BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2004


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          Date of Hearing:   April 19, 2016





                            ASSEMBLY COMMITTEE ON HEALTH


                                   Jim Wood, Chair


          AB 2004  
          (Bloom) - As Amended March 9, 2016


          


          SUBJECT:  Hearing aids: minors.


          


          SUMMARY:  Requires coverage for hearing aids for enrollees or  
          insureds less than 18 years of age, as specified.  Specifically,  
          this bill:  





          1)Requires a health care service plan (health plan) contract or  
            a health insurance policy (health policy) that is issued,  
            amended, or renewed on or after January 1, 2017, to include  
            coverage for hearing aids for an enrollee or insured under 18  
            years of age when medically necessary.  









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          2)Includes initial assessment, new hearing aids at least every  
            five years, new ear molds, new hearing aids if alternations to  
            the existing hearing aids cannot meet the needs of the child,  
            a new hearing aid if the existing one is no longer working,  
            fittings, adjustments, auditory training, and maintenance of  
            the hearing aids.



          3)Defines hearing aid as an electronic device usually worn in or  
            behind the ear of a deaf and hard of hearing person for the  
            purpose of amplifying sound.



          4)Excludes accident-only, specified disease, hospital indemnity,  
            Medicare supplement, dental-only, or vision-only health  
            insurance policies from this bill.  



          EXISTING LAW:  





          1)Establishes the Department of Managed Health Care (DMHC) to  
            regulate health plans and the California Department of  
            Insurance to regulate health insurers.

          2)Requires health plans and insurers providing health coverage  
            in the individual and small group markets to cover, at a  
            minimum, essential health benefits (EHBs), including the ten  
            EHB benefit categories in the Patient Protection and  
            Affordable Care Act (ACA), and consistent with California's  
            EHB benchmark plan, the Kaiser Foundation Health Plan Small  
            Group HMO 30 plan (Kaiser benchmark), as specified in state  
            law.  








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          3)Requires issuers of individual and small group coverage to, at  
            a minimum, cover EHBs in the following ten categories:  
            Ambulatory patient services, emergency services,  
            hospitalization, maternity and newborn care, mental health and  
            substance use disorder services, including behavioral health  
            treatment, prescription drugs, rehabilitative and habilitative  
            services and devices, laboratory services, preventive and  
            wellness services and chronic disease management, and  
            pediatric services, including oral and vision care.

          4)Requires health plans to provide basic health care services,  
            including physician services; hospital inpatient and  
            ambulatory care services; diagnostic laboratory and diagnostic  
            and therapeutic radiologic services; home health services;  
            preventive health services; emergency health care services;  
            and, hospice care.  

          FISCAL EFFECT:  This bill has not yet been analyzed by a fiscal  
          committee.  





          COMMENTS:  



          1)PURPOSE OF THIS BILL.  The author states that a child's  
            ability to hear should not be determined based on family  
            income.  It should be viewed as a fundamental right of choice  
            to the citizens of our state, especially when the state has a  
            mandated hearing screening program.  To diagnose deafness and  
            then fail to provide intervention is morally and ethically  
            unacceptable.

          2)BACKGROUND.  Every state and territory in the United States  
            has now established an Early Hearing Detection and  








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            Intervention (EHDI) program.  The EHDI program staff are  
            responsible for creating, operating, and continuously  
            improving a system of services which assures that:

             "    Every child born with a permanent hearing loss is  
               identified before three months of age and provided with  
               timely and appropriate intervention services before six  
               months of age;

             "    Every family of an infant with hearing loss receives  
               culturally-competent family support as desired;

             "    All newborns have a "medical home;" and,

             "    Effective newborn hearing screening tracking and data  
               management systems are linked with other relevant public  
               health information systems.

            The California Department of Health Care Services (DHCS),  
            Children's Medical Services has implemented a statewide  
            comprehensive Newborn Hearing Screening Program (NHSP).  The  
            NHSP helps identify hearing loss in infants and guide families  
            to the appropriate services needed to develop communication  
            skills.  Families of infants delivered in general acute care  
            hospitals with licensed perinatal services which have been  
            certified by DHCS to participate in the NHSP will have the  
            opportunity to have their baby's hearing screened. Infants who  
            do not pass the screening in the hospital will be referred for  
            additional testing after discharge.  DHCS is contracting with  
            Hearing Coordination Centers to work with the hospitals in  
            developing hearing screening programs, to perform quality  
            assurance activities, and to follow infants who need  
            additional services.

