BILL ANALYSIS Ó
AB 2115
Page 1
Date of Hearing: April 12, 2016
ASSEMBLY COMMITTEE ON HEALTH
Jim Wood, Chair
AB 2115
(Wood) - As Amended April 5, 2016
SUBJECT: Health care coverage: disclosures.
SUMMARY: Requires health care service plans (health plans) and
health insurers, when providing a notice about coverage
continuation options to covered individuals under a group
benefit plan, to also provide information about other coverage
for which they may be eligible. Specifically, this bill:
1)Requires, upon coverage termination, health plans and health
insurers to include, in any group benefit plan disclosure
issued, amended, or renewed on or after January 1, 2017, in
addition to coverage continuation options, a notice of the
following:
a) Coverage through Covered California and qualifying for
lower monthly premiums and lower out-of-pocket costs;
b) Coverage through Medi-Cal and qualifying for low or no
cost coverage;
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c) Coverage through an insured spouse; and,
d) Free or discounted prescription medicines through a
manufacturer or through the use an Internet Web site search
tool, such as those provided by the Partnership for
Prescription Assistance at https://www.ppars.org or
RxAssist at http://www.rxassist.org.
2)Requires health plans or health insurers, on or after January
1, 2017, providing individual or group health care coverage to
provide enrollees, subscribers, or policy holders or
certificate holders who cease to be enrolled, a notice
informing them free or reduced prescription medicines
prescription medicines through a manufacturer's patient
assistance program (PAP).
EXISTING LAW:
1)Regulates health plans under the Knox-Keene Health Care
Service Plan Act of 1975 through the Department of Managed
Health Care and regulates health insurers under the Insurance
Code through the California Department of Insurance.
2)Establishes the Medi-Cal program which is administered by the
Department of Health Care Services (DHCS), under which
qualified low-income persons receive health care benefits.
Governs and funds the Medi-Cal program, in part, by federal
Medicaid program provisions. Allows DHCS to exercise a
specified federal option to extend continuous Medi-Cal
eligibility to children 19 years of age and younger.
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3)Establishes California's Health Benefit Exchange (the
Exchange), also referred to as Covered California (CoveredCa)
within state government, as an independent public entity not
affiliated with an agency or department, and requires the
Exchange to compare and make available through selective
contracting health insurance for individual and small business
purchasers as authorized under the federal Patient Protection
and Affordable Care Act (ACA).
4)Establishes the Consolidated Omnibus Budget Reconciliation Act
of 1985 (COBRA) under federal law that applies to employers
and group health plans that cover 20 or more employees and
allows enrollees to keep his or her group health plan for at
least 18 months when a job ends or hours are cut.
5)Establishes the California Continuation Benefits Replacement
Act (Cal-COBRA) that applies to employers and group health
plans that cover two to19 employees and allows enrollees to
keep his or her health plan for up to 36 months and may be
available after COBRA ends.
6)Requires health plans and health insurers to send model
notices intended to inform recipients that they may be
eligible for free coverage through Medi-Cal or low-cost
coverage through CoveredCa, if certain requirements are met.
FISCAL EFFECT: This bill has not yet been analyzed by a fiscal
committee.
COMMENTS:
1)PURPOSE OF THIS BILL. This bill adds an additional disclosure
to existing requirements notifying individuals, upon
termination of coverage, of the availability of free or
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reduced prescription medicines prescription medicines through
a manufacturer's patient assistance program (PAPs). For
enrollees in a group product, health plans and health insurers
will provide notice that the individual may be eligible for
reduced-cost coverage through CoveredCa, no-cost coverage
through Medi-Cal, coverage through an insured spouse, and free
or discounted prescription medicines through a manufacturer's
PAP.
2)BACKGROUND. The Centers for Medicare and Medicaid Services
notes that pharmaceutical manufacturers may sponsor PAPs that
provide financial assistance or drug free product (through
in-kind product donations) to low income individuals to
augment any existing prescription drug coverage. PAPs can
provide assistance to Part D enrollees and interface with Part
D plans by operating "outside the Part D benefit" to ensure
separateness of Part D benefits and PAP assistance. The PAP's
assistance on behalf of the PAP enrollee does not count
towards a Part D beneficiary's true-out-of-pocket cost
(TrOOP). The calculation of TrOOP is important for
determining whether an individual has reached the threshold
for catastrophic coverage under the Part D benefit.
A 2005 Publication of the Office of Inspector General (OIG)
Special Advisory Bulletin on PAPs for Medicare Part D
(Bulletin) noted that PAPs have long provided important safety
net assistance to patients of limited means who do not have
insurance coverage for drugs, typically serving patients with
chronic illnesses and high drug costs. The OIG Bulletin noted
that PAPs are structured and operated in many different ways,
such as cash subsidies, free or reduced price drugs, or
assistance directly to patients. Some PAPs replenish drugs
furnished by pharmacies, clinics, hospitals, and other
entities to eligible patients whose drugs are not covered by
insurance manufacturers. The OIG Bulletin also indicated that
some PAPs are affiliated with particular pharmaceutical
manufacturers or independent charitable organizations without
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regard to any specific donor or industry interests.
A Consumer Reports article states that people can find out
about specific PAPs through various sources, including
doctors, pharmacists, staff at a health or community clinic,
the internet, and drug companies. Consumer Reports identifies
three Websites in particular that service as major portals to
multiple PAPs, including RxAssist, the Partnership for
Prescription Assistance, and NeedyMeds.
3)OTHER STATES. According to the National Conference of State
Legislatures, prescription drug assistance has been a
substantial and growing state interest for a number of years,
generally in response to individuals who lack insurance
coverage for medicines or who were not eligible for other
government programs. In 1975, the first states began to
authorize and fund direct subsidy programs. By 2009, a total
of at least 42 states had established or authorized some type
of program to provide pharmaceutical coverage or assistance;
several of those are not currently operational. The subsidy
programs, often termed "SPAPs," utilize state funds to pay for
a portion of the drug costs, usually for a defined population
that meets enrollment criteria. In addition, an increasing
number of states use discounts or bulk purchasing approaches
that do not spend state funds for the drug purchases,
identified as "Discount Programs." Since the passage of the
ACA, state legislatures have been less active on SPAP issues.
4)PREVIOUS LEGISLATION. AB 792 (Bonilla), Chapter 851, Statutes
of 2012, requires specified health plans and health insurers
to provide a notice informing individuals that they may be
eligible for reduced-cost coverage through the Exchange or
no-cost coverage through Medi-Cal when an enrollee or
subscriber ceases to be enrolled in coverage.
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REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
Opposition
None on file.
Analysis Prepared by:Kristene Mapile / HEALTH / (916) 319-2097