BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 2299 (Nazarian) - Developmental services: health insurance copayments, coinsurance, and deductibles. Amended: August 4, 2014 Policy Vote: Human Services 4-0 Urgency: No Mandate: No Hearing Date: August 11, 2014 Consultant: Brendan McCarthy This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 2299 would broaden the eligibility for regional centers to pay copayments, coinsurance, and/or deductibles associated with private insurance coverage on behalf a regional center consumer. Fiscal Impact: It is uncertain how many regional center consumers would be eligible to have copayments, coinsurance, or deductibles paid on their behalf under the bill. The bill broadens eligibility to have such payments made by a regional center by making the requirement that the service or support be necessary to prevent institutionalization one of several criteria that would allow payments to be made (rather than that requirement being a prerequisite for potentially making such payments). Additionally, the bill would allow regional centers to make payments on a consumer's behalf if doing so would prevent the consumer from being dropped from private health care coverage. It is not known how many consumers fall into either of those categories. The following cost estimates are based on the current population receiving behavioral health treatments, the current costs to the regional centers to pay for copayments and deductibles, and assume that 30 percent to 50 percent of consumers with family incomes over 400 percent of the federal poverty level receive payments authorized in the bill. Ongoing administrative costs from $3 million to $5 million per year for regional centers to review consumer eligibility under the bill and to process reimbursements to consumers for copayments, coinsurance, and deductibles (General Fund and federal funds). Ongoing costs from $2 million to $3 million per year for AB 2299 (Nazarian) Page 1 regional centers to pay copayments and coinsurance costs for services and supports provided to consumers with family incomes over 400 percent of the federal poverty level who are not currently eligible for such payments (General Fund and federal funds). Unknown costs for regional centers to pay for deductibles charged for services and supports provided to consumers with family incomes over 400 percent of the federal poverty level who are not currently eligible for such payments (General Fund and federal funds). The regional centers have only recently been authorized to pay consumers' deductibles. Therefore, no information is available about the average cost to do so. Given the variety of health care coverage benefit designs available, it is difficult to project the costs to make such payments. However, if a significant number of consumers who are eligible for payments under the bill have health care coverage with a high deductible, the annual costs could be in the tens of millions per year. Potential avoided costs to the regional centers from $5 million to $10 million per year, providing that the payments made by regional centers under the bill allow consumers to keep their private health care coverage. There are indications that some consumers have dropped their private health care coverage, rather than pay high copayments, coinsurance, or (particularly) deductibles. If a consumer drops his or her private health care coverage then the regional center becomes responsible for paying the entire cost services and supports the consumer is entitled to. If 5 percent to 10 percent of eligible consumers were to drop their private coverage, the costs to the regional centers would be $5 million to $10 million per year. Background: California provides community-based services to approximately 250,000 persons with developmental disabilities and their families through a statewide system of 21 regional centers. Regional centers are private, nonprofit agencies under contract with the Department of Developmental Services for the provision of various services and supports to people with developmental disabilities. As a single point of entry, regional centers provide diagnostic and assessment services to determine eligibility; convene planning teams to develop an Individual Program Plan for each eligible consumer; and either provide or AB 2299 (Nazarian) Page 2 obtain from generic agencies appropriate services for each consumer in accordance with the Individual Program Plan. Over the past several years, there have been a number of medical entities that have concluded that intensive behavioral treatments are effective in treating children and adults with autism. There are a several different types of behavioral health treatment. One of the best-known and most commonly accepted as being an evidence-based practice is Applied Behavioral Analysis. Current state law (SB 946, Steinberg, Statutes of 2011) specifically requires health plans and health insurers to cover behavioral health therapy for pervasive development disorder or autism. Under current law, behavioral health treatment includes Applied Behavior Analysis and other evidence-based behavior intervention programs. Because state law now mandates coverage for behavioral health treatment, private insurers and health plans are now responsible for paying for treatments that had previously been paid for by regional centers. Under current law, regional center consumers and their families are not required to share in the costs of service for behavioral health treatments provided by regional center vendors. As consumers with private health care coverage have shifted to receiving behavioral health treatment from private health care coverage, consumers and their families have become liable to pay for copayments, coinsurance, and/or deductibles required by their coverage. Advocates have raised the issue that this requirement has imposed a financial hardship on many families, as the high cost of behavioral health treatments can result in significant out-of-pocket expenditures by consumers and their families. As part of the 2013 Budget Act, the state authorized regional centers to pay copayments and/or coinsurance for consumers whose family income is up to 400 percent of the federal poverty level. The recently enacted 2014 Budget Act expanded this eligibility to include the payment of deductibles for consumers whose family income is up to 400 percent of the federal poverty level. In addition, current law authorizes regional centers to pay for copayments, coinsurance, and/or deductibles on behalf of AB 2299 (Nazarian) Page 3 consumers whose family income exceeds 400 percent of the federal poverty level if certain conditions are met. Specifically, those payments can be made if the services is necessary to maintain the consumer at home or in the least-restrictive setting and if 1) there is an extraordinary that impacts the family's ability to make the payments, or 2) there is a catastrophic loss that limits the family's ability to make the payments, or 3) the family has significant unreimbursed medical costs associated with the consumer or another child. Proposed Law: AB 2299 would broaden the eligibility for regional center consumers to have copayments, coinsurance, and/or deductibles associated with private insurance coverage paid on behalf of the consumer by a regional center. Specifically, the bill would: Delete the requirement that payments can only be made by a regional center on behalf of a consumer with family income over 400 percent of the federal poverty level only if the service is necessary to maintain the consumer in the home or in the least restrictive setting; Authorize regional centers to make payments on behalf of consumers with family incomes over 400 percent of the federal poverty level if the services or support is necessary to maintain the consumer in the home or least restrictive setting; Authorize regional centers to make payments on behalf of consumers with family incomes over 400 percent of the federal poverty level if the payments made by the regional center will allow the consumer to maintain health care coverage (i.e. the payments will prevent the consumer from dropping his or her private coverage due to the inability to pay the copayments, coinsurance, or deductibles). Related Legislation: SB 163 (Hueso, 2013) would have required regional centers to pay any copayment, coinsurance, or deductible required for services or supports provided to a regional center consumer by private health care coverage. That bill was held on this committee's Suspense File. AB 2041(Jones) would define the professional activities and the educational and training requirements necessary for vendorization by a regional center as a Behavior Management Assistant or a Behavior Management Consultant. That bill is AB 2299 (Nazarian) Page 4 on this committee's Suspense File. Staff Comments: The bill authorizes regional centers to make payments to pay for copayments, coinsurance, or deductibles if such payments will maintain the consumer's private health care coverage. In other words, a regional center may make payments if the consumer is likely to drop his or her private health care coverage if the regional center does not cover those costs. The intention of this change to current law is to prevent consumers from being dropped from their private coverage because they cannot afford the cost sharing associated with expensive services, such as behavioral health treatments. In practice, it will be very difficult for regional centers to determine which consumers are likely to drop coverage if they do not receive such payments. The regional centers are likely to be put in a position where they will have to analyze the income and household budget information from a consumer's family to determine how likely the family is to maintain the private health care coverage without payments from the regional center for copayments, coinsurance, or deductibles.