BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 2004
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|AUTHOR: |Bloom |
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|VERSION: |May 31, 2016 |
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|HEARING DATE: |June 29, 2016 | | |
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|CONSULTANT: |Teri Boughton |
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SUBJECT : Hearing aids: minors
SUMMARY : Requires health insurers and health plans to cover hearing
aids for enrollees under 18 years of age, including an initial
assessment, new hearing aids every five years, and more
frequently under specified circumstances.
Existing law:
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) and regulation of health
insurers by the California Department of Insurance (CDI).
2)Establishes as California's essential health benefits (EHBs)
the Kaiser Small Group HMO plan along with the following 10
federally mandated benefits under the Patient Protection and
Affordable Care Act (ACA) as well as other state mandated
benefits:
a) Ambulatory patient services;
b) Emergency services;
c) Hospitalization;
d) Maternity and newborn care;
e) Mental health and substance use disorder
services, including behavioral health treatment;
f) Prescription drugs;
g) Rehabilitative and habilitative services and
devices;
h) Laboratory services;
i) Preventive and wellness services and chronic
disease management; and,
j) Pediatric services, including oral and vision
care.
3)Defines "Habilitiative Services" as health care services and
AB 2004 (Bloom) Page 2 of ?
devices that help a person keep, learn, or improve skills and
functioning for daily living. Examples include therapy for a
child who is not walking or talking at the expected age.
These services may include physical and occupational therapy,
speech-language pathology, and other services for people with
disabilities in a variety of inpatient or outpatient settings,
or both.
4)Extends emergency regulation authority for DMHC and CDI and
makes this authority inoperative on July 1, 2018.
5)Establishes federal and state-based market places or health
benefit exchanges, under the ACA, such as Covered California,
which makes individual and small group health insurance
products available for purchase. Covered California also
administers federal premium subsidies and cost-sharing
reductions to help qualified purchasers afford health
insurance purchased through Covered California.
6)Requires, under section 1311 of the ACA, a state to make
payments to or on behalf of an individual eligible for the
premium subsidies and any cost-sharing reduction to defray the
cost to the individual of any additional benefits which are
not eligible for such credit or reduction under the ACA.
7)Prohibits, under section 1557 of the ACA, discrimination on
the basis of race, color, national origin, sex, age, or
disability in certain health programs and activities.
This bill:
1)Requires a health plan contract or health insurance policy
issued, amended, or renewed on or after January 1, 2017, to
include coverage for hearing aids for all enrollees under 18
years of age, when medically necessary.
2)Requires coverage for hearing aids to include an initial
assessment, new hearing aids at least every five years, new
ear molds, new hearing aids if alterations to 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.
AB 2004 (Bloom) Page 3 of ?
4)Exempts Medicare supplement, dental-only, vision-only health
plan contracts and health insurance policies.
5)Requires this bill to become inoperative if DMHC or CDI
receives a notification from the federal Centers for Medicare
and Medicaid Service (CMS) or any other applicable federal
agency that this bill constitutes a discriminatory age
limitation under federal law and the state is required to
defray the costs of requiring a plan contract to include
coverage for hearing aids on behalf of enrollees who are 18
years of age or older pursuant to Section 1311 of the ACA.
6)Requires this bill to become inoperative 30 days after DMHC
executes a declaration, retained by the director or insurance
commissioner, stating that DMHC or CDI received the
notification described in 5) above. Requires the director or
insurance commissioner to post the declaration on the DMHC or
CDI website, and send the declaration to the appropriate
committees of the Legislature and Legislative Counsel.
7)Sunsets this bill on January 1, 2019.
FISCAL
EFFECT : According to the Assembly Appropriations Committee:
1)According to the California Health Benefits Review Program
(CHBRP):
a) No cost to Medi-Cal (General Fund (GF)/federal) nor
California Public Employees' Retirement System (CalPERS),
as hearing aids are already covered; and,
b) Increased employer-funded premium costs in the
private insurance market of approximately $13 million.
lxxxxx) Increased premium expenditures by
employees and individuals purchasing insurance of $7.1
million, and reduced total out-of-pocket expenses of
$16.5 million (based on $19.5 million in newly covered
benefits, offset by cost-sharing of $3 million).
cccclxxxxx) These costs would only be incurred
for the operative date of the mandate, until January 1,
2019, assuming coverage was no longer provided.
AB 2004 (Bloom) Page 4 of ?
1)Minor costs to CDI (Insurance Fund) and DMHC (Managed Care
Fund) to verify plans and insurers comply with this
requirement.
