BILL ANALYSIS �
AB 72
Page 1
Date of Hearing: May 3, 2011
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 72 (Eng) - As Amended: April 4, 2011
SUBJECT : Health care coverage: acupuncture.
SUMMARY : Requires group health plan contracts and group health
insurance policies to cover acupuncture services. Specifically,
this bill :
1)Requires every health plan contract and health insurance
policy sold on a group basis that provides coverage for
hospital, medical, or surgical expenses to provide coverage
for expenses incurred as a result of treatment by
acupuncturists under terms and conditions as may be agreed
upon between the health plan and the group contract holder.
2)Repeals existing law provisions exempting health maintenance
organizations (HMOs) and health plan contracts or health
insurance policies that cover employees of a public entity
from the mandate to offer acupuncture coverage.
3)Deletes the existing requirement that health insurers pay an
acupuncturist for a bona fide claim only if the policy or
contract expressly includes acupuncture as a benefit in a
disability insurance policy or contract. Repeals a
prohibition against an acupuncturist being paid or reimbursed
under a health insurance policy unless the health insurance
policy or contract expressly includes acupuncture as a
benefit.
4)Exempts accident-only, specified disease, hospital indemnity,
Medicare supplement, or specialized health plan contracts or
insurance policies, as defined, from the provisions of this
bill.
EXISTING LAW :
1)Enacts, in federal law, the Patient Protection and Affordable
Care Act (PPACA) to, among other things, make statutory
changes affecting the regulation of, and payment for, certain
types of private health insurance. Includes the definition of
an essential health benefits package that all qualified health
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plans must cover, at a minimum, with some exceptions.
2)Provides that the essential benefits package in 1) above will
be determined by the federal Department of Health and Human
Services (HHS) Secretary and must include, at a minimum,
ambulatory patient services; emergency services;
hospitalizations; mental health and substance abuse services,
prescription drugs; rehabilitative services and devices; and,
preventive services, among other things.
3)Establishes the Knox-Keene Health Care Service Plan Act of
1975 (Knox-Keene) to regulate and license health plans and
specialized health plans by the Department of Managed Health
Care (DMHC) and provides for the regulation of health insurers
by the California Department of Insurance (CDI).
4)Defines a specialized plan contract as a contract for health
care services in a single specialized area of health care,
including dental care, for subscribers or enrollees, or which
pays for or reimburses any part of the cost for those
services, in return for a prepaid or periodic charge, paid by
or on behalf of subscribers or enrollees.
5)Defines specialized health insurance policy as a policy of
health insurance for covered benefits in a single specialized
area of health care, such as dental-only or vision-only
policies.
6)Requires acupuncture coverage to be offered by health plans
and health insurers, with the exception of HMOs, to groups,
for expenses incurred as a result of treatment by
acupuncturists under terms and conditions agreed upon between
the health plan or insurer and the group contract holder.
Requires health insurers to pay an acupuncturist for a bona
fide claim only if the policy or contract expressly includes
acupuncture as a benefit in a disability insurance policy or
contract. Prohibits an acupuncturist from being paid or
reimbursed under a health insurance policy unless the health
insurance policy or contract expressly includes acupuncture as
a benefit.
7)Defines acupuncture as the stimulation of a certain point or
points on or near the surface of the body by the insertion of
needles to prevent or modify the perception of pain or to
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normalize physiological functions, including pain control, for
the treatment of certain diseases or dysfunctions of the body.
8)Authorizes an acupuncturist to engage in the practice of
acupuncture, and to perform or prescribe the use of Asian
massage, acupressure, breathing techniques, exercise, heat,
cold, magnets, nutrition, diet, herbs, plant, animal, and
mineral products, and dietary supplements to promote,
maintain, and restore health.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author states that current law only
requires acupuncture to be offered but not covered under group
contracts and, as a result, it fails to acknowledge that
acupuncture is an effective treatment for many health
conditions and is typically much cheaper than the surgeries
for which it is often an alternative. The author notes that
many of the five million Asian Americans living in California,
who account for approximately 14% of the state's population,
value acupuncturists as their providers of choice. The
author maintains that this bill will result in the avoidance
of surgery and fewer hospital visits by ensuring that millions
of Californians will have access to this efficacious and cost
effective therapy through their health insurance.
2)BACKGROUND . Acupuncture has been used for centuries.
According to the National Center for Complementary and
Alternative Medicine, acupuncture originated in China more
than 2,000 years ago and is considered one of the oldest and
most commonly used medical procedures in the world. It
involves stimulation of anatomical points on the body by a
variety of techniques using needles, which are metallic, solid
and hair-thin, but other methods, such as heat or
finger-pressure, are also used. Experiences vary among
individuals, but most feel minimal or no pain. In 1996, the
United States Food and Drug Administration (FDA) approved
acupuncture needles for use by licensed practitioners. The
FDA requirements stipulate that the needles must be sterile,
nontoxic, and labeled for single use by qualified
practitioners only.
