CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 598

Author:(Bloom)

As Amended Ver:September 6, 2019

Majority vote

SUMMARY:

Requires a health care service plan (health plan) contract or a health insurance to include coverage for hearing aids, as defined, for an enrollee or insured under 18 years of age, as specified. Limits the maximum coverage amount to $3,000 per individual hearing aid.

The Senate Amendments:

1. Establish the Let California Kids Hear Act.
2. Add intent language that a review of literature by the California Health Benefits Review Program (CHBRP) on the effects of hearing aids on children with hearing loss suggests that early treatment of hearing loss is associated with improvement in language, verbal, nonverbal, and social development outcomes.
3. Delay implementation to July 1, 2020.
4. Require coverage to be provided by contracted providers unless the plan allows for out-of-network coverage. Requires, for children under five years of age, a contracted provider to include a pediatric audiologist.
5. Require hearing aids covered by this bill to be subject to the cost sharing imposed by the plan contract for durable medical equipment and not be subject to more restrictive limitations on coverage or higher cost sharing than other items of durable medical equipment covered by the plan contract or policy.

COMMENTS:

CHBRP analysis. CHBRP states in its analysis of this bill the following:

1. Enrollees covered. CHBRP estimates that all state-regulated coverage (24.49 million Californians) would be subject to this bill, 7.258 million of whom are age 0–17 years.
2. Impact on expenditures. CHBRP estimates that this bill would increase total net annual expenditures by $2.7 million in the first year postmandate. Prior to the mandate, enrollees without coverage incurred an estimated $13.6 million in out-of-pocket (OOP) expenses. Postmandate, that $13.6 million in OOP expenses would be shifted to health plans and insurers. However, enrollees would incur $2.5 million in copayments for the newly covered benefits (enrollee OOP expenses for covered benefits).
3. Essential health benefits (EHBs). Coverage required by this bill could be interpreted to exceed EHBs as this benefit is not included in the state's benchmark plan. CHBRP estimates the total state-responsibility in the first year could be $2.1 million to $3.07 million.
4. 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.
5. Benefit coverage. CHBRP estimates that currently, approximately 49.1% of enrollees (or 3,561,000) aged 0 to 17 years in California with health insurance have coverage that is compliant with this bill.
6. Utilization. CHBRP estimates that an additional 195 children needing hearing aids or services would be newly covered under this bill in the first year. CHBRP estimates hearing aids and services cost on average $1,825 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.
7. Public health. CHBRP points out that those who use hearing aids at a young age and maintain their communication skills into adulthood would experience improved outcomes as compared with those not using hearing aids.
8. Long-term impacts. CHBRP estimates this bill would have minimal impacts on utilization.

According to the Author:

A child's ability to hear should not be determined by their family income. 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 improve speech and spoken language outcomes in children; these outcomes are better the earlier a child begins using a hearing aid. This bill will ensure that all California children, regardless of income or background, have health insurance coverage for hearing aids.

Arguments in Support:

American Academy of Pediatrics, California, states that this bill would align with current coverage standards that exist through CCS, and would help ensure that all California children who are deaf or hard-of-hearing are able to access sound for development of spoken language, access education, socialize with friends and family members, and go about daily tasks without the impediments associated with untreated permanent hearing loss, which would in turn contribute to a marked improvement in their health and well-being.

Arguments in Opposition:

The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America's Health Insurance Plans oppose state mandates as it would increase costs of coverage, especially for families who buy coverage without subsidies, small business owners who cannot or do not wish to self-insure, and California taxpayers who foot the bill for the state's share of those mandates. The opposition notes that this bill would increase total net annual expenditures by $2.7 million. Additionally, because this benefit exceeds the EHB package, CHBRP estimates the total state responsibility in the first year could be $2.1 million to $3.1 million. The Department of Finance is opposed to this bill because it results in costs not included in the current fiscal plan. The coverage benefits set forth in this bill will exceed the essential health benefits currently required to be provided by California insurance plans, resulting in coverage costs that must be borne by the State.

FISCAL COMMENTS:

According to the Senate Appropriations Committee, for the California Department of Insurance, one-time $3,000 Insurance Fund to review health insurance policies for compliant language. For the Department of Managed Health Care (DMHC), $208,000 (Managed Care Fund) and 1.2 personnel year (PY) in fiscal year (FY) 2020-21, $177,000 (Managed Care Fund) and 1.1 PY in FY 2021-22, and ongoing. The Managed Care Fund is covered through fees assessed on health plans. Specifically, the DMHC anticipates the following: $22,000 and 0.1 PY in FY 2020-21 only in the Office of Plan Licensing for short-term workload to review disclosure forms and evidence of coverage documents; $172,000 and 1.0 PY in FY 2020-21, $164,000 and 1.0 PY in FY 2021-22, and ongoing for the Office of Legal Services to prepare legal memoranda and provide legal guidance; and, minor costs associated with the Help Center for increased workload. According to CHBRP, no measurable impact to CalPERS nor to Medi-Cal (General Fund/federal), as hearing aids are a covered benefit for children in fee-for-service and Medi-Cal managed care under the California Children's Services program. Potential costs of $2.1 to $3.1 million General Fund to pay for hearing aids for children enrolled in Covered California, as this bill is likely to exceed the essential health benefit.

VOTES:

ASM HEALTH: 15-0-0

YES: Wood, Mayes, Aguiar-Curry, Bigelow, Bonta, Burke, Carrillo, Flora, Limón, McCarty, Nazarian, Ramos, Rodriguez, Santiago, Waldron

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

ASSEMBLY FLOOR: 75-0-5

YES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Gipson, Gloria, Gonzalez, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, O'Donnell, Obernolte, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Voepel, Waldron, Weber, Wicks, Wood, Rendon

ABS, ABST OR NV: Cooley, Eduardo Garcia, Gray, Low, Ting

SENATE FLOOR: 40-0-0

YES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dahle, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

UPDATED:

VERSION: September 6, 2019

CONSULTANT: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0002321

 THIRD READING  

Bill No: AB 598

Author: Bloom (D), et al.

Amended: 9/6/19 in Senate

Vote: 21

SENATE HEALTH COMMITTEE: 8-0, 6/26/19

AYES: Pan, Stone, Lena Gonzalez, Grove, Hurtado, Leyva, Mitchell, Rubio

NO VOTE RECORDED: Monning

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/30/19

AYES: Portantino, Bates, Bradford, Durazo, Hill, Jones, Wieckowski

ASSEMBLY FLOOR: 75-0, 5/28/19 - See last page for vote

SUBJECT: Hearing aids: minors

SOURCE: Author

DIGEST:

This bill requires a health plan contract or health insurance policy issued, amended, or renewed on or after July 1, 2020, to include coverage for hearing aids up to a maximum covered amount of $3,000 per individual hearing aid, for all enrollees under 18 years of age when medically necessary.

Senate Floor Amendments of 9/6/19 add coauthors and establish this bill as the Let California Kids Hear Act.

ANALYSIS:

Existing law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans under the Knox-Keene Health Care Services Plan Act of 1975; the California Department of Insurance (CDI) to regulate health and other insurers; Covered California as California’s health benefit exchange for individual and small business purchasers as authorized under the federal Patient Protection and Affordable Care Act (ACA); and, the Department of Health Care Services (DHCS) to administer the Medi-Cal program. [HSC §1340, et seq., INS §106, et seq., GOV §100500 -100522, and WIC §14000, et seq.]
2. Establishes as California's essential health benefits (EHBs) benchmark the Kaiser Small Group Health Maintenance Organization, existing California mandates (including medically necessary basic health care services), and 10 ACA mandated benefits as described below. Requires non-grandfathered individual and small group plan contracts and insurance policies to cover 10 EHBs. [HSC §1367.005 and INS §10112.27]
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. [HSC §1367.005 and INS §10112.27]

This bill:

1. Establishes this bill as the Let California Kids Hear Act.
2. Requires a health plan contract or health insurance policy issued, amended, or renewed on or after July 1, 2020, to include coverage for hearing aids for all enrollees under 18 years of age when medically necessary. Requires coverage to be provided by contracted providers unless the plan allows for out-of-network coverage. Requires for children under five years to include a pediatric audiologist as a contracted provider.
3. Establishes as the maximum covered amount $3,000 per individual hearing aids. Permits an enrollee or insured to choose to purchase a hearing aid that exceeds the maximum coverage amount, and to be responsible for the difference between the cost of the hearing aid and the maximum coverage amount. Subjects this benefit to the same cost sharing imposed for other items of durable medical equipment and prohibits more restrictive limitations on coverage or higher cost sharing than other items of durable medical equipment under the contract or policy.
4. Requires coverage for hearing aids to include an initial assessment, new hearing aids at least every four years, new earmolds, 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, fillings, adjustments, auditory training, and maintenances of the hearing aids.
5. Defines “hearing aid” as an electronic device designed to aid or compensate for impaired human hearing and any parts, attachments, or accessories, including earmolds, but excluding batteries and cords. This includes both hearing aids traditionally worn behind the ear and auditory osseonintegrated devices, whether implanted or worn externally.
6. Exempts from this bill accident-only, specified disease, hospital indemnity, Medicare supplement, specialized health plan contracts and health insurance policies.

