BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1764


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          Date of Hearing:  May 11, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          1764 (Waldron) - As Amended May 3, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          Effective July 1, 2017, this bill requires the California Health  
          Benefit Review Program (CHBRP) to examine the impact of  
          coverage, or repeal of coverage, on projected medium-term costs  
          or savings for either two years or, if applicable, five years. 








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          Implementation is contingent upon reauthorization of the chapter  
          establishing CHBRP, which will sunset under current law sunset  
          July 1, 2017. 


          FISCAL EFFECT:


          Assuming CHBRP and its revenue source are extended and the  
          provisions of this bill take effect, this bill could result in  
          an increase in modeling, analytic efforts, actuarial, staff and  
          faculty time, resulting in the following:


          1)One-time costs to CHBRP of $200,000 to develop and test a  
            customized Cost Simulation Model (CSM).


          2)An estimated $340,000 per year for staff and contract costs to  
            add the additional projections for each bill CHBRP analyzes. 


          The fund source for additional funding is uncertain, as the  
          current funding only provides up to $2 million from an  
          assessment on health plans and insurers (Health Care Benefits  
          Fund).  The increased costs would result in cost pressure to  
          increase the assessment.  Otherwise, this bill would result in  
          less funding available for CHBRP's other duties in order to stay  
          within the $2 million annual appropriation.       


          COMMENTS:


          1)Purpose. According to the author, limiting savings and cost  
            estimates to a 12-month period does not accurately reflect the  
            benefits or impacts of the covered therapy. For example, the  








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            author notes treatment with high-cost drugs may show  
            substantial savings-from reduced hospitalization, for example-  
            that manifest after 12 months.  This bill is author-sponsored.



          2)CHBRP.  Housed in the University of California Office of the  
            President, CHBRP responds to legislative requests to provide  
            independent analysis of the medical, financial, and public  
            health impacts of bills proposing to mandate - or repeal a  
            mandate for-coverage of health insurance benefits. A small  
            analytic staff works with a task force of faculty from several  
            UC campuses, as well as actuarial consultants, to analyze  
            bills, usually before the Legislature begins formal  
            consideration of such bills.  With respect to costs, CHBRP  
            generally projects the cost for the 12-month period in which  
            the mandate is implemented. CHBRP comments on potential  
            long-term impacts when there is significant evidence  
            supporting such impacts.
           


          3)CHBRP Comments. CHBRP notes the dynamism of health insurance  
            design, and states holding factors such as technology,  
            regulation, population covered constant for a near-term  
            projection is reasonable.  With respect to long-term  
            projections, CHBRP notes numerous factors-take-up rates,  
            advances in practice patterns, technology adoption, policy or  
            regulatory changes- can have massive and unpredictable  
            impacts.  They also note they would need to create and  
            implement a simulation model for fiscal impacts (or savings)  
            that can reliably project up to 5 years.



          4)Prior legislation.  











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             a)   SB 125 (Hernández), Chapter 9, Statutes of 2015, extends  
               the sunset of the California Health Benefits Review Program  
               (CHBRP) for two years to June 30, 2017, and extends the  
               existing assessment on health plans and health insurers to  
               support the program.  



             b)   AB 1996 (Thomson), Chapter 795, Statutes of 2002,  
               requested the UC to create CHBRP.  Two prior bills have  
               extended CHBRP's sunset, one in 2002 and one in 2009. 



          1)Staff Comment. UC is required to submit a report to the  
            Legislature and the Governor by January 1, 2017 on  
            implementation of CHBRP's mandate.  The CHRBP provisions are  
            also set to expire on July 1, 2017.  Furthermore, this bill is  
            contingent on a sunset extension.  Thus, it seems logical to  
            consider an expansion of duties in context of a CHBRP sunset  
            extension.  



          Analysis Prepared by:Lisa Murawski / APPR. / (916)  
          319-2081