BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 18
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          Date of Hearing:  June 4, 2013

                            ASSEMBLY COMMITTEE ON HEALTH
                                 Richard Pan, Chair
                       AB 18 (Pan) - As Amended:  May 24, 2013
           
          SUBJECT  :  Health care coverage: pediatric oral care.

           SUMMARY  :  Exempts small group health plans and insurance  
          policies not participating in the California Health Benefit  
          Exchange (Exchange), known as Covered California, and health  
          plans and insurance policies that are qualified health plans  
          (QHPs) participating in the Exchange Small Business Health  
          Options Program (SHOP) from the Essential Health Benefits (EHBs)  
          requirement to offer a pediatric oral care benefit if a  
          specialized health plan contract or insurance policy is offered,  
          marketed, or sold through the Exchange SHOP (either bundled with  
          a QHP or standing alone) or small group market outside the  
          Exchange.  Contains an urgency clause in order to become  
          effective immediately upon enactment.  Specifically,  this bill  :   


          1)Requires, beginning January 1, 2015, every specialized health  
            plan contract and insurance policy providing pediatric oral  
            care benefits in the small group market through the Exchange  
            SHOP and outside the Exchange whether or not it is bundled  
            with a QHP or standing alone to maintain a minimum medical  
            loss ratio (MLR) of 75%.  Requires rebates to be provided to  
            each enrollee if the MLR is less than 75%.

          2)Exempts a health plan contract or insurance policy for small  
            group coverage and a health plan contract or insurance policy  
            that is offered, marketed or sold through the Exchange SHOP or  
            the small group market outside of the Exchange from the  
            pediatric oral care requirement of the EHBs if a specialized  
            health care service plan contract or insurance policy, as  
            specified, is offered through the Exchange SHOP or outside the  
            Exchange.

          3)Establishes legislative intent that all of the benefits  
            described in the Patient Protection and Affordable Care Act  
            (ACA) be included as EHBs whether obtained through a QHP, or a  
            combination of a QHP and a specialized health plan, and that  
            pediatric EHBs purchased separately are only essential for  
            pediatric enrollees, to the extent permitted by the ACA.








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          4)Requires a specialized health plan contract and insurance  
            policy providing pediatric oral care benefits that is offered  
            through the Exchange SHOP or the small group market outside  
            the Exchange, whether or not it is bundled with a QHP or  
            standing alone, at a minimum, include coverage of the benefits  
            for pediatric oral care covered under the dental plan  
            available to subscribers of the Healthy Families Program in  
            2011-12, including the provision of medically necessary  
            orthodontic care provided pursuant to the federal Children's  
            Health Insurance Program Reauthorization Act of 2009.

          5)Provides, beginning January 1, 2014, that a specialized health  
            plan contract and insurance policy providing pediatric oral  
            care benefits not be regarded as providing excepted benefits  
            under federal law, for the purpose of determining  
            applicability of the ACA sections relating to annual and  
            lifetime limits.

          6)Provides, beginning January 1, 2014, that a specialized health  
            plan contract and insurance policy providing pediatric oral  
            care benefits in the Exchange SHOP or in the small group  
            market outside the Exchange, whether or not it is bundled with  
            a QHP or standing alone, meet timely access to care and  
            adequate networks requirements in existing law, as specified.

          7)Provides, beginning January 1, 2015,  that a specialized  
            health plan contract and insurance policy providing pediatric  
            oral care benefits in the Exchange SHOP or in the small group  
            market outside the Exchange, whether or not it is bundled with  
            a QHP or standing alone, not be regarded as providing excepted  
            benefits under federal law, for the purpose of determining  
            applicability of the ACA sections relating to:  
             a)   The prohibition of preexisting condition exclusions or  
               other discrimination based on health status;
             b)   Fair health insurance premiums;
             c)   Guaranteed availability of coverage;
             d)   Guaranteed renewability of coverage;
             e)   Prohibition against discrimination against individual  
               participants and beneficiaries on the basis of health  
               status;
             f)   Nondiscrimination in health care; and,
             g)   Prohibition of excessive waiting periods.

          8)Requires a specialized health plan contract or insurance  








                                                                  AB 18
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            policy providing pediatric oral care benefits to waive the  
            applicable dental out-of-pocket (OOP) maximum upon  
            notification from a QHP on behalf of an enrollee that the  
            applicable OOP maximum under the QHP has been satisfied.  

          9)Beginning January 1, 2015, the combined OOP maximums for  
            dental and QHP shall not exceed those limits established under  
            the ACA.  Requires the plans to develop a method for  
            coordinating and tracking cost sharing that limits the burden  
            on the subscriber.  Provides that this subparagraph is to only  
            be implemented to the extent permitted by the ACA.

          10)Requires pediatric vision and oral care benefits to be  
            provided for individuals up to 22 years of age, to the extent  
            permitted under the ACA.

