BILL ANALYSIS �
AB 1877
Page 1
Date of Hearing: April 8, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 1877 (Cooley) - As Amended: April 2, 2014
SUBJECT : California Vision Care Access Council.
SUMMARY : Creates in state government the California Vision Care
Access Council (Council), modeled after the California Health
Benefit Exchange (Exchange), to create a marketplace for the
purchase of vision plans by individuals and employers. Contains
an urgency clause in order to become effective immediately upon
enactment. Specifically, this bill :
1)Creates requirements for the government of Council by an
uncompensated executive board:
a) Provides for the appointment of three board members by
the Governor, one by the Senate Committee on Rules, and one
by the Speaker of the Assembly. Sets out the terms and
qualifications of board members.
b) Contains broad prohibitions on board members having any
affiliation with health plans and insurers, agents and
brokers, health care providers, health facilities, and
health industry trade associations. Prohibits board
members from participating in decisions where they have a
conflict of interest. Requires board members to meet all
applicable state and federal requirements and to serve the
public interest of those seeking coverage through the
Council, and to ensure the operational well-being and
fiscal solvency of the Council. Makes the board subject to
the Bagley-Keene Open Meeting Act, except when considering
matters related to litigation, personnel, contracting, and
rates.
c) Requires the board to hire an executive director, who
will be exempt from civil service and serve at the pleasure
of the board. Requires the board to fill other key
executive positions, who will be exempt from civil service
to the extent permitted by law. Requires the board to set
the salaries for the exempt positions in amounts that are
reasonably necessary to attract and retain individuals of
superior qualifications. Requires salaries to be published
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and posted on the website.
2)Gives the Council the following duties:
a) Construct, manage, and maintain a vision plan
marketplace, accessible through a website and through other
means, that offers information about vision plans, ensures
secure purchase functionality, and provides standardized
comparative information on the plans on offer.
b) Create minimum requirements for participating vision
plans and apply consistent standards and criteria to vision
plans that are in the best interest of consumers.
Selectively contract for vision coverage so as to provide
options that offer the optimal combination of choice,
value, quality, and service. Provide a choice of vision
plan in each region of the state. Require vision plans to
have minimum net assets; an established website; adequate
vision care coverage networks; and adequate multilingual
consumer service and benefit delivery capabilities.
Determine and approve cost-sharing provisions for vision
plans and standardize products offered through the Council.
c) Work cooperatively with the Exchange to establish a
direct link from the Exchange website to the Council
website. Refer consumers to the Exchange if they have
questions about Medi-Cal or Exchange plan enrollment and
eligibility.
d) Market and publicize the Council's vision plans, while
ensuring clear communication to consumers that federal
subsidies are not available for this coverage.
e) Provide fair and impartial information in a culturally
and linguistically appropriate manner, including providing
a hotline and an online calculator. Conduct public
outreach and make appropriate referrals for enrollees with
grievances, complaints, or questions. Facilitate
enrollment in the least burdensome manner, including for
populations that may experience barriers to enrollment,
such as the disabled and those with limited English
language proficiency.
f) Assess a charge on the vision plans offered through the
marketplace that is reasonable and necessary to support the
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development, operations, and prudent cash management of the
Council. Authorize expenditures to pay program expenses to
administer the Council. Keep an accurate accounting of all
activities, receipts, and expenditures, and annually
publish a report concerning that accounting.
g) Annually publish a report on the implementation and
performance of the Council functions during the preceding
fiscal year, to be made available to the public on the
website of the Council. Be responsive to requests for
additional information from the Legislature, including
providing testimony and commenting on proposed state
legislation or policy issues. Require vision plans to make
disclosures to the public, to the Council, and to state
regulators.
h) Consult with stakeholders, including health care
consumers who are enrolled in vision plans, individuals and
entities with experience in facilitating enrollment in
vision plans, and representatives of small businesses and
self-employed individuals.
i) Require, as a condition of participation, plans that
sell vision products outside the Council to make all
marketplace products available outside the Council.
Excludes from this requirement Healthy Families plans and
Medi-Cal managed care plans.
j) Collect only that information from individuals or
designees of individuals as is necessary to administer the
Council and consistent with the federal Patient Protection
and Affordable Care Act (ACA).
3)Gives the Council the authority to enter into contracts; adopt
an official seal; sue and be sued; adopt rules and
regulations; and receive and accept gifts, grants, or
donations from government agencies and from individuals,
associations, private foundations, or corporations, in
compliance with conflict of interest provisions adopted by the
board at a public meeting.
