BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1000
AUTHOR: Perea
AMENDED: June 20, 2012
HEARING DATE: June 27, 2012
CONSULTANT: Orr
SUBJECT : Health care coverage: cancer treatment.
SUMMARY : Requires a health plan contract or health insurance
policy that provides coverage for prescription drugs and cancer
chemotherapy treatment to limit enrollee out-of-pocket costs for
prescribed, orally administered anticancer medications.
Existing law:
1.Provides for the regulation of health care service plans
(health plans) by the Department of Managed Health Care (DMHC)
and regulation of disability insurers who sell health
insurance (health insurers) by the California Department of
Insurance (CDI).
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 contracts and 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.
Requires, under regulation, health plans providing outpatient
prescription drugs to provide all medically necessary
prescription drugs, except as specified.
This bill:
1.Prohibits a health plan contract or insurance policy issued,
amended, or renewed on or after January 1, 2013, that provides
coverage for cancer chemotherapy treatment and for
prescription drugs, from requiring a copayment, deductible, or
coinsurance amount for a prescribed, orally administered
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anticancer medication that is higher than the copayment,
deductible, or coinsurance amount required for an
intravenously (IV) administered or injected cancer medication.
2.Exempts the California Public Employees' Retirement System
(CalPERS) plans or policies.
3.Prohibits this bill from being interpreted to prevent a plan
or policy from requiring prior approval or authorization for
the use of oral cancer medications.
4.Prohibits a health plan or insurer that increases the
copayment, deductible, or coinsurance amount for an IV
administered or injected cancer chemotherapy agent covered by
the plan or insurer from being deemed to be in compliance with
this bill.
5.Prohibits any benefits that exceed the essential health
benefits (EHBs) that all health plans will be required to
provide under the federal Patient Protection and Affordable
Care Act (ACA) from being provided under this bill.
FISCAL EFFECT : According to the Assembly Appropriations
committee:
1.According to the California Health Benefits Review Program
(CHBRP), negligible state costs as a result of this bill. This
bill would not apply to plans offered through Medi-Cal or to
CalPERS plans.
2.Increased employer-funded premium costs in the private
insurance market of approximately $2 million.
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 ACA, may impact the costs
of this bill in future years. At this time, it is unclear
whether there may be additional future state costs associated
with this bill.
PRIOR VOTES :
Assembly Health: 13- 3
Assembly Appropriations:12- 0
Assembly Floor: 52- 17
COMMENTS :
1.Author's statement. The intent of AB 1000 is to increase
AB 1000 | Page
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access to oral chemotherapeutic agents by requiring that
health plans and insurance policies, which already provide
coverage for cancer chemotherapy treatment, provide coverage
for a prescribed, orally administered, cancer medication.
Patient cost sharing for oral anticancer and supportive care
agents covered under a plan's pharmacy benefit can be
significantly higher than comparable IV therapies under the
medical benefit due to current differences in benefit design.
IV-administered anticancer medications are typically covered
under a plan's medical benefit, where most patients are only
responsible for an office copayment for each episode of care
and are not required to pay a separate fee for the IV drug.
Orally administered anticancer medications, on the other hand,
are typically covered under a plan's pharmacy benefit, where
many of these agents are placed on a 4th or specialty tier of
a prescription plan's formulary. According to the Kaiser
Family Foundation, the average coinsurance rate for 4th tier
drugs is 28 percent. For a $3,000 per month oral anticancer
medication, this could mean close to $900 per month in
out-of-pocket spending by a patient.
2.Cancer treatment options. According to CHBRP, the treatment
options for cancer depend on the type of cancer and the stage
of diagnosis, and can include surgical removal, radiation
treatment, and medications, including chemotherapy. Anticancer
medications are used to kill or slow the growth of cancer
cells, and traditionally are delivered either through IV fluid
or through injection in a physician's office or hospital.
Recently, oral anticancer medications have also been used in
cancer treatment either as an adjunct to IV therapy, as a
substitution for IV therapy, or alone. Oral anticancer
medications are being prescribed more frequently for cancer
treatment, and an estimated 25 percent of anticancer agents
currently in development are oral cancer treatments.
