BILL ANALYSIS �
SB 951
Page 1
SENATE THIRD READING
SB 951 (Ed Hernandez)
As Amended August 24, 2012
Majority vote
SENATE VOTE :25-13
HEALTH 11-5 APPROPRIATIONS 12-5
-----------------------------------------------------------------
|Ayes:|Monning, Atkins, Bonilla, |Ayes:|Gatto, Blumenfield, |
| |Eng, Gordon, Hayashi, | |Bradford, |
| |Roger Hern�ndez, Bonnie | |Charles Calderon, Campos, |
| |Lowenthal, Mitchell, Pan, | |Davis, Fuentes, Hall, |
| |Williams | |Hill, Cedillo, Mitchell, |
| | | |Solorio |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Garrick, Mansoor, |Nays:|Harkey, Donnelly, |
| |Silva, Smyth | |Nielsen, Norby, Wagner |
| | | | |
-----------------------------------------------------------------
SUMMARY : Establishes in the Insurance Code the Kaiser
Foundation Health Plan Small Group Health Maintenance
Organization (HMO) 30 plan contract as California's Essential
Health Benefits (EHB) benchmark plan. Specifically, this bill :
1)Requires an individual or small group health insurance policy
issued, amended, or renewed on or after January 1, 2014, to,
at a minimum, include coverage for EHBs, which means all of
the following:
a) The benefits and services covered by the Kaiser
Foundation Health Plan Group HMO $30 deductible plan
(Kaiser plan) contract as this contract was offered during
the first quarter of 2012, including all of the following:
i) Health benefits covered by the plan contract within
the 10 categories identified in the Patient Protection
and Affordable Care Act (ACA);
ii) Mandated benefits pursuant to statutes enacted
before December 31, 2011, as specified; and,
iii) Health benefits covered by the Kaiser plan that are
SB 951
Page 2
not otherwise required to be covered under existing law,
as specified.
b) Coverage of mental health and substance abuse disorder
services along with any scope and duration limits imposed
on the benefits, in compliance with the Paul Wellstone and
Peter Domenici Mental Health Parity and Addiction Equity
Act of 2008 (MHPAE), and all regulations, or guidance, as
specified. In addition, MHPAE applies to a policy subject
to EHB.
c) Habilitative services and health care devices means
medically necessary health care services that assist an
individual in partially or fully acquiring or improving
skills and functioning and that are necessary to address a
health condition, to the maximum extent practical. These
services address the skills and abilities needed for
functioning in interaction with an individual's
environment. Examples of health care services that are not
habilitative services, include but are not limited to,
respite care, day care, recreational care, residential
treatment, social services, custodial care, or education
services of any kind, including, but not limited to
vocational training. Habilitative services shall be
covered under the same terms and conditions applied to
rehabilitative services under the plan contract.
d) Pediatric vision care with same benefits covered under
the Federal Employees Dental and Vision Insurance Program,
and pediatric oral care with the same benefits covered
under Healthy Families including medically necessary
orthodontic care pursuant to the federal Children's Health
Insurance Program Reauthorization.
2)States that an EHB is required to be provided under this bill
only to the extent that federal law or policy does not require
the state to defray the costs of the benefit. Provides that
nothing in this bill shall obligate the state to incur costs
for the coverage of benefits that are not essential health
benefits, as defined.
3)States that this bill shall only be implemented to the extent
EHBs are required pursuant to the ACA.
4)Clarifies that where there are any conflicts or omissions in
SB 951
Page 3
the Kaiser benchmark plan as compared to the requirements of
the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene) that were enacted prior to December 31, 2011,
Knox-Keene requirements shall be controlling except in the
case of home health services benefits, as specified.
5)Makes clear that the Insurance Commissioner's authority for
enforcement of unfair practices applies, as specified.
6)Clarifies that nothing in this bill shall be construed to
exempt a health insurer or a health insurance policy from
meeting other applicable requirements of law.
7)Makes emergency regulation authority inoperative on March 1,
2016.
8)Makes this bill contingent upon the enactment of AB 1453
(Monning).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, costs will be incurred by Department of Managed
Health Care (DMHC) and California Department of Insurance (CDI)
to ensure compliance with EHB standards and respond to a
changing health care marketplace under federal law. The costs
listed below reflect the costs that will be incurred based on
the imposition of minimum EHB standards. It is difficult to
separate the regulatory and compliance costs related
specifically to this bill from those the state would incur in
absence of this bill.
