PPO
licensed by CDI, Kaiser HMO licensed by DMHC, or Anthem PPO
licensed by DMHC;
b) One of the three largest state employee health plans by
enrollment, in California these options are CalPERS Blue
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Shield Basic HMO, CalPERS Choice, or CalPERS Kaiser HMO;
c) One of the three largest federal employee health plan
options by enrollment, which are Government Employee Health
Association, Blue Cross Blue Shield (BCBS) Basic, or BCBS
Standard; or,
d) The largest HMO plan offered in the state's commercial
market by enrollment, which is the Kaiser Large Group
Commercial HMO.
3)MILLIMAN ANALYSIS . In January 2012, the Exchange retained
Milliman Inc., to analyze and compare the health services
covered by the 10 EHB California benchmark plans. Milliman
found all the plans to be comprehensive and found there to be
only a very small cost difference between the plan choices.
Milliman set as the baseline the minimum coverage for all
services available in the 10 plans. This was set at 100%.
Each plan was compared to the baseline and given a
differential percentage. According to the analysis, the range
in estimated plan costs associated with the EHB benchmark plan
options is about 2.36% (101.87% to 104.23%). Given this very
small range, cost differences between the options do not
appear to be an influential factor.
4)SUPPORT . Many organizations have expressed support for this
bill. The California Speech-Language Hearing Association
supports the speech therapy and other habilitative services
provisions of this bill. The California Psychiatric
Association supports this bill because it includes severe and
non-severe mental illness as well as substance abuse as EHBs.
The Service Employees International Union of California
believes the Kaiser Small Group HMO is a solid choice for
California. The California Pan-Ethnic Health Network is
pleased that the plan is governed by the Knox-Keene Act
because it ensures a comprehensive package of medically
necessary basic health services. The California Association
for Behavior Analysis believes this bill provides much needed
clarity on the minimum coverage which must be offered
beginning 2014, particularly with regard to behavioral health
treatment, which includes applied behavior analysis for autism
or pervasive developmental disorder. The Congress of
California Seniors supports efforts to create a benchmark
listing of EHBs for California health plans as required by
ACA. Planned Parenthood Affiliates of California indicates
that their preliminary analysis of the Kaiser Small Group HMO
is positive, including that preventive services such as family
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planning counseling, well woman exams, cancer screenings, and
prenatal care are specifically identified as covered services
with no cost sharing. Consumers Union supports the
codification of EHB standard based on upon the most popular
small group plan in California.
5)SUPPORT WITH CONCERNS . While acknowledging that guidance is
still not out on cost-sharing, the Western Center on Law and
Poverty (Western Center) wants to ensure that the cost-sharing
components of the Kaiser Small Group HMO plan are not adopted
in the EHB standard because $400 per day hospital inpatient
co-pays shouldn't be the basis for structuring cost-sharing.
Western Center is also concerned that this bill does not
explicitly address benefit substitution and insurer
flexibility. Western Center requests an amendment to say that
plans cannot substitute coverage of services even if such
substitutions are actuarially equivalent. Planned Parenthood
is also concerned about cost sharing and substitution of
benefits. The Council of Acupuncture and Oriental Medicine
Associations is pleased that this bill recognizes acupuncture
as an EHB and requires acupuncture for treatment of pain and
nausea in the individual and small group market but feels this
is limiting and prevents acupuncture for neuromusculoskeletal
and smoking abstinence.
Health Access California (HAC) supports establishing EHBs and
believes that the decision that is made will remain in place
for several decades. HAC supports the Kaiser Small Group HMO
selection at this time. However, HAC remains concerned that
the Insurance Code framework in existing law allows insurers
to impose dollar and visit limits on outpatient care or
hospital stays, deny access to prescription drugs for which
there is no therapeutic equivalent or substituting one benefit
for another. HAC seeks an amendment to require the following
provision to be included in the Health and Safety Code
1367.005 and Insurance Code 10112.27:
The services and benefits described in this paragraph shall
be covered to the extent they are medical necessary.
Medically necessary or appropriate services and benefits
described in this section shall be covered, subject to cost
sharing approved by the director and any limitation
consistent with this paragraph.
HAC also requests an enhancement of the definition of
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habilitative to include services for degenerative conditions
such as multiple sclerosis, ALS, Alzheimer's and other
conditions for which current medical science can slow the rate
of decline or minimize but does not allow individuals to
"keep, learn or improve skills and functioning." HAC suggests
the following amendment:
Habilitative services: means health care services that help a
person keep, learn, or improve skills and functioning for
daily living and that help a person to slow, minimize or
reduce the loss of skills and functioning for daily living.
