BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 163 (Hueso) - Developmental services: health insurance
payments.
Amended: April 25, 2013 Policy Vote: Human Services 6-0
Urgency: No Mandate: No
Hearing Date: May 6, 2013 Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 163 would require regional centers to pay any
co-payment, co-insurance, or deductible required under a health
plan or health insurance policy that provides coverage for
services included in a regional center consumer's Individual
Program Plan or Individualized Family Service Plan.
Fiscal Impact:
One-time costs between $150,000 and $300,000 for the
adoption of regulations by the Department of Developmental
Services (General Fund).
Ongoing administrative costs in the low millions per year
to manage payments to families or insurance companies and
health plans by the regional centers (General Fund).
Potential annual costs in the tens of millions to pay for
regional center consumers' health insurance deductibles
(General Fund). See below.
Background: The Department of Developmental Services is
responsible for coordinating care and services for about 250,000
people with developmental disabilities. The vast majority of
these people are served by 21 regional centers, which are
non-profit entities that contract with the state. The regional
centers, in turn, contract with a variety of vendors to provide
direct services to the developmentally disabled.
Current law generally requires regional centers to pay for
services only to the extent that other payers (such as
commercial insurance) do not provide coverage for those
services. Health plans and health insurers require covered
individuals to share in health care costs through co-payments
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(where the individual is required to pay a flat fee for a
service), co-insurance (where the individual pays a portion of
the total cost of the service), and/or deductibles (where the
individual is responsible for paying for all health care costs
up to a specified amount).
SB 946 (Steinberg, Statutes of 2011) explicitly requires health
plans and health insurers to cover behavioral health treatment
for pervasive developmental disorders or autism.
Following the implementation of SB 946, health plans and health
insurers now provide coverage for behavioral health treatments
that had previously been provided by regional centers. The costs
of these treatments can be significant and thus cost-sharing
required by health plans and health insurers may impose a
significant cost on families receiving these services (which
previously have been provided by regional centers at no cost to
the family).
It does not appear that the regional centers have been
consistent in whether they will pay for cost-sharing required
under commercial coverage. There have been at least two
decisions by administrative law judges regarding a regional
center's responsibility to pay for a consumer's out-of-pocket
costs when behavioral health services are covered by the
consumer's health insurance. In one of those rulings, the
regional center was ordered to pay for the consumer's
copayments. In the second ruling, the regional center was
ordered to pay the consumer's deductible. Staff is not aware of
any precedent setting court case in this area that specifically
address insurance cost-sharing.
Proposed Law: SB 163 would require regional centers to pay any
co-payment, co-insurance, or deductible required under a health
plan or health insurance policy that provides coverage for
services included in a regional center consumer's Individual
Program Plan or Individualized Family Service Plan.
The bill would prohibit regional centers from charging consumers
or their families any cost sharing for this coverage.
The bill requires the Department of Developmental Services to
establish application and documentation forms to implement the
bill.
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Staff Comments: The Governor's 2013-14 budget proposal includes
an increase in the current year of $15 million for the regional
centers to pay for co-pays and co-insurance required under
commercial insurance and health plans that are providing
behavioral health treatments to regional center consumers. (This
amount does not appear to include the costs of paying for
deductibles, which to date the regional centers do not appear to
have paid in any significant amount.)
The Governor's budget proposal also includes trailer bill
language to limit payments by regional centers. The proposed
trailer bill language would limit regional center coverage of
co-pays and co-insurance to those consumers whose family income
is below 400 percent of the federal poverty level and prohibit
payments to cover deductibles. The budget proposal indicates
that adopting these measures to control costs will reduce the
annual cost of covering co-payments and co-insurance by about $5
million per year.
Based on the requirements of the Lanterman Act and case law, it
seems very likely that the state already has an obligation to
pay for copayments and coinsurance costs, when private insurance
provides coverage for a service for which a consumer is entitled
under the Lanterman Act.
The state's obligation to pay for deductibles is less clear. In
a typical health plan or insurance plan with a deductible, the
enrollee is required to pay all medical costs out-of-pocket
until annual costs reach the deductible. At that point, the
health plan or insurance policy begins paying the costs of
service, often with a copayment or coinsurance requirement.
Typically, health plans and health insurance do not separate out
deductibles for different medical conditions or treatments. If a
regional center pays for the entire cost of a consumer's
deductible, and the consumer receives both behavioral services
(entitlements under the Lanterman Act) and regular health
services (not covered under the Lanterman Act), state funds may
end up subsidizing health care services for which the consumer
is not entitled.
In addition, health plans and insurance policies for a family
often include deductibles for both covered individuals and the
family as a group. By requiring regional centers to pay for any
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deductible, bill may lead to the regional centers subsidizing
health care costs of non-developmentally disabled family members
of regional center consumers.
The extent to which this will occur is unknown. Given the number
of consumers currently receiving behavioral services under
commercial coverage and typical deductibles available in the
state, the cost to the state for paying deductibles could be in
the millions to tens of millions per year.
On the other hand, if the families of regional center consumers
are required to pay very large out-of-pocket costs to receive
services from private insurance, some families may elect to
cancel their insurance policy or drop the consumer from their
family's policy. In that case, the total cost of providing those
services to the consumer would once again be a regional center
responsibility.