Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of disability insurers, including health insurers, by the Department of Insurance. Existing law requires a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after July 1, 2000, to provide coverage for the testing and treatment of phenylketonuria, including coverage for the formulas and special food products that are part of a prescribed diet, as specified.

This bill would require a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after July 1, 2024, to provide coverage for formulas, as defined, for the treatment of other chronic digestive diseases and inherited metabolic disorders, as specified. The bill would specify that these provisions do not apply to Medi-Cal managed care plans to the extent that the services are excluded from coverage under the contract between the Medi-Cal managed care plan and the State Department of Health Care Services. Because a violation of the bills requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

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

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

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of disability insurers, including health insurers, by the Department of Insurance. Existing law requires a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after July 1, 2000, to provide coverage for the testing and treatment of phenylketonuria, including coverage for the formulas and special food products that are part of a prescribed diet, as specified.

This bill would require a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after July 1, 2024, to provide coverage for formulas, as defined, for the treatment of other chronic digestive diseases and inherited metabolic disorders, as specified. The bill would specify that these provisions do not apply to Medi-Cal managed care plans to the extent that the services are excluded from coverage under the contract between the Medi-Cal managed care plan and the State Department of Health Care Services. Because a violation of the bills requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

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

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

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of disability insurers, including health insurers, by the Department of Insurance. Existing law requires a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after July 1, 2000, to provide coverage for the testing and treatment of phenylketonuria, including coverage for the formulas and special food products that are part of a prescribed diet, as specified.

This bill would require a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after January July 1, 2024, to provide coverage for formulas, as defined, for the testing and treatment of other chronic digestive diseases and inherited metabolic disorders, as specified. Because a violation of the bills requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

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

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

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of disability insurers, including health insurers, by the Department of Insurance. Existing law requires a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after July 1, 2000, to provide coverage for the testing and treatment of phenylketonuria, including coverage for the formulas and special food products that are part of a prescribed diet, as specified.

This bill would require a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after January 1, 2024, to provide coverage for the testing and treatment of other chronic digestive diseases and inherited metabolic disorders, as specified. Because a violation of the bills requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

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

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

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of disability insurers, including health insurers, by the Department of Insurance. Existing law requires a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after July 1, 2000, to provide coverage for the testing and treatment of phenylketonuria, including coverage for the formulas and special food products that are part of a prescribed diet, as specified.

This bill would require a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after January 1, 2024, to provide coverage for the testing and treatment of other chronic digestive diseases and inherited metabolic disorders. disorders, as specified. Because a violation of the bills requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

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

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

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of disability insurers, including health insurers, by the Department of Insurance. Existing law requires a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after July 1, 2000, to provide coverage for the testing and treatment of phenylketonuria, including coverage for the formulas and special food products that are part of a prescribed diet, as specified.

This bill would require a health care service plan contract and disability insurance policy that provides coverage for hospital, medical, or surgical expenses and is issued, amended, delivered, or renewed on and after January 1, 2024, to provide coverage for the testing and treatment of other digestive and inherited metabolic disorders. Because a violation of the bills requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

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

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

GOVERNOR'S VETO

GV Bill Id:AB 620

Author:(Connolly)

As Enrolled Ver:September 18, 2023

2/3 vote

SUMMARY

Expands existing law requiring every health care plan contract or disability insurance to cover the testing and treatment of phenylketonuria (PKU), to also cover formulas for the treatment of chronic digestive diseases, including but limited to, Crohn's disease, and inherited metabolic disorders, on or after July 1, 2024. Requires 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. Excludes special food products as defined.

Senate Amendments

Delay implementation to July 1, 2024. Exclude special food products from the coverage required above. Define special food product to mean a food product that is both of the following: 1) prescribed by a physician or nurse practitioner for the treatment of PKU; and, 2) used in place of normal food products, such as grocery store foods, used by the general population. Exclude Medi-Cal managed care plans from the provisions of this bill.

Governor’s Veto Message

This bill would require health plans to cover formulas that are part of a medically necessary diet for the treatment of chronic digestive diseases and inherited metabolic disorders.

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 essential health benefits (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.

COMMENTS

This bill amends existing law that requires coverage for the testing and treatment of PKU only to also include the testing and treatment of other digestive and inherited metabolic disorders. According to the California Health Benefits Review Programs (CHBRP), inherited metabolic disorders are genetic disorders that affect an individual's ability to metabolize nutrients due to an enzymatic or transporter deficiency. Typically, these disorders are discussed in three main groups: disorders of amino acid and protein metabolism (e.g., PKU), disorders of carbohydrate metabolism (e.g., classic galactosemia), and disorders of fatty acid oxidation metabolism. In most cases, inherited metabolic disorders, also referred to as inborn errors of metabolism, are present at birth and detected by newborn genetic screening, though some may be identified later as symptoms present. Left untreated, these disorders may result in developmental delays, intellectual disabilities, seizures, coma, or death. Severity of inherited metabolic disorders varies by disorder and how well a patient manages their nutritional needs. Traditional therapies for inherited metabolic disorders include medication, dietary management, and nutritional supplements. Treatment varies by disorder and among individuals with a given disorder based on the severity of the deficiency. For some disorders, persons with severe deficiencies may need to take special formulas and supplements for their entire lives.

Digestive disorders are acute or chronic conditions affecting the digestive system which encompasses the gastrointestinal (GI) tract, liver, pancreas, and gallbladder. These conditions affect the body's ability to absorb nutrients, which can result in mild to severe symptoms, disability, or death. Digestive disorders such as inflammatory bowel disease (IBD) typically develop, or are identified, in adolescence and early adulthood, though it is possible for infants and children to be diagnosed with digestive disorders. Current therapies for digestive disorders typically include use of medication, such as steroids, anti-inflammatories, immunosupressives, or biologics, along with dietary management. The primary concern with digestive disorders is that they may lead to malnutrition, which can occur by a variety of mechanisms: symptoms may result in reduced food intake, the body may not sufficiently absorb nutrients taken in orally, loss of nutrients after absorption (enteric nutrient loss), or increased nutritional requirements due to inflammation.