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According to the World Health Organization, the many conditions
that can be treated successfully by acupuncture include
respiratory and bronchopulmonary diseases; gastrointestinal,
orthopedic, and neurologic disorders; addiction; stroke
rehabilitation; myofascial pain; carpal tunnel syndrome;
osteoarthritis; and, low-back pain.
Many public and private payers in California reimburse
acupuncture as a service. Health plans, except for HMOs, and
insurers are required to offer coverage for acupuncture to
group purchasers, such as employers, except for groups of
public employees, but groups are not required to purchase the
coverage. In addition, acupuncture is a covered benefit under
the California Worker's Compensation system, subject to
medical necessity.
3)FEDERAL ESSENTIAL HEALTH BENEFITS . The PPACA requires
qualified health plans to cover specified categories of
federal essential health benefits (EHBs) by 2014. The HHS
Secretary is tasked with defining these benefit categories
through regulation so that they mirror those benefits offered
by a "typical" employer plan. Federal guidance with respect
to EHBs is expected later this year and in 2012.
In a January 2011 issue brief by the University of California's
Health Benefits Review Program (CHBRP) focusing on the
federal requirement to cover EHBs, CHBRP notes that
there is considerable legal ambiguity over how state mandates
requiring the coverage of the treatment for a specific
condition or disease will interact with federal law. CHBRP
states that these mandates often extend across multiple
benefit categories. CHBRP cites, as an example, California's
mandate to cover breast cancer treatment, which implicitly
requires coverage for screening and testing, medically
necessary physician services, ambulatory services,
prescription drugs, hospitalization, and surgery. CHBRP
writes that it is unclear how California benefit mandates
that overlap across several EHB categories would be evaluated
in relation to the EHB package.
4)CHBRP . CHBRP was created in response to AB 1996 (Thomson),
Chapter 795, Statutes of 2002, which requests the University
of California to assess legislation proposing a mandated
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benefit or service, and prepare a written analysis with
relevant data on the public health, medical, and economic
impact of proposed health plan and health insurance benefit
mandate legislation. In its analysis of this bill, CHBRP
reported:
a) Medical Effectiveness . CHBRP points out that its
analysis focuses on evidence from the strongest and most
current studies of the effectiveness of acupuncture,
particularly with regard to the practice of needling which
is unique to acupuncture and is typically covered by health
plans that provide acupuncture benefits. CHBRP indicates
that only recently have researchers begun conducting large,
well-designed randomized controlled trials on acupuncture,
and includes in its analysis an extensive summary of
findings based on the following comparisons: i) acupuncture
versus no treatment; ii) acupuncture versus sham
acupuncture (needling or pricking points on the body that
are not traditional acupuncture points; iii) acupuncture
versus other treatments; and, iv) acupuncture plus other
treatments versus other non-acupuncture treatments. CHBRP
emphasizes evidence regarding the impact of acupuncture on
musculoskeletal and neurological conditions, because these
are the conditions for which acupuncture is most frequently
used. The CHBRP literature review revealed that health
outcomes vary by disease or condition. Most studies of the
effectiveness of acupuncture on musculoskeletal and
neurological conditions evaluate effects on pain and
functioning.
b) Utilization, Cost, and Coverage Impacts . CHBRP
estimates there are 22 million insured Californians
currently enrolled in group health plans regulated under
Knox-Keene or insured by group health insurance policies
regulated under CDI and, therefore, subject to this bill.
CHBRP indicates that currently, 87% of insured Californians
have coverage for acupuncture, and this bill impacts the
remaining 13% who currently do not have coverage. CHBRP
estimates that there would be no measurable change in
utilization due to this bill because utilization rates
among those with insurance are not different than those
without; utilization review and medical management are
permitted under this bill; and, acupuncture may still faces
barriers of cultural acceptance because it is still not
well assimilated into the broader health care delivery
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system.
Privately insured individuals with acupuncture coverage
generally have benefit limits, including a maximum number
of annual visits. In addition, cost-sharing requirements
vary by health plan. Some health plans limit acupuncture
services to the management of neuromusculoskeletal
disorders, nausea, and pain. The California Public
Employees' Retirement System (CalPERS) provides acupuncture
to 52% of enrollees and Medi-Cal no longer provides
acupuncture benefits. Healthy Families members are not
subject to this bill though they are currently covered for
20 visits per year with a copayment of $5 per visit.
CHBRP estimates total net annual expenditures to increase by
$7 million as a result of this bill. Premiums are
estimated to increase by $55 million ($32 million for the
portion of group insurance premiums paid by private
employers, $11.5 million for the portion of group insurance
and CalPERS paid by enrollees, and $11.7 million paid by
CalPERS employers) and member copayments by $19.0 million,
while simultaneously reducing out-of-pocket expenditures by
$67.4 million among those whose acupuncture treatments are
currently not covered by insurance. Increases in insurance
premiums vary by market segment. Increases as measured by
per member, per month (PMPM) premiums are estimated to
range from $0.003 to $1.50. In the large-group market, the
increase in premiums is estimated to range from $0.07 PMPM
in CDI regulated plans to $0.25 PMPM in DMHC regulated
plans. For members with small-group insurance policies,
health insurance premiums are estimated to increase by
approximately $0.003 PMPM in CDI to $0.30 PMPM in DMHC.