          11)Makes, beginning January 1, 2015, a specialized health plan  
            contract and insurance policy providing pediatric oral care  
            benefits in the Exchange SHOP or in the small group market  
            outside the Exchange, whether or not it is bundled with a QHP  
            or standing alone, subject to existing state law related to  
            rate reviews, as specified. 

           EXISTING LAW  :  

          1)Establishes the Department of Managed Health Care (DMHC) to  
            regulate health plans under the Knox-Keene Health Care  
            Services Plan Act of 1975 in the Health and Safety Code; the  
            California Department of Insurance (CDI) to regulate health  
            insurers under the Insurance Code; and, the Exchange to  
            compare and make available through selective contracting  
            health insurance for individual and small business purchasers  
            as authorized under the ACA.  

          2)Requires every health plan and health insurer that issues,  
            sells, renews, or offers health plan contracts or policies for  
            health care coverage, including a grandfathered health plan or  
            insurer, but not including specialized health plan contracts  
            or policies, to provide an annual rebate to each enrollee  
            under such coverage if the ratio of the amount of premium  
            revenue expended by the health plan on the costs for  
            reimbursement of clinical services provided to enrollees under  
            such coverage and for activities that improve health care  
            quality to the total amount of premium revenue less certain  
            taxes and fees (known as medical loss ratio or MLR) is less  








                                                                  AB 18
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            than the following:
             a)   Eighty-five percent for a health plan or health insurer  
               in the large group market; or,
             b)   Eighty percent for a health plan or health insurer in  
               the small group or individual market.

          3)Requires health plans and health insurers to file with the  
            DMHC and CDI specified rate information for individual and  
            small group market products at least 60 days prior to  
            implementing any rate change.  Requires rate filings to be  
            actuarially sound and to include a certification by an  
            independent actuary that any increase is reasonable or  
            unreasonable.  Requires the filings in the case of large group  
            contracts only for unreasonable rate increases, as defined by  
            the ACA, prior to implementing any such rate change.  Requires  
            health plans and insurers to provide 60 days written notice to  
            an enrollee or insured before a change in premium rates or  
            coverage becomes effective.  

          4)Establishes as California's EHBs the Kaiser Small Group Health  
            Maintenance Organization (HMO) plan along with the following  
            10 ACA mandated benefits:
             a)   Ambulatory patient services;
             b)   Emergency services;
             c)   Hospitalization;
             d)   Maternity and newborn care;
             e)   Mental health and substance use disorder services,  
               including behavioral health treatment;
             f)   Prescription drugs;
             g)   Rehabilitative and habilitative services and devices;
             h)   Laboratory services;
             i)   Preventive and wellness services and chronic disease  
               management; and,
             j)   Pediatric services, including oral and vision care.

          3)Establishes in state government the Exchange as an independent  
            public entity not affiliated with an agency or department.   
            Establishes requirements for health plans seeking  
            certification as QHPs, including that carriers fairly and  
            affirmatively offer, market, and sell in the Exchange at least  
            one product within each of five specified levels.  Requires  
            carriers that sell any products outside the Exchange to fairly  
            and affirmatively offer, market, and sell all products made  
            available in the Exchange to individuals and small groups  
            outside the Exchange. 








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          4)Establishes the Exchange SHOP, separate from activities of the  
            Exchange Board related to the individual market, to assist  
            qualified small employers in facilitating the enrollment of  
            their employees in QHPs offered through the Exchange in the  
            small employer market in a manner consistent with the ACA.

          5)Pursuant to the ACA an Exchange may not make available any  
            health plan that is not a QHP.  However, each exchange within  
            a state shall allow an issuer that only provides limited scope  
            dental benefits meeting specified requirements through their  
            exchange (either separately or in conjunction with a QHP) if  
            the plan provides pediatric dental benefits meeting specified  
            requirements.  
          6)Pursuant to the ACA, exclusion of a pediatric dental EHB  
            outside of the Exchange is not permitted.  Individuals  
            enrolling outside of the Exchange must be offered all 10 EHB  
            categories, including the pediatric dental benefit.
          7)Pursuant to the ACA, in defining EHBs, requires the Secretary  
            of the federal Department of Health and Human Services to  
            provide that if a plan, as specified, (related to stand-alone  
            dental benefits plans) is offered through an Exchange, another  
            health plan offered through such Exchange shall not fail to be  
            treated as a QHP solely because the plan does not offer  
            coverage of benefits offered through the stand-alone plan that  
            are otherwise required (referring to pediatric services).  The  
            preamble to specified regulations package says this is the  
            only exception to the EHB coverage permitted under the ACA. 

          8)Pursuant to federal regulations a stand-alone dental plan  
            covering the pediatric dental EHB must demonstrate that it has  
            a reasonable annual limitation on cost-sharing as determined  
            by the Exchange.  Such annual limit is calculated without  
            regard to EHBs provided by the QHPs and without regard to  
            out-of-network services. 

