Briefings

The opioid epidemic impacts health insurance plans by driving up the utilization of prescription opioids as well as causing a greater number of insureds to seek treatment for substance use disorder and overdose. It has given rise to a whole crop of new legislation in recent years, on both the federal and state levels, to make it harder to obtain controlled substances and easier to obtain treatment.

AB 149 – Controlled Substances: Prescriptions
This urgency statute was signed into law by Governor Newsom on March 11, 2019. It delays the implementation of the requirement that prescription forms for controlled substance prescriptions be obtained from security printers and be printed with specified features, including a uniquely serialized number. This requirement will go into effect on January 1, 2020. The bill further requires that the serialized number be utilizable as a barcode that may be scanned by dispensers. This legislation essentially delayed for one year the implementation of a safety feature that will make it much more difficult for people to falsify a prescription for a controlled substance.

AB 319 – Narcotic Treatment: Medication-Assisted Treatment: Drug Medi-Cal
AB 319 would require the State Department of Health Care Services to create reimbursement rates and rate billing codes for authorized medications that are provided by licensed narcotic treatment programs for patients with a substance use disorder. This bill would essentially allow narcotic treatment programs to provide, and would require the Medi-Cal program to cover statewide, any noncontrolled medications approved by the U.S Food and Drug Administration (FDA) to treat substance use disorder, as well as associated services.

AB 714 – Opioid Prescription Drugs: Prescribers
This bill is cleanup to AB 2760 (Chapter 324, Statutes of 2018), which requires prescribers of specified medications to also offer a prescription for naloxone hydrochloride (brand name Narcan) or similar drug effective to reverse an opioid overdose. Since the passage of AB 2760, stakeholders have raised concerns regarding exactly when such co-prescribing is required. Concern has been expressed that AB 2760 does not exempt prescribers providing hospice-based care where naloxone may be contraindicated for the purposes of hospice care. Similarly, in inpatient settings, immediate medical attention is readily available such that a co-prescription is unnecessary. In response to these concerns, AB 714 clarifies and narrows the application of current law, to specify that the requirement that prescribers offer a prescription for naloxone hydrochloride applies only when an opioid or benzodiazepine is prescribed. This bill expressly exempts prescriptions for patients in inpatient facilities and patients in hospice care.

AB 1468 – Opioid Prevention and Rehabilitation Act
This bill would require a manufacturer or wholesaler that sells or distributes opioid drugs in California to submit to the State Department of Public Health a report that details all opioid drugs sold or distributed in this state during the preceding fiscal year. The bill would also require manufacturers and wholesalers to pay a total of $100,000,000 into a fund that will pay for substance use disorder prevention and treatment centers.

AB 1656 – Treatment of Addicts: Narcotic Drugs
Current law prohibits the treatment of a person for addiction to a narcotic drug except in a specified facility, including a licensed health facility, a state or county hospital, or a jail or prison. Current law authorizes the use of a controlled substance in that treatment only in narcotic treatment programs licensed by the State Department of Health Care Services. This bill would clarify that a physician or authorized hospital staff may administer or dispense narcotic drugs in a hospital to maintain or detoxify a person incidental to medical or surgical treatment of conditions other than addiction, or to treat persons with intractable pain for which relief or cure is not possible or has not been found after reasonable efforts.

AB 152 – Personal Income Taxes: Gross Income: Exclusion: Student Loan Assistance
California tax law excludes from an employee’s gross income amounts paid or incurred by an employer for educational assistance to the employee, up to $5,250 during a calendar year. However, California law does not exempt any student loan repayment plans provided as part of an employee compensation package. When employers contribute to student loan debt payments for an employee, the employee must pay taxes on the payments as if they were wages. This bill would exclude from an employee’s gross income amounts of up to $5,250 per calendar year, paid or incurred by an employer for the payment of principal or interest on a qualified education loan incurred by the employee. This provision would be in effect for tax years 2019 through 2023. This bill is sponsored by the Society for Human Resource Management, which “believes that a comprehensive and flexible benefits package is an essential tool in recruiting and retaining talented employees.”

The status of the individual health insurance market in California has an impact on the employer-sponsored group market, in terms of premium stability and adverse selection. The more robust and affordable the individual market, the more stable the group market.

AB 174 – Health Care Coverage: Financial Assistance
This bill would require Covered California to administer enhanced premium assistance to individuals with household incomes below 400% of the federal poverty level, reduce premiums to zero for individuals with household incomes at or below 138% of the federal poverty level, reduce premiums for individuals with household incomes at or between 401% and 800% of the federal poverty level and who are ineligible for federal advanced premium tax credits so their premiums do not exceed a specified percentage of their household incomes, and administer specified additional cost-sharing financial assistance for individuals with household incomes below 400% of the federal poverty level and who are eligible for premium tax credits.

AB 414 – Healthcare Coverage: Minimum Essential Coverage
This bill would enact an individual mandate in California by requiring California residents to ensure that they are covered under minimum essential coverage for each month beginning after 2019. The bill would impose a penalty for the failure to maintain minimum essential coverage.

AB 1309 – Health Care Coverage: Enrollment Periods
This bill extends the enrollment periods for individual health benefit plans (both offered through Covered California and off the exchange) for policy years beginning on or after 2020.

SB 65 – Health Care Coverage: Financial Assistance
This bill would establish the Affordable Care Access Plus Program to provide California residents with household incomes below 600% of the federal poverty level financial assistance to afford individual health insurance coverage through Covered California.

SB 175 – Health Care Coverage: Minimum Essential Coverage
SB 175 would create the Minimum Essential Coverage Individual Mandate to require California residents to obtain minimum essential health coverage for each month beginning on January 1, 2020. The bill would require Covered California to establish a process and grant exemptions from the mandate for reason of hardship or religious conscience.

SB 260 – Automatic Health Care Coverage Enrollment
This bill would require Covered California to automatically enroll an individual in the lowest cost silver plan upon receiving notification that the individual has been terminated from Medi-Cal coverage or coverage administered by the State Department of Health Care Services.

AB 567 – Long-Term Care Insurance
This bill would establish the Long-Term Care Insurance Task Force in the Department of Insurance, chaired by the Insurance Commissioner or the Commissioner’s designee, and composed of specified stakeholders and representatives of government agencies to examine the components necessary to design and implement a statewide long-term care insurance program.

Every year, the California legislature considers a number of bills that would mandate certain levels of coverage or cost-sharing. While most of these mandates have not been enacted, the cumulative effect of coverage mandates is to raise the cost of fully-insured plans.

AB 598 – Hearing Aids: Minors
This bill would require a fully-insured health insurance plan include coverage for hearing aids for an enrollee or insured under 18 years of age. It is estimated that approximately 49% of California children with health insurance already have coverage for hearing aids.

AB 651 – Air Ambulance Services
AB 651 would require a fully-insured health plan to provide that if an enrollee, insured, or subscriber (individual) receives covered services from a noncontracting air ambulance provider, the individual shall pay no more than the same cost sharing that the individual would pay for the same covered services received from a contracting air ambulance provider, referred to as the in-network cost-sharing amount. The bill would provide that an individual would not owe the noncontracting provider more than the in-network cost-sharing amount for services. According to the California Health Benefits Review Program (CHBRP), this bill would decrease enrollee expenses by: (1) eliminating balance billing; and, (2) making out-of-network cost sharing the same as in-network cost sharing for air ambulance services. According to CHBRP’s analysis, it would have no impact on premiums.

AB 767 – Health Care Coverage: Infertility
This bill would require every fully-insured health plan to provide coverage for in vitro fertilization, as a treatment of infertility, and mature oocyte cryopreservation. The bill would delete the exemption for religiously affiliated employers, health care service plans, and health insurance policies, from the requirements relating to coverage for the treatment of infertility, thereby imposing these requirements on these employers, plans, and policies. According to CHBRP, this bill would increase total net annual expenditures for insured plans by $850.5 million or 0.49%.

AB 876 – Health Care Coverage
This bill would state the intent of the Legislature to enact legislation requiring fully insured health plans that offer coverage for dependents to make that coverage available to any person who is related to and living in the same household as the enrollee or insured. AB 876 has not been assigned to a committee and is unlikely to move forward in the Legislature this year.

AB 993 – Health Care Coverage: HIV Specialists
This bill would require a fully insured health plan to permit a HIV specialist to be an eligible primary care provider if the provider requests primary care provider status and meets the plan’s or the health insurer’s eligibility criteria for all specialists seeking primary care provider status. The bill would provide that these provisions do not apply to a health insurance policy that does not require an insured to obtain a referral from the primary care physician prior to seeking covered health care services from a specialist.

AB 1246 – Healthcare Coverage: Basic Health Care Services
This bill would require large group health insurance policies regulated by the California Department of Insurance (CDI) to include coverage for medically necessary basic health care services and, to the extent the policy covers prescription drugs, coverage for medically necessary prescription drugs. Such requirements are already in place for managed care plans regulated by the Department of Managed Health Care (DMHC). Requiring health insurer coverage of basic health care services would establish a minimum set of benefits for enrollees in CDI-regulated large-group market policies and would create a single minimum for all large-group market plans and policies, whether regulated by DMHC or CDI. In practical terms, however, there is little substantive benefit difference between large-group market DMHC-regulated plans (which are already required to cover basic health care services) and large-group market CDI-regulated polices, CHBRP reports no measurable impact is anticipated for the impacted 318,000 enrollees. CHBRP is unaware of any substantive difference in the current application of medical necessity definitions for covered outpatient drugs between large-group market DMHC-regulated plans and large-group market CDI-regulated policies. The intent of this bill is to act as a backstop in the case of a federal rollback of Affordable Care Act (ACA) benefit mandates.

AB 1611 – Emergency Hospital Services: Costs
This bill would prohibit a hospital from charging more than the greater of (1) the average contracted rate, or (2) 150% of the amount Medicare reimburses on a fee-for-service basis for the same or similar hospital services in the general geographic region in which the services were rendered for emergency care or post-stabilization care. The bill would also require a fully-insured health plan to provide that if an enrollee or insured receives covered services from a noncontracting hospital, the enrollee or insured is prohibited from paying more than the same cost sharing that the enrollee or insured would pay for the same covered services received from a contracting hospital. This bill has broad support and is expected to pass this year.

AB 1670 – Health Care Coverage
This bill would authorize a provider that contracts with a health carrier to bill an insured for a service that is not a covered benefit if the insured consents in writing and that written consent meets specified criteria. The bill would require a contracting provider to provide an insured with a written estimate of the person’s total cost, based on the standard rate the provider would charge for the service, if the service sought is not a covered benefit under the person’s health coverage.

SB 159 – HIV: Preexposure and Postexposure Prophylaxis
This bill would prohibit a fully-insured health plan from subjecting combination antiretroviral drug treatments that are medically necessary for the prevention of AIDS/HIV, including preexposure prophylaxis (PrEP) and postexposure prophylaxis (PEP), to prior authorization or step therapy.

SB 163 – Healthcare Coverage: Pervasive Developmental Disorder or Autism
This bill would expand the definition of behavioral health treatment (BHT) for autism and pervasive developmental disorders and expands the provider qualifications to include additional qualified autism service (QAS) provider types that can provide BHT under the mandate that health plans and insurers cover BHT for pervasive developmental disorder or autism. This bill also prohibits a health plan or insurer from denying or reducing medically necessary BHT based on only a lack of parent or caregiver participation, the setting, location, or time of treatment.

SB 388 – Breast Feeding
This bill expresses the intent of the Legislature to enact legislation that would provide that infant feeding of breast milk should be encouraged and that would require health care service plans to provide reimbursement for the widest variety of choices and styles of breast milk pumps to facilitate their use and acceptance. The bill would express the further intent of the Legislature to enact legislation that would give the Department of Managed Health Care the authority to require health care service plans to provide that reimbursement under a specified condition. This bill has not been amended to include substantive provisions and is not likely to move through the Legislature this year.

SB 583 – Clinical Trials
This bill would conform California law with the federal requirements for fully-insured health plan requirements with regard to participants in clinical trials, which includes expanding the type of clinical trials covered to include life-threatening diseases or conditions. The bill would prohibit a plan contract or insurance policy from, among other things, discriminating against an enrollee or insured for participating in an approved clinical trial. According to CHBRP, this bill would increase total net annual expenditures by $8,298,000 or 0.0052% for commercial and CalPERS enrollees in fully-insured plans.

SB 600 – Health Care Coverage: Fertility Preservation
SB 600 would clarify that an individual or group health care service plan contract or health insurance policy that covers hospital, medical, or surgical expenses includes coverage for standard fertility preservation services when a medically necessary treatment may cause iatrogenic infertility to an enrollee or insured. The bill would state that these provisions are declaratory of existing law.

SB 746 – Health Care Coverage: Anticancer Medical Devices
This bill would require every fully-insured health plan that provides coverage for chemotherapy or radiation therapy for the treatment of cancer, to also provide coverage for anticancer medical devices. At present, the only therapy that meets the definition in the bill is tumor treating fields [TTF] therapy approved for the treatment of glioblastoma brain cancer.

In California, two agencies oversee the health insurance market: the Department of Insurance (CDI) and the Department of Managed Health Care (DMHC). This year, there are a number of bills that would give those agencies more regulatory authority over group health plans. In general, proponents of increased oversight state that it leads to greater transparency. Opponents of these measures point out that increased reporting comes with increased administrative cost, which drives up the cost of coverage overall.

AB 731 – Health Care Coverage: Rate Review
AB 731 would expand the existing requirement that health insurance carriers in the individual or small group market file specified information with the DMHC or CDI and apply this same requirement to carriers in the large group market.

AB 1268 – Health Care Coverage: Prospective Review
This bill would require a fully-insured health plan that prospectively reviews and approves, modifies, delays, or denies treatment requests based on medical necessity to report to the DMHC or the CDI the number of times in the preceding calendar year the service was approved, modified, delayed, or denied.

SB 129 – Health Care Coverage Reporting
Current law requires a health care service plan or health insurer that covers individuals, small groups, large groups, or administrative services only business lines to report the number of covered lives by product type to the DMHC or CDI. Current law requires the DMHC and CDI to publicly report that data, including posting that data on each department’s internet website. This bill would expand those health care service plan and health insurer reporting requirements to include any other business lines.

SB 343 – Healthcare Data Disclosure
This bill would eliminate the provisions in health insurance rate filing requirements that permit Kaiser Permanente health plans and insurers to report medical trend assumptions in a different manner than other health plans, including reporting trends in fewer categories. The bill would also eliminate provisions in hospital reporting requirements that permit Kaiser Permanente hospitals to report certain data as a group rather than by individual facility, and to not have to report certain financial data.

SB 406 – Health Care Coverage
SB 406 would require the DMHC and the CDI to each prepare, in coordination with the other department, an annual summary report that describes the impact of the risk adjustment program on premium rates in this state. The bill would also require the reports to be posted on the departments’ respective internet websites no later than seven (7) months after the risk adjustment year.

SB 612 – Health Care: Data Reporting
This bill would require a health carrier to report specified information on its participation in collaboratives and activities, including a program in which an enrollee or insured receives comprehensive transitional care or where the supportive and therapeutic needs of an enrollee or insured are addressed in a holistic fashion.

SB 714 – Health Care Service Plans: Exemptions from Licensure
This bill would exempt certain health plans from regulation under Knox-Keene. According to the bill’s author, in 2018 the DMHC undertook the process of creating a new regulation requiring a multitude of health care arrangements to be subjected to Knox-Keene Licensure effective July 1, 2019. After being initially rejected in October of 2018 by the Office of Administrative Law (OAL) for lacking clear standards, the regulation was finally approved last month accruing 80 pages of extensive testimony and questions – not all of which were clarified upon final adoption. This bill clarifies both the arrangements that are subject to DMHC’s new licensing regulation and the requirements to receive an exemption from DMHC Knox-Keene licensing.

Telemedicine can provide greater access to health care for people living in underserved rural areas or needing access to particular specialties. The telemedicine bills before the Legislature this year would seek to regulate the provision of telemedicine.

AB 744 – Health Care Coverage: Telehealth
This bill would require a contract between a health plan and a healthcare provider to specify that the health plan reimburse a healthcare provider for the diagnosis, consultation, or treatment of an insured delivered through telehealth services on the same basis and to the same extent that the health plan is responsible for reimbursement for the same service through in-person diagnosis, consultation, or treatment.

AB 1529 – Telephone Medical Advice Services
AB 1529 would specify that a telephone medical advice service is required to ensure that all healthcare professionals who provide telephone medical advice services from an out-of-state location are operating consistent with the laws governing their respective licenses. The bill would specify that a telephone medical advice service is required to comply with all directions and requests for information made by professional licensing boards.

AB 1676 – Health Care: Mental Health
This bill would require health plans to establish a telehealth consultation program that provides psychiatric health providers who treat children and pregnant and postpartum persons, in order to more quickly diagnose and treat members of those populations that are suffering from mental illness. The bill would require health plans to communicate information relating to the telehealth program at least twice a year in writing.

AB 954 – Dental Services: Third-Party Network Access
AB 954 would authorize a dental plan or a contracting entity to grant third-party access to a provider network or contractual discounts provided pursuant to a provider network contract, if specified circumstances are met, including clearly identifying the third-party access provision in the contract and allowing providers to opt out of third-party access. Dental carriers are concerned that the opt-out provision in the bill could limit access to dental networks, which in turn would impact patient access and choice.

SB 740 – Insurance: Unclaimed Life Insurance
This bill, the Unclaimed Life Insurance and Annuities Act, would require life insurers to use the U.S. Social Security Administration’s Death Master File to match deceased Social Security recipients with insureds on life insurance policies, and would require insurers to attempt to locate and notify the policy beneficiary about the policy. According to the bill’s author, California lacks any express statutory mandate requiring life insurers to notify beneficiaries that they have unclaimed life insurance benefits. This issue has been the subject of several significant regulatory actions – both here in California as well as nationwide – and in particular regarding insurers’ use of the Death Master File that contains the names and identities of almost everyone for whom a death certificate is filed in the United States. For decades, some life insurers used the Death Master File database to identify deceased annuitants so they could terminate annuity payments; however, they neglected to use the same database to identify deceased life insurance policyholders to pay benefits owed to beneficiaries. At least 32 states have passed similar legislation.

AB 1554 – Employers: Dependent Care Assistance Program: Notice to Employees
This bill would require an employer to notify an employee who participates in an employer-provided dependent care assistance program (DCAP) of any deadline to withdraw funds before the end of the plan year. If enacted, this bill would place a new administrative obligation on employers who sponsor DCAP benefits.

AB 1630 – Medical Billing Task Force
This bill would establish a state medical billing task force, which would be required to, among other things, engage interested parties in the development of a system to improve the readability of medical bills and create a standard medical billing form.

AB 1803 – Pharmacy: Healthcare Coverage: Claims for Prescription Drugs Sold for Retail Price
The Pharmacy Law requires a pharmacy to inform a customer at the point of sale for a covered prescription drug whether the retail price is lower than the applicable cost-sharing amount for the prescription drug and, if the customer pays the retail price, requires the pharmacy to submit the claim to the customer’s health insurer. AB 1803 would delay the effective date of the provision requiring the pharmacy to submit the claim to the customer’s health insurer until January 1, 2020. Pharmacies have asked for this delay in order to develop computer systems and allow for changes to federal law necessary to implement this provision.

SB 11 – Health Care Coverage: Mental Health Parity
SB 11 would require health insurers to submit annual reports certifying compliance with state and federal mental health parity laws, which would be available upon request, and posted on the websites of the CDI and DMHC. The bill would also prohibit prior authorization or step therapy requirements on any prescription medication approved by the federal Food and Drug Administration for the treatment of substance use disorders. The CHBRP estimates that SB 11 would increase total net annual expenditures by $20.6 million, driven by an $18 million increase in spending by private employers, and $6 million in spending by enrollees with group insurance.

AB 196 – Paid Family Leave
This bill would increase the wage replacement rate for paid family leave (PFL) claims to 100% of a worker’s highest quarterly earnings in the past 18 months.

SB 135 – Paid Family Leave
Current law prohibits an employer with 50 or more employees in a 75-mile radius to refuse to grant an employee a request to take up to 12 weeks of unpaid leave for family care and medical leave if the employee worked 1,250 hours in the prior 12 months. Current law includes within “family care and medical leave” the birth, adoption, or foster care placement of a child and the serious health condition of the employee’s child, parent, or spouse. SB 135 would expand the scope of those provisions to instead prohibit an employer with five (5) or more employees to refuse to grant an employee a request to take up to 12 weeks of unpaid leave for family care and medical leave if the employee had 180 days of service with the employer.

AB 648 – Wellness Programs
This bill would prohibit health care service plans and insurers from sharing any personal information or data collected through a wellness program, and would prohibit health insurers from taking any adverse action against an insured in response to a matter related to a wellness program, including the insured’s election to not participate in a wellness program. The bill would also impose upon health insurers various requirements related to wellness programs, such as requiring a health insurer to provide insureds with information concerning its policies and practices pertaining to the wellness program. Many providers of wellness programs are concerned that the data use restrictions in this bill would prevent plans and insurers from working collaboratively with employer groups to come up with innovative ways to improve their employees’ quality of life and overall health status while in turn reducing their health care costs.

SB 407 – Medicare Supplement Benefit Coverage
This bill requires an issuer of a Medicare supplement contract with new or innovative benefits to offer the new or innovative benefits only as a rider to the Medicare supplement contract. SB 407 would require the premium cost associated with new or innovative benefits to be charged as a separate additional premium and would require the issuer to disclose that this premium is distinct from the premium cost for the standardized benefit. The bill also extends the open enrollment period by 30 days and allows enrollees, policy holders, and certificate holders to change to any contract, policy or certificate available. This bill is intended to enable consumers to make meaningful comparisons between Medicare supplement policies.

SB 784 – Medicare Supplement Benefit Coverage
This bill would redesignate standardized Medicare supplement benefit plans C, F, and high deductible F as plans D, G, and high deductible G, respectively, for purposes of conforming state law to federal law. The bill would require standardized Medicare supplement benefit plans D, G, and high deductible G to provide the same coverage as required for plans C, F, and high deductible F, respectively, with the exception of coverage of 100%, or any portion, of the Medicare Part B deductible.