BILL ANALYSIS Ó
ENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 43
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|AUTHOR: |Hernandez |
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|VERSION: |April 20, 2015 |
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|HEARING DATE: |April 29, 2015 | | |
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|CONSULTANT: |Teri Boughton |
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SUBJECT : Health care coverage: essential health benefits
SUMMARY :1) Updates California law related to the definition of
essential health benefits to make it consistent with recent
federal regulations under the Patient Protection and
Affordable Care Act. Health plans and health insurers are
required to cover essential health benefits for products sold
in the individual and small group health insurance market,
which includes plans offered through Covered California.
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,
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j. Pediatric services, including oral and vision
care.
3)Defines "habilitative services" as medically necessary health
care services and health care devices that assist an
individual in partially or fully acquiring or improving skills
and functioning and that are necessary to address a health
condition, to the maximum extent practical. These services
address the skills and abilities needed for functioning in
interaction with an individual's environment. Examples of
health care services that are not habilitative services
include, but are not limited to, respite care, day care,
recreational care, residential treatment, social services,
custodial care, or education services of any kind, including,
but not limited to, vocational training.
4)Requires habilitative services to be covered under the same
terms and conditions applied to rehabilitative services under
the plan contract.
5)Requires, with respect to habilitative services, coverage to
also be provided as required by federal rules, regulations,
and guidance issued pursuant to ACA.
6)Requires, with respect to pediatric vision care, the same
health benefits for pediatric vision care covered under the
Federal Employees Dental and Vision Insurance Program (FEDVIP)
vision plan with the largest national enrollment as of the
first quarter of 2012.
7)Requires, with respect to pediatric oral care, the same health
benefits for pediatric oral care covered under the dental plan
available to subscribers of the Healthy Families Program in
2011-2012, including the provision of medically necessary
orthodontic care provided pursuant to the federal Children's
Health Insurance Program (CHIP) Reauthorization Act of 2009.
This bill:
1)Updates existing law to reflect that the Kaiser Foundation
Health Plan Small Group HMO 30 plan as offered during the
first quarter of 2014 (rather than 2012) is California's EHB
benchmark and makes a similar update with respect to the
pediatric vision care benchmark plan offered during the first
quarter of 2014.
SB 43 (Hernandez) Page 3 of ?
2)Prohibits, for plan years commencing on or after January 1,
2017, limits on habilitative and rehabilitative services from
being combined.
3)Replaces the existing definition of habilitative services with
the following:
"Habilitiative Services" means 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 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.
FISCAL
EFFECT : This bill has not been analyzed by a fiscal committee.
COMMENTS :
1.Author's statement. According to the author, in 2012 the
California Legislature established California's benchmark
EHB plan through a process that recognized the importance of
existing state-mandated benefits and incorporated as many
state mandates as possible; protected California's
commitment to reproductive services; embraced the
consumer-oriented regulatory framework in place at DMHC; and
maintained affordability for consumers. Using these
principles and through a process of comparison, SB 951
(Hernandez), Chapter 866, Statutes of 2012, paired with AB
1453 (Monning), Chapter 854, Statutes of 2012, designated
the Kaiser Small Group HMO to serve as the state's benchmark
plan. Additionally, the legislation established a
definition for habilitative services. Habilitative services
are federally mandated EHBs but, at the time, were not
federally defined. The federal government has since
established a definition of habilitative services, which is
contained in this bill. California's Secretary of Health
and Human Services sent a letter recently notifying the
federal government of California's proposed 2017 EHB
benchmark which remains the Kaiser Small Group HMO plan.
California must update our law to keep California EHBs in
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compliance with federal requirements.
2.2012 EHB Selection. Under the ACA, plans sold through Covered
California and those providing coverage to individuals and
small employers not through Covered California are required to
ensure coverage of EHBs, as defined by the federal Secretary
of the Department of Health and Human Services (HHS). HHS is
required to ensure that the scope of EHBs is equal to the
scope of benefits provided under a typical employer plan, as
determined by the Secretary.
