BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 43|
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UNFINISHED BUSINESS
Bill No: SB 43
Author: Hernandez (D), et al.
Amended: 8/17/15
Vote: 21
SENATE HEALTH COMMITTEE: 9-0, 4/29/15
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen,
Pan, Roth, Wolk
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SENATE FLOOR: 37-0, 6/1/15
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno,
Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach,
Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak,
Wieckowski
NO VOTE RECORDED: Hancock, Runner, Wolk
ASSEMBLY FLOOR: 79-0, 9/1/15 - See last page for vote
SUBJECT: Health care coverage: essential health benefits
SOURCE: Author
DIGEST: This bill updates Californias essential health
benefits (EHB) law to make it consistent with new federal
requirements promulgated under the Affordable Care Act (ACA),
which includes adoption of the federally required definition of
habilitative services and devices.
Assembly Amendments clarify that the federally required
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definition of habilitative services takes effect for plan years
commencing on or after January 1, 2016, that the dental benefit
received by children under Medi-Cal as of 2014 is the benchmark
benefit for pediatric oral services, and that the 2014 benchmark
plans are in effect on or after January 1, 2017.
ANALYSIS:
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 EHBs the Kaiser Small Group HMO
plan, other state mandated benefits, and the following 10
federally mandated benefits required under ACA:
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
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,
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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 for plan contracts and policies issued, amended, or
renewed on or after January 1, 2017 and makes a similar update
with respect to the pediatric vision care benchmark plan
offered during the first quarter of 2014.
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 for
plan years commencing on or after January 1, 2016 with the
following:
"Habilitative Services" means health care services and devices
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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.
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
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
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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.
3)2014 EHB selection. A recent federal regulation 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
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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 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.
4)Milliman, 2015. The California Health Benefits Review Program
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, similar
to the analysis completed for Covered California in 2012. The
analysis was presented to stakeholders on May 15, 2015.
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 federal Employees Health
Benefits Program options are approximately 0.8-1.2% higher
than the current California EHB plan.
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5)Several organizations, such as the California Orthotic and
Prosthetic Association and the California Children's Health
Coalition have submitted letters of support if amended, to
request California choose the CalPERS large group plan as the
EHB benchmark as it offers coverage for additional benefits
such as hearing aids (with coverage limits), infertility
treatment, prosthetic and orthotic devices, and eye glasses or
contact lenses following cataract surgery. Not all of these
coverage differences were factored into the Milliman cost
estimate.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Assembly Appropriations Committee:
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 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.
SUPPORT: (Verified9/1/15)
American Federation of State, County and Municipal Employees
California Teachers Association
Health Access California
Mental Health America of California
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Planned Parenthood Affiliates of California
Western Center on Law and Poverty
OPPOSITION: (Verified9/1/15)
None received
ARGUMENTS IN 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.
ASSEMBLY FLOOR: 79-0, 9/01/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Harper, Roger Hernández, Holden, Irwin,
Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Hadley
Prepared by: Teri Boughton / HEALTH /
9/1/15 21:35:18
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