BILL ANALYSIS                                                                                                                                                                                                    Ó

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          Date of Hearing:  August 13, 2013

                            ASSEMBLY COMMITTEE ON HEALTH
                                 Richard Pan, Chair
                 SB 639 (Ed Hernandez) - As Amended:  August 6, 2013

           SENATE VOTE  :  28-11
          SUBJECT  :  Health care coverage.

           SUMMARY  :  Places in California law provisions of the Patient  
          Protection and Affordable Care Act (ACA) relating to  
          out-of-pocket limits on health plan enrollee and health insured  
          cost-sharing, health plan and insurer actuarial value coverage  
          levels and catastrophic coverage requirements, and requirements  
          on health insurers with regard to coverage for out-of-network  
          emergency services.  Applies health plan enrollee and insured  
          out-of-pocket limits to specialized products that offer  
          essential health benefits (EHBs), requires the same deductibles  
          on the same benefits and requires review by health plan and  
          insurer regulators of individual market products that are not  
          standardized through the California Health Benefit Exchange  
          (Exchange).  Specifically,  this bill  :  

          1)Permits health care service plan contracts to charge  
            subscribers and enrollees a copayment or a deductible for a  
            basic health care service consistent with 3) and 4) below.

          2)Prohibits a waiver of the obligation of the plan of any  
            provision of the Knox-Keene Act Health Care Service Plan Act  
            of 1975 (Knox-Keene Act) when the plan delegates any services  
            it is required to perform to its medical groups, independent  
            practice associations, or other contracting entities.

          3)Requires a health care service plan contract or a health  
            insurance policy for nongrandfathered products, except a  
            specialized health insurance policy, in the individual and  
            small group market that is issued, amended or renewed on or  
            after January 1, 2014, to provide for a limit on annual  
            out-of-pocket expenses for all covered benefits that meet the  
            definition of EHBs.

          4)Requires a health care service plan contract or a health  
            insurance policy for nongrandfathered products, except a  
            specialized health insurance policy, in the large group market  


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            that is issued, amended, or renewed on or after January 1,  
            2014, to provide for a limit on annual out-of-pocket expenses  
            for covered benefits, including out-of-network emergency care  
            consistent with existing law.  Limits this provision to EHBs  
            covered under the policy to the extent that this bill does not  
            conflict with federal law or guidance on out-of-pocket  
            maximums for nongrandfathered products in the large group  

          5)Requires, for the first plan year commencing on or after  
            January 1, 2014, 4) above to be satisfied if both apply:
             a)   The product complies with the requirements of 4) with  
               respect to basic health care services; and,
             b)   To the extent the product includes an out-of-pocket  
               maximum on coverage other than basic health care services  
               that the out-of-pocket maximum also does not exceed the  
               limit established pursuant to 4) above.

          6)Applies the limit described in 3) and 4) above to any  
            copayment, coinsurance, deductible, incentive payment, and any  
            other form of cost sharing for all covered benefits, including  
            prescription drugs, as specified.

          7)Prohibits the limit described in 3) and 4) from exceeding the  
            ACA limit and any subsequent rules, regulations or guidance.

          8)States that nothing in this bill should be construed to affect  
            the reduction of any cost sharing for eligible enrollees  
            pursuant to the ACA.

          9)Applies the limit described in 3) thru 7) above, effective  
            January 1, 2015, if an EHB is offered by a specialized health  
            insurance policy so that the total annual out-of-pocket  
            maximum for all EHBs does not exceed the limit in 3) thru 7).   
            This does not apply to a specialized health insurance policy  
            that does not offer EHBs.

          10)                                Prohibits, for a small  
            employer health, a care service plan contract or health  
            insurance policy offered, sold, or renewed on or after January  
            1, 2014, the deductible under the plan or policy from  
            exceeding $2,000 for a single individual and $4,000 in the  
            case of any other plan contract or policy.  Requires the  
            dollar amounts to be indexed consistent with the ACA and any  
            federal rules or guidance.  Requires this limitation to be  


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            applied in a manner that does not affect the actuarial value  
            of any small employer health care service plan contract.   
            Allows the Department of Managed Health Care (DMHC) or the  
            California Department of Insurance (CDI) for small group  
            products at the bronze level of coverage to offer a higher  
            deductible in order to meet the actuarial value requirement of  
            the bronze level.  Requires DMHC/CDI to consider affordability  
            of cost sharing for enrollees and whether enrollees may be  
            deterred from seeking appropriate care because of higher cost  
            sharing.  States that nothing in this provision allows a plan  
            contract to have a deductible that applies to preventive  
            services, as specified.

