BILL ANALYSIS �
AB 18
Page 1
Date of Hearing: June 4, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 18 (Pan) - As Amended: May 24, 2013
SUBJECT : Health care coverage: pediatric oral care.
SUMMARY : Exempts small group health plans and insurance
policies not participating in the California Health Benefit
Exchange (Exchange), known as Covered California, and health
plans and insurance policies that are qualified health plans
(QHPs) participating in the Exchange Small Business Health
Options Program (SHOP) from the Essential Health Benefits (EHBs)
requirement to offer a pediatric oral care benefit if a
specialized health plan contract or insurance policy is offered,
marketed, or sold through the Exchange SHOP (either bundled with
a QHP or standing alone) or small group market outside the
Exchange. Contains an urgency clause in order to become
effective immediately upon enactment. Specifically, this bill :
1)Requires, beginning January 1, 2015, every specialized health
plan contract and insurance policy providing pediatric oral
care benefits in the small group market through the Exchange
SHOP and outside the Exchange whether or not it is bundled
with a QHP or standing alone to maintain a minimum medical
loss ratio (MLR) of 75%. Requires rebates to be provided to
each enrollee if the MLR is less than 75%.
2)Exempts a health plan contract or insurance policy for small
group coverage and a health plan contract or insurance policy
that is offered, marketed or sold through the Exchange SHOP or
the small group market outside of the Exchange from the
pediatric oral care requirement of the EHBs if a specialized
health care service plan contract or insurance policy, as
specified, is offered through the Exchange SHOP or outside the
Exchange.
3)Establishes legislative intent that all of the benefits
described in the Patient Protection and Affordable Care Act
(ACA) be included as EHBs whether obtained through a QHP, or a
combination of a QHP and a specialized health plan, and that
pediatric EHBs purchased separately are only essential for
pediatric enrollees, to the extent permitted by the ACA.
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4)Requires a specialized health plan contract and insurance
policy providing pediatric oral care benefits that is offered
through the Exchange SHOP or the small group market outside
the Exchange, whether or not it is bundled with a QHP or
standing alone, at a minimum, include coverage of the benefits
for pediatric oral care covered under the dental plan
available to subscribers of the Healthy Families Program in
2011-12, including the provision of medically necessary
orthodontic care provided pursuant to the federal Children's
Health Insurance Program Reauthorization Act of 2009.
5)Provides, beginning January 1, 2014, that a specialized health
plan contract and insurance policy providing pediatric oral
care benefits not be regarded as providing excepted benefits
under federal law, for the purpose of determining
applicability of the ACA sections relating to annual and
lifetime limits.
6)Provides, beginning January 1, 2014, that a specialized health
plan contract and insurance policy providing pediatric oral
care benefits in the Exchange SHOP or in the small group
market outside the Exchange, whether or not it is bundled with
a QHP or standing alone, meet timely access to care and
adequate networks requirements in existing law, as specified.
7)Provides, beginning January 1, 2015, that a specialized
health plan contract and insurance policy providing pediatric
oral care benefits in the Exchange SHOP or in the small group
market outside the Exchange, whether or not it is bundled with
a QHP or standing alone, not be regarded as providing excepted
benefits under federal law, for the purpose of determining
applicability of the ACA sections relating to:
a) The prohibition of preexisting condition exclusions or
other discrimination based on health status;
b) Fair health insurance premiums;
c) Guaranteed availability of coverage;
d) Guaranteed renewability of coverage;
e) Prohibition against discrimination against individual
participants and beneficiaries on the basis of health
status;
f) Nondiscrimination in health care; and,
g) Prohibition of excessive waiting periods.
8)Requires a specialized health plan contract or insurance
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policy providing pediatric oral care benefits to waive the
applicable dental out-of-pocket (OOP) maximum upon
notification from a QHP on behalf of an enrollee that the
applicable OOP maximum under the QHP has been satisfied.
9)Beginning January 1, 2015, the combined OOP maximums for
dental and QHP shall not exceed those limits established under
the ACA. Requires the plans to develop a method for
coordinating and tracking cost sharing that limits the burden
on the subscriber. Provides that this subparagraph is to only
be implemented to the extent permitted by the ACA.
10)Requires pediatric vision and oral care benefits to be
provided for individuals up to 22 years of age, to the extent
permitted under the ACA.