1. CHBRP analysis. CHBRP's analysis of this bill includes the following:
   1. Impact on expenditures. This bill would increase total net annual expenditures by $24,187,000, or 0.02%, for enrollees with Department of Managed Health Care (DMHC)-regulated plans and California Department of Insurance (CDI)-regulated policies. This is primarily due to a $26,928,000 increase in total health insurance premiums paid by employers and enrollees for newly covered benefits, adjusted by a $2,741,000 decrease in enrollee expenses for covered and/or noncovered benefits. Changes in premiums as a result of this bill would vary by market segment, with increases ranging from 0.0227% to 0.0268%. At baseline, for enrollees with inherited metabolic disorders, the annual cost is $6,369 for covered formulas and special food products and $5,846 for noncovered formulas and special food products; for enrollees with digestive disorders, the annual cost is $5,758 for covered formulas and special food products and $2,619 for noncovered formulas and special food products. Postmandate, the 579 enrollees with coverage for formulas and special food products at baseline would experience no change in cost sharing. For the 1,507 enrollees using services at baseline for whom postmandate benefit coverage would be new, enrollees would experience an average decrease in out-of-pocket expenses for noncovered benefits of $2,628. Within the individual DMHC-regulated market, health plans offered by Covered California would experience a 0.0263% premium increase, or $0.1729 per member per month (PMPM). Covered California individual market plans regulated by CDI would experience a 0.0280% increase in premiums, or $0.1500 PMPM.
      1. Medi-Cal. Based on the Medi-Cal Rx provider manual, Medi-Cal beneficiaries who have other inherited metabolic disorders or digestive disorders and are enrolled in DMHC-regulated plans already have coverage for formulas and special foods through Medi-Cal Rx.
      2. California Public Employees Retirement System (CalPERS). For enrollees associated with CalPERS in DMHC regulated plans, there would be a 0.0227% premium increase, or $0.1579 PMPM.
   2. EHBs. According to CHBRP, this bill does not exceed the definition of EHBs in California because formula and special food products are considered durable medical equipment and would be encompassed with the "rehabilitative and habilitative services and devices."
   3. Utilization. CHBRP estimates 148 commercial and CalPERS enrollees will use formula or special foods for other inherited metabolic disorders that are covered by insurance and an additional four enrollees use them as a noncovered benefit at baseline. Postmandate, 163 enrollees will use formulas or special food products covered by insurance, including the four who used them at baseline and 11 additional enrollees who begin using them due to the coverage expansion. CHBRP estimates 431 commercial and CalPERS enrollees will use formula or special foods for other digestive disorders that are covered by insurance and an additional 1,503 enrollees use them as a noncovered benefit at baseline. Postmandate, 5,185 enrollees will use formulas or special food products covered by insurance, including the 1,503 who used them at baseline and 3,251 additional enrollees who begin using them due to the coverage expansion. At baseline, a total of 579 enrollees with these conditions who use formula and special food products have coverage. Postmandate, a total of 4,769 enrollees would have new benefit coverage for these products, including 1,507 enrollees using these products at baseline and an additional 3,262 enrollees who begin using these products due to the coverage expansion.

According to the Author

This bill would require commercial health plan coverage of enteral foods or medical nutrition therapy. Medical nutrition therapy can be a successful alternative to medication treatment for several diseases, including inflammatory bowel disease (such as Crohn's or Ulcerative Colitis). The author concludes that this therapy particularly benefits pediatric patients (children) because they may not have access to or should not use certain medications.

Arguments in Support

The Crohn's and Colitis Foundation writes that IBD, which includes Crohn's disease and Ulcerative Colitis, causes chronic inflammation in the GI tract, the area of the body where digestion and absorption of nutrients take place. Normally, the immune system helps to protect the body from harmful infections and irritants. In IBD, however, the immune system reacts inappropriately, causing inflammation, which leads to symptoms such as abdominal pain and cramping, diarrhea, bleeding, weight loss, and/or fatigue. If left untreated, or when a patient is nonresponsive to treatment, complications can occur, which include malabsorption of nutrients, growth delays, and low bone mass. Some complications could lead to infection and then surgery, including removal of parts of the colon. Despite significant advances in medical care, complications are common, and ultimately occur in about 70% of Crohn's Disease patients. Nutritional support, including enteral nutrition, is an important part of managing Crohn's disease in particular, as it reduces the inflammatory process of the gut, leading to bowel rest and improving postoperative prognosis for those who require surgery. Enteral nutrition is a liquid dietary regimen, which is administered orally, as a drink, powder, dessert-like snack, or via a feeding tube, with similar efficacy. EN may be recommended as a maintenance diet during the remission phases of Crohn's Disease combined with the usual diet. Despite studies showing the benefits of medical enteral nutrition for Crohn's patients, particularly pediatric patients, health plans are not required to cover their enteral nutrition, including over the counter. For pediatric patients, over the counter formulas, recommended and prescribed by their provider, could delay a child's need to begin a more aggressive and more expensive biologic drug. To ensure access to this important treatment option, this bill expands existing coverage requirements for medical nutritional therapy to include patients diagnosed with Crohn's disease or other digestive or inherited metabolic disorders.

Arguments in Opposition

The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America's Health Insurance Plans write that state mandates 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. Health plans compete for business based on innovative benefit designs that increase access to care, improve quality, and contain costs. All ACA-compliant plans provide a robust package of EHBs in the large group, small business, and individual markets (both on and off the Exchange). In the individual market, the ACA sought to preserve the balance between comprehensive coverage and affordability by requiring states to bear the cost for new mandates that exceed the EHB package. The Centers for Medicaid and Medicare Services recently affirmed that states are still responsible for defraying the cost of new mandates. The opposition states all of these bills will increase costs and limit flexibility for employers. Faced with higher costs, employers must make difficult decisions about whether to absorb premium increases or seek alternative coverage options. The Department of Finance is opposed to this bill, as it creates new costs and pressures to the General Fund and special funds not included in the 2023-24 budget plan. These costs and pressure may also increase health care premiums. Additionally, Finance has concerns whether this bill would meet its intended objective of improving health outcomes.

FISCAL COMMENTS

According to the Senate Appropriations Committee:

1. Unknown ongoing costs, likely minor, for DMHC for state operations (Managed Care Fund).
2. Unknown one-time costs, likely minor, for CDI for state operations (Insurance Fund).
3. Unknown, ongoing General Fund costs for CalPERS health plans.
4. Unknown potential ongoing costs for the Medi-Cal program (General Fund and federal funds).

VOTES

ASM HEALTH: 14-1-0

YES: Wood, Waldron, Aguiar-Curry, Arambula, Boerner, Wendy Carrillo, Vince Fong, Maienschein, McCarty, Joe Patterson, Rodriguez, Santiago, Villapudua, Weber

NO: Flora

ASM APPROPRIATIONS: 13-2-1

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Sanchez, Weber, Ortega

NO: Megan Dahle, Dixon

ABS, ABST OR NV: Robert Rivas

ASSEMBLY FLOOR: 73-0-7

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

ABS, ABST OR NV: Alanis, Megan Dahle, Dixon, Essayli, Gallagher, Jim Patterson, Ta

SENATE FLOOR: 35-0-5

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Caballero, Grove, Jones, Niello, Seyarto

SENATE FLOOR: 32-0-8

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Bradford, Caballero, Cortese, Dodd, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Blakespear, Dahle, Durazo, Grove, Jones, Niello, Ochoa Bogh, Seyarto

SENATE FLOOR: 40-0-0

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ASSEMBLY FLOOR: 72-0-8

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

ABS, ABST OR NV: Alanis, Juan Carrillo, Megan Dahle, Dixon, Essayli, Gallagher, Jim Patterson, Ta

UPDATED

VERSION: September 18, 2023

CONSULTANT: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0002503

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 620

Author:(Connolly)

As Amended Ver:September 8, 2023

Majority vote

SUMMARY

Expands existing law requiring every health care plan contract or disability insurance to cover the testing and treatment of phenylketonuria (PKU), to also cover formulas for the treatment of chronic digestive diseases, including but limited to, Crohn's disease, and inherited metabolic disorders, on or after July 1, 2024. Requires 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. Excludes special food products as defined.

