BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1877
AUTHOR: Cooley
AMENDED: June 17, 2014
HEARING DATE: June 25, 2014
CONSULTANT: Boughton
SUBJECT : California Vision Care Access Council.
SUMMARY : Establishes in state government the California Vision
Care Access Council (Council), as an independent public entity
not affiliated with an agency or department to construct, manage,
and maintain a marketplace for the purchase of vision plans
through participating carriers by qualified individuals and
qualified employers, to determine the minimum requirements to be
considered as a carrier in the marketplace, the standards and
criteria for selecting vision plans, and assess a charge on the
vision plans offered by participating carriers through the
marketplace that is reasonable and necessary to support the
development, operations, and prudent cash management of the
Council.
Existing law:
1.Establishes in state government the California Health Benefit
Exchange (Covered California), an independent public entity not
affiliated with an agency or department.
2.Requires Covered California to be governed by an executive
board, consisting of five members who are residents of
California. Of the board members, two are appointed by the
Governor, one is appointed by the Senate Committee on Rules,
and one is appointed by the Speaker of the Assembly. The
Secretary of the California Health and Human Services or his or
her designee serves as a voting, ex officio member.
3.Requires Covered California board members, other than the ex
officio member, to be appointed for a term of four years,
except for the initial appointments of the Speaker and Rules
Committee which are two and five years, respectively. Requires
appointments made after January 2, 2011 by the Governor to be
subject to confirmation by the Senate.
4.Requires each person appointed to the Covered California board
to have demonstrated and acknowledged expertise in at least two
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of the following areas:
a. Individual health care coverage;
b. Small employer health care coverage;
c. Health benefits plan administration;
d. Health care finance;
e. Administering a public or private health care
delivery system; and,
f. Purchasing health plan coverage.
5.Requires appointing authorities to consider the expertise of
other members of the Covered California board and attempt to
make appointments so that the board's composition reflects a
diversity of expertise.
6.Requires appointing authorities to take into consideration the
cultural, ethnic, and geographical diversity of the state so
that the board's composition reflects the communities of
California.
7.Prohibits Covered California board members or staff from being
employed by, a consultant to, a member of the board of
directors of, affiliated with, or otherwise a representative
of, a carrier or other insurer, an agent or broker, a health
care provider, or a health care facility or health clinic while
serving on the board or on the staff of Covered California.
8.Prohibits a member of the board or of the staff of Covered
California from being a member, a board member, or an employee
of a trade association of carriers, health facilities, health
clinics, or health care providers while serving on the board or
on the staff of Covered California. Prohibits a member of the
Covered California board or of the staff of Covered California
from being a health care provider unless he or she receives no
compensation for rendering services as a health care provider
and does not have an ownership interest in a professional
health care practice.
9.Establishes as California's Essential Health Benefits (EHBs)
the Kaiser Small Group HMO plan along with the following ten
Affordable Care Act (ACA) mandated benefits and requires
coverage of these EHBs by non-grandfathered individual and
small group health plans, including qualified health plans
(QHPs):
a. Ambulatory patient services;
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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.
10.Requires under the ACA, that an Exchange make available QHPs
to qualified individuals and qualified employers, and that an
Exchange may not make available any health plan that is not a
QHP. Requires each Exchange within a State to allow an issuer
of a plan that only provides limited scope dental benefits, as
specified to offer the plan through the Exchange (either
separately or in conjunction with a QHP) if the plan provides
pediatric dental benefits meeting specified requirements.
11.Prohibits, under federal regulations, a plan or insurer
offering EHB from including routine non-pediatric dental
services, routine non-pediatric eye exam services,
long-term/custodial nursing home care benefits, or
non-medically necessary orthodontia as EHB.
12.Prohibits federal law from being construed to prohibit a
health plan or insurer from providing benefits in excess of the
EHB.
This bill:
1.Establishes in state government the California Vision Care
Access Council, as an independent public entity not affiliated
with an agency or department, which shall be known as the
Council, governed by the executive board of Covered California.