3.CHBRP analysis. Pursuant to provisions of SB 1704 (Kuehl),
Chapter 684 of 2006, and AB 1996 (Thomson), Chapter 795 of
2002, which request the University of California to assess
legislation proposing or repealing a mandated benefit or
service, CHBRP submitted an analysis of this measure April 21,
2011, at the request of the Legislature. Highlights from the
CHBRP report follow:
a. Medical effectiveness. All oral anticancer medications
must be approved by the U.S. Food and Drug Administration
(FDA) before they can be marketed or sold in the United
AB 1000 | Page 4
States. As of April 21, 2011, co-payment when the CHBRP
report was first released, the FDA had approved 42 oral
anticancer medications that are used to treat 57 different
types of cancer. Ten of these have generic equivalents.
Approximately 100 oral anticancer medications are currently
under development. For many oral anticancer medications,
there are no IV or injected substitutes (and vice versa).
When compared to IV and injectable anticancer medications,
oral anticancer medications have both advantages and
disadvantages. Advantages are that oral anticancer
medications may allow administration of the medication on a
daily basis, may be more
convenient for patients, and may reduce the risk of
infection or other infiltration
complications. Disadvantages include less certainty in
patient adherence to treatment
regimens and a reduction in interaction between patients
and their health care providers to manage complications of
treatment.
b. Benefit coverage impacts. Although this bill is not
expected to expand benefit coverage, CHBRP estimates that
almost all enrollees with health insurance subject to the
mandate have at least some coverage for anticancer
medications. This bill would affect the health insurance of
the 20.1 million enrollees with health insurance not
purchased by CalPERS whose insurance provides an outpatient
prescription drug benefit; 100 percent of these enrollees
are estimated to have coverage for IV and injected
anticancer medications; 97.4 percent of these enrollees are
estimated to have coverage for nongeneric oral anticancer
medications; and approximately 2.6 percent of these
enrollees have no coverage for outpatient oral nongeneric
anticancer medications, because they have generic-only
coverage.
c. Utilization impacts. CHBRP does not estimate a
measurable increase in the number of oral anticancer
medications users nor a measurable increase in the number
of prescriptions per user because the bill does not extend
benefit coverage for oral anticancer medications to
enrollees currently without coverage- it only affects cost
sharing for those enrollees already with benefit coverage.
Also, the price elasticity of demand for anticancer
medications is relatively small in comparison to the price
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elasticity for many other medications. Cancer is a
life-threatening illness; consequently, patients will
generally comply with prescribed treatment regimens.
Lastly, few oral anticancer medications have injected or IV
administered substitutes, and clinical indications may
differ between administration forms.
d. Cost impacts. This bill would shift some nongeneric oral
anticancer medication costs from users to health plans and
insurers through reduced cost sharing. In total, users
would see a reduction in out-of-pocket costs of an
estimated $2,650,000 due to lesser cost-sharing
requirements. On average, the amount of the shift is
estimated to be $100.28 per user per year. Post-mandate
amounts shifted from users to plan/insurer would range from
$0 to $18,262, per user per year with variation due to the
price of particular nongeneric oral anticancer medications,
the utilization of a particular user, and the cost-sharing
provisions of any one user's contract or policy.
The mandate is estimated to increase premiums by about
$3,137,000 (0.0036 percent). Total premiums for private
employers are estimated to increase by $2,030,000, or
0.0039 percent. Enrollee contributions toward premiums for
group insurance are estimated to increase by $541,000, or
0.0036 percent. Total premiums for those with individually
purchased insurance are estimated to increase by $565,000,
or 0.0084 percent.
This bill would apply to Medi-Cal Managed Care, Healthy
Families Program, and
Access for Infants and Mothers, however, the state entities
that administer these programs would not be expected to
face measurable expenditure or premium increases as these
plans currently cover oral anticancer medication benefits
with minimal or no cost-sharing requirements. Major Risk
Medical Insurance Program (MRMIP) plans have cost-sharing
provisions similar to those included in privately purchased
plans, but the population enrolled in MRMIP is so small
that it is difficult to estimate this impact with accuracy.