          9)Pursuant to the ACA, prohibits OOP limits greater than Health  
            Savings Accounts (HSAs) in all markets.  

           FISCAL EFFECT  :  This bill has not yet been analyzed by a fiscal  
          committee.

           COMMENTS  :

           1)PURPOSE OF THIS BILL  .  This bill is needed to update  








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            California's EHB law to exempt QHPs in Covered California's  
            SHOP and carriers of small group market products outside the  
            Exchange from the requirement to offer pediatric oral benefits  
            if there are stand-alone dental plans providing pediatric  
            coverage participating in the Exchange, SHOP and outside the  
            Exchange.  A conflict between state laws and the ACA and its  
            regulations may prevent stand-alone dental plans from  
            competing with QHPs for enrollment of pediatric enrollees and  
            their families in Covered California and in the small group  
            market outside of the Exchange, which could disrupt existing  
            relationships between dental providers and their patients.   
            Further, with the addition of the stand-alone dental option  
            for pediatric oral coverage, consumers choosing a stand-alone  
            pediatric dental benefit in addition to a health plan will  
            have complexities in managing and tracking OOP maximums on  
            cost sharing associated with the two plans.  This bill aims to  
            make this process as easy as possible for consumers and ensure  
            the broadest possible consumer protections.  This bill also  
            resolves a conflict in the age associated with pediatric  
            services for purposes of vision and dental EHB coverage.  The  
            California Health Benefits Review Program (CHBRP) issued a  
            report on March 6, 2013, indicating that Healthy Families  
            (which has been chosen as the basis for California's pediatric  
            dental benefit) provides coverage up to age 19.  The Blue  
            Cross Blue Shield (BCBS) Federal Employee Dental and Vision  
            Insurance Program (FEDVIP) Blue Vision plan for vision  
            coverage (which has been chosen as the basis for California's  
            pediatric vision benefit) provides coverage up to age 22.   
            Federal ACA regulations recommend age 19 but allow states to  
            provide these benefits beyond age 19.  This bill adopts the  
            state option to set the age at 22.

           2)BACKGROUND  .  On March 23, 2010, the federal ACA (Public Law  
            111-148), as amended by the Health Care and Education  
            Reconciliation Act of 2010 (Public Law 111-152) became law.   
            Among many other provisions, the new law makes statutory  
            changes affecting the regulation of and payment for certain  
            types of private health insurance.  Beginning in 2014,  
            individuals will be required to maintain health insurance or  
            pay a penalty, with exceptions for financial hardship (if  
            health insurance premiums exceed 8% of household adjusted  
            gross income), religion, incarceration, and immigration  
            status.  Several insurance market reforms are required, such  
            as prohibitions against health insurers imposing preexisting  
            health condition exclusions and a requirement that carriers  








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            offer EHBs in the individual and small group markets.  These  
            reforms impose new requirements on states related to the  
            allocation of insurance risk, prohibit insurers from basing  
            eligibility for coverage on health status-related factors,  
            allow the offering of premium discounts or rewards based on  
            enrollee participation in wellness programs, impose  
            nondiscrimination requirements, require insurers to offer  
            coverage on a guaranteed issue and renewal basis, and  
            determine premiums based on adjusted community rating (age,  
            family, geography, and tobacco use).

          Additionally, by 2014 either a state will establish a separate  
            Exchange to offer individual and small-group coverage or the  
            federal government will establish one.  Exchanges will not be  
            insurers but will provide eligible individuals and small  
            businesses with access to private plans in a comparable way.   
            In 2014 some individuals with income below 400% of the federal  
            poverty level (FPL) will qualify for credits toward their  
            premium costs, subsidies, and cost-sharing for insurance  
            purchased through an Exchange.  California has established  
            Covered California, as a state-based exchange that is  
            operating as an independent government entity with a  
            five-member Board of Directors.

          Beginning in 2014, QHPs will be required to offer coverage at  
            one of four levels:  bronze, silver, gold, or platinum.   
            Levels will be based on a specified share of full actuarial  
            value of the EHBs.  These plans will be prohibited from  
            imposing an annual cost-sharing limit that exceeds the  
            thresholds applicable to HAS-qualified High Deductible Health  
            Plans (HDHPs).  In 2014, the annual OOP maximum for an  
            individual is $6,400 and $12,800 for family coverage.   
            Catastrophic plans are also permitted only in the individual  
            market for young adults (under age 30) and for those persons  
            exempt from the individual mandate, but catastrophic plans  
            must cover EHBs and have deductibles equal to the amounts  
            specified as OOP limits for HAS-qualified HDHPs.  Small group  
            health plans providing QHPs will be prohibited from imposing a  
            deductible greater than $2,000 for individual coverage and  
            $4,000 for any other coverage in 2014, adjusted annually  
            after.

