BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 125 --------------------------------------------------------------- |AUTHOR: |Hernandez | |---------------+-----------------------------------------------| |VERSION: |February 26, 2015 | --------------------------------------------------------------- --------------------------------------------------------------- |HEARING DATE: |March 25, 2015 | | | --------------------------------------------------------------- --------------------------------------------------------------- |CONSULTANT: |Melanie Moreno | --------------------------------------------------------------- SUBJECT : Health care coverage SUMMARY : Requests the California Health Benefit Review Program (CHBRP) to analyze the impact of specified legislation on essential health benefits and Covered California, as well as legislation that impacts health insurance benefit design, cost sharing, premiums, and other health insurance topics. Requests the analyses to be provided to the Legislature in a manner pursuant to a timeline agreed upon by CHBRP and the Legislature. Extends the fee assessed on health plans and insurers for this purpose until fiscal year 2016-17. Extends the sunset date of CHBRP to June 30, 2017. Establishes an annual open enrollment period for purchasers in the individual health insurance market for the policy year beginning on January 1, 2016, from November 1, of the preceding calendar year, to January 31, of the benefit year, inclusive. Existing law: 1.Requests the University of California (UC) to establish the CHBRP to assess, as specified and not later than 60 days from receiving a request by the Legislature, legislation proposing to mandate or repeal a health plan or health insurance benefit or service for public health, medical, and financial impacts. 2.Requires health plans, except specialized health plans, and health insurers, for fiscal years 2010-11 to 2014-15, to be assessed an annual fee to fund CHBRP, as specified, not to exceed $2 million. 3.Sunsets CHBRP on June 30, 2015. 4.Requires health plans and insurers to limit enrollment in individual health benefit plans to open enrollment periods, SB 125 (Hernandez) Page 2 of ? annual enrollment periods, and special enrollment periods. 5.Requires plans and insurers to provide an initial open enrollment period from October 1, 2013, to March 31, 2014, inclusive, an annual enrollment period for the policy year beginning on January 1, 2015, from November 15, 2014, to February 15, 2015, inclusive, and annual enrollment periods for policy years beginning on or after January 1, 2016, from October 15 to December 7, inclusive, of the preceding calendar year. This bill: 1.Requests CHBRP, in addition to analyzing the public health impacts, medical effectiveness, and financial impacts of legislation proposing to mandate or repeal a benefit or service, to also analyze the impact on essential health benefits (EHBs) and Covered California. 2.Requests CHBRP to assess legislation that impacts health insurance benefit design, cost sharing, premiums, and other health insurance topics. 3.Requests analyses to be provided to the appropriate committees of the Legislature in a manner pursuant to a timeline agreed upon by the Legislature and CHBRP. 4.Extends the fee assessed on health plans and insurers to fiscal year 2016-17. 5.Requests CHBRP to submit a report to the Governor and Legislature by January 1, 2017 regarding the implementation of the program. 6.Extends the sunset date of CHBRP to June 30, 2017. 7.Establishes an annual open enrollment period for the policy year beginning on or after January 1, 2016, from November 1, of the preceding calendar year, to January 31, of the benefit year, inclusive. 8.Contains an urgency clause that will make this bill effective upon enactment. FISCAL EFFECT : This bill has not been analyzed by a fiscal committee. SB 125 (Hernandez) Page 3 of ? COMMENTS : 1.Author's statement. According to the author, SB 125 updates California statutes to reflect the new, post-Affordable Care Act (ACA) environment by reauthorizing CHBRP and incorporating EHB and health insurance exchanges (Covered California) into their work. The bill also expands the breadth of CHBRP's studies by requesting the inclusion of impacts from legislation on health insurance benefit design, cost sharing, premiums, and other health insurance topics in their assessments. SB 125 also revises the open enrollment period in the individual market to remain consistent with federal regulations beginning with the 2016 benefit year. The open enrollment period in the individual market will begin from November 1 of the preceding calendar year to January 31, of the benefit year, inclusive, for benefit years beginning on or after January 1, 2016. The change in open enrollment dates for the individual market is to not only align with federal regulations, but to also allow the consumers adequate time for plan choice or changes to their plan prior to a January 1 effective date of coverage. 