1)Costs to the DMHC (Managed Care Fund) of $600,000 over the
next three years to review compliance with this bill, to issue
regulations, and to handle increased phone calls and consumer
complaints. (Recent amendments strike the Health and Safety
Code provisions enforced by DMHC).
2)Costs to the CDI (Insurance Fund) of $400,000 over the next
three years to review compliance with this bill and review
rate filings for premium changes resulting from this
alteration in benefits.
3)CDI will incur additional one-time costs estimated at $1.5
million (Insurance Fund) to conduct review premium rates for
reasonableness in a highly dynamic market environment.
SB 951
Page 4
4)This bill responds to pre-regulatory federal guidance. We
assume it is likely that forthcoming federal regulations will
reflect the guidance issued thus far. If the federal
regulations take a different approach, potential costs of
requiring all individual and small group plans to meet the EHB
standards are unknown but could be significant, to the extent
a different approach requires the state to defray the costs of
state-mandated benefits (as explained further below).
However, given this bill includes protective language that
requires the bill to be implemented only to the extent that
federal law or policy does not require the state to defray the
costs of benefits included within the definition of EHBs, it
should not result in increased state costs related to benefits
that exceed EHBs. There could be minor legal costs to CDI and
DMHC to make this determination.
COMMENTS : According to the author, keeping in mind federal
guidance issued to date and federal health care reform, this
bill uses the following principles to guide the selection of
California's benchmark EHB: recognize the importance of
existing state-mandated benefits and incorporate as many state
mandates as possible; protect California's commitment to
reproductive services; embrace the consumer-oriented regulatory
framework in place at the DMHC; and, maintain affordability for
consumers. Using these principles and through a process of
comparison, this bill selected the Kaiser Small Group HMO to
serve as the state's benchmark plan. Beginning January 1, 2014,
this bill would require individual and small group health
insurance policies, both inside and outside of the Exchange, to
cover EHB. All services and benefits covered by the Kaiser
Small Group HMO, as of the first quarter of 2012, will define
EHB. These include the 10 categories identified in the ACA, as
well as all state mandates enacted before December 31, 2011.
Many organizations have expressed support for this bill. The
California Psychiatric Association supports this bill because it
includes severe and non-severe mental illness as well as
substance abuse as EHBs. Service Employees International Union
(SEIU) California believes the Kaiser Small Group HMO is a solid
choice for California. The California Pan-Ethnic Health Network
is pleased that the plan is governed by the Knox-Keene Health
Care Service Plan Act of 1974 because it ensures a comprehensive
package of medically necessary basic health services. The
California Association for Behavior Analysis believes this bill
SB 951
Page 5
provides much needed clarity on the minimum coverage which must
be offered beginning 2014, particularly with regard to
behavioral health treatment, which includes applied behavior
analysis for autism or pervasive developmental disorder. The
Congress of California Seniors supports efforts to create a
benchmark listing of EHBs for California health plans as
required by ACA. Planned Parenthood Affiliates of California
indicates that their preliminary analysis of the Kaiser Small
Group HMO is positive, including that preventive services such
as family planning counseling, well woman exams, cancer
screenings, and prenatal care are specifically identified as
covered services with no cost sharing. Consumers Union supports
the codification of EHB standard based on upon the most popular
small group plan in California. The California Optometric
Association applauds amendments to supplement pediatric vision
with the Federal Employees Dental and Vision Insurance Program
(FEDVIP) which will allow coverage for corrective lenses for
children. The National Alliance on Mental Illness supports this
bill because it provides an adequate floor for benefits and it
is a good starting point.
The Council of Acupuncture and Oriental Medicine Associations is
pleased that this bill recognizes acupuncture as an EHB and
requires acupuncture for treatment of pain and nausea in the
individual and small group market but feels this is limiting and
prevents acupuncture for neuromusculoskeletal and smoking
abstinence. Health Access California supports establishing EHBs
and believes that the decision that is made will remain in place
for several decades. HAC supports the Kaiser Small Group HMO
selection at this time coverage.
The California Chiropractic Association asks that the
Legislature reexamine the possible choices for an EHB plan to
select one that includes chiropractic benefits.
Recent amendments regarding MHPAE are intended to clarify that
small group insurance policies are required to comply with
MHPAE.
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097
SB 951
Page 6
FN: 0005619