BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    SB 125    
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          |AUTHOR:        |Hernandez                                      |
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          |VERSION:       |February 26, 2015                              |
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          |HEARING DATE:  |March 25, 2015 |               |               |
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          |CONSULTANT:    |Melanie Moreno                                 |
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           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.








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          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  








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            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;








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               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  








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            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.  








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                  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  








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            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  








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            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  








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                 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.















































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          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 where  gender and racial  disparities  
               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.


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