BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1052| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 CONTINUED SB 1052 Page 2 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. CONTINUED SB 1052 Page 3 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 CONTINUED SB 1052 Page 4 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 CONTINUED SB 1052 Page 5 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 CONTINUED SB 1052 Page 6 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 **** END **** CONTINUED