11)Makes, beginning January 1, 2015, a specialized health plan
contract and insurance policy providing pediatric oral care
benefits in the Exchange SHOP or in the small group market
outside the Exchange, whether or not it is bundled with a QHP
or standing alone, subject to existing state law related to
rate reviews, as specified.
EXISTING LAW :
1)Establishes the Department of Managed Health Care (DMHC) to
regulate health plans under the Knox-Keene Health Care
Services Plan Act of 1975 in the Health and Safety Code; the
California Department of Insurance (CDI) to regulate health
insurers under the Insurance Code; and, the Exchange to
compare and make available through selective contracting
health insurance for individual and small business purchasers
as authorized under the ACA.
2)Requires every health plan and health insurer that issues,
sells, renews, or offers health plan contracts or policies for
health care coverage, including a grandfathered health plan or
insurer, but not including specialized health plan contracts
or policies, to provide an annual rebate to each enrollee
under such coverage if the ratio of the amount of premium
revenue expended by the health plan on the costs for
reimbursement of clinical services provided to enrollees under
such coverage and for activities that improve health care
quality to the total amount of premium revenue less certain
taxes and fees (known as medical loss ratio or MLR) is less
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than the following:
a) Eighty-five percent for a health plan or health insurer
in the large group market; or,
b) Eighty percent for a health plan or health insurer in
the small group or individual market.
3)Requires health plans and health insurers to file with the
DMHC and CDI specified rate information for individual and
small group market products at least 60 days prior to
implementing any rate change. Requires rate filings to be
actuarially sound and to include a certification by an
independent actuary that any increase is reasonable or
unreasonable. Requires the filings in the case of large group
contracts only for unreasonable rate increases, as defined by
the ACA, prior to implementing any such rate change. Requires
health plans and insurers to provide 60 days written notice to
an enrollee or insured before a change in premium rates or
coverage becomes effective.
4)Establishes as California's EHBs the Kaiser Small Group Health
Maintenance Organization (HMO) plan along with the following
10 ACA mandated benefits:
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.
3)Establishes in state government the Exchange as an independent
public entity not affiliated with an agency or department.
Establishes requirements for health plans seeking
certification as QHPs, including that carriers fairly and
affirmatively offer, market, and sell in the Exchange at least
one product within each of five specified levels. Requires
carriers that sell any products outside the Exchange to fairly
and affirmatively offer, market, and sell all products made
available in the Exchange to individuals and small groups
outside the Exchange.
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4)Establishes the Exchange SHOP, separate from activities of the
Exchange Board related to the individual market, to assist
qualified small employers in facilitating the enrollment of
their employees in QHPs offered through the Exchange in the
small employer market in a manner consistent with the ACA.
5)Pursuant to the ACA an Exchange may not make available any
health plan that is not a QHP. However, each exchange within
a state shall allow an issuer that only provides limited scope
dental benefits meeting specified requirements through their
exchange (either separately or in conjunction with a QHP) if
the plan provides pediatric dental benefits meeting specified
requirements.
6)Pursuant to the ACA, exclusion of a pediatric dental EHB
outside of the Exchange is not permitted. Individuals
enrolling outside of the Exchange must be offered all 10 EHB
categories, including the pediatric dental benefit.
7)Pursuant to the ACA, in defining EHBs, requires the Secretary
of the federal Department of Health and Human Services to
provide that if a plan, as specified, (related to stand-alone
dental benefits plans) is offered through an Exchange, another
health plan offered through such Exchange shall not fail to be
treated as a QHP solely because the plan does not offer
coverage of benefits offered through the stand-alone plan that
are otherwise required (referring to pediatric services). The
preamble to specified regulations package says this is the
only exception to the EHB coverage permitted under the ACA.
8)Pursuant to federal regulations a stand-alone dental plan
covering the pediatric dental EHB must demonstrate that it has
a reasonable annual limitation on cost-sharing as determined
by the Exchange. Such annual limit is calculated without
regard to EHBs provided by the QHPs and without regard to
out-of-network services.
