BILL ANALYSIS �
SB 1053
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Date of Hearing: August 6, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1053 (Mitchell) - As Amended: July 2, 2014
Policy Committee: HealthVote:12-6
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
Effective January 1, 2016, this bill requires most health plans
and insurers to cover all FDA-approved contraceptive drugs,
devices, and products for women, as well as related counseling
and follow-up services and voluntary sterilization procedures.
This bill also prohibits cost-sharing, restrictions, or delays
in the provision of covered services, but allows cost-sharing
for non-preferred contraceptives if the generic or preferred
equivalents are offered with no cost sharing.
FISCAL EFFECT
1)According to the California Health Benefits Review Program
(CHBRP), annual fiscal impact in the private insurance market
as follows:
a) $65 million in increased premiums for private health
care coverage statewide, including:
i) $37 million in premium costs to private
employers.
ii) $26 million in premium costs to individuals.
iii) $2 million in premium costs to CalPERS.
a) $216 million in cost savings due to averted deliveries
and abortion services. Assuming these costs savings are
proportionate to increased expenditures:
i) $123 million in savings to private employers.
ii) $86 million in savings to individuals.
iii) $7 million in savings to CalPERS.
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In the private market, estimated savings from averted
pregnancies outweigh costs by a factor of 3. However, there
is a time lag in the first year where savings from averted
deliveries are only accrued after the expected gestational
period of nine months.
1)Estimated Medi-Cal managed care costs of $10 million (10%
GF/90% federal), and projected cost savings of $56 million
(about 45% GF/55% federal) annually after implementation due
to an estimated 6,000 additional pregnancies averted.
Because the state pays only 10% of the costs for family
planning services but pays a much higher percentage of the
costs for labor and delivery, as well as children's health
care services, it is estimated the fiscal impact of this bill
on Medi-Cal is net positive, and that GF savings outweigh GF
costs by a significant factor.
2)Estimated potential increased state costs exceeding $5 million
to pay the costs of this contraceptive coverage on behalf of
enrollees in Covered California, if this mandate is determined
to exceed the state's essential health benefits (EHBs)
requirements. Federal regulations hold the state responsible
for paying costs of additional mandated benefits. Providing
more contraceptives would also likely lead to averted costs
for delivery and abortion services as described above, but it
does not appear this could offset state costs. It is possible
that this contraception mandate could be considered
cost-neutral by plans, which would avoid the potential state
cost liability, but it is far from certain that this would
occur. Federal regulations related to EHBs are discussed in
more detail below.
3)CHBRP notes there is a possibility the estimates provided
could underestimate the costs, because they were not able to
capture the impact of removing utilization controls for plans
currently using them in the administration of their
contraceptive coverage. Since these protocols are used on a
case by case basis and their utilization varies by health
plan, it is difficult to capture their impact at a statewide
level. In addition, CHBRP notes, it is unclear how prevalent
such controls may still be if this bill were law. The
estimates provided are the marginal cost and savings of
covering all FDA-approved contraceptives, and do not reflect
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changes in cost and utilization based on modifying utilization
controls. To the extent this broader mandate increases
utilization of higher-cost methods without leading to a higher
number of pregnancies averted, it could increase costs beyond
what is noted above.
4)Costs to the Department of Managed Health Care of $300,000 to
verify compliance and clarify coverage requirements via
regulation (Managed Care Fund). Ongoing costs should be
minor, in the range of $50,000 annually (Managed Care Fund).
5)Minor ongoing costs to California Department of Insurance to
oversee compliance, in the range of $50,000 annually
(Insurance Fund).
6)Reduced future cost pressure to state and local governments in
a variety of health, social services, and education programs,
including Medi-Cal, due to reduced demand for these services
as a result of over 25,000 fewer unintended pregnancies
statewide. About half of pregnancies end in delivery. These
cost savings are beyond the scope of this analysis but will be
cumulative and are likely to be significant.
COMMENTS
1)Purpose . The author states this bill builds on current state
and federal contraception mandates by requiring coverage of
each FDA-approved drug, device, and product. According to the
author, different interpretations of federal guidance have led
to a patchwork of contraceptive coverage policies, some of
which create barriers to particular methods. The author
believes this bill furthers the intent of federal
contraceptive requirements and enhances reproductive autonomy.
