BILL ANALYSIS Ó
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Date of Hearing: July 14, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
SB
43 (Ed Hernandez) - As Amended April 20, 2015
SENATE VOTE: 37-0
SUBJECT: Health care coverage: essential health benefits.
SUMMARY: Updates California law related to the definition of
essential health benefits (EHBs) to make it consistent with
recent federal regulations under the Patient Protection and
Affordable Care Act (ACA). Specifically, 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.
2)Updates existing law to reflect that, for pediatric vision
care, the Federal Employees Dental and Vision Insurance
Program (FEDVIP) as offered during the first quarter of 2014
(rather than 2012) California's benchmark for pediatric vision
care.
3)Prohibits, for plan years commencing on or after January 1,
2017, limits on habilitative and rehabilitative services from
being combined.
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4)Replaces the existing definition of habilitative services with
the following: "Habilitative 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.
5)Extends emergency regulation authority for the Department of
Managed Health Care (DMHC) and the California Department of
Insurance (CDI) and makes this authority inoperative on July
1, 2018.
EXISTING LAW:
1)Provides for the regulation of health plans by DMHC and
regulation of health insurers by CDI.
2)Establishes as California's EHBs the Kaiser Small Group HMO 30
plan as offered during the first quarter of 2012 along with
the following 10 federally mandated benefits under the ACA as
well as other state mandated benefits:
a) Ambulatory patient services;
b) Emergency services;
c) Hospitalization;
d) Maternity and newborn care;
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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 "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
FEDVIP vision plan with the largest national enrollment as of
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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 (HFP)
in 2011-12, including the provision of medically necessary
orthodontic care provided pursuant to the federal Children's
Health Insurance Program (CHIP) Reauthorization Act of 2009.
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill results in:
1)One-time costs over $150,000 to revise regulations by CDI
(Insurance Fund).
2)One-time costs over $150,000 to revise regulations by DMHC
(Managed Care Fund).
3)No anticipated impact to state health care program such as
Medi-Cal or California Public Employees' Retirement System
(CalPERS). This bill's provisions make minor changes to
statute governing the individual and small group health care
markets, which do not include those programs.
4)No cost to the state to provide subsidies for additional costs
to Covered California plans, due to the change to the
definition of habilitative services. Recent federal guidance
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indicates that states are not obligated to defray any
additional subsidy costs in health benefit exchanges due to a
change to the definition of habilitative services.
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, in 2012, the
Legislature established California's benchmark EHB plan
through a process that recognized the importance of existing
state-mandated benefits incorporating as many state mandates
as possible; protecting California's commitment to
reproductive services; embracing the consumer-oriented
regulatory framework in place at DMHC; and maintaining
affordability for consumers. Using these principles and
through a process of comparison, SB 951 (Ed 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. The author
states that, earlier this year, the federal government issued
new regulations requiring states to update their EHBs based on
2014 benchmark plans. The new regulations also create a
definition of habilitative services and devices that is more
generous than California's current definition. The author
states that this bill has been introduced to make statutory
changes necessary to conform to federal requirements.
2)BACKGROUND.
a) 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
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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. Such an
approach 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:
i) One of the three largest small group plans in the
state by enrollment;
ii) One of the three largest state employee health plans
by enrollment;
iii) One of the three largest federal employee health
plan options by enrollment; or,
iv) 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.
The analysis was used by stakeholders in the decision
making process for selecting the EHB benchmark plan
effective January 1, 2014.
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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.
Also, if a base-benchmark plan selected by a state does not
include items or services within one or more of the EHBs,
the plan must be supplemented by the addition of the entire
category of such benefits offered under any other benchmark
plan option. To supplement the Kaiser Small Group HMO base
benchmark plan in the areas of pediatric vision and
pediatric dental services, the state selected the FEDVIP
plan for pediatric vision, and CHIP, formerly referred to
as HFP, for pediatric dental services.
The 2012-13 state Budget required the transition of
children enrolled in the HFP to the Medi-Cal program. As
such, CHIP-eligible children are covered under Medi-Cal.
For the purposes of selection of the state's CHIP program
to supplement the base-benchmark plan, dental benefits
provided under the Medi-Cal program serves as the benchmark
for pediatric dental benefits.
a) EHB Selection for 2017. A recent federal regulation
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issued by CCIIO, requires states to use 2014 plans to
define EHB, 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. Under the Knox-Keene Health Care Service
Plan Act of 1975, coverage requirements are based on medical
necessity. 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 subsidy costs if a
mandate is passed to supplement the habilitative coverage
category.
States that plan to select an EHB benchmark were required to
identify their proposed benchmark plan (including
supplementation if necessary) and send supporting documents to
CCIIO by June 1, 2015. As was the case in 2012, states that
do not make a plan selection default to the largest product by
enrollment in the state's small group market. Final benchmark
plans selections are due to CCIIO by August 2015, and 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
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quarter of 2014 as the pediatric vision services benchmark.
b) 2015 Milliman analysis. The California Health Benefits
Review Program (CHBRP) asked Milliman to analyze and
compare the health services covered by the 10 plans
available to California as options for California's EHB
benchmark effective January 1, 2017. Milliman found
relatively small differences in average healthcare costs
among the 10 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% higher.
The estimated average costs for the three FEHBP options are
approximately 1% higher than the current California EHB
plan.
As noted below, some recommend a change in the selected EHB
base benchmark plan from the Kaiser Small Group HMO 30 plan
to the CalPERS Kaiser HMO. According to the Milliman
analysis, there are coverage differences between the two
plans. The CalPERS Kaiser HMO includes coverage for
hearing aids (with coverage limits), and infertility
treatment. While both plans provide coverage for home
health care, the Kaiser Small Group HMO 30 covers 100
visits per year. The CalPERS Kaiser HMO does not limit the
number of visits per year. Milliman estimated that with
these coverage differences, selecting the CalPERS Kaiser
HMO would result in an increase in allowed costs by 0.38%.