4)Requires participating vision plans to submit to the Council a
written justification prior to implementing a premium
increase. Requires participating vision plans to present
vision plan options to the Council using a standardized
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format. Requires participating vision plans to make available
a regularly updated electronic directory of contracting vision
care providers in the plan's network.
5)Allows the Council to require vision plans to provide
information on providers' acceptance of new patients; to
provide an integrated and uniform consumer directory of health
care providers and contracting plans; and to establish methods
for direct transmittal of information from providers to the
Council.
6)Exempts the Council from licensure or regulation by the
Department of Insurance and the Department of Managed Health
Care and requires participating vision plans to have a license
or certificate of authority from their respective regulatory
agencies.
7)Exempts certain Council records from the California Public
Records Act (PRA), including records of negotiations with
contracting entities and impressions, opinions,
recommendations, meeting minutes, research, work product,
theories, or strategy of the board or its staff, or records
that provide instructions, advice, or training to employees.
8)Creates the California Vision Care Access Trust Fund (Fund) in
the State Treasury, continuously appropriated to fund the
activities of the Council. Prohibits loaning or borrowing of
these funds, requires a prudent reserve in the fund, and
prohibits use of the fund for staff retreats, promotional
giveaways, excessive executive compensation, or promotion of
federal or state legislative or regulatory modifications.
Makes this bill's implementation contingent on the existence
of at least $250,000 in the fund.
EXISTING LAW :
1)Requires, under the ACA, each state, by January 1, 2014, to
establish a health benefit exchange that makes qualified
health plans (QHPs) available to qualified individuals and
qualified employers, or, if a state chooses not to establish
an exchange, requires the federal government to establish one
for the state. Federal law establishes requirements for an
exchange, for health plans participating in an exchange, and
who is eligible to receive coverage in the exchange.
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2)Establishes in state government the Exchange as an independent
public entity not affiliated with an agency or department.
Requires the Exchange to compare and make available through
selective contracting health insurance for individual and
small business purchasers as authorized under the ACA.
3)Under federal law, establishes requirements for health plans
offered through state exchanges, including that the plan
provides essential health benefits (EHBs) and follows
established limits on cost-sharing (deductibles, copayments,
and out-of-pocket maximum amounts).
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.
5)Establishes the Exchange SHOP (the Small Business Health
Options Program), 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.
6)Exempts specialized health plans, which include vision plans,
from a number of requirements that apply more broadly to
health plans.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author of this bill,
vision is a critical part of everyday life, affecting how we
learn, communicate, work, play, and interact with the world,
and eyes are the window to overall health, revealing vital
information about cholesterol, high blood pressure, diabetes,
and other health conditions. The author writes that, despite
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the obvious importance of vision health, consumers do not have
an opportunity to select a vision care plan when shopping for
healthcare on California's new health insurance marketplace,
Covered California. This bill is intended, consistent with
federal guidance, to establish a separate and legally distinct
entity that offers California consumers the opportunity to
choose vision care coverage in addition to their other health
care choices when purchasing coverage on the Exchange.
2)BACKGROUND . Under the ACA, individuals are required to
maintain health insurance or pay a penalty, with exceptions
for financial hardship, religion, incarceration, and
immigration status. The ACA also includes several insurance
market reforms, such as prohibitions against health insurers
imposing preexisting health condition exclusions and a
requirement that health plans and insurers offer EHBs in the
individual and small group markets.
The ACA allows each state to establish its own exchange to
offer individual and small group coverage; if a state
declines, the federal government will establish one for the
state. California's state exchange is Covered California,
which is an independent government entity with a five-member
board of directors. Individuals with income under 400% of the
federal poverty level (FPL), provided certain conditions are
met, can receive a subsidy in the form of a refundable tax
credit toward the purchase of an Exchange plan. The payment
goes directly to the insurer and reduces the premium liability
for that individual. For some products in the Exchange,
individuals who are eligible for a tax subsidy are also be
eligible for assistance in paying cost-sharing for their
health services. Federal subsidies are only available for
Exchange plans.
All Exchange plans must cover the EHBs.Under the ACA,
pediatric vision care is included in the EHBs, while adult
vision care is considered a supplemental benefit.
Covered California Letter. On October 25, 2012, the Exchange
Board adopted a policy to offer supplemental dental and vision
benefits in the individual and SHOP exchanges. The Exchange,
in a letter to the Centers for Medicaid and Medicare Services
(CMS), Center for Consumer Information and Insurance Oversight
(CCIIO), advised CCIIO of its intention offer stand-alone
vision and requested federal guidance about offering these
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benefits. The letter noted that stand-alone vision plans may
increase the likelihood of utilization and provide greater
emphasis on preventive care, and stated that offering
stand-alone vision plans would bolster the consumer
friendliness of the Exchange.