9)Pursuant to the ACA, prohibits OOP limits greater than Health
Savings Accounts (HSAs) in all markets.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . This bill is needed to update
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California's EHB law to exempt QHPs in Covered California's
SHOP and carriers of small group market products outside the
Exchange from the requirement to offer pediatric oral benefits
if there are stand-alone dental plans providing pediatric
coverage participating in the Exchange, SHOP and outside the
Exchange. A conflict between state laws and the ACA and its
regulations may prevent stand-alone dental plans from
competing with QHPs for enrollment of pediatric enrollees and
their families in Covered California and in the small group
market outside of the Exchange, which could disrupt existing
relationships between dental providers and their patients.
Further, with the addition of the stand-alone dental option
for pediatric oral coverage, consumers choosing a stand-alone
pediatric dental benefit in addition to a health plan will
have complexities in managing and tracking OOP maximums on
cost sharing associated with the two plans. This bill aims to
make this process as easy as possible for consumers and ensure
the broadest possible consumer protections. This bill also
resolves a conflict in the age associated with pediatric
services for purposes of vision and dental EHB coverage. The
California Health Benefits Review Program (CHBRP) issued a
report on March 6, 2013, indicating that Healthy Families
(which has been chosen as the basis for California's pediatric
dental benefit) provides coverage up to age 19. The Blue
Cross Blue Shield (BCBS) Federal Employee Dental and Vision
Insurance Program (FEDVIP) Blue Vision plan for vision
coverage (which has been chosen as the basis for California's
pediatric vision benefit) provides coverage up to age 22.
Federal ACA regulations recommend age 19 but allow states to
provide these benefits beyond age 19. This bill adopts the
state option to set the age at 22.
2)BACKGROUND . On March 23, 2010, the federal ACA (Public Law
111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Public Law 111-152) became law.
Among many other provisions, the new law makes statutory
changes affecting the regulation of and payment for certain
types of private health insurance. Beginning in 2014,
individuals will be required to maintain health insurance or
pay a penalty, with exceptions for financial hardship (if
health insurance premiums exceed 8% of household adjusted
gross income), religion, incarceration, and immigration
status. Several insurance market reforms are required, such
as prohibitions against health insurers imposing preexisting
health condition exclusions and a requirement that carriers
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offer EHBs in the individual and small group markets. These
reforms impose new requirements on states related to the
allocation of insurance risk, prohibit insurers from basing
eligibility for coverage on health status-related factors,
allow the offering of premium discounts or rewards based on
enrollee participation in wellness programs, impose
nondiscrimination requirements, require insurers to offer
coverage on a guaranteed issue and renewal basis, and
determine premiums based on adjusted community rating (age,
family, geography, and tobacco use).
Additionally, by 2014 either a state will establish a separate
Exchange to offer individual and small-group coverage or the
federal government will establish one. Exchanges will not be
insurers but will provide eligible individuals and small
businesses with access to private plans in a comparable way.
In 2014 some individuals with income below 400% of the federal
poverty level (FPL) will qualify for credits toward their
premium costs, subsidies, and cost-sharing for insurance
purchased through an Exchange. California has established
Covered California, as a state-based exchange that is
operating as an independent government entity with a
five-member Board of Directors.
Beginning in 2014, QHPs will be required to offer coverage at
one of four levels: bronze, silver, gold, or platinum.
Levels will be based on a specified share of full actuarial
value of the EHBs. These plans will be prohibited from
imposing an annual cost-sharing limit that exceeds the
thresholds applicable to HAS-qualified High Deductible Health
Plans (HDHPs). In 2014, the annual OOP maximum for an
individual is $6,400 and $12,800 for family coverage.
Catastrophic plans are also permitted only in the individual
market for young adults (under age 30) and for those persons
exempt from the individual mandate, but catastrophic plans
must cover EHBs and have deductibles equal to the amounts
specified as OOP limits for HAS-qualified HDHPs. Small group
health plans providing QHPs will be prohibited from imposing a
deductible greater than $2,000 for individual coverage and
$4,000 for any other coverage in 2014, adjusted annually
after.
As mentioned, some individuals with income under 400% FPL will
receive advanceable, refundable tax credits toward the
purchase of an Exchange plan. The payment will go directly to
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the insurer and will reduce the premium liability for that
individual. Those who qualify for premium credits and are
enrolled in an Exchange plan at the silver tier beginning in
2014 will also be eligible for assistance in paying any
required cost-sharing for their health services. As indicated
above, limitations on Exchange plans related to OOP costs will
be based upon HDHPs that qualify individuals for HSAs. Cost
sharing subsidies will further reduce those OOP maximums by
two-thirds for qualifying individuals between 100% and 200%
FPL, by one-half for qualifying individuals between 201% and
300% FPL, and by one-third for qualifying individuals between
301% and 400% FPL.
