BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 220
S
AUTHOR: Yee
B
AMENDED: June 24, 2010
HEARING DATE: August 31, 2010
2
CONSULTANT:
2
Dunstan/cjt
0
PURSUANT TO S.R. 29.10
SUBJECT
Health care coverage: preventive health services: tobacco
cessation services
SUMMARY
Requires a health care service plan (health plan) contract
or health insurance policy issued, amended, renewed or
delivered after January 1, 2011 to cover specified tobacco
cessation treatments. Requests the California Health
Benefits Review Program (CHBRP) of the University of
California to prepare an analysis of the cost savings as a
result of the provisions of this bill and states that this
bill shall become inoperative if the state determines that
the requirements of this bill will result in additional
costs to the state. Requires certain health care plans and
health insurers to provide coverage for specified
preventive services without cost sharing, consistent with
federal law.
CHANGES TO EXISTING LAW
Existing federal law:
Continued---
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Requires, under the PPACA (Public Law 111-148), health
plans and issuers, subject to the minimum interval
established by the U.S. Secretary Health and Human
Services, to provide coverage and not impose cost-sharing
requirements, for selected preventive services with respect
to plan years beginning on and after September 23, 2010
Existing state law
Provides for regulation of health plans by the Department
of Managed Health Care (DMHC) and health insurers by the
Department of Insurance. Allows health insurers (but not
health plans) to subject treatment for nicotine use to
separate deductibles, co-pays, and overall cost
limitations. Pursuant to regulations, allows health plans
covering prescription drug benefits to require prior
authorization and to establish co-payments or deductibles
and, for smoking cessation, require counseling prior to
receiving a prescription for cessation pharmaceuticals.
Requires DMHC-regulated health plans to provide all
medically necessary basic health care services, as defined.
Permits DMHC to define the scope of the required services
and to exempt plans from the requirement for good cause.
Requires every health plan or insurer that covers hospital,
medical, or surgical expenses, on a group basis, to provide
certain preventive health care benefits for children,
including immunizations.
Requests the University of California to analyze bills
proposing to mandate that a health plan or a health insurer
offer or provide a benefit. Requests that UC analyze
mandate bills for their public health, medical, and cost
impacts. Assesses a fee on every health plan and health
insurer to cover the costs of the UC mandate bill analysis
program.
This bill:
Makes specified findings and declarations regarding the
costs of tobacco use in California and the benefits of
tobacco cessation services.
Requires group or individual health plan contracts and
health insurance policies that are issued, amended, renewed
or delivered on or after September 23, 2010 to comply with
specified requirements related to preventative health of
STAFF ANALYSIS OF SENATE BILL 220 (Yee) Page
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the federal PPACA and any subsequent rules or regulations
issued pursuant to those requirements.
Requires a health plan contract or health insurance policy
issued, amended, renewed, or delivered on or after January
1, 2011 to cover a minimum of two "courses of treatment" in
a 12-month period for all smoking cessation treatments
rated "A" or "B" by the United States Preventive Services
Task Force, which shall include counseling and
over-the-counter medication and prescription
pharmacotherapy approved by the federal Food and Drug and
Administration (FDA). For purposes of this bill, states
that "course of treatment" shall be defined to consist of
the following:
As applied to "counseling," at least four sessions
of counseling, which may be telephone, group, or
individual counseling with each session lasting at
least ten minutes; and,
As applied to "prescription" or "over-the-counter"
medication, the duration of treatment approved by the
FDA for that medication.
States that coverage provided pursuant to this bill shall
only be available upon the order of an authorized provider
and that nothing in this bill shall preclude a health plan
from allowing enrollees to access tobacco cessation
services on a self-referral basis. States that enrollees
shall not be required to enter counseling in order to
receive tobacco cessation medications after the patient's
first course of treatment. Prohibits a health plan
contract or health insurance policy from imposing prior
authorization or step therapy requirements on tobacco
cessation treatments after the patient's first course of
treatment.