Federal guidance. On April 5, 2013, CCIIO published a list of
"Frequently Asked Questions (FAQ) on Reuse of Exchange for
Ancillary Products." The FAQ indicates that stand-alone
vision plans and other ancillary insurance products such as
disability or life insurance products cannot be offered in or
through an Exchange: "An Exchange only may offer QHPs,
including stand-alone dental plans, to qualified individuals
and qualified employers... However, ancillary insurance
products, which are not QHPs, may be offered by separate state
programs that share resources and infrastructure with a
State-based Exchange."
The FAQ also indicates that Exchange websites may provide
basic information on vision and ancillary, and that, if this
information is provided, it must indicate that the vision and
ancillary insurance products are not QHPs and advance payment
of premium tax credits and cost-sharing reductions are not
available for these products. The FAQ advises that it would
be acceptable, for example, for vision and ancillary products
to be listed on an Exchange website, along with the disclaimer
about non-QHP status and unavailability of subsidies, with
consumers having the ability to add the product to a shopping
basket along with QHPs. The FAQ provides conditions that must
be met if Exchange resources are used to offer non-QHP
ancillary plans: the agency or program facilitating the
coverage must be legally and publicly distinct from the
Exchange, and no federal funds or Exchange user fees or
assessments may be used to support non-Exchange activities.
To the extent that an Exchange resource is used to offer
non-Exchange products, the FAQ indicates that the cost of
using the resource must be paid by the other, non-Exchange
state program.
Marketplace design. This bill's provisions are nearly all
adapted from current law that governs the Exchange. That
means the choices the Legislature made in designing the
Exchange will also apply to the Council and its marketplace.
A key attribute of this design is that the Council, like the
Exchange, will serve as an active purchaser, negotiating and
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selectively contracting with insurers to obtain the best value
product in exchange for a large volume of enrollees.
According to a California Health Care Foundation analysis of
insurance exchange designs, an active purchaser exchange has a
number of perceived benefits: a) providing an easy to navigate
single point of entry where people can go to choose among
several health plans; b) reducing the cost of coverage, by
reducing costs through economies of scale, negotiating lower
prices, and fostering market competition; and c) enhancing the
portability of coverage.
3)SUPPORT . VSP Global, the sponsor of this bill, writes that
currently, Covered California cannot offer the 3 to 5 million
Californians without vision care benefits access to
stand-alone vision plans, including those plans offered by
VSP. VSP argues that vision coverage, particularly in
California, is primarily provided through stand-alone plans.
VSP further asserts that eye doctors are able to detect
previously undetected chronic conditions like diabetes,
hypertension, and high cholesterol. Moreover, VSP asserts
that enrollees in stand-alone vision plans are more likely to
utilize their benefits than enrollees with vision benefits
bundled with other health care services. This bill is
intended to use federal guidance to create a new marketplace
for the purchase of affordable, quality vision care coverage,
thereby increasing access to vision care through stand-alone
vision plans. The National Association of Social Workers,
California Chapter, also in support, writes that vision
services are a basic benefit that everyone needs, from
children who need eye screenings to seniors who may have
glaucoma.
4)OPPOSITION . The California Association of Health Underwriters
(CAHU), in opposition, writes that consumers and agents
continue to struggle with the current Exchange's faulty
computer and phone systems, hours-long wait times for service,
and many other functionality problems. CAHU argues that that,
until the existing Exchange systems work as planned and as
promised, no additional structures should be added.
5)RELATED LEGISLATION .
a) AB 18 (Pan) would have exempted small group health plans
and insurers not participating in the Exchange and QHPs
participating in the SHOP from the EHB requirement to offer
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a pediatric oral care benefit if a specialized plan is
offered through the Exchange SHOP (either bundled with a
QHP or standing alone) or small group market outside the
Exchange. AB 18 died without a hearing in Assembly
Appropriations Committee.
b) AB 710 (Pan) would have required the Exchange to
facilitate the purchase of qualified health plans by
multiemployer plans. AB 710 was held under submission by
the Assembly Appropriations Committee.
c) AB 1428 (Conway), Chapter 561, Statutes of 2013, inserts
a reference to a specific federal document relating to
health exchange privacy and security to clarify criminal
background check requirements for employees, contractors,
and vendors who facilitate enrollment in the Exchange.
