BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2115|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: AB 2115
Author: Wood (D)
Amended: 8/2/16 in Senate
Vote: 21
SENATE HEALTH COMMITTEE: 7-0, 6/29/16
AYES: Hernandez, Nguyen, Hall, Mitchell, Nielsen, Pan, Roth
NO VOTE RECORDED: Monning, Wolk
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 71-0, 5/23/16 - See last page for vote
SUBJECT: Health care coverage: disclosures
SOURCE: California Life Science Association
DIGEST: This bill requires health plans and health insurers to
inform an individual who ceases to be enrolled in coverage that
additional information on low- or no-cost programs for health
care and prescription medicines may be found on the Office of
the Patient Advocate's Internet Web site but these programs may
not meet the requirements of the individual mandate under the
federal Patient Protection and Affordable Care Act (ACA).
ANALYSIS:
Existing law:
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1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC), regulation of health insurers
by the California Department of Insurance (CDI), and the
administration of the Medi-Cal program by the Department of
Health Care Services, which provides health coverage for
qualified low income individuals, children, families and
individuals who are aged and disabled.
2)Establishes federal and state-based market places or health
benefit exchanges, under the ACA, such as Covered California,
which make individual and small group health insurance
products available for purchase. Exchanges also administer
federal premium subsidies and cost-sharing reductions to help
qualified purchasers afford health insurance purchased through
an exchange.
3)Requires most Americans to have health insurance coverage or
pay a tax penalty. Provides for open enrollment periods when
individuals can purchase health insurance, and special
enrollment periods which allow for the purchase of insurance
within 60 days of certain life events including but not
limited to marriage, divorce, and loss of group coverage.
4)Requires on and after January 1, 2014, a health plan or health
insurer providing individual or group health care coverage to
provide to enrollees, subscribers, policyholders or
certificate holders, who cease to be enrolled in coverage, a
notice informing them that they may be eligible for
reduced-cost coverage through Covered California or no-cost
coverage through Medi-Cal.
5)Requires the notice to include information on obtaining
coverage pursuant to those programs, and to be in no less than
12-point type, and developed by DMHC and CDI, no later than
July 1, 2013, in consultation with Covered California.
6)Permits the notice to be incorporated into or sent
simultaneously with and in the same manner as any other
notices sent by the health plan or health insurer.
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7)Exempts a specialized health plan contract, specialized health
insurance policy, or a health insurance policy consisting
solely of coverage of excepted health benefits, as specified,
or a Medicare supplemental plan contract from the provisions
described in 4) to 6) above.
This bill:
1)Adds to notices required of health plans and health insurers
when an individual ceases to be enrolled in coverage a
statement indicating that additional information on low- or
no-cost programs for health care and prescription medicines
may be found on the Office of the Patient Advocate's Internet
Web site but these programs may not meet the requirements of
the individual mandate under the ACA.
2)Requires this notice to be provided on and after January 1,
2018.
Comments
1)Author's statement. According to the author, despite
California's implementation of the ACA, which created or
expanded coverage options for many Californians, gaps remain -
with an estimated 3.8 million Californians under age 65
remaining without coverage. Compared to their insured
counterparts, California's uninsured have reported having a
significantly lower health status and a substantially higher
rate of not seeking care due to cost concerns. Nationwide, an
estimated 125,000 deaths per year and between 33 and 69% of
medication-related hospital admissions are a result of
patients not getting or taking a prescribed medicine in a
timely manner. Washington State established a program using
navigators and online resources to assist consumers in finding
appropriate patient assistance programs for their respective
situations and medication needs, handling over 41 million
prescriptions since 2009. A recent study of the Washington
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program found that patients receiving assistance in finding
appropriate programs had nearly half the number of emergency
department and hospital encounters as those not receiving such
assistance. In helping to ensure Californians leaving
coverage understand the programs available to them for free
and reduced cost medicines, AB 2115 will help to reduce the
potential negative health impact that delays in access to
prescribed medicines can cause.
2)Prescription Assistance Programs. According to an April 2016
article in the Journal of Managed Care and Specialty Pharmacy,
there are over 200 Prescription Assistance Programs available
from pharmaceutical companies. Use of these programs is
hindered by inconsistent eligibility requirements and reported
difficulties in identifying and applying for appropriate
programs. These programs typically provide brand-name drugs
at little or no cost to income-eligible patients. These
programs remain underutilized by target populations. In a
survey of 215 safety-net facilities in California, Florida,
Illinois, and Texas, 22% of the clinics reported not using the
programs at all because the enrollment process was too complex
and time consuming. A nationwide effort sponsored by
America's biopharmaceutical research companies called the
Partnership for Prescription Assistance (PPA) has helped
nearly 10 million uninsured and underinsured Americans get
information about programs that provide prescription medicines
for free or nearly free. PPA provides a single point of access
to more than 475 patient assistance programs, including nearly
200 offered by biopharmaceutical companies. From April 2009 to
May 2016, 320,830 California residents have been helped by
PPA, according to its Web site.