States that this bill shall not apply to Medicare
supplement plan contracts or to specialized health plan
contracts.
Requests that the University of California, as part of
CHBRP, prepare a report by December 31, 2013, to determine
any state savings as a result of the requirements of this
bill and requests that the report be made available to the
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Legislature and to the Department of Insurance and the
Department of Managed Health Care. States that this bill
shall become inoperative on the date that the state
determines that, taking into account any state savings
identified in the CHBRP report, the requirements of this
bill will result in the state assuming additional costs
pursuant to specified requirements of the PPACA.
FISCAL IMPACT
According to the Assembly Appropriations Committee analysis
of a previous version of the bill with similar provisions
regarding tobacco cessation:
According to CHBRP, increased costs of $2.2 million
(58 percent General Fund) to CalPERS to comply with
the mandate established by this bill. Increased costs
of $103,000 to the Healthy Families Program (33
percent General Fund) and Major Risk Medical Insurance
Program. No increased costs to the Medi-Cal program
because the Medi-Cal program already provides the
treatments addressed in this bill.
Increased premium costs in the employer-based and
individual insurance markets of $66 million, partially
offset by a reduction in out-of-pocket costs paid by
individuals under current law for smoking cessation
treatments.
These cost impacts may be reduced in the coming
years as federal health reform, the PPACA, is
implemented. Federal regulations published recently
require health plans to cover specified preventive
care services without charging participants
deductibles, copayments, or similar cost-sharing
amounts. The regulations include smoking cessation
services rated by the United States Preventive
Services Task Force as a part of preventive services.
BACKGROUND AND DISCUSSION
According to the author, smoking remains one of the most
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difficult public health issues facing California, with
nearly four million smokers in our state and 32,000 youth
becoming smokers each year. Smoking costs California's
economy an estimated $18 billion a year in the form of
medical care, lost productivity, and worker absenteeism.
Studies show that people who use tobacco cessation
treatment such as counseling, over-the-counter and
prescription medications are more likely to quit and stay
tobacco free for a longer period of time. Additionally,
people with full coverage for medications and counseling
services for tobacco cessation are more likely to use
tobacco cessation medication than those who do not have
coverage. The author states this bill will address these
negative impacts by requiring health plans and health
insurance policies that provide outpatient prescription
drug benefits to include coverage for comprehensive tobacco
cessation services.
Background
Despite significant efforts to reduce smoking in
California, nicotine use remains prevalent, particularly
among ethnic communities. While, overall, 15 percent of
Californians smoke, Native Americans smoke at twice this
rate and one in five African Americans smoke. Nicotine is
highly addictive and difficult to quit. According to the
U.S. Department of Health and Human Services, 70 percent of
smokers attempt to quit each year, but only 7 percent
remain smoke free for one year after attempting.
Comprehensive tobacco cessation services include telephone,
group, or individual counseling, and all prescription and
over-the-counter medication approved by the FDA. Numerous
studies show that behavioral and pharmacological treatments
and combinations of the two significantly improve quit
rates and increase the likelihood of sustained abstinence
from smoking.
Federal health reform
On March 23, 2010, the federal government enacted PPACA,
which was further amended by the Health Care Education
Reconciliation Act (H.R. 4872). Under PPACA, Medicaid
would now cover tobacco cessation counseling and
pharmacotherapy for pregnant women, including the removal
of cost-sharing between Medicaid and beneficiaries. The
provisions of PPACA that go into effect on 2014 will change
California's health insurance market and regulatory
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framework and also require tobacco cessation treatments to
be provided by qualified health plans providing coverage in
small-group and individual markets through the state-based
insurance exchanges. PPACA also requires coberage of
tobacco cessation as part of the prevention services that
all plans are required to provide effective September 23,
2010. Tobacco cessation will also be considered part of
the "essential health benefits package" to be provided,
effective in 2014.
