BILL ANALYSIS Ó
AB 2752
Page 1
Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON HEALTH
Jim Wood, Chair
AB 2752
(Nazarian) - As Amended April 12, 2016
SUBJECT: Health care coverage: continuity of care.
SUMMARY: Requires a health care service plan (health plan) or a
health insurer to annually notify an enrollee or insured that
the enrollees's or insured's drug treatment or provider is no
longer covered by the plan or policy. Specifically, this bill:
1)Requires a health plan or insurer, upon annual renewal of a
health plan contract or insurance policy that is issued,
renewed, or amended on or after January 1, 2017, to include in
renewal materials:
a) A notice to an enrollee or insured if that enrollee's or
insured's current drug treatment is no longer covered by
the plan or has changed tiers in the health plan's or
insurer's formulary; and,
b) Information regarding the health plan's or health
insurer's provider directory or directories.
2)Exempts specialized health plans and specialized health
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insurers that cover dental or vision services.
EXISTING LAW:
1)Regulates health plans through the Department of Managed
Health Care (DMHC) under the Knox-Keene Act and health
insurance policies through the California Department of
Insurance (CDI) under the Insurance Code.
2)Requires health plans and insurers that provide prescription
drug benefits and maintain drug formularies to post the
formulary or formularies for each product offered by the plan
or insurer on the plan's or insurer's Website in a manner that
is accessible and searchable by potential enrollees and
insureds, enrollees, insureds and providers.
3)Requires DMHC and CDI to develop a standard formulary template
that contains specified information by January 1, 2017.
Requires health plans and insurers to use the standard
formulary template within six months of the date the template
is developed by DMHC and CDI.
4)Requires health plans and insurers to update their posted
formularies with any change to those formularies on a monthly
basis.
5)Requires health plans, for certain contracts, to provide 60
days' notice prior to the effective date of the contract
renewal for any change in premium rate or coverage.
6)Requires a health plan, and a health insurer that contracts
with providers for alternative rates of payment, to publish
and maintain a provider directory or directories with
information on contracting providers that deliver health care
services to the health plan's enrollees or the health
insurer's insureds, and would require the health plan or
health insurer to make an online provider directory or
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directories available on the health plan or health insurer's
Internet Web site, as specified.
FISCAL EFFECT: This bill has yet to be analyzed by a fiscal
committee.
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, this bill
requires, at the time of renewal, a health care service plan
or a health insurer to annually notify an enrollee or insured
that the enrollee's or insured's prescription drug is no
longer covered by the plan or policy or has changed tiers in
the plan's drug formulary, if that is the case. For people
with serious and chronic conditions, making sure that the
health insurance plan they choose covers the prescription
drugs they need is important. Making sure that the health
insurance plan with which they renew covers their prescription
drug is equally as important. Typically, the health insurance
plan was initially chosen because of the plan's decision to
cover his or her prescription drug. Often times, an enrollee
assumes that if the plan or policy covered his or her drug
before, then the plan will cover the drug for the new benefit
year. This bill takes the first step to guarantee consumers
are aware of formulary changes that affect their specific
prescription drugs by ensuring that, at least at the point of
plan/policy renewal, an enrollee or insured is notified of a
change if one has taken place. This bill also builds upon
recent legislation relating to provider directories and
requires the plan or insurer to provide information about the
plan's or insurer's provider directories.
2)BACKGROUND.