Comments

1. Author’s statement. According to the author, California does not require health insurance plans or policies to include coverage for hearing aids. These devices are expensive, often need to be replaced, and have been shown to improve speech and language outcomes in children. These outcomes are greater the earlier a child begins using a hearing aid. California’s Newborn Hearing Screening Program requires hospitals to screen newborns for hearing loss, with the goal of identifying hearing loss before three months of age and guiding children to intervention services by six months of age. Yet once hearing loss is identified, the state does not ensure that the necessary interventions are covered. As a result, a mere 9% of families enrolled in privately funded health plans have coverage for their hearing aids. These families, who are already paying into their insurance plans, have to pay for hearing aids out of their own pockets or forego the devices (as well as necessary maintenance and replacements) for their children.
2. EHB benchmark plan selection. A benefit required by a state after December 31, 2011, is not an EHB unless it is covered under the benchmark plan. States must defray the costs of additional mandated benefits to enrollees or QHPs. However, a state mandated benefit adopted after December 31, 2011, must be defrayed even if the benefit is covered under the benchmark plan after that date. California has reviewed its EHB benchmark options twice. Once in 2012 and again in 2015. On both occasions, the consulting firm, Milliman, analyzed and compared the health services covered by the 10 EHB California benchmark plan options. Both times the plans compared were comprehensive with small cost differences between them. In both cases, the Legislature, with stakeholder input, chose the Kaiser Small Group HMO, which was also the default plan had California not made an affirmative choice. In both reports, Milliman found differing coverage among the plan options for acupuncture, infertility treatment, chiropractic care, and hearing aids. In 2015, 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% higher. The estimated average costs for the three federal plan options were approximately 0.8-1.2% higher than the California EHB benchmark 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.
3. New Process. Under a new regulation issued in 2018, a state may change its EHB-benchmark plan for plan years on or after January 1, 2020, by: (a) selecting the EHB-benchmark plan that another state used for the 2017 plan year; (b) replacing one or more categories of EHBs in the state’s EHB benchmark plan used for the 2017 plan year with the same category or categories of EHB from the EHB-benchmark plan that another state used for the 2017 plan year; or, (c) otherwise selecting a set of benefits that would become the state’s EHB benchmark plan. According to Covered California, the proposed federal deadline to select a new EHB benchmark plan for the 2022 plan year is May 8, 2020. The regulation also requires the state to provide reasonable public notice and an opportunity for public comment on the state’s selection of an EHB-benchmark plan.
4. Antidiscrimination. Section 1557 of the ACA prohibits an individual from being excluded from participation in, denied the benefits of, or 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 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.

The federal Office of Civil Rights (OCR) indicates that the final rule states that age distinctions contained in federal, state, or local statutes or ordinances adopted by an elected, legislative body are not covered by the final rule. States may adopt new laws that contain age distinctions and 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, 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 to this exemption says that age limits may violate Centers for Medicare and Medicaid Services (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.

1. 2017 CMS Letter. In a 2017 CMS Letter to Issuers in the Federally-facilitated Marketplaces, CMS continues to caution both issuers and states that age limits may potentially be discriminatory when applied to services that have been found clinically effective at all ages. For example, it might be arbitrary to limit coverage for a hearing aid to enrollees who are six years of age and younger since there may be some older enrollees for whom a hearing aid is medically necessary. Although CMS does not enumerate which benefits fall into each statutory EHB category, issuers should not attempt to circumvent coverage of medically necessary benefits by labeling the benefit as a “pediatric service,” thereby excluding adults. The letter states that non-discrimination in benefit design with respect to EHB is a market-wide consumer protection that applies inside and outside of exchanges for non-grandfathered plans offered in the individual and small group markets. In 2018, CMS reiterates the cautions from the 2017 Letter to Issuers regarding potentially discriminatory age limits, inappropriately labeling benefits as “pediatric services,” and potentially discriminatory formulary exclusions and/or tier structures.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee:

• CDI. One-time $3,000 Insurance Fund to review health insurance policies for compliant language.
• DMHC. $208,000 (Managed Care Fund) and 1.2 PY in FY 2020-21, $177,000 (Managed Care Fund) and 1.1 PY in FY 2021-22, and ongoing. The Managed Care Fund is covered through fees assessed on health plans. Specifically, the DMHC anticipates the following:
• $22,000 and 0.1 PY in FY 2020-21 only in the Office of Plan Licensing (OPL) for short-term workload to review disclosure forms and evidence of coverage documents.
• $172,000 and 1.0 PY in FY 2020-21, $164,000 and 1.0 PY in FY 2021-22, and ongoing for the Office of Legal Services (OLS) to prepare legal memoranda and provide legal guidance.
• Minor costs associated with the Help Center for increased workload.
• According to the California Health Benefits Review Program, no measurable impact to CalPERS nor to Medi-Cal (General Fund/federal), as hearing aids are a covered benefit for children in fee-for-service and Medi-Cal managed care under the California Children’s Services program. Potential costs of $2.1 to $3.1 million General Fund to pay for hearing aids for children enrolled in Covered California, as this bill is likely to exceed the essential health benefit.

SUPPORT: (Verified 9/9/19)

American Academy of Pediatrics, California

California Academy of Audiology

California Children’s Hospital Association

California State PTA

California Teachers Association

Caruso Family Center for Childhood Communication

CCHAT Center

Center for Early Intervention of Deafness

Children’s Specialty Care Coalition

Hearing Health Foundation

Hearing Healthcare Providers of California

John Tracy Center

Let California Kids Hear

National Association of Social Workers, California Chapter

No Limits for Deaf Children and Families

Special Education Local Plan Areas Administrators of California

Speech-Language Pathology and Audiology and Hearing Aid Dispensers Board

University of Southern California

One individual

OPPOSITION: (Verified 9/6/19)

America’s Health Insurance Plans

Association of California Life and Health Insurance Companies

California Association of Health Plans

ARGUMENTS IN SUPPORT: Proponents write that the cost of a hearing aid is the most significant barrier preventing families from accessing hearing aids and hearing aid services. Some families are forced to forego hearing aids for their children or postpone services such as fittings and maintenance. Others have to deplete their savings or seek out other charity assistance for a device that should be covered by their medical insurance. In addition to serving its medical purpose, a hearing aid is also a valuable educational tool. Hearing aids improve verbal speech outcomes in children, many of whom learn both spoken and visual language. Deaf or hard of hearing children should have access to as many tools as possible in the classroom to aid their learning.

ARGUMENTS IN OPPOSITION: The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans oppose mandate bills that lead to higher premiums, harming affordability and access for small businesses and individual market consumers. Over the past several years, employers have been losing more and more flexibility to set their own benefit designs due to costly state and federal regulations. These mandates will add to those higher health care costs.

ASSEMBLY FLOOR: 75-0, 5/28/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Gipson, Gloria, Gonzalez, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Voepel, Waldron, Weber, Wicks, Wood, Rendon

NO VOTE RECORDED: Cooley, Eduardo Garcia, Gray, Low, Ting

Prepared by: Teri Boughton / HEALTH / (916) 651-4111

9/9/19 18:36:26

**** END ****

 THIRD READING  

Bill No: AB 598

Author: Bloom (D), et al.

Amended: 8/30/19 in Senate

Vote: 21

SENATE HEALTH COMMITTEE: 8-0, 6/26/19

AYES: Pan, Stone, Lena Gonzalez, Grove, Hurtado, Leyva, Mitchell, Rubio

NO VOTE RECORDED: Monning

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/30/19

AYES: Portantino, Bates, Bradford, Durazo, Hill, Jones, Wieckowski

ASSEMBLY FLOOR: 75-0, 5/28/19 - See last page for vote

SUBJECT: Hearing aids: minors

SOURCE: Author

DIGEST:

This bill requires a health plan contract or health insurance policy issued, amended, or renewed on or after July 1, 2020, to include coverage for hearing aids up to a maximum covered amount of $3,000 per individual hearing aid, for all enrollees under 18 years of age when medically necessary.

ANALYSIS:

Existing law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans under the Knox-Keene Health Care Services Plan Act of 1975; the California Department of Insurance (CDI) to regulate health and other insurers; Covered California as California’s health benefit exchange for individual and small business purchasers as authorized under the federal Patient Protection and Affordable Care Act (ACA); and, the Department of Health Care Services (DHCS) to administer the Medi-Cal program. [HSC §1340, et seq., INS §106, et seq., GOV §100500 -100522, and WIC §14000, et seq.]
   
2. Establishes as California's essential health benefits (EHBs) benchmark the Kaiser Small Group Health Maintenance Organization, existing California mandates (including medically necessary basic health care services), and ten ACA mandated benefits as described below. Requires non-grandfathered individual and small group plan contracts and insurance policies to cover these EHBs:
   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.
       [HSC §1367.005 and INS §10112.27]
       
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. [HSC §1367.005 and INS §10112.27]
   

This bill:

1. Requires a health plan contract or health insurance policy issued, amended, or renewed on or after July 1, 2020, to include coverage for hearing aids for all enrollees under 18 years of age when medically necessary. Requires coverage to be provided by contracted providers unless the plan allows for out-of-network coverage. Requires for children under five years to include a pediatric audiologist as a contracted provider.
2. Establishes as the maximum covered amount $3,000 per individual hearing aids. Permits an enrollee or insured to choose to purchase a hearing aid that exceeds the maximum coverage amount, and to be responsible for the difference between the cost of the hearing aid and the maximum coverage amount. Subjects this benefit to the same cost sharing imposed for other items of durable medical equipment and prohibits more restrictive limitations on coverage or higher cost sharing than other items of durable medical equipment under the contract or policy.
   
