BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair SB 1052 (Torres) - Health care coverage. Amended: April 29, 2014 Policy Vote: Health 7-0 Urgency: No Mandate: Yes Hearing Date: May 12, 2014 Consultant: Brendan McCarthy This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 1052 would require health insurers and health plans to post specified information on their websites regarding their drug formularies. The bill would require the California Health Benefit Exchange (Covered California) to post links to health insurer and health plan drug formularies and to create a search tool to allow consumers to search for health care coverage by drug or by therapeutic condition. Fiscal Impact: Potential one-time costs up to $150,000 to adopt regulations by the Department of Insurance (Insurance Fund). Ongoing enforcement costs are not expected to be significant. One-time costs of $140,000 in 2014-15 and $110,000 in 2015-16 to develop standards and adopt regulations by the Department of Managed Health Care. Ongoing enforcement costs are not expected to be significant. One-time costs between $1 million and $5 million for Covered California to add a search function to its website and make the underlying improvements to its information technology systems (federal funds and special funds). One-time cost of about $250,000 to $500,000 to hire an independent contractor to evaluate Covered California's marketing efforts (federal funds and special funds). Background: Under current law, health insurers are regulated by the Department of Insurance and health plans are regulated by the Department of Managed Health Care. (Collectively health insurers and health plans are referred to as "carriers"). SB 1052 (Torres) Page 1 Under the federal Affordable Care Act states are required to establish American Health Benefit Exchanges. If a state does not create an Exchange, the federal government will do so. Within the Exchanges, individuals will be able to purchase health care coverage with standardized benefit packages and actuarial values. In addition, individuals with incomes between 100 percent and 400 percent of the federal poverty level will be eligible for subsidies for coverage purchased in the Exchanges. California has established its own California Health Benefit Exchange (sometimes referred to as "Covered California"). Covered California has developed a website which allows consumers to shop for health care coverage and compare health plan costs and benefits. Proposed Law: SB 1052 would require carriers to post specified information on their websites regarding their drug formularies and require Covered California to take certain, related actions. Specific provisions of the bill would: Require a carrier that provides prescription drug benefits to post its drug formulary on its website and to update that formulary within 24 hours of making a change; Require a carrier to use a standard template for displaying the drug formulary; Require a carrier to include specified information on cost sharing, prior authorization requirements, and step therapy requirements for each drug; Authorize the Department of Insurance and the Department of Managed Health Care to develop standard templates and require carriers to use those standard templates; Require Covered California to post links on its website to the drug formularies of all carriers that offer coverage through Covered California; Require Covered California to create a search tool on its website to allow consumers to search for health care coverage through Covered California by drug or by therapeutic condition; Require Covered California to provide additional information to the Legislature on its marketing efforts. Staff Comments: The only costs that may be incurred by a local government under the bill relate to crimes and infractions. SB 1052 (Torres) Page 2 Under the California Constitution, such costs are not reimbursable by the state.