BILL ANALYSIS �
SB 1176
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Date of Hearing: August 6, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1176 (Steinberg) - As Amended: June 24, 2014
Policy Committee: HealthVote:14-5
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires a health care service plan or health insurer
that provides coverage for essential health benefits to monitor
the accrual of out-of-pocket (OOP) costs toward the annual OOP
limit, and specifies mechanisms for monitoring OOP costs under
different circumstances, such as in-network versus
out-of-network care.
It also requires plans and insurers to reimburse enrollees or
insured who exceed maximum OOP limits, and applies to contracts
issued, amended, or renewed on or after January 1, 2015.
FISCAL EFFECT
1)Costs of about $200,000 per year for the first two years, and
$40,000 per year thereafter for regulations, the review of
plan filings, and enforcement by the Department of Managed
Health Care (Managed Care Fund).
2)Potential minor administrative and enforcement costs to the
California Department of Insurance (CDI) (Insurance Fund) for
the first two years after implementation.
COMMENTS
1)Purpose . This bill specifies it is the responsibility of the
health plans or insurers, not the consumer, to track accrual
toward maximum OOP costs. The author states current law is
unclear or silent on whether it is the responsibility of the
consumer or the health plan to monitor accrual of OOP costs in
order to determine when the consumer has met the annual
maximum. The author argues that many consumers currently face
SB 1176
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grave difficulties and onerous challenges in monitoring their
annual OOP expenses. This bill is co-sponsored by the
California Association of Physician Groups and autism advocacy
organizations.
2)Maximum OOP Limits . The ACA sets limits on cost-sharing for
the individual and small-group market to protect individuals
from excessive out-of-pocket expenses. California law goes
further and also imposes these OOP limits on all group health
plans, including large-group health plans generally offered by
employers. In essence, all health plan contracts and
insurance policies offered in California, with certain limited
exceptions, have the same maximum OOP limits. In 2015, this
maximum limit will be $6,600 for self-only coverage and
$13,200 for family coverage. In practical terms, this cap
means that even if an individual had a catastrophic accident
and incurred extremely high health care costs in a given year,
they would only be responsible to pay $6,600 for the year in
addition to their premiums. Notably, the OOP maximums only
apply to "essential health benefits," a core group of benefits
that constitute the major categories of health care services.
OOP expenses include any charges incurred when accessing
health care, including co-payments and co-insurance imposed
for health care services, drugs, and devices. Some plans also
have deductibles, a minimum level of OOP expenditure that
individuals must incur before plans or insurers will pay for
most services. For example, a "silver" level health plan
offered through the Covered California in 2015 will likely
have a $2,000 deductible and a $6,600 OOP maximum. Spending
toward the deductible counts toward the OOP maximum, since the
OOP maximum captures all expenses incurred by individuals as
they access covered benefits.
3)Opposition . Health plans and insurers oppose this bill,
citing significant concerns with their ability to accurately
track incurred expenses incurred by consumers, given data and
timing limitations.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081