          As mentioned, some individuals with income under 400% FPL will  
            receive advanceable, refundable tax credits toward the  
            purchase of an Exchange plan.  The payment will go directly to  








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            the insurer and will reduce the premium liability for that  
            individual.  Those who qualify for premium credits and are  
            enrolled in an Exchange plan at the silver tier beginning in  
            2014 will also be eligible for assistance in paying any  
            required cost-sharing for their health services.  As indicated  
            above, limitations on Exchange plans related to OOP costs will  
            be based upon HDHPs that qualify individuals for HSAs.  Cost  
            sharing subsidies will further reduce those OOP maximums by  
            two-thirds for qualifying individuals between 100% and 200%  
            FPL, by one-half for qualifying individuals between 201% and  
            300% FPL, and by one-third for qualifying individuals between  
            301% and 400% FPL.

           3)CENTER FOR CONSUMER INFORMATION AND INSURANCE OVERSIGHT  
            LETTER  .  On April 5, 2013, the Center for Consumer Information  
            and Insurance Oversight (CCIIO), Centers for Medicare and  
            Medicaid Services (CMS) issued a letter to issuers on  
            federally-facilitated and state partnership Exchanges.  The  
            CCIIO letter includes a chapter on stand-alone dental plans.   
            The letter indicates that stand-alone dental plans are not  
            subject to the insurance market reform provisions of the ACA  
            that generally apply to health plans in the individual and  
            small group markets inside and outside an Exchange, such as  
            guaranteed availability and renewability.  However, some  
            market-wide and exchange-specific provisions in the ACA apply  
            to stand-alone plans seeking certification as a QHP, including  
            the prohibition on annual and lifetime dollar limits and  
            annual limits on cost sharing.  Under federal regulations,  
            rather than meeting the specific dollar limits that apply to  
            cost sharing for comprehensive medical QHPs, stand-alone  
            dental plans certified to be offered in an Exchange will be  
            required to demonstrate that they have a reasonable annual  
            limitation on cost-sharing.  The final rule clarified that an  
            exchange is responsible for determining the level of  
            "reasonable" annual limits.  For the federal exchange, CMS  
            interprets reasonable to mean any annual limit on cost sharing  
            that is at or below $700 for a plan with one child or $1,400  
            for a plan with two or more children.

           4)STAND-ALONE OUTSIDE  .  According to the preamble to the final  
            federal rule, CMS restates that the ACA does not provide for  
            the exclusion of a pediatric dental EHB outside the Exchange.   
            Therefore, individuals enrolling in health insurance coverage  
            not offered in an Exchange must be offered the full 10 EHB  
            categories, including the pediatric dental benefit.  The  








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            preamble states that an individual can purchase stand-alone  
            pediatric dental coverage offered by an Exchange-certified  
            stand-alone plan, and when the health insurance carrier is  
            reasonably assured that the individual has obtained such  
            coverage, the issuer would not be found non-compliant with the  
            EHB requirements.  This alternate method of compliance is at  
            the option of the health insurance carrier.  The preamble also  
            indicates that while someone purchasing in the Exchange  
            whether or not he or she has children, can opt not to purchase  
            a separate stand-alone dental plan, the same option is not  
            available outside the Exchange.  Outside the Exchange an  
            individual must be offered coverage of all 10 categories of  
            EHB, either through one policy (where the dental benefit is  
            embedded in the health plan), or through a combination of a  
            medical policy and an Exchange-certified stand-alone dental  
            plan.  Many questions have been raised about how this option  
            would be enforced.  

           5)COST SHARING  .  With respect to the annual limit on cost  
            sharing the CCIIO letter indicates where an issuer uses  
            multiple service providers to help administer benefits  
            (separate pharmacy benefit manager or behavioral health  
            organization), new coordination processes may be required to  
            ensure compliance with the maximum OOP limits.  This may be  
            necessary where, for example, the plan's service providers  
            impose different levels of OOP limitations and/or use  
            different methods for crediting participants' expenses against  
            any OOP maximums.  

          Additionally, the ACA and implementing regulations exclude  
            stand-alone dental plans from the cost-sharing reduction  
            requirements placed on medical QHPs.  According to the CCIIO  
            letter, the ACA generally states that any cost sharing  
            reductions that would be applied to the pediatric dental EHB  
            in a comprehensive medical QHP will not be applied if the  
            pediatric dental benefit is provided through a stand-alone  
            dental plan.  The final federal regulations state that a  
            stand-alone dental plan covering the pediatric dental EHB must  
            demonstrate that it has a reasonable annual limitation on  
            cost-sharing as determined by the Exchange.  Such annual limit  
            is calculated without regard to EHB provided by the QHP and  
            without regard to out-of-network services.  With regard to  
            calculation of actuarial value, a stand-alone plan may not use  
                                             the federal actual value calculator.  The stand-alone dental  
            plan must demonstrate that it offers the pediatric EHB at  








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            either a low level of coverage with an actuarial value of 70%  
            or a high level of coverage with an actuarial value of 85%,  
            and within a de minimis variation of plus or minus two  
            percentage points of the 70% or 85%. 

