BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 951
AUTHOR: Hernandez
AMENDED: March 26, 2012
HEARING DATE: April 11, 2012
CONSULTANT: Trueworthy
SUBJECT : Health care coverage: essential health benefits.
SUMMARY : Designates the Kaiser Small Group HMO as California's
benchmark plan to serve as the essential health benefit (EHB)
standard, as required by federal health care reform.
Existing federal law:
1.Requires, under the federal Patient Protection and Affordable
Care Act (ACA), health plans and health insurers that offer
coverage in the small group or individual market to ensure
that coverage includes the EHB package.
2.Requires each state, by January 1, 2014, to establish an
American Health Benefit Exchange that facilitates the purchase
of qualified health plans by qualified individuals and
qualified small employers.
Existing state law:
1.Establishes the Department of Managed Health Care (DMHC) to
license and regulate health care service plans (health plans)
and establishes the Department of Insurance to provide for the
regulation of health insurers.
2.Requires health plan contracts and health insurance policies
to cover various benefits.
3.Establishes the California Health Benefit Exchange (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 plans and health
insurance policy contracts, both inside and outside of the
Exchange, to cover EHBs, as defined.
2.Defines EHBs as the benefits and services covered by Kaiser
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Small Group HMO, including the categories identified in the
ACA.
3.Requires the services and benefits to be covered to the extent
they are medically necessary, and prohibits the scope and
duration limits from exceeding the scope and duration limits
imposed on those services by the plan contract.
4.Requires habilitative services to be provided for the same
services as the plan contract provides for rehabilitative
services 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.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1.Author's statement. Keeping in mind federal guidance issued
to date and federal health care reform, SB 951 uses the
following principles to guide the selection of California's
benchmark EHB: recognize the importance of existing
state-mandated benefits and incorporate as many state
mandates as possible; protect California's commitment to
reproductive services; embrace the consumer-oriented
regulatory framework in place at the DMHC; and maintain
affordability for consumers. Using these principles and
through a process of comparison, SB 951 designates the
Kaiser Small Group HMO to serve as the state's benchmark
plan.
2.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
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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.
§ 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.
§ Pediatric services, including oral and vision
care.
1.EHB Bulletin. On December 16, 2011, the HHS Center for
Consumer Information and Insurance Oversight 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;
§ 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
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BCBS Standard; or
§ The largest HMO plan offered in the state's commercial
market by enrollment, which is the Kaiser Large Group
Commercial HMO.
1.Frequently Asked Questions for Essential Health Benefits
bulletin. HHS issued a Frequently Asked Questions for
Essential Health Benefits bulletin to provide additional
guidance on HHS's intended approach in defining EHB. The
bulletin outlines three categories of benefits not included
in many of the health insurance plans - 1) pediatric oral
services; 2) pediatric vision services; and 3) habilitative
services. The bulletin describes rules to ensure coverage
of these categories, and SB 951 implements these rules
related to pediatric oral services and habilitative
services. Specifically, SB 951 requires a plan to cover
pediatric oral services at par with the largest federal plan
by enrollment, the federal BCBS Standard Option Service
Benefit Plan. The bill also requires habilitative services
to be covered at parity with rehabilitative services
provided by the Kaiser Small Group HMO.
2.Milliman analysis. In January 2012, the Exchange retained
consulting firm, Milliman, to analyze and compare the health
services covered by the 10 EHB California benchmark plan
options. Milliman found all the plans to be comprehensive
and found there to be only a very small cost difference
between the optional plans.
3.Related legislation. SB 961 (Hernandez) would require a
health plan contract to comply with federal requirements in
the individual market. SB 961 is pending before the Senate
Health Committee.
SB 1321 (Harman) would require 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.
AB 1453 (Monning) would select the Kaiser Small Group HMO as
California's benchmark plan to serve as the EHB standard, as
required by federal law. AB 1453 is pending before the
Assembly Health Committee.
AB 1461 (Monning) would require a health plan contract to
comply with federal requirements in the individual market. AB
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1461 is pending before the Assembly Health Committee.
