Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care. Existing law requires a health care service plan to meet specified requirements, and requires a health care service plan contract to provide to subscribers and enrollees specified basic health care services.

This bill would make technical, nonsubstantive changes to those provisions.

 THIRD READING  

Bill No: AB 2914

Author: Bonta (D)

Amended: 4/10/24 in Assembly

Vote: 21

SENATE HEALTH COMMITTEE: 11-0, 7/3/24

AYES: Roth, Nguyen, Glazer, Gonzalez, Grove, Hurtado, Limón, Menjivar, Rubio, Smallwood-Cuevas, Wiener

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 71-0, 5/16/24 (Consent) - See last page for vote

SUBJECT: Health care coverage: essential health benefits

SOURCE: Author

DIGEST:

This bill sunsets the Kaiser Foundation Health Plan Small Group HMO 30 plan as California’s Essential Health Benefit benchmark for individual and small group health plan contracts and health insurance policies after the 2026 plan year.

ANALYSIS:

Existing law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans under the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act); California Department of Insurance (CDI) to regulate health and other insurance; and, the Department of Health Care Services (DHCS) to administer the Medi-Cal program. [Health and Safety Code (HSC) §1340, et seq., Insurance Code (INS) §106, et seq., and Welfare and Institutions Code (WIC) §14000, et seq.]
2. Requires an individual or small group health plan contract or insurance policy issued, amended, or renewed on or after January 1, 2017, to include at a minimum, coverage for essential health benefits (EHBs) pursuant to the Patient Protection and Affordable Care Act (ACA), and as outlined below. Health benefits within the categories identified in the ACA:
   1. Ambulatory patient services.
   2. Emergency services.
   3. Hospitalization.
   4. Maternity and newborn care.
   5. Mental health and substance use disorder services.
   6. Prescription drugs.
   7. Rehabilitative and habilitative services and devices.
   8. Laboratory services.
   9. Preventive and wellness services and chronic disease management.
   10. Pediatric services, including oral and vision care.
   11. Health benefits covered by the Kaiser Foundation Health Plan Small Group HMO 30 (Kaiser Small Group HMO), as this plan was offered during the first quarter of 2014, regardless of whether the benefits are specifically referenced in the evidence of coverage or plan contract for that plan.
   12. Medically necessary basic health care services, as specified.
   13. Health benefits mandated to be covered by the plan pursuant to statutes enacted before December 31, 2011, as described.
   14. Health benefits covered by the plan that are not otherwise required to be covered, as specified. [HSC §1367.005 and INS §10112.27]
3. Requires pediatric vision care to be the same health benefits for pediatric vision care covered under the Federal Employees Dental and Vision Insurance Program vision plan with the largest national enrollment as of the first quarter of 2014. [HSC §1367.005 and INS §10112.27]
4. Requires pediatric oral care to be the same health benefits for pediatric oral care covered under the dental benefit received by children under the Medi-Cal program as of 2014, including the provision of medically necessary orthodontic care provided pursuant to the federal Children’s Health Insurance Program Reauthorization Act of 2009. [HSC §1367.005 and INS §10112.27]
5. Defines “habilitative services” to mean 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. Requires habilitative services to be covered under the same terms and conditions applied to rehabilitative services under the plan contract. [HSC §1367.005 and INS §10112.27]
6. Establishes federal EHB requirements including that the Secretary of the federal Department of Health and Human Services (DHHS) not make coverage decisions, determine reimbursement rates, establish incentive program, or design benefits in ways that discriminate against individuals because of their age, disability, or expected length of life. [Title 42 United States Code §18022]

This bill:

1. Sunsets the Kaiser Small Group HMO plan, as offered in 2014, as California’s EHB benchmark plan.
2. States legislative intent to review California’s EHB and establish a new benchmark plan for the 2027 plan year.

Comments

1. Author’s statement. According to the author, this bill states the intent of the Legislature to consider a new benchmark plan for California’s EHBs. California’s benchmark plan does not currently include hearing aids for children or durable medical equipment (DME) that will allow individuals to use such DMEs outside of the home, even if medically necessary. This bill will allow California to consider new benefits that must be covered as an EHB and will avoid having the state to defray the cost of additional benefits that exceed the EHB.
2. California’s benchmark plan. California’s current benchmark plan is the Kaiser Small Group HMO plan. The benchmark plan and other state mandates existing prior to December 31, 2011 are used to determine EHBs. Any state mandate exceeding EHBs requires the state defray the costs associated with the mandate. California last reviewed its benchmark plan in 2015. At that time, the California Health Benefits Review Program (CHBRP) asked Milliman to analyze and compare the health services covered by the ten plans available to California as options for California’s EHB benchmark effective January 1, 2017, similar to an analysis completed for Covered California in 2012. Milliman found relatively small differences in average healthcare costs among the ten-benchmark options. Among the plan options, Milliman found differing coverage of acupuncture, infertility treatment, chiropractic care, and hearing aids. The three California small group plans were essentially the same average cost as the California EHB plan and the California large group and CalPERS plans were approximately 0.2% to 1% higher in cost. The estimated average costs for the three federal employee plan options was approximately 0.8% to 1.2% higher than the California EHB plan. On April 17, 2015, the Secretary of California’s Health and Human Services Agency sent a letter to the federal Center for Consumer Information and Insurance Oversight (CCIIO) selecting the same Kaiser Small Group Plan to remain as California’s benchmark plan. CMS has finalized new rules for EHB benchmark updates through the HHS Notice of Benefit and Payment Parameters for 2025.
3. California stakeholder process. DMHC is held a public meeting to discuss California’s EHBs and the process for updating the benchmark plan on June 27, 2024. Between June and August 2024, an analysis will be conducted of the current benchmark plan to determine the benefit allowance for the proposed benchmark plan and potential options and prices will be identified. Notification to the federal Department of Health and Human Services will take place in May of 2025 and the effective date of a new benchmark will be January 1, 2027.
4. Consumer advocate coalition. A coalition of consumer advocates submitted a letter to DMHC requesting a transparent benchmarking process with meaningful opportunity for public and stakeholder comment. The letter requests DMHC to engage in a holistic evaluation of current coverage requirements and plan practices in order to identify gaps that are contributing to health inequities. Additionally, the letter requests DMHC assess compliance with federal nondiscrimination requirements applying the correct legal standard. The letter urges the resulting proposed benchmark plan to improve current benchmark coverage without cutting or reducing benefits. Lastly, it indicates that DMHC should evaluate (and commission an actuarial report on) the addition of durable medical equipment, doula services, adult dental care, infertility treatment, behavioral health support services, over-the-counter naloxone, and community health workers.
5. Support if amended. The California Dental Association (CDA) writes that because adult dental was left out of the ACA, there is no minimum standard for dental coverage, and most dental plans have an annual maximum with no caps on patient out-of-pocket spending. Currently there is a significant variation across the dental insurance market of services covered and plan policies, but no standard benefits or “floor” required of plans. This often leaves consumers purchasing inadequate dental coverage, coverage inappropriate to their dental needs, or simply receiving little value for their premiums. CDA urges the state to clearly define a minimum dental benefit design to ensure consumers receive a meaningful benefit. We urge the state to consider at minimum the following items when considering a dental benefit design:
   1. A separate dental deductible for embedded dental benefits;
   2. No annual or lifetime limits on covered dental services; and,
   3. A reasonable annual out-of-pocket maximum.
6. Health plan comments. The California Association of Health Plans, which has no position on this bill, writes that while reopening California’s EHB package is not without its challenges, it offers policymakers the opportunity to engage in a more thoughtful and comprehensive analysis of affordability and accessibility to health care coverage. Together, health plans, legislators, and the administration can work on a logical approach to benefits and coverage, instead of continuing to introduce benefit mandate bills that increase premiums for everyone. This bill potentially offers this logical path. If California goes down the path of reopening the EHB package, it must keep in mind the work being done at the Office of Health Care Affordability (OHCA) within the Department of Health Care Access and Information. OHCA’s enabling statute emphasizes that it is in the public interest that all Californians receive health care that is accessible, affordable, equitable, high quality, and universal. As such, the OHCA board has adopted a Statewide Health Care Spending Target recommendation.

