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 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.
-- END --