3. Requires coverage for hearing aids to include an initial assessment, new hearing aids at least every four years, new earmolds, 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, fillings, adjustments, auditory training, and maintenances of the hearing aids.
   
4. Defines “hearing aid” as an electronic device designed to aid or compensate for impaired human hearing and any parts, attachments, or accessories, including earmolds, but excluding batteries and cords. This includes both hearing aids traditionally worn behind the ear and auditory osseonintegrated devices, whether implanted or worn externally.
   
5. Exempts from this bill accident-only, specified disease, hospital indemnity, Medicare supplement, specialized health plan contracts and health insurance policies.

Comments

1. Author’s statement. According to the author, California does not require health insurance plans or policies to include coverage for hearing aids. These devices are expensive, often need to be replaced, and have been shown to improve speech and language outcomes in children. These outcomes are greater the earlier a child begins using a hearing aid. California’s Newborn Hearing Screening Program requires hospitals to screen newborns for hearing loss, with the goal of identifying hearing loss before three months of age and guiding children to intervention services by six months of age. Yet once hearing loss is identified, the state does not ensure that the necessary interventions are covered. As a result, a mere 9% of families enrolled in privately funded health plans have coverage for their hearing aids. These families, who are already paying into their insurance plans, have to pay for hearing aids out of their own pockets or forego the devices (as well as necessary maintenance and replacements) for their children.
   
2. EHB benchmark plan selection. A benefit required by a state after December 31, 2011, is not an EHB unless it is covered under the benchmark plan. States must defray the costs of additional mandated benefits to enrollees or QHPs. However, a state mandated benefit adopted after December 31, 2011, must be defrayed even if the benefit is covered under the benchmark plan after that date. California has reviewed its EHB benchmark options twice. Once in 2012 and again in 2015. On both occasions, the consulting firm, Milliman, analyzed and compared the health services covered by the ten EHB California benchmark plan options. Both times the plans compared were comprehensive with small cost differences between them. In both cases, the Legislature, with stakeholder input, chose the Kaiser Small Group HMO, which was also the default plan had California not made an affirmative choice. In both reports, Milliman found differing coverage among the plan options for acupuncture, infertility treatment, chiropractic care, and hearing aids. In 2015, 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% higher. The estimated average costs for the three federal plan options were approximately 0.8-1.2% higher than the California EHB benchmark 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.
   
3. New Process. Under a new regulation issued in 2018, a state may change its EHB-benchmark plan for plan years on or after January 1, 2020, by: (a) selecting the EHB-benchmark plan that another state used for the 2017 plan year; (b) replacing one or more categories of EHBs in the state’s EHB benchmark plan used for the 2017 plan year with the same category or categories of EHB from the EHB-benchmark plan that another state used for the 2017 plan year; (c) or, otherwise selecting a set of benefits that would become the state’s EHB benchmark plan. According to Covered California, the proposed federal deadline to select a new EHB benchmark plan for the 2022 plan year is May 8, 2020. The regulation also requires the state to provide reasonable public notice and an opportunity for public comment on the state’s selection of an EHB-benchmark plan.
   
4. Antidiscrimination. Section 1557 of the ACA prohibits an individual from being excluded from participation in, denied the benefits of, or 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 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.
   The federal Office of Civil Rights (OCR) indicates that the final rule states that age distinctions contained in federal, state, or local statutes or ordinances adopted by an elected, legislative body are not covered by the final rule. States may adopt new laws that contain age distinctions and 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, 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 to this exemption says that age limits may violate Centers for Medicare and Medicaid Services (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.
   
5. 2017 CMS Letter. In a 2017 CMS Letter to Issuers in the Federally-facilitated Marketplaces, CMS continues to caution both issuers and states that age limits may potentially be discriminatory when applied to services that have been found clinically effective at all ages. For example, it might be arbitrary to limit coverage for a hearing aid to enrollees who are six years of age and younger since there may be some older enrollees for whom a hearing aid is medically necessary. Although CMS does not enumerate which benefits fall into each statutory EHB category, issuers should not attempt to circumvent coverage of medically necessary benefits by labeling the benefit as a “pediatric service,” thereby excluding adults. The letter states that non-discrimination in benefit design with respect to EHB is a market-wide consumer protection that applies inside and outside of exchanges for non-grandfathered plans offered in the individual and small group markets. In 2018, CMS reiterates the cautions from the 2017 Letter to Issuers regarding potentially discriminatory age limits, inappropriately labeling benefits as “pediatric services,” and potentially discriminatory formulary exclusions and/or tier structures.
6. 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, and reviewed this bill. 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) in Covered California. A state that requires QHPs to offer benefits in excess of the EHBs could be required to 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 could be required to defray $2,102,000 to $3,067,000 total.
7. Medi-Cal and California Children’s Services (CCS). For children age 21 years and under in Medi-Cal and children who meet certain qualifications, including a qualifying hearing loss, hearing aids are covered through CCS. CCS is a state program that provides coverage for children under age 21 with certain eligible medical conditions, including hearing loss. Children may also qualify for CCS by meeting certain age, residence, medical, and financial requirements. The eligibility criteria are: (a) The child must be under age 21; (b) The child must be a California resident; (c) The child has a medical condition that is covered by CCS; and, (d) The child and family meets one of the following criteria: (i) Family state adjusted gross income of $40,000 or less; (ii) Out-of-pocket medical expenses expected to be more than 20% of family's adjusted gross income; (iii) A need for an evaluation to find out whether there is a health problem covered by CCS; (iv) The child was adopted with a known health problem that is covered by CCS; (v) The child has a need for the Medical Therapy Program (a state program that provides services for children who have handicapping conditions, generally due to neurological or musculoskeletal disorders); or, (vi) Is eligible for Medi-Cal, with full benefits.
   
8. Other states. Colorado, Delaware, Georgia, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, Tennessee, and Texas require that health benefits plans in their state pay for hearing aids for children. Arkansas, Connecticut, Illinois, New Hampshire, and Rhode Island require coverage for both children and adults. Wisconsin requires coverage for both hearing aids and cochlear implants for children. Oregon and Connecticut expanded their hearing aid benefit to include adults to comply with the antidiscrimination prohibition of the ACA. Requirements vary state by state for ages covered, amount of coverage, benefit period, and provider qualifications.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee:

• CDI. One-time $3,000 Insurance Fund to review health insurance policies for compliant language.
• DMHC. $208,000 (Managed Care Fund) and 1.2 PY in FY 2020-21, $177,000 (Managed Care Fund) and 1.1 PY in FY 2021-22, and ongoing. The Managed Care Fund is covered through fees assessed on health plans. Specifically, the DMHC anticipates the following:
• $22,000 and 0.1 PY in FY 2020-21 only in the Office of Plan Licensing (OPL) for short-term workload to review disclosure forms and evidence of coverage documents.
• $172,000 and 1.0 PY in FY 2020-21, $164,000 and 1.0 PY in FY 2021-22, and ongoing for the Office of Legal Services (OLS) to prepare legal memoranda and provide legal guidance.
• Minor costs associated with the Help Center for increased workload.
• According to CHBRP, no measurable impact to CalPERS nor to Medi-Cal (General Fund/federal), as hearing aids are a covered benefit for children in fee-for-service and Medi-Cal managed care under the California Children’s Services program. Potential costs of $2.1 to $3.1 million General Fund to pay for hearing aids for children enrolled in Covered California, as this bill is likely to exceed the essential health benefit.

SUPPORT: (Verified 8/26/19)

American Academy of Pediatrics, California

California Academy of Audiology

California Children’s Hospital Association

California State PTA

California Teachers Association

Caruso Family Center for Childhood Communication

CCHAT Center

Children’s Specialty Care Coalition

Hearing Health Foundation

Hearing Healthcare Providers of California

National Association of Social Workers, California Chapter

No Limits for Deaf Children and Families

Special Education Local Plan Areas Administrators of California

Speech-Language Pathology and Audiology and Hearing Aid Dispensers Board

University of Southern California

One individual

OPPOSITION: (Verified 8/26/19)

America’s Health Insurance Plans

Association of California Life and Health Insurance Companies

California Association of Health Plans

ARGUMENTS IN SUPPORT: Proponents write that the cost of a hearing aid is the most significant barrier preventing families from accessing hearing aids and hearing aid services. Some families are forced to forego hearing aids for their children or postpone services such as fittings and maintenance. Others have to deplete their savings or seek out other charity assistance for a device that should be covered by their medical insurance. In addition to serving its medical purpose, a hearing aid is also a valuable educational tool. Hearing aids improve verbal speech outcomes in children, many of whom learn both spoken and visual language. Deaf or hard of hearing children should have access to as many tools as possible in the classroom to aid their learning.

ARGUMENTS IN OPPOSITION: The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans oppose mandate bills that lead to higher premiums, harming affordability and access for small businesses and individual market consumers. Over the past several years, employers have been losing more and more flexibility to set their own benefit designs due to costly state and federal regulations. These mandates will add to those higher health care costs.