2.Requires each member of the Covered California board to have
the responsibility and duty to meet the requirements of this
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bill, the ACA, and all applicable state and federal laws and
regulations to serve the public interest of individuals and
small business seeking health care coverage through the
Council, and to ensure the operational well-being and fiscal
solvency of the Council.
3.Prohibits any liability in a private capacity on the part of
Covered California or any member of the Covered California
board, or any officer or employee of Covered California, for or
on account of any act performed or obligation entered into in
an official capacity when done in good faith, as specified.
4.Requires the Council, to the extent permitted by the ACA, to
establish interagency agreements with Covered California,
allowing the Council to utilize the executive, administrative,
and other related resources of Covered California, including,
but not limited to the staff employed by Covered California and
the programming and information technology infrastructure
supporting Covered California. Authorizes the Council to
establish interagency agreements with other agencies for the
purposes of contracting for executive, administrative, and
other related services, if necessary.
5.Prohibits a member of the Covered California board or staff of
the Council from being employed by, a consultant to, a member
of the board of directors of, affiliated with, or otherwise a
representative of, an optical company that manufactures, sells
or distributes lenses, frames, or other vision care appliance.
6.Requires the Council to:
a. Construct, manage, and maintain a marketplace
for the purchase of vision plans through participating
carriers by qualified individuals and qualified
employers. Requires the market place to offer full and
complete carrier information to consumers;
b. Maintain an Internet Web site, separate from
the Internet Web site of Covered California, through
which enrollees and prospective enrollees of vision
plans may obtain standardized comparative information
on the plans offered in the marketplace;
c. Work cooperatively with Covered California to
establish a direct link from the Internet Web site
maintained by Covered California to an Internet Web
site maintained by the Council to connect Covered
California consumers to the marketplace and to licensed
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agents;
d. Make the marketplace available to individuals
without access to the Internet;
e. Determine the minimum requirements to be
considered as a carrier in the marketplace and the
standards and criteria for selecting vision plans.
Requires consistent and uniform application of these
requirements, and require at a minimum:
i. That carriers meet a minimum net
asset threshold as determined by the Council and
possibly minimum annual premium revenue;
ii. That carriers have, and maintain, an
Internet Web site;
iii. That carriers demonstrate adequate
vision care networks sufficient to ensure
convenient geographic access to vision care in
California;
iv. That carriers demonstrate adequate
multilingual consumer service and benefit delivery
capabilities; and,
v. Any other requirement determined
necessary by Covered California based on input
from stakeholders, as specified.
f. Make available to the public and regulators, as
applicable, accurate and timely disclosure, in plain
language, of:
i. Claims payment policies and
practices;
ii. Periodic financial disclosures;
iii. Data on enrollment;
iv. Data on disenrollment;
v. Data on the number of claims denied;
and,
vi. Information on cost sharing and
out-of-network payments.
g. Permit individuals to learn, in a timely manner
upon request, the amount of cost sharing, including
deductibles, copayments, and coinsurance that an
individual would be responsible for paying with respect
to a specific item or service by a participating
provider.
h. Undertake activities necessary to market and
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publicize the availability of vision plans through the
Council, ensuring clear communication to the consumer
that federal subsidies are not available for this
coverage. Requires Covered California to undertake
outreach and enrollment activities using licensed
agents to assist enrollees and potential enrollees with
enrolling and reenrolling in the coverage offered by
the Council in the least burdensome manner, including
populations that may experience barriers to enrollment.
i. Assess a charge on the vision plans offered by
participating carriers through the marketplace that is
reasonable and necessary to support the development,
operations, and prudent cash management of the Council.
j. Annually publish a report on the implementation
and performance of the Council functions during the
preceding fiscal year on the Internet Web site, and be
responsive to requests for additional information from
the Legislature, including providing testimony on state
legislation or policy.
aa. Provide a choice of carrier in each region of
the state.
bb. Require, as a condition of participation,
carriers that sell vision products outside the Council
to:
i. Fairly and affirmatively offer,
market, and sell all products made available to
individuals and employers in the marketplace to
individuals and employers purchasing coverage
outside the Council. Requires the products
available to individuals and employers in the
market place to be the same as individual and
employer coverage products offered outside the
Council through licensed agents.