a) Prescription drug notices. Recent legislation and
California's Health Benefit Exchange (also known as
Covered California) have made changes to prescription drug
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benefits, identifying prescription drug tiers and setting
cost-sharing limits. For example, beginning in 2016,
Covered California plans will be required to limit
enrollee deductibles for prescription drugs to $250 for a
30-day supply of drugs in tier 4 ($500 for enrollees in a
bronze plan). Covered California will also require
formularies to include at least one drug in tiers 1, 2, or
3 if all Food and Drug Administration approved drugs in
the same class would otherwise be included in the plan's
tier 4 and at least three drugs in that class are
available. Generally, a drug in tier 1 has the lowest
cost sharing with tier 4 being the highest. Recent
legislation defines the drugs tiers as follows:
-------------------------------------------------------------
|Tie| Covered California | AB 339 (Gordon) |
| r | | |
|---+--------------------------+------------------------------|
| 1 |Most generic drugs and |Most generic drugs and |
| |low cost preferred brands |low-cost preferred brand name |
| | |drugs |
|---+--------------------------+------------------------------|
| 2 |Non-preferred generic |Non-preferred generic drugs, |
| |drugs; or preferred brand |preferred brand name drugs, |
| |name drugs or recommended |and any other drugs |
| |by the plan's pharmacy |recommended by the health |
| |and therapeutics (P&T) |care service plan's P&T |
| |committee based on drug |committee based on safety, |
| |safety, efficacy and |efficacy, and cost. |
| |cost. | |
|---+--------------------------+------------------------------|
| 3 |Non-preferred brand name |Non-preferred brand name |
| |drugs; or recommended by |drugs or drugs that are |
| |the plan's P&T committee |recommended by the health |
| |based on drug safety, |care service plan's P&T |
| |efficacy and cost; or |committee based on safety, |
| |generally have a |efficacy, and cost, or that |
| |preferred and often less |generally have a preferred |
| |costly therapeutic |and often less costly |
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| |alternative at a lower |therapeutic alternative at a |
| |tier. |lower tier. |
|---+--------------------------+------------------------------|
| 4 |The Food and Drug |Drugs that are biologics, |
| |Administration (FDA) or |that the FDA or the |
| |drug manufacturer limits |manufacturer requires to be |
| |distribution to specialty |distributed through a |
| |pharmacies; or self- |specialty pharmacy, that |
| |administration requires |require the enrollee to have |
| |training, clinical |special training or clinical |
| |monitoring; or drug was |monitoring for |
| |manufactured using |self-administration, or that |
| |biotechnology or plan |cost the health plan more |
| |cost (net of rebates) is |than six hundred dollars |
| |more than $600. |($600) net of rebates for a |
| | |one-month supply. |
-------------------------------------------------------------
Additionally, existing law requires the DMHC and CDI to
jointly develop a standard formulary template by January 1,
2017, and requires plans and insurers to use that template
to display formularies, as specified, and requires the
standard formulary template to include specified
information.
b) Provider network notices. Recent legislation also
addresses provider directories, specifically that the DMHC
and CDI develop uniform provider directory standards in SB
137 (Hernandez), Chapter 649, Statutes of 2015, beginning
July 1, 2016. SB 137 would also require a health plan or
health insurer to take appropriate steps to ensure the
accuracy of the information contained in the plan or
health insurer's directory or directories, and would
require the plan or health insurer, at least annually, to
review and update the entire provider directory or
directories for each product offered, as specified.
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Additionally, SB 137 would require a health plan or health
insurer, at least weekly, to update its online provider
directory or directories, and would require a plan or
insurer, at least quarterly, to update its printed
provider directory or directories.
3)SUPPORT. California Chronic Care Coalition (CCCC), the
sponsor of this bill, states that this bill will fill a
continuity of care gap by providing an important information
tool for consumers to better understand health plan changes.
CCCC additionally states that this bill takes the first step
to ensure at least at the point of plan or policy renewal that
an enrollee or insured is notified of formulary and network
changes. Epilepsy California states that this bill will
ensure that people with epilepsy will be informed of any
formulary changes that affect their medications to avoid a
delay in treatment. The California Pharmacists Association
(CPhA) states that despite recent legislation to help
consumers better understand their prescription drug costs and
standardize provider directories, significant gaps in
awareness and notification still exist. CPhA contents that
as a result, consumers are left unaware of such changes until
they pick up a prescription or make an appointment with their
provider. Pharmacists see firsthand the frustration of
patients and understand the economic burden that this places
on their patients especially with the rising costs of drugs.
