BILL ANALYSIS
AB 214
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Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 214 (Chesbro) - As Amended: April 23, 2009
Policy Committee: Health Vote:12-4
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires group health plans and insurers to provide
coverage for durable medical equipment (DME) at parity with
other health benefits. Specifically, this bill:
1)Requires DME benefits to be provided at levels no less than
the greatest annual and lifetime benefit maximums applicable
to other health services.
2)Requires copayments, coinsurance, deductibles, and maximum
out-of-pocket costs to be no more than the most common amounts
applied to basic health services.
FISCAL EFFECT
1)According to the California Health Benefits Review Program
(CHBRP), no direct fiscal impact to CalPERS, Medi-Cal and
Healthy Families to comply with the parity requirement
established by this bill, as these programs provide DME
parity.
2)Annual increased premium costs across the private insurance
market of $182 million as a result of the mandated provision
of DME generally and at parity, specifically. 80% of these
premium increases reflect reduced out-of-pocket spending by
individuals on DME. The individuals benefiting from this
legislative mandate are those for whom annual DME costs exceed
insurer caps of $2,000 and for beneficiaries whose policies do
not provide DME coverage.
COMMENTS
AB 214
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1)Rationale . This bill is co-sponsored by the Disability Rights
Education and Defense Fund (DREDF), Disability Rights
California, and the National Multiple Sclerosis Society. This
bill requires insurers to provide coverage for DME and imposes
a parity requirement on coverage. Parity for DME means access
to benefits would be equal to service levels for other medical
benefits. According to the author, although many health
policies cover DME, up to 90% of private plans in California
impose an annual benefit cap of $2,000 and exclude certain
medically necessary equipment. While some DME is inexpensive,
other equipment such as breathing machines and wheel chairs
can cost as much as $2,000 to $25,000. As a result of
insurance limits, many disabled people with health insurance
go without medically necessary DME. This bill ensures 57,000
individuals statewide gain coverage for DME in the individual
insurance market.
2)DME and Coverage . DME is equipment used for a medical purpose
to assist patients with health, daily functioning, and quality
of life. Examples of DME include wheelchairs, walkers, bed
pads, and catheters. Under current law, there are no specific
requirements that address the provision of DME coverage in the
private insurance market, unless the equipment is associated
with one of several conditions. For example, managed care
plans are required to provide pediatric asthma management and
treatment, including inhalers and nebulizers. Both managed
care plans and insurers regulated by the California Department
of Insurance are required to cover equipment and supplies
related to diabetes.
3)Industry Cost Concerns . Opponents of this bill indicate
legislatively mandated health benefits increase costs and
limit insurer, employer, and individual choices with respect
to a variety of health benefits. According to health plans and
insurers, when considered together, mandates may also hinder
the ability of insurers and employers to offer a wide range of
affordable products to consumers with a variety of health care
needs.
4)Related Legislation . There are more than two dozen current law
health mandates, established over the last two decades, to
provide coverage for specified services such as cancer
screenings and treatment. There are another handful of
AB 214
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mandates to offer coverage for a number of other health
services.
SB 1198 (Kuehl) in 2008 was similar to this bill, but required
health plans to offer coverage for DME. AB 214 requires
insurers to provide coverage for DME. SB 1198 was vetoed due
to cost concerns about health mandates.
5)Other Health Mandates in the Current Session . There are 9
health mandates under legislative consideration this year,
including AB 214. Other proposed health mandates include:
i) AB 56 (Portantino): mammography notification
ii) AB 98 (De La Torre): maternity coverage
iii) AB 163 (Emmerson): amino acid elemental formula
coverage
iv) AB 244 (Beall): mental health parity
v) AB 259 (Skinner): access to nurse midwives
vi) AB 513 (De Leon): lactation consultant coverage
vii) SB 158 (Wiggins): HPV vaccine coverage
vii) SB 161 (Wright): chemotherapy treatment
a) Two other bills address minimum coverage or loosening of
current law mandates in the current session. These two
bills are:
i) AB 786 (Jones): standardization of individual market
products
ii) SB 92 (Aanestad): out-of-state carrier coverage
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081