BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 951|
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UNFINISHED BUSINESS
Bill No: SB 951
Author: Hernandez (D), et al
Amended: 8/24/12
Vote: 21
SENATE HEALTH COMMITTEE : 6-3, 4/11/12
AYES: Hernandez, Alquist, De Le�n, DeSaulnier, Rubio, Wolk
NOES: Harman, Anderson, Blakeslee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 4/30/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
SENATE FLOOR : 25-13, 5/7/12
AYES: Alquist, Calderon, Corbett, Correa, De Le�n,
DeSaulnier, Evans, Hancock, Hernandez, Kehoe, Leno, Lieu,
Liu, Lowenthal, Negrete McLeod, Padilla, Pavley, Price,
Rubio, Simitian, Steinberg, Vargas, Wolk, Wright, Yee
NOES: Anderson, Berryhill, Blakeslee, Cannella, Dutton,
Emmerson, Fuller, Gaines, Harman, Huff, La Malfa,
Walters, Wyland
NO VOTE RECORDED: Runner, Strickland
ASSEMBLY FLOOR : Not available
SUBJECT : Health care coverage: essential health
benefits
SOURCE : Author
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DIGEST : This bill 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.
Assembly Amendments make technical and clarifying changes.
ANALYSIS :
Existing federal law:
1. Requires, under the federal Patient Protection and
Affordable Care Act (ACA), health plans and health
insurers that offer coverage in the small group or
individual market to ensure that coverage includes the
essential health benefit (EHB) package.
2. Requires each state, by January 1, 2014, to establish an
American Health Benefit Exchange that facilitates the
purchase of qualified health plans by qualified
individuals and qualified small employers.
Existing state law:
1. Establishes the Department of Managed Health Care (DMHC)
to license and regulate health care service plans
(health plans) and establishes the Department of
Insurance (CDI) to provide for the regulation of health
insurers.
2. Requires health plan contracts and health insurance
policies to cover various benefits.
3. Establishes the California Health Benefit Exchange to
facilitate the purchase of qualified health plans by
qualified individuals and qualified small employers by
January 1, 2014.
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,
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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:
(1) Health benefits covered by the plan
contract within the 10 categories identified
in the Patient Protection and Affordable Care
Act (ACA);
(2) Mandated benefits pursuant to statutes
enacted before December 31, 2011, as
specified; and,
(3) Health benefits covered by the Kaiser
plan that are 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
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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 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).
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Background
Effective January 1, 2014, federal law requires Medicaid
benchmark and benchmark-equivalent plans, plans sold
through the American Health Benefit Exchange and the Basic
Health Program (if 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee, costs
will be incurred by DMHC and 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; (4) 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
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(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.
SUPPORT : (Verified 5/1/12)
California Academy of Child and Adolescent Psychiatry
California Association for Behavioral Analysis
California Psychiatric Association
California Speech-Language Hearing Association
Council of Acupuncture and Oriental Medicine Associations
Planned Parenthood Affiliates of California
Western Center on Law & Poverty
ARGUMENTS IN SUPPORT : The California Psychiatric
Association supports the inclusion of all significant
diagnoses in the Diagnostic and Statistical Manual of the
American Psychiatric Association within the EHBs. The
California Association for Behavioral Analysis writes in
support of this bill stating that it makes clear,
consistent with the requirements of state and federal law,
that applied behavior analysis for autism is a covered
benefit in the benchmark benefit package. The California
Speech-Language Hearing Association writes in support of
the bill including speech therapy and other habilitative
services.
CTW:d 8/28/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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