7.Requires a participating carrier to submit a written
justification for a premium increase prior to implementing the
increase, and use a standardized format for presenting vision
plan options to the Council.
8.Requires the Council to require a participating carrier to make
available to consumers and regularly update an electronic
directory of contracting vision care providers in the network.
9.Authorizes the Council to require regularly updated information
as to whether a health care provider is accepting new patients
for a particular vision plan, provide an integrated and uniform
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consumer directory, and establish methods by which health care
providers may transmit relevant information directly to the
Council, rather than through a participating carrier.
10.Establishes the California Vision Care Access Trust Fund to be
continuously appropriated without regard to fiscal year.
Implements some, but not all provisions of this bill,
contingent on a determination by Covered California that at
least $250,000 exists in the fund. Requires Covered California
to provide notice to the Joint Legislative Budget Committee and
the Director of Finance when the financial threshold has been
reached.
11. Contains an urgency clause that will make this bill
effective upon enactment.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1.One-time costs as follows:
a. Significant costs, likely millions of dollars
at a minimum (special fund), for information technology
(IT) systems with required functionality;
b. Indeterminate costs, likely in the range of
hundreds of thousands to low millions of dollars
(special fund) for initial policy and procedure
development, hiring, training, equipment, and other
start-up activities; and,
c. This bill makes implementation contingent upon
$250,000 in the fund, but does not provide a mechanism
for funding start-up costs.
2.Ongoing costs of at least $5 million dollars (special fund/fee
revenue), for state staff and IT support of numerous activities
including enrollment, provision of information via a public
facing website, financial management, public outreach and
communication, and plan contracting and oversight.
This bill requires the Council to assess a charge on the vision
plans offered through the marketplace that is reasonable and
necessary to support Council activities, but does not require
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the Council to be fully fee-supported.
PRIOR VOTES :
Assembly Health: 19- 0
Assembly Appropriations:16- 0
Assembly Floor: 77- 0
COMMENTS :
1.Author's statement. According to the author, this bill will
establish the California Vision Care Access Act to provide
California consumers the opportunity to shop for adult,
individual vision care. Covered California currently offers
pediatric-only vision benefits. This leaves adult consumers
without access to affordable vision coverage when purchasing a
health plan through Covered California. Vision care is a
critical part of everyday life and this bill will ensure that
Californians have access to a single, competitive platform to
purchase affordable, stand-alone, adult vision coverage.
2.ACA, Risk and California Implementation. The ACA, enacted on March
23, 2010 and amended on March 30, 2010 represents a major expansion
of U.S. health care coverage through an expansion and
simplification of the Medicaid program and the adoption of major
reforms of the health insurance market. Most transformational are
changes to the small group and individual insurance markets, such
as mandating guaranteed issuance of coverage, eliminating pre-
existing condition exclusions, limiting factors upon which premium
rates can be developed, and authorizing the creation of health
benefit exchanges either at the state or federal level.
Beginning in 2014, individuals are required to maintain health
insurance or pay a penalty, with exceptions for financial
hardship (if health insurance premiums exceed eight percent of
household adjusted gross income), religion, incarceration, and
immigration status. Large businesses (those with 50 or more
full-time workers) that do not provide adequate health
insurance are required to pay an assessment if their employees
receive premium tax credits in Exchanges to buy their own
individual insurance. Small businesses with generally fewer
than 100 employees can shop in an exchange for QHPs. Exchanges
offer a choice of plans that meet certain benefits and cost
standards. For the self-employed, the cost of the health
insurance may be deductible from federal taxes. Tax credits are
available for individual health insurance purchased through an
exchange. These tax credits are available to individuals with
income between 100 percent and 400 percent of the federal
poverty level and who are not eligible for other affordable
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coverage. Pursuant to the ACA, 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.
