BILL ANALYSIS �
AB 1000
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CONCURRENCE IN SENATE AMENDMENTS
AB 1000 (Perea)
As Amended August 9, 2012
Majority vote
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|ASSEMBLY: |52-17|(January 26, |SENATE: |29-9 |(August 20, |
| | |2012) | | |2012) |
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Original Committee Reference: HEALTH
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.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Prohibit a health plan contract or insurance policy issued,
amended, or renewed on or after July 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
anticancer medication that is higher than the copayment,
deductible, or coinsurance amount required for an
intravenously (IV) administered or injected cancer medication.
2)Exempt the California Public Employees' Retirement System
(CalPERS) plans or policies.
3)Prohibit this bill from being interpreted to prevent a plan or
policy from requiring prior authorization or conducting
utilization review for the use of oral cancer medications.
4)Prohibit 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)Prohibit any benefits that exceed the essential health
benefits (EHBs) that all health plans will be required to
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provide under the federal Patient Protection and Affordable
Care Act (ACA) from being provided under this bill.
6)Prohibits this bill from applying to a health care service
plan contract that does not provide coverage for outpatient
prescription drugs.
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
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 (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 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.
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Existing regulation requires health plans providing outpatient
prescription drugs to provide all medically necessary
prescription drugs, except as specified in that regulation.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version as passed by the Senate.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill will result in the following fiscal impact:
1)Minor costs to DMHC and CDI to review plan filings.
2)No state costs to state health care programs. Medi-Cal,
Healthy Families, and Access for Infants and Mothers have no
or limited cost sharing for anticancer drugs. This bill
specifically exempts CalPERS contracted health plans and
insurance policies.
3)It is unlikely that the bill will require the state to provide
coverage subsidies through the California Health Benefit
Exchange due to any coverage mandate in the bill. The bill
would only apply to plans that already cover anticancer drugs
and specifies that no benefits that exceed essential health
benefits are required to be provided under the bill.
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
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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.
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.
In March 2010, the federal government passed the ACA, which
includes a number of provisions that would directly and
indirectly prompt changes in health care delivery, finance, and
coverage, and that would affect benefits covered by California
health insurance products. Specifically, the ACA includes
provisions that require coverage for new federal benefit
mandates. One of these mandates requires coverage of EHBs for
most health insurance products sold in the individual and
small-group markets, including the qualified health plans that
will be sold through state health insurance exchanges. Under
federal law, EHBs must include 10 general categories and the
items and services covered within the categories are:
1)Ambulatory patient services;
2)Emergency services;
3)Hospitalization;
4)Maternity and newborn care;
5)Mental health and substance use disorder services, including
behavioral health treatment;
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6)Prescription drugs;
7)Rehabilitative and habilitative services and devices;
8)Laboratory services;
9)Preventive and wellness services and chronic disease
management; and,
10)Pediatric services, including oral and vision care.
On December 16, 2011, the federal Department of Health and Human
Services (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 EHB
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." EHBs would include coverage of services
and items in all 10 statutory categories above, but states would
choose one of the following benchmark health insurance plans:
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; or,
5)If a state chose not to select a benchmark, HHS proposed that
the default benchmark will be the small group plan with the
largest enrollment in the state. HHS is accepting comments on
the EHB Bulletin until January 31, 2012.
AB 1453 (Monning) and SB 951 (Ed Hernandez), currently before
the Legislature, both propose to select the Kaiser Small Group
HMO as California's benchmark plan to serve as the EHB standard,
as required by federal law. 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
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plan.
Analysis Prepared by : Tanya Robinson-Taylor / HEALTH / (916)
319-2097
FN: 0004751