BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                 UNFINISHED BUSINESS


          Bill No:  SB 1052
          Author:   Torres (D)
          Amended:  8/18/14
          Vote:     21

           
           SENATE HEALTH COMMITTEE  :  7-0, 4/24/14
          AYES:  Hernandez, Beall, De León, DeSaulnier, Evans, Monning,  
            Wolk
          NO VOTE RECORDED:  Morrell, Nielsen

           SENATE APPROPRIATIONS COMMITTEE  :  6-1, 5/23/14
          AYES:  De León, Gaines, Hill, Lara, Padilla, Steinberg
          NOES:  Walters

           SENATE FLOOR  :  30-6, 5/29/14
          AYES:  Anderson, Beall, Berryhill, Block, Cannella, Corbett,  
            Correa, De León, DeSaulnier, Evans, Gaines, Galgiani, Hancock,  
            Hernandez, Hill, Hueso, Jackson, Lara, Leno, Lieu, Liu,  
            Mitchell, Monning, Nielsen, Padilla, Pavley, Roth, Steinberg,  
            Torres, Wolk
          NOES:  Fuller, Huff, Knight, Vidak, Walters, Wyland
          NO VOTE RECORDED:  Calderon, Morrell, Wright, Yee

           ASSEMBLY FLOOR  :  74-0, 8/25/14 - See last page for vote


           SUBJECT  :    Health care coverage

           SOURCE  :     American Cancer Society Cancer Action Network 


           DIGEST  :    This bill requires health plans and insurers to use a  
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          standard drug formulary template to display their drug  
          formularies and to post their formularies on their Internet Web  
          sites.  Requires the California Health Benefit Exchange (Covered  
          California) to provide links to the formularies.

           Assembly Amendments  (1) add a co-author; (2) delete the  
          requirement for health care plans and insurers to post changes  
          to formularies within 72- hours on their Internet Web site; (3)  
          delete the requirement for the Covered California board to  
          create a search tool on its Internet Web site that allows a  
          potential enrollee to search for qualified health plans (QHPs)  
          by a particular drug; (4) add to the information included to be  
          required on the standard formulary template; and 5) make other  
          technical changes.

           ANALYSIS  :    

          Existing federal law:

          1. Requires under the federal Affordable Care Act (ACA)  
             non-grandfathered individual and small group health insurance  
             plans and policies to cover ten essential health benefits  
             (EHBs), including prescription drugs and under regulatory  
             guidance, authorizes states to establish a benchmark plan.

          2. Establishes under the federal ACA, market places for  
             individuals and small groups to purchase QHPs, which must  
             cover EHBs, and meet other federal requirements.  Authorizes  
             states to establish state level health benefit exchanges. 

          Existing state law:

          1. Establishes Covered California as an independent government  
             entity governed by a five member board of directors to  
             selectively contract with QHPs and administer premium  
             assistance and cost sharing subsidies.

          2. Authorizes Covered California to adopt standardized QHP  
             benefit designs.

          3. Requires Covered California to maintain an Internet Web site  
             through which enrollees and prospective enrollees of QHPs may  
             obtain standardized comparative information on QHPs.


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          4. Establishes Kaiser Small Group Health Plan as California's  
             EHB benchmark plan.

          5. Establishes the Department of Insurance (CDI) to regulate  
             health insurance pursuant to the Insurance Code and the  
             Department of Managed Health Care to regulate health plans  
             under the Knox-Keene Act.

          6. Requires according to CDI regulations on EHBs, an individual  
             or small group health insurance policy to provide coverage  
             for prescription drugs that complies with specified state law  
             and federal regulations.  Requires a health insurer to submit  
             specified information to the CDI Commissioner together with a  
             health insurance policy form, as specified, and annually on  
             July 1 thereafter.

          7. Requires, under state regulations, a health plan to file an  
             EHB worksheet to demonstrate compliance with EHB  
             requirements, including prescription drug benefits, as  
             required by state law and federal regulations, including the  
             plan's prescription drug list and/or formulary.  Requires the  
             EHB Filing Worksheet to include a certification that the  
             plan's drug list meets or exceeds the prescription drug  
             formulary requirements specified in federal regulations.   
             Prior Legislation
           
          This bill:

          1. Requires health plans and insurers that provide prescription  
             drug benefits and maintain drug formularies to post the  
             formulary or formularies for each product offered by the plan  
             on the plan's Web site in a manner that is accessible and  
             searchable by potential enrollees, enrollees, and providers.

