BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 219 (Perea) - Health care coverage: cancer treatment. Amended: July 2, 2013 Policy Vote: Health 7-2 Urgency: No Mandate: Yes Hearing Date: August 12, 2013 Consultant: Brendan McCarthy This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 219 would require health plans and health insurers the cover orally-administered anti-cancer medications to limit enrollee costs to no more than $100 per filled prescription. Fiscal Impact: One-time costs of $70,000 in 2013-14 and $90,000 in 2014-15 for review of health plan filings by the Department of Managed Health Care. Ongoing enforcement costs are expected to be minor (Managed Care Fund). Minor ongoing enforcement cost by the Department of Insurance (Insurance Fund). No costs to state-run health care programs. The Medi-Cal, Healthy Families, and Access for Infants and Mothers programs have limited or no cost sharing. CalPERS health plans all have enrollee copayment amounts for prescription drugs that are less than $100 per prescription. No costs to provide subsidies for mandated benefits in the California Health Benefit Exchange (General Fund). See below. Background: Under current law, health plans are regulated by the Department of Managed Care and health insurers are regulated by the Department of Insurance. Current law and regulation place a variety requirements and restrictions on health plans and health insurers. Under current law and practice, intravenous anticancer AB 219 (Perea) Page 1 medications may be treated differently than oral anticancer medication when it comes to cost-sharing by patients. Often, intravenous anticancer medications are provided in a doctor's office or hospital and are covered as a medical benefit. On the other hand, oral anticancer medications are often covered under a pharmacy benefit. It is common for health plans and health insurers to have limited copayment requirements or coinsurance requirements for medical benefits; whereas larger copayment requirements or significant coinsurance requirements may apply to pharmacy benefits. Thus, a patient could pay significantly more in out-of-pocket costs for oral anticancer drugs than intravenous anticancer drugs. Under the federal Patient Protection and Affordable Care Act (Affordable Care Act), health plans and health insurers that offer coverage in the individual market or the small group market must provide coverage that is equivalent to the benefits of a specified essential health benefits benchmark plan. Federal guidance allows states to determine which plan will be the benchmark plan. The state has selected the Kaiser Small Group HMO as the state's essential health benefit benchmark plan. Also under the Affordable Care Act, individuals with household income less than 400 percent of the federal poverty level and certain small businesses purchasing health plans through the California Health Benefit Exchange will be eligible for subsidies. The Affordable Care Act requires a state to pay for the subsidies attributable to any state-mandated benefits that are not provided under the benchmark plan. Proposed Law: AB 219 would require health plans and health insurers the cover orally-administered anti-cancer medications to limit enrollee costs to no more than $100 per filled prescription. Specific provisions of the bill would: Implement the cost limitations for health plans and insurance policies in the large group market on January 1, 2014; Implement the cost limitations for health plans and insurance policies in the small group or individual market on January 1, 2015; Exempt high-deductible health plans and insurance policies when the deductible has not been met. AB 219 (Perea) Page 2 Related Legislation: AB 1000 (Perea, 2011) would have prohibited health plans and health insurers that cover prescription drugs and chemotherapy treatment from imposing higher copayments, deductibles, or coinsurance for oral anticancer drugs than would be imposed for intravenous anticancer drugs. That bill was vetoed by Governor Brown. SB 961 (Wright, 2010) was substantially similar to AB 1000 (Perea, 2011). That bill was vetoed by Governor Schwarzenegger. SB 161 (Wright, 2009) was substantially similar to AB 1000 (Perea, 2011). That bill was vetoed by Governor Schwarzenegger. AB 460 (Ammiano) would add non-discrimination language to the current mandate to offer infertility treatment. That bill will be heard in this committee. AB 889 (Frazier) would limit the ability of health insurers and health plans to use step therapy protocols for prescription drugs. That bill will be heard in this committee. AB 912 (Quirk-Silva) would require large group health plans or health insurance policies to provide coverage for fertility preservation services when a necessary medical treatment may cause infertility in the patient. That bill will be heard in this committee. Staff Comments: According to the California Health Benefits Review Program, the changes to enrollee cost-sharing in AB 219 do not constitute a new or expanded benefit mandate, as defined in federal law or regulation. Therefore, there would be no obligation on the state to provide subsidies for coverage through the California Health Benefit Exchange. Under the bill, the only costs that may be incurred by a local agency relate to crimes or infractions. Under the California Constitution, such costs are not reimbursable by the state. Proposed Author Amendments: Would delay implementation of the cost limitations in the large group market until January 1, 2015. AB 219 (Perea) Page 3