BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 951| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 951 Author: Hernandez (D), et al Amended: 8/24/12 Vote: 21 SENATE HEALTH COMMITTEE : 6-3, 4/11/12 AYES: Hernandez, Alquist, De León, DeSaulnier, Rubio, Wolk NOES: Harman, Anderson, Blakeslee SENATE APPROPRIATIONS COMMITTEE : 5-2, 4/30/12 AYES: Kehoe, Alquist, Lieu, Price, Steinberg NOES: Walters, Dutton SENATE FLOOR : 25-13, 5/7/12 AYES: Alquist, Calderon, Corbett, Correa, De León, DeSaulnier, Evans, Hancock, Hernandez, Kehoe, Leno, Lieu, Liu, Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio, Simitian, Steinberg, Vargas, Wolk, Wright, Yee NOES: Anderson, Berryhill, Blakeslee, Cannella, Dutton, Emmerson, Fuller, Gaines, Harman, Huff, La Malfa, Walters, Wyland NO VOTE RECORDED: Runner, Strickland ASSEMBLY FLOOR : Not available SUBJECT : Health care coverage: essential health benefits SOURCE : Author CONTINUED SB 951 Page 2 DIGEST : This bill establishes in the Insurance Code the Kaiser Foundation Health Plan Small Group Health Maintenance Organization (HMO) 30 plan contract as California's Essential Health Benefits (EHB) benchmark plan. Assembly Amendments make technical and clarifying changes. ANALYSIS : 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 essential health benefit (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 (CDI) 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 to facilitate the purchase of qualified health plans by qualified individuals and qualified small employers by January 1, 2014. This bill: 1. Requires an individual or small group health insurance policy issued, amended, or renewed on or after January 1, 2014, to, at a minimum, include coverage for EHBs, CONTINUED SB 951 Page 3 which means all of the following: A. The benefits and services covered by the Kaiser Foundation Health Plan Group HMO $30 deductible plan (Kaiser plan) contract as this contract was offered during the first quarter of 2012, including all of the following: (1) Health benefits covered by the plan contract within the 10 categories identified in the Patient Protection and Affordable Care Act (ACA); (2) Mandated benefits pursuant to statutes enacted before December 31, 2011, as specified; and, (3) Health benefits covered by the Kaiser plan that are not otherwise required to be covered under existing law, as specified. B. Coverage of mental health and substance abuse disorder services along with any scope and duration limits imposed on the benefits, in compliance with the Paul Wellstone and Peter Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAE), and all regulations, or guidance, as specified. In addition, MHPAE applies to a policy subject to EHB. C. Habilitative services and health care devices means medically necessary health care services that assist an individual in partially or fully acquiring or improving skills and functioning and that are necessary to address a health condition, to the maximum extent practical. These services address the skills and abilities needed for functioning in interaction with an individual's environment. Examples of health care services that are not habilitative services, include but are not limited to, respite care, day care, recreational care, residential treatment, social services, custodial care, or education services of any kind, including, but not limited to vocational training. Habilitative services shall be covered under the CONTINUED SB 951 Page 4 same terms and conditions applied to rehabilitative services under the plan contract. D. Pediatric vision care with same benefits covered under the Federal Employees Dental and Vision Insurance Program, and pediatric oral care with the same benefits covered under Healthy Families including medically necessary orthodontic care pursuant to the federal Children's Health Insurance Program Reauthorization. 2. States that an EHB is required to be provided under this bill only to the extent that federal law or policy does not require the state to defray the costs of the benefit. Provides that nothing in this bill shall obligate the state to incur costs for the coverage of benefits that are not essential health benefits, as defined. 3. States that this bill shall only be implemented to the extent EHBs are required pursuant to the ACA. 4. Clarifies that where there are any conflicts or omissions in the Kaiser benchmark plan as compared to the requirements of the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene) that were enacted prior to December 31, 2011, Knox-Keene requirements shall be controlling except in the case of home health services benefits, as specified. 5. Makes clear that the Insurance Commissioner's authority for enforcement of unfair practices applies, as specified. 6. Clarifies that nothing in this bill shall be construed to exempt a health insurer or a health insurance policy from meeting other applicable requirements of law. 7. Makes emergency regulation authority inoperative on March 1, 2016. 8. Makes this bill contingent upon the enactment of AB 1453 (Monning). CONTINUED SB 951 Page 5 Background Effective January 1, 2014, federal law requires Medicaid benchmark and benchmark-equivalent plans, plans sold through the American Health Benefit 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Assembly Appropriations Committee, costs will be incurred by DMHC and CDI to ensure compliance with EHB standards and respond to a changing health care marketplace under federal law. The costs listed below reflect the costs that will be incurred based on the imposition of minimum EHB standards. It is difficult to separate the regulatory and compliance costs related specifically to this bill from those the state would incur in absence of this bill. (1) costs to the DMHC (Managed Care Fund) of $600,000 over the next three years to review compliance with this bill, to issue regulations, and to handle increased phone calls and consumer complaints. (Recent amendments strike the Health and Safety Code provisions enforced by DMHC); (2) costs to the CDI (Insurance Fund) of $400,000 over the next three years to review compliance with this bill and review rate filings for premium changes resulting from this alteration in benefits; (3) CDI will incur additional one-time costs estimated at $1.5 million (Insurance Fund) to conduct review premium rates for reasonableness in a highly dynamic market environment; (4) responds to pre-regulatory federal guidance. We assume it is likely that forthcoming federal regulations will reflect the guidance issued thus far. If the federal regulations take a different approach, potential costs of requiring all individual and small group plans to meet the EHB standards are unknown but could be significant, to the extent a different approach requires the state to defray the costs of state-mandated benefits CONTINUED SB 951 Page 6 (as explained further below). However, given this bill includes protective language that requires the bill to 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, it should not result in increased state costs related to benefits that exceed EHBs. There could be minor legal costs to CDI and DMHC to make this determination. SUPPORT : (Verified 5/1/12) 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 Planned Parenthood Affiliates of California Western Center on Law & Poverty ARGUMENTS IN SUPPORT : The California Psychiatric Association supports the inclusion of all significant diagnoses in the Diagnostic and Statistical Manual of the American Psychiatric Association within the EHBs. The California Association for Behavioral Analysis writes in support of this bill 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. CTW:d 8/28/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED SB 951 Page 7 CONTINUED