BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 2418 (Bonilla and Skinner) - Health care coverage:
prescription drugs: refills.
Amended: July 3, 2014 Policy Vote: Health 7-0
Urgency: No Mandate: Yes
Hearing Date: August 14, 2014
Consultant: Brendan McCarthy
SUSPENSE FILE. AS AMENDED.
Bill Summary: AB 2418 would require health plans and health
insurers with mandatory mail order filling of drug prescriptions
to allow enrollees to opt out of mandatory mail order. The bill
would allow enrollees to receive a partial prescription refill,
at a prorated share of cost, in order to synchronize
prescriptions. The bill would require health plans and health
insurers to provide coverage for the early refill of covered
ophthalmic products at 70 percent of the predicted days of use.
Fiscal Impact (as approved on August 14, 2014):
One-time costs of $80,000 and ongoing costs of $70,000 per
year for review of insurance plan filings and enforcement by
the Department of Insurance (Insurance Fund).
One-time costs of $275,000 and ongoing costs of $40,000 for
development of regulations and enforcement by the Department
of Managed Health Care (Managed Care Fund).
Increased health care costs to CalPERS of about $6,000 per
year due to increased prescription drug benefit costs
(various funds). costs.
Increased health care costs to the Medi-Cal program, due to
increased prescription drug costs to Medi-Cal managed care
plans of about $155,000 per year (General Fund and federal
funds).
Background: Under current law, health insurers are regulated by
the Department of Insurance and health plans are regulated by
the Department of Managed Health Care (collectively referred to
as "carriers").
AB 2418 (Bonilla and Skinner)
Page 1
The federal Affordable Care Act and implementing legislation
enacted in California make a variety of changes to the
individual and group health insurance market. Changes to the
market include a requirement for "guaranteed issue" of coverage
if premiums are paid, a prohibition on denials of coverage for
preexisting conditions, and many other regulatory requirements.
In addition, non-grandfathered plans are required to provide
specified essential health benefits, including coverage of
prescription drugs.
Beginning on January 1, 2015 in the individual market and small
group market, the amount of out-of-pocket expenditures made by
enrollees due to copayments, coinsurance, or deductibles for
covered essential health benefits will be limited. State law
will limit out-of-pocket expenditures to the limits allowed
under federal law (for 2014, those limits are $6,500 for an
individual and $12,700 for a family).
Proposed Law: AB 2418 would require health plans and health
insurers with mandatory mail order filling of drug prescriptions
to allow enrollees to opt out of mandatory mail order. However,
the bill would allow carriers to use mandatory mail order
filling of prescriptions, with no opt-out requirement, for
high-cost drugs, as defined.
The bill would allow enrollees to receive a partial prescription
refill, at a prorated share of cost, in order to synchronize the
enrollee's prescriptions.
The bill would require health plans and health insurers to
provide coverage for the early refill of covered ophthalmic
products at 70 per cent of the predicted days of use. (The
intended purpose of this provision is to allow enrollees to
refill prescriptions for eye drops early, accounting for the
fact that it can be difficult to accurately dispense the exact
number of eye drops by an enrollee and there is often some
spillage during dispensing).
All of those provisions of the bill would go into effect on and
after January 1, 2016.
Related Legislation: AB 1917 (Gordon) would limit cost sharing
for a 30-day supply of a prescription drug to 1/12 of the annual
AB 2418 (Bonilla and Skinner)
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out-of-pocket maximum for a prescription that has a course of
treatment more than three months or 1/2 of the annual
out-of-pocket limit for a prescription with a course of
treatment of less than three months. That bill will be heard in
this committee.
Staff Comments: The increased health care costs for CalPERS and
the Medi-Cal program noted above are generally due to the change
in benefit coverage for ophthalmic drugs and due to increased
administrative costs by health plans and health insurers to
facilitate the opt out process.
Health plans and health insurers use mail order filling of
prescriptions, in part, to consolidate drug purchases at a
single pharmacy and/or through a pharmacy benefits manager. In
doing so, health plans, health insurers, and pharmacy benefits
managers are able to use their purchasing power to negotiate
better prices on common prescription drugs. Over the long-run,
this bill may reduce the number of enrollees using mail order
prescription filling. To the extent this happens, it could
reduce the bargaining power of health plans, health insurers,
and pharmacy benefit managers. In the long-run, this could
increase overall health care costs, although the size of such an
impact is unknown.
The only costs that may be incurred by a local agency under the
bill relate to crimes and infractions. Under the California
Constitution, such costs are not reimbursable by the state.
Author amendments: delete the provisions of the bill relating to
mail order pharmacy benefits.