ASSEMBLY FLOOR: 75-0, 5/28/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Gipson, Gloria, Gonzalez, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Voepel, Waldron, Weber, Wicks, Wood, Rendon

NO VOTE RECORDED: Cooley, Eduardo Garcia, Gray, Low, Ting

Prepared by: Teri Boughton / HEALTH / (916) 651-4111

9/3/19 11:24:03

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 598 (Bloom) - Hearing aids: minors

Bill Summary:

Assembly Bill 598 would require a health plan contract or health insurance policy issued, amended, or renewed, on or after January 1, 2020, to include coverage for hearing aids, up to $3,000 per individual hearing aid, for all enrollees under 18 years of age, when medically necessary.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on August 30, 2019

Fiscal Impact:

• Department of Insurance. One-time $3,000 Insurance Fund to review health insurance policies for compliant language.
• Department of Managed Health Care (DMHC). $208,000 (Managed Care Fund) and 1.2 PY in FY 2020-21, $177,000 (Managed Care Fund) and 1.1 PY in FY 2021-22, and ongoing. The Managed Care Fund (MCF) is covered through fees assessed on health plans. Specifically, the DMHC anticipates the following:
  • $22,000 and 0.1 PY in FY 2020-21 only in the Office of Plan Licensing (OPL) for short-term workload to review disclosure forms and evidence of coverage documents.
  • $172,000 and 1.0 PY in FY 2020-21, $164,000 and 1.0 PY in FY 2021-22, and ongoing for the Office of Legal Services (OLS) to prepare legal memoranda and provide legal guidance.
  • Minor costs associated with the Help Center for increased workload.
• According to the California Health Benefits Review Program (CHBRP), no measurable impact to CalPERS nor to Medi-Cal (General Fund/federal), as hearing aids are a covered benefit for children in fee-for-service and Medi-Cal managed care under the California Children’s Services program. Potential costs of $2.1 to $3.1 million General Fund to pay for hearing aids for children enrolled in Covered California, as the bill is likely to exceed the essential health benefit.

Committee Amendments:

The committee amendments would add a co-author.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 598 (Bloom) - Hearing aids: minors

Bill Summary:

Assembly Bill 598 would require a health plan contract or health insurance policy issued, amended, or renewed, on or after January 1, 2020, to include coverage for hearing aids, up to $3,000 per individual hearing aid, for all enrollees under 18 years of age, when medically necessary.

Fiscal Impact:

• Department of Insurance. One-time $3,000 Insurance Fund to review health insurance policies for compliant language.
• Department of Managed Health Care (DMHC). $208,000 (Managed Care Fund) and 1.2 PY in FY 2020-21, $177,000 (Managed Care Fund) and 1.1 PY in FY 2021-22, and ongoing. The Managed Care Fund (MCF) is covered through fees assessed on health plans. Specifically, the DMHC anticipates the following:
  • $22,000 and 0.1 PY in FY 2020-21 only in the Office of Plan Licensing (OPL) for short-term workload to review disclosure forms and evidence of coverage documents.
  • $172,000 and 1.0 PY in FY 2020-21, $164,000 and 1.0 PY in FY 2021-22, and ongoing for the Office of Legal Services (OLS) to prepare legal memoranda and provide legal guidance.
  • Minor costs associated with the Help Center for increased workload.
• According to the California Health Benefits Review Program (CHBRP), no measurable impact to CalPERS nor to Medi-Cal (General Fund/federal), as hearing aids are a covered benefit for children in fee-for-service and Medi-Cal managed care under the California Children’s Services program. Potential costs of $2.1 to $3.1 million General Fund to pay for hearing aids for children enrolled in Covered California, as the bill is likely to exceed the essential health benefit.

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 defraying the cost of providing the new benefit. Currently, the state’s 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.

The federal deadline to select a new EHB benchmark plan for the 2022 plan year is May 8, 2020.

Proposed Law:

Assembly Bill 598 would require a health plan contract or health insurance policy issued, amended, or renewed, on or after January 1, 2020, to include coverage for hearing aids, as defined, up to $3,000 per individual hearing aid, for all enrollees under 18 years of age, when medically necessary.

The bill would authorize an enrollee to purchase to hearing aid that exceeds the maximum coverage amount, and requires the enrollee to cover the difference.

The bill would subject hearing aids covered to the cost sharing imposed by the plan contract for durable medical equipment and not the more restrictive limitations on coverage or higher cost sharing than other items of durable medical equipment.

In addition, the bill would specify coverage for hearing aids includes an initial assessment, new hearing aids at least every four years, new earmolds, 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.

The bill would prohibit a portion of the bill’s provisions from applying to accident-only, specified disease, hospital indemnity, Medicare supplement, or specialized health insurance policies.

Related Legislation:

• AB 1601 (Bloom, 2017) and AB 2004 (Bloom, 2016) would have required health plans and insurers to cover hearing aids and related services for all enrollees under 18 years of age when medically necessary. AB 1601 bill was held on the Assembly Appropriations Committee suspense file. AB 2004 was held in the Senate Appropriations Committee suspense file.
• AB 368 (Carter, 2007) would have required health plans and health insurers, on or after January 1, 2009, to offer coverage up to 1,000 for hearing aids, to specified individuals under 18 years of age. Governor Schwarzanegger vetoed the bill, citing his previous vetoes of SB 1223 (Scott, 2006) and SB 1158 (Scott, 2004), because of the overall increase to health care.

Staff Comments:

According to CHBRP, a total net increase of $2.7 million reflecting a shift in costs from enrollee out-of-pocket expenditures to costs by health plans and policies. Specifically, increased employer-funded premium costs in the private market of $10.3 million and increased premium expenditures by employees and individuals purchasing insurance of $3.5 million, a reduced total of out-of-pocket expenses of $11.1 million.

CBRP estimates approximately 49 percent of enrollees aged 0 to 17 years old have an insurance coverage that provides hearing aids; and an additional 195 children needing hearing aids or services would be newly covered in the first year. With respect to public health impacts, the bill would increase first-time use of hearing aids by these 195 children (all in the privately funded insurance market), and hearing, speech, and language skills would be expected to improve.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Dr. Richard Pan, Chair

BILL NO: AB 598

SUBJECT: Hearing aids: minors

SUMMARY:

1. Requires a health plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2020, to include coverage for hearing aids up to a maximum covered amount of $3,000 per individual hearing aid, for all enrollees under 18 years of age when medically necessary.
   

Existing law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans under the Knox-Keene Health Care Services Plan Act of 1975; the California Department of Insurance (CDI) to regulate health and other insurers; Covered California as California’s health benefit exchange for individual and small business purchasers as authorized under the federal Patient Protection and Affordable Care Act (ACA); and, the Department of Health Care Services (DHCS) to administer the Medi-Cal program. [HSC §1340, et seq., INS §106, et seq., GOV §100500 -100522, and WIC §14000, et seq.]
   
2. Establishes as California's essential health benefits (EHBs) benchmark the Kaiser Small Group Health Maintenance Organization, existing California mandates (including medically necessary basic health care services), and ten ACA mandated benefits as described below. Requires non-grandfathered individual and small group plan contracts and insurance policies to cover these EHBs:
   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.
       [HSC §1367.005 and INS §10112.27]
       
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. [HSC §1367.005 and INS §10112.27]
   

This bill:

1. Requires a health plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2020, to include coverage for hearing aids for all enrollees under 18 years of age when medically necessary.
2. Establishes as the maximum covered amount $3,000 per individual hearing aids. Permits an enrollee or insured to choose to purchase a hearing aid that exceeds the maximum coverage amount, and to be responsible for the difference between the cost of the hearing aid and the maximum coverage amount.
   
3. Requires coverage for hearing aids to include an initial assessment, new hearing aids at least every four years, new earmolds, 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, fillings, adjustments, auditory training, and maintenances of the hearing aids.
   
4. Defines “hearing aid” as an electronic device designed to aid or compensate for impaired human hearing and any parts, attachments, or accessories, including earmolds, but excluding batteries and cords. This includes both hearing aids traditionally worn behind the ear and auditory osseonintegrated devices, whether implanted or worn externally.
   
5. Exempts from this bill accident-only, specified disease, hospital indemnity, Medicare supplement, dental-only, or vision-only health plan contracts and health insurance policies.

FISCAL EFFECT:

According to the Assembly Appropriations Committee:

1. According to the California Health Benefits Review Program (CHBRP), this bill has no cost to Medi-Cal (General Fund/federal) nor to the California Public Employees' Retirement System, as hearing aids are already covered. This bill, however, is likely to exceed EHBs 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. CHBRP estimates costs of $2.1 to $3.1 million General Fund, assuming costs must be defrayed for small-group and individual enrollees in Covered California plans.
2. CHBRP reports the following private market costs: Increased employer-funded premium costs in the private insurance market of approximately $10.4 million; Increased premium expenditures by employees and individuals purchasing insurance of $3.5 million, and reduced total out-of-pocket expenses of $11.1 million; Minor and absorbable one-time costs to CDI (Insurance Fund) to verify compliance; Costs of about $35,000 in 2019-20, $100,000 in 201-21, and $15,000 ongoing to DMHC (Managed Care Fund) to verify compliance.