Massachusetts tobacco cessation coverage
In July 2006, Massachusetts passed a comprehensive health
reform law that mandated tobacco cessation coverage for its
Medicaid population. The coverage, which included
behavioral counseling and all FDA approved medications has
been utilized by over 70,000 Medicaid users, or 37 percent
of all Medicaid smokers. In a recent report entitled,
"Medicaid Coverage for Tobacco Dependence Treatments in
Massachusetts and Associated Decreases in Smoking
Prevalence," researchers sought to determine if smoking
prevalence decreased as a result of coverage, by measuring
smoking prevalence pre- and post-benefit. The study found
that smoking rates decreased from 38 percent in the
pre-benefit period to 28 percent in the post-benefit
period, representing a decline of 26 percent. The authors
concluded that providing access to tobacco cessation
coverage, combined with broad promotion, can significantly
reduce smoking prevalence. In 2004, U.S. Medicaid
expenditures for smoking-related conditions totaled $22
billion. The report concludes that tobacco cessation
treatment is cost-effective and should be made available to
all smokers via health insurance benefits.
California health benefits review program
In its analysis of SB 220, CHBRP considered two factors for
this analysis:
The level of benefit coverage.
The type of tobacco cessation used.
The estimated impact of the bill is based on data and
literature that demonstrates the total number of people
attempting to quit will not increase post-mandate.
Instead, this population will be more likely to use
cessation services rather than attempting to quit "cold
turkey," and as a result, a higher percentage will quit
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successfully. Additionally, CHBRP excluded adolescents age
12 to 17 from the analysis because this group is typically
in the initiation phase rather than the cessation phase.
According to CHBRP, the literature on the effectiveness of
tobacco cessation treatments is clear and convincing that
it improves quit rates and increases the likelihood of
sustained abstinence from smoking. These conclusions about
the efficacy of smoking cessation interventions are
unlikely to change because of the large quantity of
literature available on this topic.
Nearly 19.5 million Californians are currently enrolled in
health plan insurance policies. The report anticipated the
coverage increase in 2011 would immediately affect the 97
percent of enrollees that have coverage for prescription
drugs, or 18.9 million individuals. The report focuses on
the impact of increasing premium costs of all 19.5 million
enrollees with plans or policies subject to the mandate.
The report also focuses on the estimated increase of
utilization of smoking cessation treatment among 1.8
million adult smokers with current prescription drug
coverage because this population will be likely to use
cessation services covered by this new mandate.
The report estimated that 81.7 percent of enrollees already
have full or partial coverage for smoking cessation-related
counseling; 57.4 percent have full or partial coverage for
over-the-counter smoking cessation treatment; and, 77.8
percent have full or partial coverage for prescription
smoking cessation treatment. Medi-Cal already provides
comprehensive smoking cessation benefits and would not be
subject to the mandate.
CHBRP found that 268,344 of the 1.83 million adult smokers
used one or more tobacco cessation treatments, with 203,845
using treatments covered through insurance and 64,500 using
treatments for which they did not have insurance. CHBRP
estimated that this bill would increase utilization by 34.3
percent for counseling; 54.2 percent for over-the-counter
treatments; and, 37.2 percent for prescription treatments
for an overall increased 44.2 percent or 118,482 additional
smokers receiving treatment.
Cost impacts
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CHBRP found that increases in premiums per member per month
(PMPM) varied by type of plan, with DMHC-regulated Medi-Cal
HMO plans experiencing no increases, and CDI-regulated
individual insurance policies experiencing an increase of
.37 percent. Total increases range from $0.00 to $0.67
PMPM. Total net annual health expenditures are projected
to increase by $52.7 million or 0.07 percent, with an $83.7
million increase in health insurance premiums which is
partially offset by enrollee copayments ($10 million) and
out-of-pocket expenditures ($20.6 million). However, the
analysis projects potential savings of $1.04 million
annually as a result of an estimated 10 fewer low-birth
weight deliveries and hospitalizations. The analysis also
anticipates measurable long-term improvements in health,
which are not accounted for in the analysis. Numerous
studies suggest that smoking cessation is cost-effective as
quitters gain an average 7.1 years of life at a net cost of
$3,417 per year of life saved, or $24,261 per quitter.