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

SUPPORT: (Verified 8/5/24)

California Chiropractic Association
Children Now
Children's Specialty Care Coalition

City of Santa Clarita
Crohn’s and Colitis Foundation
Health Access California
Let California Kids Hear Coalition
National Health Law Program

Western Center on Law and Poverty, Inc.

OPPOSITION: (Verified 8/5/24)

None received

ARGUMENTS IN SUPPORT: The California Chiropractic Association (CCA) writes that including chiropractic services in the EHB package would positively impact California enrollees as chiropractic care allows for a more cost-effective and holistic approach to primary care that aligns with the ACA’s intent. With so many benefits associated with chiropractic services, including nonpharmacologic treatment of pain, surgical avoidance, and reduced reliance on opioids, there is a growing public demand for integrative healthcare options, including chiropractic care. CCA is confident that once the actuarial analysis of the premium impact associated with the addition of chiropractic services is completed, it will be clear that California should join the other 46 states that already provide those benefits as part of their EHB package. Children Now and Let California Kids Hear write with recent federal EHB flexibilities and the introduction of this bill, California lawmakers now have the opportunity to update the benchmark, close the coverage gap, and ensure that all children in California have comprehensive coverage and services – including hearing aids – to meet their health and developmental needs. Thirty-two states already require that private individual and group health insurance plans include coverage for children’s hearing aids & services through a state insurance benefit mandate or by way of the state’s EHB benchmark selection, but California is not one of them. The Children’s Specialty Care Coalition writes it has been over a decade since the original EHB benchmark was determined by California lawmakers during implementation of the historic ACA. Unfortunately, there have been persistent coverage gaps, namely for children and youth who need hearing aids, which are not included as an EHB. Over 20,000 children and youth are in need of hearing aids, the costs of which are financially burdensome to most families. Failure to provide appropriate intervention to deaf and hard of hearing children by three to six months of age leads to speech, language, cognitive, educational, and social-emotional deficits and permanent delays. Health Access California believes a reexamination of our state’s benchmark plan is timely, necessary, and has potential to reduce health inequities and increase access to care. Though the current benchmark plan may have been a satisfactory choice when originally selected in 2014, in the ten years since, we have seen potential for leveraging the ACA to ensure consumers are covered for the care they need and have seen the impact and necessity of some services and benefits which are not included in the current benchmark and are therefore not covered EHBs.

ASSEMBLY FLOOR: 71-0, 5/16/24

AYES: Aguiar-Curry, Alanis, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Grayson, Haney, Hart, Holden, Hoover, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

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

8/14/24 14:03:13

**** END ****

 CONSENT  

Bill No: AB 2914

Author: Bonta (D)

Amended: 4/10/24 in Assembly

Vote: 21

SENATE HEALTH COMMITTEE: 11-0, 7/3/24

AYES: Roth, Nguyen, Glazer, Gonzalez, Grove, Hurtado, Limón, Menjivar, Rubio, Smallwood-Cuevas, Wiener

ASSEMBLY FLOOR: 71-0, 5/16/24 (Consent) - See last page for vote

SUBJECT: Health care coverage: essential health benefits

SOURCE: Author

DIGEST: This bill sunsets the Kaiser Foundation Health Plan Small Group HMO 30 plan as California’s Essential Health Benefit benchmark for individual and small group health plan contracts and health insurance policies after the 2026 plan year.

ANALYSIS:

Existing law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans under the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act); California Department of Insurance (CDI) to regulate health and other insurance; and, the Department of Health Care Services (DHCS) to administer the Medi-Cal program. [Health and Safety Code (HSC) §1340, et seq., Insurance Code (INS) §106, et seq., and Welfare and Institutions Code (WIC) §14000, et seq.]
2. Requires an individual or small group health plan contract or insurance policy issued, amended, or renewed on or after January 1, 2017, to include at a minimum, coverage for essential health benefits (EHBs) pursuant to the Patient Protection and Affordable Care Act (ACA), and as outlined below. Health benefits within the categories identified in the ACA:

a) Ambulatory patient services.

b) Emergency services.

c) Hospitalization.

d) Maternity and newborn care.

e) Mental health and substance use disorder services.

f) Prescription drugs.

g) Rehabilitative and habilitative services and devices.

h) Laboratory services.

i) Preventive and wellness services and chronic disease management.

j) Pediatric services, including oral and vision care.

k) Health benefits covered by the Kaiser Foundation Health Plan Small Group HMO 30 (Kaiser Small Group HMO), as this plan was offered during the first quarter of 2014, regardless of whether the benefits are specifically referenced in the evidence of coverage or plan contract for that plan.

l) Medically necessary basic health care services, as specified.

m) Health benefits mandated to be covered by the plan pursuant to statutes enacted before December 31, 2011, as described.

n) Health benefits covered by the plan that are not otherwise required to be covered, as specified. [HSC §1367.005 and INS §10112.27]