3)CENTER FOR CONSUMER INFORMATION AND INSURANCE OVERSIGHT
LETTER . On April 5, 2013, the Center for Consumer Information
and Insurance Oversight (CCIIO), Centers for Medicare and
Medicaid Services (CMS) issued a letter to issuers on
federally-facilitated and state partnership Exchanges. The
CCIIO letter includes a chapter on stand-alone dental plans.
The letter indicates that stand-alone dental plans are not
subject to the insurance market reform provisions of the ACA
that generally apply to health plans in the individual and
small group markets inside and outside an Exchange, such as
guaranteed availability and renewability. However, some
market-wide and exchange-specific provisions in the ACA apply
to stand-alone plans seeking certification as a QHP, including
the prohibition on annual and lifetime dollar limits and
annual limits on cost sharing. Under federal regulations,
rather than meeting the specific dollar limits that apply to
cost sharing for comprehensive medical QHPs, stand-alone
dental plans certified to be offered in an Exchange will be
required to demonstrate that they have a reasonable annual
limitation on cost-sharing. The final rule clarified that an
exchange is responsible for determining the level of
"reasonable" annual limits. For the federal exchange, CMS
interprets reasonable to mean any annual limit on cost sharing
that is at or below $700 for a plan with one child or $1,400
for a plan with two or more children.
4)STAND-ALONE OUTSIDE . According to the preamble to the final
federal rule, CMS restates that the ACA does not provide for
the exclusion of a pediatric dental EHB outside the Exchange.
Therefore, individuals enrolling in health insurance coverage
not offered in an Exchange must be offered the full 10 EHB
categories, including the pediatric dental benefit. The
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preamble states that an individual can purchase stand-alone
pediatric dental coverage offered by an Exchange-certified
stand-alone plan, and when the health insurance carrier is
reasonably assured that the individual has obtained such
coverage, the issuer would not be found non-compliant with the
EHB requirements. This alternate method of compliance is at
the option of the health insurance carrier. The preamble also
indicates that while someone purchasing in the Exchange
whether or not he or she has children, can opt not to purchase
a separate stand-alone dental plan, the same option is not
available outside the Exchange. Outside the Exchange an
individual must be offered coverage of all 10 categories of
EHB, either through one policy (where the dental benefit is
embedded in the health plan), or through a combination of a
medical policy and an Exchange-certified stand-alone dental
plan. Many questions have been raised about how this option
would be enforced.
5)COST SHARING . With respect to the annual limit on cost
sharing the CCIIO letter indicates where an issuer uses
multiple service providers to help administer benefits
(separate pharmacy benefit manager or behavioral health
organization), new coordination processes may be required to
ensure compliance with the maximum OOP limits. This may be
necessary where, for example, the plan's service providers
impose different levels of OOP limitations and/or use
different methods for crediting participants' expenses against
any OOP maximums.
Additionally, the ACA and implementing regulations exclude
stand-alone dental plans from the cost-sharing reduction
requirements placed on medical QHPs. According to the CCIIO
letter, the ACA generally states that any cost sharing
reductions that would be applied to the pediatric dental EHB
in a comprehensive medical QHP will not be applied if the
pediatric dental benefit is provided through a stand-alone
dental plan. The final federal regulations state that a
stand-alone dental plan covering the pediatric dental EHB must
demonstrate that it has a reasonable annual limitation on
cost-sharing as determined by the Exchange. Such annual limit
is calculated without regard to EHB provided by the QHP and
without regard to out-of-network services. With regard to
calculation of actuarial value, a stand-alone plan may not use
the federal actual value calculator. The stand-alone dental
plan must demonstrate that it offers the pediatric EHB at
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either a low level of coverage with an actuarial value of 70%
or a high level of coverage with an actuarial value of 85%,
and within a de minimis variation of plus or minus two
percentage points of the 70% or 85%.