Senate Amendments

Delay implementation to July 1, 2024. Exclude special food products from the coverage required above. Define special food product to mean a food product that is both of the following: 1) prescribed by a physician or nurse practitioner for the treatment of PKU; and, 2) used in place of normal food products, such as grocery store foods, used by the general population. Exclude Medi-Cal managed care plans from the provisions of this bill.

COMMENTS

This bill amends existing law that requires coverage for the testing and treatment of PKU only to also include the testing and treatment of other digestive and inherited metabolic disorders. According to the California Health Benefits Review Programs (CHBRP), inherited metabolic disorders are genetic disorders that affect an individual's ability to metabolize nutrients due to an enzymatic or transporter deficiency. Typically, these disorders are discussed in three main groups: disorders of amino acid and protein metabolism (e.g., PKU), disorders of carbohydrate metabolism (e.g., classic galactosemia), and disorders of fatty acid oxidation metabolism. In most cases, inherited metabolic disorders, also referred to as inborn errors of metabolism, are present at birth and detected by newborn genetic screening, though some may be identified later as symptoms present. Left untreated, these disorders may result in developmental delays, intellectual disabilities, seizures, coma, or death. Severity of inherited metabolic disorders varies by disorder and how well a patient manages their nutritional needs. Traditional therapies for inherited metabolic disorders include medication, dietary management, and nutritional supplements. Treatment varies by disorder and among individuals with a given disorder based on the severity of the deficiency. For some disorders, persons with severe deficiencies may need to take special formulas and supplements for their entire lives.

Digestive disorders are acute or chronic conditions affecting the digestive system which encompasses the gastrointestinal (GI) tract, liver, pancreas, and gallbladder. These conditions affect the body's ability to absorb nutrients, which can result in mild to severe symptoms, disability, or death. Digestive disorders such as inflammatory bowel disease (IBD) typically develop, or are identified, in adolescence and early adulthood, though it is possible for infants and children to be diagnosed with digestive disorders. Current therapies for digestive disorders typically include use of medication, such as steroids, anti-inflammatories, immunosupressives, or biologics, along with dietary management. The primary concern with digestive disorders is that they may lead to malnutrition, which can occur by a variety of mechanisms: symptoms may result in reduced food intake, the body may not sufficiently absorb nutrients taken in orally, loss of nutrients after absorption (enteric nutrient loss), or increased nutritional requirements due to inflammation.

1. CHBRP analysis. CHBRP's analysis of this bill includes the following:
   1. Impact on expenditures. This bill would increase total net annual expenditures by $24,187,000, or 0.02%, for enrollees with Department of Managed Health Care (DMHC)-regulated plans and California Department of Insurance (CDI)-regulated policies. This is primarily due to a $26,928,000 increase in total health insurance premiums paid by employers and enrollees for newly covered benefits, adjusted by a $2,741,000 decrease in enrollee expenses for covered and/or noncovered benefits. Changes in premiums as a result of this bill would vary by market segment, with increases ranging from 0.0227% to 0.0268%. At baseline, for enrollees with inherited metabolic disorders, the annual cost is $6,369 for covered formulas and special food products and $5,846 for noncovered formulas and special food products; for enrollees with digestive disorders, the annual cost is $5,758 for covered formulas and special food products and $2,619 for noncovered formulas and special food products. Postmandate, the 579 enrollees with coverage for formulas and special food products at baseline would experience no change in cost sharing. For the 1,507 enrollees using services at baseline for whom postmandate benefit coverage would be new, enrollees would experience an average decrease in out-of-pocket expenses for noncovered benefits of $2,628. Within the individual DMHC-regulated market, health plans offered by Covered California would experience a 0.0263% premium increase, or $0.1729 per member per month (PMPM). Covered California individual market plans regulated by CDI would experience a 0.0280% increase in premiums, or $0.1500 PMPM.
      1. Medi-Cal. Based on the Medi-Cal Rx provider manual, Medi-Cal beneficiaries who have other inherited metabolic disorders or digestive disorders and are enrolled in DMHC-regulated plans already have coverage for formulas and special foods through Medi-Cal Rx.
      2. California Public Employees Retirement System (CalPERS). For enrollees associated with CalPERS in DMHC regulated plans, there would be a 0.0227% premium increase, or $0.1579 PMPM.
   2. Essential Health Benefits (EHBs). According to CHBRP, this bill does not exceed the definition of EHBs in California because formula and special food products are considered durable medical equipment and would be encompassed with the "rehabilitative and habilitative services and devices."
   3. Utilization. CHBRP estimates 148 commercial and CalPERS enrollees will use formula or special foods for other inherited metabolic disorders that are covered by insurance and an additional four enrollees use them as a noncovered benefit at baseline. Postmandate, 163 enrollees will use formulas or special food products covered by insurance, including the four who used them at baseline and 11 additional enrollees who begin using them due to the coverage expansion. CHBRP estimates 431 commercial and CalPERS enrollees will use formula or special foods for other digestive disorders that are covered by insurance and an additional 1,503 enrollees use them as a noncovered benefit at baseline. Postmandate, 5,185 enrollees will use formulas or special food products covered by insurance, including the 1,503 who used them at baseline and 3,251 additional enrollees who begin using them due to the coverage expansion. At baseline, a total of 579 enrollees with these conditions who use formula and special food products have coverage. Postmandate, a total of 4,769 enrollees would have new benefit coverage for these products, including 1,507 enrollees using these products at baseline and an additional 3,262 enrollees who begin using these products due to the coverage expansion.

According to the Author

This bill would require commercial health plan coverage of enteral foods or medical nutrition therapy. Medical nutrition therapy can be a successful alternative to medication treatment for several diseases, including inflammatory bowel disease (such as Crohn's or Ulcerative Colitis). The author concludes that this therapy particularly benefits pediatric patients (children) because they may not have access to or should not use certain medications.