Overall, the estimated premium increases would not have a
measurable impact on number of persons who are uninsured.
e. Public health impacts. CHBRP does not project a
measurable increase in utilization of oral anticancer
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medications as a result of this bill. However, the
reduction in out-of-pocket costs for oral anticancer
medications could reduce the financial burden and related
health consequences faced by cancer patients. Breast cancer
is the most prevalent cancer in California, and
approximately 70 percent of the prescriptions and 31
percent of the total cost for nongeneric oral anticancer
medications are for drugs used to treat breast cancer.
Therefore, there is a potential to reduce the financial
burden faced by women undergoing treatment for breast
cancer.
After breast cancer, the next three most common cancers in
California are colorectal, prostate, and lung cancer, which
have disparate impacts on non-Hispanic blacks in California
and may all be treated using nongeneric oral anticancer
medications. Therefore non-Hispanic black cancer patients
could also face a reduced financial burden.
4.CHBRP assumptions. For the purpose of their analysis, CHBRP
assumes that through coverage of hospital and
physician/provider services as part of a medical benefit, all
plans and policies-even those without an outpatient
prescription drug/pharmacy benefit-do cover prescription
drugs. CHBRP notes that the specified limitations in the bill
make clear that the bill does not require plans/policies that
do not already provide coverage for nongeneric prescription
drugs on an outpatient basis to begin covering them. According
to CHBRP, orally administered anticancer medications are, in
most instances, subject to the plans or policies' outpatient
pharmacy benefits' cost sharing provisions, often in the form
of flat-dollar copayments per prescription, coupled in some
instances with a calendar-year deductible IV administered and
injectable anticancer medications are generally covered as
part of a medical benefit when the drug is administered
outside of a hospital environment, and are subject to the
cost-sharing requirements associated with a physician's office
visit. The differences in forms of cost sharing between
outpatient prescription drug benefit coverage and physician's
office visit complicate the quantification of the impacts of
this bill on costs borne by the enrollee and the plan/insurer.
5.EHBs and state benefit mandates. Effective January 1, 2014,
federal law requires Medicaid benchmark and benchmark
equivalent plans, plans sold through the California Health
Benefit Exchange (Exchange) and the Basic Health Program (if
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enacted), and health plans and health insurers providing
coverage to individuals and small employers to ensure coverage
of EHBs as defined by the Secretary of the Department of
Health and Human Services (HHS). HHS is required to ensure
that the scope of EHBs is equal to the scope of benefits
provided under a typical employer plan, as determined by the
Secretary. Under federal law, EHBs must include 10 general
categories and the items and services covered within the
categories:
Ambulatory patient services;
Emergency services;
Hospitalization;
Maternity and newborn care;
Mental health and substance use disorder services,
including behavioral health treatment;
Prescription drugs;
Rehabilitative and habilitative services and devices;
Laboratory services;
Preventive and wellness services and chronic disease
management; and
Pediatric services, including oral and vision care.
On December 16, 2011, the HHS Center for Consumer Information
and Insurance Oversight released an EHB Bulletin outlining a
regulatory approach that HHS plans to propose to define EHBs.
In the Bulletin, HHS proposed that EHBs be defined using a
benchmark approach. States would have the flexibility to
select a benchmark plan that reflects the scope of services
offered by a "typical employer plan." AB 1461 (Monning) and SB
951 (Hernandez) have selected the Kaiser Small Group health
plan to serve as California's EHB benchmark plan.
CHBRP notes that the ACA requires, beginning 2014, that states
"make payments?to defray the cost of any additional benefits"
required of qualified health plans (QHPs) sold in the Exchange
beyond the EHBs outlined in the ACA. EHBs explicitly include
prescription drugs. In order to determine whether any
additional state fiscal liability as it relates to the
Exchange would be incurred under this bill, CHBRP suggests
examination of the following factors:
A determination of whether this bill actually
constitutes a requirement of "additional benefits," given
provisions that state that it does not require the coverage
of additional medications, does not prohibit plans/insurers
from removing drugs from formulary, and does not apply to
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plans that do not provide coverage for prescription drugs;
The scope of prescription drug benefits in the final EHB
package;
A determination of whether the cost-sharing requirement
under this bill is consistent with the cost-sharing
structures of the QHPs to be offered in the Exchange;
The number of enrollees in QHPs; and
The methods used to define and calculate the cost of
additional benefits.
