Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires health care service plan contracts and health insurance policies to provide coverage for specified benefits.

This bill bill, until January 1, 2019, would require a health care service plan contract or a health insurance policy issued, amended, or renewed on or after January 1, 2017, to include coverage for hearing aids for an enrollee or insured under 18 years of age, as specified. These provisions would become inoperative if the Department of Managed Health Care and the Department of Insurance receive a notification from the federal Centers for Medicare and Medicaid Services or any other applicable federal agency that these provisions constitute a discriminatory age limitation under federal law and the state is required to defray the costs of requiring a plan contract or policy to include coverage for hearing aids on behalf of enrollees or insureds who are 18 years of age or older pursuant to a specified federal law. Because a willful violation of these requirements by a health care service plan would be a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires health care service plan contracts and health insurance policies to provide coverage for specified benefits.

This bill would require a health care service plan contract or a health insurance policy issued, amended, or renewed on or after January 1, 2017, to include coverage for hearing aids for an enrollee or insured under 18 years of age, as specified. Because a willful violation of these requirements by a health care service plan would be a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires health care service plan contracts and health insurance policies to provide coverage for specified benefits.

This bill would require a health care service plan contract or a health insurance policy issued, amended, or renewed on or after January 1, 2017, to include coverage for hearing aids for an enrollee or insured under 18 years of age, as specified. Because a willful violation of these requirements by a health care service plan would be a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires health care service plan contracts and health insurance policies to provide coverage for specified benefits.

This bill would require a health care service plan contract or a health insurance policy issued, amended, or renewed on or after January 1, 2017, to include coverage for hearing aids for an enrollee or insured under 18 years of age, as specified. Because a willful violation of these requirements by a health care service plan would be a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 2004 (Bloom) - Hearing aids: minors

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 2004 would require health insurers and health plans to provide coverage for hearing aids for enrollees under 18 years of age.

Fiscal Impact:

• No cost impact is anticipated is anticipated for the Medi-Cal program or for CalPERS health care coverage. Both programs already provide coverage for hearing aids for enrollees under 18 years of age.
• Ongoing costs of $1.5 to $2.0 million per year to subsidize the cost to provide the hearing aid benefit for individuals enrolled in health care coverage through Covered California. Under federal law, states are required to cover the cost of any new benefit mandate that exceeds essential health benefits for those individuals that are receiving subsidized coverage through a health benefit exchange. The state’s current essential health benefit benchmark plan does not include coverage for hearing aids. Therefore, under this bill the state would be imposing a new benefit mandate that exceeds essential health benefits and the state would be responsible for covering the cost to subsidize that benefit for individuals purchasing subsidized coverage through Covered California.
• Minor ongoing costs for review of insurance plan filings by the Department of Insurance (Insurance Fund).
• Minor ongoing costs for review of health plan filings by the Department of Managed Health Care (Managed Care Fund).

Background:

Under federal law, health insurance policies and health plans are generally required to provide coverage for ten essential health benefits (such as emergency services, prescription drugs, etc.). Under federal regulation, the states are authorized to select an essential health benefits benchmark plan, which sets the standards for providing essential health benefits. Once a state has selected an essential health benefits benchmark plan, any new benefit mandate imposed by the state that is not already covered by the benchmark plan is considered to exceed the essential health benefits. For individuals purchasing subsidized health care coverage through a health benefits exchange, such as Covered California, the state would be responsible for paying for the cost to subsidize the new benefit.

The state’s current essential health benefits benchmark plan, the Kaiser Small Group HMO plan, does not provide coverage for hearing aids.

One of the essential health benefits required under federal law is “habilitative services” which are health care services and devices that help a person keep, learn, or improve skills and functioning for daily living.

Proposed Law:

SB 2004 would require health insurers and health plans to provide coverage for hearing aids for enrollees under 18 years of age.

Specific provisions of the bill would:

• Require health insurance policies and health plans to provide coverage for hearing aids for all enrollees under 18 years of age when medically necessary;
• Specify the services and devices included in the coverage mandate;
• Exempt certain specialty insurance policies and health plans;
• Make the provisions of the bill inoperative if any federal agency determines that the benefit mandate constitutes a discriminatory age limitation and the state is required to defray the costs to provide subsidized coverage for hearing aids to individuals over 18 years of age;
• Impose a January 1, 2019 sunset on the bill’s requirements.

Staff Comments:

The requirement to provide coverage for hearing aids for enrollees under age 18 exceeds the benefits in the state’s essential health benefits benchmark plan. To date, the state has not enacted a benefit mandate that clearly exceeded essential health benefit requirements.

Federal law and regulation prohibit discrimination on the basis of race, color, national origin, sex, age, or disability in a variety of health care programs. Some states have interpreted federal requirements to prohibit health coverage benefit mandates with limitations based on age. A federal regulation issued in May 2016 indicates that states may impose new laws that impose age distinctions without violating federal law. However, the regulation also stated that arbitrary age limitations could constitute age discrimination.

Based on the clear requirement that hearing aids must only be covered for enrollees under 18 years of age, it is likely that the federal government would rule that this bill discriminates based on age.

The federal essential health benefits requirement includes coverage of habilitative services. Under federal guidance, if a state’s essential health benefits benchmark plan provides coverage for habilitative services, then the habilitative services benefit is set by the coverage provided by the benchmark plan. If the benchmark plan does not cover habilitative services, they would still be a required essential health benefit, but the parameters of the benefit could be defined by the state. The Kaiser Small Group HMO plan does provide coverage for habilitative services, but it excludes coverage for hearing aids. Therefore, in California habilitative services do not include coverage for hearing aids.

According to the California Health Benefits Review Program, there is a preponderance of evidence that hearing aids are effective in improving speech outcomes in children and that hearing aids are effective in improving language development outcomes in children.