           6)COVERED CALIFORNIA  .  On April 3, 2013, Covered California  
            issued "Rules for QHP bidders for Submission of Pediatric  
            Dental Essential Health Benefit Dental Plans in conjunction  
            with Qualified Health Plans which provide all Essential Health  
            Benefits other than Pediatric Dental EHB."  In this document,  
            Covered California indicates that the QHP solicitation  
            requires all QHP bidders to submit two premium bids:  one  
            inclusive of pediatric dental EHB and one without.  The  
            purpose of this requirement was to provide the Exchange with  
            the option of selecting stand-alone dental plans which offer  
            the pediatric dental EHB.  Because of final federal rules  
            issued in February 2013 the Exchange in the letter is  
            clarifying bidding rules.  The final federal rules regarding  
            pediatric stand-alone dental plans allow a separate annual  
            limitation on cost-sharing to apply to the pediatric dental  
            EHB only if it is offered by a separate dental plan.  The  
            Exchange has adopted standard benefit plans for the pediatric  
            dental EHB that include a $1000 annual OOP maximum and  
            determined it to be reasonable.  This applies to both dental  
            preferred provider organizations (PPOs) and dental HMOs.   
            Covered California states with respect to QHPs which embed the  
            pediatric dental EHB plan it is clear that single QHP OOP  
            maximum would apply to all 10 EHBs including pediatric dental.  
             Therefore, Covered California is requiring all QHPs to bid  
            the pediatric dental EHB by bundling with a dental plan  
            partner and is not allowing the pediatric dental EHB to be  
            embedded.  According to Covered California, this approach  
            creates administrative and offering uniformity and avoids the  
            need for QHPs to cross accumulate all patient cost-sharing,  
            including for dental services, to a single OOP maximum which  
            many health plans indicated they could not accomplish. 

           7)COVERED CALIFORNIA STANDARD BENEFIT DESIGNS  .


             ------------------------------------------------------------- 
            |Procedure Categories      |PPO High |PPO Low   |HMO   |HMO   |
            |                          |(Plan    |(Plan     |High  |Low   |
            |                          |Pays)    |Pays)     |(copay|(copay|
            |                          |         |          |s)    |s)    |








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            |--------------------------+---------+----------+------+------|
            |Diagnostic & Preventive   |         |          |      |      |
            |(D&P)                     |         |          |      |      |
            |--------------------------+---------+----------+------+------|
            |X-rays, Exams, Cleanings  |100%     |100%      |0     |0     |
            |Sealants                  |         |          |      |      |
            |--------------------------+---------+----------+------+------|
            |Office visit              |n/a      |n/a       |0     |$20   |
            |--------------------------+---------+----------+------+------|
            |Basic Restorative         |80%      |50%       |$40   |$95   |
            |Services                  |         |          |      |      |
            |--------------------------+---------+----------+------+------|
            |Major Services:  Crowns & |50%      |50%       |$365  |$365  |
            |Casts, Prosthodontics,    |         |          |      |      |
            |Endodontics,              |         |          |      |      |
            |Periodontics, Oral        |         |          |      |      |
            |Surgery                   |         |          |      |      |
            |--------------------------+---------+----------+------+------|
            |                          |Enrollee |Enrollee  |      |      |
            |                          |Pays     |Pays      |      |      |
            |--------------------------+---------+----------+------+------|
            |Medically Necessary       |50%      |50%       |$1,000|$1,000|
            |Orthodontics              |         |          |      |      |
            |--------------------------+---------+----------+------+------|
            |Deductible                |$50 (not |$60       |None  |None  |
            |                          |applied  |(applied  |      |      |
            |                          |to D&P)  |to all    |      |      |
            |                          |         |services) |      |      |
            |--------------------------+---------+----------+------+------|
            |Annual Maximum            |None     |None      |None  |None  |
            |--------------------------+---------+----------+------+------|
            |OOP Maximum               |$1,000   |$1,000    |$1,000|$1,000|
            |                          |         |          |      |      |
            |--------------------------+---------+----------+------+------|
            |Waiting periods           |None     |None      |None  |None  |
            |--------------------------+---------+----------+------+------|
            |Actuarial Value           |86%      |72%       |87%   |72%   |
             ------------------------------------------------------------- 

           8)PEDIATRIC AGE FOR BENEFITS  .  AB 1996 (Thomson), Chapter 795,  
            Statutes of 2002, requests the University of California to  
            assess legislation proposing a mandated benefit or service,  
            and prepare a written analysis with relevant data on the  
            medical, economic, and public health impacts of proposed  
            health plan and health insurance benefit mandate legislation.   