          11)                                Establishes the following  
            levels of coverage for the nongrandfathered individual and  
            small group market:
             a)   Bronze level - coverage that is actuarially equivalent  
               to 60% of the full actuarial value of the benefits provided  
               under the plan contract;
             b)   Silver level - coverage that is actuarially equivalent  
               to 70% of the full actuarial value of the benefits provided  
               under the plan contract;
             c)   Gold level - coverage that is actuarially equivalent to  
               80% of the full actuarial value of the benefits provided  
               under the plan contract; and,
             d)   Platinum level - coverage that is actuarially equivalent  
               to 90% of the full actuarial value of the benefits provided  
               under the plan contract.   

          12)                                Requires the actuarial value  
            for nongrandfathered individual and small group health care  
            service plan contracts or health insurance policies to be  
            determined in accordance with the following:
             a)   Cannot vary by more than plus or minus 2%;
             b)   Must be determined on the basis of EHBs and as provided  
               to a standard, nonelderly population (not individuals on  
               Medi-Cal or Medicare);
             c)   Allows DMHC/CDI to use the actuarial value methodology  
               developed consistent with the ACA;
             d)   Requires, for pediatric dental benefits whether offered  
               by a full service plan or insurance policy or a specialized  
               plan or policy, the actuarial value to be consistent with  
               federal law and guidance;
             e)   Requires DMHC/CDI, in consultation with each other and  
               the Exchange, to consider whether to exercise state-level  


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               flexibility with respect to the actuarial value calculator  
               in order to take into account the unique characteristics of  
               the California health care coverage market, including the  
               prevalence of health care service plans, total cost of care  
               paid for by the carrier, price of care, patterns of service  
               utilization, and relevant demographic factors; and,
             f)   For small group, requires employer contributions toward  
               health reimbursement accounts and health savings accounts  
               to count toward the actuarial value of the product in the  
               manner specified in federal rules and guidance.

          13)                                Requires for all products in  
            the nongrandfathered individual and small group market  
            commencing January 1, 2015, any deductible to apply to the  
            same service for any product in the same level of coverage  
            whether regulated by DMHC or CDI.

          14)                                Defines a catastrophic plan  
            as a health care service plan contract or health insurance  
            policy that provides no benefits for any plan year until the  
            enrollee has incurred cost-sharing expenses in an amount equal  
            to the annual limit on out-of-pocket costs as specified in 3)  
            above except requires that it provide coverage for at least  
            three primary care visits. 

          15)                                Prohibits a carrier that is  
            not participating in the Exchange from offering, marketing, or  
            selling a catastrophic plan in the individual market.

          16)                                Authorizes catastrophic plans  
            or policies to be offered only if either of the following  
             a)   The individual purchasing the plan has not yet attained  
               30 years of age; or,
             b)   The individual has a certificate of exemption from the  
               federal individual mandate because the individual is not  
               offered affordable coverage or because the individual faces  

          17)                                Makes nongrandfathered  
            products in the individual market which are not standardized  
            products as provided in the Exchange to be subject to review  
            by DMHC/CDI consistent with this bill prior to product  
            approval.  Requires this provision to also apply to carriers  
            offering specialized health insurance policies that provide  


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            coverage of an EHB, as specified.
          18)                                Requires DMHC/CDI to publicly  
            post information on nonstandardized products no less than 60  
            days prior to the date on which the product is approved.  For  
            the purposes of products offered by the Exchange, requires  
            DMHC/CDI to post nonstandardized products for review 60 days  
            prior to the finalization of any contract between the Exchange  
            and the health care service plan. 

          19)                                Requires for each proposed  
            nonstandardized product, the carrier to provide to DMHC/CDI  
            the following:
             a)   Whether the product was proposed to the Exchange and any  
               written information from the Exchange on whether the  
               product was approved, denied, or modified;
             b)   The estimated actuarial value of the proposed product  
               and the actuarial value tier of the proposed product;
             c)   The anticipated impact on risk mix of plan enrollees  
               purchasing the proposed product, including information on  
               the risk mix of enrollees purchasing the same or similar  
               products in prior years; and,
             d)   Any benefit to consumers, including anticipated impact  
               on premiums.