The California Health Benefits Review Program found that the bill would result in a minor increase in utilization of hearing aids. This is because the Program found that when hearing aids are not covered by health insurance, families pay the necessary out-of-pocket costs themselves. According to the Program, about 21,000 families would experience cost savings, because the costs of coverage would shift from consumers to health insurers and health plans. On the other hand, the Program projects that only about 200 additional children would receive hearing aids who would not receive them under current law (e.g. because the out-of-pocket costs are unaffordable).

The only costs that may be incurred by a local agency relate to crimes and infractions. Under the California Constitution, such costs are not reimbursable by the state.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: AB 2004

SUBJECT: Hearing aids: minors

SUMMARY:

Requires health insurers and health plans to cover hearing aids for enrollees under 18 years of age, including an initial assessment, new hearing aids every five years, and more frequently under specified circumstances.

Existing law:

1. Provides for the regulation of health plans by the Department of Managed Health Care (DMHC) and regulation of health insurers by the California Department of Insurance (CDI).
   
2. Establishes as California's essential health benefits (EHBs) the Kaiser Small Group HMO plan along with the following 10 federally mandated benefits under the Patient Protection and Affordable Care Act (ACA) as well as other state mandated benefits:
   1. Ambulatory patient services;
   2. Emergency services;
   3. Hospitalization;
   4. Maternity and newborn care;
   5. Mental health and substance use disorder services, including behavioral health treatment;
   6. Prescription drugs;
   7. Rehabilitative and habilitative services and devices;
   8. Laboratory services;
   9. Preventive and wellness services and chronic disease management; and,
   10. Pediatric services, including oral and vision care.
       
3. Defines “Habilitiative Services” as health care services and devices that help a person keep, learn, or improve skills and functioning for daily living. Examples include therapy for a child who is not walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology, and other services for people with disabilities in a variety of inpatient or outpatient settings, or both.
   
4. Extends emergency regulation authority for DMHC and CDI and makes this authority inoperative on July 1, 2018.
5. Establishes federal and state-based market places or health benefit exchanges, under the ACA, such as Covered California, which makes individual and small group health insurance products available for purchase. Covered California also administers federal premium subsidies and cost-sharing reductions to help qualified purchasers afford health insurance purchased through Covered California.
   
6. Requires, under section 1311 of the ACA, a state to make payments to or on behalf of an individual eligible for the premium subsidies and any cost-sharing reduction to defray the cost to the individual of any additional benefits which are not eligible for such credit or reduction under the ACA.
   
7. Prohibits, under section 1557 of the ACA, discrimination on the basis of race, color, national origin, sex, age, or disability in certain health programs and activities.

This bill:

1. Requires a health plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2017, to include coverage for hearing aids for all enrollees under 18 years of age, when medically necessary.
   
2. Requires coverage for hearing aids to include an initial assessment, new hearing aids at least every five years, new ear molds, new hearing aids if alterations to existing hearing aids cannot meet the needs of the child, a new hearing aid if the existing one is no longer working, fittings, adjustments, auditory training, and maintenance of the hearing aids.
   
3. Defines “hearing aid” as an electronic device usually worn in or behind the ear of a deaf and hard of hearing person for the purpose of amplifying sound.
   
4. Exempts Medicare supplement, dental-only, vision-only health plan contracts and health insurance policies.
   
5. Requires this bill to become inoperative if DMHC or CDI receives a notification from the federal Centers for Medicare and Medicaid Service (CMS) or any other applicable federal agency that this bill constitutes a discriminatory age limitation under federal law and the state is required to defray the costs of requiring a plan contract to include coverage for hearing aids on behalf of enrollees who are 18 years of age or older pursuant to Section 1311 of the ACA.
   
6. Requires this bill to become inoperative 30 days after DMHC executes a declaration, retained by the director or insurance commissioner, stating that DMHC or CDI received the notification described in 5) above. Requires the director or insurance commissioner to post the declaration on the DMHC or CDI website, and send the declaration to the appropriate committees of the Legislature and Legislative Counsel.
   
7. Sunsets this bill on January 1, 2019.

FISCAL EFFECT:

According to the Assembly Appropriations Committee:

1. According to the California Health Benefits Review Program (CHBRP):
2. No cost to Medi-Cal (General Fund (GF)/federal) nor California Public Employees' Retirement System (CalPERS), as hearing aids are already covered; and,
3. Increased employer-funded premium costs in the private insurance market of approximately $13 million.
   • 1. Increased premium expenditures by employees and individuals purchasing insurance of $7.1 million, and reduced total out-of-pocket expenses of $16.5 million (based on $19.5 million in newly covered benefits, offset by cost-sharing of $3 million).
     2. These costs would only be incurred for the operative date of the mandate, until January 1, 2019, assuming coverage was no longer provided.
4. Minor costs to CDI (Insurance Fund) and DMHC (Managed Care Fund) to verify plans and insurers comply with this requirement.
5. This bill is likely to exceed the EHB and result in a cost to the state to defray expenditures on behalf of enrollees in Covered California plans to which this mandate would apply. This essentially means the state would pay for hearing aids on behalf of anyone enrolled in Covered California. These costs could be as high as $1.8 million GF for 2017 and 2018, assuming costs must be defrayed for small-group and individual enrollees in Covered California plans. The mandate expires in 2019 and the state would not incur costs to defray the costs of exceeding EHBs beyond this date.
6. Recent state regulatory action in other states indicated a broad federal ban on age discrimination in insurance coverage invalidates age limits for coverage of hearing aids. If similar logic applied in California, the state would be required to pay for hearing aids for adults as well. Federal regulations issued on May 16, 2016 clarifying antidiscrimination provisions do not apply to state mandates may resolve this concern.