             a)   California Health Benefits Review Program (CHBRP)  
               analysis.  AB 1996 (Thomson), Chapter 795, Statutes of  
               2002, requests the University of California to assess  
               legislation proposing a mandated benefit or service and  
               prepare a written analysis with relevant data on the  








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               medical, economic, and public health impacts of proposed  
               health plan and health insurance benefit mandate  
               legislation.  CHBRP was created in response to AB 1996.  SB  
               125 (Hernandez), Chapter 9, Statutes of 2015, added an  
               impact assessment on essential health benefits, and  
               legislation that impacts health insurance benefit designs,  
               cost sharing, premiums, and other health insurance topics.   
               CHBRP states in its analysis of AB 2004 the following:

                 i)       Enrollees covered. CHBRP estimates that in 2015,  
                   all state-regulated coverage (for 25.2 million  
                   Californians) would be subject to this bill.

                 ii)      Impact on expenditures. CHBRP estimates that  
                   this bill would increase total net annual expenditures  
                   by $3,599,000 in the first year postmandate.  While  
                   CHBRP does not anticipate a major increase in  
                   utilization, there would be a shift in costs from  
                   enrollee out-of-pocket expenditures to costs paid by  
                   health plans and policies for children's hearing aids.   
                   Postmandate, CHBRP estimates that premiums would remain  
                   the same or increase per member per month (PMPM) as  
                   follows:

                  (1)       Publicly funded plans (CalPERS HMO, Medi-Cal  
                    managed care plans): $0.00 change PMPM due to current  
                    coverage of hearing aids;

                  (2)       Privately funded DMHC plans: PMPM increases  
                    range from $0.05 in the individual market, $0.10 in  
                    large group, to $0.13 in small group; and,

                  (3)       Privately funded CDI policies: $0.09 PMPM  
                    increase in the individual market, $0.12 PMPM increase  
                    in large group and $0.13 PMPM increase in small group.  


                 iii)     EHBs.  Coverage required by this bill would  
                   appear to exceed EHBs as this benefit is not included  








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                   in the state's benchmark plan.

                 iv)      Medical effectiveness.  It is generally accepted  
                   that the use of hearing aids improves the hearing of  
                   children with hearing loss.  As a result, there have  
                   been few recent studies on the impact of hearing aids  
                   on hearing in children.  CHBRP concludes that there is  
                   a preponderance of evidence from studies with  
                   moderately strong research designs that: 
                    Hearing aids are effective in improving speech  
                   outcomes in children. In particular, evidence suggests  
                   that earlier age of fitting with hearing aid is  
                   associated with greater gains in speech outcomes. 

                    Hearing aids are effective in improving language  
                   development outcomes in children. In particular, risk  
                   for language delays in children with hearing loss may  
                   be mitigated from an early age of fitting and  
                   consistent use of hearing aids. 





                   Conversely, there is insufficient evidence that hearing  
                   aids are effective in improving nonverbal outcomes  
                   (e.g., motor behavior) in children. There is  
                   ambiguous/conflicting evidence that hearing aids are  
                   effective in improving personal and social development  
                   outcomes in children

                 v)       Benefit coverage.  Currently, CHBRP estimates  
                   that in privately funded plans and policies, about 9%  
                   of enrollees through age 17 have coverage for hearing  
                   aids and services. In publicly funded plans, CHBRP  
                   estimates that 100% of enrollees through age 17 have  
                   coverage for hearing aids and services.

                 vi)      Utilization.  Postmandate, CHBRP estimates there  








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                   would be no change in the average per enrollee cost of  
                   hearing aids and services. CHBRP estimates hearing aids  
                   and services cost on average $2,023 per enrollee, which  
                   includes children who may not have purchased a new  
                   hearing aid in the given year, but may use related  
                   hearing aid services in that year. The average cost per  
                   hearing aid user for their hearing aid and hearing aid  
                   services is approximately $3,566.