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            CHBRP was created in response to AB 1996 and extended for four  
            additional years in SB 1704 (Kuehl), Chapter 684, Statutes of  
            2006, and another four years in AB 1540 (Committee on Health),  
            Chapter 298, Statutes of 2009.  In a 2013 CHBRP report to the  
            Legislature, "Policy Brief: Pediatric Dental and Pediatric  
            Vision Essential Health Benefits" CHBRP points out that the  
            ACA does not specify age eligibility guidelines for pediatric  
            dental and pediatric vision EHBs and California law is silent  
            as to the exact age of enrollees eligible for EHB pediatric  
            dental and pediatric vision benefits.  The two benchmarks  
            specified in AB 1453 (Monning) Chapter 854, Statutes of 2012,  
            and SB 951 (Ed Hernandez), Chapter 866, Statutes of 2012, for  
            defining the supplemental benefit packages use two distinct  
            age guidelines.  Healthy Families provides pediatric dental  
            benefits to beneficiaries up to age 19.  BCBS FEDVIP  
            BlueVision plan provides pediatric vision benefits to  
            enrollees up to age 22.  Therefore, the benefit packages may  
            be made available to differing age groups.  CHBRP indicates  
            that the question of age eligibility for pediatric EHBs may be  
            resolved by the federal rule finalized on February 25, 2013,  
            which recommends that pediatric dental and pediatric vision  
            benefits be provided to children up to age 19, with a state  
            option to provide these benefits beyond age 19.  CHBRP also  
            adds that California regulation or legislation may be  
            necessary to reconcile the differences between the California  
            legislation passed in September and this federal rule.

           9)SUPPORT  .  The California Dental Association (CDA) supports  
            this bill because it will clarify state law to allow  
            stand-alone dental benefits in the Exchange, giving families  
            the most choice in their dental coverage.  CDA states that  
            stand-alone dental benefits currently allow children to  
            maintain their dental coverage even when their medical  
            coverage changes.  This bill also applies standard patient  
            protections to dental care, including that a patient receives  
            high value for their premiums.  According to CDA, dental plans  
            will be treated fairly with respect to the MLR, because the  
            for dental the MLR is proposed to be 75%, less than the 80-85%  
            required of medical plans, less than the MLR required of  
            Healthy Families, and less than the MLR dental plans report to  
            DMHC and the Internal Revenue Service for their current plans.  
             CDA also supports this bill because it is not intended to  
            disrupt any of the current health or dental plan bids or  
            offerings currently in process at the Exchange.  
          Health Access writes in support that it strongly supported  








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            legislation adopted last year to implement EHBs, which  
            included pediatric dental benefits as required by federal law.  
            Health Access is very hesitant to allow the offering of any  
            benefit package which does not include all 10 EHBs.  Health  
            Access learned from the bitter experience of maternity  
            coverage that carriers will slice and dice benefits if  
            permitted to do so, leaving much of the market without  
            affordable coverage that included maternity.  Health Access  
            recognizes that today most dental coverage is sold on a  
            standalone basis.  However, reconciling standalone dental  
            plans with the other consumer protections already in  
            California law is a real challenge.  Health Access supports  
            the provisions of this bill that apply consumer protections  
            including timely access, network adequacy, and MLR to products  
            offered on both the CDI and DMHC side so that this bill will  
            level the playing field between the two regulators in terms of  
            stand-alone dental plans.  The American Federation of State,  
            County and Municipal Employees also supports this bill because  
            it presents crucial consumer protections, including compliance  
            with minimum MLR and a 60 day review of rate changes by the  
            DMHC and CDI.

           10)OPPOSE UNLESS AMENDED  .  According to the California  
            Association of Dental Plans (CADP), this bill would negatively  
            impact the affordability and availability of pediatric dental  
            EHB policies offered by dental plans in the small group market  
            both inside and outside the Exchange.  CADP believes this bill  
            would result in diminished consumer choice and continuity of  
            dental care for Californians.  Delta Dental and Kaiser  
            Permanente have concerns about coordinating with dental plans  
            and the age pediatric age requirement of 22. 
              a)   MLR  .  According to CADP this bill imposes a 75% MLR on  
               the provision of pediatric dental EHB policies even though  
               the ACA exempts dental plans from the MLR requirement.   
               CADP indicates that a 75% MLR on a $15 dental HMO premium  
               would leave $3.75 per member per month for administrative  
               costs compared to 80% MLR on a $400 HMO premium would leave  
               $80 per member per month for administrative costs.  CADP  
               indicates that while dental plans have many of the same  
               basic administrative functions as medical plans they have  
               to execute those functions for a fraction of the  
               administrative costs of medical plans.  CADP is also  
               opposed to the rebate requirement because it could force a  
               dental plan that fails to meet the MLR threshold to mail  
               thousands of checks for possibly 10 cents or less and cost  








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               four times the rebate amount.  Delta Dental indicates that  
               an uneven playing field will be created outside the  
               Exchange where an embedded dental benefit would escape the  
               MLR entirely by hiding its higher MLR under the health  
               plan's total MLR.  Delta Dental requests the MLR provisions  
               be deleted or require a study period so that dental plans  
               could establish an MLR baseline or adopt an MLR consistent  
               with the National Association of Insurance Commissioners  
               recommendation of 65%.  