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, a child’s ability to hear should not be determined by their family income. It should be viewed as a fundamental right of choice to the citizens of our state. Yet here in California, the overwhelming majority of private insurance companies do not cover the cost of hearing aids, forcing families to either forgo these medically-necessary devices for their children or pay the full cost of hearing aids and hearing aid services out of their own pockets. Hearing aids have been shown to mitigate the effects of hearing loss and improve speech and language outcomes in children; these outcomes are better the earlier a child begins using a hearing aid. Hearing aids, however, also come with a steep financial cost. Pediatric hearing aids cost thousands of dollars and must be accompanied by a number of “hearing aid services” including hearing aid assessments, replacement hearing aids and ear molds, fittings, and maintenance. Cumulatively, hearing aids and hearing aid services cost an average of $3,500 and cost is the most significant barrier to parents obtaining pediatric hearing aids. AB 2004 will ensure that all California children, regardless of income or background, have health insurance coverage for hearing aids.
   
2. CHBRP analysis. AB 1996 (Thomson, Chapter 795, Statutes of 2002), requests the University of California assess legislation proposing a mandated benefit or service and prepare a written analysis with relevant data on the medical, economic, and public health impacts of proposed health plan and health insurance benefit mandate legislation. CHBRP was created in response to AB 1996, and analyzed this bill. Key findings include:
   
   1. Coverage impacts and enrollees covered. Approximately 53.2% of enrollees aged 10 to 17 years in California already heave health insurance compliant with this bill. This is because 100% of children in publicly funded health insurance products have coverage for hearing aids and services. Only 9% of enrollees aged 0 to 17 in privately funded health insurance have coverage for hearing aids and services;
   2. Essential health benefits. CHBRP indicates that this bill would exceed the EHB benchmark and would appear to trigger the ACA requirement for enrollees in Covered California;
   3. Medical effectiveness. There is a preponderance of evidence from studies with moderately strong research designs that hearing aids are effective in improving speech and language development outcomes in children. Evidence suggests that earlier age of fitting with hearing aid is associated with greater gains in speech outcomes. There is insufficient evidence that hearing aids are effective in improving nonverbal outcomes in children. There is ambiguous/conflicting evidence that hearing aids are effective in improving personal and social development outcomes in children;
   4. Utilization. CHBRP indicates that some evidence suggests that hearing aids are price inelastic thus a modest increase in utilization is anticipated of 2.4% among enrollees who did not have coverage for hearing aids and services premandate;
   5. Impact on expenditures. CHBRP estimates that this bill would increase total net annual expenditures by $3,599,000 in the first year postmandate. While a major increase in utilization is not anticipated, there would be a shift in costs from enrollee out-of-pocket expenditures to costs paid by health plans and insurance policies. CHBRP believes this bill would reduce the net financial burden of out-of-pocket expenses by approximately $17 million for the families of 21,100 children who use hearing aids and services in the first year, postmandate. The annual out-of-pocket costs for families of the newly covered children would decrease from about $1,850 to $300; and,
   6. Public health. CHBRP projects that AB 2004 would increase the first-time use of hearing aids and services by 200 children (all in the privately funded insurance market) in the first-year postmandate; thus, assuming new coverage is similar to premandate cost sharing, hearing and speech and language skills would be expected to improve for this subset of newly covered children with hearing loss who were unable to afford hearing aids premandate.
      
3. EHB plan selection. Under the ACA, qualified health plans (QHPs) are sold through Covered California and provide coverage to individuals and small employers not through Covered California. QHPs are required to ensure coverage of EHBs, as defined by the federal Secretary of the Department of Health and Human Services (HHS). In 2011, the federal Center for Consumer Information and Insurance Oversight (CCIIO) released an EHB Bulletin proposing that EHBs be defined using a benchmark approach, which gave states the flexibility to select a benchmark plan that reflected the scope of services offered by a “typical employer plan.” If a state did not choose a benchmark health plan, the default benchmark plan for the state would be the largest plan by enrollment in the largest product in the small group market. EHBs must include coverage of services and items in all 10 statutory categories required in the ACA. A report by the consulting firm, Milliman, analyzed and compared the health services covered by the 10 EHB California benchmark plan options and found all the plans to be comprehensive and a very small cost difference between the optional plans. The Legislature, with stakeholder input, chose the Kaiser Small Group HMO, which was also the default plan had California not made an affirmative choice.
   

Last year a similar analysis and process was used to update the EHB benchmark plan. Additionally, federal regulations required if the benchmark does not include coverage of habilitative services, the state may determine which services are included in that category. The federal guidance indicates states should consider the new definition of habilitative services and devices to determine if coverage exists, and indicates there is no need to defray QHP subsidy costs if a mandate is passed to supplement the habilitative coverage category. A second Milliman analysis found relatively small differences in average healthcare costs among the 2014, ten benchmark plan options. Milliman also found differing coverage for acupuncture, infertility treatment, chiropractic care, and hearing aids. The three California small group plans were essentially the same average cost as the California EHB plan and the California large group and CalPERS plans were approximately 0.2-1.0% higher. The estimated average costs for the three federal plan options were approximately 0.8-1.2% higher than the previous California EHB plan. With this information, the Legislature passed SB 43 (Hernandez, Chapter 648, Statutes of 2015) which adopted the federal definition of habilitative services and maintained the Kaiser Small Group HMO Plan as California’s EHB benchmark. The Kaiser Small Group HMO Plan does not cover hearing aids.

1. Antidiscrimination. Section 1557 of the ACA provides that an individual shall not, on the grounds prohibited under multiple provisions of federal law including the Civil Rights Act, Title IX of the Education Act, the Age Discrimination Act, the Rehabilitation Act and others be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any health program or activity, any part of which is receiving federal financial assistance, or under any program or activity that is administered by a federal or other agency, as specified. Some states, such as Connecticut’s Department of Insurance, have issued bulletins specific to hearing aids for children, indicating that the benefit is potentially discriminatory under Section 1557 of the ACA, directing carriers to remove the age limits.
   