6)COVERED CALIFORNIA . On April 3, 2013, Covered California
issued "Rules for QHP bidders for Submission of Pediatric
Dental Essential Health Benefit Dental Plans in conjunction
with Qualified Health Plans which provide all Essential Health
Benefits other than Pediatric Dental EHB." In this document,
Covered California indicates that the QHP solicitation
requires all QHP bidders to submit two premium bids: one
inclusive of pediatric dental EHB and one without. The
purpose of this requirement was to provide the Exchange with
the option of selecting stand-alone dental plans which offer
the pediatric dental EHB. Because of final federal rules
issued in February 2013 the Exchange in the letter is
clarifying bidding rules. The final federal rules regarding
pediatric stand-alone dental plans allow a separate annual
limitation on cost-sharing to apply to the pediatric dental
EHB only if it is offered by a separate dental plan. The
Exchange has adopted standard benefit plans for the pediatric
dental EHB that include a $1000 annual OOP maximum and
determined it to be reasonable. This applies to both dental
preferred provider organizations (PPOs) and dental HMOs.
Covered California states with respect to QHPs which embed the
pediatric dental EHB plan it is clear that single QHP OOP
maximum would apply to all 10 EHBs including pediatric dental.
Therefore, Covered California is requiring all QHPs to bid
the pediatric dental EHB by bundling with a dental plan
partner and is not allowing the pediatric dental EHB to be
embedded. According to Covered California, this approach
creates administrative and offering uniformity and avoids the
need for QHPs to cross accumulate all patient cost-sharing,
including for dental services, to a single OOP maximum which
many health plans indicated they could not accomplish.
7)COVERED CALIFORNIA STANDARD BENEFIT DESIGNS .
-------------------------------------------------------------
|Procedure Categories |PPO High |PPO Low |HMO |HMO |
| |(Plan |(Plan |High |Low |
| |Pays) |Pays) |(copay|(copay|
| | | |s) |s) |
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|--------------------------+---------+----------+------+------|
|Diagnostic & Preventive | | | | |
|(D&P) | | | | |
|--------------------------+---------+----------+------+------|
|X-rays, Exams, Cleanings |100% |100% |0 |0 |
|Sealants | | | | |
|--------------------------+---------+----------+------+------|
|Office visit |n/a |n/a |0 |$20 |
|--------------------------+---------+----------+------+------|
|Basic Restorative |80% |50% |$40 |$95 |
|Services | | | | |
|--------------------------+---------+----------+------+------|
|Major Services: Crowns & |50% |50% |$365 |$365 |
|Casts, Prosthodontics, | | | | |
|Endodontics, | | | | |
|Periodontics, Oral | | | | |
|Surgery | | | | |
|--------------------------+---------+----------+------+------|
| |Enrollee |Enrollee | | |
| |Pays |Pays | | |
|--------------------------+---------+----------+------+------|
|Medically Necessary |50% |50% |$1,000|$1,000|
|Orthodontics | | | | |
|--------------------------+---------+----------+------+------|
|Deductible |$50 (not |$60 |None |None |
| |applied |(applied | | |
| |to D&P) |to all | | |
| | |services) | | |
|--------------------------+---------+----------+------+------|
|Annual Maximum |None |None |None |None |
|--------------------------+---------+----------+------+------|
|OOP Maximum |$1,000 |$1,000 |$1,000|$1,000|
| | | | | |
|--------------------------+---------+----------+------+------|
|Waiting periods |None |None |None |None |
|--------------------------+---------+----------+------+------|
|Actuarial Value |86% |72% |87% |72% |
-------------------------------------------------------------
8)PEDIATRIC AGE FOR BENEFITS . AB 1996 (Thomson), Chapter 795,
Statutes of 2002, requests the University of California to
assess legislation proposing a mandated benefit or service,
and prepare a written analysis with relevant data on the
medical, economic, and public health impacts of proposed
health plan and health insurance benefit mandate legislation.