1. Requires pediatric vision care to be the same health benefits for pediatric vision care covered under the Federal Employees Dental and Vision Insurance Program vision plan with the largest national enrollment as of the first quarter of 2014. [HSC §1367.005 and INS §10112.27]
2. Requires pediatric oral care to be the same health benefits for pediatric oral care covered under the dental benefit received by children under the Medi-Cal program as of 2014, including the provision of medically necessary orthodontic care provided pursuant to the federal Children’s Health Insurance Program Reauthorization Act of 2009. [HSC §1367.005 and INS §10112.27]
3. Defines “habilitative services” to mean 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. Requires habilitative services to be covered under the same terms and conditions applied to rehabilitative services under the plan contract. [HSC §1367.005 and INS §10112.27]
4. Establishes federal EHB requirements including that the Secretary of the federal Department of Health and Human Services (DHHS) not make coverage decisions, determine reimbursement rates, establish incentive program, or design benefits in ways that discriminate against individuals because of their age, disability, or expected length of life. [Title 42 United States Code §18022]

This bill:

1. Sunsets the Kaiser Small Group HMO plan, as offered in 2014, as California’s EHB benchmark plan.
2. States legislative intent to review California’s EHB and establish a new benchmark plan for the 2027 plan year.

Comments

1. Author’s statement. According to the author, this bill states the intent of the Legislature to consider a new benchmark plan for California’s EHBs. California’s benchmark plan does not currently include hearing aids for children or durable medical equipment (DME) that will allow individuals to use such DMEs outside of the home, even if medically necessary. This bill will allow California to consider new benefits that must be covered as an EHB and will avoid having the state to defray the cost of additional benefits that exceed the EHB.
2. California’s benchmark plan. California’s current benchmark plan is the Kaiser Small Group HMO plan. The benchmark plan and other state mandates existing prior to December 31, 2011 are used to determine EHBs. Any state mandate exceeding EHBs requires the state defray the costs associated with the mandate. California last reviewed its benchmark plan in 2015. At that time, the California Health Benefits Review Program (CHBRP) asked Milliman to analyze and compare the health services covered by the ten plans available to California as options for California’s EHB benchmark effective January 1, 2017, similar to an analysis completed for Covered California in 2012. Milliman found relatively small differences in average healthcare costs among the ten-benchmark options. Among the plan options, Milliman found differing coverage of acupuncture, infertility treatment, chiropractic care, and hearing aids. The three California small group plans were essentially the same average cost as the California EHB plan and the California large group and CalPERS plans were approximately 0.2% to 1% higher in cost. The estimated average costs for the three federal employee plan options was approximately 0.8% to 1.2% higher than the California EHB plan. On April 17, 2015, the Secretary of California’s Health and Human Services Agency sent a letter to the federal Center for Consumer Information and Insurance Oversight (CCIIO) selecting the same Kaiser Small Group Plan to remain as California’s benchmark plan. CMS has finalized new rules for EHB benchmark updates through the HHS Notice of Benefit and Payment Parameters for 2025.
3. California stakeholder process. DMHC is held a public meeting to discuss California’s EHBs and the process for updating the benchmark plan on June 27, 2024. Between June and August 2024, an analysis will be conducted of the current benchmark plan to determine the benefit allowance for the proposed benchmark plan and potential options and prices will be identified. Notification to the federal Department of Health and Human Services will take place in May of 2025 and the effective date of a new benchmark will be January 1, 2027.
4. Consumer advocate coalition. A coalition of consumer advocates submitted a letter to DMHC requesting a transparent benchmarking process with meaningful opportunity for public and stakeholder comment. The letter requests DMHC to engage in a holistic evaluation of current coverage requirements and plan practices in order to identify gaps that are contributing to health inequities. Additionally, the letter requests DMHC assess compliance with federal nondiscrimination requirements applying the correct legal standard. The letter urges the resulting proposed benchmark plan to improve current benchmark coverage without cutting or reducing benefits. Lastly, it indicates that DMHC should evaluate (and commission an actuarial report on) the addition of durable medical equipment, doula services, adult dental care, infertility treatment, behavioral health support services, over-the-counter naloxone, and community health workers.
5. Support if amended. The California Dental Association (CDA) writes that because adult dental was left out of the ACA, there is no minimum standard for dental coverage, and most dental plans have an annual maximum with no caps on patient out-of-pocket spending. Currently there is a significant variation across the dental insurance market of services covered and plan policies, but no standard benefits or “floor” required of plans. This often leaves consumers purchasing inadequate dental coverage, coverage inappropriate to their dental needs, or simply receiving little value for their premiums. CDA urges the state to clearly define a minimum dental benefit design to ensure consumers receive a meaningful benefit. We urge the state to consider at minimum the following items when considering a dental benefit design:

a) A separate dental deductible for embedded dental benefits;

b) No annual or lifetime limits on covered dental services; and,

c) A reasonable annual out-of-pocket maximum.

1. Health plan comments. The California Association of Health Plans, which has no position on this bill, writes that while reopening California’s EHB package is not without its challenges, it offers policymakers the opportunity to engage in a more thoughtful and comprehensive analysis of affordability and accessibility to health care coverage. Together, health plans, legislators, and the administration can work on a logical approach to benefits and coverage, instead of continuing to introduce benefit mandate bills that increase premiums for everyone. This bill potentially offers this logical path. If California goes down the path of reopening the EHB package, it must keep in mind the work being done at the Office of Health Care Affordability (OHCA) within the Department of Health Care Access and Information. OHCA’s enabling statute emphasizes that it is in the public interest that all Californians receive health care that is accessible, affordable, equitable, high quality, and universal. As such, the OHCA board has adopted a Statewide Health Care Spending Target recommendation.

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

SUPPORT: (Verified 8/5/24)

California Chiropractic Association
Children Now
Children's Specialty Care Coalition

City of Santa Clarita
Crohn’s and Colitis Foundation
Health Access California
Let California Kids Hear Coalition
National Health Law Program

Western Center on Law and Poverty, Inc.