Arguments in Support

The Crohn's and Colitis Foundation writes that IBD, which includes Crohn's disease and Ulcerative Colitis, causes chronic inflammation in the GI tract, the area of the body where digestion and absorption of nutrients take place. Normally, the immune system helps to protect the body from harmful infections and irritants. In IBD, however, the immune system reacts inappropriately, causing inflammation, which leads to symptoms such as abdominal pain and cramping, diarrhea, bleeding, weight loss, and/or fatigue. If left untreated, or when a patient is nonresponsive to treatment, complications can occur, which include malabsorption of nutrients, growth delays, and low bone mass. Some complications could lead to infection and then surgery, including removal of parts of the colon. Despite significant advances in medical care, complications are common, and ultimately occur in about 70% of Crohn's Disease patients. Nutritional support, including enteral nutrition, is an important part of managing Crohn's disease in particular, as it reduces the inflammatory process of the gut, leading to bowel rest and improving postoperative prognosis for those who require surgery. Enteral nutrition is a liquid dietary regimen, which is administered orally, as a drink, powder, dessert-like snack, or via a feeding tube, with similar efficacy. EN may be recommended as a maintenance diet during the remission phases of Crohn's Disease combined with the usual diet. Despite studies showing the benefits of medical enteral nutrition for Crohn's patients, particularly pediatric patients, health plans are not required to cover their enteral nutrition, including over the counter. For pediatric patients, over the counter formulas, recommended and prescribed by their provider, could delay a child's need to begin a more aggressive and more expensive biologic drug. To ensure access to this important treatment option, this bill expands existing coverage requirements for medical nutritional therapy to include patients diagnosed with Crohn's disease or other digestive or inherited metabolic disorders.

Arguments in Opposition

The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America's Health Insurance Plans write that state mandates 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. Health plans compete for business based on innovative benefit designs that increase access to care, improve quality, and contain costs. All federal Patient Protection and Affordable Care Act (ACA)-compliant plans provide a robust package of EHBs in the large group, small business, and individual markets (both on and off the Exchange). In the individual market, the ACA sought to preserve the balance between comprehensive coverage and affordability by requiring states to bear the cost for new mandates that exceed the EHB package. The Centers for Medicaid and Medicare Services recently affirmed that states are still responsible for defraying the cost of new mandates. The opposition states all of these bills will increase costs and limit flexibility for employers. Faced with higher costs, employers must make difficult decisions about whether to absorb premium increases or seek alternative coverage options. The Department of Finance is opposed to this bill, as it creates new costs and pressures to the General Fund and special funds not included in the 2023-24 budget plan. These costs and pressure may also increase health care premiums. Additionally, Finance has concerns whether this bill would meet its intended objective of improving health outcomes.

FISCAL COMMENTS

According to the Senate Appropriations Committee,

1. Unknown ongoing costs, likely minor, for DMHC for state operations (Managed Care Fund).
2. Unknown one-time costs, likely minor, for CDI for state operations (Insurance Fund).
3. Unknown, ongoing General Fund costs for CalPERS health plans.
4. Unknown potential ongoing costs for the Medi-Cal program (General Fund and federal funds).

VOTES:

ASM HEALTH: 14-1-0

YES: Wood, Waldron, Aguiar-Curry, Arambula, Boerner, Wendy Carrillo, Vince Fong, Maienschein, McCarty, Joe Patterson, Rodriguez, Santiago, Villapudua, Weber

NO: Flora

ASM APPROPRIATIONS: 13-2-1

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Sanchez, Weber, Ortega

NO: Megan Dahle, Dixon

ABS, ABST OR NV: Robert Rivas

ASSEMBLY FLOOR: 73-0-7

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

ABS, ABST OR NV: Alanis, Megan Dahle, Dixon, Essayli, Gallagher, Jim Patterson, Ta

SENATE FLOOR: 35-0-5

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood‑Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Caballero, Grove, Jones, Niello, Seyarto

SENATE FLOOR: 32-0-8

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Bradford, Caballero, Cortese, Dodd, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Blakespear, Dahle, Durazo, Grove, Jones, Niello, Ochoa Bogh, Seyarto

SENATE FLOOR: 40-0-0

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

UPDATED

VERSION: September 8, 2023

CONSULTANT: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0002280

 THIRD READING  

Bill No: AB 620

Author: Connolly (D), et al.

Amended: 9/8/23 in Senate

Vote: 21

SENATE HEALTH COMMITTEE: 11-0, 6/28/23

AYES: Eggman, Nguyen, Glazer, Gonzalez, Hurtado, Limón, Menjivar, Roth, Rubio, Wahab, Wiener

NO VOTE RECORDED: Grove

SENATE APPROPRIATIONS COMMITTEE: 5-1, 9/1/23

AYES: Portantino, Ashby, Bradford, Wahab, Wiener

NOES: Jones

NO VOTE RECORDED: Seyarto

ASSEMBLY FLOOR: 73-0, 5/31/23 - See last page for vote

SUBJECT: Health care coverage for metabolic disorders

SOURCE: Crohn’s and Colitis Foundation

DIGEST:

This bill requires health plans and insurers to cover formulas that are part of a medically necessary diet 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.

Senate Floor Amendments of 9/8/23 exempt Medi-Cal managed care plans to the extent that the services are excluded from coverage under the Medi-Cal contract.

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) and the California Department of Insurance (CDI) to regulate health and other insurers. [HSC §1340, et seq., and INS §106, et seq.]
2. Establishes, as California's essential health benefits (EHB) benchmark, the Kaiser Small Group Health Maintenance Organization, existing California mandates, and ten federal Patient Protection and Affordable Care Act mandated benefits. [HSC §1367.005 and INS §10112.27]
3. Requires health plans and disability insurance that provides coverage for hospital, medical, or surgical expenses to provide coverage for the testing and treatment of phenylketonuria (PKU) under the terms and conditions of the plan contract or policy. This includes coverage of formulas and special food products 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 metabolic disease and who participates in or is authorized by the plan or insurer, provided 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 PKU. Requires this coverage to the extent the cost exceeds the cost of a normal diet. [HSC §1374.56 and INS §10123.89]
4. Defines “Formula” means an enteral product or enteral products for use at home that are prescribed by a physician or nurse practitioner, or ordered by a registered dietician upon referral by a health care provider authorized to prescribe dietary treatments, as medically necessary for the treatment of PKU or other chronic digestive diseases and inherited metabolic disorders. [HSC §1374.56 and INS §10123.89]
5. Defines “Special food product” means a food product that is both of the following:
   1. Prescribed by a physician or nurse practitioner for the treatment of PKU and is consistent with the recommendations and best practices of qualified health professionals with expertise germane to, and experience in the treatment and care of, PKU. It does not include a food that is naturally low in protein, but may include a food product that is specially formulated to have less than one gram of protein per serving, and,
   2. Used in place of normal food products, such as grocery store foods, used by the general population. [HSC §1374.56 and INS §10123.89]

This bill:

1. Requires, on and after July 1, 2025, health plan and insurer coverage, as specified, for formulas 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, including but not limited to Crohn’s disease, 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.
2. Exempts a special food product, as defined in existing law.
3. Revises the definition of formula to include “nutritional drinks.”