                 vii)     Public health.  According to CHBRP, hearing loss  
                   may be congenital (present at birth) or acquired later  
                   during childhood. Children may experience hearing loss  
                   in one or both ears, and may require either one or two  
                   hearing aids. Nationwide, hearing loss in one ear  
                   (unilateral) occurs in about 2.7% of adolescents aged  
                   12 to 19 while hearing loss in both ears (bilateral) is  
                   less common at 0.8% of adolescents. This overall  
                   prevalence rate of 3.5% among adolescents includes both  
                   congenital and acquired hearing loss. This hearing loss  
                   range is greater than the moderate-to-severe range for  
                   which hearing aids are most commonly prescribed.  CHBRP  
                   projects that AB 2004 would increase the first-time use  
                   of hearing aids and services by 200 children (all in  
                   the privately funded insurance market) in the  
                   first-year postmandate; thus, assuming new coverage is  
                   similar to premandate cost sharing, hearing and speech  
                   and language skills would be expected to improve for  
                   this subset of newly covered children with hearing loss  
                   who were unable to afford hearing aids premandate.  

                 viii)    Long-term impacts.  It is unknown to what degree  
                   this bill would improve the future educational and  
                   employment outcomes of children who obtain hearing aids  
                   through new coverage. However, it stands to reason that  
                   those who need and use hearing aids at a young age  
                   would experience improved outcomes as compared with no  
                   hearing aid use.

             a)   Coverage for Hearing Aids.  California law requires  








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               screening for hearing loss among children, first at birth  
               in the Newborn Hearing Screening Program and subsequently  
               at school-age.  There is no existing law mandating any kind  
               of coverage for hearing aids for private insurance.  
               However, for children 21 and under in Medi-Cal and children  
               who meet certain qualifications including a qualifying  
               hearing loss, hearing aids are covered through California  
               Children's Services (CCS). CCS is a state program that  
               provides coverage for children under age 21 with certain  
               eligible physical limitations and chronic health conditions  
               or diseases, including disorders of the sense organs like  
               hearing loss. Children may also qualify for CCS by meeting  
               certain age, residence, medical, and financial  
               requirements.

          Medi-Cal recipients under age 21 must be referred to CCS for  
          hearing loss services, including hearing aids, both for  
          fee-for-service and managed care. For Medi-Cal beneficiaries in  
          county organized health system (COHS) plans, the COHS plans,  
          rather than CCS, provide hearing services.  

             b)   Similar requirements in other states.  Sixteen states  
               (Colorado, Connecticut, Delaware, Kentucky, Louisiana,  
               Maryland, Massachusetts, Minnesota,, Mississippi, New  
               Jersey, New Mexico, North Carolina, Oklahoma, Oregon, and  
               Tennessee) require that health benefit plans cover hearing  
               aids for children.  Three states - Arkansas, New Hampshire,  
               and Rhode Island require that plans cover hearing aids for  
               adults and children. Wisconsin requires coverage for both  
               hearing aids and cochlear implants for children. Of the 16  
               states that mandate coverage of hearing aids for children,  
               California's proposed legislation is most similar to  
               Colorado's law which requires plans to cover hearing aids  
               for children younger than 18 years when medically  
               necessary.  Under Colorado's law, coverage includes new  
               hearing aid(s) every five years, a new hearing aid when  
               alterations to the existing hearing aid(s) cannot meet the  
               needs of the child, and services and supplies such as the  
               initial assessment, fitting, adjustments, and auditory  








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               training.

          3)SUPPORT.  According to the Deaf and Hard of Hearing Service  
            Center, Inc., the barrier of cost needs to be removed,  
            primarily because some parents feel forced to choose a more  
            risky option, which is surgery to implant a cochlear device  
            that does not guarantee the child will hear.  While not every  
            deaf child can benefit from a hearing device, those who can,  
            may be able to learn a spoken language.  The California  
            Coalition of Option Schools (CCOS) and the Center for Early  
            Intervention on Deafness (CEID) state that many children who  
            are deaf and hard of hearing and their families choose the  
            most recent advancements in technology, including hearing  
            aids, as a way to aid them in accessing language and  
            communication.  CCOS and CEID state that timely access to  
            hearing aids is a critical component to achieving optimal  
            outcomes for these children.  

            The National Association of Social Workers, California Chapter  
            (NASW-CA) state that purchasing hearing aids for children can  
            be a financial challenge for parents and as children grow so  
            do their ears.  NASW-CA contends that a child's ability to  
            hear should not be determined by family income and should be  
            viewed as a fundamental right of choice.  NASW-CA states that  
            existing law mandates a hearing screening for newborns and  
            when a child is diagnosed with deafness, the state fails to  
            provide intervention to the child and also fails the parent.   
            The Greater Los Angeles Agency on Deafness, Inc. writes that  
            hearing aids are a tool to assist deaf and hard of hearing  
            children identify sounds if they have some residual hearing  
            and state that it is critical for deaf and hard of hearing  
            children be fluent in American Sign Language and English.  The  
            California Coalition of Agencies Service the Deaf & Hard of  
            Hearing (CCASDHH) states that language involves more than just  
            communication and with language, individuals can fully develop  
            their cognitive and neurological functions, thus increasing  
            their abilities and opportunities to attain their full  
            potential.  









