BILL ANALYSIS �
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THIRD READING
Bill No: SB 1176
Author: Steinberg (D)
Amended: 4/30/14
Vote: 21
SENATE HEALTH COMMITTEE : 7-1, 4/24/14
AYES: Hernandez, Beall, De Le�n, DeSaulnier, Evans, Monning,
Wolk
NOES: Morrell
NO VOTE RECORDED: Nielsen
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/23/14
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
SUBJECT : Health care coverage: cost sharing: tracking
SOURCE : Autism Health Insurance Project
Center for Autism and Related Disorders
DIGEST : This bill requires a health plan or health insurer to
track the accumulation of cost sharing for covered essential
health benefits (EHBs) and makes a health plan or insurer
responsible for notifying the enrollee or insured within 30 days
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. This bill requires the enrollee
or insured to have the opportunity to review the accrual of cost
sharing, as specified. This bill makes these provisions
applicable to nongrandfathered individual and group health care
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service plans, specialized health care service plans that
provide coverage for EHBs, nongrandfathered individual and group
health insurers, and specialized health insurers that provide
coverage for EHBs.
ANALYSIS :
Existing law:
1. Regulates health plans through the Department of Managed
Health Care (DMHC) and health insurance policies through the
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. Establishes Kaiser Small Group HMO as California's EHB
benchmark plan, which includes, as mandated coverage required
of non-grandfathered individual and small group health plan
contracts and insurance policies, as specified, and all
rules, regulations and guidance issued pursuant to the
Affordable Care Act (ACA).
5. 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, 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, as specified. Requires this limit to only
apply to EHBs that are covered under the plan or policy to
the extent that it does not conflict with federal law or
guidance on OOP maximums.
6. Requires the maximum OOP limit to apply to any copayment,
coinsurance, deductible and any other form of cost sharing
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for all covered benefits that meet the definition of EHB, as
specified.
7. Requires the limit described in #6 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.
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, subject to the annual limit on OOP, as specified.
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
within 30 days 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
been reached.
7.Requires the enrollee to have the opportunity to review the
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accrual of cost sharing and provide additional information
regarding cost sharing that should be accrued to the annual
OOP limit.
8.Specifies these provisions apply to nongrandfathered
individual and group health care service plans and to
specialized health care service plans that provide coverage
for EHBs, as defined, and that are issued, amended, or renewed
on or after January 1, 2015.
Background
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% reporting that these payments posed a significant financial
hardship. Over 40% of families had copays of $20 or greater for
each applied behavior analysis visit; 56% of families had
applied behavior analysis visits of four or more times per week.
Also, 19% 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 4 hearing,
SB 1176 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 does not 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.
Prior Legislation
SB 639 (Hernandez, Chapter 316, Statutes of 2013) codifies
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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, 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.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Potential one-time costs of about $150,000 to adopt
regulations and potential ongoing costs in the low hundreds of
thousands to enforce the bill's provisions by CDI (Insurance
Fund).
Costs of about $200,000 in 2014-15, $220,000 in 2015-16, and
$40,000 per year thereafter for the review of plan filings and
enforcement by the DMHC (Managed Care Fund).
SUPPORT : (Verified 5/23/14)
Autism Health Insurance Project (co-source)
Center for Autism and Related Disorders (co-source)
Alliance of California Autism Organizations
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Association of Regional Center Agencies
Autism Care and Treatment Today
Autism Research Group
Autism Society Inland Empire
Autism Society-Kern Autism Network
Autism Speaks
Capitol Autism Services
Central Valley Autism Project
City and County of San Francisco
Easter Seals California
Golden Gate Regional Center
Grandparent Autism Network
Health Access California
Occupational Therapy Association of California
Special Needs Network
Western Center on Law and Poverty
OPPOSITION : (Verified 5/23/14)
Association of California Life and Health Insurance Companies
California Association of Health Plans
ARGUMENTS IN 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. 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 families do submit reimbursement, it
can take health plans months to reimburse families for the
overcharged costs. Families of individuals with disabilities
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and chronic health conditions are disproportionately affected by
this injustice as they are heavier users of health care than
typical families.
ARGUMENTS IN OPPOSITION : The California Association of Health
Plans (CAHP) writes 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 OOP
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. 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.
JL:k 5/25/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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