CHBRP found that the bill would likely have a positive
impact on public health in California, based on scientific
evidence of the medical effectiveness of smoking cessation
treatments. In California, 14.2 percent of the insured
adult population smokes, which results in 34,492 deaths
annually. Evidence suggests that this bill would increase
utilization of smoking cessation treatments, with
approximately 118,482 insured adult smokers shifting from
self-help to obtaining some form of tobacco cessation
services. CHBRP estimates an increase in utilization, with
an additional 8,081 smokers successfully quitting smoking
annually. There is significant evidence that this bill
would contribute to the reduction in premature death from
long-term smoking-related diseases such as cancer and
cardiovascular and respiratory diseases. When the
estimates of increased longevity for quitters are applied
to the projected 8,081 additional smokers who successfully
quit each year attributable to the mandate in this bill,
the result is that the successful quitters live an
additional 50,000 to 100,000 years.
Smoking-related productivity loss in California in 2004 was
about $8.5 billion. Both direct costs and indirect costs
are reduced by smoking cessation. There is sufficient
evidence to conclude that this bill would reduce smoking
and its concomitant economic loss. Overall, smoking
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cessation treatment is cost-effective, which is supported
by over two decades of health economics literature and is
supported by America's Health Insurance Plans, a trade
group representing health insurers, which recommends
coverage of clinical treatments for smoking cessation as a
cost-effective business investment.
U.S. Preventive Services Task Force
Included in the preventive services this bill would require
health plans and insurers to cover effective September 23,
2010, are those services that have an 'A' or 'B' rating in
the most current recommendations of the U.S. Preventive
Services Task Force (USPSTF). The USPSTF, first convened
by the U.S. Public Health Service in 1984, and since 1998
sponsored by the Agency for Healthcare Research and
Quality, is the leading independent panel of private-sector
experts in prevention and primary care. The USPSTF
conducts rigorous, impartial assessments of the scientific
evidence for the effectiveness of a broad range of clinical
preventive services, including screening, counseling, and
preventive medications. The USPSTF makes recommendations
that certain services be provided based on the risk and
benefit of the service and the level of evidence supporting
the provision of the service, and classifies services as
follows:
Level A: Good scientific evidence suggests that
the benefit of the clinical service substantially
outweighs the potential risks. Clinicians should
discuss the service with eligible patients.
Level B: At least fair scientific evidence
suggests that the benefit of the clinical service
outweighs the potential risks. Clinicians should
discuss the service with eligible patients.
Level C: At least fair scientific evidence
suggests that there are benefits provided by the
clinical service, but the balance between benefits and
risks are too close for making general
recommendations. Clinicians need not offer it unless
there are individual considerations.
Level D: At least fair scientific evidence
suggests that the risk of the clinical service
outweighs potential benefits. Clinicians should not
routinely offer the service to asymptomatic patients.
Level I: Scientific evidence is lacking, of poor
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quality, or conflicting, such that the risk versus
benefit balance cannot be assessed. Clinicians should
help patients understand the uncertainty surrounding
the clinical service.
Currently, the USPSTF has two recommendations for tobacco
use, both of which are classified as "A" recommendation.
They recommend that clinicians ask all adults about tobacco
use and provide tobacco interventions for those who use
tobacco products. In addition, USPSTF recommends that
clinicians ask all pregnant women about tobacco use and
provide augmented, pregnancy-tailored counseling for those
who smoke.
Related bills
AB 2345 (De La Torre) requires health care service plan
contracts and health insurance policies issued, amended,
renewed or delivered on or after September 23, 2010, to
comply with the provisions of the federal Patient
Protection and Affordable Care Act regarding coverage of,
and cost-sharing for, preventive services and any rules or
regulations issued pursuant to those provisions to the
extent required under federal law. This bill is to
enrollment.