Other coverage differences between the two plans include
coverage by the CalPERS Kaiser HMO for certain categories
of prosthetic an orthotic devices, eyeglasses or contact
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lenses following cataract surgery. These coverage
differences were not factored into Milliman's cost
estimate.
c) Stakeholder engagement. On May 15, 2015, the Senate
Health Committee held a stakeholder meeting where
stakeholders were given an opportunity to hear from, and
ask questions to, representatives of the CHBRP, Milliman,
DMHC, CDI, and the Department of Health Care Services about
EHBs for 2017. Following the meeting, some stakeholders
submitted written comments to the Senate Health Committee
offering a range of suggestions and recommendations for
inclusion in this bill, including:
i) Retaining the current Kaiser Small Group HMO 30
plan as the state's EHB benchmark;
ii) Adopting the CalPERS Kaiser HMO plan as the
state's EHB benchmark;
iii) Conforming to the federal definition of
"habilitative services";
iv) Prohibiting the combination of coverage limits
on habilitative and rehabilitative services;
v) Increasing the age limit for pediatric services
from 19 to 21 years of age;
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vi) Including Medi-Cal's Early and Periodic
Screening, Diagnosis, and Treatment benefit in the
pediatric dental services benchmark;
vii) Clarifying that no limits may be imposed on
habilitative services to the extent they are medically
necessary; and,
viii) Prohibiting plans from excluding chiropractors
as a category of provider, and prohibiting Covered
California from precluding plans from covering
chiropractic services if such services are not included
in the Kaiser Small Group HMO 30 plan.
3)SUPPORT. Health Access California (HAC) states that EHBs
assure individuals and small employers who purchase coverage
that their benefits are as comprehensive as those offered by
large employers, and prior to the enactment of EHBs, many
Californians had minimal coverage that lacked coverage for
basic health benefits. HAC supports the state's current
definition of EHBs which assures comprehensive health
benefits, and asserts that by conforming to the federal
definition of "habilitative services" this bill will provide
comprehensive habilitative services thus helping get families
and children the care they need.
Autism Speaks, the Center for Autism and Related Disorders,
and other supporters support the redesignation of the Kaiser
Small Group HMO 30 plan as the EHB standard, as well as the
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revised definition of "habilitative services" which, they
state, provides examples of services that are covered and set
the standard for care as services that help a person keep,
learn, or improve sills and functioning for daily living. The
Western Center on Law and Poverty (WCLP) supports this bill,
although is disappointed that the Kaiser Small Group HMO 30
plan does not include coverage for hearing aids. WCLP and the
National Health Law Program recommend changing the age for
qualification of pediatric coverage from 19 to 21 years of
age, in order to allow 19 and 20 year olds to receive services
consistent with Medi-Cal.
The California Insurance Commissioner Dave Jones supports this
bill, if amended to choose the Kaiser CalPERS HMO for the
state's EHB benchmark plan because it broadens coverage. The
Amputee Coalition, and orthotics and prosthetics providers
also support the bill if amended to select the CalPERS Kaiser
HMO plan as the state's EHB benchmark plan, stating that the
current EHB benchmark plan offers limited coverage for
orthotics and prosthetics.
4)PREVIOUS LEGISLATION.
a) SB 951 and AB 1453 select the Kaiser Small Group HMO 30
as California's benchmark plan to serve as the EHB
standard, as required by federal law.
b) 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.
c) SB 51 (Alquist), Chapter 644, Statutes of 2011,
established enforcement authority in California law to
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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.
d) SB 900 (Alquist), Chapter 659, Statutes of 2010, and AB
1602 (Perez), Chapter 655, Statutes of 2010, established
the California Health Benefit Exchange.
5)AMENDMENTS. The author would like to make the following
amendments to this bill:
a) Clarify that all of the proposed change in the bill
become effective for the 2017 plan year.
b) Replace an outdated reference to the HFP, with a
reference to the Medi-Cal program with respect to pediatric
oral benchmark benefits as follows:
Page 5, lines 16 to 24:
"With respect to pediatric oral care, the same health benefits
for pediatric oral care covered under the dental benefit
received by children under Medi-Cal as of 2014 the dental plan
available to subscribers of the Healthy Families Program in
2011-12 , including the provision of medically necessary
orthodontic care provided pursuant to the federal Children's
Health Insurance Program Reauthorization Act of 2009. The
pediatric oral care benefits covered pursuant to this paragraph
shall be in addition to, and shall not replace, any dental or
orthodontic services covered under the plan identified in
paragraph (2)."
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REGISTERED SUPPORT / OPPOSITION:
Support
Insurance Commissioner Dave Jones (if amended)
American Federation of State, County, and Municipal Employees,
AFL-CIO
Amputee Coalition (if amended)
Autism Speaks
California Association of Medical Product Suppliers (if amended)
California Chiropractic Association (if amended) (previous
version)
California Orthotic and Prosthetic Association (if amended)
California Primary Care Association
California State University Dominguez Hills Orthotic and
Prosthetic Program (if amended)
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California Teachers Association
Center for Autism and Related Disorders
Collier Orthotics and Prosthetics
Health Access California
National Association for the Advancement of Orthotics and
Prosthetics (if amended)
National Health Law Program (if amended)
Occupational Therapy Association of California
Planned Parenthood Affiliates of California
Western Center on Law and Poverty
Opposition
None on file.
Analysis Prepared by:Kelly Green / HEALTH / (916)
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319-2097