          20)                                Requires DMHC/CDI to review  
            and take public comment on the nonstandardized products for  
            the following: 
             a)   Whether the proposed product is likely to affect the  
               risk adjustment scores or reinsurance amounts for the  
               product or the plan;
             b)   Whether the consumer will be provided additional or more  
               comprehensive benefits;
             c)   Whether the proposed product has a disproportionate  
               impact on individuals with high health care needs and the  
               anticipated impact on premiums; and,
             d)   Whether the proposed product is otherwise consistent  
               with existing law. 

          21)                                Requires if the product is  
            approved or modified, the approved product to be posted.

          22)                                Requires nothing in this bill  
            to be interpreted to prohibit a carrier from offering  
            supplemental benefits for services that are not included in  


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            EHBs, including adult dental, adult vision, acupuncture, or  
            chiropractic, if the plan/insurer demonstrates to the  
            satisfaction of the director of DMHC or the Insurance  
            Commissioner that those benefits will not affect the risk  
            adjustment scores or the reinsurance amounts for the product  
            or the plan.  Requires for a plan/insurer to continue to offer  
            a supplemental benefit, the plan to annually provide to  
            DMHC/CDI information necessary to determine whether the  
            benefit has affected the risk mix in the prior plan year.

          23)Requires a group or individual health insurance policy  
            issued, amended, or renewed on or after January 1, 2014, that  
            provides or covers any benefits with respect to service in an  
            emergency department of a hospital to cover emergency services  
            as follows:
             a)   Without the need for any prior authorization  
             b)   Regardless of whether the health care provider  
               furnishing the services is a participating provider with  
               respect to those services; 
             c)   In a manner so that, if the services are provided to an  
               insured by a nonparticipating healthcare provider, with or  
               without prior authorization; the services will be provided  
               without imposing any requirement under the policy for prior  
               authorization of services or any limitation on coverage  
               that is more restrictive than the requirements or  
               limitations that apply to providers who do have a  
               contractual relationship with the insurer; and, 
             d)   If the services are provided to an insured  
               out-of-network, the cost-sharing requirement, expressed as  
               a copayment amount or coinsurance rate, is the same  
               requirement that would apply if the services were provided  

          24)Defines "emergency services" with respect to an emergency  
            medical condition as:
             a)   A medical screening examination that is within the  
               capability of the emergency department of a hospital,  
               including ancillary services routinely available to the  
               emergency department to evaluate that emergency condition.
             b)   Within the capabilities of the staff and facilities  
               available at the hospital, further medical examination and  
               treatment as are required under federal law to stabilize  
               the patient.  


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          EXISTING LAW  :

          1)Provides for regulation of health plans by the DMHC under the  
            Knox-Keene Act and regulation of health insurers by the CDI  
            under the Insurance Code.

          2)Defines basic health care services under the Knox-Keene Act  
             a)   Physician services, including consultation and referral;
             b)   Hospital inpatient service and ambulatory care services;
             c)   Diagnostic laboratory and diagnostic and therapeutic  
               radiologic services;
             d)   Home health services;
             e)   Preventive health services;
             f)   Emergency health care services, including ambulance and  
               ambulance transport services, and out-of-area coverage;  
             g)   Hospice care, as specified.

          3)States that nothing in existing law, as specified, prohibits a  
            health plan from charging subscribers or enrollees a copayment  
            or a deductible for a basic health care service or from  
            setting forth, by contract, limitations on maximum coverage of  
            basic health care services, provided that the copayments,  
            deductibles, or limitations are reported to, and held  
            unobjectionable by, the DMHC Director and set forth to the  
            subscriber or enrollee pursuant to specified disclosures.

          4)Requires a health care service plan that covers hospital,  
            medical, or surgical expenses, or its contracting medical  
            providers, to provide 24-hour access for enrollees and  
            providers including, but not limited to, noncontracting  
            hospitals, to obtain timely authorization for medically  
            necessary care, for circumstances where the enrollee has  
            received emergency services and care is stabilized, but the  
            treating provider believes that the enrollee may not be  
            discharged safely.

          5)Requires every health care service plan that provides  
            prescription drug benefits to maintain an expeditious process  
            by which prescribing providers may obtain authorization for a  
            medically necessary nonformulary prescription drug.  Requires  
            nonformulary prescription drugs to include any drug for which  


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            an enrollee's copayment or out-of-pocket costs are different  
            than the copayment for a formulary prescription drug, except  
            as otherwise provided by law or regulation or in cases in  
            which the drug has been excluded in the plan contract pursuant  
            to existing law.

