BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1052|
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THIRD READING
Bill No: SB 1052
Author: Torres (D)
Amended: 5/27/14
Vote: 21
SENATE HEALTH COMMITTEE : 7-0, 4/24/14
AYES: Hernandez, Beall, De Le�n, DeSaulnier, Evans, Monning,
Wolk
NO VOTE RECORDED: Morrell, Nielsen
SENATE APPROPRIATIONS COMMITTEE : 6-1, 5/23/14
AYES: De Le�n, Gaines, Hill, Lara, Padilla, Steinberg
NOES: Walters
SUBJECT : California Health Benefit Exchange: annual report
SOURCE : American Cancer Society Cancer Action Network
DIGEST : This bill requires a health care service plan or
health insurer that provides prescription drug benefits to post
those formularies on its Internet Web site, update that posting
within 24 hours after making any formulary changes, use a
standard template to display formularies, and include in any
published formulary, among other information, the prior
authorization or step edit requirements for, and the range of
cost sharing for, each drug included on the formulary for each
drug included on the formulary. This bill requires the Covered
California Board (Board) to ensure that its Internet Web site
provides a direct link to the formularies offered by plans and
insurers, as specified. This bill also requires the Board, on
CONTINUED
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or before January 1, 2016, to create a search tool on its
Internet Web site that allows potential enrollees to search for
qualified health plans (QHPs) by a particular drug and by a
particular therapeutic condition.
ANALYSIS :
Existing federal law:
1. Requires under the federal Affordable Care Act (ACA)
non-grandfathered individual and small group health insurance
plans and policies to cover ten essential health benefits
(EHBs), including prescription drugs and under regulatory
guidance, authorizes states to establish a benchmark plan.
2. Establishes under the federal ACA, market places for
individuals and small groups to purchase QHPs, which must
cover EHBs, and meet other federal requirements. Authorizes
states to establish state level health benefit exchanges.
3. Requires under federal regulations regarding prescription
drug benefits, that a health plan, with regard to EHB, cover
at least the greater of one drug in every United States
Pharmacopeia category and class; or the same number of
prescription drugs in each category and class as the EHB
benchmark plan; and, submit its drug list to the federal
Exchange, the State, or U.S. Office of Personnel Management.
Requires a health plan providing EHBs to have procedures in
place that allow an enrollee to request and gain access to
clinically appropriate drugs not covered by the health plan.
4. Requires under federal regulations under the Summary of
Benefits and Coverage (SBC) specified content including among
other items: a description of the coverage, including cost
sharing, for each category of benefits identified by the
Secretary of the Department of Health and Human Services in
guidance; the cost-sharing provisions of the coverage,
including deductible, coinsurance, and copayment obligations;
and for plans and issuers that use a formulary in providing
prescription drug coverage, an Internet address (or similar
contact information) for obtaining information on
prescription drug coverage.
Existing state law:
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1. Establishes Covered California as an independent government
entity governed by a five member board of directors to
selectively contract with QHPs and administer premium
assistance and cost sharing subsidies.
2. Authorizes Covered California to adopt standardized QHP
benefit designs.
3. Requires Covered California to maintain an Internet Web site
through which enrollees and prospective enrollees of QHPs may
obtain standardized comparative information on QHPs.
4. Establishes Kaiser Small Group Health Plan as California's
EHB benchmark plan.
5. Establishes the Department of Insurance (CDI) to regulate
health insurance pursuant to the Insurance Code and the
Department of Managed Health Care to regulate health plans
under the Knox-Keene Act.
6. Requires according to CDI regulations on EHBs, an individual
or small group health insurance policy to provide coverage
for prescription drugs that complies with specified state law
and federal regulations. Requires a health insurer to submit
specified information to the CDI Commissioner together with a
health insurance policy form, as specified, and annually on
July 1 thereafter.
7. Requires, under state regulations, a health plan to file an
EHB worksheet to demonstrate compliance with EHB
requirements, including prescription drug benefits, as
required by state law and federal regulations, including the
plan's prescription drug list and/or formulary. Requires the
EHB Filing Worksheet to include a certification that the
plan's drug list meets or exceeds the prescription drug
formulary requirements specified in federal regulations.