2)This bill expands upon existing contraceptive mandates .
Existing state law requires group and individual health plans
to cover a variety of FDA-approved prescription contraceptive
methods designated by the plan, if the plan or policy provides
coverage for outpatient prescription drug benefits.
The federal Patient Protection and Affordable Care Act (ACA)
mandates most plans cover a number of preventive health care
benefits, including (by reference to federal Health Resources
and Services Administration (HRSA) guidelines for women's
preventive health care), coverage of "all FDA-approved
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contraceptive methods, as approved by a physician."
Contraceptive methods, defined through guidance, include
barrier (condoms), hormonal (pills, ring, patch, injection),
emergency contraception (brand names Plan B, ella), implanted
devices (including intrauterine devices (IUDs) with or without
hormones), and permanent (sterilization). Within each method,
there may be numerous products or types. The most common
method, hormonal, includes several distinct delivery devices
that render the types quite different from each other, even
though they all work similarly from a clinical perspective.
For example, some women may be more adherent to the ring
versus the pill; other women may not be able to tolerate the
ring but prefer a quarterly injection. Different types within
the same method also have differing effectiveness-women
receiving injections for birth control have fewer pregnancies
than women using the pill or the ring. A Centers for Medicare
and Medicaid Services (CMS) FAQ document also clarifies health
plan issuers may use reasonable medical management techniques
to control costs and promote efficient delivery of care.
3)Current Coverage . Given current legal mandates and demand for
coverage, there appears to be broad coverage of all
contraceptive methods in current practice. However, actual
coverage of a specific drug or product can be quite nuanced.
For example, although federal guidance requires coverage of
all contraceptive methods, a plan may not cover all types or
all formulations within the method.
Thus, even though a plan covers a range of methods and
complies with the letter of state and federal law, a woman may
encounter barriers to her preferred contraceptive method,
including step therapy (where a woman must try a lower-cost or
safer alternative before receiving what was originally
requested), a requirement for prior authorization before a
contraceptive is covered, or other acceptable medical
management techniques. For example, if a woman requests the
ring, it appears a plan does not have to provide the ring with
no cost-sharing if they make an alternative hormonal method
available, such as the pill. Federal guidance requires a plan
to accommodate any individual for whom a certain drug would be
medically inappropriate, as determined by the individual's
health care provider, and to cover a medically appropriate
alternative with no cost-sharing. However, this rule is also
subject to interpretation.
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Advocates who support this bill voice concern that medical
management techniques that limit or delay a woman's access to
her preferred method lead to lapsed or inconsistent
contraceptive use and increase risk of unintended pregnancy.
This bill attempts to address this by requiring coverage for
every FDA-approved drug, device, and product.
4)Coverage in Medi-Cal . Medi-Cal covers a full range of
contraceptive services. Contraception benefits in Medi-Cal
are reimbursed at a 90% federal matching rate. However, there
are some limitations, and allowable medical management
techniques, similar to those that exist in the private market.
5)State Costs Associated with Mandates Exceeding Essential
Health Benefits . The ACA requires individual and small-group
health plans to cover certain categories of benefits, called
Essential Health Benefits (EHBs). The ACA further specifies
that if states require plans in the Exchange to offer
additional benefits that go beyond the defined EHBs, then
states must pay the additional cost related to those mandates
for individuals in qualified health plans offered through an
Exchange, either to the individuals or to health plans on
behalf of individuals, excluding mandates enacted prior to
December 31, 2011. A federal final rule on EHBs also
specifies that Exchanges must identify which state-required
benefits are in excess of EHBs for purposes of payment, and
that qualified health plan issuers must quantify the cost
attributable to each additional required benefit. The rule
does not specify a federal enforcement mechanism.
6)Opposition . Health plans and insurers oppose this measure,
citing concern that it interferes and micromanages formularies
by preventing plans from imposing different cost-sharing
levels and imposing restrictions or delays. They indicate a
desire to retain control over their prescription drug coverage
design and to retain the right to impose reasonable cost
management techniques in order to keep health care affordable.
In addition, Catholic health care facilities oppose this bill,
stating it exceeds federal requirements and does not conform
to the federal definition of religious employer.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081
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