HAC also requests amendments in legislation this year to add
consumer protections to the Insurance Code related to network
adequacy, access to specialists, out of network emergency room
care, balance billing for out of network emergency service,
timely access to care, prior approval of changes to cost
sharing and covered benefits, and standards for prescription
drug coverage.
6)RELATED LEGISLATION .
a) SB 1321 (Harman) - requires the Exchange to select the
plan with the lowest EHB cost to be the set benchmark for
the definition of EHBs. SB 1321 is pending before the
Senate Health Committee.
b) SB 951 (Ed Hernandez) - selects the Kaiser Small Group
HMO as California's benchmark plan to serve as the EHB
standard, as required by federal law. SB 951 is pending
before the Senate Health Committee.
c) AB 1738 (Huffman) requires health plan contracts and
health insurance policies issued, amended, renewed, or
delivered on or after January 1, 2013, to provide coverage
for two courses of treatment in a 12-month period for
tobacco cessation preventive services rated "A" or "B" by
the United States Preventive Services Task Force, and would
prohibit plans and insurers from charging a copayment,
coinsurance, or deductible for those services. AB 1738 is
pending in the Assembly Health Committee.
d) AB 1800 (Ma) requires, commencing January 1, 2013, a
health plan contract, and a health insurance policy
offering outpatient prescription drug coverage, to provide
for a limit on annual out-of-pocket expenses for all
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covered benefits, except as specified, and specifies that
this limit shall not exceed federal limits. AB 1800 is
pending in the Assembly Health Committee.
e) AB 1000 (Perea) requires a health plan contract or
health insurance policy that provides coverage for cancer
chemotherapy treatment to establish limits on enrollee
out-of-pocket costs for prescribed, orally administered,
nongeneric cancer medication. AB 1000 is pending in the
Senate Health Committee.
f) AB 154 (Beall) 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 as in existing law. AB 154 is
pending in the Senate Health Committee.
g) AB 171 (Beall) requires health plans and health insurers
to cover the screening, diagnosis, and treatment of
pervasive developmental disorder or autism. AB 171 is
pending in the Senate Health Committee.
h) AB 137 (Portantino) requires health plan contracts and
health insurance policies that are issued, amended,
delivered, or renewed, on or after July 1, 2013, to provide
coverage for mammography for screening or diagnostic
purposes upon referral by a health care professional, based
on medical need, regardless of age. AB 137 is pending in
the Senate Health Committee.
i) AB 369 (Huffman) prohibits health plans and health
insurers that restrict medications for the treatment of
pain from requiring a patient to try and fail on more than
two pain medications before allowing the patient access to
the pain medication, or its generic equivalent, prescribed
by his or her physician. AB 369 is pending in the Senate
Health Committee.
7)AUTHOR'S AMENDMENTS .
a) Listing of benefits. The listing of certain benefits
and services covered by the Kaiser Small Group HMO and not
all of the benefits and services covered by this plan is
confusing and unnecessary. To eliminate confusion, the
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author has agreed to Strike-out Page 3, Lines 26-29 and
Page 4, Lines 1-13.
b) Mandated benefits. The ACA requires States to defray
the costs of State-mandated benefits and requires any
State-mandated benefit enacted by December 31, 2011 would
be a part of the EHB. To provide clarity the author has
agreed to insert on Page 4, after Line 14: "Mandated
benefits pursuant to statutes enacted before December 31,
2011."
c) Pediatric Oral and Vision Care. This bill supplements
pediatric oral care with the federal Blue Cross and Blue
Shield Standard Option Service Benefit Plan. However, this
is not the benchmark plan option provided by the federal
guidance to use as a supplemental plan. This bill is
silent on vision care which can be supplemented by the same
plan. The author has agreed to on Page 4, Lines 25-35,
Strike out: "federal Blue Cross and Blue Shield Standard
Option Service Benefit Plan available to enrollees through
the Federal Employees Health Benefit Plan (FEHB) as of
December 31, 2011." and Insert: Federal Employees Dental
and Vision Insurance Program with the largest national
enrollment as of the first quarter of 2012.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association for Behavior Analysis
California Black Health Network
California Communities United Institute
California Pan-Ethnic Health Network
California Psychiatric Association
California Speech-Language Hearing Association
Congress of California Seniors
Consumers Union
Planned Parenthood Affiliates of California
Service Employees International Union California
Opposition
None on file.
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Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097