BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 951|
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                              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


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           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, 

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             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 

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                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).


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           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 

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          (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

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