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, until January 1, 2020, would would, to the extent permitted under federal law, require a health care service plan contract or a health insurance policy issued, amended, or renewed on or after January 1, 2018, 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, until January 1, 2020, would require a health care service plan contract or a health insurance policy issued, amended, or renewed on or after January 1, 2018, 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.

Date of Hearing: May 17, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 1601

Author:(Bloom) – As Amended Ver:March 16, 2017

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

SUMMARY:

This bill, until January 1, 2020, 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, vision-only, and other specified health plans and insurers.

It also states the intent of the Legislature to explore alternate approaches to ensure the continuation of broad coverage of pediatric hearing benefits upon expiration of this mandate, including exploring ways to add pediatric hearing as an essential health benefit without incurring ongoing state costs.

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 $6 million, and reduced total out-of-pocket expenses of $15.5 million (based on $18 million in newly covered benefits, offset by cost-sharing of $2.5 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 (Covered CA) plans to which this mandate would apply. This essentially means the state would pay for hearing aids on behalf of children enrolled in Covered CA. CHBRP estimates costs of $5.6 million GF, assuming costs must be defrayed for small-group and individual enrollees in Covered CA plans.

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 about 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 10% 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.
4. Support. Children's advocates and advocates for deaf children support this bill, as well as the California Teachers' Association and the California Children's Hospital Association. 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 2004 (Bloom), of the 2015-16 Legislative Session, was similar to this bill, and was held on the Senate Appropriations Committee's Suspense.

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 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 25, 2017

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 1601

Author:(Bloom) – As Amended Ver:March 16, 2017

SUBJECT: Hearing aids: minors.

SUMMARY: Requires health care service plans (health plans) or health insurers to cover hearing aids for enrollees or insureds under 18 years of age, as specified. Specifically, this bill:

1. Requires a health plan contract or a health insurance policy (health policy) that is issued, amended, or renewed on or after January 1, 2018, to include coverage for hearing aids for an enrollee or insured under 18 years of age when medically necessary.
2. Includes coverage for 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.
5. Sunsets the provisions of this bill on January 1, 2020.

EXISTING LAW:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurers.
   
2. Requires health plans and health 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. Specifies the EHBs in the following 10 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.
5. Establishes the Medi-Cal program, administered by the Department of Health Care Services, under which qualified low-income individuals receive health care benefits.

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

COMMENTS:

1. PURPOSE OF THIS BILL. 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 steep financial costs. 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 approximately $3,500 and are the most significant barrier to parents obtaining pediatric hearing aids. This bill will ensure that all California children, regardless of income or background, have health insurance coverage for hearing aids.
2. BACKGROUND.
   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. 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 EHBs, and legislation that impacts health insurance benefit designs, cost sharing, premiums, and other health insurance topics. CHBRP states in its analysis of this bill the following:
     
     1. Enrollees covered. CHBRP estimates that 24 million Californians in state-regulated coverage would be subject to this bill.
        
     2. Impact on expenditures. CHBRP estimates that this bill would increase total net annual expenditures by $3.2 million in the first year postmandate. Notably, although 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. Prior to the mandate, enrollees without coverage for this bill incurred an estimated just over $18 million in out-of-pocket expenses. Postmandate, the out-of-pocket expenses would continue to be shifted to health plans and health insurers. However, enrollees would incur $2.5 million in copayments for the newly covered benefits (enrollee out-of-pocket expenses for covered benefits). 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 $0.06 in the individual market, $0.11 in large group, to $0.12 in small group.
        3. Privately funded CDI policies: $0.12 PMPM increase in the individual market, $0.12 PMPM increase in large group and $0.11 PMPM increase in small group.
        4. There would be no measurable impact on Medi-Cal because children in Medi-Cal (both fee-for-service and Medi-Cal managed care) receive medically necessary hearing aid services through CCS. Additionally, CHBRP estimates no measureable impact on state-regulated California Public Employees' Retirement System (CalPERS) plans or on the number of uninsured.
     3. EHBs. The state’s benchmark plan, which determines which services are included as a part of California’s EHBs, does not include coverage for hearing aids. Coverage for children’s hearing aids and associated services (e.g., replacement, repair) mandated by this bill appears to exceed EHBs, and therefore would appear to trigger the ACA requirement that the state defray the cost of additional benefit coverage for enrollees in qualified health plans (QHPs) sold in Covered California. A state that requires QHPs to offer benefits in excess of the EHBs must make payments to defray the cost of those additionally mandated benefits, either by paying the purchaser directly or by paying the QHP. CHBRP estimates that the state would be required to defray the following amounts due to this bill:
        1. PMPM of $0.12 for each QHP enrollee in a small-group DMHC-regulated plan;
        2. PMPM of $0.06 for each QHP enrollee in an individual market DMHC-regulated plan;
        3. PMPM of $0.11 for each QHP enrollee in a small-group CDI-regulated policy; and
        4. PMPM of $0.09 for each QHP enrollee in an individual market CDI-regulated policy.