Comments

According to the author, this bill requires commercial health plan coverage of enteral foods, or medical nutrition therapy. Medical nutrition therapy can be a successful alternative to medication treatment for several diseases, including inflammatory bowel disease, such as Crohn’s Disease. This therapy particularly benefits pediatric patients (children) because they may not have access to or should not use certain medications.

CHBRP analysis. AB 1996 (Thomson, Chapter 795, Statutes of 2002) requested 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. Assumptions. CHBRP’s analysis focuses primarily on formula and special food products that are administered orally, as those administered via tube feeding are already covered. CHBRP considers the following to be the most common digestive diseases that may benefit from formula and special food products: inflammatory bowel disease (IBD) including Crohn’s disease and ulcerative colitis; cystic fibrosis; eosinophilic enteritis; enteropathy; chronic pancreatitis; and, intestinal malabsorption.

Inherited metabolic disorders are individually rare and estimated to be about 1/3,000 individuals overall. Many of these are diagnosed through newborn screening, which is performed in order to initiate life- and brain-saving treatment early, before irreversible damage or death has occurred. These are often grouped into categories including: disorders of amino acid and protein metabolism (e.g., PKU, for which coverage of formula and special food products is already mandated), disorders of carbohydrate metabolism, and disorders of fatty acid oxidation metabolism. CHBRP assumes that this bill is focused on chronic conditions that may benefit from formula and special food products and would exclude various acute digestive disorders. If any of the assumptions listed above are incorrect, in particular, if the bill were to require coverage of formulas for acute conditions such as reflux, the cost impacts presented in this analysis may be significantly understated.

1. Coverage impacts and enrollees covered. Carriers have some coverage for formulas and special food products consumed orally for inherited metabolic disorders or digestive disorders; however, there are exceptions and limitations to when they are covered. Postmandate, all users have coverage for oral formulas and special food products for inherited metabolic and digestive disorders.
2. Medical effectiveness. CHBRP found limited evidence from two Cochrane reviews that nutritional treatment is effective on induction and maintenance of remission in Crohn’s disease and comparatively effective to standard treatment (i.e., drug therapy). CHBRP found insufficient evidence from one systematic review on the efficacy of nutritional treatment for ulcerative colitis. Though the studies in the systematic review provide some evidence regarding the efficacy of nutritional treatment for ulcerative colitis, they were not specific to nutritional treatment alone, but to patients on an enteral nutrition (EN) diet and steroid therapy. CHBRP found insufficient evidence on the efficacy of nutritional treatment for inherited metabolic disorders. No studies were found that examined the effectiveness of nutritional treatment for inherited metabolic disorders, and available evidence on treatment for these disorders are treatment guidelines based on expert opinion. Limiting factors that contribute to this evidence grade are the small number of individuals with these conditions, need for timely treatment, and ethical barriers to conducting other types of studies with this population.
3. Utilization. Postmandate, a total of 4,769 enrollees would have new benefit coverage for these products, including 1,507 enrollees using these products at baseline and an additional 3,262 enrollees who begin using these products due to the coverage expansion.
4. Medi-Cal. Although more than 80% of Medi-Cal enrollees are in DMHC-regulated plans, Medi-Cal Rx has taken over the responsibility for administering EN products when billed by a pharmacy on a pharmacy claim. Therefore, CHBRP indicates based on the Medi-Cal Rx provider manual, Medi-Cal beneficiaries who have other inherited metabolic disorders or digestive disorders and are enrolled in DMHC-regulated plans have coverage for formulas and special foods through Medi-Cal Rx, and did not include them in this analysis.
5. CalPERS. For enrollees associated with CalPERS in DMHC-regulated plans, there would be a 0.0227% premium increase, or $0.1579, per member per month (PMPM).
6. Covered California Individual Market Plans. Within the individual DMHC-regulated market, health plans offered by Covered California would experience a 0.0263% premium increase, or $0.1729 PMPM. Covered California individual market plans regulated by CDI would experience a 0.0280% increase in premiums, or $0.1500 PMPM.
7. Impact on expenditures. This bill increases total annual expenditures by $26,928,000 for employers, employees, and families enrolled with DMHC-regulated plans and California CDI-regulated policies. For enrollees using the mandated services should the bill be enacted, there is a $2,741,000 decrease in enrollee expenses for covered and/or noncovered benefits.
8. Public health. Due to the limited number of enrollees impacted, CHBRP concludes that passage of this bill would have no measurable short-term or long-term public health impact. Although nutritional treatment for inherited metabolic disorders is supported by clinical guidelines, the change in utilization is small, and such disorders are rare. Although utilization of nutritional treatment for digestive disorders would increase, there is:
   1. Limited evidence that this treatment is effective for inducing or maintaining remission compared to standard drug treatment for Crohn’s disease.
   2. Insufficient evidence on the effect on nutritional treatment for ulcerative colitis.

EHB. This bill does not exceed the definition of EHBs in California because formula and special food products are considered durable medical equipment and would be encompassed within the “rehabilitative and habilitative services and devices” EHB benefit category.

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

According to the Senate Appropriations Committee:

• Unknown ongoing costs, likely minor, for DMHC for state operations (Managed Care Fund).
• Unknown one-time costs, likely minor, for CDI for state operations (Insurance Fund).
• Unknown, ongoing General Fund costs for CalPERS health plans.
• Unknown potential ongoing costs for the Medi-Cal program (General Fund and federal funds).

SUPPORT: (Verified 9/8/23)

Crohn’s and Colitis Foundation (source)

American GI Forum Education Foundation of Santa Maria

California Children’s Hospital Association

California Chronic Care Coalition

California Life Sciences

California Nurses Association

Children’s Hospital of Orange County

County of Los Angeles Board of Supervisors

San Francisco Marin Medical Society

OPPOSITION: (Verified 9/8/23)

