BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1578
AUTHOR: Pan
AMENDED: August 19, 2014
HEARING DATE: August 29, 2014
CONSULTANT: Moreno
PURSUANT TO SENATE RULE 29.10.
SUBJECT : Health: The California Health Benefit Review Program.
SUMMARY : Requests the California Health Benefit Review Program
(CHBRP), in addition to analyzing the public health impacts,
medical effectiveness, and financial impacts of legislation
proposing to mandate or repeal benefits or services, to also
analyze the impact on essential health benefits and the
California Health Benefit Exchange. Extends the annual fee
assessed on health plans and insurers for this purpose to fiscal
year 2015-16. Extends CHBRP, from June 30, 2015, to June 30,
2016. Contains an urgency that will make this bill effective
upon enactment.
Existing law:
1.Requests the University of California (UC) to establish the
California Health Benefit Review Program (CHBRP) to assess, as
specified and not later than 60 days from receiving a request
by the Legislature, legislation proposing to mandate or repeal
a health plan or health insurance benefit or service for
public health, medical, and financial impacts.
2.Requires health plans, except specialized health plans, and
health insurers, for fiscal years 2010-11 to 2014-15, to be
assessed an annual fee to fund CHBRP, as specified, not to
exceed $2 million.
3.Sunsets CHBRP on June 30, 2015.
This bill:
1.Requests CHBRP, in addition to analyzing the public health
impacts, medical effectiveness, and financial impacts of
legislation proposing to mandate or repeal a benefit or
service, to also analyze the impact on essential health
benefits (EHBs) and the California Health Benefit Exchange,
known as Covered California.
Continued---
AB 1578 | Page 2
2.Requests CHBRP to assess legislation that impacts health
insurance benefit design, cost sharing, premiums, and other
health insurance topics.
3.Requests analyses be provided to the appropriate policy and
fiscal committees of the Legislature not later than 60 days,
or in a manner and pursuant to a timeline agreed to by the
Legislature and CHBRP.
4.Extends the annual fee assessed on health plans and insurers
to fiscal year 2015-16.
5.Extends CHBRP, from June 30, 2015, to June 30, 2016.
.
6.Contains an urgency clause that will make this bill effective
upon enactment.
FISCAL EFFECT : Current version of this bill has not been
analyzed by a fiscal committee.
PRIOR VOTES : Not applicable to the current version of this
bill.
COMMENTS :
1.Author's statement. According to the author, AB 1578 reforms
the CHBRP program to reflect the new health care environment
since the implementation of federal health care reform. The
bill expands the scope of the program by requiring the mandate
studies to examine the impact on essential health benefits and
authorizes CHBRP to undertake research on additional important
health insurance topics such as benefit design, cost sharing
and premiums. This bill also extend for an additional year
the sunset date on overall CHBRP program and the requirement
that health plans and health insurers be assessed a fee to
support CHBRP. The extensions will be through the 2015-16
fiscal year. The bill also requires a report to the
Legislature and the Governor by January 1, 2016. The studies
conducted by CHBRP supply important information as the
Legislature and Governor consider the impacts of different
health policy issues related to health insurance.
2.CHBRP. AB 1996 (Thomson), Chapter 795, Statutes of 2002,
requests UC to assess legislation proposing a mandated benefit
or service (referred to as "mandate bills") and prepare a
written analysis with relevant data on the medical, economic,
AB 1578 | Page
3
and public health impacts of proposed health plan and health
insurance benefit mandate legislation. Since 2004, CHBRP has
analyzed 103 mandate bills, 45 of which were passed by the
Legislature and enrolled to the Governor. Thirty-three of
those bills analyzed were vetoed, and 11 were signed into law.
In the past two years, during CHBRP's analysis of what were
thought to be mandate bills, it determined that a number of
those referred were not, in fact, new mandates. Additionally,
a number of the bills that became law were amended enough by
the time they were sent to the Governor to no longer be
considered a new mandated benefit or service.
3.EHBs. On March 23, 2010, President Obama signed the
Affordable Care Act (ACA, Public Law 111-148), as amended by
the Health Care and Education Reconciliation Act of 2010
(Public Law 111-152), into law. Among many other provisions,
the ACA requires Medicaid benchmark and benchmark-equivalent
plans, plans sold through the Exchange, and health plans and
health insurers providing coverage to individuals and small
employers to ensure coverage of EHBs, as defined by the
federal 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 following categories:
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.
On December 16, 2011, the HHS Center for Consumer Information
and Insurance Oversight released a bulletin proposing that
EHBs be defined using a benchmark approach. SB 951
AB 1578 | Page 4
(Hernandez), Chapter 866, Statutes of 2012 and AB 1453
(Monning), Chapter 854, Statutes of 2012 designated the Kaiser
Small Group HMO as California's benchmark plan to serve as the
EHB standard. The state has to defray the costs of federal
subsidies to cover any mandate enacted that is beyond what is
contained in EHBs pursuant to SB 951 and AB 1453.
1.Covered California. Through SB 900 (Alquist) Chapter 659,
Statutes of 2010, and AB 1602 (Perez), Chapter 655, Statutes
of 2010, California was the first state in the nation to
establish a Health Benefit Exchange (known as Covered
California). Adopting its Board of Directors in October 2011,
Covered California's vision is to improve the health of all
Californians by assuring their access to affordable, high
quality care. According to Covered California, it is an
easy-to-use marketplace where individuals can get financial
assistance to make coverage more affordable and where people
can compare and choose health coverage. As of March 31, 2014,
approximately 3.2 million Californians have enrolled in
coverage since October 1, 2013, including 1.9 million in
Medi-Cal.