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, California does not require health insurance plans or policies to include coverage for hearing aids. These devices are expensive, often need to be replaced, and have been shown to improve speech and language outcomes in children. These outcomes are greater the earlier a child begins using a hearing aid. California’s Newborn Hearing Screening Program requires hospitals to screen newborns for hearing loss, with the goal of identifying hearing loss before three months of age and guiding children to intervention services by six months of age. Yet once hearing loss is identified, the state does not ensure that the necessary interventions are covered. As a result, a mere 9% of families enrolled in privately funded health plans have coverage for their hearing aids. These families, who are already paying into their insurance plans, have to pay for hearing aids out of their own pockets or forego the devices (as well as necessary maintenance and replacements) for their children.
   
2. EHB plan selection. Under the ACA, qualified health plans (QHPs) are sold through Covered California and also 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). EHBs must include coverage of services and items in all ten statutory categories required in the ACA. In addition, states are permitted to choose a benchmark plan as the basis for a state’s EHBs. California has reviewed its EHB options twice. Once in 2012 and again in 2015. On both occasions, the consulting firm, Milliman, analyzed and compared the health services covered by the ten EHB California benchmark plan options. Both times the plans compared were comprehensive with small cost differences between them. The Legislature, with stakeholder input, chose the Kaiser Small Group HMO, which was also the default plan had California not made an affirmative choice. However, Milliman found differing coverage among the plan options for acupuncture, infertility treatment, chiropractic care, and hearing aids. In 2015, 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% higher. The estimated average costs for the three federal plan options were approximately 0.8-1.2% higher than the California EHB benchmark 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.
   
3. Benchmark plan. Under a new regulation issued in 2018, a state may change its EHB-benchmark plan for plan years on or after January 1, 2020 by: a) selecting the EHB-benchmark plan that another state used for the 2017 plan year; b) replacing one or more categories of EHBs in the state’s EHB benchmark plan used for the 2017 plan year with the same category or categories of EHB from the EHB-benchmark plan that another state used for the 2017 plan year; c) or, otherwise selecting a set of benefits that would become the state’s EHB benchmark plan. The regulation requires the scope of benefits to be equal to, or greater than, the scope of benefits of a typical employer plan, to the extent any supplementation is required to provide coverage within each EHB category. The scope of benefits cannot exceed the generosity of the most generous among a set of comparison plans, including the state’s EHB benchmark plan used for the 2017 plan year, and any of the state’s base-benchmark plan options for the 2017 plan year. According to Covered California, the proposed federal deadline to select a new EHB benchmark plan for the 2022 plan year is May 8, 2020. The regulation also requires the state to provide reasonable public notice and an opportunity for public comment on the state’s selection of an EHB-benchmark plan.
   
4. Antidiscrimination. Section 1557 of the ACA prohibits an individual from being excluded from participation in, denied the benefits of, or 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 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.
   The federal Office of Civil Rights (OCR) indicates that the final rule states that age distinctions contained in federal, state, or local statutes or ordinances adopted by an elected, legislative body are not covered by the final rule. States may adopt new laws that contain age distinctions and 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, 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 to this exemption says that age limits may violate Centers for Medicare and Medicaid Services (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.
   
5. 2017 CMS Letter. In a 2017 CMS Letter to Issuers in the Federally-facilitated Marketplaces, CMS continues to caution both issuers and states that age limits may potentially be discriminatory when applied to services that have been found clinically effective at all ages. For example, it might be arbitrary to limit coverage for a hearing aid to enrollees who are six years of age and younger since there may be some older enrollees for whom a hearing aid is medically necessary. Although CMS does not enumerate which benefits fall into each statutory EHB category, issuers should not attempt to circumvent coverage of medically necessary benefits by labeling the benefit as a “pediatric service,” thereby excluding adults.

The letter states that non-discrimination in benefit design with respect to EHB is a market-wide consumer protection that applies inside and outside of exchanges for non-grandfathered plans offered in the individual and small group markets. In 2018, CMS reiterates the cautions from the 2017 Letter to Issuers regarding potentially discriminatory age limits, inappropriately labeling benefits as “pediatric services,” and potentially discriminatory formulary exclusions and/or tier structures.

1. 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, and reviewed this bill. Key findings include:
   
   1. Coverage impacts and enrollees covered. CHBRP indicates that 100% of enrollees aged 0 to 17 in publicly funded plans and CalPERS have coverage for hearing aids and services. Approximately, 11% of enrollees aged 0 to 17 in privately funded products have coverage for hearing aids and services.
      
   2. 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; and, 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.
      
   3. Utilization. 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; 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 aged 0 to 17 postmandate is estimated at 1.2%. CHBRP estimates that an additional 195 children needing hearing aids or services would be newly covered under this bill in the first year. 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. 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 $1,825 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.
      
   4. Medi-Cal. CHBRP states that because children in Medi-Cal (both fee-for-service and Medi-Cal Managed Care) receive medically necessary hearing aid services through the California Children’s Services (CCS) program, there would be no measurable impact on Medi-Cal as a result of this bill.
      
   5. Impact on expenditures. CHBRP estimates that this bill would increase total net annual expenditures by $2,685,000 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 $13,586,000 in out-of-pocket expenses. Postmandate, that $13,586,000 in out-of-pocket expenses would be shifted to health plans and insurers. However, enrollees would incur $2,462,000 in copayments for the newly covered benefits (enrollee out of-pocket expenses for covered benefits).
      
   6. Public health. 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 $11.124 million for the families of children who use hearing aids and services in the first year, postmandate.
      
   7. Essential health benefits. 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) in Covered California. A state that requires QHPs to offer benefits in excess of the EHBs could be required to 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 could be required to defray $2,102,000 to $3,067,000 total.
2. Medi-Cal and CCS. Children age 21 years and under in Medi-Cal and children who meet certain qualifications, including a qualifying hearing loss, hearing aids are covered through CCS. CCS is a state program that provides coverage for children under age 21 with certain eligible medical conditions, including hearing loss. Children may also qualify for CCS by meeting certain age, residence, medical, and financial requirements. The eligibility criteria are: a) The child must be under age 21; b) The child must be a California resident; c) The child has a medical condition that is covered by CCS; and, d) The child and family meets one of the following criteria: i) Family state adjusted gross income of $40,000 or less; ii) Out-of-pocket medical expenses expected to be more than 20% of family's adjusted gross income; iii) A need for an evaluation to find out whether there is a health problem covered by CCS; iv) The child was adopted with a known health problem that is covered by CCS; v) The child has a need for the Medical Therapy Program (a state program that provides services for children who have handicapping conditions, generally due to neurological or musculoskeletal disorders); or, vi) Is eligible for Medi-Cal, with full benefits.
   
3. Other states. Colorado, Delaware, Georgia, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, Tennessee, and Texas require that health benefits plans in their state pay for hearing aids for children. Arkansas, Connecticut, Illinois, New Hampshire, and Rhode Island require coverage for both children and adults. Wisconsin requires coverage for both hearing aids and cochlear implants for children. Oregon and Connecticut expanded their hearing aid benefit to include adults to comply with the antidiscrimination prohibition of the ACA. Requirements vary state by state for ages covered, amount of coverage, benefit period, and provider qualifications.
   
4. Related legislation. AB 767 (Wicks) requires Covered California, in consultation with stakeholders, to develop options for the inclusion of in vitro fertilization coverage as part of, or as supplementary to, coverage currently offered through Covered California, and report the options to the Legislature on or before July 1, 2020. AB 767 is also scheduled to be heard in the Senate Health Committee on June 26, 2019.

AB 888 (Low) among other provisions, finds and declares nonpharmacological treatments for pain are vitally important to the state’s efforts to combat the opioid crisis, and that coverage of these treatments should be considered during the next update to the state’s EHB benchmark plan, as specified. AB 888 is pending in the Senate Committee on Business Professions and Economic Development.

1. Prior legislation. AB 1601 (Bloom of 2017) would have required health plans and insurers to cover hearing aids and related services for all enrollees under 18 years of age when medically necessary and stated 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 EHB without incurring ongoing state costs. AB 1601 was held in the Assembly Appropriations Committee.
   

AB 2004 (Bloom of 2016) would have required health insurers and health plans to provide coverage for hearing aids for enrollees under 18 years of age. AB 2004 was held in the Senate Appropriations Committee.

AB 368 (Carter of 2007) would have required health plans and health insurers, in 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. AB 368 was vetoed by Governor Schwarzenegger who wrote:

This bill is similar to measures I vetoed in 2004 and 2006. The addition of a new mandate, no matter how small, will only serve to increase the overall cost of health care. Increasing the cost of coverage by mandating benefits, may ultimately leave more children without any coverage. I would urge the Legislature to work with me next year on a comprehensive health care reform solution that provides no-cost or low-cost comprehensive coverage to all children below 300% of the federal poverty level, regardless of their documentation status.

SB 1223 (Scott of 2006) would have required health plans and health insurers to offer or provide coverage for hearing aids to all enrollees and subscribers less than 18 years of age. SB 1223 was vetoed by Governor Schwarzenegger, who wrote:

According to the Kaiser Family Foundation, health insurance premiums have steadily risen by double digits every year since 2001 and employers cite high premiums as the most common reason for not offering health coverage. I am concerned that without fundamental changes in the system, insurance coverage will become even less affordable for workers and employers. This is why I want to see a new health care paradigm that addresses affordability, shared responsibility and the promotion of healthy living. Consistent with this approach, I have signed AB 2651 (Jones) to ensure early detection of hearing loss through newborn hearing screenings. Early detection is critical to ensuring children with hearing loss receive effective treatment and intervention to support them in developing strong communication skills, and succeeding in school.

