BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 1176
AUTHOR: Steinberg
AMENDED: April 7, 2014
HEARING DATE: April 24, 2014
CONSULTANT: Boughton
SUBJECT : Health care coverage: cost sharing: tracking.
SUMMARY : Requires a health plan or health insurer to track the
accumulation of cost sharing for covered essential health
benefits and makes a health plan or insurer responsible for
notifying the enrollee or insured when the maximum accrual limit
has been reached and requires the plan or insurer to reimburse
the enrollee or insured if cost sharing exceeds annual limits.
Existing law:
1.Regulates health plans through the Department of Managed
Health Care (DMHC) and health insurance policies through the
California Department of Insurance (CDI).
2.Requires a health plan's disclosure forms to provide
information about any copayment, coinsurance, or deductible
requirements that may be incurred by a member.
3.Pursuant to regulations, requires a description of each
copayment, coinsurance, or deductible requirement that may be
incurred, a complete statement of all benefits and coverages
and related limitations, exclusions, exceptions, reductions,
copayments, and deductibles.
4.Requires, under the California Mental Health Parity Act
(MHPA), health plans and health insurers to provide coverage
for the diagnosis and medically necessary treatment of severe
mental illnesses of a person of any age, and of serious
emotional disturbances of a child, as specified, under the
same terms and conditions applied to other medical conditions,
as specified.
5.Requires, under MHPA, maximum lifetime benefits, copayments
and coinsurance, and individual and family deductibles to be
applied equally to all benefits under the plan or policy.
6.Requires health plans and insurers to also provide coverage
Continued---
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for behavioral health treatment for pervasive developmental
disorder, or autism, no later than July 1, 2012, and requires
the coverage to be provided in the same manner and subject to
the same requirements as provided in 4) and 5) above.
7.Establishes Kaiser Small Group HMO as California's essential
health benefit (EHB) benchmark plan, which includes, as
mandated coverage required of non-grandfathered individual and
small group health plan contracts and insurance policies,
MHPA, treatment for behavioral health treatment for pervasive
developmental disorder or autism, and the federal Mental
Health Parity and Addiction Equity Act of 2008 (MHPAE) and all
rules, regulations and guidance issued pursuant to the
Affordable Care Act (ACA).
8.Requires, on or after January 1, 2015, for non-grandfathered
health plan contracts or health insurance policies in the
individual and small group markets to provide for a limit on
annual out-of-pocket (OOP) expenses for all covered benefits
that meet the definition of EHB, including out-of-network
emergency care, as specified. For large group, requires a
non-grandfathered health plan or health insurer to provide for
a limit on annual OOP expenses for covered benefits, including
out-of-network emergency care, as specified. Requires this
limit to only apply to EHBs that are covered under the plan or
policy to the extent that this provision does not conflict
with federal law or guidance on OOP maximums.
9.Requires the maximum OOP limit to apply to any copayment,
coinsurance, deductible and any other form of cost sharing for
all covered benefits that meet the definition of EHB.
10.Requires the limit described in 9) to result in a total
maximum OOP limit for all EHBs equal to the dollar amounts in
effect under the Internal Revenue Service, as specified, as
adjusted by the ACA, as specified.
11.Excludes specialized health plans or insurance policies from
9-10 unless it offers or provides an EHB.
12.Requires a health plan that covers hospital, medical, or
surgical expenses, or its contracting medical providers to
provide 24-hour access for enrollees and providers, including,
but not limited to, non-contracting hospitals, to obtain
timely authorization for medically necessary care, as
specified.
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13.Requires a group or individual health insurance policy
issued, amended, or renewed on or after January 1, 2014 that
provides or covers emergency services to cover those services
as follows:
a. Without the need for prior authorization
determination;
b. Whether or not the health care provider
furnishing the services is a participating provider
with respect to those services, and,
c. In a manner so that out-of-network cost
sharing is the same as would apply if services were
provided in network.
This bill:
1.Requires a health plan or health insurer to be responsible for
monitoring accrual of OOP costs, as defined.
2.Requires the health plan or health insurer to track the
accumulation of cost sharing for covered EHB attributed to
in-network providers, including contracted vendors. Prohibits
the plan or insurer from requiring the consumers to track or
monitor the accumulation of cost sharing for covered EHB
attributed to in-network providers, including contracted
vendors.
3.Requires the plan or insurer to accept claims from the
provider or consumer with respect to cost sharing attributed
to out-of-network providers who are providing emergency
services, as specified, or otherwise providing covered
benefits.
4.Requires the health plan or insurer to be responsible for
reimbursing the individual within 30 days of receipt of claims
information if the cost sharing for covered EHBs attributable
to an enrollee exceeds the maximum annual OOP limits.