2)This bill is likely to exceed the EHB and result in a cost to
the state to defray expenditures on behalf of enrollees in
Covered California plans to which this mandate would apply.
This essentially means the state would pay for hearing aids on
behalf of anyone enrolled in Covered
California. These costs could be as high as $1.8 million GF
for 2017 and 2018, assuming costs must be defrayed for
small-group and individual enrollees in Covered California
plans. The mandate expires in 2019 and the state would not
incur costs to defray the costs of exceeding EHBs beyond this
date.
3)Recent state regulatory action in other states indicated a
broad federal ban on age discrimination in insurance coverage
invalidates age limits for coverage of hearing aids. If
similar logic applied in California, the state would be
required to pay for hearing aids for adults as well. Federal
regulations issued on May 16, 2016 clarifying
antidiscrimination provisions do not apply to state mandates
may resolve this concern.
PRIOR
VOTES :
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|Assembly Floor: |69 - 6 |
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|Assembly Appropriations Committee: |16 - 2 |
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|Assembly Health Committee: |16 - 0 |
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COMMENTS :
1)Author's statement. According to the author, a child's
ability to hear should not be determined by their family
income. It should be viewed as a fundamental right of choice
to the citizens of our state. Yet here in California, the
overwhelming majority of private insurance companies do not
AB 2004 (Bloom) Page 5 of ?
cover the cost of hearing aids, forcing families to either
forgo these medically-necessary devices for their children or
pay the full cost of hearing aids and hearing aid services out
of their own pockets. Hearing aids have been shown to
mitigate the effects of hearing loss and improve speech and
language outcomes in children; these outcomes are better the
earlier a child begins using a hearing aid. Hearing aids,
however, also come with a steep financial cost. Pediatric
hearing aids cost thousands of dollars and must be accompanied
by a number of "hearing aid services" including hearing aid
assessments, replacement hearing aids and ear molds, fittings,
and maintenance. Cumulatively, hearing aids and hearing aid
services cost an average of $3,500 and cost is the most
significant barrier to parents obtaining pediatric hearing
aids. AB 2004 will ensure that all California children,
regardless of income or background, have health insurance
coverage for hearing aids.
2)CHBRP analysis. AB 1996 (Thomson, Chapter 795, Statutes of
2002), requests the University of California assess
legislation proposing a mandated benefit or service and
prepare a written analysis with relevant data on the medical,
economic, and public health impacts of proposed health plan
and health insurance benefit mandate legislation. CHBRP was
created in response to AB 1996, and analyzed this bill. Key
findings include:
a) Coverage impacts and enrollees covered.
Approximately 53.2% of enrollees aged 10 to 17 years in
California already heave health insurance compliant with
this bill. This is because 100% of children in publicly
funded health insurance products have coverage for
hearing aids and services. Only 9% of enrollees aged 0
to 17 in privately funded health insurance have coverage
for hearing aids and services;
b) Essential health benefits. CHBRP indicates that this
bill would exceed the EHB benchmark and would appear to
trigger the ACA requirement for enrollees in Covered
California;
c) Medical effectiveness. There is a preponderance of
evidence from studies with moderately strong research
designs that hearing aids are effective in improving
speech and language development outcomes in children.
Evidence suggests that earlier age of fitting with
hearing aid is associated with greater gains in speech
outcomes. There is insufficient evidence that hearing
AB 2004 (Bloom) Page 6 of ?
aids are effective in improving nonverbal outcomes in
children. There is ambiguous/conflicting evidence that
hearing aids are effective in improving personal and
social development outcomes in children;
d) Utilization. CHBRP indicates that some evidence
suggests that hearing aids are price inelastic thus a
modest increase in utilization is anticipated of 2.4%
among enrollees who did not have coverage for hearing
aids and services premandate;
e) Impact on expenditures. CHBRP estimates that this
bill would increase total net annual expenditures by
$3,599,000 in the first year postmandate. While a major
increase in utilization is not anticipated, there would
be a shift in costs from enrollee out-of-pocket
expenditures to costs paid by health plans and insurance
policies. CHBRP believes this bill would reduce the net
financial burden of out-of-pocket expenses by
approximately $17 million for the families of 21,100
children who use hearing aids and services in the first
year, postmandate. The annual out-of-pocket costs for
families of the newly covered children would decrease
from about $1,850 to $300; and,
f) Public health. 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.