1.Related legislation. AB 369 (Huffman) would prohibit health
care service plans and insurers that restrict medications for
the treatment of pain, pursuant to step therapy or fail-first
protocol, from requiring a patient to try and fail on more
than two pain medications before allowing the patient access
to the pain medication or generically equivalent drug, as
defined, prescribed by the prescribing provider, as defined.
Set to be heard in Senate Health Committee on June 27, 2012.
2.Prior legislation. SB 961 (Wright) in 2010 and SB 161 (Wright)
in 2009 were substantially similar to this bill. Both bills
were vetoed by the Governor, who cited concerns about adding
costs to our increasingly expensive health insurance premiums.
The Governor also thought the bills were unnecessary in light
of the provisions of the ACA that will take effect on January
1, 2014, and cap out-of-pocket costs for both individuals and
families.
3.Support. The California Coalition for Cancer Treatment Access
(Coalition), consisting of the International Myeloma
Foundation, American Cancer Society, Susan G. Komen for the
Cure, Leukemia & Lymphoma Society, California Healthcare
Institute, BIOCOM, BayBio, Association of Northern California
Oncologists, California Medical Association, Aim at Melanoma,
Cancer Legal Resource Center, Padres Contra el Cancer, and
Parker and Friends, supports this bill because they believe it
will eliminate the cost disparity between oral and IV
chemotherapy treatment, decreasing the out-of-pocket costs to
patients and increasing access to life-saving treatments. The
Coalition claims that the emergence of safe, clinically
effective, orally administered anticancer medication has
increased the treatment options for cancer patients, but the
disparity between medical and pharmacy benefit designs creates
a significant barrier. The Coalition claims there are
significantly greater patient out-of-pocket costs for oral
anticancer therapies covered under the pharmacy benefit than
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IV therapies covered under the medical benefit, which become a
de facto denial of access, resulting in one out of six
patients not receiving treatment solely due to high cost. The
Coalition notes that this bill does not mandate health
contracts and policies to provide coverage for anticancer
medications. Instead, this bill requires that, if contracts
and policies already provide this coverage, that they provide
it on an equal basis for oral and IV medications.
4.Opposition. America's Health Insurance Plans (AHIP), the
Association of Life and Health Insurance Companies (ACLHIC),
and the California Association of Health Plans (CAHP) all
oppose this bill because it is a benefit mandate. AHIP claims
benefit mandates increase costs to consumers and may expose
California fiscally if the mandates conflict with federal
requirements. AHIP claims that health insurance plans have
taken important steps over the last decade to address the
critical issues of increasing access to innovative, quality
health care products and cost control mechanisms that would
better allow individuals and small businesses to obtain
coverage in the private market, but this bill threatens the
efforts of all health care stakeholders to provide consumers
with meaningful health care choices and affordable coverage
options. ACLHIC is concerned that this additional mandate,
added to the 87 mandates that are already in statute, will
further erode affordable health insurance options for
insureds. CAHP points out that the best evidence of the high
cost of mandates is that many of them, by design, completely
exempt public employers and programs. This spares the
government from the cost of these bills but means that private
employers will be expected to shoulder that cost instead. This
concern is echoed by the California Chamber of Commerce,
California Manufacturers and Technology Association, and the
National Federation of Independent Businesses, who all cite
concerns about the cumulative impact of benefit mandates on
premiums for employers, particularly at a time when employers
are struggling in an uncertain economic environment.
SUPPORT AND OPPOSITION :
Support: AIM at Melanoma
American Cancer Society
Association of Northern California Oncologists
BayBio
BIOCOM
California Affiliates of Susan G. Komen for the Cure
AB 1000 | Page 10
California Healthcare Institute
California Medical Association
Cancer Legal Resource Center
International Myeloma Foundation
Leukemia & Lymphoma Society
Medical Oncology Association of Southern California,
Inc.
Padres Contra El C�ncer
The Parker and Friends Fund
Oppose: Association of California Life and Health Insurance
Companies
America's Health Insurance Plans
Blue Shield of California
California Association of Health Plans
California Chamber of Commerce
Health Net
Kaiser Permanente
Southwest California Legislative Council
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