BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1696 (Holden) - Medi-Cal: tobacco cessation services ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 27, 2016 |Policy Vote: HEALTH 8 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- 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 AB 1696 (Holden) Page 1 of ? 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 AB 1696 (Holden) Page 2 of ? 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 AB 1696 (Holden) Page 3 of ? 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 AB 1696 (Holden) Page 4 of ? 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. -- END --