Prior legislation
SB 576 (Ortiz) of 2005 would have required health plans and
health insurers to provide coverage for two courses of
tobacco cessation treatments per year, including counseling
and prescription and over-the-counter medications, and
would have prohibited plans and insurers from applying
deductibles but allow specified co-payments for those
benefits. SB 576 was vetoed by Governor Schwarzenegger,
who stated that the bill would impose costs on employers,
plans, and individuals with only a small increase in
utilization of cessation benefits.
COMMENTS
1. Assembly amendments. When the bill left the Senate
it addressed whistleblower protections. The Assembly
amendments deleted these provisions and instead do the
following:
Requires a health care service plan (health
plan) contract or health insurance policy issued,
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amended, renewed or delivered after January 1, 2011
to cover specified tobacco cessation treatments.
Requests the California Health Benefits Review
Program (CHBRP) to prepare an analysis of the cost
savings as a result of the provisions of this bill
and states that this bill shall become inoperative
if the state determines that the requirements of
this bill will result in additional costs to the
state.
Requires certain health care plans and health
insurers to provide coverage for specified
preventive services without cost sharing, consistent
with federal law.
1. Conditions for bill becoming inoperative is vague.
The bill requires CHBRP to conduct a study regarding
the possible increased costs to the state and provides
that the bill will become inoperative if the state
determines that there are additional costs. However,
the bill does not further clarify the meaning of the
term "state" and it could be construed to be the
Governor, the Legislature and Governor or even the
Departments of Insurance and Managed Care.
2. The bill contains identical provisions to AB 2345 (De
La Torre). The general preventive services mandate in
SB 220 is the same as in AB 2345.
PRIOR ACTIONS
Assembly Rules: 10-0
Assembly Health: 14-5
Assembly Appropriations:12-5
Assembly Floor: 12-2
Assembly Health: 12-2 (August 25, 2010)
Assembly Floor: 53-24
Other votes not relevant to this version of the bill.
POSITIONS
Support:
(From the August 25th, Assembly Health Committee analysis
and are based on a previous version of bill.)
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American Heart Association (cosponsor)
American Cancer Society (cosponsor)
American Lung Association (cosponsor)
American Academy of Pediatrics
American Bone Health
American Cancer Society, California Division
American Nurses Association/California
American Stroke Association
Association of Northern California Oncologists
Asthma and Allergy Foundation of America, California
Chapter
Bienestar Human Services, Inc.
Breathe California
California Academy of Family Physicians
California Academy of Physician Assistants
California Academy of Preventative Medicine
California Association of Physician Groups
California Black Chamber of Commerce
California Hispanic Chamber of Commerce
California Medical Association
California State Firefighters' Association, Inc.
California Tobacco Control Alliance
City and County of San Francisco
Coalition of Lavender-Americans on Smoking and Health
First 5 LA
The Foundation for Osteoporosis Research and Education
Institute for Restorative Health
Korean American Medical Association of Southern California
Loma Linda University, School of Medicine, Division of
Cardiology
Loma Linda University, School of Public Health
Los Angeles Society of Allergy, Asthma and Clinical
Immunology, Inc.
Medical Oncology Association of Southern California, Inc.
Mental Health Association in California
Mental Health Systems, Inc.
Microsoft
National Kidney Foundation
Osteopathic Physicians and Surgeons of California
Pharmacists Planning Service, Inc.
San Francisco Fire Fighters, Local 798
Smoke Free Marin Coalition
State Building and Construction Trades Council
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Oppose:
California Association of Health Plans
(Following positions are from the August 25th, Assembly
Health Committee analysis and are on previous version of
bill.)
Association of California Life and Health Insurance
Companies
California Chamber of Commerce
Health Net
Molina Healthcare
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