BILL ANALYSIS Ó
SB 951
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Date of Hearing: July 3, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
SB 951 (Ed Hernandez) - As Amended: April 16, 2012
SENATE VOTE : 25-13
SUBJECT : Health care coverage: 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
Foundation Health Plan Group HMO $30 deductible plan
contract as this contract was offered during the first
quarter of 2012, 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, chronic disease management, and pediatric
services, including oral and vision care.
ii) Mandated benefits pursuant to statutes enacted
before December 31, 2011.
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.
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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
and pediatric vision care covered under the Federal
Employees Dental and Vision Insurance Program (FEDVIP)
dental plan and vision plan with the largest national
enrollment as the first quarter of 2012. 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 FEDVIP dental plan and vision plan
with the largest national enrollment as of the first
quarter of 2012. Requires the pediatric oral and vision
care benefits to be in addition to, and not replace, any
dental, orthodontic, or vision services covered under the
plan contract in 1)a) above.
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.
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.
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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
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
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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 : According to the Senate Appropriations
Committee, no additional costs to subsidize the costs of state
benefit mandates for health plans sold in the Exchange.
One-time costs to CDI of $120,000 in 2012-13 and $110,000 in
2013-14 for the review of health insurance policy filings
(Insurance Fund).
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, keeping in
mind federal guidance issued to date and federal health care
reform, this bill 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, this bill
selected the Kaiser Small Group HMO to serve as the state's
benchmark plan. Beginning January 1, 2014, this bill would
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require individual and small group health care service plans
and health insurance policy contracts, both inside and outside
of the Exchange, to cover EHB. All services and benefits
covered by the Kaiser Small Group HMO, as of the first quarter
of 2012, will define EHB. These include the 10 categories
identified above, as well as all state mandates enacted before
December 31, 2011.
HHS's Frequently Asked Questions for EHBs bulletin outlines
three categories of benefits not included in many of the
health insurance plans: a) pediatric oral services; b)
pediatric vision services; and, c) habilitative services. The
bulletin describes rules to ensure coverage of these
categories and this bill implements these rules related to
pediatric oral services and habilitative services. The Kaiser
Small Group HMO covers pediatric vision services. The bill
also requires habilitative services to be covered at parity
with rehabilitative services provided by the Kaiser Small
Group HMO.
This bill further protects consumers by prohibiting plans from
indicating or implying a contract or policy meets EHB unless
it covers EHBs, as defined by the services and benefits
covered by the Kaiser Small Group HMO, as of the first quarter
of 2012. As required by federal law, this bill applies to
both the individual and small group market, both inside and
outside of the Exchange. This bill does not apply to
self-insured group health plans, large group market health
plans, or grandfathered health plans.
2)BACKGROUND . 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, 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
Preferred Provider Organization (PPO) licensed by CDI,
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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 California
Public Employees' Retirement System (CalPERS) Blue 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.
SEIU 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 Knox-Keene
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
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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
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. The California Optometric
Association applauds recent amendments to supplement pediatric
vision with the FEDVIP which will allow coverage for
corrective lenses for children. While in support of this
bill, Children Now expresses concerns with possibilities to
select California's Healthy Families Program dental plan
standard as the pediatric dental benchmark, and suggests
clarifying coverage for medically necessary orthodontic
treatment should such amendment be adopted. Children Now also
requests clarifications on mental health coverage for
children, definition of habilitative, and coverage of hearing
aids. The National Alliance on Mental Illness supports this
bill because it provides an adequate floor for benefits and it
is a good starting point.
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
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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
habilitative to include services for degenerative conditions
such as multiple sclerosis, Amyotrophic Lateral Sclerosis,
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)SUPPORT IF AMENDED. The National Health Law Program (NHeLP)
requests several amendments such as broader coverage for
children in order to access mental health services than are
permitted in the Kaiser plan so that children do not have to
wait until conditions worsen to the "severe emotionally
disturbed" threshold required by Kaiser. NHeLP would like an
amendment to address a 24-month waiting period for orthodontic
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services which exists in the Met Life (FEDVIP) plan, and
requests a restriction on benefit substitutions. NHeLP is
concerned that there is not much information about Kaiser's
rehabilitative services and requests that habilitative service
not be covered in the same way as rehabilitative as the bill
requires, and NHeLP requests using the Medicaid definition of
"habilitative services" which is:
Habilitiative services: means services designed to assist
individuals in acquiring, retaining, and improving the
self-help, socialization, and adaptive skills necessary to
reside successfully in home and community-based settings,
including prevocational, educational, and supported
employment services.
7)OPPOSE UNLESS AMENDED . The California Chiropractic
Association asks that the Legislature reexamine the possible
choices for an EHB plan to select one that includes
chiropractic benefits. The California Association of Alcohol
and Drug Program Executives respectfully requests that this
bill be amended to assure that California's EHB package is in
compliance with ACA and the federal parity requirements
specified in the Paul Wellstone-Pete Domenici Mental Health
Parity and Addiction Equity Act of 2008.
8)RELATED LEGISLATION .
a) SB 615 (Calderon) prohibits multiple employer welfare
arrangements (MEWAs) from offering, issuing, selling or
renewing health coverage benefits unless the MEWA discloses
whether the benefits constitute minimum essential coverage
as defined by the ACA. SB 615 is pending in the Assembly
Health Committee.
b) 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 failed passage in the
Senate Health Committee.
c) AB 1453 (Monning) selects 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
Senate Appropriations Committee.
d) AB 1738 (Huffman) requires health plan contracts and
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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 was
held by the author in the Assembly Health Committee.
e) AB 1800 (Ma) requires, commencing January 1, 2013, a
health plan contract, and a health insurance policy, to
provide for a limit on annual out-of-pocket expenses for
all covered benefits, and specifies that this limit shall
not exceed federal limits. AB 1800 is pending in the
Senate Appropriations Committee.
f) 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 Appropriations Committee.
g) 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 was held
by the author in the Senate Health Committee.
h) AB 171 (Beall) requires health plans and health insurers
to cover the screening, diagnosis, and treatment of
pervasive developmental disorder or autism. AB 171 was
held by the author in the Senate Health Committee.
i) 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 Appropriations Committee.
j) AB 369 (Huffman) prohibits health plans and health
insurers that restrict medications for the treatment of
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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
Appropriations Committee.
9)POLICY COMMENT . As indicated, federal regulations have not
yet been issued on EHBs. Absent federal guidance, policy
staff and stakeholders are working to craft an EHB benchmark
that is workable in California. Stakeholders have commented
on provisions of this bill including the definition of
habilitative, implication of medical necessity, mental health
and substance abuse parity, benefit substitutions, pediatric
oral coverage, and other issues. The author and the Assembly
Health Chair, through committee staff, have been working with
stakeholders to work through these issues. Amendments are
being developed but are not ready at this time.
REGISTERED SUPPORT / OPPOSITION :
Support
100% Campaign
Association of Regional Center Agencies
Autism Speaks
California Academy of Child and Adolescent Psychiatry
California Association for Behavioral Analysis
California Council of Community Mental Health Agencies
California Coverage & Health Initiatives
California Optometric Association
California Pan-Ethnic Health Network
California Primary Care Association
California Psychiatric Association
California Speech-Language Hearing Association
Children NOW
Children's Defense Fund - California
Consumers Union
Greenlining Institute
Health Access
Jacob's Institute of Women's Health
Mental Health America of California
NAMI California
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Planned Parenthood Affiliates of California
SEIU California
The Children's Partnership
United Ways of California
Opposition
None on file.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097