BILL ANALYSIS �
AB 1000
Page 1
ASSEMBLY THIRD READING
AB 1000 (Perea)
As Amended January 23, 2012
Majority vote
HEALTH 13-3 APPROPRIATIONS 12-0
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|Ayes:|Monning, Ammiano, Atkins, |Ayes:|Fuentes, Blumenfield, |
| |Bonilla, Eng, Gordon, | |Bradford, Charles |
| |Hayashi, | |Calderon, Campos, |
| |Roger Hern�ndez, Bonnie | |Chesbro, Gatto, Hall, |
| |Lowenthal, Mitchell, Pan, | |Hill, Ammiano, Mitchell, |
| |V. Manuel P�rez, Williams | |Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Mansoor, Silva | | |
| | | | |
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SUMMARY : Requires a health care service plan (health plan)
contract or health insurance policy that provides coverage for
cancer chemotherapy treatment to establish limits on enrollee
out-of-pocket costs for prescribed, orally administered,
nongeneric cancer medication. Specifically, this bill :
1)Requires a health plan contract or health insurance policy
issued, amended, or renewed on or after January 1, 2013, that
provides coverage for cancer chemotherapy treatment, to
provide coverage for prescribed, orally administered,
nongeneric cancer medication, used to kill or slow the growth
of cancerous cells.
2)Requires the health plan contract or health insurance policy
referenced in 1) above, to review the percentage cost share
for oral nongeneric cancer medication and intravenous (IV) or
injected nongeneric cancer medications and apply the lower of
the two as the cost-sharing provision for oral nongeneric
cancer medications.
3)Prohibits a health plan contract or health insurance policy
from providing an increase in enrollee cost sharing for
nongeneric cancer medications to any greater extent than the
contract or policy provides for an increase in enrollee cost
sharing for other nongeneric covered medications.
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4)Defines "cost share" as copayment, coinsurance, or deductible
provisions applicable to coverage for oral, IV, or injected
nongeneric cancer medications.
5)Prohibits the provisions of this bill from being construed to
require a health plan contract or health insurance policy to
provide coverage for any additional medication not otherwise
required by law.
6)Clarifies that provisions of this bill do not prohibit a
health plan contract or health insurance policy from removing
a prescription drug from its formulary of covered prescription
drugs.
7)Prohibits the provisions of this bill from applying to a
health plan contract or health insurance policy that does not
provide coverage for prescription drugs.
8)Prohibits the provision of this bill from applying to a health
care benefit plan or contract entered into with the Board of
Administration of the Public Employees' Retirement System
(CalPERS) pursuant to the Public Employees' Medical and
Hospital Care Act.
9)Prohibits, as of the date that proposed final rulemaking for
essential health benefits (EHB) is issued, any benefits to be
provided by a health plan contract or health insurance policy
that exceed the EHBs that will be required by the Patient
Protection and Affordable Care Act (ACA).
10)Requires the provisions of this bill to remain in effect only
until January 1, 2016, and as of that date are repealed,
unless a later enacted statute deletes or extends that date.
EXISTING FEDERAL LAW :
1)Enacts, in federal law, the ACA to, among other things, make
statutory changes affecting the regulation of, and payment
for, certain types of private health insurance. Includes the
definition of EHBs that all qualified health plans must cover,
at a minimum, with some exceptions.
2)Provides that the EHB package in 1) above will be determined
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by the federal Department of Health and Human Services
Secretary and must include, at a minimum, ambulatory patient
services; emergency services; hospitalizations; mental health
and substance abuse disorder services, including behavioral
health; prescription drugs; and, rehabilitative and
habilitative services and devices, among other things.
EXISTING STATE LAW :
1)Establishes the Knox-Keene Health Care Service Plan Act of
1975 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.
2)Requires health plan contracts and health insurance policies
to provide coverage for all generally medically accepted
cancer screening tests and requires those plans and policies
to also provide coverage for the treatment of breast cancer.
3)Imposes various requirements on health plan contracts and
health insurance policies that cover prescription drug
benefits, such as a requirement to cover "off-label" uses, as
specified, and a requirement to cover previously prescribed
drugs, as specified.
4)Authorizes DMHC to regulate the provision of medically
necessary prescription drug benefits by a health plan to the
extent that the plan provides coverage for those benefits.
