BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1696 (Holden) - Medi-Cal:  tobacco cessation services
          
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          |Version: June 27, 2016          |Policy Vote: HEALTH 8 - 1       |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Brendan McCarthy    |
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          This bill meets the criteria for referral to the Suspense File.

          Bill  
          Summary:  AB 1696 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).

           Annual costs of about $140,000 per year for four years for the  
            development and implementation of a new HEDIS measurement  
            relating to smoking cessation by the Department of Health Care  
            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  







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            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).

            The bill requires the Department to contract with California  
            Smokers' Helpline to directly furnish over-the-counter  
            nicotine replacement therapy to Medi-Cal beneficiaries. Under  
            a recently concluded pilot project, about 90% of Medi-Cal  
            beneficiaries who called the Helpline (and were not included  
            in a control group) were furnished with over-the-counter  
            nicotine replacement therapy, at a per capita cost of $74. On  
            average, about 20,000 Medi-Cal beneficiaries call the Helpline  
            each year, and under the bill most of those individuals would  
            likely receive over-the-counter nicotine replacement therapy,  
            at a projected annual cost of about $1.3 million per year.  
            However, it is important to note that providing nicotine  
            replacement therapy directly through the Helpline is likely to  
            reduce provision of such services by Medi-Cal managed care  
            plans, including utilization of such services that is  
            currently occurring. Therefore, most of the cost to provide  
            over-the-counter medications through the Smokers' Helpline are  
            likely to be offset by reduced Medi-Cal managed care plan  
            expenditures to provide such services.

           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 the  
            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  








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          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 has adopted a grade of A for all FDA approved  
          drugs and 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 counseling sessions, and seven  
          FDA-approved drugs (with at least one available without prior  
          authorization).


          The University of San Diego, under contract with the Department  
          of Public Health, operates the California Smokers' Helpline. The  
          Helpline provides counseling to individuals who wish to quit  
          smoking. Certain populations are also eligible to be sent  
          over-the-counter nicotine replacement therapy, depending on the  
          source of funding received by the Helpline. (The primary source  
          of funding for the Helpline, Proposition 99 educational funds,  
          cannot be used to pay for medication.) Under a federal grant,  
          the Helpline ran a pilot program to provide over-the-counter  
          nicotine replacement therapy to Medi-Cal beneficiaries. That  
          pilot program has been concluded and the results are being  
          analyzed. Each year, the Helpline receives about 40,000 calls,  
          about half of which come from Medi-Cal beneficiaries.




          Proposed Law:  
            AB 1696 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 a covered benefit in  








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            the Medi-Cal program, subject to utilization controls;
           Require all intervention recommendations of the United State  
            Preventative Services Task Force assigned a grade of A or B to  
            be covered;
           Include at least four quit attempts per year;
           Include at least four counseling sessions per quit attempt, in  
            person, on the telephone, or as part of a group, at the  
            beneficiary's option;
           Include a 12-week 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;
           Prohibit requiring a beneficiary to receive any form of  
            service (e.g. counseling) as a condition of receiving another  
            form of service (e.g. medication);
           Require the Department of Health Care Services to enter into  
            an agreement that authorizes the California Smokers' Helpline  
            to directly furnish over-the-counter nicotine replacement  
            therapy to Medi-Cal beneficiaries;
           Require the Department, by December 31, 2017, to include  
            medical assistance with smoking and tobacco use cessation  
            rates in its HEDIS measures (a system for measuring Medi-Cal  
            managed care plan quality).


          Related  
          Legislation:  AB 1162 (Holden, 2015) was substantially similar  
          to this bill. That bill was vetoed by Governor Brown.


          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 tobacco  
          cessation.
          The Department of Health Care Services typically received  
          rebates from drug manufacturers to incentivize the state to put  
          certain drugs on the Medi-Cal formulary. The Department  








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          indicates that the bill's requirement that most drugs be  
          included in the Medi-Cal formulary could reduce the incentive  
          for drug manufacturers to offer the state rebates. However, the  
          bill allows Medi-Cal managed care plans to use utilization  
          controls and only requires one prescription medication to be  
          provided without prior authorization. Therefore, it is likely  
          that the Department and Medi-Cal managed care plans would still  
          have some ability to negotiate rebates with drug manufactures.




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