   A federal final rule issued on May 18, 2016 includes a discussion about state mandates with age limits. Specifically, the commenters asked that the federal Office of Civil Rights (OCR) clarify that state mandates that have age limits are exempt and that states are allowed to create new mandates that have age distinctions if clinically appropriate. The response from the OCR indicates that the final rule states that age distinctions contained in federal, state, or local statutes or ordinances adopted by an elected, general purpose legislative body are not covered by the final rule. States may adopt new laws that contain age distinctions: those distinctions would not violate the final rule. The regulations specifically reference the following exemption: An age distinction contained in that part of federal, state, or local statute or ordinance adopted by an elected, general purpose legislative body which provides any benefits or assistance to persons based on age; establishes criteria for participation in age-related terms; or describes intended beneficiaries or target groups in age-related terms.

However, a footnote says that age limits may violate CMS regulations under the ACA and covered entities are responsible for ensuring compliance with all applicable CMS regulations and other federal laws. Furthermore, elsewhere OCR states that arbitrary age, visit, or coverage limitations could constitute discrimination based on age, in certain cases, for example where consideration of age is not necessary to the normal operation of a health program. AB 2004 states that this bill would become inoperative upon a notification by a federal agency that California is in violation of age discrimination provisions and if the state would be required to defray costs.

1. Habilitative services. While the current EHB benchmark plan does not cover hearing aids, it is not clear why hearing aids are not covered under the current definition of habilitative services. The federal and state definition for habilitative services is the following: Health care services and devices that help a person keep, learn, or improve skills and functioning for daily living. Examples include therapy for a child who is not walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology, and other services for people with disabilities in a variety of inpatient or outpatient settings, or both. Furthermore, the federal regulations clearly gave states the authority to determine which services are included in habilitative services if the EHB benchmark did not have coverage for habilitative services and the state would not have to defray costs. Initially, the benchmark plan did not cover habilitative which is why California adopted its own definition and later adjusted it to conform to the federal minimum definition which is the current definition. Federal guidance indicates that if the benchmark includes habilitative services and the state adds a new definition that includes additional benefits, this would need to be defrayed as a new mandate. But if a state with a “habilitative services” definition chooses to modify or clarify it, this would not need to be defrayed.
   
2. Prior legislation. SB 43 (Hernandez, Chapter 648, Statutes of 2015), updates California’s EHB law to make it consistent with new federal requirements promulgated under the ACA, which includes adoption of the federally required definition of habilitative services and devices.

SB 951 (Hernandez, Chapter 866, Statutes of 2012) and AB 1453 (Monning, Chapter 854, Statutes of 2012) select the Kaiser Small Group HMO as California’s benchmark plan to serve as the EHB standard, as required by federal law.

SB 1321 (Harman of 2012), would have required Covered California to select the plan with the lowest EHB cost to be the set benchmark for the definition of EHBs. SB 1321 failed passage in the Senate Health Committee.

1. Support. The Children’s Partnership writes in support that pediatric services has yet to be federally defined and is often not fully covered, and California’s current EHB benchmark does not cover all essential pediatric services, such as hearing aids or audiology services. The National Association of Social Workers – California Chapter writes that purchasing hearing aids for children can be a financial challenge for parents and as children grow so do their ears. A child’s ability to hear should not be determined by family income and should be viewed as a fundamental right of choice to all Californians. This bill is not simply covering hearing aids but allowing children to continue to maintain the same if not better quality of life as they grow. The Center for Early Intervention on Deafness writes that timely access to hearing aids is a critical component of achieving optimal outcomes for these children. Hearing Healthcare Providers California writes that in spite of the fact that California offers a program to screen the hearing of infants delivered in hospitals via the Newborn Hearing Screening Program, families that do not qualify for publicly-subsidized coverage are left with almost no assistance in covering the cost of a child’s hearing aid. These devices are out of reach for most families’ finances and require ongoing modifications and fittings as the child grows. This bill would provide a huge financial relief for families with job-based coverage and will put California on par with 16 other states that require this benefit.
   
2. Opposition. The California Association of Health Plans writes that the bill exceeds EHBs and it is the wrong time to pass more mandates. Maintaining affordable premiums is a delicate balancing act. Federal law clearly states that the cost of any benefits that exceed EHBs must be borne by the state. Key protections that were built into the ACA to stabilize the market such as reinsurance and risk corridors are scheduled to expire. Multiple surveys confirm the cost of the monthly premium is the number one concern for consumers when selecting a health plan. Americas Health Insurance Plans writes that this bill will increase annual expenditures by $3.6 million. The state should be looking for ways to bring down health care costs for consumers, not drive them up.
   
3. Policy Comment. Just last year, California legislators made a choice for the EHB benchmark plan knowing that it was not the plan that offered coverage of hearing aids and other services. If the Kaiser large group CalPERS plan had been chosen, hearing aids for children and adults would have clearly been included in the EHBs. The age discrimination issue remains a concern. Should legislators choose to support this measure in its current form it is quite possible that it will never be implemented.
   

SUPPORT AND OPPOSITION:

Support: California Association of the Deaf

California Children’s Hospital Association

California Coalition of Agencies Serving the Deaf & Hard of Hearing

California Coalition of Option Schools

California State PTA

California Teachers Association

Center for Early Intervention on Deafness

Deaf and Hard of Hearing Service Center, Inc

Disability Rights California

Greater Los Angeles Agency on Deafness

Hearing Healthcare Providers

National Association of Social Workers

National Health Law Program

The Children’s Partnership

Fifty Individuals

Oppose: Association of California Life and Health Insurance Companies

America’s Health Insurance Plans

California Association of Health Plans

California Chamber of Commerce

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2004

Author:(Bloom)

