BILL ANALYSIS Ó SB 639 Page 1 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 SB 639 Page 2 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 market. 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 SB 639 Page 3 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 SB 639 Page 4 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 apply: 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 hardship. 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 SB 639 Page 5 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 SB 639 Page 6 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 determination; 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 in-network. 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. SB 639 Page 7 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 as: 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; and, 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 SB 639 Page 8 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); and, 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 SB 639 Page 9 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; SB 639 Page 10 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 SB 639 Page 11 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 debate. 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 SB 639 Page 12 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% FPL. 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 SB 639 Page 13 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 SB 639 Page 14 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 affordable. 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 process. 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 SB 639 Page 15 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 SB 639 Page 16 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 period. 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. 8)TECHNICAL AMENDMENTS . a) Page 9, line 20 the cross reference should be to 1366.6 SB 639 Page 17 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. REGISTERED SUPPORT / OPPOSITION : Support Health Access California (sponsor) American Cancer Society Cancer Action Network American Federation of State, County and Municipal Employees, AFL-CIO California Optometric Association California Pan-Ethnic Health Network California Teachers Association National Multiple Sclerosis Society United Nurses Associations of California/Union of Health Care Professionals Western Center on Law and Poverty Opposition 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 California Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097 SB 639 Page 18