3)EHB plan selection. Under the ACA, qualified health plans
(QHPs) are sold through Covered California and provide
coverage to individuals and small employers not through
Covered California. QHPs are required to ensure coverage of
EHBs, as defined by the federal Secretary of the Department of
Health and Human Services (HHS). In 2011, the federal Center
for Consumer Information and Insurance Oversight (CCIIO)
released an EHB Bulletin proposing that EHBs be defined using
a benchmark approach, which gave states the flexibility to
select a benchmark plan that reflected the scope of services
offered by a "typical employer plan." If a state did not
choose a benchmark health plan, the default benchmark plan for
the state would be the largest plan by enrollment in the
largest product in the small group market. EHBs must include
AB 2004 (Bloom) Page 7 of ?
coverage of services and items in all 10 statutory categories
required in the ACA. A report by the consulting firm,
Milliman, analyzed and compared the health services covered by
the 10 EHB California benchmark plan options and found all the
plans to be comprehensive and a very small cost difference
between the optional plans. The Legislature, with stakeholder
input, chose the Kaiser Small Group HMO, which was also the
default plan had California not made an affirmative choice.
Last year a similar analysis and process was used to update
the EHB benchmark plan. Additionally, federal regulations
required if the benchmark does not include coverage of
habilitative services, the state may determine which services
are included in that category. The federal guidance indicates
states should consider the new definition of habilitative
services and devices to determine if coverage exists, and
indicates there is no need to defray QHP subsidy costs if a
mandate is passed to supplement the habilitative coverage
category. A second Milliman analysis found relatively small
differences in average healthcare costs among the 2014, ten
benchmark plan options. Milliman also found differing
coverage for acupuncture, infertility treatment, chiropractic
care, and hearing aids. The three California small group
plans were essentially the same average cost as the California
EHB plan and the California large group and CalPERS plans were
approximately 0.2-1.0% higher. The estimated average costs
for the three federal plan options were approximately 0.8-1.2%
higher than the previous California EHB plan. With this
information, the Legislature passed SB 43 (Hernandez, Chapter
648, Statutes of 2015) which adopted the federal definition of
habilitative services and maintained the Kaiser Small Group
HMO Plan as California's EHB benchmark. The Kaiser Small
Group HMO Plan does not cover hearing aids.
4)Antidiscrimination. Section 1557 of the ACA provides that an
individual shall not, on the grounds prohibited under multiple
provisions of federal law including the Civil Rights Act,
Title IX of the Education Act, the Age Discrimination Act, the
Rehabilitation Act and others be excluded from participation
in, be denied the benefits of, or be subjected to
discrimination under any health program or activity, any part
of which is receiving federal financial assistance, or under
any program or activity that is administered by a federal or
other agency, as specified. Some states, such as Connecticut's
Department of Insurance, have issued bulletins specific to
hearing aids for children, indicating that the benefit is
AB 2004 (Bloom) Page 8 of ?
potentially discriminatory under Section 1557 of the ACA,
directing carriers to remove the age limits.
A federal final rule issued on May 18, 2016 includes a
discussion about state mandates with age limits. Specifically,
the commenters asked that the federal Office of Civil Rights
(OCR) clarify that state mandates that have age limits are
exempt and that states are allowed to create new mandates that
have age distinctions if clinically appropriate. The response
from the OCR indicates that the final rule states that age
distinctions contained in federal, state, or local statutes or
ordinances adopted by an elected, general purpose legislative
body are not covered by the final rule. States may adopt new
laws that contain age distinctions: those distinctions would
not violate the final rule. The regulations specifically
reference the following exemption: An age distinction
contained in that part of federal, state, or local statute or
ordinance adopted by an elected, general purpose legislative
body which provides any benefits or assistance to persons
based on age; establishes criteria for participation in
age-related terms; or describes intended beneficiaries or
target groups in age-related terms.
However, a footnote says that age limits may violate CMS
regulations under the ACA and covered entities are responsible
for ensuring compliance with all applicable CMS regulations
and other federal laws. Furthermore, elsewhere OCR states
that arbitrary age, visit, or coverage limitations could
constitute discrimination based on age, in certain cases, for
example where consideration of age is not necessary to the
normal operation of a health program. AB 2004 states that
this bill would become inoperative upon a notification by a
federal agency that California is in violation of age
discrimination provisions and if the state would be required
to defray costs.
5)Habilitative services. While the current EHB benchmark plan
does not cover hearing aids, it is not clear why hearing aids
are not covered under the current definition of habilitative
services. The federal and state definition for habilitative
services is the following: Health care services and devices
that help a person keep, learn, or improve skills and
functioning for daily living. Examples include therapy for a
child who is not walking or talking at the expected age.
