BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1453| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1453 Author: Monning (D), et al. Amended: 8/23/12 in Senate Vote: 21 SENATE HEALTH COMMITTEE : 6-3, 6/27/12 AYES: Hernandez, Alquist, De León, DeSaulnier, Rubio, Wolk NOES: Harman, Anderson, Blakeslee SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/16/12 AYES: Kehoe, Alquist, Lieu, Price, Steinberg NOES: Walters, Dutton ASSEMBLY FLOOR : 50-25, 5/14/12 - See last page for vote SUBJECT : Essential health benefits SOURCE : Author DIGEST : This bill designates the Kaiser Small Group HMO as Californias benchmark plan to serve as the essential health benefit (EHB) standard. Assembly Amendments make technical and clarifying changes and add co-authors. ANALYSIS : Existing federal law: CONTINUED AB 1453 Page 2 1. Establishes the Patient Protection Affordable Care Act (ACA), which among other provisions, imposes new requirements on individuals, employers, and health plans; restructures the private health insurance market; sets minimum standards for health coverage; establishes health benefit exchanges; and provides financial assistance to certain individuals and small employers. 2. Requires, under the ACA, each state, by January 1, 2014, to establish an American Health Benefit Exchange (Exchange) that facilitates the purchase of qualified health plans by qualified individuals and qualified small employers. 3. Requires, under the ACA, health plans and health insurers that offer coverage in the small group or individual market, both inside and outside of the Exchange, to ensure coverage includes the EHB package. Existing state law: 1. Provides for regulation of health insurers by the Department of Insurance (CDI) under the Insurance Code, and provides for the regulation of health plans by the Department of Managed Health Care (DMHC), pursuant to the Knox-Keene Health Care Service Plan Act of 1975. 2. Requires health plan contracts and health insurance policies to cover various benefits. 3. Establishes the Exchange to facilitate the purchase of qualified health plans by qualified individuals and qualified small employers by January 1, 2014. This bill: 1. Requires individual and small group health plan contracts, both inside and outside of the Exchange, to cover EHBs, as defined. 2. Defines EHBs as the benefits and services covered by Kaiser Small Group HMO, including the categories identified in the ACA. CONTINUED AB 1453 Page 3 3. Requires the services and benefits to be covered to the extent they are medically necessary. Prohibits scope and duration limits from exceeding the scope and duration limits imposed on those services by the Kaiser Small Group HMO plan contract. 4. Requires habilitative services to be provided for the same services as, and under the same terms and conditions of, the plan contract for rehabilitative services. 5. Requires the same services and benefits for pediatric oral care as provided by a specified federal plan to be provided as an EHB. 6. Prohibits plans from indicating or implying a contract or policy meets the EHB standard unless it covers EHBs, as defined. 7. Exempts self-insured group health plans, large group market health plans, or grandfathered health plans. 8. Requires this bill go into effect to the extent that federal health benefits are required, and that medically necessary basic health services are covered. Background Effective January 1, 2014, federal law requires Medicaid benchmark and benchmark-equivalent plans, plans sold through the Exchange and the Basic Health Program (if enacted), and health plans and health insurers providing coverage to individuals and small employers to ensure coverage of EHBs, as defined by the Secretary of the Department of Health and Human Services (HHS). HHS is required to ensure that the scope of EHBs is equal to the scope of benefits provided under a typical employer plan, as determined by the Secretary. Under federal law, EHBs must include 10 general categories and the items and services covered within the following categories: Ambulatory patient services; CONTINUED AB 1453 Page 4 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 services, including oral and vision care. EHB Bulletin . 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. EHBs must include coverage of services and items in all 10 statutory categories listed above, but states would choose one of the following benchmark health insurance plans: 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; One of the three largest state employee health plans by enrollment-in California, these options are CalPERS Blue Shield Basic HMO, CalPERS Choice, or CalPERS Kaiser HMO; CONTINUED AB 1453 Page 5 One of the three largest federal employee health plan options by enrollment, which are Government Employee Health Association, Blue Cross and Blue Shield (BCBS) Basic, or BCBS Standard; or The largest HMO plan offered in the state's commercial market by enrollment, which is the Kaiser Large Group Commercial HMO. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee: One-time costs of about $350,000 to adopt regulations and review health plan filings by DMHC Fund. Ongoing costs of about $100,000 per year to respond to consumer complaints by DMHC Fund. One-time costs of about $2 million to adopt regulations and review insurance policy filings by the CDI (Insurance Fund). The much higher projected costs to reflect the fact that the adoption of comprehensive EHBs requirements will have a pose a much larger change in business practices on health insurers than health plans. Therefore, there will be greater workload to adopt regulations and review changes to insurance policies. No anticipated costs to subsidize the costs of state benefit mandates for health plans sold in the Exchange. SUPPORT : (Verified 8/24/12) Association of Regional Center Agencies Autism Speaks California Association for Behavior Analysis California Black Health Network California Children's Health Coverage Coalition California Commission on Aging California Communities United Institute California Council of Community Mental Health Agencies California Coverage & Health Initiatives CONTINUED AB 1453 Page 6 California Pan-Ethnic Health Network California Physical Therapy Association California Podiatric Medical Association California Primary Care Association California Psychiatric Association California Speech-Language Hearing Association Children Now Children's Defense Fund-California Children's Partnership Congress of California Seniors Consumers Union Greenlining Institute Health Access California Jericho Mental Health America of California National Alliance on Mental Illness, California National Health Law Program (if amended) Planned Parenthood Affiliates of California SEIU California United Ways of California Western Center on Law and Poverty OPPOSITION : (Verified 8/24/12) California Association of Alcohol and Drug Program Executives California Chiropractic Association ARGUMENTS IN SUPPORT : The California Children's Health Coverage Coalition writes, in support of this bill, that the selection of a robust EHB benchmark is the first step towards providing children in the Exchange with the most comprehensive coverage possible. The California Pan-Ethnic Health Network supports this bill writing the bill will ensure that California's EHB package covers a comprehensive package of health care services both inside and outside of the Exchange. Consumers Union writes that the marketplace today is flooded with plans offering skimpy coverage and argues this bill will ensure California's EHB will cover a comprehensive package of health services. ARGUMENTS IN OPPOSITION : The California Chiropractic Association (CCA) writes that in California seven of the benchmark plan options include a chiropractic benefit. CCA CONTINUED AB 1453 Page 7 is opposed to this bill and asks that the legislature re-examine the possible choices for an EHB plan to select one that includes chiropractic benefits. Any health care reform program should rely on access to chiropractic treatment to achieve the most positive health and financial results. The California Association of Alcohol and Drug Program Executives writes in opposition that this bill selects a benchmark plan that does not meet the mental health and substance abuse mandates in both the ACA and federal Mental Health parity law. ASSEMBLY FLOOR : 50-25, 5/14/12 AYES: Alejo, Allen, Ammiano, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani, Gatto, Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan, V. Manuel Pérez, Portantino, Skinner, Solorio, Swanson, Torres, Wieckowski, Williams, Yamada, John A. Pérez NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly, Beth Gaines, Garrick, Gorell, Grove, Hagman, Halderman, Harkey, Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell, Nielsen, Norby, Olsen, Silva, Smyth, Wagner NO VOTE RECORDED: Atkins, Fletcher, Nestande, Perea, Valadao CTW:d 8/24/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED