BILL ANALYSIS �
SB 1176
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Date of Hearing: June 17, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 1176 (Steinberg) - As Amended: April 30, 2014
SENATE VOTE : 24-11
SUBJECT : Health care coverage: cost sharing: tracking.
SUMMARY : Requires health plans and insurers to track
out-of-pocket costs, as specified, and notify and reimburse
enrollees or insureds when cost sharing reaches the maximum
annual out-of-pocket limit. Specifically, this bill :
1)Requires health plans and insurers that provide coverage for
essential health benefits (EHBs), as specified, to be
responsible for monitoring the amount of out-of-pocket costs
as defined in current law.
2)Requires health plans and insurers to track cost sharing for
covered EHBs attributed to in-network providers, including
contracted vendors.
3)Prohibits health plans and insurers from requiring consumers
to track or monitor cost sharing for covered EHBs attributed
to in-network providers, including contracted vendors.
4)Requires health plans and insurers to accept claims from
providers or consumers for 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 out-of-pocket expenses specified in
current law.
5)Requires health plans and insurers, if cost sharing exceeds
the maximum annual out-of-pocket limits, to be responsible for
reimbursing the individual within 30 days of receipt of claims
information.
6)Requires a health plan or insurer, within 30 days, to notify
each insured when the insured's cost sharing has reached the
maximum annual out-of-pocket limit for covered EHBs.
7)Requires enrollees and insureds to have the opportunity to
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review the accrual of cost sharing and provide additional
information regarding cost sharing that should be accrued to
the annual out-of-pocket limit.
EXISTING LAW :
1)Requires health plans and insurers, as specified, to have a
limit on annual out-of-pocket expenses for EHBs, including
out-of-network emergency care, that does not exceed the
out-of-pocket limits specified in the federal Patient
Protection and Affordable Care Act (ACA).
2)Requires health plans and insurers to reimburse claims as soon
as practicable, but no later than 30 working days after
receipt of the claim (or 45 days for health maintenance
organizations), unless the plan or insurer contests or denies
the claim, as specified. Specifies that this requirement
applies regardless of whether a plan or insurer requires
medical groups, independent practice associations, or other
contracting entities to pay claims for covered services.
FISCAL EFFECT : 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 the California
Department of Insurance (Insurance Fund). For the Department of
Managed Health Care, 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 (Managed Care
Fund).
COMMENTS :
1)PURPOSE OF THIS BILL . The author of this bill writes that,
although current law limits annual out-of-pocket expenses
incurred by consumers for covered EHBs, the law is unclear or
silent on whether it is the responsibility of the consumer or
the health plan to monitor accrual of out-of-pocket costs in
order to determine when the consumer has met the annual
maximum. The author argues that many consumers currently face
grave difficulties and onerous challenges in monitoring their
annual out-of-pocket expenses. In particular, under the
state's autism insurance mandate (SB 946, Steinberg, Chapter
650, Statutes of 2011), many individuals who receive
behavioral intervention therapy for autism must pay a separate
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copay for each visit, with up to 20 visits per month,
compounding the difficulties of tracking copays.
2)BACKGROUND . The ACA sets limits on cost sharing to protect
individuals from excessive out-of-pocket expenses. In 2014,
the annual out-of-pocket maximum is $6,350 for an individual
and $12,700 for family coverage. The ACA requires that these
limits be updated annually based on the percent increase in
average per capita premiums for health insurance coverage.
Under a final rule recently published by the Centers for
Medicare and Medicaid Services, using a premium adjustment
percentage of 4.213431463% and rounding down to the nearest
multiple of 50, the 2015 maximum annual limitation on cost
sharing will be $6,600 for self-only coverage and $13,200 for
family coverage.
In March 2014, The Senate Select Committee on Autism and Related
Disorders held a hearing on oversight of SB 946, which
requires health plans and insurers to provide behavioral
health treatment for autism. As part of this hearing, the
Autism Society of California compiled and published a document
which indicates copays were a significant issue, with 75% of
families surveyed 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, and 56% of families had applied behavior analysis
visits of four or more times per week. This bill was prompted
by the stories of autism families facing this problem. For
example, the Kaiser Permanente health plan included in a
letter that its electronic health record does not track
payments to non-Kaiser providers (applied behavior analysis
are contracted vendors, since Kaiser does not have applied
behavior analysis providers as plan providers). The letter
indicates the family is responsible for keeping track of
expenditures and retaining receipts, in order to determine
when the out-of-pocket maximum has been met.
3)FEDERAL OPERATING RULES . The ACA requires the Secretary of
the U.S. Department of Health and Human Services (HHS) to
adopt standards for transactions to enable health information
to be exchanged electronically. These standards and
associated operating rules are, among other things, required
to enable determination of an individual's eligibility and
financial responsibility for specific services prior to or at
the point of care, to the extent feasible. After a
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comprehensive review of health care operating rules, the
Secretary of HHS determined that a set of rules developed by
the Council for Affordable Quality Healthcare Committee on
Operating Rules for Information Exchange (CORE) was qualified
to be the operating rule authority entity for health plan
eligibility and health care claim status transactions and, in
2011, adopted a subset of the CORE rules for the two
transactions.
CORE was established in 2005 as a national initiative,
bringing together over 100 health care industry stakeholders
to simplify health care administration through the improvement
of electronic health care information exchange. CORE's
mission is to "build consensus among healthcare industry
stakeholders on a set of operating rules that facilitate
administrative interoperability between providers and health
plans." CORE, in 2008, developed two sets of operating rules
built upon applicable federal standard transaction
requirements, and enabled providers to submit transactions
from any system, facilitating administrative and clinical data
integration. Among the CORE operating rules adopted by HHS
are standards that require health plans or information sources
to return the remaining deductible that is the patient's
responsibility, including both patient and family deductibles,
and the patient's financial responsibility for copayment and
coinsurance.
4)SUPPORT . In support, Consumers Union writes that onerous and
confusing requirements that force consumers to gather and
submit receipts for all medical expenses mean that consumers
may inadvertently pay excessive out-of-pocket expenses,
especially individuals and families with complex medical
needs. The Alliance of California Autism Organizations, a
co-sponsor of this bill, writes that when families do submit
reimbursement, it can take plans months to reimburse
overcharged costs. The Western Center on Law and Poverty
writes that health plans are in the best position to track the
copays a consumer has paid and should have the responsibility
to advise their enrollees when the out-of-pocket has been met.
Western Center requests that the bill add a time frame for
when plans and insurers must notify consumers that they have
reached the out-of-pocket maximum.
The California Association of Physician Groups (CAPG), a
cosponsor of this bill, writes that with the ACA, high
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deductible benefit designs became the prevalent product
offered to newly covered consumers. CAPG argues that this
bill's requirement for plans to be responsible for tracking is
realistic, since patients often do not know or understand the
myriad charges that can accrue in health care delivery. For
example, a hospitalized patient could receive separate bills
from treating physicians, institutional services from the
hospital, and perhaps even for durable medical equipment; CAPG
argues that health insurers understand these charges and can
track them more accurately. CAPG states that it has convened
a workgroup to devise a methodology to track claims and
encounter data in a near real-time manner and that the
workgroup has a proposal in place that would, upon
implementation, result in a "patient accumulator" that can be
used by health plans, providers, and patients to track charges
as they accumulate against a deductible.
5)OPPOSITION . The California Association of Health Plans
(CAHP), in opposition, argues that this bill is unworkable
because it does not take into account the delegation of
medical management and administrative functions to providers
under a capitated payment structure. CAHP argues that plans
do not always know when services have been rendered and thus
what an enrollee has paid in share of cost. CAHP argues that
there are few integrated systems that allow for real time
notification for this purpose, making this bill costly and
challenging to implement at a time when plans are being
pressured to keep administrative costs as low as possible.
The Association of California Life and Health Companies argues
that consumers, not insurers, are more likely to have a
reasonable estimate, in real time, of what services they have
utilized and paid for: insurers only have this information
once claims have been submitted and an explanation of benefits
has been issued.
6)RELATED LEGISLATION .
a) SB 639 (Ed 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. Applies
out-of-pocket limits to specialized products that offer
EHBs and permits carriers in the small group market to
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establish an index rate no more frequently than each
calendar quarter.
b) SB 1052 (Torres) requires health plans and insurers to
use a standard template to display their drug formularies,
post their formularies on their websites, and update posted
formularies within 24 hours after making a change; and
requires Covered California to provide links to the
formularies and, by January 1, 2016, create a search tool
that allows potential enrollees to search for health plans
by a particular drug and a particular therapeutic
condition. SB 1052 is currently pending in this Committee.
7)PREVIOUS LEGISLATION .
a) SB 126 (Steinberg), Chapter 680, Statutes of 2013,
extends, until January 1, 2017, the sunset date of SB 946's
autism mandate.
b) AB 1453 (Monning), Chapter 854, Statutes of 2012, and SB
951 (Ed Hernandez), Chapter 866, Statutes of 2012,
establishes California's EHBs.
c) SB 946 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, establishes an Autism Task Force in DMHC, and
sunsets SB 946's autism mandate provisions on July 1, 2014.
8)POLICY COMMENTS .
a) Capitation. This bill is intended, in part, to promptly
provide consumers with notification and reimbursement when
their cost sharing exceeds the limit specified by their
plan or insurer: plans and insurers are required to
reimburse enrollees within 30 days of the receipt of claims
information if their cost sharing exceeds out-of-pocket
limits. However, many health plans use capitation, not
claims, for in-network services. This bill does not create
a mechanism for patient reimbursement when cost sharing for
such capitated services pushes an enrollee over his or her
annual out-of-pocket limit.
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b) Insufficient time. Under current law, plans and
insurers have 30 working days after receipt of a claim to
pay or contest the claim (except for HMOs, which have 45
days). This bill's requirement to reimburse out-of-pocket
costs beyond the annual limit within 30 days after receipt
of a claim imposes an earlier deadline than the current
deadline for processing and paying an uncontested claim.
The Committee may wish to amend this bill to provide plans
and insurers some time after they are required to pay an
uncontested claim before they are required to reimburse an
enrollee.
c) Clarifying amendment. This bill requires plans and
insurers to reimburse enrollees within 30 days after
receipt of claims information, but there is no similar
triggering event for this bill's notification requirement.
This bill should be amended to explicitly identify the
triggering event after which plans and insurers must
promptly provide notice.
REGISTERED SUPPORT / OPPOSITION :
Support
Alliance of California Autism Organizations (cosponsor)
Association of Regional Center Agencies (cosponsor)
Autism Health Insurance Project (cosponsor)
California Association of Physician Groups (cosponsor)
Center for Autism and Related Disorders (cosponsor)
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
Consumers Union
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
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Several individuals
Opposition
Association of California Life and Health Insurance Companies
California Association of Health Plans
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097