4. Prior legislation. SB 51 (Alquist), Chapter 644, Statutes
of 2011, establishes enforcement authority in California law
to implement provisions of the ACA related to medical loss
ratio requirements on health plans and health insurers and
enacts prohibitions on annual and lifetime benefits.
SB 900 (Alquist), Chapter 659, Statutes of 2010, and AB 1602
(Perez), Chapter 655, Statutes of 2010, established the
California Health Benefit Exchange.
5.Support. The California Psychiatric Association supports
the inclusion of all significant diagnoses in the Diagnostic
and Statiscal Manual of the American Psychiatric Association
within the EHBs. The California Association for Behavioral
Analysis writes in support of SB 951 stating that it makes
clear, consistent with the requirements of state and federal
law, that applied behavior analysis for autism is a covered
benefit in the benchmark benefit package. The California
Speech-Language Hearing Association writes in support of the
bill including speech therapy and other habilitative
services.
6.Support with concern. The Council of Acupuncture and
Oriental Medicine Association write they are pleased to see
SB 951 recognize acupuncture as an EHB, but they are
concerned SB 951 will only apply to acupuncture for
treatment of pain and nausea.
Western Center on Law and Poverty supports the approach of
SB 951 selecting a Knox-Keene licensed plan to serve as the
state's EHB benchmark standard. However, they are
requesting an amendment to explicitly say plans cannot
substitute coverage of services even if such substitutions
are actuarially equivalent. Western Center on Law and
Poverty also writes they want to ensure that the Kaiser
Small Group HMO plan is not the basis for structuring
cost-sharing models for individual and small group markets.
Health Access writes they strongly support the requirement
for an EHB standard and supports the selection of a
Knox-Keene plan. However, Health Access is concerned SB 951
does not include the necessary statutory underpinning to
assure consumers regulated under the Insurance Code have the
same benefits as those with coverage regulated under the
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Knox-Keene Act. Health Access is seeking an amendment to
ensure the bill as drafted is not construed to put the
burden on the consumer to demonstrate that care is medically
necessary.
7.Selection of EHB benchmark plan. Federal guidance states
that if a state selects a benchmark plan that does not
include all state-mandated benefits, the state must pay the
costs of those mandated benefits. Given the impact this
could have on the state's budget it is appropriate for the
Legislature to select the benchmark plan. Further, given
that the EHB benchmark plan impacts plans outside of the
Exchange, it is reasonable for the Legislature to select to
the benchmark plan.
The Kaiser Small Group HMO includes all state mandates which
will protect the state budget and many of the items and
services are covered within the 10 required categories
requiring very few supplements from different plans.
Further, according to a recent data analysis complied by
Milliman, "the range in estimated plan costs due to the chosen
EHB benchmark is about 2.36% (101.87% to 104.23%)." Given this
very small difference, cost does not appear to be an
influential factor.
8.Amendments to be taken in Committee.
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 author has agreed to strike out Page 3,
Lines 34 - 40 and Page 4, Lines 1-6.
b. Mandated benefits. The PPACA requires states to
defray the costs of state-mandated benefits and requires
any state-mandated benefit enacted by December 31, 2011,
to be a part of the EHB. To provide clarity, the author
has agreed to insert on Page 4, after Line 6: "Mandated
benefits pursuant to statutes enacted by the Governor
before December 31, 2011."
c. Pediatric oral and vision care. SB 951 supplements
pediatric oral care with the federal BCBS Standard Option
Service Benefit Plan. However, this is not the benchmark
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plan option provided by the federal guidance to use as a
supplemental plan. SB 951 is silent on vision care which
can be supplemented by the same plan. The author has
agreed to strike out on Page 4, Lines 19-22: "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."
SUPPORT AND OPPOSITION :
Support: California Academy of Child and Adolescent Psychiatry
California Association for Behavioral Analysis
California Psychiatric Association
California Speech-Language Hearing Association
Council of Acupuncture and Oriental Medicine
Associations (with concerns)
Health Access (with amendments)
Planned Parenthood Affiliates of California
Western Center on Law & Poverty
Oppose: None received.
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