BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1162 (Holden) - Medi-Cal: tobacco cessation ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: July 14, 2015 |Policy Vote: HEALTH 8 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- 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). AB 1162 (Holden) Page 1 of ? 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 ? 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 AB 1162 (Holden) Page 3 of ? 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. -- END --