5.Requires the health plan to notify each enrollee or insured
when the enrollee's cost sharing has reached the maximum
annual OOP limit for covered EHB.
6.States that nothing in this bill shall be construed as
requiring the enrollee or insured to determine or identify
when the maximum annual OOP limit for covered benefits has
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been reached.
FISCAL EFFECT : This bill has not been heard by a fiscal
committee.
COMMENTS :
1.Author's statement. According to the author, existing law has
established that specified health plans and health insurance
policies are subject to a maximum limit on annual OOP expenses
for all covered benefits that meet the definition of EHBs.
This bill will require health plans and insurers to monitor
OOP expenses incurred by the enrollee; to notify the consumer
when they have achieved the maximum limits of their copay,
coinsurance, deductibles and other OOP expenses; and to
reimburse the consumer for costs in excess of the annual
limit. This bill is a simple measure that establishes uniform
reporting requirements on these expenditures from the health
plans and insurance companies to the consumers. This
legislation also provides added consumer protection by
providing patients with information that will help safeguard
Californians from inadvertently paying inappropriate OOP.
Thus, this bill clarifies existing law and establishes a
"level playing field" for the health care industry.
2.OOP Policy. According to DMHC, the department requires health
plans to disclose the amounts of deductibles and OOP maximums
and how they apply to an individual, an individual member of a
family, and the family as a whole so that consumers have full
and fair disclosure of the expenses they may incur. For
example, a health plan may have a $2,000 individual/$4,000
family OOP maximum. When an individual member of a family
unit has paid deductibles and copayments for the contract year
equal to the individual OOP maximum, that individual does not
have to pay any copayments for covered services for the
remainder of the year. The DMHC reviews plan materials filed
by health plans (both full service and specialized) including
Evidence of Coverage and Schedules of Benefits, to ensure that
the disclosures relating to OOP maximums and deductibles
comply with all the provisions of SB 639 (Hernandez), Chapter
316, Statutes of 2013. If a plan presented an OOP maximum for
small groups that exceeded allowable limits, DMHC would direct
the plan to lower its OOP to comply with the law. If a small
group plan requested a higher OOP maximum for a bronze level
of coverage (which is allowed under the law), DMHC would
require the plan to demonstrate affordability and access to
care. The plan would have the burden to demonstrate to DMHC
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the benefits to consumers of the proposed higher OOP, such as
premium savings and/or richer benefits. According to DMHC, if
the consumer exceeds the OOP under the contract, the enrollee
is entitled to seek reimbursement from the plan and the
enrollee may file a complaint against the plan for paying more
than is required under the contract.
3.Senate Select Committee on Autism and Related Disorders. The
Senate Select Committee on Autism and Related Disorders has
been monitoring oversight of SB 946 (Steinberg), Chapter 650,
Statutes of 2011, also known as the autism mandate and held a
hearing on the topic on March 4, 2014. As part of this
effort, the Autism Society of California compiled and
published a March 2014 document which indicates copays were a
significant issue with 75 percent reporting that these
payments posed a significant financial hardship. Over 40
percent of families had copays of $20 or greater for each
applied behavior analysis visit; 56 percent of families had
applied behavior analysis visits of four or more times per
week. Also, 19 percent of regional center families dropped
their private insurance coverage with the copay factor being
the most frequent reason for this action. Although the issue
of copay notification or tracking was not discussed in detail
at the March 4th hearing, this bill was prompted by hearing
the stories of autism families facing this problem. For
example, Kaiser Permanente (KP) health plan included in a
letter that its electronic health record does not track
payments to non-KP providers (applied behavior analysis are
contracted vendors, since KP doesn't have applied behavior
analysis providers as KP providers). The letter indicates the
family is responsible for keeping track of expenditures and
retaining receipts, in order to determine when the OOP maximum
has been met.
4.Prior legislation. SB 639 (Hernandez), Chapter 316, Statutes
of 2013, codifies provisions of the ACA relating to OOP
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. Applies OOP limits to
specialized products that offer EHBs and permits carriers in
the small group market to establish an index rate no more
frequently than each calendar quarter.
SB 126 (Steinberg), Chapter 680, Statutes of 2013, extends,
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until January 1, 2017, the sunset date of an existing state
health benefit mandate that requires health plans and health
insurance policies to cover behavioral health treatment for
pervasive developmental disorder or autism and requires plans
and insurers to maintain adequate networks of service
providers.
AB 1453 (Monning), Chapter 854, Statutes of 2012, and SB 951
(Hernandez), Chapter 866, Statutes of 2012, established
California's EHBs.