3)Washington State. According to an April 2016 article in the
Journal of Managed Care and Specialty Pharmacy in 2008, the
Spokane Prescription Assistance Network (SPAN) was started as
a pilot project to assist low-income adults with accessing
affordable prescription medications. A SPAN patient
prescription coordinator accepted referrals from area health
clinics, social service organizations, pharmacies, hospitals,
etc. The coordinator matched patients with appropriate
prescription assistance programs and helped the patients apply
for the programs. The coordinator followed-up with the
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patient and their providers regularly. The aim was to reduce
unnecessary and avoidable health care encounters for patients
having difficulty accessing prescription medications. Among
310 SPAN participants, emergency department and hospital
encounters declined from .38 per participant the year before
enrollment to .20 encounters in the year following program
entry. SPAN was associated with a 51% decline in the rate of
emergency department and hospital utilization. The study
concluded a formalized patient prescription coordinator can
help patients access prescribed medications at low cost and
remain compliant with treatment plans.
4)Other studies. A 2009 study published in Health Affairs
concluded the benefits of patient assistance programs remain
unclear. Little is known about these programs. A survey
found much variability in their structures and application
processes. Most of these programs cover only one or two
drugs. Only 4% disclosed how many patients they had directly
helped, and half would not disclose their income eligibility
criteria. A 2014 perspective in the New England Journal of
Medicine indicates that more than 300 drugs have associated
patient assistance programs, and manufacturers spend about $4
billion per year on these programs. The article says these
programs increase demand, allow companies to charge higher
prices, and provide public-relations benefits. In addition,
patient assistance programs may lead to higher drug prices as
a result of the interplay between patent demand and prices.
If patient demand is less sensitive to prices, manufacturers
of on-patent drugs respond by setting higher prices. The
author of the study also points out that the federal
Department of Health and Human Services (DHHS) has sent mixed
signals about these programs and has discouraged hospitals and
other providers from paying premiums or other cost-sharing
liabilities for exchange enrollees; and the author believes
DHHS is right to limit the scope of these programs and that
these programs can help individual patients but are associated
with hidden costs for insurers and taxpayers.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
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SUPPORT: (Verified 8/9/16)
California Life Science Association (source)
National Multiple Sclerosis Society
OPPOSITION:(Verified 8/9/16)
Association of California Life and Health Insurance Companies
Blue Shield of California
California Association of Health Plans
Kaiser Permanente
ARGUMENTS IN SUPPORT: The California Life Sciences Association
(CLSA) writes that this bill is simply adding a new item to a
list in an existing notice requirement for health plans and
insurers, its costs should be minimal, especially in light of
the significant potential for healthcare costs avoided and
improvements in patients' health. Greater awareness of patient
assistance programs among individuals who are at-risk of
becoming uninsured could bring benefits similar to those seen in
Washington. In response to concerns raised by health plans,
this bill has been amended to delete sections applicable to
Cal-COBRA (a California specific version of the federal
Consolidated Omnibus Budget Reconciliation Act) and all specific
language requirements for the notices, including website
citations. CLSA believes this bill achieves, at a modest cost, a
greater awareness of patient assistance programs, helping
patients stay on their medications during coverage interruptions
and consequently reducing preventable emergency room visits and
other care as a result of medication non-adherence.
ARGUMENTS IN OPPOSITION: The California Association of Health
Plans (CAHP) writes that drug company-sponsored assistance
programs provide a major advantage for manufacturers of brand
name or otherwise costly drugs. These programs increase demand
for brand name and costly products over lower cost and equally
effective generics, which is why this bill is supported by the
pharmaceutical industry. Researchers, government agencies, and
payers have expressed a fair amount of skepticism about the
intent and utility of these programs. These programs are banned
or discouraged in certain public programs. CAHP states that due
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to a lack of transparency, very little is known about these
programs or how they impact the health system. Before California
starts promoting these programs, which provide a huge public
relations benefit for drug companies, a better understanding of
their purpose and impact on cost-effective drug use should be
obtained. The Association of California Life and Health
Insurance Companies (ACLHIC) writes that it is unclear what
problem this bill is intending to solve, and while the increased
cost and administrative burden of updating current notices is an
issue, even more concerning to ACLHIC's members is the decision
to require one industry to promote the activities of another.
Especially when taking into consideration that these programs
can have a direct impact on driving up the cost of healthcare by
steering patients toward higher cost brand name drugs when
equally effective generic alternatives are available. Kaiser
Permanente writes that federal law prohibits the use of these
discount coupons (also known as third party payments in public
programs) and discourages their use by health plans
participating in ACA exchanges due to their effect of increasing
drug spending.
ASSEMBLY FLOOR: 71-0, 5/23/16
AYES: Achadjian, Alejo, Travis Allen, Atkins, Baker, Bloom,
Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Frazier, Beth Gaines, Cristina Garcia, Eduardo Garcia,
Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley,
Harper, Roger Hernández, Holden, Irwin, Jones, Kim, Lackey,
Levine, Linder, Lopez, Low, Maienschein, Mathis, McCarty,
Medina, Melendez, Mullin, Nazarian, O'Donnell, Olsen, Quirk,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,
Wood, Rendon
NO VOTE RECORDED: Arambula, Bigelow, Brough, Eggman, Gallagher,
Jones-Sawyer, Mayes, Obernolte, Patterson
Prepared by:Teri Boughton / HEALTH / (916) 651-4111
8/10/16 16:00:46
**** END ****
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