          6)Enacts, in federal law, the ACA to, among other things, make  
            statutory changes affecting the regulation of, and payment  
            for, certain types of private health insurance.  Includes the  
            definition of an EHBs package that all qualified health plans  
            (QHPs) must cover, at a minimum, with some exceptions, and  
            requires bronze, silver, gold, or platinum levels of coverage.  
             Prohibits out-of-pocket limits greater than HSAs in all  
            markets. Under federal guidance only for the first plan year  
            beginning on or after January 1, 2014, allows for group  
            coverage the annual limitation on out-of-pocket maximums to be  
            satisfied if both of the following conditions are satisfied:
             a)   The plan complies with the requirements with respect to  
               its major medical coverage (excluding, for example,  
               prescription drug coverage and pediatric dental coverage);  
             b)   To the extent the plan or any health insurance coverage  
               includes an out-of-pocket maximum on coverage that does not  
               consist solely of major medical coverage (for example, if a  
               separate out-of-pocket maximum applies with respect to  
               prescription drug coverage), such out-of-pocket maximum  
               does not exceed HSA limits.

          7)Prohibits all health insurance issuers from setting lifetime  
            limits.  Prohibits "restricted annual limits" on coverage  
            through 2013 subject to oversight by the Secretary of the  
            federal Department of Health and Human Services with no annual  
            limits allowed starting in 2014 to new plans in the individual  
            market, and all new and existing group plans but excludes  
            self-insured plans.

          8)Requires if an insurance issuer covers emergency services, the  
            issuer to cover emergency services without prior  
            authorization, whether or not the provider is a participating  
            provider without imposing any limitation on coverage where the  
            provider does not have a contractual relationship with the  
            plan that is more restrictive than the requirements or  
            limitations that apply to providers who do have a contractual  
            relationship with the issuer.  If such services are provided  
            out-of-network, the cost-sharing requirement (expressed as a  


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            copayment amount or coninsurance rate) is the same requirement  
            that would apply if such services were provided in-network.

          9)Establishes the Exchange (now called Covered California) as an  
            independent entity in state government not affiliated with any  
            state agency or department, governed by a five member board.   
            Requires the board to establish and use a competitive process  
            to select participating carriers and other contractors.   
            Requires the board to determine the minimum requirements a  
            carrier must meet to be considered for participation, and the  
            standards and criteria for selecting QHPs to be offered  
            through the Exchange that are in the best interests of  
            qualified individuals and qualified small employers.  Requires  
            in the course of selective contracting for health care  
            coverage the board to seek to contract with carriers choices  
            that offer the optimal choice, value, quality, and service.   
            Authorizes the board to standardize products to be offered in  
            the Exchange.

          10)   Requires carriers participating in the Exchange to fairly  
            and affirmatively offer, market, and sell in the Exchange at  
            least one product within each of five coverage categories of  
            the ACA (Bronze, Silver, Gold, Platinum, Catastrophic).   
            Authorizes the board to require carriers to sell additional  
            products within each of those levels of coverage.  Requires  
            carriers participating in the Exchange that sell any products  
            outside the Exchange to fairly, affirmatively offer, market  
            and sell all individual and small group market products sold  
            inside the Exchange to individuals and small employers  
            purchasing outside the Exchange.  Requires carriers that do  
            not participate in the Exchange to offer at least one  
            standardized product that has been designated by the Exchange  
            in each of the four levels of coverage (Bronze, Silver, Gold,  
            and Platinum), only if the board exercises its authority to  
            standardize products.

          11)   Establishes as California's EHBs the Kaiser Small Group  
            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;


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             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.

          12)   Requires in federal law, under provisions of the federal  
            Emergency Medical Treatment and Active Labor Act, and in state  
            law, hospital emergency department to provide emergency  
            screening and stabilization services without regard to the  
            patient's insurance status or ability to pay.
          FISCAL EFFECT  :  According the Senate Appropriations Committee,  
          one-time costs of $400,000 to review plan filings and ongoing  
          costs of $60,000 for enforcement of the bill's provisions by  
               DMHC (Managed Care Fund).  Potential ongoing costs in the tens  
          of thousands to low hundreds of thousands for enforcement of the  
          bill's provisions by CDI. (Insurance Fund).