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          4)OPPOSITION.  According to the California Association of Health  
            Plans (CAHP), the Association of California Life and Health  
            Insurance Companies, and America's Health Insurance Plans  
            contend that health insurance mandates threaten efforts of all  
            health care stakeholders to provide consumers with meaningful  
            health care choices and affordable coverage options.  They  
            state that the ACA requires the state to pay for the increased  
            cost associated with the mandate for those enrollees who  
            purchase health insurance on the Exchange.  They also state  
            that benefit mandates eliminate the ability of health insurers  
            and HMOs to provide unique benefit packages aimed at the needs  
            of consumers by requiring individuals and employers to  
            purchase benefits prescribed by the Legislature, not driven by  
            consumer choice.  Finally, they note that health benefit  
            mandates stifle the use of innovative, evidence based  
            medicine.  The California Chamber of Commerce (CalChamber)  
            states that when health care issuers are required to cover new  
            services for all enrollees, premiums for all enrollees and  
            purchasers go up and this is true if only some enrollees  
            utilize the mandate.  CalChamber states that these costs add  
            quickly.  CalChamber notes that California has statutorily  
            imposed approximately 30 individual mandates, which helps  
            explain why the average monthly premium in California is  
            already more than $75 higher than the average monthly premium  
            nationally.  Additionally, CalChamber notes that these  
            mandates have reduced health plans' flexibility in benefit  
            design and reduced employers' choice of benefit packages to  
            offer their employees.  

          5)PREVIOUS LEGISLATION.

             a)   AB 368 (Carter) of 2007 would have required health care  
               service plans and health insurers, on or after January 1,  
               2009, to offer, at minimal cost, coverage up to $1,000 for  
               hearing aids, as defined, to all enrollees, subscribers,  
               and insureds under 18 years of age. The Governor's veto of  
               AB 368 noted that the addition of a new mandate, no matter  
               how small, will only serve to increase the overall cost of  
               health care and increasing the cost of coverage by  








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               mandating benefits, may ultimately leave more children  
               without any coverage.  

             b)   SB 1223 (Scott) of 2006 would require health care  
               service plans and health insurers to offer or provide, as  
               specified, coverage up to $1,000 for hearing aids, as  
               defined, to all enrollees, subscribers, and insureds under  
               18 years of age.  SB 1223 would have provided that the  
               coverage would not apply to certain types of insurance. The  
               Governor vetoed SB 1223 and indicated that the bill may  
               contribute to rising premiums and make health care less  
               affordable and accessible for uninsured Californians.

             c)   SB 174 (Scott, Koretz, and Wiggins) of 2004, would have  
               required health plans and health insurers to provide  
               coverage, up to $1,000, for hearing aids, as defined, to  
               all enrollees and subscribers under 18 years of age.   SB  
               174 was held in Senate Rules Committee.  

             d)   SB 1158 (Scott) of 2004 would have require health care  
               service plans and health insurers to provide coverage up to  
               $1,000 for hearing aids, as defined, to all enrollees,  
               subscribers, and insureds under 18 years of age. SB 1158  
               would provide that the coverage would not apply to certain  
               types of insurance.  SB 1158 was vetoed by the Governor who  
               indicated that increasing the cost of health coverage by  
               mandating benefits, if even by a small amount, would have  
               the far more serious consequence of leaving some children  
               without health insurance.
          


          REGISTERED SUPPORT / OPPOSITION:





          Support








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          California Coalition of Agencies Servicing the Deaf & Hard of  
          Hearing


          California Coalition of Option Schools


          Center for Early Intervention on Deafness


          Deaf and Hard of Hearing Service Center, Inc. 


          Greater Los Angeles Agency on Deafness, Inc.


          National Association of Social Workers





          Opposition





          America's Health Insurance Plans 


          Association of California Life and Health Insurance Companies










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          California Association of Health Plans


          California Chamber of Commerce





          Analysis Prepared by:Kristene Mapile / HEALTH / (916) 319-2097