These services may include physical and occupational therapy,
speech-language pathology, and other services for people with
AB 2004 (Bloom) Page 9 of ?
disabilities in a variety of inpatient or outpatient settings,
or both. Furthermore, the federal regulations clearly gave
states the authority to determine which services are included
in habilitative services if the EHB benchmark did not have
coverage for habilitative services and the state would not
have to defray costs. Initially, the benchmark plan did not
cover habilitative which is why California adopted its own
definition and later adjusted it to conform to the federal
minimum definition which is the current definition. Federal
guidance indicates that if the benchmark includes habilitative
services and the state adds a new definition that includes
additional benefits, this would need to be defrayed as a new
mandate. But if a state with a "habilitative services"
definition chooses to modify or clarify it, this would not
need to be defrayed.
6)Prior legislation. SB 43 (Hernandez, Chapter 648, Statutes of
2015), updates California's EHB law to make it consistent with
new federal requirements promulgated under the ACA, which
includes adoption of the federally required definition of
habilitative services and devices.
SB 951 (Hernandez, Chapter 866, Statutes of 2012) and AB 1453
(Monning, Chapter 854, Statutes of 2012) select the Kaiser
Small Group HMO as California's benchmark plan to serve as the
EHB standard, as required by federal law.
SB 1321 (Harman of 2012), would have required Covered
California to select the plan with the lowest EHB cost to be
the set benchmark for the definition of EHBs. SB 1321 failed
passage in the Senate Health Committee.
7)Support. The Children's Partnership writes in support that
pediatric services has yet to be federally defined and is
often not fully covered, and California's current EHB
benchmark does not cover all essential pediatric services,
such as hearing aids or audiology services. The National
Association of Social Workers - California Chapter writes that
purchasing hearing aids for children can be a financial
challenge for parents and as children grow so do their ears.
A child's ability to hear should not be determined by family
income and should be viewed as a fundamental right of choice
to all Californians. This bill is not simply covering hearing
aids but allowing children to continue to maintain the same if
not better quality of life as they grow. The Center for Early
Intervention on Deafness writes that timely access to hearing
AB 2004 (Bloom) Page 10 of ?
aids is a critical component of achieving optimal outcomes for
these children. Hearing Healthcare Providers California
writes that in spite of the fact that California offers a
program to screen the hearing of infants delivered in
hospitals via the Newborn Hearing Screening Program, families
that do not qualify for publicly-subsidized coverage are left
with almost no assistance in covering the cost of a child's
hearing aid. These devices are out of reach for most
families' finances and require ongoing modifications and
fittings as the child grows. This bill would provide a huge
financial relief for families with job-based coverage and will
put California on par with 16 other states that require this
benefit.
8)Opposition. The California Association of Health Plans writes
that the bill exceeds EHBs and it is the wrong time to pass
more mandates. Maintaining affordable premiums is a delicate
balancing act. Federal law clearly states that the cost of
any benefits that exceed EHBs must be borne by the state. Key
protections that were built into the ACA to stabilize the
market such as reinsurance and risk corridors are scheduled to
expire. Multiple surveys confirm the cost of the monthly
premium is the number one concern for consumers when selecting
a health plan. Americas Health Insurance Plans writes that
this bill will increase annual expenditures by $3.6 million.
The state should be looking for ways to bring down health care
costs for consumers, not drive them up.
9)Policy Comment. Just last year, California legislators made a
choice for the EHB benchmark plan knowing that it was not the
plan that offered coverage of hearing aids and other services.
If the Kaiser large group CalPERS plan had been chosen,
hearing aids for children and adults would have clearly been
included in the EHBs. The age discrimination issue remains a
concern. Should legislators choose to support this measure in
its current form it is quite possible that it will never be
implemented.
SUPPORT AND OPPOSITION :
Support: California Association of the Deaf
California Children's Hospital Association
California Coalition of Agencies Serving the Deaf &
Hard of Hearing
California Coalition of Option Schools
California State PTA
California Teachers Association
AB 2004 (Bloom) Page 11 of ?
Center for Early Intervention on Deafness
Deaf and Hard of Hearing Service Center, Inc
Disability Rights California
Greater Los Angeles Agency on Deafness
Hearing Healthcare Providers
National Association of Social Workers
National Health Law Program
The Children's Partnership
Fifty Individuals
Oppose: Association of California Life and Health Insurance
Companies
America's Health Insurance Plans
California Association of Health Plans
California Chamber of Commerce
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