2.Affordable Care Act. The Affordable Care Act (ACA), enacted on March 23, 2010 and amended on March 30, 2010, represents a major expansion of U.S. health care coverage through an expansion and simplification of the Medicaid program and the adoption of major reforms of the health insurance market. Most transformational are changes to the small group and individual insurance markets, such as mandating guaranteed issuance of coverage, eliminating pre-existing condition exclusions, limiting factors upon which premium rates can be developed, and authorizing the creation of health benefit exchanges either at the state or federal level. California took early steps to establish Covered California, pass rate review requirements, establish essential health benefits, and adopt insurance market reforms to implement aspects of the ACA, in some cases before federal regulatory guidance was issued or finalized. An overarching objective in the development of California implementing legislation was to ensure, to the extent possible, that laws applicable to plans and insurers participating in Covered California were also applied to plans and insurers not participating in Covered SB 125 (Hernandez) Page 4 of ? California in order to keep a level, regulatory playing field. For example, open and special enrollment periods not only apply to qualified health plans (QHPs) but also to health plans and insurers not participating in Covered California. As such, for the individual market, an initial open enrollment period of October 1, 2013 to March 31, 2014 and annual open enrollment period of November 15, 2014, to February 15, 2015 for the 2015 benefit year apply to QHPs and health plans and insurers not participating in Covered California. The federal Department of Health and Human Services (HHS) initially issued a regulation to maintain an annual open enrollment period, for policy years beginning on or after January 1, 2016, from November 1 to December 15, inclusive, of the preceding calendar year. On February 20, 2015, HHS issed the "Final HHS Notice of Benefit and Payment Parameters for 2016," which requires the annual open enrollment period for the 2016 policy year to be November 1, of the preceding calendar year, to January 31, of the benefit year. HHS made these changes to give health insurance carriers additional time before they would need to set their 2016 rates and submit their QHPs applications, give states and HHS more time to prepare for open enrollment, and give consumers more time to shop for coverage. 3.EHBs. Among many other provisions, the ACA requires Medicaid benchmark and benchmark-equivalent plans, plans sold through the Exchange, and health plans and health insurers providing coverage to individuals and small employers to ensure coverage of EHBs, as defined by 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. Under federal law, EHBs must include 10 general categories and the items and services covered within the following categories: 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; SB 125 (Hernandez) Page 5 of ? i. Preventive and wellness services and chronic disease management; and, j. Pediatric services, including oral and vision care. On December 16, 2011, the HHS Center for Consumer Information and Insurance Oversight released a bulletin proposing that EHBs be defined using a benchmark approach. SB 951 (Hernandez), Chapter 866, Statutes of 2012 and AB 1453 (Monning), Chapter 854, Statutes of 2012 designated the Kaiser Small Group HMO as California's benchmark plan to serve as the EHB standard. The state has to defray the costs of federal subsidies to cover any mandate enacted that is beyond what is contained in EHBs pursuant to SB 951 and AB 1453. The 2016 Notice of Benefit and Payment Parameters final rule includes a definition of habilitative, which differs from California's definition, and proposes that states select new benchmark plans for 2017 based on plans available in 2014. SB 43 (Hernandez) has been introduced to update California's EHB benchmark selection. 4.Covered California. Through SB 900 (Alquist) Chapter 659, Statutes of 2010, and AB 1602 (Perez), Chapter 655, Statutes of 2010, California was the first state in the nation to establish a Health Benefit Exchange (known as Covered California). Adopting its Board of Directors in October 2011, Covered California's vision is to improve the health of all Californians by assuring their access to affordable, high quality care. According to Covered California, it is an easy-to-use marketplace where individuals can get financial assistance to make coverage more affordable and where people can compare and choose health coverage. As of March 31, 2014, approximately 3.2 million Californians have enrolled in coverage since October 1, 2013, including 1.9 million in Medi-Cal. 5.California Health Benefits Review Program. CHBRP was established under AB 1996 (Thomson), Chapter 795, Statutes of 2002, which requested UC to assess legislation that proposes a mandated benefit or service (referred to as "mandate bills") and prepare a timely written analysis within 60 days with relevant data on the medical, economic, and public health impacts of proposed health plan and health insurance benefit mandate legislation. Current law requires health plans, except specialized health plans, and health insurers, for fiscal years 2010-11 to 2014-15, to be assessed an annual fee to fund SB 125 (Hernandez) Page 6 of ? CHBRP, this amount is to not to exceed $2 million. CHBRP is administered in the UC Office of the President and has staff that supports a task force of faculty from six UC campuses (Berkeley, Davis, Irvine, Los Angeles, San Diego, and San Francisco) and three private universities (Loma Linda University, the University of Southern California, and Stanford University). CHBRP is set to sunset on December 31, 2015. The Governor's proposed budget provides $2 million for CHBRP. 