d) AB 1560 (Gorell) prohibits the Exchange from disclosing
an individual's personal information to third parties for
the purpose of eligibility or enrollment in health care
coverage unless the individual confirms specified
information and provides prior written consent. AB 1560 is
pending in the Assembly Health Committee.
e) AB 1829 (Conway) prohibits the Exchange from hiring or
contracting with a person who has been convicted of
specified crimes if the person would be facilitating
enrollment or have access to enrollees' financial or
medical information. AB 1829 is pending in the Assembly
Health Committee.
f) AB 1830 (Conway) prohibits the Exchange and its
employees from using or disclosing personal information
except as necessary to carry out specified functions under
the ACA and creates a civil penalty of up to $25,000 per
individual or entity, per use or disclosure. AB 1830 is
pending in the Assembly Health Committee.
g) AB 2301 (Mansoor) requires the Exchange to report on a
quarterly basis on enrollments and disenrollments under
qualified health plans purchased through the Exchange by
specified categories. AB 2301 is pending in the Assembly
Health Committee.
h) AB 2601 (Conway) prohibits the Exchange from assessing
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or increasing a charge on health plans, on or after January
1, 2016, unless the charge is enacted as a statute. AB 2601
is pending in the Assembly Health Committee.
i) SB 332 (Emmerson and DeSaulnier), Chapter 446, Statutes
of 2013, eliminates an exemption from the PRA for contracts
entered into by the Exchange and instead requires contracts
between health plans or insurers and Covered California to
be open to inspection one year after the effective date and
payment rates to be open three years after a contract or
amendment is open to inspection. Also deletes a provision
which exempts impressions, opinions, strategy, training,
and other Covered California business from the PRA.
j) SB 509 (DeSaulnier and Emmerson), Chapter 10, Statutes
of 2013, requires fingerprint-based background checks for
all Exchange employees, contractors, volunteers, or vendors
with access to enrollees' personal information.
aa) SB 972 (Torres) increases the number of Exchange board
members from five to seven, with the two additional board
members appointed by the Governor, and broadens the types
of expertise that qualifies an individual to serve on the
board. SB 972 is pending in the Senate Health Committee.
bb) SB 974 (Anderson) prohibits the Exchange from disclosing
an individual's personal information to any other person or
entity without explicit permission and requires the
Exchange to report a disclosure in violation of this
provision within five business days. SB 974 is pending in
the Senate Appropriations Committee.
cc) SB 1052 (Torres) requires health plans offered in the
Exchange to post a current formulary for the plan on their
websites, requires the Exchange to provide a direct link to
the posted formularies, and requires the Exchange to
provide a web search tool that allows searching by drug or
by therapeutic condition. SB 1052 is pending in the Senate
Health Committee.
6)PREVIOUS LEGISLATION .
a) AB 1453 (Ed Hernandez), Chapter 866, Statutes of 2012,
and SB 951 (Monning), Chapter 854, Statutes of 2012,
establish California's EHBs.
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b) AB 1602 (John A. P�rez), Chapter 655, Statutes of 2010,
and SB 900 (Alquist), Chapter 659, Statutes of 2010,
establish the Exchange and its powers and duties.
7)POLICY COMMENTS .
a) Background checks. SB 509 of 2013 requires Exchange
employees and contractors with access to enrollees'
personal information to undergo fingerprint-based
background checks. This bill is silent on the question of
background checks for employees and contractors.
b) PRA exemption. SB 332 of 2013 narrows the PRA exemption
for the Exchange, but this bill contains the broader PRA
exemption that applied to the Exchange prior to 2013.
c) Diversity of the governing board. Appointing
authorities for the Exchange board are directed to take
into consideration the cultural, ethnic, and geographical
diversity of the state so that the board's composition
reflects the communities of the state. This bill does not
contain a similar requirement.
d) Pediatric vision. Pediatric vision care is currently an
essential health benefit, required to be included in all
individual and small group health plans in the state.
Nothing in this bill prevents the purchase of a stand-alone
vision plan for a minor. To help consumers, the Council
could be required to inform consumers that pediatric vision
is an EHB and may be covered by their health insurance.
e) Urgency clause. This bill creates the Council as an
independent entity in state government. It also contains
an urgency clause and will take effect immediately upon
enactment. However, pursuant to the California
Constitution, an urgency statute may not create or abolish
any office.
REGISTERED SUPPORT / OPPOSITION :
Support
VSP Global (sponsor)
National Association of Social Workers, California Chapter
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Opposition
California Association of Health Underwriters
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097