CHBRP estimates that the state costs amount to $5.6 million total, which includes:

• • • 1. Payments of $3.84 million to DMHC-regulated small group plans;
      2. Payments of $1.5million to DMHC-regulated individual plans;
      3. Payments of $190,000 to CDI-regulated small group policies; and
      4. Payments of $55,000 to CDI-regulated individual policies.
    1. Medical effectiveness. It is generally accepted that the use of hearing aids improves the hearing of children with hearing loss. A preponderance of evidence suggests that hearing aids are effective in improving speech and language outcomes among children with hearing loss. Early and consistent use of hearing aids is associated with better speech and language outcomes.
       
       There have been few recent studies on the impact of hearing aids on hearing in children and CHBRP concludes that there is a preponderance of evidence from studies with moderately strong research designs that:
       1. 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; and,
       2. 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 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. Given the necessity of hearing aids for children who need them, parents and guardians may find a way to obtain hearing aids even without insurance coverage. Some evidence suggests that hearing aids are largely price inelastic; in other words, the purchase and use of hearing aids may be largely unaffected by price. CHBRP estimates that the removal of a cost barrier when coverage is introduced for hearing aids would thus result in a modest increase in utilization of 2.4% among enrollees who do not have coverage for hearing aids and services postmandate. CHBRP estimates no change in utilization among the population with coverage postmandate. The combined rate of utilization for the total population of enrollees up to 17 years of age postmandate is estimated at 1.1%. CHBRP estimates that an additional 195 children needing hearing aids or services would be newly covered under this bill in the first year (17,839 children using hearing aids and services baseline to 18,034 children postmandate). For some, this permits first-time use of hearing aids, and for all newly covered hearing aid users, it permits more repairs, replacements, testing, and recasted ear molds, which improve the effectiveness of the hearing aids. All of these newly covered children would be in privately funded health insurance plans or policies since Medi-Cal and CalPERS currently cover hearing aids and services.
    3. Public health. It is unknown the degree to which the passage of this bill would improve the future educational attainment and employment status of children who obtain hearing aids through the new coverage. However, it stands to reason that those who use hearing aids at a young age and maintain their communication skills into adulthood would experience improved outcomes as compared with not using hearing aids. CHBRP expects that speech and language skills would improve for a subset of children with hearing loss who were unable to afford hearing aids premandate. CHBRP estimates that this bill would reduce the financial burden on families currently without coverage for hearing aids who would gain coverage postmandate. 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, whereas 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. CHBRP projects that this bill would increase the first-time use of hearing aids and services by 195 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.

No literature was found that discussed the receipt of hearing aids and its effect on ameliorating existing disparities in hearing loss by gender, income, and maternal education. CHBRP estimates that this bill would reduce the net financial burden of out-of-pocket expenses by approximately $15.5 million for the families of 18,034 children who use hearing aids and services in the first year, postmandate. CHBRP estimates that the annual out-of-pocket costs for families of the 195 newly covered children would decrease from about $1,980 to $290.

• • 1. Long-term impacts. Regarding utilization impacts, CHBRP estimates this bill would have minimal impacts on utilization. Premium expenditures by payer increase with this bill. However, as technology changes, it is possible that unit costs of these devices will change. In the absence of data on likely changes to unit cost of hearing aids, the long-term impact is not quantifiable.
  1. Similar requirements in other states. Fifteen states require that health benefit plans cover hearing aids for children, but not adults. Four states (Arkansas, Connecticut, 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 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. The Weingarten Children’s Center writes that children who are deaf and hard of hearing have the same ability and capability to learn as their peers who are not deaf and hard of hearing. The Children’s Choice for Hearing and Talking Sacramento states that timely access to hearing aids is a critical component to achieving optimal outcomes for these children.
2. SUPPORT IF AMENDED. Health Access California (Health Access) supports this bill if amended to extend coverage of hearing aids to adults. According to Health Access, this bill is contrary to the non-discrimination provision of the ACA based on age. Health Access would also support including hearing aids in the definition of EHBs when the definition of EHBs is revisited by the Legislature and the Governor.
3. OPPOSITION. The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans oppose this bill because the state must assume the cost of any mandate in excess of the EHB package; consumers and employers benefit from a robust health insurance marketplace offering competition and choice; and, health benefit mandates stifle the use of innovative, evidence-based medicine.
4. PREVIOUS LEGISLATION.
   1. AB 2004 (Bloom) of 2016 is substantially similar to this bill and would have required coverage for hearing aids for enrollees or insureds under 18 years of age, as specified. AB 2004 was held in Senate Appropriations Committee.
   2. 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 vetoed AB 368 and indicated 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.”
      
   3. SB 1223 (Scott) of 2006 would have required health 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 was vetoed by the Governor who indicated that the bill may contribute to rising premiums and make health care less affordable and accessible for uninsured Californians.
   4. 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.
   5. SB 1158 (Scott) of 2004 would have required 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 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 Children’s Hospital Association

California Teachers Association

Center for Early Intervention on Deafness

Children Now

Children’s Choice for Hearing and Talking

Health Access California (if amended)

Hearing Healthcare Providers of California

John Tracy Clinic

National Association of Social Workers – California Chapter

Weingarten Children’s Center

Opposition

America’s Health Insurance Plans
Association of California Life and Health Insurance Companies

CalChamber

California Association of Health Plans

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