              b)   Rate Review  .  CADP believes Covered California, as an  
               active purchaser, is a far better means of keeping premiums  
               in check than burdensome regulatory rate review  
               requirements.  CADP points out that dental is different  
               than medical and that premiums have remained flat for over  
               a decade even trending downward in the last few years.   
               Delta Dental believes rate review is a significant and  
               unnecessary administrative burden that is inappropriate in  
               a dental context.  Delta Dental expresses concerns about  
               introducing the administrative expense of rate review at  
               the same time the bill proposes a dental loss ratio.

              c)   Coordination of Cost-Sharing  .  Delta Dental argues for  
               keeping dental and medical OOP maximums separate and that  
               coordinating the two among the dental and health plans  
               represents an extreme challenge.  According to Delta  
               Dental, the 2014 dental scheme that Delta Dental suggested  
               (and has been adopted in this bill) will take some time to  
               work out and that it is unwise to impose the changes  
               proposed for 2015.  CADP indicates that this bill would  
               circumvent Covered California's decision, which was based  
               on federal guidance, to establish separate OOP maximums for  
               2014 medical EHB and pediatric dental EHB policies through  
               the imposition of a burdensome administrative process on  
               the QHP participating in the Exchange.  CADP believes this  
               bill has plans jump through hoops in a time frame too short  
               to succeed and suggests this bill focus on the policy  
               direction for Covered California starting in 2015.  

           11)OPPOSITION  .  The California Association of Health Plans  
            (CAHP) opposes this bill because CAHP believes it will  
            interfere with the launch of Covered California.  CAHP  
            believes this bill is not only poorly timed it reverses  
            Covered California's decision to establish separate OOP  
            maximums for medical and pediatric dental benefits.  CAHP  








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            states that this bill imposes a new and burdensome  
            administrative process on health plans to track an enrollee's  
            medical OOP max and notify the dental plan so that the  
            pediatric dental OOP costs can be waived.  Notwithstanding the  
            privacy concerns associated with the transfer of this  
            information, the new process envisioned by the bill would only  
            be in place for one year because in 2015 this bill combines  
            the medical and dental OOP without any regard for the  
            disruption this could cause. The Exchange developed benefit  
            designs carefully to comply with federal guidance and to keep  
            premiums affordable.  Reversing Exchange policies  
            legislatively before it is fully operational is a mistake  
            because of the potential for increased cost.  Anthem Blue  
            Cross believes this bill would make significant and burdensome  
            changes to the way specialized health plans are offered in the  
            small group market, both inside and outside of the Exchange.   
            Anthem believes the conflict in law is being addressed by the  
            Exchange, state regulators, and the federal agencies.  Anthem  
            argues that this bill is inconsistent with constantly changing  
            rules that could disrupt planning and isn't realistically  
            achievable.  Anthem believes if there is an MLR it should be  
            between 60-65%.  Anthem indicates that combined OOP are not  
            achievable and will increase the costs of both the medical and  
            the dental plans.  According to Anthem changing the age for  
            pediatric services will increase the costs of premiums for  
            19-22 year olds between 5-10%, and increase premiums for all  
            consumers as well.

           12)PREVIOUS LEGISLATION  .  

             a)   AB 1453 and SB 951 establish California's EHBs.

             b)   AB 51 (Alquist), Chapter 644, Statutes of 2011, conforms  
               California law to provisions of the ACA related to MLR  
               requirements on health plan and health insurers and  
               prohibitions on annual and lifetime benefits.

             c)   AB 1602 (John A. P�rez), Chapter 655, Statutes of 2010,  
               establishes the Exchange as an independent public entity to  
               purchase health insurance on behalf of Californians,  
               including those with incomes of between 100% and 400% of  
               the FPL and small businesses.  Clarifies the powers and  
               duties of the board governing the Exchange relative to the  
               administration of the Exchange, determining eligibility and  
               enrollment in the Exchange, and arranging for coverage  








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               under qualified insurers. 

             d)   SB 900 (Alquist), Chapter 659, Statues of 2010,  
               establishes the Exchange and requires the Exchange to be  
               governed by a five-member board, as specified.

             e)   SB 1163 (Leno), Chapter 661, Statutes of 2010, requires  
               health plans and health insurers to file with DMHC and CDI  
               specified rate information for individual and small group  
               coverage at least 60 days prior to implementing any rate  
               change.  Requires rate filings to be actuarially sound and  
               to include a certification by an independent actuary that  
               any increase is reasonable or unreasonable.  Requires the  
               filings in the case of large group contracts only for  
               unreasonable rate increases prior to implementing any such  
               rate change.  Increases, from 30 days to 60 days, the  
               amount of time that a health plan or insurer provides  
               written noticed to an enrollee or insured before a change  
               in premium rates or coverage becomes effective.  Requires  
               health plans and insurers that decline to offer coverage to  
               or deny enrollment for a large group applying for coverage  
               or that offer small group coverage at a rate that is higher  
               than the standard employee risk rate to, at the time of the  
               denial or offer of coverage, provide the applicant with  
               reason for the decision, as specified.

             f)   AB 2179 (Cohn), Chapter 1594, Statutes of 2002, requires  
               DMHC and CDI to develop and adopt regulations to ensure  
               that enrollees have access to needed health care services.