I look forward to building on our efforts to date and working with my partners in the Legislature, to develop a comprehensive and systemic approach to health care that supports cost containment, recognizes the shared responsibility of individuals, employers and government, and not only provides medical treatment to people when they are sick, but strives to make sure people don’t get sick in the first place.

AB 2641 (Jones, Chapter 335, Statute of 2006) requires every general acute care hospital that has not been approved by CCS and with licensed perinatal services, on or after January 1, 2008, to administer a hearing screening test to every newborn, as specified.

SB 174 (Scott, Koretz, and Wiggins of 2004) would have mandated that every group health care service plan contract and every health insurance policy provide coverage for hearing aids, up to $1,000, to all enrollees and subscribers, or insureds, under 18 years of age. The hearing for SB 174 was canceled in the Senate Insurance Committee.

SB 1158 (Scott of 2004) would have required group health plan contracts and health insurance policies that cover hospital, medical, or surgical expenses to cover one claim for hearing aids in a 36-month period, up to $1,000 for all enrollees, subscribers, or insureds under 18 years of age. SB 1158 was vetoed by Governor Schwarzenegger who states:

The Kaiser Family Foundation and Health Research and Educational Trust recently determined that health insurance premiums have steadily risen by double digits every year since 2001. The same group found that the most common reason stated by employers for not offering health coverage was high premiums.

While I want children with hearing impairments to have hearing aids, I am concerned 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 whatsoever.

1. Support. Proponents write that the cost of a hearing aid is the most significant barrier preventing families from accessing hearing aids and hearing aid services. Some families are forced to forego hearing aids for their children or postpone services such as fittings and maintenance. Others have to deplete their savings or seek out other charity assistance for a device that should be covered by their medical insurance. In addition to serving its medical purpose, a hearing aid is also a valuable educational tool. Hearing aids improve verbal speech outcomes in children, many of whom learn both spoken and visual language. Deaf or hard of hearing children should have access to as many tools as possible in the classroom to aid their learning.
   
2. Opposition. The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans oppose mandate bills that lead to higher premiums, harming affordability and access for small businesses and individual market consumers. Over the past several years, employers have been losing more and more flexibility to set their own benefit designs due to costly state and federal regulations. These mandates will add to those higher health care costs.
   
3. Policy Comments.
   1. It is unclear why hearing aids are not already covered under the definition of habilitative services, which, includes devices that help a person keep, learn, or improve skills and functioning for daily living. 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. 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. California’s current benchmark plan includes this definition and also specifically excludes hearing aids. Should the definition of habilitative be amended to clarify that hearing aids fall within that definition?
   2. EHB and Mandates. California’s existing coverage mandates, including EHB, provide comprehensive benefit coverage. While many policy arguments can be made to advance additional mandated benefits, Committee members may also wish to consider the cumulative effect of these bills and the tradeoffs associated with increasing health insurance premiums in the context of the already high cost of health insurance, another potential restructuring of health insurance markets nationally and in California because of actions taking place at the federal level to repeal the ACA, and in consideration of the budget action to fund state financial assistance to help Californians afford their health insurance, and a requirement that Californians have health insurance. Furthermore, if this bill becomes law, the State of California will have to pay QHPs or purchasers for the cost of these additional benefits being added to individual and small group products.
      
   3. EHB Benchmark Review. The Legislature has reviewed California’s benchmark plan twice before. It is up to the state to decide if there is a need to review the state benchmark options but a state must comply with applicable federal deadlines and rules governing the selection process. Since multiple bills have been introduced aimed at expanding benefits beyond California’s current EHBs, it may be time for California to review its benchmark plan options again. For the 2022 plan/policy year, the proposed deadline to notify the federal government of a new benchmark is May 8, 2020.
      
4. Amendments. Author requests the Committee adopt clarifying amendments that the health care service plan /health insurance policy shall provide full coverage under the contract as described in this section, up to a maximum of $3000 per individual hearing aid.
   
5. Technical amendments.
   1. HSC 1367.72 (a)(1)(B) An insured enrollee may choose to purchase a hearing aid …
   2. HSC 1367.72 (c) This section shall not apply to Medicare supplement, dental-only, or vision-only specialized health care service plan contracts.
   3. INS 10123.72 (c) This section shall not apply to accident-only, specified disease, hospital indemnity, Medicare supplement, dental-only, or vision-only specialized health insurance policies.
   4. The author may wish to clarify that the coverage requirement applies when obtained through in-network providers.

SUPPORT AND OPPOSITION:

Support: American Academy of Pediatrics, California

California Academy of Audiology

California Children’s Hospital Association

California State PTA

California Teachers Association

Children’s Specialty Care Coalition

Hearing Health Foundation

Hearing Healthcare Providers of California

National Association of Social Workers, California Chapter

No Limits for Deaf Children and Families

Special Education Local Plan Areas Administrators of California

Speech-Language Pathology and Audiology and Hearing Aid Dispensers Board

University of Southern California

One Individual

Oppose: Association of California Life and Health Insurance Companies

America’s Health Insurance Plans

California Association of Health Plans

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 598

Author:(Bloom)

As Amended Ver:May 16, 2019

Majority vote

SUMMARY:

Requires a health care service plan (health plan) contract or a health insurance to include coverage for hearing aids, as defined, for an enrollee or insured under 18 years of age, as specified. Limits the maximum coverage amount to $3,000 per individual hearing aid.

Major Provisions

COMMENTS:

California Health Benefits Review Program (CHBRP) analysis. CHBRP states in its analysis of this bill the following

1. Enrollees covered. CHBRP estimates that all state-regulated coverage (24.49 million Californians) would be subject to this bill, 7.258 million of whom are age 0–17 years.
2. Impact on expenditures. CHBRP estimates that this bill would increase total net annual expenditures by $2.7 million in the first year postmandate. Prior to the mandate, enrollees without coverage incurred an estimated $13.6 million in out-of-pocket (OOP) expenses. Postmandate, that $13.6 million in OOP expenses would be shifted to health plans and insurers. However, enrollees would incur $2.5 million in copayments for the newly covered benefits (enrollee OOP expenses for covered benefits).
3. Essential health benefits (EHBs). Coverage required by this bill could be interpreted to exceed EHBs as this benefit is not included in the state’s benchmark plan. CHBRP estimates the total state-responsibility in the first year could be $2.1 million to $3.07 million.
4. 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.
5. Benefit coverage. CHBRP estimates that currently, approximately 49.1% of enrollees (or 3,561,000) aged 0 to 17 years in California with health insurance have coverage that is compliant with this bill.
6. Utilization. CHBRP estimates that an additional 195 children needing hearing aids or services would be newly covered under this bill in the first year. CHBRP estimates hearing aids and services cost on average $1,825 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.
7. Public health. CHBRP points out that those who use hearing aids at a young age and maintain their communication skills into adulthood would experience improved outcomes as compared with those not using hearing aids.
8. Long-term impacts. CHBRP estimates this bill would have minimal impacts on utilization.

According to the Author:

A child’s ability to hear should not be determined by their family income. 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 improve speech and spoken language outcomes in children; these outcomes are better the earlier a child begins using a hearing aid. This bill will ensure that all California children, regardless of income or background, have health insurance coverage for hearing aids.

Arguments in Support:

American Academy of Pediatrics, California, states that this bill would align with current coverage standards that exist through CCS, and would help ensure that all California children who are deaf or hard-of-hearing are able to access sound for development of spoken language, access education, socialize with friends and family members, and go about daily tasks without the impediments associated with untreated permanent hearing loss, which would in turn contribute to a marked improvement in their health and well-being.

Support if Amended: The California Association of Health Underwriters would move to a support position if this new benefit mandate is amended to include appropriate cost containment measures to ensure that other policyholders do not face unnecessary premium rate increases.

Arguments in Opposition:

The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans oppose state mandates as it would increase costs of coverage, especially for families who buy coverage without subsidies, small business owners who cannot or do not wish to self-insure, and California taxpayers who foot the bill for the state’s share of those mandates.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee:

1. According to CHBRP, this bill has no cost to Medi-Cal (General Fund/federal) nor to the California Public Employees' Retirement System, as hearing aids are already covered. This bill, however, is likely to exceed EHBs 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. CHBRP estimates costs of $2.1 to $3.1 million General Fund, assuming costs must be defrayed for small-group and individual enrollees in Covered California plans.
2. CHBRP reports the following private market costs: Increased employer-funded premium costs in the private insurance market of approximately $10.4 million; Increased premium expenditures by employees and individuals purchasing insurance of $3.5 million, and reduced total OOP expenses of $11.1 million; Minor and absorbable one-time costs to the California Department of Insurance (Insurance Fund) to verify compliance; Costs of about $35,000 in 2019-20, $100,000 in 201-21, and $15,000 ongoing to the Department of Managed Health Care (Managed Care Fund) to verify compliance.

VOTES:

ASM HEALTH: 15-0-0

YES: Wood, Mayes, Aguiar-Curry, Bigelow, Bonta, Burke, Carrillo, Flora, Limón, McCarty, Nazarian, Ramos, Rodriguez, Santiago, Waldron

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

UPDATED:

VERSION: May 16, 2019

CONSULTANT: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0000860

Date of Hearing: May 8, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 598

Author:(Bloom) – As Introduced Ver:February 14, 2019

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, vision-only, and other specified health plans and insurers.