As Amended Ver:May 31, 2016

Majority vote

SUMMARY: Requires coverage for hearing aids for enrollees or insureds less than 18 years of age, as specified. Includes initial assessment, new hearing aids at least every five years, new ear molds, new hearing aids if alternations to the existing hearing aids cannot meet the needs of the child, a new hearing aid if the existing one is no longer working, fittings, adjustments, auditory training, and maintenance of the hearing aids. Defines hearing aid as an electronic device usually worn in or behind the ear of a deaf and hard of hearing person for the purpose of amplifying sound. Makes coverage inoperative if the state becomes fiscally liable for hearing aid coverage provided to adults. Sunsets coverage on January 1, 2019. Includes legislative intent to explore alternate approaches to ensure the continuation of broad coverage of pediatric hearing benefits without incurring ongoing state costs.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. According to the California Health Benefits Review Program (CHBRP):
   1. No cost to Medi-Cal (General Fund (GF)/federal) nor California Public Employees' Retirement System, as hearing aids are already covered.
   2. Increased employer-funded premium costs in the private insurance market of approximately $13 million.
   3. Increased premium expenditures by employees and individuals purchasing insurance of $7.1 million, and reduced total out-of-pocket expenses of $16.5 million (based on $19.5 million in newly covered benefits, offset by cost-sharing of $3 million).

These costs would only be incurred for the operative date of the mandate, until January 1, 2019, assuming coverage was no longer provided.

1. Minor costs to the California Department of Insurance (Insurance Fund) and the Department of Managed Health Care (Managed Care Fund) to verify plans and insurers comply with this requirement.
2. This bill is likely to exceed the essential health benefits and result in a cost to the state to defray expenditures on behalf of enrollees in Covered California (CoveredCA) plans to which this mandate would apply. This essentially means the state would pay for hearing aids on behalf of anyone enrolled in CoveredCA. These costs could be as high as $1.8 million GF for 2017 and 2018, assuming costs must be defrayed for small-group and individual enrollees in CoveredCA plans. The mandate expires in 2019 and the state would not incur costs to defray the costs of exceeding essential health benefits (EHBs) beyond this date.
3. Recent state regulatory action in other states indicated a broad federal ban on age discrimination in insurance coverage invalidates age limits for coverage of hearing aids. If similar logic applied in California, the state would be required to pay for hearing aids for adults as well. Federal regulations issued on May 16, 2016 clarifying antidiscrimination provisions do not apply to state mandates may resolve this concern.

COMMENTS: The author states that a child's ability to hear should not be determined based on family income. It should be viewed as a fundamental right of choice to the citizens of our state, especially when the state has a mandated hearing screening program. To diagnose deafness and then fail to provide intervention is morally and ethically unacceptable.

CHBRP Analysis. CHBRP estimates that in 2015, all state-regulated coverage (for 25.2 million Californians) would be subject to this bill. Coverage required by this bill would appear to exceed EHBs as this benefit is not included in the state's benchmark plan. Currently, CHBRP estimates that in privately funded plans and policies, about 9% of enrollees through age 17 have coverage for hearing aids and services. In publicly funded plans, CHBRP estimates that 100% of enrollees through age 17 have coverage for hearing aids and services. Postmandate, CHBRP estimates there would be no change in the average per enrollee cost of hearing aids and services. CHBRP estimates hearing aids and services cost on average $2,023 per enrollee, which includes children who may not have purchased a new hearing aid in the given year, but may use related hearing aid services in that year. The average cost per hearing aid user for their hearing aid and hearing aid services is approximately $3,566.

Coverage for Hearing Aids. California law requires screening for hearing loss among children, first at birth in the Newborn Hearing Screening Program and subsequently at school-age. There is no existing law mandating any kind of coverage for hearing aids for private insurance. However, for children 21 and under in Medi-Cal and children who meet certain qualifications including a qualifying hearing loss, hearing aids are covered through California Children's Services (CCS). CCS is a state program that provides coverage for children under age 21 with certain eligible physical limitations and chronic health conditions or diseases, including disorders of the sense organs like hearing loss. Children may also qualify for CCS by meeting certain age, residence, medical, and financial requirements. Medi-Cal recipients under age 21 must be referred to CCS for hearing loss services, including hearing aids, both for fee-for-service and managed care. For Medi-Cal beneficiaries in county organized health system (COHS) plans, the COHS plans, rather than CCS, provide hearing services.

Similar Requirements in Other States. Sixteen states require that health benefit plans cover hearing aids for children. Three states – Arkansas, New Hampshire, and Rhode Island require that plans cover hearing aids for adults and children. Wisconsin requires coverage for both hearing aids and cochlear implants for children. Of the 16 states that mandate coverage of hearing aids for children, California's proposed legislation is most similar to Colorado's law which requires plans to cover hearing aids for children younger than 18 years when medically necessary.

According to the Deaf and Hard of Hearing Service Center, Inc., the barrier of cost needs to be removed, primarily because some parents feel forced to choose a more risky option, which is surgery to implant a cochlear device that does not guarantee the child will hear. While not every deaf child can benefit from a hearing device, those who can, may be able to learn a spoken language.

The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans contend that health insurance mandates threaten efforts of all health care stakeholders to provide consumers with meaningful health care choices and affordable coverage options.

Analysis Prepared by: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0003286

Date of Hearing: May 4, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2004

Author:(Bloom) – As Amended Ver:April 26, 2016

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill requires health plans and insurers to cover hearing aids and related services for all enrollees under 18 years of age when medically necessary. It exempts Medicare supplement, dental-only, or vision-only health plans and insurers.