OPPOSITION: (Verified 8/5/24)

None received

ARGUMENTS IN SUPPORT: The California Chiropractic Association (CCA) writes that including chiropractic services in the EHB package would positively impact California enrollees as chiropractic care allows for a more cost-effective and holistic approach to primary care that aligns with the ACA’s intent. With so many benefits associated with chiropractic services, including nonpharmacologic treatment of pain, surgical avoidance, and reduced reliance on opioids, there is a growing public demand for integrative healthcare options, including chiropractic care. CCA is confident that once the actuarial analysis of the premium impact associated with the addition of chiropractic services is completed, it will be clear that California should join the other 46 states that already provide those benefits as part of their EHB package. Children Now and Let California Kids Hear write with recent federal EHB flexibilities and the introduction of this bill, California lawmakers now have the opportunity to update the benchmark, close the coverage gap, and ensure that all children in California have comprehensive coverage and services – including hearing aids – to meet their health and developmental needs. Thirty-two states already require that private individual and group health insurance plans include coverage for children’s hearing aids & services through a state insurance benefit mandate or by way of the state’s EHB benchmark selection, but California is not one of them. The Children’s Specialty Care Coalition writes it has been over a decade since the original EHB benchmark was determined by California lawmakers during implementation of the historic ACA. Unfortunately, there have been persistent coverage gaps, namely for children and youth who need hearing aids, which are not included as an EHB. Over 20,000 children and youth are in need of hearing aids, the costs of which are financially burdensome to most families. Failure to provide appropriate intervention to deaf and hard of hearing children by three to six months of age leads to speech, language, cognitive, educational, and social-emotional deficits and permanent delays. Health Access California believes a reexamination of our state’s benchmark plan is timely, necessary, and has potential to reduce health inequities and increase access to care. Though the current benchmark plan may have been a satisfactory choice when originally selected in 2014, in the ten years since, we have seen potential for leveraging the ACA to ensure consumers are covered for the care they need and have seen the impact and necessity of some services and benefits which are not included in the current benchmark and are therefore not covered EHBs.

ASSEMBLY FLOOR: 71-0, 5/16/24

AYES: Aguiar-Curry, Alanis, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Grayson, Haney, Hart, Holden, Hoover, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

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

8/6/24 16:19:14

**** END ****

SENATE COMMITTEE ON HEALTH

Senator Richard Roth, Chair

BILL NO: AB 2914

SUBJECT: Health care coverage: essential health benefits

SUMMARY:

Sunsets the Kaiser Foundation Health Plan Small Group HMO 30 plan as California’s Essential Health Benefit benchmark for individual and small group health plan contracts and health insurance policies after the 2026 plan year.

Existing law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans under the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act); California Department of Insurance (CDI) to regulate health and other insurance; and, the Department of Health Care Services (DHCS) to administer the Medi-Cal program. [HSC §1340, et seq., INS §106, et seq., and WIC §14000, et seq.]
   
2. Requires an individual or small group health plan contract or insurance policy issued, amended, or renewed on or after January 1, 2017, to include at a minimum, coverage for essential health benefits (EHBs) pursuant to the Patient Protection and Affordable Care Act (ACA), and as outlined below:
   1. Health benefits within the categories identified in the ACA:
   2. Ambulatory patient services;
   3. Emergency services;
   4. Hospitalization;
   5. Maternity and newborn care;
   6. Mental health and substance use disorder services;
   7. Prescription drugs;
   8. Rehabilitative and habilitative services and devices;
   9. Laboratory services;
   10. Preventive and wellness services and chronic disease management; and,
   11. Pediatric services, including oral and vision care;
   12. Health benefits covered by the Kaiser Foundation Health Plan Small Group HMO 30 (Kaiser Small Group HMO), as this plan was offered during the first quarter of 2014, regardless of whether the benefits are specifically referenced in the evidence of coverage or plan contract for that plan;
   13. Medically necessary basic health care services, as specified;
   14. Health benefits mandated to be covered by the plan pursuant to statutes enacted before December 31, 2011, as described; and,
   15. Health benefits covered by the plan that are not otherwise required to be covered, as specified. [HSC §1367.005 and INS §10112.27]
       
3. Requires pediatric vision care to be the same health benefits for pediatric vision care covered under the Federal Employees Dental and Vision Insurance Program vision plan with the largest national enrollment as of the first quarter of 2014. [HSC §1367.005 and INS §10112.27]
   
4. Requires pediatric oral care to be the same health benefits for pediatric oral care covered under the dental benefit received by children under the Medi-Cal program as of 2014, including the provision of medically necessary orthodontic care provided pursuant to the federal Children’s Health Insurance Program Reauthorization Act of 2009. [HSC §1367.005 and INS §10112.27]
   
5. Defines “habilitative services” to mean 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. Requires habilitative services to be covered under the same terms and conditions applied to rehabilitative services under the plan contract. [HSC §1367.005 and INS §10112.27]
   
6. Establishes federal EHB requirements including that the Secretary of the federal Department of Health and Human Services (HHS) not make coverage decisions, determine reimbursement rates, establish incentive program, or design benefits in ways that discriminate against individuals because of their age, disability, or expected length of life. [42 U.S.C. §18022]
   

This bill:

1. Sunsets the Kaiser Small Group HMO plan, as offered in 2014, as California’s EHB benchmark plan.
   
2. States legislative intent to review California’s EHB and establish a new benchmark plan for the 2027 plan year.

FISCAL EFFECT:

No costs to the DMHC and CDI.

