BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1162 (Holden) - Medi-Cal: tobacco cessation
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|Version: July 14, 2015 |Policy Vote: HEALTH 8 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 17, 2015 |Consultant: Brendan McCarthy |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1162 would require tobacco cessation services to be
a covered benefit in the Medi-Cal program with specified
requirements for benefits.
Fiscal
Impact:
Minor administrative costs to update existing Medi-Cal
policies for the provision of smoking cessation services
(General Fund and federal funds).
Unknown costs due to increased utilization of smoking
cessation services. Under current practice, about 30,000
Medi-Cal beneficiaries access smoking cessation services at a
total annual cost of about $4 million per year. Assuming that
the expanded benefits required in the bill result in increased
demand for smoking cessation services of 10% to 20%, the bill
would result in increased costs of $400,000 to $800,000 per
year (General Fund and federal funds).
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Unknown cost from increased drug prices (General Fund and
federal funds). Under current practice, the Department of
Health Care Services and Medi-Cal managed care plans negotiate
with drug companies over the cost of prescription drugs. The
Department and the managed care plans use requirements such as
prior authorization to encourage beneficiaries to utilize less
costly drugs before trying more costly drugs. This system
gives the Department and managed care plans some leverage when
negotiating prices with drug companies. The bill is unclear as
to whether it would allow utilization controls for covered
drugs. To the extent that it was interpreted to limit or
prohibit utilization controls, the bill could limit the
Department and managed care plans' ability to negotiate drug
prices with manufactures, increasing costs.
Unknown short term cost savings due to reduced smoking-related
health care costs for Medi-Cal beneficiaries. A review of a
new smoking cessation benefit in the Massachusetts Medicaid
program indicates that reducing smoking by beneficiaries led
to a net reduction in health care costs of about $2 for each
$1 spent on the program. Using the assumptions for utilization
increase above, potential cost savings of $800,000 to $1.7
million per year. The long-term health care spending impacts
of reduced tobacco use are less clear, because reduced health
care spending on smoking-related conditions will be offset by
increased longevity.
Background: Under state and federal law, the Department of Health Care
Services operates the Medi-Cal program, which provides health
care coverage to low income individuals, families, and children.
Medi-Cal provides coverage to childless adults and parents with
household incomes up to 138% of the federal poverty level and to
children with household incomes up to 266% of the federal
poverty level. The federal government provides matching funds
that vary from 50% to 90% of expenditures depending on the
category of beneficiary.
Smoking cessation services are not specifically mandated as a
benefit in the Medi-Cal program. However, current state and
federal law require Medi-Cal to provide coverage for medically
necessary, FDA approved drugs. In addition, state and federal
law require coverage for preventative services assigned a grade
of A or B by the United States Preventative Services Task Force.
The Task Force had proposed, but not adopted, a grade of A for
AB 1162 (Holden) Page 2 of
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all FDA approved drugs or behavioral interventions for smoking
cessation.
In September 2014, the Department of Health Care Services
updated its policy for coverage of smoking cessation services.
Current policy requires coverage of at least two quit attempts
per year, at least four counselling sessions, and seven
FDA-approved drugs (with at least one available without prior
authorization).
Proposed Law:
AB 1162 would require tobacco cessation services to be a
covered benefit in the Medi-Cal program with specified
requirements for benefits.
Specific provisions of the bill would:
Require tobacco cessation services to be covered
benefits in the Medi-Cal program;
Include at least four quit attempts per year;
Include at least four counselling sessions per quit
attempt, in person, on the telephone, or as part of a
group, at the beneficiary's option;
Include a 90-day treatment regimen of any drug approved
by the FDA for smoking cessation;
Require at least one prescription and all over the
counter medications to be available without prior
authorization;
Apply the requirements of the bill to medications
approved by the FDA and covered by Medi-Cal as of January
1, 2015;
Prohibit a requirement that a beneficiary receive any
form of service (e.g. counselling) as a condition of
receiving another form of service (e.g. drugs).
Related
Legislation:
SB 220 (Yee, 2010) would have required health plans and
health insurers to cover certain smoking cessation
services. That bill was vetoed by Governor Schwarzenegger.
AB 2662 (Dymally, 2007) would have prohibited receiving
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one form of smoking cessation services from being a
condition of receiving another form of service. That bill
was held on this committee's Suspense File.
SB 576 (Ortiz, 2005) would have required health plans
and health insurers to cover certain smoking cessation
services. That bill was vetoed by Governor Schwarzenegger.
Staff
Comments: As noted above, the Department of Health Care
Services revised its policy on coverage of smoking cessation
services in September 2014. The requirements of this bill are
similar to those requirements, but this bill expands certain
requirements. For example, this bill increases the number of
quit attempts per year from two to four. In addition, the
Department policy requires coverage for seven specific FDA
approved tobacco cessation medications, whereas this bill would
require coverage for any FDA approved drug for smoking cessation
that was covered by Medi-Cal on January 1, 2015.
As drafted, the bill prohibits coverage of smoking cessation
services with any barriers, requirements or restrictions, except
that at least one prescription medication and all
over-the-counter medications shall be available without prior
authorization. These two provisions of the bill, in combination,
may have the effect of actually prohibiting any utilization
control for smoking cessation services.
Recommended
Amendments: Staff recommends the bill be clarified to allow for
utilization controls, as long as at least one prescription
medication and all over-the-counter medications are available
without prior authorization.
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