FISCAL EFFECT:

1. According to the California Health Benefits Review Program (CHBRP):
   1. No cost to Medi-Cal (GF/federal) nor CalPERS, as hearing aids are already covered.
   2. Increased employer-funded premium costs in the private insurance market of approximately $13 million.
   3. Increased premium expenditures by employees and individuals purchasing insurance of $7.1 million, and reduced total out-of-pocket expenses of $16.5 million (based on $19.5 million in newly covered benefits, offset by cost-sharing of $3 million).
2. Minor costs to the California Department of Insurance (Insurance Fund) and the Department of Managed Health Care (Managed Care Fund) to verify plans and insurers comply with this requirement.
3. This bill is likely to exceed the essential health benefits and result in a cost to the state to defray expenditures on behalf of enrollees in Covered California (CoveredCA ) plans to which this mandate would apply. This essentially means the state would pay for hearing aids on behalf of anyone enrolled in CoveredCA. These costs could be as high as $1.8 million GF, assuming costs must be defrayed for small-group and individual enrollees in CoveredCA plans.
4. Sixteen other states require coverage of hearing aids for children, including Oregon. According to a 2015 regulatory bulletin from the Oregon Insurance Commissioner, a broad federal ban on age discrimination in insurance coverage invalidates age limits for coverage of hearing aids in current Oregon law. The bulletin requires carriers to cover issuers to remove age limits on coverage of hearing aids because federal law deems it discriminatory. If similar logic applies in California, this age-restricted mandate may turn into a mandate for coverage for individuals of all ages, posing much higher fiscal risk associated with provision (3), as the state would be required to pay for hearing aids for adults as well.

COMMENTS:

1. Purpose. The author states that a child's ability to hear should not be determined based on family income, but that hearing aids for children should be a fundamental right. This bill will ensure all children have access to hearing aids.
2. CHBRP findings. CHBRP notes it is generally accepted that the use of hearing aids improves the hearing of children with hearing loss. As a result, there have been few recent studies on the impact of hearing aids on hearing in children. CHBRP concludes that there is a preponderance of evidence from studies with moderately strong research designs that hearing aids are effective in improving speech and language development outcomes in children. This bill will have very little impact on the number of children with hearing aids; CHBRP predicts a small increase in utilization of 200 individuals. It will reduce the out-of-pocket costs of hearing aids for individuals with commercial insurance by increasing premiums to cover the cost.
3. Current Coverage. Currently, CHBRP estimates that in privately funded plans and policies, about 9% of enrollees through age 17 have coverage for hearing aids and services. Children enrolled in publicly funded plans, including Medi-Cal which enrolls children up to 250% of the federal poverty level, have coverage for hearing aids. The federal poverty level for a family of two, for example, is $16,020. This means a child of a single parent who makes less than $40,000 annually would be eligible for Medi-Cal and, if enrolled, would receive hearing aids and related services at no cost.
4. Support. According to the Deaf and Hard of Hearing Service Center, Inc., the barrier of cost needs to be removed, primarily because some parents feel forced to choose a more risky option, which is surgery to implant a cochlear device that does not guarantee the child will hear. While not every deaf child can benefit from a hearing device, those who can, may be able to learn a spoken language. The National Association of Social Workers, California Chapter (NASW-CA) state that purchasing hearing aids for children can be a financial challenge for parents.
5. Opposition. Health plans and insurers, as well as the California Chamber of Commerce, oppose this bill, stating it exceeds EHBs and poses significant fiscal risk to the state, and that mandates raise premiums at a time when health care affordability is a significant issue for families.
6. Prior legislation. AB 368 (Carter) of 2007, along with three other bills in 2006 and 2004 required health care service plans and health insurers to offer, at minimal cost, coverage up to $1,000 for hearing aids, as defined, to all enrollees, subscribers, and insureds under 18 years of age. Three were vetoed due to the cumulative cost impact of mandates and one was held in the Senate Rules Committee.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: April 19, 2016

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 2004 (

Author:Bloom) – As Amended Ver:March 9, 2016

SUBJECT: Hearing aids: minors.

SUMMARY: Requires coverage for hearing aids for enrollees or insureds less than 18 years of age, as specified. Specifically, this bill:

1. Requires a health care service plan (health plan) contract or a health insurance policy (health policy) that is issued, amended, or renewed on or after January 1, 2017, to include coverage for hearing aids for an enrollee or insured under 18 years of age when medically necessary.
   
2. Includes initial assessment, new hearing aids at least every five years, new ear molds, new hearing aids if alternations to the existing hearing aids cannot meet the needs of the child, a new hearing aid if the existing one is no longer working, fittings, adjustments, auditory training, and maintenance of the hearing aids.
   
3. Defines hearing aid as an electronic device usually worn in or behind the ear of a deaf and hard of hearing person for the purpose of amplifying sound.
   
4. Excludes accident-only, specified disease, hospital indemnity, Medicare supplement, dental-only, or vision-only health insurance policies from this bill.
   

EXISTING LAW:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance to regulate health insurers.
   
2. Requires health plans and insurers providing health coverage in the individual and small group markets to cover, at a minimum, essential health benefits (EHBs), including the ten EHB benefit categories in the Patient Protection and Affordable Care Act (ACA), and consistent with California’s EHB benchmark plan, the Kaiser Foundation Health Plan Small Group HMO 30 plan (Kaiser benchmark), as specified in state law.
   
3. Requires issuers of individual and small group coverage to, at a minimum, cover EHBs in the following ten categories: Ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, including behavioral health treatment, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services, including oral and vision care.
4. Requires health plans to provide basic health care services, including physician services; hospital inpatient and ambulatory care services; diagnostic laboratory and diagnostic and therapeutic radiologic services; home health services; preventive health services; emergency health care services; and, hospice care.

FISCAL EFFECT: This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. The author states that a child's ability to hear should not be determined based on family income. It should be viewed as a fundamental right of choice to the citizens of our state, especially when the state has a mandated hearing screening program. To diagnose deafness and then fail to provide intervention is morally and ethically unacceptable.
   
2. BACKGROUND. Every state and territory in the United States has now established an Early Hearing Detection and Intervention (EHDI) program. The EHDI program staff are responsible for creating, operating, and continuously improving a system of services which assures that:
   
   • Every child born with a permanent hearing loss is identified before three months of age and provided with timely and appropriate intervention services before six months of age;
     
   • Every family of an infant with hearing loss receives culturally-competent family support as desired;
     
   • All newborns have a "medical home;" and,
     
   • Effective newborn hearing screening tracking and data management systems are linked with other relevant public health information systems.
     