FISCAL EFFECT:

1. According to the California Health Benefits Review Program (CHBRP), this bill has no cost to Medi-Cal (GF/federal) nor CalPERS, as hearing aids are already covered.

This bill, however, 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 $2.1 to $3.1 million GF, assuming costs must be defrayed for small-group and individual enrollees in Covered CA plans.

1. CHBRP reports the following private market costs:
   1. Increased employer-funded premium costs in the private insurance market of approximately $10.4 million.
   2. Increased premium expenditures by employees and individuals purchasing insurance of $3.5 million, and reduced total out-of-pocket expenses of $11.1 million.
2. Minor and absorbable one-time costs to the California Department of Insurance (Insurance Fund) to verify compliance.
3. Costs of about $35,000 in 2019-20, $100,000 in 201-21, and $15,000 ongoing to the Department of Managed Health Care (Managed Care Fund) to verify compliance.

COMMENTS:

1. Purpose. The author states 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 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, 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.
5. Opposition. Health plans and insurers, as well as the California Chamber of Commerce, oppose this bill, stating mandates raise premiums at a time when health care affordability is a significant issue for families.
6. Prior legislation. AB 1601 (Bloom), of the 2017-18 Legislative Session, was similar to this bill and was held on this committee’s Suspense File.

AB 2004 (Bloom), of the 2015-16 Legislative Session, was similar to this bill and was held on the Senate Appropriations Committee's Suspense File.

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 of the bills 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 23, 2019

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 598

Author:(Bloom) – As Introduced Ver:February 14, 2019

SUBJECT: Hearing aids: minors.

SUMMARY: Requires a health care service plan (health plan) contract or a health insurance to include coverage for hearing aids, as defined, for an enrollee or insured under 18 years of age, as specified. Specifically, this bill:

1. Requires a health plan contract or a health insurance policy issued, amended, or renewed on or after January 1, 2020, to include coverage for hearing aids, as defined, for an enrollee or insured under 18 years of age, as specified.
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 designed to aid or compensate for impaired human hearing and any parts, attachments, or accessories, including earmolds, but excluding batteries and cords, and includes both hearing aids traditionally worn behind the ear and auditory osseointegrated devices, whether implanted or worn externally.
4. Excludes Medicare supplement, dental-only, or vision-only health plan contracts.

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 10 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, in state government, California’s Health Benefit Exchange (Exchange), or Covered California, as an independent public entity not affiliated with an agency or department, and requires the Exchange to compare and make available through selective contracting, health insurance for individual and small business purchasers, as authorized under the ACA. Specifies the powers and duties of the board governing the Exchange, and requires the board to facilitate the purchase of qualified health plans (QHPs) though the Exchange by qualified individuals and small employers.
6. 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. 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 improve speech and spoken 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. A pair of hearing aids costs, on average, between $3,000 and $4,000. These devices must be replaced frequently for growing children, causing costs to quickly spiral. Parents will often go to great lengths, such as depleting their savings, to pay for their hearing aids. When unable to find funds, they often delay necessary maintenance or replacement hearing aids. It is unconscionable that California can continue to expect families to make this sacrifice. This bill will ensure that all California children, regardless of income or background, have health insurance coverage for hearing aids.
2. BACKGROUND.
   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 all state-regulated coverage (24.49 million Californians) would be subject to this bill, 7.258 million of whom are age 0–17 years.
      2. Impact on expenditures. CHBRP estimates that this bill would increase total net annual expenditures by $2.7million 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 incurred an estimated $13.6 million in out-of-pocket expenses. Postmandate, that $13.6 million in out-of-pocket expenses would be shifted to health plans and insurers. However, enrollees would incur $2.5 million in copayments for the newly covered benefits (enrollee out-of-pocket expenses for covered benefits).
         1. Medi-Cal. Because children in Medi-Cal (both fee-for-service and Medi-Cal Managed Care) receive medically necessary hearing aid services through California Children’s Services, there would be no measurable impact on Medi-Cal as a result of this bill.
         2. The California Public Employees' Retirement System (CalPERS). CHBRP estimates no measureable impact on enrollees in state-regulated CalPERS plans since CalPERS currently covers hearing aids.
         3. Number of Uninsured in California. According to CHBRP, this bill would have no measureable impact projected on the number of uninsured in California.
      3. EHBs. Coverage required by this bill could be interpreted to exceed EHBs as this benefit is not included in the state’s benchmark plan. CHBRP estimates the total state-responsibility in the first year could be $2.1 million to $3.07 million. CHBRP estimates that the state could be required to defray the following (net of baseline coverage offsets) amounts due to this bill: (1) $0.12 per member, per month (PMPM) for each QHP enrollee in a small-group DMHC-regulated plan; (2) $0.08 PMPM for each QHP enrollee in an individual market DMHC-regulated plan; (3) $0.07 PMPM for each QHP enrollee in a small-group CDI-regulated policy; and, $0.08 PMPM for each QHP enrollee in an individual market CDI-regulated policy.
      4. 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. CHBRP estimates that currently, approximately 49.1% of enrollees (or 3,561,000) aged 0 to 17 years in California with health insurance have coverage that is compliant with this bill. This estimate includes children in both privately funded Health Insurance in California and publicly funded health insurance products regulated by DMHC or CDI. CHBRP estimates that approximately: (1) 11% of enrollees aged 0 to 17 in privately funded products have coverage for hearing aids and services; and, (2) 100% of enrollees aged 0 to 17 in publicly funded plans have coverage for hearing aids and services. Postmandate, 100% of enrollees aged 0 to 17 with health insurance would have mandate-compliant coverage of hearing aids.
    2. Utilization. According to CHBRP, 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 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 aged 0 to 17 postmandate is estimated at 1.2%. CHBRP estimates that an additional 195 children needing hearing aids or services would be newly covered under this bill in the first year. 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. 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 $1,825 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.

• • 1. Public health. According to CHBRP, 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 is unknown. However, CHBRP points out that those who use hearing aids at a young age and maintain their communication skills into adulthood would experience improved outcomes as compared with those not using hearing aids.
    2. Long-term impacts. CHBRP estimates this bill would have minimal impacts on utilization. Premium expenditures by payer will 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. Other States. Colorado, Delaware, Georgia, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, Tennessee, and Texas require that health benefits plans in their state pay for hearing aids for children. Arkansas, Connecticut, Illinois, New Hampshire, and Rhode Island require coverage for both children and adults. Wisconsin requires coverage for both hearing aids and cochlear implants for children. Requirements vary state by state for ages covered, amount of coverage, benefit period, and provider qualifications.

California’s proposed legislation is most similar to Colorado’s law. Under Colorado’s law, effective January 1, 2009, 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. Hearing Screening. California law requires screening for hearing loss among children, first at birth in the Newborn Hearing Screening Program and subsequently at school age (for students in the public school system). There is no existing law mandating any kind of coverage for hearing aids for private insurance. 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 medical conditions, including hearing loss. Children may also qualify for CCS by meeting certain age, residence, medical, and financial requirements.

1. SUPPORT. American Academy of Pediatrics, California, states that this bill would align with current coverage standards that exist through CCS, and would help ensure that all California children who are deaf or hard-of-hearing are able to access sound for development of spoken language, access education, socialize with friends and family members, and go about daily tasks without the impediments associated with untreated permanent hearing loss, which would in turn contribute to a marked improvement in their health and well-being. Children’s Specialty Care Coalition states that while all newborns in California are screened for hearing status under the Newborn Hearing Screening Program, the vast majority of children with private health insurance do not have coverage for hearing aids. Early diagnosis of a child’s hearing status and quick intervention is critical to developing language and improving speech outcomes.
2. SUPPORT IF AMENDED. The California Association of Health Underwriters would move to a support position if this new benefit mandate is amended to include appropriate cost containment measures to ensure that other policyholders do not face unnecessary premium rate increases.
3. OPPOSITION. The California Association of Health Plans (CAHP), the Association of California Life and Health Insurance Companies (ACLHIC), and America’s Health Insurance Plans (AHIP) oppose state mandates as it would increase costs of coverage, especially for families who buy coverage without subsidies, small business owners who cannot or do not wish to self-insure, and California taxpayers who foot the bill for the state’s share of those mandates. According to CAHP, ACLHIC, and AHIP, with the elimination of the federal individual mandate, Covered California reported that new enrollment growth dropped by 24% and the average benchmark premium rose by 7.7% from 2018 to 2019. The repeal of the individual mandate has already caused increased premiums and coverage losses, and these mandates would further exacerbate the situation.
4. PREVIOUS LEGISLATION.
   1. AB 1601 (Bloom) of 2017 and AB 2004 (Bloom) of 2016 are substantially similar to this bill. AB 1601 was held in Assembly Appropriations Committee. 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 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

American Academy Of Pediatrics, California

Burbank Audiology Center

California Academy of Audiology

California Children's Hospital Association

California Educators of the Deaf

California Hands & Voices

California Speech & Hearing Association

California Speech Language Hearing Association

California Teachers Association

Center for Early Intervention on Deafness

Children Now

Children’s Choice for Hearing and Talking Sacramento

Children's Specialty Care Coalition

Echo Center/Echo Horizon School

Hearing Health Foundation

Hearing Healthcare Providers/California

Hearing Loss Association of America, California Chapter

John Tracy Clinic

Knights of Columbus, Southern California Chapter

Let America Hear

Let California Kids Hear

Let California Kids Hear Coalition

No Limits

SELPA Administrators of California

Speech Language Pathology & Audiology & Hearing Aid Dispensers Board

UC San Diego School of Medicine, Rady’s Children’s Specialists

UCSF Benioff Children’s Hospital, Oakland

UCSF Department of Otolaryngology-Head and Neck Surgery

University of Southern California

Weingarten Children’s Center

Opposition

America's Health Insurance Plans
Association of California Life & Health Insurance Companies
California Association of Health Plans

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

Date of Hearing: April 23, 2019

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 598

Author:(Bloom) – As Introduced Ver:February 14, 2019

SUBJECT: Hearing aids: minors.