6.Number of mandate bills. Since CHBRP's inception, the number of bills mandating benefits and services has fluctuated, and in the last year has decreased significantly. When AB 1996 was being considered by the Legislature, the author stated that during the 2001-2002 legislative session, more than 14 mandate bills were introduced. The author believed that UC would facilitate the provision of quality, cost-effective health services by providing current, accurate data and information to the Governor and the Legislature for the purpose of determining health-related programs and policies in connection with proposed legislation. In 2003, the first year that the UC received requests for analysis of mandate bills, only four were introduced and analyzed. The following year, there were 13 mandate bills analyzed. Between 2005 and 2014, the number of mandate bills introduced has varied, with the largest number (15 mandate bills) in 2011. With the passage of the ACA, and the establishment of EHBs, policymakers have worked to ensure the successful implementation of the ACA and Covered California, and have endeavored to discourage any additional legislation to alter state mandated benefits until the implications on EHBs were known. 7.New ways to tweak coverage requirements. In the 10 years since CHBRP has been analyzing mandate bills, various stakeholders and interest groups have developed legislative proposals other than mandates to have a similar effect on coverage requirements. These have included: a. SB 639 (Hernandez), Chapter 316, Statutes of 2013 places in California law provisions of the ACA relating to out-of-pocket limits on health plan enrollee and insured cost-sharing, health plan and insurer actuarial value coverage levels and catastrophic coverage requirements, and requirements on health insurers with regard to coverage for out-of-network emergency services. SB 125 (Hernandez) Page 7 of ? Applies health plan enrollee and insured out-of-pocket limits to specialized products that offer EHBs. b. AB 1800 (Ma), of 2012, would have implemented provisions of the ACA related to prohibitions on health plans and health insurers from imposing out-of-pocket maximum caps which exceed specified levels. AB 1800 was held in the Senate Appropriations Committee. c. AB 310 (Ma), of 2011, would have prohibited health plan contracts and health insurance policies that cover outpatient prescription drugs from requiring coinsurance, as defined, as a basis for cost sharing for outpatient prescription drug benefits and imposes specified limitations on copayments, as defined, and out-of-pocket expenses for outpatient prescription drugs. AB 310 was held in Assembly Appropriations Committee. 8.60-day Timeline. AB 1996 and subsequent legislation that extended CHBRP included a request that analyses be provided to the Legislature within 60 days. CHBRP developed a model that has resulted in analyses not being completed prior to that 60-day deadline. According to CHBRP's 2013 report to the Legislature, it uses a 60-day timeline that details which activities occur on what day. The 60-day clock is initiated by CHBRP upon receipt of a request from the Senate or Assembly Health Committee. According to CHBRP, it must have sufficient capacity to do multiple (e.g., eight or more) analyses on simultaneous 60-day timelines. CHBRP faculty, actuaries, librarians, reviewers, and staff must produce and review multiple drafts on multiple bills in what they consider a very compressed timeframe, given their model. This timeline has led to challenges for incorporating CHBRP's assessment into the policy committee analysis used by legislators and the public at the time of the bill hearing. Often times mandate bills are introduced close to the bill introduction deadline, which is also about 60 days before deadline for policy committees to hear bills, meaning mandate bills are almost always scheduled for the final hearing prior to the policy committee deadline for fiscal bills. Therefore, there is a tight window between the time the CHBRP analysis is received and the Committee analysis must be completed. 