America's Health Insurance Plans

Association of California Life and Health Insurance Companies

California Association of Health Plans

Department of Finance

ARGUMENTS IN SUPPORT: This bill is sponsored by the Crohn’s and Colitis Foundation which writes current state law requires health plans to cover the treatment of PKU which includes those formulas and special food products that are part of a diet prescribed by a licensed provider. Unfortunately, this requirement is limited and does not apply to patients with Crohn’s and inherited metabolic diseases. Despite studies showing the benefits of medical EN for Crohn’s patients, particularly pediatric patients, health plans are not required to cover their EN, including over the counter. For pediatric patients, over the counter formulas, recommended and prescribed by their provider, could delay a child’s need to begin a more aggressive and more expensive biologic drug. To ensure access to this important treatment option, this bill expands existing coverage requirements for medical nutritional therapy to include patients diagnosed with Crohn’s disease or other digestive or inherited metabolic disorders. EN is a liquid dietary regimen, which is administered orally, as a drink, powder, dessert-like snack, or via a feeding tube, with similar efficacy. EN may be recommended as a maintenance diet during the remission phases of Crohn’s Disease combined with the usual diet. A maintenance enteral diet has been shown to increase the positive effects of biological therapies, thus preventing the relapse of the disease after surgical-induced remission. EN can also be administered as the only nutrition treatment, i.e., exclusive EN (EEN). EEN excludes solid food, providing the full amount of necessary calories. The use of this type of diet is particularly recommended during relapse of the disease, when it is applied for six to eight weeks to induce remission. EEN can be the main therapy for mild-to-moderate Crohn’s Disease in children and adolescents, as this regimen promotes, beside the remission of the illness in 80% to 85% of the cases, a reduced use of steroids, which are known to impair growth. Besides the primary function, EEN provides other beneficial effects, such as improving the nutritional status and bone metabolism/turnover in children.

ARGUMENTS IN OPPOSITION: The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans write in opposition to this along with 22 other health insurance mandate bills. These bills include mandates for health plans and insurers to cover specific services, as well as bills that eliminate cost sharing and limit utilization management, which have similar cost impacts as coverage mandates. Moreover, they will increase costs, reduce choice and competition, and further incent some employers and individuals to avoid state regulation by seeking alternative coverage options. Taken together, these bills will increase premiums by at least $742,533,000 in 2024 alone, with projected additional increases in out years. Ultimately, these bills will harm affordability and access for small businesses and individual market consumers. State mandates 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. Benefit mandates that do not promote evidence-based medicine can lead to lower quality care, over- or misutilization of services, and higher costs for treatments that may be ineffective, less safe, or higher cost than other, new or trusted services. California is rightly focused on achieving both universal coverage and cost containment at a time when the national conversation has shifted toward lower costs through less comprehensive options. The Department of Finance is opposed to this bill, as it creates new costs and pressures to the General Fund and special funds not included in the 2023-24 Budget plan. These costs and pressure may also increase health care premiums. Additionally, Finance has concerns whether this bill would meet its intended objective of improving health outcomes. According to CHBRP’s analysis of this bill on April 14, 2023, there was either insufficient or limited evidence on the medical effectiveness of nutritional treatment for inherited metabolic disorders or chronic digestive diseases.

ASSEMBLY FLOOR: 73-0, 5/31/23

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

NO VOTE RECORDED: Alanis, Megan Dahle, Dixon, Essayli, Gallagher, Jim Patterson, Ta

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

9/11/23 12:48:40

**** END ****

 THIRD READING  

Bill No: AB 620

Author: Connolly (D), et al.

Amended: 9/1/23 in Senate

Vote: 21

SENATE HEALTH COMMITTEE: 11-0, 6/28/23

AYES: Eggman, Nguyen, Glazer, Gonzalez, Hurtado, Limón, Menjivar, Roth, Rubio, Wahab, Wiener

NO VOTE RECORDED: Grove

SENATE APPROPRIATIONS COMMITTEE: 5-1, 9/1/23

AYES: Portantino, Ashby, Bradford, Wahab, Wiener

NOES: Jones

NO VOTE RECORDED: Seyarto

ASSEMBLY FLOOR: 73-0, 5/31/23 - See last page for vote

SUBJECT: Health care coverage for metabolic disorders

SOURCE: Crohn’s and Colitis Foundation

DIGEST:

This bill requires health plans and insurers to cover formulas that are part of a medically necessary diet 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.

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) and the California Department of Insurance (CDI) to regulate health and other insurers. [HSC §1340, et seq., and INS §106, et seq.]
2. Establishes, as California's essential health benefits (EHB) benchmark, the Kaiser Small Group Health Maintenance Organization, existing California mandates, and ten federal Patient Protection and Affordable Care Act mandated benefits. [HSC §1367.005 and INS §10112.27]
3. Requires health plans and disability insurance that provides coverage for hospital, medical, or surgical expenses to provide coverage for the testing and treatment of phenylketonuria (PKU) under the terms and conditions of the plan contract or policy. This includes coverage of formulas and special food products 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 metabolic disease and who participates in or is authorized by the plan or insurer, provided 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 PKU. Requires this coverage to the extent the cost exceeds the cost of a normal diet. [HSC §1374.56 and INS §10123.89]
4. Defines “Formula” means an enteral product or enteral products for use at home that are prescribed by a physician or nurse practitioner, or ordered by a registered dietician upon referral by a health care provider authorized to prescribe dietary treatments, as medically necessary for the treatment of PKU or other chronic digestive diseases and inherited metabolic disorders. [HSC §1374.56 and INS §10123.89]
5. Defines “Special food product” means a food product that is both of the following:
   1. Prescribed by a physician or nurse practitioner for the treatment of PKU and is consistent with the recommendations and best practices of qualified health professionals with expertise germane to, and experience in the treatment and care of, PKU. It does not include a food that is naturally low in protein, but may include a food product that is specially formulated to have less than one gram of protein per serving, and,
   2. Used in place of normal food products, such as grocery store foods, used by the general population. [HSC §1374.56 and INS §10123.89]

This bill:

1. Requires, on and after July 1, 2025, health plan and insurer coverage, as specified, for formulas 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, including but not limited to Crohn’s disease, 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.
2. Exempts a special food product, as defined in existing law.
3. Revises the definition of formula to include “nutritional drinks.”

Comments

According to the author, this bill would require commercial health plan coverage of enteral foods, or medical nutrition therapy. Medical nutrition therapy can be a successful alternative to medication treatment for several diseases, including inflammatory bowel disease, such as Crohn’s Disease. This therapy particularly benefits pediatric patients (children) because they may not have access to or should not use certain medications.

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. Assumptions. CHBRP’s analysis focuses primarily on formula and special food products that are administered orally, as those administered via tube feeding are already covered. CHBRP considers the following to be the most common digestive diseases that may benefit from formula and special food products: inflammatory bowel disease (IBD) including Crohn’s disease and ulcerative colitis; cystic fibrosis; eosinophilic enteritis; enteropathy; chronic pancreatitis; and, intestinal malabsorption.

Inherited metabolic disorders are individually rare and estimated to be about 1/3,000 individuals overall. Many of these are diagnosed through newborn screening, which is performed in order to initiate life- and brain-saving treatment early, before irreversible damage or death has occurred. These are often grouped into categories including: disorders of amino acid and protein metabolism (e.g., PKU, for which coverage of formula and special food products is already mandated), disorders of carbohydrate metabolism, and disorders of fatty acid oxidation metabolism. CHBRP assumes that this bill is focused on chronic conditions that may benefit from formula and special food products and would exclude various acute digestive disorders. If any of the assumptions listed above are incorrect, in particular, if the bill were to require coverage of formulas for acute conditions such as reflux, the cost impacts presented in this analysis may be significantly understated.

