BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
630 (Steinberg)
Hearing Date: 4/27/2009 Amended: As Introduced
Consultant: Katie Johnson Policy Vote: Health 10-0
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BILL SUMMARY: SB 630 would provide that no health care service
plan or health insurance contract could exclude coverage for
dental or orthodontic services that are related to, and
medically necessary to provide or complete, reconstructive
surgery as defined in current law.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
CalPERS state unknown, but potentially more
thanGeneral/
employers' cost $50 General Funds and Special*
$150 Special Funds annually
Medi-Cal increased unknown, but potentially more
thanGeneral/
reimbursement to health $50 General Funds annuallyFederal**
plans and insurers
*Each state agency pays its employees premiums to CalPERS out of
its budget. Approximately 55 percent of employee premiums are
from the General Fund and 45 percent are from other state funds.
These other funds are made up of approximately 67 percent
special funds and 33 percent moneys from other sources such as
federal funds.
**Medi-Cal costs are shared 50% General Fund and 50% federal
funds. However, in February of 2009, President Obama signed the
American Reinvestment and Recovery Act (ARRA) into law. As a
result, the Federal Medical Assistance Percentage (FMAP)
increased from 50 percent to 61.59 percent. Thus, retroactively
from October 1, 2008 through December 31, 2010, the federal
government would pay for approximately 62 percent and the state
General Fund would pay for 38 percent of benefit-related
Medi-Cal expenditures.
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STAFF COMMENTS: This bill meets the criteria for referral to
the Suspense File.
Existing law provides for the licensure and regulation of health
care service plans by the Department of Managed Health Care
(DMHC) and for the regulation of health insurers by the
California Department of Insurance (CDI). Costs to perform
regulatory duties associated with this bill would be minor and
absorbable to both departments.
Existing law requires health care service plans and health
insurers to cover reconstructive surgery, defined as, "surgery
performed to correct or repair abnormal structures of the body
caused by congenital defects, developmental abnormalities,
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SB 630 (Steinberg)
trauma, infection, tumors, or disease to do either of the
following: (1) to improve function. (2) to create a normal
appearance, to the extent possible."
This bill would require that a plan contract could not exclude
coverage for dental or orthodontic services related to, and
medically necessary to provide or complete, reconstructive
surgery.
This bill is similar to SB 1634 (Steinberg), a bill that would
have required health plans and insurers to cover orthodontic
services deemed necessary for medical reasons for cleft palate
procedures. A cleft palate or a cleft lip is a congenital
defect. The Governor vetoed SB 1634 stating, "?The costs
associated with new mandates means that those costs are passed
through to the purchaser and consumer. They are a significant
driver of cost."
In a 2008 California Health Benefits Review Program (CHBRP)
analysis of SB 1634 (Steinberg), a bill which would have
required health plans and insurers to cover medically necessary
orthodontic services related to cleft palate procedures, $68,000
in costs to the California Public Employees Retirement System
(CalPERS) employer members were identified as a result of
increased premiums due to the requirements of SB 1634.
Approximately 60 percent of these costs are attributable to
state funds, with
55 percent of that being from the General Fund ($22,500) and 45
percent of that being from other funds ($18,500).
Staff notes that since the CHBRP analysis only addresses costs
associated with requiring plans and insurers to provide dental
and orthodontic services for one type of a congenital defect and
the definition in law of reconstructive surgery covers not only
congenital defects, but several other categories that could
cause abnormal body structures, the cost to CalPERS associated
with increased premiums as a result of this bill would be more
than those identified in the CHBRP analysis. For example, if the
cost of covering cleft palate reconstructive surgery increased
premiums for CalPERS as stated above, it is likely that the
costs of implementing this bill could result in over $50,000 GF
and over $150,000 in special fund costs to CalPERS annually.
Existing law creates the California Children Services (CCS)
program and provides that it is administered by the Department
of Health Care Services (DHCS) and county health departments.
The purpose of the CCS program is to provide children with
chronic medical conditions, such as cystic fibrosis, cancer, and
hemophilia, with diagnostic and treatment services, case
management, and physical and occupational therapy services.
Existing law establishes the state's Medicaid program referred
to as Medi-Cal for the purposes of providing health benefits to
low-income children, pregnant women, and the elderly, blind and
disabled, among others. Existing law establishes the Healthy
Families Program (HFP) which provides low-cost health benefits
for low-income children.
Medi-Cal managed care plans and the HFP plans are responsible
for paying for an enrollee's non-CCS condition health care
needs. In Medi-Cal, CCS services, and dental services that are
not included in managed care plans, are paid by fee-for-service
Medi-Cal. Since this bill would require all types of health
plans and insurers to provide dental
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SB 630 (Steinberg)
and orthodontic services related to reconstructive surgery for
members, it is possible that this bill would require health
plans and insurers who provide managed care plans that
"carve-out" dental and CCS services to now provide those
services which would increase the cost of providing health care
to Medi-Cal enrollees. If a health plan or insurer's costs
increase, it is likely that they would renegotiate their
Medi-Cal reimbursement rates at a higher rate to cover increased
costs. Additionally, in the 2009-2010 Budget Act, Medi-Cal
coverage for adult dental services was eliminated. This bill
could cause a health plan or insurer to provide an unreimbursed
service to an adult Medi-Cal enrollee and thus increase the cost
to the health plan or insurer to provide health care to its
enrollees.