The California Department of Health Care Services (DHCS), Children's Medical Services has implemented a statewide comprehensive Newborn Hearing Screening Program (NHSP). The NHSP helps identify hearing loss in infants and guide families to the appropriate services needed to develop communication skills. Families of infants delivered in general acute care hospitals with licensed perinatal services which have been certified by DHCS to participate in the NHSP will have the opportunity to have their baby's hearing screened. Infants who do not pass the screening in the hospital will be referred for additional testing after discharge. DHCS is contracting with Hearing Coordination Centers to work with the hospitals in developing hearing screening programs, to perform quality assurance activities, and to follow infants who need additional services.

1. California Health Benefits Review Program (CHBRP) analysis. AB 1996 (Thomson), Chapter 795, Statutes of 2002, requests the University of California to assess legislation proposing a mandated benefit or service and prepare a written analysis with relevant data on the medical, economic, and public health impacts of proposed health plan and health insurance benefit mandate legislation. CHBRP was created in response to AB 1996. SB 125 (Hernandez), Chapter 9, Statutes of 2015, added an impact assessment on essential health benefits, and legislation that impacts health insurance benefit designs, cost sharing, premiums, and other health insurance topics. CHBRP states in its analysis of AB 2004 the following:
   
   • 1. Enrollees covered. CHBRP estimates that in 2015, all state-regulated coverage (for 25.2 million Californians) would be subject to this bill.
        
     2. Impact on expenditures. CHBRP estimates that this bill would increase total net annual expenditures by $3,599,000 in the first year postmandate. While CHBRP does not anticipate a major increase in utilization, there would be a shift in costs from enrollee out-of-pocket expenditures to costs paid by health plans and policies for children’s hearing aids. Postmandate, CHBRP estimates that premiums would remain the same or increase per member per month (PMPM) as follows:
        
        1. Publicly funded plans (CalPERS HMO, Medi-Cal managed care plans): $0.00 change PMPM due to current coverage of hearing aids;
           
        2. Privately funded DMHC plans: PMPM increases range from $0.05 in the individual market, $0.10 in large group, to $0.13 in small group; and,
           
        3. Privately funded CDI policies: $0.09 PMPM increase in the individual market, $0.12 PMPM increase in large group and $0.13 PMPM increase in small group.
           
     3. EHBs. Coverage required by this bill would appear to exceed EHBs as this benefit is not included in the state’s benchmark plan.
        
     4. Medical effectiveness. It is generally accepted that the use of hearing aids improves the hearing of children with hearing loss. As a result, there have been few recent studies on the impact of hearing aids on hearing in children. CHBRP concludes that there is a preponderance of evidence from studies with moderately strong research designs that:

• Hearing aids are effective in improving speech outcomes in children. In particular, evidence suggests that earlier age of fitting with hearing aid is associated with greater gains in speech outcomes.

• Hearing aids are effective in improving language development outcomes in children. In particular, risk for language delays in children with hearing loss may be mitigated from an early age of fitting and consistent use of hearing aids.

Conversely, there is insufficient evidence that hearing aids are effective in improving nonverbal outcomes (e.g., motor behavior) in children. There is ambiguous/conflicting evidence that hearing aids are effective in improving personal and social development outcomes in children

• • 1. Benefit coverage. Currently, CHBRP estimates that in privately funded plans and policies, about 9% of enrollees through age 17 have coverage for hearing aids and services. In publicly funded plans, CHBRP estimates that 100% of enrollees through age 17 have coverage for hearing aids and services.
       
    2. Utilization. Postmandate, CHBRP estimates there would be no change in the average per enrollee cost of hearing aids and services. CHBRP estimates hearing aids and services cost on average $2,023 per enrollee, which includes children who may not have purchased a new hearing aid in the given year, but may use related hearing aid services in that year. The average cost per hearing aid user for their hearing aid and hearing aid services is approximately $3,566.
    3. Public health. According to CHBRP, hearing loss may be congenital (present at birth) or acquired later during childhood. Children may experience hearing loss in one or both ears, and may require either one or two hearing aids. Nationwide, hearing loss in one ear (unilateral) occurs in about 2.7% of adolescents aged 12 to 19 while hearing loss in both ears (bilateral) is less common at 0.8% of adolescents. This overall prevalence rate of 3.5% among adolescents includes both congenital and acquired hearing loss. This hearing loss range is greater than the moderate-to-severe range for which hearing aids are most commonly prescribed. CHBRP projects that AB 2004 would increase the first-time use of hearing aids and services by 200 children (all in the privately funded insurance market) in the first-year postmandate; thus, assuming new coverage is similar to premandate cost sharing, hearing and speech and language skills would be expected to improve for this subset of newly covered children with hearing loss who were unable to afford hearing aids premandate.
    4. Long-term impacts. It is unknown to what degree this bill would improve the future educational and employment outcomes of children who obtain hearing aids through new coverage. However, it stands to reason that those who need and use hearing aids at a young age would experience improved outcomes as compared with no hearing aid use.
       
  1. Coverage for Hearing Aids. California law requires screening for hearing loss among children, first at birth in the Newborn Hearing Screening Program and subsequently at school-age. There is no existing law mandating any kind of coverage for hearing aids for private insurance. However, for children 21 and under in Medi-Cal and children who meet certain qualifications including a qualifying hearing loss, hearing aids are covered through California Children’s Services (CCS). CCS is a state program that provides coverage for children under age 21 with certain eligible physical limitations and chronic health conditions or diseases, including disorders of the sense organs like hearing loss. Children may also qualify for CCS by meeting certain age, residence, medical, and financial requirements.
     

Medi-Cal recipients under age 21 must be referred to CCS for hearing loss services, including hearing aids, both for fee-for-service and managed care. For Medi-Cal beneficiaries in county organized health system (COHS) plans, the COHS plans, rather than CCS, provide hearing services.

• 1. Similar requirements in other states. Sixteen states (Colorado, Connecticut, Delaware, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota,, Mississippi, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, and Tennessee) require that health benefit plans cover hearing aids for children. Three states — Arkansas, New Hampshire, and Rhode Island require that plans cover hearing aids for adults and children. Wisconsin requires coverage for both hearing aids and cochlear implants for children. Of the 16 states that mandate coverage of hearing aids for children, California’s proposed legislation is most similar to Colorado’s law which requires plans to cover hearing aids for children younger than 18 years when medically necessary. Under Colorado’s law, coverage includes new hearing aid(s) every five years, a new hearing aid when alterations to the existing hearing aid(s) cannot meet the needs of the child, and services and supplies such as the initial assessment, fitting, adjustments, and auditory training.
     

1. SUPPORT. According to the Deaf and Hard of Hearing Service Center, Inc., the barrier of cost needs to be removed, primarily because some parents feel forced to choose a more risky option, which is surgery to implant a cochlear device that does not guarantee the child will hear. While not every deaf child can benefit from a hearing device, those who can, may be able to learn a spoken language. The California Coalition of Option Schools (CCOS) and the Center for Early Intervention on Deafness (CEID) state that many children who are deaf and hard of hearing and their families choose the most recent advancements in technology, including hearing aids, as a way to aid them in accessing language and communication. CCOS and CEID state that timely access to hearing aids is a critical component to achieving optimal outcomes for these children.

The National Association of Social Workers, California Chapter (NASW-CA) state that purchasing hearing aids for children can be a financial challenge for parents and as children grow so do their ears. NASW-CA contends that a child’s ability to hear should not be determined by family income and should be viewed as a fundamental right of choice. NASW-CA states that existing law mandates a hearing screening for newborns and when a child is diagnosed with deafness, the state fails to provide intervention to the child and also fails the parent. The Greater Los Angeles Agency on Deafness, Inc. writes that hearing aids are a tool to assist deaf and hard of hearing children identify sounds if they have some residual hearing and state that it is critical for deaf and hard of hearing children be fluent in American Sign Language and English. The California Coalition of Agencies Service the Deaf & Hard of Hearing (CCASDHH) states that language involves more than just communication and with language, individuals can fully develop their cognitive and neurological functions, thus increasing their abilities and opportunities to attain their full potential.

1. OPPOSITION. According to the California Association of Health Plans (CAHP), the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans contend that health insurance mandates threaten efforts of all health care stakeholders to provide consumers with meaningful health care choices and affordable coverage options. They state that the ACA requires the state to pay for the increased cost associated with the mandate for those enrollees who purchase health insurance on the Exchange. They also state that benefit mandates eliminate the ability of health insurers and HMOs to provide unique benefit packages aimed at the needs of consumers by requiring individuals and employers to purchase benefits prescribed by the Legislature, not driven by consumer choice. Finally, they note that health benefit mandates stifle the use of innovative, evidence based medicine. The California Chamber of Commerce (CalChamber) states that when health care issuers are required to cover new services for all enrollees, premiums for all enrollees and purchasers go up and this is true if only some enrollees utilize the mandate. CalChamber states that these costs add quickly. CalChamber notes that California has statutorily imposed approximately 30 individual mandates, which helps explain why the average monthly premium in California is already more than $75 higher than the average monthly premium nationally. Additionally, CalChamber notes that these mandates have reduced health plans’ flexibility in benefit design and reduced employers’ choice of benefit packages to offer their employees.
   
2. PREVIOUS LEGISLATION.
   1. AB 368 (Carter) of 2007 would have required health care service plans and health insurers, on or after January 1, 2009, to offer, at minimal cost, coverage up to $1,000 for hearing aids, as defined, to all enrollees, subscribers, and insureds under 18 years of age. The Governor’s veto of AB 368 noted that the addition of a new mandate, no matter how small, will only serve to increase the overall cost of health care and increasing the cost of coverage by mandating benefits, may ultimately leave more children without any coverage.
      
   2. SB 1223 (Scott) of 2006 would require health care service plans and health insurers to offer or provide, as specified, coverage up to $1,000 for hearing aids, as defined, to all enrollees, subscribers, and insureds under 18 years of age. SB 1223 would have provided that the coverage would not apply to certain types of insurance. The Governor vetoed SB 1223 and indicated that the bill may contribute to rising premiums and make health care less affordable and accessible for uninsured Californians.
   3. SB 174 (Scott, Koretz, and Wiggins) of 2004, would have required health plans and health insurers to provide coverage, up to $1,000, for hearing aids, as defined, to all enrollees and subscribers under 18 years of age. SB 174 was held in Senate Rules Committee.
   4. SB 1158 (Scott) of 2004 would have require health care service plans and health insurers to provide coverage up to $1,000 for hearing aids, as defined, to all enrollees, subscribers, and insureds under 18 years of age. SB 1158 would provide that the coverage would not apply to certain types of insurance. SB 1158 was vetoed by the Governor who indicated that increasing the cost of health coverage by mandating benefits, if even by a small amount, would have the far more serious consequence of leaving some children without health insurance.

REGISTERED SUPPORT / OPPOSITION:

Support

California Coalition of Agencies Servicing the Deaf & Hard of Hearing

California Coalition of Option Schools

Center for Early Intervention on Deafness

Deaf and Hard of Hearing Service Center, Inc.

Greater Los Angeles Agency on Deafness, Inc.

National Association of Social Workers

Opposition

America’s Health Insurance Plans

Association of California Life and Health Insurance Companies

California Association of Health Plans

California Chamber of Commerce

Analysis Prepared by: Kristene Mapile / HEALTH / (916) 319-2097