BILL ANALYSIS Ó AB 2004 Page 1 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. AB 2004 Page 2 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. AB 2004 Page 3 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 AB 2004 Page 4 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 AB 2004 Page 5 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 AB 2004 Page 6 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 AB 2004 Page 7 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 AB 2004 Page 8 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 AB 2004 Page 9 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. AB 2004 Page 10 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 AB 2004 Page 11 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 AB 2004 Page 12 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 AB 2004 Page 13 California Association of Health Plans California Chamber of Commerce Analysis Prepared by:Kristene Mapile / HEALTH / (916) 319-2097