• 1. Coverage impacts and enrollees covered. Carriers have some coverage for formulas and special food products consumed orally for inherited metabolic disorders or digestive disorders; however, there are exceptions and limitations to when they are covered. Postmandate, all users have coverage for oral formulas and special food products for inherited metabolic and digestive disorders.
  2. Medical effectiveness. CHBRP found limited evidence from two Cochrane reviews that nutritional treatment is effective on induction and maintenance of remission in Crohn’s disease and comparatively effective to standard treatment (i.e., drug therapy). CHBRP found insufficient evidence from one systematic review on the efficacy of nutritional treatment for ulcerative colitis. Though the studies in the systematic review provide some evidence regarding the efficacy of nutritional treatment for ulcerative colitis, they were not specific to nutritional treatment alone, but to patients on an enteral nutrition (EN) diet and steroid therapy. CHBRP found insufficient evidence on the efficacy of nutritional treatment for inherited metabolic disorders. No studies were found that examined the effectiveness of nutritional treatment for inherited metabolic disorders, and available evidence on treatment for these disorders are treatment guidelines based on expert opinion. Limiting factors that contribute to this evidence grade are the small number of individuals with these conditions, need for timely treatment, and ethical barriers to conducting other types of studies with this population.
  3. Utilization. Postmandate, a total of 4,769 enrollees would have new benefit coverage for these products, including 1,507 enrollees using these products at baseline and an additional 3,262 enrollees who begin using these products due to the coverage expansion.
  4. Medi-Cal. Although more than 80% of Medi-Cal enrollees are in DMHC-regulated plans, Medi-Cal Rx has taken over the responsibility for administering EN products when billed by a pharmacy on a pharmacy claim. Therefore, CHBRP indicates based on the Medi-Cal Rx provider manual, Medi-Cal beneficiaries who have other inherited metabolic disorders or digestive disorders and are enrolled in DMHC-regulated plans have coverage for formulas and special foods through Medi-Cal Rx, and did not include them in this analysis.
  5. CalPERS. For enrollees associated with CalPERS in DMHC-regulated plans, there would be a 0.0227% premium increase, or $0.1579, per member per month (PMPM).
  6. Covered California Individual Market Plans. Within the individual DMHC-regulated market, health plans offered by Covered California would experience a 0.0263% premium increase, or $0.1729 PMPM. Covered California individual market plans regulated by CDI would experience a 0.0280% increase in premiums, or $0.1500 PMPM.
  7. Impact on expenditures. This bill would increase total annual expenditures by $26,928,000 for employers, employees, and families enrolled with DMHC-regulated plans and California CDI-regulated policies. For enrollees using the mandated services should the bill be enacted, there is a $2,741,000 decrease in enrollee expenses for covered and/or noncovered benefits.
  8. Public health. Due to the limited number of enrollees impacted, CHBRP concludes that passage of this bill would have no measurable short-term or long-term public health impact. Although nutritional treatment for inherited metabolic disorders is supported by clinical guidelines, the change in utilization is small, and such disorders are rare. Although utilization of nutritional treatment for digestive disorders would increase, there is:
     1. Limited evidence that this treatment is effective for inducing or maintaining remission compared to standard drug treatment for Crohn’s disease.
     2. Insufficient evidence on the effect on nutritional treatment for ulcerative colitis.

EHB. This bill does not exceed the definition of EHBs in California because formula and special food products are considered durable medical equipment and would be encompassed within the “rehabilitative and habilitative services and devices” EHB benefit category.

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

According to the Senate Appropriations Committee:

• Unknown ongoing costs, likely minor, for DMHC for state operations (Managed Care Fund).
• Unknown one-time costs, likely minor, for CDI for state operations (Insurance Fund).
• Unknown, ongoing General Fund costs for CalPERS health plans.
• Unknown potential ongoing costs for the Medi-Cal program (General Fund and federal funds).

SUPPORT: (Verified 8/17/23)

Crohn’s and Colitis Foundation (source)

American GI Forum Education Foundation of Santa Maria

California Children’s Hospital Association

California Chronic Care Coalition

California Life Sciences

California Nurses Association

Children’s Hospital of Orange County

County of Los Angeles Board of Supervisors

San Francisco Marin Medical Society

OPPOSITION: (Verified 8/17/23)

America's Health Insurance Plans

Association of California Life & Health Insurance Companies

California Association of Health Plans

Department of Finance

ARGUMENTS IN SUPPORT: This bill is sponsored by the Crohn’s and Colitis Foundation which writes current state law requires health plans to cover the treatment of PKU which includes those formulas and special food products that are part of a diet prescribed by a licensed provider. Unfortunately, this requirement is limited and does not apply to patients with Crohn’s and inherited metabolic diseases. Despite studies showing the benefits of medical EN for Crohn’s patients, particularly pediatric patients, health plans are not required to cover their EN, including over the counter. For pediatric patients, over the counter formulas, recommended and prescribed by their provider, could delay a child’s need to begin a more aggressive and more expensive biologic drug. To ensure access to this important treatment option, this bill expands existing coverage requirements for medical nutritional therapy to include patients diagnosed with Crohn’s disease or other digestive or inherited metabolic disorders. EN is a liquid dietary regimen, which is administered orally, as a drink, powder, dessert-like snack, or via a feeding tube, with similar efficacy. EN may be recommended as a maintenance diet during the remission phases of Crohn’s Disease combined with the usual diet. A maintenance enteral diet has been shown to increase the positive effects of biological therapies, thus preventing the relapse of the disease after surgical-induced remission. EN can also be administered as the only nutrition treatment, i.e., exclusive EN (EEN). EEN excludes solid food, providing the full amount of necessary calories. The use of this type of diet is particularly recommended during relapse of the disease, when it is applied for six to eight weeks to induce remission. EEN can be the main therapy for mild-to-moderate Crohn’s Disease in children and adolescents, as this regimen promotes, beside the remission of the illness in 80% to 85% of the cases, a reduced use of steroids, which are known to impair growth. Besides the primary function, EEN provides other beneficial effects, such as improving the nutritional status and bone metabolism/turnover in children.

