BILL ANALYSIS �
SB 639
Page 1
Date of Hearing: September 10, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 639 (Ed Hernandez) - As Amended: September 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 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). Allows carriers in the small
group market to establish an index rate no more frequently than
each calendar quarter. Specifically, this bill :
1)Allows a carrier at least each calendar year, and no more
frequently than each calendar quarter to establish an index
rate for the small employer market based on the total combined
claims costs for providing EHBs within the single risk pool
required under the ACA.
Out-of-pocket limits 2015
2)Requires nongrandfathered individual and group health care
service plan contracts and health insurance policies that
provide coverage for EHBs, and that are issued, amended, or
renewed on or after January 1, 2015, to provide for a limit on
annual out-of-pocket expenses for all covered benefits that
meet the definition of EHBs, including out-of-network
emergency care consistent with existing law. Exempts
specialized health plans and insurance policies.
3)Requires nongrandfathered large group health care service plan
contracts and health insurance policies that are issued,
amended, or renewed on or after January 1, 2015 to provide for
a limit on annual out-of-pocket expenses for covered benefits,
including out -of-network emergency care. Requires this limit
to apply only to EHBs that are covered under the plan, to the
SB 639
Page 2
extent this does not conflict with federal law. Exempts
specialized health plans and insurance policies.
4)Requires the limits in 2) and 3) above not to exceed the limit
described in the ACA and to result in a total maximum
out-of-pocket limit for all EHBs equal to the dollar amounts
in effect under the Internal Revenue Code with dollar amounts
adjusted, as specified in the ACA.
5)Requires for an EHB offered or provided by a specialized
health care service plan or insurer the total annual
out-of-pocket maximum for all covered EHBs from exceeding the
limit in 2) and 3) above. Exempts a specialized health care
service plan or insurer that does not offer an EHB.
6)Requires the maximum out-of-pocket limit to apply to any
copayment, coinsurance, deductible, and any other form of cost
sharing for all covered benefits that meet the definition of
EHBs.
Out-of-pocket limits 2014
7)Requires, for 2014, for nongrandfathered health care service
plan contracts or health insurance policies, except
specialized health plan contracts and health insurance
policies, in the individual and small group market and to the
extent allowed by federal law, regulations and guidance, to
provide for a limit on annual out-of-pocket expenses for all
covered benefits that meet the definition of EHBs, including
out-of-network emergency care, as specified. Limits the total
out-of-pocket maximum to $6,350 for individual coverage and
$12,700 for family coverage. Prohibits a separate
out-of-pocket maximum from being applied to mental health or
substance use disorders benefits. For small group health plan
contracts and health insurance policies, the total
out-of-pocket may be split between prescription drug services
and all other EHBs.
8)Limits, when a nongrandfathered health care service plan or a
health insurer in the individual or small group market
provides a pediatric oral care benefit meeting the definition
as specified in the ACA, the out-of-pocket maximum for the
pediatric oral care benefits to $1,000 for one child and
$2,000 for more than one child.
SB 639
Page 3
9)Requires a health care service plan contract or a health
insurance policy for nongrandfathered products in the large
group market for 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. Exempts specialized
health plans and insurance policies. Includes in the
out-of-pocket limit any copayment, coinsurance, deductible,
incentive payment, and any other form of cost sharing for all
covered benefits, including prescription drugs, as specified.
10)Limits a health care service plan contract or a health
insurance policy for nongrandfathered products in the large
group market the total out-of-pocket maximums from exceeding
$6,350 for individual coverage or $12,700 for family coverage,
with respect to basic health care services and services,
except prescription drugs, required under mental health parity
and autism requirements of existing law.
11)Prohibits an enrollee or insured in a large group plan
contract or policy from being subject to more than two limits
on annual out-of-pocket expenses for covered benefits that
meet the definition of EHB. Prohibits a separate
out-of-pocket maximum from being applied to mental health or
substance use disorders benefits.
12)Prohibits, for a small employer health 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 applied in a manner that does not affect the
actuarial value of any small employer health care service plan
contract. Exempts multiple employer welfare arrangements that
provide health care benefits to their members and that comply
with small group health reforms unless otherwise required by
federal law or guidance from these provisions.