3.Federal FAQ. According to a Frequently Asked Questions
document issued March 29, 2014 by the federal Center for
Consumer Information and Insurance Oversight (CCIIO), an
Exchange may only offer QHPs, including stand-alone dental
plans, to qualified individuals and qualified employers, as
specified in the ACA. Ancillary insurance products, which are
not QHPs, may be offered by separate state programs that share
resources and infrastructure with a State-based Exchange. An
Exchange may provide basic information about vision or other
ancillary insurance products on the Exchange website, such as
explaining the type of coverage these products provide. This
basic information must include that enrollment in vision and
ancillary insurance products does not constitute enrollment in
a QHP or enrollment through the Exchange but rather enrollment
in a separate legally and publicly-distinct program. In
addition, the basic information must include that advance
payment of premium tax credits and cost-sharing reductions are
not available for vision or other ancillary insurance products.
An Exchange could include information on its Exchange website
or through its call center about stand-alone vision plans and
other ancillary insurance products, the benefits these products
provide, and how to purchase these products. Purchasing
information could include the ability for consumers to click on
a product link that would take them to a page containing
product and pricing information, where they could add the
product to a shopping basket and purchase the product along
with any QHP products. The product page would need to include
the basic information described above. These ancillary products
pages may reside on the Exchange information technology
infrastructure as long as the web pages and call center
information meets specified requirements.
4.Covered California Efforts. According to a September 19, 2013
Board Brief of Covered California, under the ACA, pediatric
vision care is defined as one of the ten EHBs, while adult
vision care is considered a supplemental, or ancillary,
benefit. Since Covered California consumers who enroll their
children in vision benefits through a QHP may desire to access
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similar benefits for themselves, Covered California endorsed
the objective of providing access to supplemental vision
benefits. On October 25, 2012, the Covered California board
adopted a policy to offer supplemental dental and vision
benefits in the individual and Small Business Health Options
Program (SHOP) Exchanges. Covered California advised CCIIO of
its intention to offer stand-alone vision and supplemental
adult vision in a November 9, 2012 letter, requesting
clarification about the federal rules that govern these
benefits. Following guidance from CCIIO, Covered California
worked with its Plan Management and Delivery System Reform
Advisory Group and stakeholders in the vision care industry,
consumer advocates, and regulators to identify feasible options
(including an assessment of what other states are doing) for
implementing the board's objective to make adult vision
available to Covered California consumers. The options
developed are: Option 1 - State-hosted Educational and
Enrollment Referral Site, Option 2 State-hosted Vision Care
Exchange, and Option 3 - Privately-hosted Vision Marketplace.
The Covered California board adopted Option 1.
5.Colorado Exchange. According to a June 19, 2013 Sacramento
Business Journal article, Connect for Health Colorado, the
Colorado Health Benefit Exchange, provides direct access to
stand-alone vision plans for consumers via a link during the
health insurance enrollment process. Colorado embeds links to
stand-alone vision carriers on the exit page for consumers who
have shopped for health coverage. The page offers access to
vision carriers; consumers can click on the link and be taken
to a co-branded landing page of the vision carrier to shop for
coverage there.
6.Vision plan providers. According to the California Department
of Insurance (CDI), there were 37 CDI regulated companies that
provide vision coverage for 139,936 lives in the individual
market and 2,595,070 lives in the group market in 2012. The
Department of Managed Health Care currently licenses ten vision
plans. There are 6.7 million enrollees in vision plans, and
almost 13 million enrollees in combination vision/dental plans.
Vision Service Plan (VSP) is the leading vision benefit plan,
with 65 million members in the U.S.
7.Prevalence vision problems. According to the Centers for
Disease Control and Prevention, vision disability is one of the
top 10 disabilities among adults aged 18 years and older.