           COMMENTS  :

           1)PURPOSE OF THIS BILL  .  According to the author, the DMHC and  
            the CDI are currently reviewing and approving Exchange  
            products with no statutory authority to enforce the  
            requirements of the ACA with respect to cost sharing.  As  
            such, this bill codifies several provisions of the ACA related  
            to cost sharing, coverage tiers, and emergency services.  The  
            author states that the ACA limits maximum out-of-pocket costs  
            for all health insurance to $6500 for an individual and about  
            $13,000 for a family: these limits are consistent with those  
            for HSAs.  This bill specifies that the maximum out-of-pocket  
            limits apply to EHBs as defined in state and federal law.  All  
            cost sharing, including not only the deductible but any  
            copays, coinsurance, or other cost sharing applies toward the  
            maximum out-of-pocket limit.  In addition, consistent with  
            federal law, this bill codifies the requirement that  
            deductibles for small employer products are limited to $2,000  
            for an individual and $4,000 for a family, consistent with the  
            ACA provisions. This bill codifies the precious metal tiers of  
            the ACA.  The ACA categorizes coverage in the individual and  
            small employer markets into five tiers (Bronze, Silver, Gold,  
            Platinum, Catastrophic) based on actuarial value, that is, the  
            percent of health costs covered across a population.   
            According to the author, states have the opportunity to adopt  
            a state-specific actuarial value calculator:  because  


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            utilization is different in California (such as shorter  
            hospital stays), a California-specific calculator is  
            important. This bill permits DMHC and CDI to adopt a  
            California-specific calculator.

            This bill also requires insurers and health plans to submit  
            for review to regulators nonstandardized products to be sold  
            in the individual market outside the Exchange.  The author  
            indicates that this bill does not eliminate innovation in  
            benefit design; instead it requires public scrutiny and  

           2)FEDERAL HEALTH REFORM  .  On March 23, 2010, the federal  
            government enacted the ACA (Public Law 111-148), which was  
            further amended by the Health Care Education Reconciliation  
            Act (H.R. 4872).  The ACA, as modified by the U.S. Supreme  
            Court ruling, gives states the option to expand eligibility in  
            the Medicaid program to include adults without children, and  
            it contains other required program simplifications.  Regarding  
            the private health insurance market, the ACA primarily  
            restructures the individual and small group markets, setting  
            minimum standards for health coverage, providing financial  
            assistance to individuals with income below 400% of the  
            federal poverty level (FPL), tax credits for small employers,  
            and the establishment of Health Benefit Exchanges and EHBs  
            that are required to be offered by QHPs, which are plans  
            participating the small group and individual market through  
            Exchanges and in the market outside Exchanges.  Beginning in  
            2014, QHPs will be required to offer coverage at one of four  
            levels:  bronze, silver, gold, or platinum and a catastrophic  
            plan which can only be offered by plans participating in the  
            Exchange.  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 HSA-qualified High Deductible Health  
            Plans (HDHPs).  In 2014, the annual out-of-pocket maximum for  
            an individual is $6,350 and $12,700 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 out-of-pocket limits for HSA-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  


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            annually after.

             S ome 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 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.  Limitations on Exchange plans  
            related to out-of-pocket costs will be based upon HDHPs that  
            qualify individuals for HSAs.  Cost sharing subsidies will  
            further reduce those out-of-pocket 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%  

           3)PEDIATRIC DENTAL EHB  .  The ACA and subsequent regulations and  
            federal guidance establish separate requirements for pediatric  
            dental EHBs provided by specialized dental plans (sometimes  
            referred to as stand-alone plans).  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 federal rule clarified  
            that an exchange is responsible for determining the level of  
            "reasonable" annual limits.  For the federal Exchange, the  
            federal Centers on Medicare and Medicaid Services 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.

          Additionally, the ACA and implementing regulations exclude  
            stand-alone dental plans from the cost-sharing reduction  
            requirements placed on medical QHPs.  According to federal  
            guidance, 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.  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 either a low level of coverage  


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            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%.  The Exchange has adopted standard benefit plans for the  
            pediatric dental EHB that include a $1000 annual out-of-pocket  
            maximum and determined it to be reasonable.