8. Establishes, under state regulations, standards for
outpatient prescription drug benefit plans.
This bill:
1. Requires the Board to ensure that its Internet Web site
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provides a direct link to the formulary for each QHP offered.
2. Requires, on or before January 1, 2016, the Board to create
a search tool on its Internet Web site that allows potential
enrollees to search for QHPs by a particular drug and by a
particular therapeutic condition.
3. Clarifies that notice of the opportunity to secure
information from the plan regarding a QHP's formulary,
include the plan's Internet Web site where the formulary is
posted to be included in the evidence of coverage and
disclosure form to enrollees.
4. Requires a health care service plan and insurer that
provides prescription drug benefits and maintains one or more
drug formularies to do all of the following:
A. Post the formulary or formularies for each product
offered by the plan on the plan's Internet Web site in a
manner that is accessible and searchable by potential
enrollees, enrollees, and providers.
B. Update the posted formularies with any changes
within 24 hours after making the change.
C. Use a standard template to display the formularies
for each product offered by the plan. Requires this
template to do both of the following:
(1) Use the United States Pharmacopeia
classification system.
(2) Organize drugs by therapeutic class, listing
drugs alphabetically.
A. Include all of the following on any published
formulary for any product offered by the plan and insurer,
including, but not limited to:
(1) Any prior authorization or step edit
requirements for each specific drug included on the
formulary.
(2) The range of cost sharing for a potential
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enrollee of each specific drug included on the
formulary, as specified.
(3) Identification of any drugs on the formulary
that are preferred over other drugs on the formulary.
1. Permits CDI and the Department of Health Care Services to
develop a standard formulary template provided each consults
with the other on the template design.
2. Specifies that a notification that the presence of a drug on
the insurer's formulary does not guarantee that an insured
will be prescribed that drug.
Background
Draft 2015 Letter to Issuers in the Federally-facilitated
Marketplace . In 2015, the Centers for Medicare and Medicaid
Services (CMS) is proposing for the federal Exchange the ability
for issuers to indicate whether a drug (identified through its
RxNorm Concept Unique Identifier or RxCUI12) is considered a
"medical drug" covered under a plan's medical benefit. CMS
believes that this revision will provide greater clarity with
respect to how drugs are covered and paid for while ensuring
that medical benefit drugs are taken into account when
evaluating potential QHPs for compliance with federal
regulations. Issuers will continue to be required to submit
their entire drug lists, including drugs covered either under
the prescription drug or the medical benefit, to the count
service in order to test for compliance with the benchmark drug
counts. Under a similar proposal, issuers will have the option
of identifying a drug as a "preventive drug" covered at zero
cost. As part of the QHP Application, issuers must provide a
URL to their formularies and must also provide information
regarding formularies to consumers, pursuant to federal SBC
regulations. CMS expects the URL link to direct consumers to an
up-to-date formulary where they can view the covered drugs,
including tiering and cost sharing, that are specific to a given
QHP. The URL provided to the federal Exchange as part of the
QHP Application should link directly to the formulary, such that
consumers do not have to log on, enter a policy number or
otherwise navigate the issuer's website before locating it. If
an issuer has multiple formularies, it should be clear to
consumers which directory applies to which QHP(s).
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CMS also intends to propose through rulemaking that state
exchanges may require issuers to temporarily cover non-formulary
drugs, including drugs that are on the issuer's formulary but
require prior authorization or step therapy, as if they were on
the issuer's formulary during the first 30 days of coverage, for
coverage beginning on January 1 of each year, starting with the
2015 plan year. This proposed policy also allows those newly
enrolled in a QHP to receive coverage for a non-formulary drug
during this time period without using the exceptions process.