SB 946 (Steinberg), Chapter 650, Statutes of 2012, requires
health plans and health insurance policies to cover behavioral
health treatment for pervasive developmental disorder or
autism, requires plans and insurers to maintain adequate
networks of autism service providers, established an Autism
Task Force in DMHC, and sunsets SB 946's autism mandate
provisions on July 1, 2014.
AB 88 (Thomson), Chapter 534, Statutes of 1999, requires a
health care service plan contract or disability insurance
policy to provide coverage for severe mental illness, and for
the serious emotional disturbances of a child under the same
terms and conditions as applied to other medical conditions.
5.Support. Proponents argue that existing law is unclear or
silent on whether it is the responsibility of the consumer or
the health plan to monitor accrual of OOP expenses. Some
health plans and insurers require members to keep receipts,
even for in-network care. Patients may wind up paying for
health care expenses that are the legal responsibility of the
health plans or insurance companies. This bill places the
burden on the health plan or insurer not the consumer and is
an important measure that will safeguard Californians from
inadvertently paying inappropriate OOP expenses. The Alliance
of California Autism Organizations writes this modification to
the Health and Safety Code and Insurance Codes is important
because now some health plans put the burden of tracking
copayments, coinsurance and deductibles on the families and
require families to submit receipts documenting when cost
sharing maximums have been met. These practices put an undue
burden on families when the health plan is in a much better
position to be able to track this information. Most families
are unable to do this excessive administrative tracking and
therefore many are charged significantly more than the cost
sharing maximums defined in their contracts. Also when
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families do submit reimbursement, it can take health plans
months to reimburse families for the overcharged costs.
Families of individuals with disabilities and chronic health
conditions are disproportionately affected by this injustice
as they are heavier users of healthcare than typical families.
Western Center on Law and Poverty supports this bill and
requests amendments to include a timeframe for plans and
insurers to notify consumer when the OOP maximum has been
reached, and that consumers' have the right to review and
correct the tally of charges maintained by the plan or
insurer.
6.Opposition. The California Association of Health Plans (CAHP)
writes in opposition that this bill is unworkable because it
does not take into account the nature of the health plan model
featuring the delegation of medical management and
administrative functions to providers under a capitated
payment structure. There are currently few integrated systems
that allow for real time notification between providers and
plans for this particular purpose. Implementing this bill,
particularly the notice requirements, could be costly and
challenging at a time when plans are being pressured to keep
administrative costs as low as possible. According to many of
CAHP members, consumers currently have the ability to contact
the customer service department of their plan for updates on
their out-of-pocket expenditures. However, if the provider has
not sent the appropriate encounter or claims information to
the plan the data could be outdated. The Association of
California Life and Health Insurance Companies writes given
the nature of health insurance claims, and the operational
realities of the flexibility provided under Preferred Provider
Organizations (PPO), the insurer is often the last to know
when services have been rendered. Under a PPO, an insured
often has the flexibility to choose a provider without prior
authorization or referral so an insurer rarely knows until a
claim is submitted and processed that a service was provided.
As an added complication, while plans are in the process of
working toward this goal, there are currently no integrated
systems that allow for real time notification between
providers and insurers for when services are rendered.
Furthermore, the elapsed time between the date of the service
and its submittal as a claim can vary from one provider to the
next based on each individual provider's operating procedure.
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7.Amendments.
a.It is the author's intent that this bill's provisions apply to
non-grandfathered individual and group health plans and
insurers and specialized plans and insurers that offer or
provide EHB. This bill should be amended to make this clear.
b.The author also requests the following amendment to Health and
Safety Code 1367.0061 and Insurance Code 10112.281:
(c)For cost sharing attributed to out-of-network providers who
are providing emergency services consistent with Section
1371.4/10112.7 or otherwise providing covered benefits subject
to the annual limit on out-of-pocket expenses as specified in
Section 1367.006/10112.281 the health care service plan/health
insurance policy shall accept claims from the provider or the
consumer with respect to cost sharing.
(e) Within 30 days, the health care service plan/insurer shall
notify each enrollee/insured when the enrollee's/insured's
cost sharing has reached the maximum annual out-of-pocket
limit for covered essential health benefits.
New subdivision (f). The enrollee/insured shall have the
opportunity to review the accrual of cost sharing and provide
additional information regarding cost sharing that should be
accrued to the annual out of pocket limit.
SUPPORT AND OPPOSITION :
Support: Autism Health Insurance Project (co-sponsor)
Center for Autism and Related Disorders (co-sponsor)
Alliance of California Autism Organizations
Association of Regional Center Agencies
Autism Care and Treatment Today
Autism Research Group
Autism Speaks
Grandparent Autism Network
Special Needs Network
Western Center on Law and Poverty
Several Individuals
Oppose: Association of California Life and Health Insurance
Companies
California Association of Health Plans
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