13)Allows the Department of Managed Health Care (DMHC) or the
SB 639
Page 4
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.
14)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.
15)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 California Health Benefit Exchange (Exchange), to
consider whether to exercise state-level 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
SB 639
Page 5
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
(HSAs) to count toward the actuarial value of the product
in the manner specified in federal rules and guidance.
16)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
the plan provide coverage for at least three primary care
visits.
17)Prohibits a carrier that is not participating in the Exchange
from offering, marketing, or selling a catastrophic plan in
the individual market.
18)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.
19)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
SB 639
Page 6
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.
EXISTING LAW :
1)Provides for regulation of health plans by the DMHC under the
Knox-Keene Health Care Services Plan Act of 1975 (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
SB 639
Page 7
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
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 a 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.
SB 639
Page 8
8)Requires, under the ACA, 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 copayment amount or coinsurance
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.
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 Exchange 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;
SB 639
Page 9
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;
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 a carrier each calendar year to establish an index
rate for the small employer market in the state based on the
total combined claims costs for providing EHBs, within the
single risk pool required for rating purposes. Requires the
index rate to be adjusted on a market wide basis based on the
total expected market wide payments and charges under the risk
adjustment and reinsurance programs established under the ACA.
FISCAL EFFECT : According the Assembly Appropriations Committee:
1)One-time costs in the range of hundreds of thousands of
dollars each to CDI (Insurance Fund) and DMHC (Managed Care
Fund). Costs will be incurred for rulemaking, as well as
review and enforcement related to adoption of the definition
of out-of-pocket maximum established in the bill. Both CDI
and DMHC report activities related to the federal requirements
codified in this bill are already being undertaken, so
codifying these requirements should not result in additional
costs.
2)Unknown potential costs related to state employee benefit
plans (General Fund/federal funds/special funds). Federal law
and this bill impose maximum out-of-pocket costs on covered
EHBs in the large-group market. Beginning in 2015, this bill
applies to health, dental, and vision plans administered by
the state, to the extent they offered one or more EHBs. This
bill essentially protects individuals from paying more than
approximately $6,350 combined for all covered EHBs, including
health coverage as well as pediatric vision and dental
coverage. The establishment of an out-of-pocket maximum that
combines health, dental, and vision coverage, for benefits
offered in the large-group market, goes further than federal
SB 639
Page 10
law requires. It also imposes requirements for administrative
coordination between health, dental, and vision plans.
It is unclear whether this bill would apply to state employee
plans because it is unclear whether such plans offer EHBs as
defined by this bill. This could be elucidated through
regulation.
If the out-of-pocket maximums established by this bill do apply
to state employee plans, total costs could range from
negligible to benefit costs in the millions of dollars
annually (General Fund /federal funds/special funds),
depending how the state decides to design its benefit plans to
respond to the new requirements. Currently, the State's
out-of-pocket maximum for health coverage is far below the
combined out-of-pocket maximum established by this bill, but
there is no out-of-pocket maximum for state employee pediatric
dental or vision coverage.
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.
The September 6, 2013 amendments revise provisions from AB 2
X1 (Pan), Chapter 1, Statutes of 2013-14 First Extraordinary
Session and SB 2 X1 (Ed Hernandez), Chapter 2, Statutes of
2013-14 First Extraordinary Session, which require health
insurance carriers to establish "an index rate" (singular) for
its small group business "each calendar year" rather than more
frequently. The index rate is based on the total combined
claims costs for providing EHBs within the single risk pool
required by the ACA. Existing law requires the index rate to
be adjusted on a market wide basis based on the total expected
market wide payments and charges under the risk adjustment and
reinsurance programs established for the state under the ACA.
Without this bill, under existing law in AB 2 X1 and SB 2 X1
the index rate will be updated once for the entire 12 month
period. According to the DMHC, a change to quarterly indexing
is necessary because otherwise carriers will apply the same
base rate for all small employers. When a carrier has to
project too far in advance, uncertainty is created, causing
carriers to price products higher. According to DMHC, DMHC
and CDI actuaries estimate that the current law (if not
changed) will result in January 1 premium rates that are about
3-5% higher than if quarterly updates are permitted.