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, this bill states the intent of the Legislature to consider a new benchmark plan for California’s EHBs. California’s benchmark plan does not currently include hearing aids for children or durable medical equipment (DME) that will allow individuals to use such DMEs outside of the home, even if medically necessary. This bill will allow California to consider new benefits that must be covered as an EHB and will avoid having the state to defray the cost of additional benefits that exceed the EHB.
2. California’s benchmark plan. California’s current benchmark plan is the Kaiser Small Group HMO plan. The benchmark plan and other state mandates existing prior to December 31, 2011 are used to determine EHBs. Any state mandate exceeding EHBs requires the state defray the costs associated with the mandate. California last reviewed its benchmark plan in 2015. At that time, the California Health Benefits Review Program (CHBRP) asked Milliman to analyze and compare the health services covered by the ten plans available to California as options for California’s EHB benchmark effective January 1, 2017, similar to an analysis completed for Covered California in 2012. Milliman found relatively small differences in average healthcare costs among the ten benchmark options. Among the plan options, Milliman found differing coverage of acupuncture, infertility treatment, chiropractic care, and hearing aids. The three California small group plans were essentially the same average cost as the California EHB plan and the California large group and CalPERS plans were approximately 0.2% to 1% higher in cost. The estimated average costs for the three federal employee plan options was approximately 0.8% to 1.2% higher than the California EHB plan. On April 17, 2015, the Secretary of California’s Health and Human Services Agency sent a letter to the federal Center for Consumer Information and Insurance Oversight (CCIIO) selecting the same Kaiser Small Group Plan to remain as California’s benchmark plan.
3. Updating EHBs. According to a 2022 CHBRP brief on EHBs, federal HHS issued final rules in 2018 and 2019, which provided new flexibility for states by allowing three new options for the EHB benchmark plan, in addition to the option of retaining the current EHB benchmark plan. Beginning with the 2020 plan year, states could: 1) select an EHB benchmark plan used by another state for the 2017 plan year; 2) replace one or more of the ten EHB categories in the state’s EHB benchmark plan with the same category or categories of EHBs from another state’s 2017 EHB benchmark plan; or, 3) otherwise select a set of benefits that would become the state’s EHB benchmark plan. At a minimum, the EHB benchmark plan must provide a scope of benefits equal to or greater than a typical employer plan. Furthermore, a new “generosity test” requires that EHBs cannot exceed the generosity of the most generous among the set of ten previous 2017 benchmark comparison plan options. A mandate that is added through the benchmark plan process is not subject to the requirement that the state defray those mandate costs if it is not a state mandated benefit enacted after December 31, 2011. According to the CMS website, for plan years between 2020 and 2025, nine states have updated their EHB benchmark plans.
4. Updated process rules. CMS has finalized new rules for EHB benchmark updates through the HHS Notice of Benefit and Payment Parameters for 2025. As part of this update, CMS removed a regulatory prohibition on plans and insurers from including routine non-pediatric dental services as an EHB. This allows states to add routine adult dental services as an EHB by updating their EHB benchmark plans. For plan years beginning on or after January 1, 2026, CMS has approved three revisions to the standards for state selection of EHB-benchmark plans to address long-standing requests from states to improve, and reduce the burden of, the EHB-benchmark plan update process. First, CMS will allow states to consolidate the options for states to change EHB-benchmark plans such that a state may change its EHB-benchmark plan by selecting a set of benefits that would become the state’s EHB-benchmark plan. Any changes to state EHB-benchmark plan options would also be applicable to states when choosing a benchmark plan used to define EHBs in a state Basic Health Programs (BHPs) established under section 1331 of the ACA and Medicaid Alternative Benefit Plans (ABPs) implemented pursuant to section 1937 of the ACA. Second, CMS has removed the generosity standard and revised the typicality standard so that, in demonstrating that a state’s new EHB-benchmark plan provides a scope of benefits that is equal to the scope of benefits of a typical employer plan in the state, the scope of benefits of a typical employer plan in the state would be defined as any scope of benefits that is as or more generous than the scope of benefits in the state’s least generous typical employer plan, and as or less generous than the scope of benefits in the state’s most generous typical employer plan. Third, CMS removed the requirement for states to submit a formulary drug list as part of their documentation to change EHB-benchmark plans unless the state changes its prescription drug EHBs.
5. California stakeholder process. DMHC is held a public meeting to discuss California’s EHBs and the process for updating the benchmark plan on June 27, 2024. Between June and July 2024 an analysis will be conducted of the current benchmark plan to determine the benefit allowance for the proposed benchmark plan. In July through August potential options and prices will be identified. Notification to the federal Department of Health and Human Services will take place in May of 2025 and the effective date of a new benchmark will be January 1, 2027.
   
6. Related legislation. SB 1290 (Roth) is substantially similar to this bill. SB 1290 passed the Assembly Health Committee on June 25, 2024 on a vote of 16-0.
   

AB 1926 (Connolly) requires health plan contracts and health insurance policies to provide coverage for dietary enteral formulas for the treatment of regional enteritis. AB 1926 is in the Senate Appropriations Committee Suspense File.

AB 2753 (Ortega) requires, as part of EHBs, coverage of rehabilitative and habilitative services and devices to include durable medical equipment, services, and repairs, if the equipment, services, or repairs are prescribed or ordered by a physician, surgeon, or other health professional acting within the scope of their license. AB 2753 was held in the Assembly Appropriations Committee Suspense File.

1. Prior legislation. SB 635 (Menjivar of 2023) would have required coverage for hearing aids and related services for all enrollees and insureds under 21 years of age, if medically necessary; limited the maximum required coverage amount to $3,000 per individual hearing aid; and, prohibited covered hearing aids from being subject to a coinsurance, deductible or copayment requirement, or, subject to financial or treatment limitations, including a dollar limit set below $3,000 per individual hearing aid. SB 635 was vetoed by the Governor. The Governor’s veto message states:

I am committed to ensuring that hearing impaired children have access to the services and supports they need, including hearing aids. Today, children can receive hearing aids and related services through the California Children's Services (CCS) program or through Medi-Cal. In July 2021, we launched the Hearing Aid Coverage for Children Program (HACCP) within the Department of Health Care Services (DHCS) for those who do not qualify for hearing aids through CCS or Medi-Cal.

HACCP was created to improve access and coverage for children's hearing aids, a shared goal of this proposed bill. Unlike HACCP, however, SB 635 would exceed the state's set of EHB, which are established by the state's benchmark plan under the provisions of the federal Affordable Care Act (ACA). As such, this bill's mandate would require the state to defray the costs of coverage in Covered California. This would not only increase ongoing state General Fund costs, but it would set a new precedent by adding requirements that exceed the benchmark plan. A pattern of new coverage mandate bills like this could open the state to millions to billions of dollars in new costs to cover services relating to other health conditions. This creates uncertainty for our healthcare system's affordability, particularly when we have developed an alternative program that can serve the target population.

That said, improving access to hearing aids for children is a priority for my Administration. We can, and we must, do better for these children and their families as we implement HACCP. To this end, I am directing my Administration to explore increases to Medi-Cal provider payments with the goal of incentivizing additional provider participation in HACCP, increasing access for youth in need of hearing aids.

In addition, DHCS has developed a comprehensive plan to increase provider participation and program enrollment. These improvements will enable HACCP to reach and serve more children, which is our shared goal.

Specifically, in the next six months, DHCS will take a variety of steps to help patients maximize benefits, including: (1) partnering with other state entities to promote participation and awareness of HACCP, (2) completing translations for HACCP related materials into 18 languages, (3) implementing a streamlined annual eligibility renewal process to simplify provider enrollment, (4) conducting outreach to Medi-Cal providers not yet participating in HACCP to support their participation, (5) hosting quarterly webinars with providers and stakeholders, and (6) continuing to identify potential service improvements and strategies to increase program success.

Given the structural concerns this bill presents to our healthcare system and the opportunity to improve the existing HACCP to accomplish the same objectives, I cannot sign this bill.

