BILL ANALYSIS Ó SB 43 Page 1 Date of Hearing: August 19, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair SB 43 (Hernandez) - As Amended August 17, 2015 ----------------------------------------------------------------- |Policy |Health |Vote:|17 - 1 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 SB 43 Page 2 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). SB 43 Page 3 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 SB 43 Page 4 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. SB 43 Page 5 Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081