           4)SUPPORT  .  Proponents describe this bill as implementing and  
            improving upon the federal ACA.  Today some health insurance  
            provides no limit on out-of-pocket costs and consumers end up  
            owing tens of thousands of dollars for necessary health care  
            even when they have insurance.  Health Access California  
            indicates that this bill says that if a specialized plan  
            offers any of the EHBs, then it is subject to the consumer  
            protections provided under this bill. This is because, for  
            many years, it has been routine in California to exempt  
            specialized health plans from consumer protections on the  
            grounds that the benefits offered were incidental or  
            supplemental or just not that important but in 2014, pediatric  
            dental and pediatric vision will be part of the EHBs required  
            under state and federal law. 

          The National Multiple Sclerosis Society supports this bill  
            because it will establish cost sharing limits on health  
            insurance and will help people living with chronic diseases  
            like MS who are frequent users of the health care system and  
            rely on expensive medicines.  Four of the disease modifying  
            therapies used to treat MS are routinely placed on specialty  
            tiers and require patients to pay coinsurance, which can force  
            patients with chronic conditions to make desperate choices  
            between vital medical care and mortgage and groceries.  The  
            Western Center on Law and Poverty says that California has  
            already implemented many elements of the ACA, but the state  
            must still codify cost-sharing.  The California HealthCare  
            Foundation found in 2011 that 70% of California's uninsured  
            are low to moderate income.  This bill helps provide peace of  
            mind to consumers for what they are purchasing and how much  
            they will pay for it, regardless of if they get coverage in or  
            out of the Exchange.

           5)OPPOSITION  .  Opponents argue that this bill contains  
            provisions that conflict with or go beyond requirements of the  
            ACA and federal guidance.  They believe that certain other  
            provisions differ from the out-of-pocket requirements in  
            federal law or restrict the use of incentives.  America's  


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            Health Insurance Plans states that this bill would establish  
            that any deductible applies to all benefits, and that the ACA  
            permits carriers to apply different deductibles for benefits  
            that are not part of EHBs.  Implementing separate deductibles  
            for non-EHBs enables carriers to offer additional benefits  
            desired by consumers while keeping the health care product  

          The Association of California Life and Health Insurance  
            Companies (ACLHIC) indicates that this bill will severely  
            impede an insurer's ability to offer unique benefit options to  
            consumers, as it creates a far more arduous regulatory  
            approval process for non-standardized plan designs in the  
            individual market.  ACLHIC states that with no regard for the  
            proprietary nature of the information, this measure requires  
            CDI to publically post information on non-standardized  
            products no less than 60 days prior to approval and requires  
            CDI to open up that process to public comment for an  
            unspecified period of time.  Certainly, this in and of itself  
            is concerning as it will make it almost impossible for  
            insurers to adjust quickly to the demands of the market as it  
            further delay's what is often a very involved and complex  
          6)RELATED LEGISLATION  .  AB 18 (Pan) would have required a  
            specialized health plan contract or insurance policy providing  
            pediatric oral care benefits to waive the applicable dental  
            out-of-pocket maximum upon notification from a QHP on behalf  
            of an enrollee that the applicable out-of-pocket maximum under  
            the QHP has been satisfied, and beginning January 1, 2015,  
            would have prohibited the combined out-of-pocket maximums for  
            dental and a QHP from exceeding those limits established under  
            the ACA.  Would have required the plans to develop a method  
            for coordinating and tracking cost sharing that limits the  
            burden on the subscriber.  AB 18 was amended to delete those  
            provisions and instead establish medical loss ratio and rate  
            review requirements on specialized plans offering pediatric  
            oral care benefits.  AB 18 is pending in the Assembly  
            Appropriations Committee. 

           7)PREVIOUS LEGISLATION  .  

             a)   AB 1800 (Ma) would have implemented provisions of the  
               ACA related to prohibitions on health plans and health  
               insurers from imposing out-of-pocket maximum caps which  


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               exceed specified levels.  AB 1800 was held in the Senate  
               Appropriations Committee.
             b)   AB 310 (Ma) of 2011 would have prohibited health plan  
               contracts and health insurance policies that cover  
               outpatient prescription drugs from requiring coinsurance,  
               as defined, as a basis for cost sharing for outpatient  
               prescription drug benefits and imposes specified  
               limitations on copayments, as defined, and out-of-pocket  
               expenses for outpatient prescription drugs.  AB 2011 was  
               held in Assembly Appropriations Committee.