SB 729 (Menjivar of 2023) requires a large group health plan contract or insurance policy to provide, and a small group health plan or insurance policy to offer, coverage for the diagnosis and treatment of infertility and fertility services. SB 729 also revises the definition of infertility and requires fertility services to be provided without discrimination on the basis of specified characteristics. SB 729 is pending in the Assembly Appropriations Committee.

AB 620 (Connolly of 2023) would have required coverage for treatment of chronic digestive diseases, including, but not limited to, Crohn's disease, and inherited metabolic disorders, to include those formulas, including nutritional drinks, that are part of a diet prescribed by a licensed physician and managed by a health care professional in consultation with a physician who specializes in the treatment of chronic digestive diseases and inherited metabolic disorders and who participates in or is authorized by the health plan or insurer, provided that the diet is deemed medically necessary to avert the development of serious physical or mental disabilities or to promote normal development or function as a consequence of chronic digestive diseases and inherited metabolic disorders. AB 620 was vetoed by the Governor. The veto message states:

While I support individuals with these conditions having access to the nutritional support they may need, I am concerned this bill would exceed the state's set of EHB (EHBs), which are established by the state's benchmark plan under the provisions of the federal Affordable Care Act (ACA). As such, this bill's mandate would require the state to defray the costs of coverage in Covered California. This would not only increase ongoing state General Fund costs, but it would set a new precedent by adding requirements that exceed the benchmark plan. A pattern of new coverage mandate bills like this could open the state to millions to billions of dollars in new costs to cover services relating to other health conditions. This creates uncertainty for our healthcare system's affordability.

AB 1060 (Ortega of 2023) would have required coverage for prescription and nonprescription naloxone hydrochloride and all other drugs or products approved by the U.S. Food and Drug Administration (FDA) for the complete or partial reversal of an opioid overdose. This bill limits cost-sharing and coinsurance to not more than $10 per package, and, sunsets on January 1, 2030. AB 1060 was vetoed by the Governor. The veto message states:

Combating the opioid crisis is one of my top priorities. I appreciate the author's shared commitment to this critical public health and public safety imperative. Together with the Legislature, we have invested more than $1 billion to combat overdoses, support those with opioid use disorder, raise awareness, and crack down on trafficking. Further, the 2023 Budget Act included $30 million for the CalRx Naloxone Access Initiative, to support partners in developing, manufacturing, procuring, and distributing a low-cost naloxone nasal product.

While I support providing access to opioid antagonists to individuals with opioid use disorder or other risk factors, this bill would exceed the state's set of EHB, which are established by the state's benchmark plan under the provisions of the federal Affordable Care Act (ACA). As such, this bill's mandate would require the state to defray the costs of coverage in Covered California. This would not only increase ongoing state General Fund costs, but it would set a new precedent by adding requirements that exceed the benchmark plan. A pattern of new coverage mandate bills like this could open the state to millions to billions of dollars in new costs to cover services relating to other health conditions. This creates uncertainty for our healthcare system's affordability.

AB 1157 (Ortega of 2023) would have included, as a mandated California EHB under the rehabilitative and habilitative services and devices benefit, coverage of durable medical equipment, as specified. AB 1157 was held in the Senate Appropriations Committee.

SB 43 (Hernandez, Chapter 648, Statutes of 2015) updates California’s EHB law to make it consistent with new federal requirements promulgated under the ACA, which includes adoption of the federally required definition of habilitative services and devices.

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

1. Support. The California Chiropractic Association (CCA) writes that including chiropractic services in the EHB package would positively impact California enrollees as chiropractic care allows for a more cost-effective and holistic approach to primary care that aligns with the ACA’s intent. With so many benefits associated with chiropractic services, including nonpharmacologic treatment of pain, surgical avoidance, and reduced reliance on opioids, there is a growing public demand for integrative healthcare options, including chiropractic care. CCA is confident that once the actuarial analysis of the premium impact associated with the addition of chiropractic services is completed, it will be clear that California should join the other 46 states that already provide those benefits as part of their EHB package. Children Now and Let California Kids Hear write with recent federal EHB flexibilities and the introduction of this bill, California lawmakers now have the opportunity to update the benchmark, close the coverage gap, and ensure that all children in California have comprehensive coverage and services – including hearing aids – to meet their health and developmental needs. Thirty-two states already require that private individual and group health insurance plans include coverage for children’s hearing aids & services through a state insurance benefit mandate or by way of the state’s EHB benchmark selection, but California is not one of them. The Children’s Specialty Care Coalition writes it has been over a decade since the original EHB benchmark was determined by California lawmakers during implementation of the historic ACA. Unfortunately, there have been persistent coverage gaps, namely for children and youth who need hearing aids, which are not included as an EHB. Over 20,000 children and youth are in need of hearing aids, the costs of which are financially burdensome to most families. Failure to provide appropriate intervention to deaf and hard of hearing children by three to six months of age leads to speech, language, cognitive, educational, and social-emotional deficits and permanent delays. Health Access California believes a reexamination of our state’s benchmark plan is timely, necessary, and has potential to reduce health inequities and increase access to care. Though the current benchmark plan may have been a satisfactory choice when originally selected in 2014, in the ten years since, we have seen potential for leveraging the ACA to ensure consumers are covered for the care they need and have seen the impact and necessity of some services and benefits which are not included in the current benchmark and are therefore not covered EHBs.
   
2. Support if amended. The California Dental Association writes that because adult dental was left out of the ACA, there is no minimum standard for dental coverage, and most dental plans have an annual maximum with no caps on patient out-of-pocket spending. Currently there is a significant variation across the dental insurance market of services covered and plan policies, but no standard benefits or “floor” required of plans. This often leaves consumers purchasing inadequate dental coverage, coverage inappropriate to their dental needs, or simply receiving little value for their premiums. CDA urges the state to clearly define a minimum dental benefit design to ensure consumers receive a meaningful benefit. We urge the state to consider at minimum the following items when considering a dental benefit design:
   1. A separate dental deductible for embedded dental benefits;
   2. No annual or lifetime limits on covered dental services; and,
   3. A reasonable annual out-of-pocket maximum.
3. Other. The California Association of Health Plans, which has no position on this bill, writes that while reopening California’s EHB package is not without its challenges, it offers policymakers the opportunity to engage in a more thoughtful and comprehensive analysis of affordability and accessibility to health care coverage. Together, health plans, legislators, and the administration can work on a logical approach to benefits and coverage, instead of continuing to introduce benefit mandate bills that increase premiums for everyone. This bill potentially offers this logical path. If California goes down the path of reopening the EHB package, it must keep in mind the work being done at the Office of Health Care Affordability (OHCA) within the Department of Health Care Access and Information. OHCA’s enabling statute emphasizes that it is in the public interest that all Californians receive health care that is accessible, affordable, equitable, high quality, and universal. As such, the OHCA board has adopted a Statewide Health Care Spending Target recommendation.
   