Existing regulation requires health plans providing outpatient
prescription drugs to provide all medically necessary
prescription drugs, except as specified in that regulation.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill will have the following fiscal impact:
1)Negligible state costs because this bill would not apply to
plans offered through Medi-Cal or CalPERS plans.
2)Increased employer-funded premium costs in the private
insurance market of approximately $2 million.
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3)Increased premium expenditures by employees and individuals
purchasing insurance of $1 million. Increased costs are
estimated to be offset by a reduction in out-of-pocket costs
for policyholders of $2.7 million.
4)Federal regulations implementing the federal health reform
law, ACA, may impact the costs of this bill in future years.
This bill includes a provision rendering it inoperative if it
is found to exceed the essential health benefits; thus, no
future state fiscal impact is expected.
5)Additionally, the provisions of this bill sunset January 1,
2016, thus, there would be no costs directly attributable to
the mandate after this date. However, there would be
continued cost pressure beyond that date in the private
insurance market to maintain the mandated benefit design.
COMMENTS : According to the author, the emergence of safe,
clinically effective, orally administered anticancer medication
has significantly increased the treatment options for cancer
patients; however, many barriers currently impede the adoption
of orally administered treatment as the main form of cancer
therapy. The author maintains that one of the most significant
barriers is reflected in the disparity between medical and
pharmacy benefit designs resulting in greater patient
out-of-pocket costs for oral therapies covered under the
pharmacy benefit than IV therapies covered under the medical
benefit. The author further maintains that, where IV
administered anticancer medications are typically covered under
a plan's medical benefit, most patients are only responsible for
an office co-payment for each episode of care and are not
required to pay a separate fee for the IV drug. The author
argues that, in contrast, orally administered anticancer
medications are typically covered under a plan's pharmacy
benefit, where many of these agents are placed on a specialty
tier of a prescription plan's formulary. The author points out
that, according to the Kaiser Family Foundation, the average
coinsurance rate for 4th tier drugs is 28%, which, for a $3,000
per month oral anticancer medication, could expose a patient to
$900 in out-of-pocket spending. Citing a study done by Prime
Therapeutics, which concluded that 1-in-6 patients did not
receive oral anticancer treatment solely due to cost, the author
maintains that out-of-pocket costs for oral anticancer
medications becomes a de facto denial of access.
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The author additionally points out that, in 2007, the Oregon
State Senate passed similar legislation (S.B. 8 (Courtney),
Chapter 566, 2007 Laws), and that, upon enactment of S.B. 8 in
January 2008, the top state plans eliminated their high
coinsurance rates. Most Oregon plans eliminated their high
coinsurance rates and established separate oral anticancer
therapy coverage under their pharmacy benefit, and patients with
no pharmacy benefits gained access to oral anticancer agents
through their medical benefit. The author further notes that,
Colorado, Hawaii, Indiana, Iowa, Kansas, Minnesota, Vermont,
Washington, D.C., and Connecticut have all passed similar
legislation.
On December 16, 2011, the federal Center for Consumer
Information and Insurance Oversight (CCIIO) issued a bulletin
proposing that EHBs be defined using a benchmark approach.
Under the CCIIO intended approach, states would have the
flexibility to select a benchmark plan that reflects the scope
of services offered by a "typical employer plan." This approach
would give states the flexibility to select a plan that would
best meet the needs of their residents. In accordance with the
guidance, the benchmark options include:
1)One of the three largest small group plans in the state by
enrollment.
2)One of the three largest state employee health plans by
enrollment.
3)One of the three largest federal employee health plan options
by enrollment.
4)The largest HMO plan offered in the state's commercial market
by enrollment.
The benefits and services included in the benchmark plan
selected by the state would be the EHB package.
To meet the EHB coverage standard, a health plan or health
insurer would offer benefits that are "substantially equal" to
the benchmark plan selected by the state and modified as
necessary to reflect the 10 coverage categories. The bulletin
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indicates that states must select their benchmark plan in the
third quarter two years prior to the coverage year (by September
2012). The ACA requires states to defray the cost of any
benefits required by state law to be covered by health plans and
health insurers beyond the EHBs. The federal bulletin implies
that existing state mandates could be incorporated in EHBs to
the extent they are included in a benchmark plan existing in
2012. However, the federal rules are not final or entirely
clear on this point. Comments on the federal bulletin are due
by January 31, 2012. Further evaluation of individual state
mandates pending this year will need to be considered in the
context of a broader discussion about California's benchmark
plan.
Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916)
319-2097
FN: 0003072