Vision impairments in people younger than age 40 are mainly
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caused by refractive errors, which affect 25 percent of
children and adolescents, and accidental eye injury.
Additionally, diabetes affects this age group and is the
leading cause of blindness among the working group aged 20-74.
Among specific high-risk groups such as African Americans,
early signs of glaucoma may begin in this age group,
particularly if there is a family history for glaucoma.
American adults aged 40 years and older are at greatest risk
for eye diseases; as a result, extensive population-based study
data are available for this age group. The major eye diseases
among people aged 40 years and older are age-related macular
degeneration, cataract, diabetic retinopathy, and glaucoma.
These diseases are often asymptomatic in the early treatable
stages. The prevalence of blindness and vision impairment
increases rapidly with age among all racial and ethnic groups,
particularly after age 75. California is home to over 12
percent of the nation's adults age 40 and older with impaired
vision and 28 percent of U.S. Latinas age 40 and older with
impaired vision live in California. California's estimated
prevalence rate of vision impairment in adults age 40 and older
of 3.04 percent is the eighth-worst in the U.S. According to
Blindness America's 2007 study, The Economic Impact of Vision
Problems: The Toll of Major Adult Eye Disorders, Visual
Impairment and Blindness on the U.S. Economy, the costs
associated with adult vision problems in the U. S. is estimated
at $51.4 billion ($35.4 billion was calculated as the annual
total burden to the U.S. economy of age-related macular
degeneration, cataract, diabetic retinopathy, glaucoma,
refractive errors, visual impairment and blindness with $16
billion in direct health care costs.)
8.Prior legislation. SB 900 (Alquist), Chapter 659, Statutes of
2010, and AB 1602 (P�rez), Chapter 655, Statutes of 2010,
established Covered California.
9.Support. According to VSP Global, this bill is an outgrowth of
collaborative efforts to include supplemental vision care
offerings through Covered California. Federal guidelines
published in March 2013 prohibit state-based exchanges from
directly offering ancillary insurance products, like adult
vision care, unless certain conditions are met. Specifically,
this guidance stated that these products can only be offered by
separate state programs that share resources and infrastructure
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with our state exchange. AB 1877 responds to this guidance by
establishing the Vision Care Access Council for the specific
purpose of offering affordable, stand-alone adult vision
coverage. This program is modeled after the many
industry-funded marketing programs that currently exist in
California state government. The sponsor indicates based on
available information, between a low of about 3 million adults
to as many as just over 5 million adults could benefit from
access to the options presented by the Vision Care Access
Council.
10.Suggested amendments.
a. Although the bill requires guaranteed issuance
of products available through the Council, this bill
should also be amended to prohibit carriers from
imposing any preexisting condition provisions.
b. According to Covered California, although the
adult vision benefit is not an EHB and may not be
offered on the exchange on a stand-alone basis, federal
and state law do not prohibit a QHP from offering
benefits in addition to EHBs. This means that a QHP
could offer an adult vision benefit in addition to the
EHBs. However, Covered California has made a policy
decision for plan year 2014 and 2015 to standardize QHP
offerings that do not allow for additional benefits,
but such a decision is not required under federal or
state law. To clarify that the creation of the Council
does not require QHPs to only offer vision coverage
through the Council, this bill should be amended as
follows: on page 13, line 27 (c) "Nothing in this bill
shall be construed to require a QHP to contract with
the council in order to offer coverage for adult vision
through California's health benefit exchange."
11.Policy question. With Covered California a loan was provided
from the General Fund for start-up expenses. This bill delays
some but not all aspects of the bill until at least $250,000
exists in the California Vision Care Access Trust Fund. The
bill also prohibits federal exchange establishment funds and
General Fund moneys from being used for this bill. From what
source will start-up funding come?
SUPPORT AND OPPOSITION :
Support: VSP Global (sponsor)
National Association of Social Workers, California
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Chapter
Vision Plan of America
Oppose: None received.
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