SUPPORT AND OPPOSITION:

Support: California Chiropractic Association
Children Now
Children's Specialty Care Coalition
Crohn’s and Colitis Foundation
Health Access California
Let California Kids Hear Coalition
National Health Law Program

Western Center on Law and Poverty, Inc.

Oppose: None received

-- END --

Date of Hearing: May 8, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2914

Author:(Bonta) – As Amended Ver:April 10, 2024

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

SUMMARY:

This bill expresses the intent of the Legislature to review California’s essential health benefits (EHBs) benchmark plan and establish a new EHB plan for the 2027 plan year, and limits the current EHB plan to the 2027 plan year or earlier.

FISCAL EFFECT:

No costs to the Department of Managed Health Care (DMHC) and the Department of Insurance.

COMMENTS

1. Purpose. According to the author:

This bill states the intent of the Legislature to consider a new benchmark plan for California’s EHBs. California’s benchmark plan does not currently include hearing aids for children or durable medical equipment (DME) that will allow individuals to use such DMEs outside of the home, even if medically necessary. This bill will allow California to consider new benefits that must be covered as an EHB and will avoid the state having to defray the cost of additional benefits that exceed the EHBs.

1. Background.
   1. Federal Affordable Care Act (ACA). Enacted in March 2010, the ACA expands access to quality, affordable insurance and health care and provides the framework, policies, regulations and guidelines for the implementation of comprehensive health care reform by the states. The ACA prohibits insurers from denying coverage or charging higher premiums based on preexisting conditions. The ACA, along with tax credits for low and middle income people buying insurance on their own in health benefit exchanges, make it easier for people with preexisting conditions to gain insurance coverage. Additionally, the ACA requires health plans sold in the individual and small group markets to offer a comprehensive package of items and services, known as EHBs. The federal government gave each state the authority to choose its “benchmark” plan.
   2. California’s EHBs. The federal Department of Health and Human Services (DHHS) defines EHB based on state-specific EHB benchmark plans. According to the California Health Benefits Review Program (CHBRP), the base-benchmark plan California selected for 2014, the Kaiser Foundation Health Plan Small Group HMO 30 plan, was the largest plan by enrollment in one of the three largest small-group insurance products in the state’s small-group market. California chose to supplement this plan with the pediatric oral benefit from its Children’s Health Insurance Program, and the pediatric vision benefits from a federal plan to create the EHB-benchmark plan. Additionally, California chose to define habilitative services and required that these services be provided “under the same terms and conditions applied to rehabilitative services.”
   3. New Benchmark Selection. In late 2023, DHHS published a proposed rule that would, among other things, allow states to mandate new benefits without exceeding EHB or triggering the requirement that the state cover the costs of those new benefits (as explained below), if the state adopts a new benchmark plan that includes the new benefits. If enacted, this rule change would allow California to adopt a new benchmark plan that requires health plans to cover new benefits (such as hearing aids for children) without also incurring the cost for those benefits for on-Exchange enrollees. States must submit a proposed modified benchmark plan selection by the first Wednesday in May two years prior to the effective date of the new benchmark plan (i.e., by May 2024 for plan year beginning in 2026). Based on these time frames, the earliest that California could have a new benchmark plan in place is for plan year 2027.
      
      According to DMHC, federal law dictates the process a state must follow when selecting a new benchmark plan. These requirements include criteria for the “floor” and “ceiling” of benefit packages, benefits for diverse segments of the population and benefit designs that are not discriminatory, and submission of a formulary list, among others.
2. Related Legislation. SB 1290 (Roth) is substantially similar to this bill. SB 1290 is pending on the Senate Floor.

Analysis Prepared by: Allegra Kim / APPR. / (916) 319-2081

Date of Hearing: April 23, 2024

ASSEMBLY COMMITTEE ON HEALTH

Mia Bonta, Chair

ABPCA Bill Id:AB 2914 (

Author:(Bonta) – As Amended Ver:April 10, 2024

SUBJECT: Health care coverage: essential health benefits.

SUMMARY: Expresses the intent of the Legislature to review California’s essential health benefits (EHBs) benchmark plan and establish a new EHB plan for the 2027 plan year.

EXISTING LAW:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans under the Knox-Keene Health Care Service Plan Act of 1975 and the California Department of Insurance to regulate health insurers. [Health and Safety Code (HSC) §1340, et seq., and Insurance Code (INS) §106, et seq.]
2. Establishes as California's EHB benchmark under the federal Patient Protection and Affordable Care Act (ACA), the Kaiser Small Group Health Maintenance Organization contract, existing California health insurance mandates, and the 10 ACA mandated benefits. Specifies EHBs in the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; 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. [HSC §1367.005 and INS §10112.27]
3. Defines “basic health care services” as all of the following:
   1. Physician services, including consultation and referral;
   2. Hospital inpatient services and ambulatory care services;
   3. Diagnostic laboratory and therapeutic radiologic services;
   4. Home health services;
   5. Preventive health services;
   6. Emergency health care services, including ambulance and ambulance transport services and out-of-area coverage. Basic health care services includes ambulance and ambulance transport services provided through the 911 emergency response system; and,
   7. Hospice care. [HSC §1345]