           13)IS PEDIATRIC DENTAL ESSENTIAL OR NOT, AND FOR WHOM?    
            According to the Institute of Medicine, in 2008, 4.6 million  
            children (one out of every 16 children in the US) did not  
            receive needed dental care because their families could not  
            afford it.  Arguably, this is the reason why the pediatric  
            oral benefit was included as a mandated EHB.  When the  
            Legislature passed the EHB bills last year, the policy  
            decision was made to make all 10 of the federally mandated  
            EHBs, state mandates.  The Exchange has pursued a contracting  
            approach that is in conflict with state law by asking health  
            plans to submit bids for 9.5 out of the 10 EHBs.  Some argue  
            that because federal law and regulations allow this 9.5  
            option, state law should conform to the approach taken by the  
            Exchange.  This policy decision merits further consideration.   
            The federal regulations make clear in the Exchange an  








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            individual doesn't have to purchase the pediatric oral benefit  
            if the plan does not offer it.  

            Certainly individuals without children will choose the less  
            expensive 9.5 option and choose not to purchase a separate  
            pediatric oral policy they do not need.  Some families may  
            also choose not to purchase the pediatric oral benefit for a  
            variety of reasons, including avoiding the added cost.  This  
            option to avoid pediatric dental would not be presented if all  
            10 of the benefits were part of the mandatory package, as is  
            the case with maternity, prostate screening, and mental health  
            coverage.  This bill establishes legislative intent that all  
            10 of the EHBs are "essential," but the pediatric services are  
            only essential for pediatric enrollees.

           14)DISPARITIES OF INSIDE VS. OUTSIDE THE EXCHANGE  .  Under  
            federal rules, 9.5 EHB plans can be sold outside the Exchange  
            but a purchaser, whether he or she has children or not, must  
            also purchase a stand-alone pediatric dental EHB plan.   
            Embedded plans (those that cover all 10 EHBs) will also be  
            sold outside the Exchange.  A person who purchases a plan  
            where the pediatric dental is embedded will automatically get  
            pediatric dental whether they need it or not, like maternity,  
            prostate screening, and mental health coverage.  But as  
            indicated in comment 13) above, embedded plans will not be  
            available in the Exchange.  When the Legislature passed the  
            bill authored by Speaker Perez which establishes the Exchange  
            a policy decision was made to require plans participating in  
            the Exchange to sell the same products outside the Exchange.   
            Once again, a conflict exists between state and federal law,  
            because federal regulations only allow an exemption for a  
            health plan outside of the Exchange from the pediatric dental  
            EHB offering if the health plan has reasonable assurance that  
            the enrollee has Exchange certified stand-alone dental  
            coverage already.  This bill addresses this problem by  
            allowing health plans without pediatric dental to be sold both  
            inside and outside the Exchange.

           15)OOP MAX  .  Further, there are additional disparities when one  
            compares the total OOP maximum for an individual with  
            pediatric dental embedded vs. a bundled or stand-alone  
            situation.  In an embedded situation, there will be a total  
            OOP maximum tied to HSA limits (in 2014, no more than $6,400  
            for an individual and $12,800 for a family).  This means that  
            a person or family with high medical and dental expenses will  








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            have full coverage once the OOP max is met.  Cost sharing  
            toward the OOP will be coordinated by the health plan.  In a  
            bundled and stand-alone situation there will be two separate  
            deductibles.  The HSA limits described above for the health  
            plan and $1,000 for the dental plan.  A consumer benefit of  
            this approach is that on the dental side, once a person  
            satisfies the $1,000 OOP all dental benefits will be covered.   
            It has been suggested that between 2-5% of children will reach  
            the $1,000 OOP max.  A concern for consumers is that, the  
                                               total OOP maximum would now exceed the HSA limits because  
            effectively the total maximum amount expended by an enrollee  
            would be $7,400 and $13,800.  Furthermore, without a  
            requirement for coordination, the enrollee will be responsible  
            for tracking his or her progress toward satisfying their cost  
            sharing up to the OOP limits.  
          REGISTERED SUPPORT / OPPOSITION  :  

           Support 

           American Federation of State, County and Municipal Employees  
          AFL-CIO
          California Dental Association
          Health Access California

           Opposition 

           Anthem Blue Cross
          Association of California Life and Health Insurance Companies
          California Association of Health Plans
          San Francisco Chamber of Commerce
          United Concordia Dental
           
          Analysis Prepared by  :    Teri Boughton / HEALTH / (916) 319-2097