This will prevent disruptions in treatment for new enrollees
while the issuer and/or the enrollee pursues prior
authorization, step therapy, and/or drug exception processes and
only applies to enrollees who change QHPs or who become newly
enrolled in a QHP after having other non-QHP coverage. As
stated in the interim final rule published on December 17, 2013,
issuers are encouraged to accommodate the needs of new enrollees
by covering a transitional fill of non-formulary drugs to new
enrollees. Also being contemplated are policies to help with
transitions for other types of care (e.g., continuity of access
to specialists for individuals in the midst of a course of
cancer treatment).
Prior Legislation
SB 639 (Hernandez, Chapter 316, Statutes of 2013), codifies
provisions of the ACA relating to out-of-pocket maximums on
cost-sharing, health plan and insurer actuarial value coverage
levels and catastrophic coverage requirements, and requirements
on health insurers for coverage of out-of-network emergency
services.
AB 1453 (Monning, Chapter 854, Statutes of 2012) and SB 951
(Hernandez, Chapter 866, Statutes of 2012) establish
California's EHBs.
AB 219 (Perea, Chapter 661, Statutes of 2013) limits the total
amount of copayments and coinsurance an enrollee or insured is
required to pay for orally administered anticancer medications
to $200 for an individual prescription of up to a 30-day supply.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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According to the Senate Appropriations Committee:
Potential one-time costs up to $150,000 to adopt regulations
by the CDI (Insurance Fund). Ongoing enforcement costs are
not expected to be significant.
One-time costs of $140,000 in 2014-15 and $110,000 in 2015-16
to develop standards and adopt regulations by the Department
of Managed Health Care. Ongoing enforcement costs are not
expected to be significant.
One-time costs between $1 million and $5 million for Covered
California to add a search function to its website and make
the underlying improvements to its information technology
systems (federal funds and special funds).
SUPPORT : (Verified 5/28/14)
American Cancer Society Cancer Action Network (source)
Association of Northern California Oncologists
BayBio
Biocom
California Arthritis Foundation Council
California Healthcare Institute
California Pharmacists Association
California Primary Care Association
California Urological Association
Huntington's Disease Society of America
Lupus Foundation of Southern California
Medical Oncology Association of Southern California
National Multiple Sclerosis Society - CA Action Network
Pharmaceutical Research and Manufacturers of America
Project Inform
OPPOSITION : (Verified 5/28/14)
Anthem Blue Cross
Association of California Life and Health Insurance Companies
California Association of Health Plans
Pharmaceutical Care Management Association
ARGUMENTS IN SUPPORT : According to the National Multiple
Sclerosis Society - CA Action Network, people living with
Multiple Sclerosis (MS) have very high medical expenses. They
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make frequent health care visits and rely on expensive
prescription medications to help manage their disease. There
are ten injectibles and three oral medications used to help
manage MS. These medications have no generic equivalents and
are typically placed on specialty drug tiers, which make them
subject to more costly co-insurance, rather than a standard
co-payment. Therefore, when selecting a health insurance plan,
many patients living with MS find that their top priority is
determining whether their drugs are contained on a plan drug
formulary, as well as comparing the cost sharing requirements
for these medications across plans. Currently, there is no easy
way to find and navigate this information. This bill will
provide a simple way for an individual to determine which of
their drugs are covered by an Exchange plan, as well as compare
plans based on coverage of their particular prescription drugs.
The California Healthcare Institute strongly supports
legislation that provides patients and their families with
access to treatments and a higher quality of life.
ARGUMENTS IN OPPOSITION : According to the California
Association of Health Plans, this bill inappropriately
micromanages Covered California's contracting process by
prohibiting plan participation if the plan does not meet the
bureaucratic specifications of this bill. Under this bill not
only would a plan have to post its drug formulary on its
Internet Web site (something many plans already do) but the plan
would also be required to update the formulary under unrealistic
time frames and to post drug management and share-of-cost
related information. Nothing in the bill helps control the
underlying cost pressures of prescription drugs. This is
unfortunate considering the alarmingly high price-tag of many
new specialty drugs. Policymakers and consumers could benefit
from knowing how the underlying cost of new drugs is driving
share of-cost. The Association of California Life and Health
Insurance Companies believe this bill is not necessary and
thinks the 24-hour adherence requirement is not administratively
feasible.
JL:dm 5/28/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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