2.Number of mandate bills. Since CHBRP's inception, the number
of bills mandating benefits and services has fluctuated, and
in the last year has decreased significantly. When AB 1996
was being considered by the Legislature, the author stated
that during the 2001-2002 legislative session, more than 14
mandate bills were introduced. The author believed that UC
would facilitate the provision of quality, cost-effective
health services by providing current, accurate data and
information to the Governor and the Legislature for the
purpose of determining health-related programs and policies in
connection with proposed legislation. In 2003, the first year
that the UC received requests for analysis of mandate bills,
only four were introduced and analyzed. The following year,
there were 13 mandate bills analyzed. Between 2005 and 2014,
the number of mandate bills introduced has varied, with the
largest number (15 mandate bills) in 2011. With the passage
of the ACA, and the establishment of EHBs, policymakers have
worked to ensure the successful implementation of the ACA and
Covered California, and have endeavored to discourage any
additional legislation to alter state mandated benefits until
the implications of EHBs were known.
3.New ways to tweak coverage requirements. In the 10 years
since CHBRP has been analyzing mandate bills, various
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stakeholders and interest groups have developed legislative
proposals other than mandates to have a similar effect on
coverage requirements. These have included:
a. SB 639 (Hernandez), Chapter 316, Statutes of 2013 places
in California law provisions of the ACA relating to
out-of-pocket limits on health plan enrollee and insured
cost-sharing, health plan and insurer actuarial value
coverage levels and catastrophic coverage requirements, and
requirements on health insurers with regard to coverage for
out-of-network emergency services. Applies health plan
enrollee and insured out-of-pocket limits to specialized
products that offer EHBs.
b. AB 1800 (Ma), of 2012, would have implemented provisions
of the ACA related to prohibitions on health plans and
health insurers from imposing out-of-pocket maximum caps
which exceed specified levels. AB 1800 was held in the
Senate Appropriations Committee.
c. AB 310 (Ma), of 2011, would have prohibited health plan
contracts and health insurance policies that cover
outpatient prescription drugs from requiring coinsurance,
as defined, as a basis for cost sharing for outpatient
prescription drug benefits and imposes specified
limitations on copayments, as defined, and out-of-pocket
expenses for outpatient prescription drugs. AB 310 was
held in Assembly Appropriations Committee.
4.60-day timeline. AB 1996 and subsequent legislation that
extended CHBRP included a request that analyses be provided to
the legislature within 60 days. CHBRP developed a model that
has resulted in analyses not being completed prior to that
60-day deadline. According to CHBRP's 2013 report to the
Legislature, it uses a 60-day timeline that details which
activities occur on what day. The 60-day clock is initiated
by CHBRP upon receipt of a request from the Senate or Assembly
Health Committee. According to CHBRP, it must have sufficient
capacity to do multiple (e.g., eight or more) analyses on
simultaneous 60-day timelines. CHBRP faculty, actuaries,
librarians, reviewers, and staff must produce and review
multiple drafts on multiple bills in what they consider a very
compressed timeframe, given their model. This timeline has
led to challenges for policy committee staff, because Assembly
and Senate Health Committee staff requires the CHBRP analysis
prior to completing their analysis. Often times mandate bills
are introduced close to the bill introduction deadline, which
AB 1578 | Page 6
is also about 60 days before deadline for policy committees to
hear bills, and there is a tight window between the time the
CHBRP analysis is received and the Committee analysis must be
completed. This arrangement gives the Health Committees
little time to incorporate its findings in a meaningful way
into the Committee analysis.
5.Prior legislation. AB 1996 requests UC to, within 60 days of
receiving a request by the Legislature, analyze legislation
proposing to mandate or repeal a health plan or health
insurance benefit or service for public health, medical, and
financial impacts.
SB 1704 (Kuehl), Chapter 684, Statutes of 2006, extended the
sunset date of the UC program to January 1, 2011 and adds
legislation proposing to repeal a mandated benefit or service
to the types of legislation that the Legislature requests that
UC assess.
AB 1540 (Committee on Health), Chapter 298, Statutes of 2009,
extends the sunset date of the UC program to June 30, 2015.
SB 18 (Hernandez) would have requested CHBRP to assess, in
addition to the health, medical, and financial impacts, the
impact that health coverage mandates will have on EHBs, as
specified, and Covered California. SB 18 was subsequently
amended to a different subject matter.
6.Policy comment. Committee staff surveyed stakeholders in 2013
on CHBRP, its process, their work product, and the need for
analysis on matters other than mandate bills. Overall,
respondents were supportive of the function of CHBRP
especially with regard to the fiscal implications of health
insurance mandates and of housing it within UC despite
challenges. Given the new post-ACA environment, there is need
for in-depth, independent analysis beyond mandate bills. And
while there is ongoing value to having independent evaluation,
to be most valuable to stakeholders and policymakers, the
analytic process has to be nimble and responsive to the
legislative calendar. In order to make maximum use of this
resource and to be more responsive to the Legislature and the
legislative cycle, this bill expands CHBRP's charge and
applies a more flexible timeline. Through the budget process,
as that is where CHBRP will receive its annual appropriation,
there can be legislative oversight to ensure the changes
contained in this bill are implemented over the next year.
AB 1578 | Page
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SUPPORT AND OPPOSITION :
Support: America's Health Insurance Plans
California Association of Health Plans
Oppose: None received.
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