SUMMARY: Requires a health care service plan (health plan) contract or a health insurance to include coverage for hearing aids, as defined, for an enrollee or insured under 18 years of age, as specified. Specifically, this bill:

1. Requires a health plan contract or a health insurance policy issued, amended, or renewed on or after January 1, 2020, to include coverage for hearing aids, as defined, for an enrollee or insured under 18 years of age, as specified.
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 designed to aid or compensate for impaired human hearing and any parts, attachments, or accessories, including earmolds, but excluding batteries and cords, and includes both hearing aids traditionally worn behind the ear and auditory osseointegrated devices, whether implanted or worn externally.
4. Excludes Medicare supplement, dental-only, or vision-only health plan contracts.

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 10 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, in state government, California’s Health Benefit Exchange (Exchange), or Covered California, as an independent public entity not affiliated with an agency or department, and requires the Exchange to compare and make available through selective contracting, health insurance for individual and small business purchasers, as authorized under the ACA. Specifies the powers and duties of the board governing the Exchange, and requires the board to facilitate the purchase of qualified health plans (QHPs) though the Exchange by qualified individuals and small employers.
6. 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. 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 improve speech and spoken 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. A pair of hearing aids costs, on average, between $3,000 and $4,000. These devices must be replaced frequently for growing children, causing costs to quickly spiral. Parents will often go to great lengths, such as depleting their savings, to pay for their hearing aids. When unable to find funds, they often delay necessary maintenance or replacement hearing aids. It is unconscionable that California can continue to expect families to make this sacrifice. This bill will ensure that all California children, regardless of income or background, have health insurance coverage for hearing aids.
2. BACKGROUND.
   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 all state-regulated coverage (24.49 million Californians) would be subject to this bill, 7.258 million of whom are age 0–17 years.
      2. Impact on expenditures. CHBRP estimates that this bill would increase total net annual expenditures by $2.7million 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 incurred an estimated $13.6 million in out-of-pocket expenses. Postmandate, that $13.6 million in out-of-pocket expenses would be shifted to health plans and insurers. However, enrollees would incur $2.5 million in copayments for the newly covered benefits (enrollee out-of-pocket expenses for covered benefits).
         1. Medi-Cal. Because children in Medi-Cal (both fee-for-service and Medi-Cal Managed Care) receive medically necessary hearing aid services through California Children’s Services, there would be no measurable impact on Medi-Cal as a result of this bill.
         2. The California Public Employees' Retirement System (CalPERS). CHBRP estimates no measureable impact on enrollees in state-regulated CalPERS plans since CalPERS currently covers hearing aids.
         3. Number of Uninsured in California. According to CHBRP, this bill would have no measureable impact projected on the number of uninsured in California.
      3. EHBs. Coverage required by this bill could be interpreted to exceed EHBs as this benefit is not included in the state’s benchmark plan. CHBRP estimates the total state-responsibility in the first year could be $2.1 million to $3.07 million. CHBRP estimates that the state could be required to defray the following (net of baseline coverage offsets) amounts due to this bill: (1) $0.12 per member, per month (PMPM) for each QHP enrollee in a small-group DMHC-regulated plan; (2) $0.08 PMPM for each QHP enrollee in an individual market DMHC-regulated plan; (3) $0.07 PMPM for each QHP enrollee in a small-group CDI-regulated policy; and, $0.08 PMPM for each QHP enrollee in an individual market CDI-regulated policy.
      4. 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. CHBRP estimates that currently, approximately 49.1% of enrollees (or 3,561,000) aged 0 to 17 years in California with health insurance have coverage that is compliant with this bill. This estimate includes children in both privately funded Health Insurance in California and publicly funded health insurance products regulated by DMHC or CDI. CHBRP estimates that approximately: (1) 11% of enrollees aged 0 to 17 in privately funded products have coverage for hearing aids and services; and, (2) 100% of enrollees aged 0 to 17 in publicly funded plans have coverage for hearing aids and services. Postmandate, 100% of enrollees aged 0 to 17 with health insurance would have mandate-compliant coverage of hearing aids.
    2. Utilization. According to CHBRP, 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 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 aged 0 to 17 postmandate is estimated at 1.2%. CHBRP estimates that an additional 195 children needing hearing aids or services would be newly covered under this bill in the first year. 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. 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 $1,825 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.

• • 1. Public health. According to CHBRP, 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 is unknown. However, CHBRP points out that those who use hearing aids at a young age and maintain their communication skills into adulthood would experience improved outcomes as compared with those not using hearing aids.
    2. Long-term impacts. CHBRP estimates this bill would have minimal impacts on utilization. Premium expenditures by payer will 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. Other States. Colorado, Delaware, Georgia, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, Tennessee, and Texas require that health benefits plans in their state pay for hearing aids for children. Arkansas, Connecticut, Illinois, New Hampshire, and Rhode Island require coverage for both children and adults. Wisconsin requires coverage for both hearing aids and cochlear implants for children. Requirements vary state by state for ages covered, amount of coverage, benefit period, and provider qualifications.

California’s proposed legislation is most similar to Colorado’s law. Under Colorado’s law, effective January 1, 2009, 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. Hearing Screening. California law requires screening for hearing loss among children, first at birth in the Newborn Hearing Screening Program and subsequently at school age (for students in the public school system). There is no existing law mandating any kind of coverage for hearing aids for private insurance. 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 medical conditions, including hearing loss. Children may also qualify for CCS by meeting certain age, residence, medical, and financial requirements.

1. SUPPORT. American Academy of Pediatrics, California, states that this bill would align with current coverage standards that exist through CCS, and would help ensure that all California children who are deaf or hard-of-hearing are able to access sound for development of spoken language, access education, socialize with friends and family members, and go about daily tasks without the impediments associated with untreated permanent hearing loss, which would in turn contribute to a marked improvement in their health and well-being. Children’s Specialty Care Coalition states that while all newborns in California are screened for hearing status under the Newborn Hearing Screening Program, the vast majority of children with private health insurance do not have coverage for hearing aids. Early diagnosis of a child’s hearing status and quick intervention is critical to developing language and improving speech outcomes.
2. SUPPORT IF AMENDED. The California Association of Health Underwriters would move to a support position if this new benefit mandate is amended to include appropriate cost containment measures to ensure that other policyholders do not face unnecessary premium rate increases.
3. OPPOSITION. The California Association of Health Plans (CAHP), the Association of California Life and Health Insurance Companies (ACLHIC), and America’s Health Insurance Plans (AHIP) oppose state mandates as it would increase costs of coverage, especially for families who buy coverage without subsidies, small business owners who cannot or do not wish to self-insure, and California taxpayers who foot the bill for the state’s share of those mandates. According to CAHP, ACLHIC, and AHIP, with the elimination of the federal individual mandate, Covered California reported that new enrollment growth dropped by 24% and the average benchmark premium rose by 7.7% from 2018 to 2019. The repeal of the individual mandate has already caused increased premiums and coverage losses, and these mandates would further exacerbate the situation.
4. PREVIOUS LEGISLATION.
   1. AB 1601 (Bloom) of 2017 and AB 2004 (Bloom) of 2016 are substantially similar to this bill. AB 1601 was held in Assembly Appropriations Committee. 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 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.
5. AUTHOR’S AMENDMENTS.

REGISTERED SUPPORT / OPPOSITION:

Support

American Academy Of Pediatrics, California

Burbank Audiology Center

California Academy of Audiology

California Children's Hospital Association

California Educators of the Deaf

California Hands & Voices

California Speech & Hearing Association

California Speech Language Hearing Association

California Teachers Association

Center for Early Intervention on Deafness

Children Now

Children’s Choice for Hearing and Talking Sacramento

Children's Specialty Care Coalition

Echo Center/Echo Horizon School

Hearing Health Foundation

Hearing Healthcare Providers/California

Hearing Loss Association of America, California Chapter

John Tracy Clinic

Knights of Columbus, Southern California Chapter

Let America Hear

Let California Kids Hear

Let California Kids Hear Coalition

No Limits

SELPA Administrators of California

Speech Language Pathology & Audiology & Hearing Aid Dispensers Board

UC San Diego School of Medicine, Rady’s Children’s Specialists

UCSF Benioff Children’s Hospital, Oakland

UCSF Department of Otolaryngology-Head and Neck Surgery

University of Southern California

Weingarten Children’s Center

Opposition

America's Health Insurance Plans
Association of California Life & Health Insurance Companies
California Association of Health Plans

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