DMHC indicates that proposed federal rule 45 CFR 156.80(d) (3)
and subsequent pronouncements allow for quarterly updates, as
well as instructions contained in Covered California's Small
Group Option Program (SHOP). The solicitation instructed
issuers to bid under the assumption that rates could be
updated quarterly. Rates that have been advertised by Covered
California's SHOP assume quarterly indexing. Failure to amend
the current law could result in increases to the small group
rates negotiated with SHOP participants and already published
by Covered California.
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
SB 639
Page 12
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 American Health Benefit Exchanges and
EHBs that are required to be offered by QHPs, which are plans
participating in 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
annually after.
Some 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%
SB 639
Page 13
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. Covered California 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
SB 639
Page 14
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)REMOVAL OF OPPOSITION . The California Association of Health
Plans (CAHP) has removed its opposition based on substantial
amendments taken to this bill and because of the amendment
that allows quarterly adjustments according to the latest
available actuarial data. According to CAHP, these adjustments
impact renewals and new market entrants and in no way weaken
the annual premium guarantee employers enjoy under state and
federal law. Without this fix, small employers could initially
pay higher than necessary premiums. This is an important
provision of this bill supported by the health plans and will
help make the launch of the Small Employer Health Options
Program in the Exchange a success. Furthermore, CAHP
indicates that some provisions of this bill conflict in
specific ways with recent federal guidance allowing a one-year
safe harbor for employer sponsored coverage. Non-conformity
distracts health plans from the work of implementing reform.
6)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.
7)TECHNICAL ISSUES .
a) Page 11, line 18 "1317.4" should be "1371.4"
b) Page 12, line 31 "covered" should be added before
"essential health benefits"
c) Page 13, line 3 subdivision "(b)" should be "(c)"
d) Page 29, line 27 subdivision "(b)" should be "(c)"
e) Page 29, line 29 "10112.28" should be "10112.27"
f) Page 29, line 33 "10112.28" should be "10112.27"
8)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
SB 639
Page 15
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.
9)PREVIOUS LEGISLATION .
a) AB 2 X1 and SB 2 X1 reform California's individual
market in accordance with the ACA and applies its
provisions to insurers regulated by the CDI and health
plans regulated by DMHC in the individual market; require
guaranteed issue of individual market health insurance
policies and health plan contracts; prohibit the use of
preexisting condition exclusions; establish open and
special enrollment periods; prohibit conditioning issuance
or offering based on specified rating factors; prohibit
marketing and solicitation practices consistent with small
group requirements; require guaranteed renewability of
plans; and, permit rating factors based on age, geographic
region and family size only. Makes conforming changes and
clean-up to California's small group law enacted in AB 1083
(Monning), Chapter 852, Statutes of 2012.
b) AB 1083 (Monning) makes conforming and other changes to
state law governing the sale of small group health
insurance products to implement provisions in the ACA.
c) 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
exceed specified levels. AB 1800 was held in the Senate
Appropriations Committee.
d) 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
SB 639
Page 16
limitations on copayments, as defined, and out-of-pocket
expenses for outpatient prescription drugs. AB 2011 was
held in Assembly Appropriations Committee.
e) AB 1453 (Monning), Chapter 854, Statutes of 2012, and SB
951 (Ed Hernandez), Chapter 866, Statutes of 2012,
establish California's EHBs.
f) AB 1602 (John A. P�rez), 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.
g) 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.
REGISTERED SUPPORT / OPPOSITION :
Support
Health Access California (sponsor)
American Cancer Society Cancer Action Network
American Federation of State, County and Municipal Employees,
AFL-CIO
Blue Shield of California
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 (prior version)
Association of California Life and Health Insurance Companies
(prior version)
California Association of Dental Plans (prior version)
SB 639
Page 17
California Association of Health Underwriters (prior version)
California Chamber of Commerce (prior version)
Independent Insurance Agents and Brokers of California (prior
version)
National Association of Insurance and Financial Advisors of
California (prior version)
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097