BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  August 19, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          SB 43  
          (Hernandez) - As Amended August 17, 2015


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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill 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  








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          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) is 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.

          4)Replaces the existing definition of habilitative services to  
            be consistent with new federal regulation.  

          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.
          


          FISCAL EFFECT:





          1)One-time costs of $150,000 to revise regulations and ensure  
            policy compliance by CDI (Insurance Fund).











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          2)One-time costs of $350,000 to revise regulations and ensure  
            plan compliance 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  
            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. 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, 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 (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.  Earlier this year, the federal government issued new  








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            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 this bill has been introduced to make statutory changes  
            necessary to conform to federal requirements.  



          2)EHB Designation. The ACA requires health plans offered in the  
            individual and small group markets to offer a comprehensive  
            package of items and services termed EHBs. These EHBs must  
            include items and services with at least the following 10  
            categories: ambulatory patient services; emergency services;  
            hospitalization; maternity and newborn care; mental health and  
            substance use disorder services, including behavioral health  
            treatment; prescription drugs; rehabilitative and habilitative  
            services and devices; laboratory services; preventive and  
            wellness services and chronic disease management; and  
            pediatric services, including oral and vision care.  States  
            were provided authority to designate EHBs by reference to a  
            benchmark plan, and California designated a Kaiser Small Group  
            HMO plan as the benchmark.  This bill simply updates the  
            benchmark to a 2014 product instead of a 2012 product, which  
            the code currently references. This choice was based on  
            significant actuarial analysis and stakeholder engagement. 



          3)Support. This bill has fairly broad support and has no  
            opposition. Certain interest groups and entities, including  
            Insurance Commissioner Dave Jones, the Amputee Coalition,  
            National Health Law Program, and the California Orthotic and  
            Prosthetic Association, have urged consideration of the Kaiser  
            CalPERS HMO product as a benchmark instead of the small-group  
            product identified in the bill, as it includes a slightly  
            greater benefit package that includes coverage for hearing  
            aids, infertility treatment, and certain prosthetic and  
            orthotic devices. 








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          Analysis Prepared by:Lisa Murawski / APPR. / (916)  
          319-2081