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 as of the first quarter of 2012. EHBs
must include coverage of services and items in all 10
statutory categories required in the ACA. States were
permitted to choose among the following benchmark health
insurance plan options:
a. One of the three largest small group plans in the state
by enrollment;
b. One of the three largest state employee health plans by
enrollment;
c. One of the three largest federal employee health plan
options by enrollment; or
d. The largest HMO plan offered in the state's commercial
market by enrollment.
In January 2012, Covered California retained a consulting
firm, Milliman, to analyze and compare the health services
covered by the 10 EHB California benchmark plan options.
Milliman found all the plans to be comprehensive and found
there to be only 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.
1.2014 EHB Selection. A recent federal regulation issued by
CCIIO, requires states to use 2014 plans to define EHB,
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starting with the 2017 plan year. The process will largely
mirror the prior benchmark selection process conducted in
2012. The benchmark options and default plan are the same
10 types as in 2012. If a benchmark plan does not include
items or services within one or more of the 10 federally
required EHB categories, the EHB must be supplemented by the
addition of the entire category of such benefits offered
under any other benchmark plan option. 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 qualified health plan (QHP) subsidy
costs if a mandate is passed to supplement the habilitative
coverage category. States that plan to select an EHB
benchmark must identify their proposed benchmark plan
(including supplementation if necessary) and send supporting
documents by June 1, 2015. As was the case in 2012, states
that do not make a plan selection will default to the
largest product by enrollment in the state's small group
market. Final benchmark plans will be published in the
Federal Register in fall of 2015.
On April 17, 2015, the Secretary of California's Health and
Human Services Agency sent a letter to CCIIO selecting the
Kaiser Small Group HMO as the state's proposed benchmark
plan. Additionally, the state has selected the state's CHIP
program for pediatric oral services and the FEDVIP with the
largest national enrollment as of the first quarter of 2014
as the pediatric vision services benchmark.
2.Milliman, 2015. The California Health Benefits Review
Program asked Milliman to analyze and compare the health
services covered by the ten plans available to California as
options for California's EHB benchmark effective January 1,
2017, similar to the analysis completed for Covered
California in 2012. Milliman found relatively small
differences in average healthcare costs among the ten
benchmark options. Milliman did find differing coverage of
acupuncture, infertility treatment, chiropractic care, and
hearing aids. The three California small group plans are
essentially the same average cost as the current California
EHB plan and the California large group and CalPERS plans
are approximately 0.2-1.0 percent higher. The estimated
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average costs for the three FEHBP options are approximately
0.8-1.2 percent higher than the current California EHB plan.
3.Prior legislation.
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.
SB 51 (Alquist), Chapter 644, Statutes of 2011, established
enforcement authority in California law to implement
provisions of the ACA related to medical loss ratio
requirements on health plans and health insurers and enacts
prohibitions on annual and lifetime benefits.
SB 900 (Alquist), Chapter 659, Statutes of 2010, and AB 1602
(Perez), Chapter 655, Statutes of 2010, established the
California Health Benefit Exchange.
4.Support. Health Access California supports this bill
because it has a more comprehensive definition of
habilitative consistent with federal guidance adopted in
February 2015. The Western Center on Law and Poverty writes
that they support the provisions in SB 43 to conform the
definition of habilitative services to the federal
definition and keeping the parity language with
rehabilitative services and adding language indicating that
for plan years on or after 2017, limits on habilitative and
rehabilitative services shall not be combined. Additionally,
while the bill selects the 2014 Kaiser Small Group HMO plan
as the benchmark plan Western Center understands that an
analysis of the ten California benchmark plans is being
conducted and looks forward to reviewing that analysis and
having stakeholders assess at that point if a different plan
should be chosen as the benchmark. There may be other needed
changes to the bill including regarding prescription drug
coverage based on federal regulatory requirements in that
arena as well.
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5.Support if amended. California Chiropractic Association
requests this bill be amended to include language specific to
EHB plan that would require the Covered California governing
board to offer additional benefits. The California
Chiropractic Association believes amending this bill as such
would make the EHB the minimum of covered services and allow
plans to offer any other services or benefits they would like
provide their insured patient.
SUPPORT AND OPPOSITION :
Support: Health Access California
California Primary Care Association
Western Center on Law and Poverty
Oppose: None received
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