BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 1453|
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                                 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:

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           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.


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           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;

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           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; 


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             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

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          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 

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          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

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