          2. Requires the Department of Managed Health Care (DMHC) and the  
             CDI to develop a standard formulary template that contains  
             specified information by January 1, 2017.  

          3. Requires health plans and insurers to use the standard  
             formulary template within six months of the date the template  
             is developed by DMHC and CDI.

          4. Requires health plans and insurers to update their posted  
             formularies with any change to those formularies on a monthly  

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             basis.

           Prior Legislation
           
          SB 639 (Hernandez, Chapter 316, Statutes of 2013), codifies  
          provisions of the ACA relating to out-of-pocket maximums on  
          cost-sharing, health plan and insurer actuarial value coverage  
          levels and catastrophic coverage requirements, and requirements  
          on health insurers for coverage of out-of-network emergency  
          services.  

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

          AB 219 (Perea, Chapter 661, Statutes of 2013) limits the total  
          amount of copayments and coinsurance an enrollee or insured is  
          required to pay for orally administered anticancer medications  
          to $200 for an individual prescription of up to a 30-day supply.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes


          According to the Assembly Appropriations Committee:


           Potential one-time costs up to $150,000 to adopt regulations  
            by CDI (Insurance Fund).


           One-time costs of $250,000 to develop standards and adopt  
            regulations by DMHC (Managed Care Fund).

           Ongoing monitoring and enforcement costs to DMHC and CDI  
            (Managed Care Fund/Insurance Fund) could be in the range of  
            $50,000 per year for each department for the first two years,  
            but should be less on an ongoing basis once systems are  
            routinized.

           SUPPORT  :   (Verified  8/26/14) 

          American Cancer Society Cancer Action Network (source)
          Association of Northern California Oncologists

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          BayBio
          Biocom
          California Arthritis Foundation Council
          California Chronic Care Coalition
          California Healthcare Institute
          California Manufacturers and Technology Association
          California Pharmacists Association
          California Primary Care Association
          California Urological Association
          Health Access
          Hemophilia Council of California
          Huntington's Disease Society of America
          Lupus Foundation of Southern California
          Medical Oncology Association of Southern California
          National Multiple Sclerosis Society
          Pharmaceutical Research and Manufacturers of America
          Project Inform
          The Leukemia and Lymphoma Society

           OPPOSITION  :    (Verified  8/26/14) 

          Aetna
          America's Health Insurance Plan
          Anthem Blue Cross
          Association of California Life and Health Insurance Companies 
          California Association of Health Plans
          Pharmaceutical Care Management Association

           ARGUMENTS IN SUPPORT  :    The American Cancer Society Cancer  
          Action Network, the sponsor of this bill, writes that currently,  
          obtaining information to confirm whether a person's drugs are  
          covered by a qualified health plan is impossible or incredibly  
          time consuming.  BayBio and Biocom, in support, assert this bill  
          is especially important for patients who may have gone through a  
          number of therapeutics before finding a specific product that  
          best manages their condition.  For these people, these  
          supporters argue, having coverage for the right drug becomes a  
          basic quality of life issue.

           ARGUMENTS IN OPPOSITION  :    In opposition, health plans and  
          insurers argue that this bill's requirements are unworkable and  
          in conflict with other requirements related to formularies and  
          suggest that policymakers should instead focus on controlling  
          the underlying cost pressures of prescription drugs, considering  

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          the alarmingly high price tag of many new specialty drugs.   
          Pharmaceutical benefit managers, also in opposition, argue that  
          the standard formulary template required by this bill differs  
          from standard formats used nationwide and that implementation of  
          this bill will be technologically difficult.

           ASSEMBLY FLOOR  :  74-0, 8/25/14
          AYES:  Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,  
            Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian  
            Calderon, Campos, Chau, Chesbro, Conway, Cooley, Dababneh,  
            Daly, Dickinson, Eggman, Fong, Fox, Frazier, Garcia, Gatto,  
            Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hagman, Hall,  
            Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer, Levine,  
            Linder, Logue, Lowenthal, Maienschein, Medina, Melendez,  
            Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson,  
            Perea, John A. Pérez, V. Manuel Pérez, Quirk, Quirk-Silva,  
            Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting,  
            Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, 
            Atkins
          NO VOTE RECORDED:  Chávez, Dahle, Donnelly, Beth Gaines,  
            Mansoor, Vacancy


          JL:d  8/26/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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