For CalPERS, the estimated increase in premium is $1.50
PMPM.
c) Public Health Impact . CHBRP reports that low back pain,
neck pain, and migraine or severe headaches are the three
common conditions for which acupuncture is used. The
primary health outcomes associated with acupuncture
treatment for musculoskeletal and neurological disorders
are reduced pain and improved functionality. Although
acupuncture needling has been found to be effective for
some conditions, this bill is not expected to result in an
overall increase in utilization in the short term and thus
is not expected to have any measurable impact on community
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health in the 1-year time frame used in the CHBRP analysis.
CHBRP notes that it is possible that in the longer term,
passage of this bill, along with a potential increase in
cultural acceptance of acupuncture as a treatment option,
will contribute to an increase in utilization of
acupuncture and, therefore, improved health outcomes for
persons who do not respond to other treatments. CHBRP also
points out that Asians report the highest utilization of
acupuncture, and therefore, more Asians are expected to
benefit financially from this bill compared to other racial
or ethnic groups until and unless utilization rates in
other ethnic groups come to approximate those of Asians.
5)SUPPORT . The sponsors of this bill, the California
Acupuncture Medical Association and the Council of Acupuncture
and Oriental Medicine Associations write that, as policymakers
strive to find ways to reduce the cost of health care while
maintaining quality, acupuncture has been shown to be a cost
effective and low risk form of treatment for a variety of
chronic and recurring pain conditions. The sponsors also note
in support that acupuncturists are the providers of choice for
many residents in this state and to deny coverage for
acupuncture across the board raises issues of cultural
fairness. Supporters, including several individual
acupuncturists, add that acupuncture has become very popular
California and this bill will allow more Californians to
obtain relief from medical conditions for which acupuncture is
highly effective.
6)OPPOSITION . Health plans, health insurers, and business
groups object to all benefit mandate bills. The California
Association of Health Plans states that it is the wrong time
for the Legislature to consider enacting new benefit mandates
since, starting in 2014, many Californians can enroll in
health coverage through the newly created insurance Exchange
established under PPACA. The Association of California Life &
Health Insurance Companies contends that mandate bills are
counterproductive to industry efforts to make health insurance
more affordable and available and could have real impacts both
on individuals struggling to maintain coverage and on the
State budget. Health Net argues that coverage mandates, such
as requiring coverage for acupuncture, take away any freedom
from purchasers of health coverage to tailor their policies to
the needs of their employees. The California Chamber of
Commerce adds that benefit mandates make insurance less
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affordable, further contributing to an increase number of
uninsured.
7)PRIOR LEGISLATION .
a) AB 54 (Dymally) of 2008, which was substantively
identical to this bill, was vetoed by Governor
Schwarzenegger who stated that approximately 86% of insured
Californians already have access to acupuncture coverage
because they have chosen to purchase such coverage, and
mandates, when taken collectively or individually, increase
and shift health care costs to consumers and purchasers.
b) AB 53 (Dymally) of 2008 would have revised eligibility
in the Medi-Cal Program to allow beneficiaries to receive
up to 12 acupuncture services in six months. AB 53 died on
the Assembly Appropriations Committee Suspense File.
c) SB 573 (Burton) of 2002, which was substantially similar
to this bill, was referred to the Assembly Health Committee
but was never heard.
8)POLICY COMMENT . This bill is one of several health mandates
introduced for legislative consideration this year. The
author may wish to address the extent to which the need for
this bill and others similar to it are premature, given that
federal regulations to define the parameters of the EHB
package have yet to be promulgated.
REGISTERED SUPPORT / OPPOSITION :
Support
California Acupuncture Medical Association (sponsor)
Council of Acupuncture and Oriental Medicine Associations
(sponsor)
California State Board of Equalization Member Betty Yee
Acupuncture & Herbal Care of Los Altos
American Traditional Chinese Medicine Society
Association of Korean Asian Medicine & Acupuncture of California
Best Eastern Acupuncture & Herbal Clinic
California Certified Acupuncturists Association
California Chinese Engineer Association
California State Oriental Medical Association
CNA Medical Group, Inc.
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Emperor Medical Group, Inc.
Golden Life Medical Group
National Alliance of Korean Asian Medicine & Acupuncture
National Certification Commission for Acupuncture and Oriental
Medicine
National Guild of Acupuncture and Oriental Medicine
Oakmead Acupuncture Center
Rejuvenation & Longevity Clinic
United California Practitioners of Chinese Medicine
Numerous licensed acupuncturists
Numerous individuals
Opposition
America's Health Insurance Plans
Association of California Life & Health Insurance Companies
California Association of Health Plans
California Association of Health Underwriters
California Association of Joint Powers Authorities
California Chamber of Commerce
Health Net
Analysis Prepared by : Cassie Royce / HEALTH / (916) 319-2097