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CHBRP was created in response to AB 1996 and extended for four
additional years in SB 1704 (Kuehl), Chapter 684, Statutes of
2006, and another four years in AB 1540 (Committee on Health),
Chapter 298, Statutes of 2009. In a 2013 CHBRP report to the
Legislature, "Policy Brief: Pediatric Dental and Pediatric
Vision Essential Health Benefits" CHBRP points out that the
ACA does not specify age eligibility guidelines for pediatric
dental and pediatric vision EHBs and California law is silent
as to the exact age of enrollees eligible for EHB pediatric
dental and pediatric vision benefits. The two benchmarks
specified in AB 1453 (Monning) Chapter 854, Statutes of 2012,
and SB 951 (Ed Hernandez), Chapter 866, Statutes of 2012, for
defining the supplemental benefit packages use two distinct
age guidelines. Healthy Families provides pediatric dental
benefits to beneficiaries up to age 19. BCBS FEDVIP
BlueVision plan provides pediatric vision benefits to
enrollees up to age 22. Therefore, the benefit packages may
be made available to differing age groups. CHBRP indicates
that the question of age eligibility for pediatric EHBs may be
resolved by the federal rule finalized on February 25, 2013,
which recommends that pediatric dental and pediatric vision
benefits be provided to children up to age 19, with a state
option to provide these benefits beyond age 19. CHBRP also
adds that California regulation or legislation may be
necessary to reconcile the differences between the California
legislation passed in September and this federal rule.
9)SUPPORT . The California Dental Association (CDA) supports
this bill because it will clarify state law to allow
stand-alone dental benefits in the Exchange, giving families
the most choice in their dental coverage. CDA states that
stand-alone dental benefits currently allow children to
maintain their dental coverage even when their medical
coverage changes. This bill also applies standard patient
protections to dental care, including that a patient receives
high value for their premiums. According to CDA, dental plans
will be treated fairly with respect to the MLR, because the
for dental the MLR is proposed to be 75%, less than the 80-85%
required of medical plans, less than the MLR required of
Healthy Families, and less than the MLR dental plans report to
DMHC and the Internal Revenue Service for their current plans.
CDA also supports this bill because it is not intended to
disrupt any of the current health or dental plan bids or
offerings currently in process at the Exchange.
Health Access writes in support that it strongly supported
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legislation adopted last year to implement EHBs, which
included pediatric dental benefits as required by federal law.
Health Access is very hesitant to allow the offering of any
benefit package which does not include all 10 EHBs. Health
Access learned from the bitter experience of maternity
coverage that carriers will slice and dice benefits if
permitted to do so, leaving much of the market without
affordable coverage that included maternity. Health Access
recognizes that today most dental coverage is sold on a
standalone basis. However, reconciling standalone dental
plans with the other consumer protections already in
California law is a real challenge. Health Access supports
the provisions of this bill that apply consumer protections
including timely access, network adequacy, and MLR to products
offered on both the CDI and DMHC side so that this bill will
level the playing field between the two regulators in terms of
stand-alone dental plans. The American Federation of State,
County and Municipal Employees also supports this bill because
it presents crucial consumer protections, including compliance
with minimum MLR and a 60 day review of rate changes by the
DMHC and CDI.
10)OPPOSE UNLESS AMENDED . According to the California
Association of Dental Plans (CADP), this bill would negatively
impact the affordability and availability of pediatric dental
EHB policies offered by dental plans in the small group market
both inside and outside the Exchange. CADP believes this bill
would result in diminished consumer choice and continuity of
dental care for Californians. Delta Dental and Kaiser
Permanente have concerns about coordinating with dental plans
and the age pediatric age requirement of 22.
a) MLR . According to CADP this bill imposes a 75% MLR on
the provision of pediatric dental EHB policies even though
the ACA exempts dental plans from the MLR requirement.
CADP indicates that a 75% MLR on a $15 dental HMO premium
would leave $3.75 per member per month for administrative
costs compared to 80% MLR on a $400 HMO premium would leave
$80 per member per month for administrative costs. CADP
indicates that while dental plans have many of the same
basic administrative functions as medical plans they have
to execute those functions for a fraction of the
administrative costs of medical plans. CADP is also
opposed to the rebate requirement because it could force a
dental plan that fails to meet the MLR threshold to mail
thousands of checks for possibly 10 cents or less and cost
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four times the rebate amount. Delta Dental indicates that
an uneven playing field will be created outside the
Exchange where an embedded dental benefit would escape the
MLR entirely by hiding its higher MLR under the health
plan's total MLR. Delta Dental requests the MLR provisions
be deleted or require a study period so that dental plans
could establish an MLR baseline or adopt an MLR consistent
with the National Association of Insurance Commissioners
recommendation of 65%.
b) Rate Review . CADP believes Covered California, as an
active purchaser, is a far better means of keeping premiums
in check than burdensome regulatory rate review
requirements. CADP points out that dental is different
than medical and that premiums have remained flat for over
a decade even trending downward in the last few years.