             c)   SB 961 (Wright) of 2010 would have required a health  
               plan contract or health insurance policy that provides  
               coverage for cancer chemotherapy treatment to establish  
               limits on enrollee out-of-pocket costs for prescribed,  
               orally administered, nongeneric cancer medication.  SB 961  
               was vetoed by the Governor Schwarzenegger.  In his veto  
               message he indicated that his concerns about adding costs  
               to our increasingly expensive health insurance premiums had  
               not been addressed, and that SB 961 is unnecessary in light  
               of the provisions of the federal health reform act that  
               will take effect on January 1, 2014 and cap out-of-pocket  
               costs for both individuals and families.

             d)   SB 161 (Wright) of 2009 would have required a health  
               plan contract or health insurance policy issued, amended,  
               or renewed after January 1, 2010, that provides coverage  
               for cancer chemotherapy treatment to provide coverage for  
               an orally administered cancer medication no less favorably  
               than intravenously administered or injected cancer  
               medications covered under the contract or policy.  In his  
               veto message, Governor Schwarzenegger stated, "For those  
               patients fortunate enough to have health coverage in  
               today's economic environment, health plans already provide  
               coverage for oral anticancer medications.  This bill limits  
               a plan's ability to control both the appropriateness of the  
               care and the cost by requiring them to immediately cover  
               every medication as soon as it receives federal approval  
               regardless of the provisions of the health plan's formulary  
               placing them at a severe disadvantage when negotiating  
               prices with drug manufacturers.  I do believe that oral  
               anticancer medications can be more cost-effective and  
               efficacious in some instances.  If there is a way to  
               provide greater access without increasing overall costs, I  


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               would be willing to reconsider such a measure next year.  I  
               would encourage
               a collaborative approach with my Administration, the health  
               plans, and the pharmaceutical manufacturers next year on  
               this topic."

             e)   AB 2170 (Bonnie Lowenthal) of 2010 would have prohibited  
               health plans and health insurers that cover prescription  
               drugs and use a formulary from increasing applicable  
               copayments or deductibles for prescription drugs for the  
               length of the contract, including, but not limited to,  
               during an open enrollment period.  AB 2170 died on the  
               Assembly Appropriations Committee Suspense File.

             f)   AB 2052 (Goldberg), Chapter 336, Statutes of 2002,  
               prohibits health plans and health insurers from making any  
               change in premium rates or cost sharing after acceptance of  
               a contract or policy or after the annual open enrollment  

             g)   AB 974 (Gallegos), Chapter 68, Statutes of 1998,  
               prohibits health plans from limiting coverage for a drug  
               that had previously been approved by the plan and requires  
               specified disclosures regarding the use and contents of  
               drug formularies.

             h)   AB 1453 (Monning), Chapter 854, Statutes of 2012, and SB  
               951 (Hernandez), Chapter 866, Statutes of 2012, establish  
               California's EHBs.

             i)   AB 1602 (John A. Pérez), 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  
               under qualified insurers. 
             j)   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.

             a)   Page 9, line 20 the cross reference should be to 1366.6  


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               not 1366.1. 
             b)   Page 13, line 22 the cross reference should be to  
               10112.27 not 1367.005.   
             c)   Page 9, line 13 and Page 16, line 8: add after "age"  
                before the beginning of the plan year.  
              d)   Page 13, line 2, Section 10112.28 (a) (2) (B) after  
               "basic health care services" add "as defined in Health and  
               Safety Code Section 1345 (b)"
             e)   Page 8, line 24 and Page 11, line 31 add after  
               "guidance"  applicable to the plan type.  
             f)   Page 15, line 19 and Page 18, line 26 add after  
               "guidance"  applicable to the policy type.  


          Health Access California (sponsor)
          American Cancer Society Cancer Action Network
          American Federation of State, County and Municipal Employees,  
          California Optometric Association
          California Pan-Ethnic Health Network
          California Teachers Association
          National Multiple Sclerosis Society
          United Nurses Associations of California/Union of Health Care  
          Western Center on Law and Poverty

          America's Health Insurance Plans
          Association of California Life and Health Insurance Companies
          California Association of Dental Plans
          California Association of Health Plans
          California Association of Health Underwriters
          California Chamber of Commerce
          Independent Insurance Agents and Brokers of California
          National Association of Insurance and Financial Advisors of  

           Analysis Prepared by  :    Teri Boughton / HEALTH / (916) 319-2097  


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