9.Prior legislation. AB 1996 (Thomson), Chapter 795, Statutes of 2002, requests UC (which created CHBRP in response), until January 1, 2007, to, within 60 days of receiving a request by the Legislature, review legislation proposing to mandate or SB 125 (Hernandez) Page 8 of ? repeal a health plan or health insurance benefit or service for public health, medical, and financial impacts. SB 1704 (Kuehl), Chapter 684, Statutes of 2006, extends CHBRP's sunset date to January 1, 2011 and added legislation proposing to repeal a mandated benefit or service to the types of legislation that the Legislature requests CHBRP assess. Extended the sunset date of the program to January 1, 2011. AB 1540 (Committee on Health), Chapter 298, Statutes of 2009, extends CHBRP's sunset date to June 30, 2015. SB 1465 (Committee on Health), Chapter 442, Statutes of 2014, extends the CHBRP's sunset date to December 31, 2015. SB 20 (Hernandez), Chapter 24, Statutes of 2014, requires a plan or insurer to provide annual enrollment periods for policy years beginning on or after January 1, 2016, from October 15 to December 7, inclusive, of the preceding calendar year. AB 1578 (Pan) of 2014 would have extended CHBRP's sunset date to June 30, 2016. AB 1578 died in the Assembly. 10.Support. Proponents of the bill note the significance of the analyses produced by CHBRP as well as the necessity to maintain consistency between open enrollment periods for health benefit plans in California and federal regulations. The California Association of Health Plans believes the changes to the individual annual open enrollment periods should be made to conform to federal law and guidance as soon as possible to allow for greater clarity on the matter for health plans, consumers, and regulators. The California Chamber of Commerce also acknowledges the need to extend the operative date for CHBRP in order to make it possible for the Legislature to fully weigh the potential health benefits and costs to the system related to a particular proposal. 11.Support if amended. Health Access supports expanding CHBRP's role to include review of essential health benefits for the individual and small group markets: their analysis of the legislation that initially implemented essential health benefits was useful. However, the bill requests that CHBRP "?assess legislation that impacts health insurance benefit design, cost sharing, premiums, and other health insurance SB 125 (Hernandez) Page 9 of ? topics." According to Health Access, this added responsibility lacks focus. Health Access states that it is literally any legislation related to health insurance-and indeed is so broad that if one accepts the theory that there is cost shifting from public programs to private coverage, it would also encompass Medi-Cal and other public programs. Health Access states that this language might encompass legislation intended to address the quadruple aim, such as an All-Payer Claims Database, which would arguably affect "health insurance premiums" and that changes to rate review, including rate regulation, would also "impact" premiums. 12.Opposition. The California Right to Life Committee, Inc. opposes the bill because of the request to include EHBs into the CHBRP analyses. The opponents note that EHBs can include preventative services which encompasses reproductive health and abortion services. The California Right to Life Committee, Inc. continues to oppose any effort to include or require that abortion is an essential service or one called preventative. 13.Policy comments. a. Committee staff surveyed stakeholders in 2013 and 2015 on CHBRP, its process, their work product, and the need for analysis on matters other than mandate bills. Overall, respondents were supportive of the function of CHBRP especially with regard to the fiscal implications of health insurance mandates and of housing it within UC despite challenges. Given the new post-ACA environment, there is need for additional in-depth, independent analysis beyond mandate bills. And while there is ongoing value to having independent evaluation, to be most valuable to stakeholders and policymakers, the analytic process has to be nimble and responsive to the legislative calendar. In order to make maximum use of this resource and to be more responsive, this bill expands CHBRP's charge and applies a more flexible timeline. b. The Senate Budget and Fiscal Review Subcommittee No. 1 on Education heard testimony from CHBRP staff about the program's budget on March 12, 2015, as CHBRP receives its annual appropriation through the budget. CHBRP staff testified that they had made changes to the program to address concerns raised about timelines and report design. In particular, CHBRP staff indicated that they SB 125 (Hernandez) Page 10 of ? had initiated a pilot project that would ensure reports were released within 30 days of a request and that the report templates had been significantly streamlined and shortened. Through the budget process, there can be continued oversight to ensure the changes contained in this bill are implemented over the next year. SB 125 (Hernandez) Page 11 of ? 14.Amendments. The author has agreed to take the following amendment in Committee: On page 9, line 27 (B) The impact on the health of the community, including diseases and conditions wheregender and racialdisparities in outcomes associated with the social determinants of health as well as gender, race, sexual orientation or gender identity are established in peer-reviewed scientific and medical literature. SUPPORT AND OPPOSITION : Support: Anthem Blue Cross California Association of Health Plans California Chamber of Commerce California Immigrant Policy Center Kaiser Permanente L.A. Care Health Plan Western Center on Law and Poverty Oppose: California Right to Life Committee, Inc. -- END --