Delta Dental believes rate review is a significant and
unnecessary administrative burden that is inappropriate in
a dental context. Delta Dental expresses concerns about
introducing the administrative expense of rate review at
the same time the bill proposes a dental loss ratio.
c) Coordination of Cost-Sharing . Delta Dental argues for
keeping dental and medical OOP maximums separate and that
coordinating the two among the dental and health plans
represents an extreme challenge. According to Delta
Dental, the 2014 dental scheme that Delta Dental suggested
(and has been adopted in this bill) will take some time to
work out and that it is unwise to impose the changes
proposed for 2015. CADP indicates that this bill would
circumvent Covered California's decision, which was based
on federal guidance, to establish separate OOP maximums for
2014 medical EHB and pediatric dental EHB policies through
the imposition of a burdensome administrative process on
the QHP participating in the Exchange. CADP believes this
bill has plans jump through hoops in a time frame too short
to succeed and suggests this bill focus on the policy
direction for Covered California starting in 2015.
11)OPPOSITION . The California Association of Health Plans
(CAHP) opposes this bill because CAHP believes it will
interfere with the launch of Covered California. CAHP
believes this bill is not only poorly timed it reverses
Covered California's decision to establish separate OOP
maximums for medical and pediatric dental benefits. CAHP
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states that this bill imposes a new and burdensome
administrative process on health plans to track an enrollee's
medical OOP max and notify the dental plan so that the
pediatric dental OOP costs can be waived. Notwithstanding the
privacy concerns associated with the transfer of this
information, the new process envisioned by the bill would only
be in place for one year because in 2015 this bill combines
the medical and dental OOP without any regard for the
disruption this could cause. The Exchange developed benefit
designs carefully to comply with federal guidance and to keep
premiums affordable. Reversing Exchange policies
legislatively before it is fully operational is a mistake
because of the potential for increased cost. Anthem Blue
Cross believes this bill would make significant and burdensome
changes to the way specialized health plans are offered in the
small group market, both inside and outside of the Exchange.
Anthem believes the conflict in law is being addressed by the
Exchange, state regulators, and the federal agencies. Anthem
argues that this bill is inconsistent with constantly changing
rules that could disrupt planning and isn't realistically
achievable. Anthem believes if there is an MLR it should be
between 60-65%. Anthem indicates that combined OOP are not
achievable and will increase the costs of both the medical and
the dental plans. According to Anthem changing the age for
pediatric services will increase the costs of premiums for
19-22 year olds between 5-10%, and increase premiums for all
consumers as well.
12)PREVIOUS LEGISLATION .
a) AB 1453 and SB 951 establish California's EHBs.
b) AB 51 (Alquist), Chapter 644, Statutes of 2011, conforms
California law to provisions of the ACA related to MLR
requirements on health plan and health insurers and
prohibitions on annual and lifetime benefits.
c) AB 1602 (John A. P�rez), Chapter 655, Statutes of 2010,
establishes the Exchange as an independent public entity to
purchase health insurance on behalf of Californians,
including those with incomes of between 100% and 400% of
the FPL and small businesses. Clarifies the powers and
duties of the board governing the Exchange relative to the
administration of the Exchange, determining eligibility and
enrollment in the Exchange, and arranging for coverage
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under qualified insurers.
d) SB 900 (Alquist), Chapter 659, Statues of 2010,
establishes the Exchange and requires the Exchange to be
governed by a five-member board, as specified.
e) SB 1163 (Leno), Chapter 661, Statutes of 2010, requires
health plans and health insurers to file with DMHC and CDI
specified rate information for individual and small group
coverage at least 60 days prior to implementing any rate
change. Requires rate filings to be actuarially sound and
to include a certification by an independent actuary that
any increase is reasonable or unreasonable. Requires the
filings in the case of large group contracts only for
unreasonable rate increases prior to implementing any such
rate change. Increases, from 30 days to 60 days, the
amount of time that a health plan or insurer provides
written noticed to an enrollee or insured before a change
in premium rates or coverage becomes effective. Requires
health plans and insurers that decline to offer coverage to
or deny enrollment for a large group applying for coverage
or that offer small group coverage at a rate that is higher
than the standard employee risk rate to, at the time of the
denial or offer of coverage, provide the applicant with
reason for the decision, as specified.
f) AB 2179 (Cohn), Chapter 1594, Statutes of 2002, requires
DMHC and CDI to develop and adopt regulations to ensure
that enrollees have access to needed health care services.