CPhA states that this bill sets fair practices to ensure that
Californians are aware of any changes within t4)heir plan
network, so that they can take action on getting the right
health care coverage that they need. The California Primary
Care Association states that this bill would provide greater
consumer protections regarding continuity of care consistent
with the intent of the Patient Protection and Affordable Care
Act. The California Hepatitis C Task Force states that
changes in coverage and networks during a course of curative
treatments to resolve chronic disease in a hepatitis C
infected patient population could have devastating
consequences with a patient achieving the outcomes intended by
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medications now available, if interrupted or delayed, and
therefore states that these reforms will help consumers better
reach their wellness goals.
Additionally, the Neuropathy Action Foundation states that
this bill takes the first step to ensure consumers are aware
of formulary changes that affect their specific prescription
drugs by ensuring that enrollees are notified of a change at
least upon renewal and of provider network changes if their
provider has moved out-of-network for the new benefit year.
Arthritis Foundation notes that without notification of
changes, patients assume that their provider and/or necessary
prescription drugs will continue to be covered by their health
insurer and could lead to patients going without proper care
or treatment for extended periods of time by selecting the
wrong plan.
5)OPPOSITION. Blue Shield of California (BSC) states that this
bill will cause confusion for consumers and add unnecessary
administrative burdens that will increase the cost of
premiums. BSC states that current law requires health plans
to notify a member when a drug is moved from formulary to
non-formulary. The Association of California Life and Health
Companies is opposed to a prior version of this bill and
indicates this bill is duplicative of current practice and
would weaken existing consumer protections.
6)RELATED LEGISLATION.
a) SB 923 (Hernandez) prohibits, for grandfathered plan
contracts and policies and nongrandfathered plan contracts
and policies in the individual and small group markets, a
health care service plan contract or health insurance
policy that is issued, amended, or renewed on or after
January 1, 2017, from changing any cost sharing
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requirements during the plan year or policy year, except
when required by a change in state or federal law. SB 923
is currently pending in the Senate Appropriations
Committee.
b) SB 1135 (Monning) requires health plans and insurers to
provide information to enrollees and insureds regarding the
standards for timely access to health care services and
other specified health care access information, including
information related to receipt of interpreter services in a
timely manner, no less than annually, and would make these
provisions applicable to Medi-Cal managed care plans.
Requires a health care service plan, including a Medi-Cal
managed care plan, or health insurer to provide an enrollee
or an insured with information regarding consumer
assistance provided by the licensing agency, as specified.
Requires a health care service plan or a health insurer to
provide a contracting health care provider with specified
information relating to the provision of referrals or
health care services in a timely manner. SB 1135 is
pending in the Senate Appropriations Committee.
7)PREVIOUS LEGISLATION.
a) AB 339 (Gordon), Chapter 619, Statutes of 2015, requires
health plans and health insurers that provide coverage for
outpatient prescription drugs to have formularies that do
not discourage the enrollment of individuals with health
conditions, and requires combination antiretrovirals drug
treatment coverage of a single-tablet that is as effective
as a multitablet regimen for treatment of Human
immunodeficiency virus infection and acquired immune
deficiency syndrome, as specified. AB 339 places in state
law, federal requirements related to pharmacy and
therapeutics committees, access to in-network retail
pharmacies, standardized formulary requirements, formulary
tier requirements similar to those required of health plans
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and insurers participating in Covered California and
copayment caps of $250 and $500 for a supply of up to 30
days for an individual prescription, as specified.
b) SB 137 (Hernandez), Chapter 649, Statutes of 2015,
requires a health plan or insurer to make available a
provider directory or directories that provide information
on contracting providers, including those that accept new
patients and prohibits a provider directory from including
information on a provider that does not have a current
contract with the plan or insurer.
c) SB 1052 (Torres), Chapter 575, Statutes of 2014,
requires health plans and insurers to use a standard drug
formulary template to display their drug formularies and to
post their formularies on their Web sites and requires
Covered California to provide links to the formularies.
REGISTERED SUPPORT / OPPOSITION:
Support
California Chronic Care Coalition (sponsor)
Arthritis Foundation
California Hepatitis C Task Force
California Pharmacists Association
California Primary Care Association
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Neuropathy Action Foundation
Opposition
Association of California Life and Health Insurance Companies
(prior version)
Blue Shield of California
Analysis Prepared by:Kristene Mapile / HEALTH / (916) 319-2097