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

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, this bill states the intent of the Legislature to consider a new benchmark plan for California’s EHBs. California’s benchmark plan does not currently include hearing aids for children or durable medical equipment (DME) that will allow individuals to use such DMEs outside of the home, even if medically necessary. The author concludes that this bill will allow California to consider new benefits that must be covered as an EHB and will avoid having the state to defray the cost of additional benefits that exceed the EHB.
2. BACKGROUND.
   1. ACA and federal requirements. Enacted in March 2010, the ACA provides the framework, policies, regulations and guidelines for the implementation of comprehensive health care reform by the states. The ACA expands access to quality, affordable insurance and health care. As of January 1, 2014, insurers are no longer able to deny coverage or charge higher premiums based on preexisting conditions. These aspects of the ACA, along with tax credits for low and middle income people buying insurance on their own in new health benefit exchanges, make it easier for people with preexisting conditions to gain insurance coverage. Additionally, the ACA requires health plans sold in the individual and small group markets to offer a comprehensive package of items and services, known as EHBs. The federal government gave each state the authority to choose its “benchmark” plan.
   2. California’s Current EHB. The federal Department of Health and Human Services (DHHS) define EHB based on State-specific EHB benchmark plans. The base-benchmark plan California selected for 2014 (Kaiser Foundation Health Plan Small Group HMO 30 plan) was the largest plan by enrollment in one of the three largest small-group insurance products in the state’s small-group market. According to the California Health Benefits Review Program (CHBRP), California chose to supplement this plan with the pediatric oral benefit from its Children’s Health Insurance Program, and the pediatric vision benefits from a federal plan to create the EHB-benchmark plan. Additionally, California chose to define habilitative services and required that these services be provided “under the same terms and conditions applied to rehabilitative services.”
   3. New Benchmark Selection. In late 2023, DHHS published a proposed rule that would, among other things, allow states to mandate new benefits without exceeding EHB or triggering the requirement that the state cover the costs of those new benefits (as explained below), if the state adopts a new benchmark plan that includes the new benefits. If enacted, this rule change would allow California to adopt a new benchmark plan that requires health plans to cover new benefits (such as hearing aids for children) without also incurring the cost for those benefits for on-Exchange enrollees. States must submit a proposed modified benchmark plan selection by the first Wednesday in May two years prior to the effective date of the new benchmark plan (i.e., by May 2024 for plan year beginning in 2026). Based on these time frames, the earliest that California could have a new benchmark plan in place is for plan year 2027.

Current DHHS regulations provide states with three options for choosing a new benchmark plan as follows:

• • 1. Adopt another state’s benchmark plan as used for the 2017 plan year;
    2. Replace one or more categories of EHBs under the state’s 2017 benchmark plan with the same category or categories of EHB from another state’s benchmark plan as used in plan year 2017; or,
    3. Select a set of benefits that would become the state’s new benchmark plan.

According to the DMHC, federal law dictates the process a state must follow when selecting a new benchmark plan. These requirements include the following:

1. The state must select a benchmark plan that provides a scope of benefits equal to or greater than the scope of benefits provided by a “typical employer plan.” This sets the floor for the generosity of the benefits. The benchmark plan also cannot exceed the generosity of the state’s most generous “comparison plan.” This sets the ceiling for the generosity of the benefits. The state must submit to DHHS an actuarial certification and report affirming the selected benchmark plan meets these floor and ceiling requirements;
2. The benefits in the proposed benchmark plan cannot be “unduly” weighted toward any particular category of benefits, must provide benefits for diverse segments of the population, and cannot include discriminatory benefit designs;
3. The state must submit a formulary drug list in a format and manner specified by DHHS;
4. The state must provide reasonable public notice regarding the proposed new benchmark plan and must give the public a reasonable time to comment on the proposed plan; and,
5. The state must notify DHHS of the selected new benchmark plan and submit supporting documentation, including the required actuarial certification and report, “by the first Wednesday in May of the year that is two years before the effective date” of the new benchmark plan.
   1. Health insurance mandates. The ACA establishes that while states are permitted to require coverage of benefits in addition to those considered EHBs, they must defray the cost of providing those state-mandated benefits, either by paying the enrollee directly or by paying the qualified health plan (offered on Covered California). For California, it is unclear which entity or person would be responsible for the determination of whether a benefit mandate requires defrayal. According to CHBRP, federal guidance established the “State” as the entity that would identify when a state benefit mandate exceeds EHBs; however, the state entity would be subject to federal oversight. Additionally, California has not yet officially determined who or which agency would be the responsible party for determining whether a benefit exceeds EHBs. It should be noted that since the passage of the ACA and the selection of the Kaiser benchmark plan, no legislation has been signed into law that exceeded the EHBs and required the state to defray the cost of that service. As recently as last year, SB 635 (Menjivar) of 2023 would have required hearing aids for children and was vetoed by Governor Newsom as exceeding EHBs.

New health benefit mandates do not require defrayal when they do not exceed the state’s definition of EHBs. According to CHBRP, state rules around service delivery method (such as telemedicine), provider types, cost sharing, or reimbursement methods are not considered state benefit mandates that would trigger the requirement for the state to defray the costs even though plans and policies in a state must comply with these requirements. Premiums, however, may increase as a result of a new benefit mandate. It should also be noted that states adopting a new benchmark plan or revising the existing one, will not result in triggering defrayal. Premiums, however, may increase as a result of setting a new benchmark plan.

1. SUPPORT. Children Now and Let California Kids Hear write in support that this bill provides a policy solution that will permanently close coverage gaps and ensure that all children in California have access to affordable and comprehensive health insurance that meets all of their health needs.
2. SUPPORT IF AMENDED. The California Dental Association (CDA) urges the state to clearly define a minimum dental benefit design to ensure consumers receive a meaningful benefit. CDA urges the state to consider at minimum the following items when considering a dental benefit design: A separate dental deductible for embedded dental benefits; no annual or lifetime limits on covered dental services; and, a reasonable annual out-of-pocket maximum.
3. SUPPORT IN CONCEPT. The California Association of Health Plans (CAHP), a support in concept position on this bill. The process envisioned by this bill is preferrable to the current approach of haphazardly considering one-off benefit mandate bills that inflate health care premiums for all Californians. As lawmakers, health plans, and many others are working to make health care more affordable, other interest groups continue to propose a slew of individual coverage mandate bills that collectively significantly increase the cost of health plan premiums. While relatively few consumers benefit from most health care mandates, ALL Californians would pay higher premiums. According to CAHP, this is the wrong approach.
4. RELATED LEGISLATION.
   1. SB 1290 (Roth) is substantially similar to this bill. SB 1290 is pending in Senate Health Committee.
   2. AB 2753 (Ortega) includes DME, as specified, under EHBs coverage of rehabilitative and habilitative services and devices.
5. PREVIOUS LEGISLATION.
   1. SB 635 would have required health aid coverage for enrollees or insureds under 21 years of age. Governor Newsom vetoed SB 635, stating in part, that the Department of Health Care Services has developed a comprehensive plan to increase provider participation and program enrollment for the Hearing Aid Coverage for Children Program.
   2. AB 1157 (Ortega) of 2023 was substantially similar to AB 2753 (Ortega) and was held in Senate Appropriations Committee.
   3. SB 729 (Menjivar) would have required large and small group health plan contracts and disability insurance policies issued, amended, or renewed on or after January 1, 2024, to provide coverage for the diagnosis and treatment of infertility and fertility services. SB 729 was held on the Assembly Appropriations Suspense file.

REGISTERED SUPPORT / OPPOSITION:

Support

Children Now

Children's Specialty Care Coalition

City of Santa Clarita

Crohns and Colitis Foundation

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