13)IS PEDIATRIC DENTAL ESSENTIAL OR NOT, AND FOR WHOM?
According to the Institute of Medicine, in 2008, 4.6 million
children (one out of every 16 children in the US) did not
receive needed dental care because their families could not
afford it. Arguably, this is the reason why the pediatric
oral benefit was included as a mandated EHB. When the
Legislature passed the EHB bills last year, the policy
decision was made to make all 10 of the federally mandated
EHBs, state mandates. The Exchange has pursued a contracting
approach that is in conflict with state law by asking health
plans to submit bids for 9.5 out of the 10 EHBs. Some argue
that because federal law and regulations allow this 9.5
option, state law should conform to the approach taken by the
Exchange. This policy decision merits further consideration.
The federal regulations make clear in the Exchange an
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individual doesn't have to purchase the pediatric oral benefit
if the plan does not offer it.
Certainly individuals without children will choose the less
expensive 9.5 option and choose not to purchase a separate
pediatric oral policy they do not need. Some families may
also choose not to purchase the pediatric oral benefit for a
variety of reasons, including avoiding the added cost. This
option to avoid pediatric dental would not be presented if all
10 of the benefits were part of the mandatory package, as is
the case with maternity, prostate screening, and mental health
coverage. This bill establishes legislative intent that all
10 of the EHBs are "essential," but the pediatric services are
only essential for pediatric enrollees.
14)DISPARITIES OF INSIDE VS. OUTSIDE THE EXCHANGE . Under
federal rules, 9.5 EHB plans can be sold outside the Exchange
but a purchaser, whether he or she has children or not, must
also purchase a stand-alone pediatric dental EHB plan.
Embedded plans (those that cover all 10 EHBs) will also be
sold outside the Exchange. A person who purchases a plan
where the pediatric dental is embedded will automatically get
pediatric dental whether they need it or not, like maternity,
prostate screening, and mental health coverage. But as
indicated in comment 13) above, embedded plans will not be
available in the Exchange. When the Legislature passed the
bill authored by Speaker Perez which establishes the Exchange
a policy decision was made to require plans participating in
the Exchange to sell the same products outside the Exchange.
Once again, a conflict exists between state and federal law,
because federal regulations only allow an exemption for a
health plan outside of the Exchange from the pediatric dental
EHB offering if the health plan has reasonable assurance that
the enrollee has Exchange certified stand-alone dental
coverage already. This bill addresses this problem by
allowing health plans without pediatric dental to be sold both
inside and outside the Exchange.
15)OOP MAX . Further, there are additional disparities when one
compares the total OOP maximum for an individual with
pediatric dental embedded vs. a bundled or stand-alone
situation. In an embedded situation, there will be a total
OOP maximum tied to HSA limits (in 2014, no more than $6,400
for an individual and $12,800 for a family). This means that
a person or family with high medical and dental expenses will
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have full coverage once the OOP max is met. Cost sharing
toward the OOP will be coordinated by the health plan. In a
bundled and stand-alone situation there will be two separate
deductibles. The HSA limits described above for the health
plan and $1,000 for the dental plan. A consumer benefit of
this approach is that on the dental side, once a person
satisfies the $1,000 OOP all dental benefits will be covered.
It has been suggested that between 2-5% of children will reach
the $1,000 OOP max. A concern for consumers is that, the
total OOP maximum would now exceed the HSA limits because
effectively the total maximum amount expended by an enrollee
would be $7,400 and $13,800. Furthermore, without a
requirement for coordination, the enrollee will be responsible
for tracking his or her progress toward satisfying their cost
sharing up to the OOP limits.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
AFL-CIO
California Dental Association
Health Access California
Opposition
Anthem Blue Cross
Association of California Life and Health Insurance Companies
California Association of Health Plans
San Francisco Chamber of Commerce
United Concordia Dental
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097