ARGUMENTS IN OPPOSITION: The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans write in opposition to this along with 22 other health insurance mandate bills. These bills include mandates for health plans and insurers to cover specific services, as well as bills that eliminate cost sharing and limit utilization management, which have similar cost impacts as coverage mandates. Moreover, they will increase costs, reduce choice and competition, and further incent some employers and individuals to avoid state regulation by seeking alternative coverage options. Taken together, these bills will increase premiums by at least $742,533,000 in 2024 alone, with projected additional increases in out years. Ultimately, these bills will harm affordability and access for small businesses and individual market consumers. State mandates 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. Benefit mandates that do not promote evidence-based medicine can lead to lower quality care, over- or misutilization of services, and higher costs for treatments that may be ineffective, less safe, or higher cost than other, new or trusted services. California is rightly focused on achieving both universal coverage and cost containment at a time when the national conversation has shifted toward lower costs through less comprehensive options. The Department of Finance is opposed to this bill, as it creates new costs and pressures to the General Fund and special funds not included in the 2023-24 budget plan. These costs and pressure may also increase health care premiums. Additionally, Finance has concerns whether this bill would meet its intended objective of improving health outcomes. According to CHBRP’s analysis of this bill on April 14, 2023, there was either insufficient or limited evidence on the medical effectiveness of nutritional treatment for inherited metabolic disorders or chronic digestive diseases.

ASSEMBLY FLOOR: 73-0, 5/31/23

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

NO VOTE RECORDED: Alanis, Megan Dahle, Dixon, Essayli, Gallagher, Jim Patterson, Ta

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

9/2/23 9:57:22

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

AB 620 (Connolly) - Health care coverage for metabolic disorders

Bill Summary:

AB 620 would require health plans and insurers to cover treatment of chronic digestive diseases and inherited metabolic disorders, as specified.

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

The following information is revised to reflect amendments

adopted by the committee on September 1, 2023

Fiscal Impact:

• Unknown ongoing costs, likely minor, for the Department of Managed Health Care (DMHC) for state operations (Managed Care Fund).
• Unknown one-time costs, likely minor, for the California Department of Insurance (CDI) for state operations (Insurance Fund).
• Unknown, ongoing General Fund costs for CalPERS health plans.
• Unknown potential ongoing costs for the Medi-Cal program (General Fund and federal funds).

Author Amendments:

Author amendments delay implementation to July 1, 2024 and further specifies required coverage treatments.

-- END --

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

AB 620 (Connolly) - Health care coverage for metabolic disorders

Bill Summary:

AB 620 would require health plans and insurers to cover treatment of chronic digestive diseases and inherited metabolic disorders, as specified.

Fiscal Impact:

• Unknown ongoing costs, likely minor, for the Department of Managed Health Care (DMHC) for state operations (Managed Care Fund).
• The California Department of Insurance (CDI) estimates costs of $3,000 in 2023-24 for state operations (Insurance Fund).
• Unknown, ongoing General Fund costs, at least hundreds of thousands, for CalPERS health plan premiums.

Background:

The DMHC regulates health plans under the Knox-Keene Act and the CDI regulates health insurance. Current law requires health plans and disability insurance policies that provide coverage for hospital, medical, or surgical expenses to provide coverage for the testing and treatment of phenylketonuria (PKU) under the terms and conditions of the plan contract or policy. PKU is one type of an inherited metabolic disorder, which is a genetic disorder that affects an individual's ability to metabolize nutrients due to an enzymatic or transporter deficiency.

Health coverage for treatment of PKU includes coverage of formulas and special food products 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 metabolic disease and who participates in or is authorized by the plan or insurer, provided 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 PKU. Current law requires this coverage to the extent the cost exceeds the cost of a normal diet.

Proposed Law:

AB 620 would require, on and after January 1, 2024, health plans and insurers to also provide coverage for the testing and treatment of other chronic digestive diseases, including, but not limited to, Crohn’s disease, and inherited metabolic disorders, as specified.

Staff Comments:

The California Health Benefits Review Program (CHBRP) analysis of AB 620, as introduced, estimated an increase in total net annual expenditures of $24,187,000 for enrollees with DMHC-regulated plans and CDI-regulated policies. This is primarily due to a $26,928,000 increase in total health insurance premiums paid by employers and enrollees for newly covered benefits, adjusted by a $2,741,000 decrease in enrollee expenses for covered and/or noncovered benefits. This estimate includes an increase in total net annual expenditures for CalPERS health plan premium costs of $1,399,000. CHBRP estimated no fiscal impact to the Medi-Cal program.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Dr. Susan Talamantes Eggman, Chair

BILL NO: AB 620

SUBJECT: Health care coverage for metabolic disorders

SUMMARY:

Requires health plans and insurers to cover formulas that are part of a medically necessary diet 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.

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) and the California Department of Insurance (CDI) to regulate health and other insurers. [HSC §1340, et seq., and INS §106, et seq.]
   
2. Establishes, as California's essential health benefits benchmark, the Kaiser Small Group Health Maintenance Organization, existing California mandates, and ten federal Patient Protection and Affordable Care Act mandated benefits. [HSC §1367.005 and INS §10112.27]
   
3. Requires health plans and disability insurance that provides coverage for hospital, medical, or surgical expenses to provide coverage for the testing and treatment of phenylketonuria (PKU) under the terms and conditions of the plan contract or policy. This includes coverage of formulas and special food products 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 metabolic disease and who participates in or is authorized by the plan or insurer, provided 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 PKU. Requires this coverage to the extent the cost exceeds the cost of a normal diet. [HSC §1374.56 and INS §10123.89]
   

This bill: Requires, on and after January 1, 2024, coverage for formulas 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.

FISCAL EFFECT:

According to the Assembly Appropriations Committee:

1. No costs to CDI.
2. Minor and absorbable costs to DMHC.
3. The California Health Benefits Review Program (CHBRP) estimates this bill will increase total premiums for CalPERS health plans and insurance policies by $1.4 million; roughly 60% of these premiums are for state enrollees, and an unknown percentage is paid for by the state. For health plans and contracts offered through Covered California, CHBRP estimates the bill will increase premiums by $4.3 million, with state subsidies making up an unknown portion of premiums. Total state costs for this bill will likely exceed $150,000 (General Fund and other funds).
4. CHBRP estimates this bill will increase total net annual health plan and insurance expenditures by $24.2 million, or 0.02%, for enrollees with DMHC-regulated plans and CDI-regulated policies. This is primarily due to a $26.9 million increase in total health insurance premiums paid by employers and enrollees for newly covered benefits, adjusted by a $2.7 million decrease in enrollee expenses for covered and noncovered benefits.

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, this bill would require commercial health plan coverage of enteral foods, or medical nutrition therapy. Medical nutrition therapy can be a successful alternative to medication treatment for several diseases, including inflammatory bowel disease, such as Crohn’s Disease. This therapy particularly benefits pediatric patients (children) because they may not have access to or should not use certain medications.
   
2. 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. Assumptions. CHBRP’s analysis focuses primarily on formula and special food products that are administered orally, as those administered via tube feeding are already covered. CHBRP considers the following to be the most common digestive diseases that may benefit from formula and special food products: inflammatory bowel disease (IBD) including Crohn’s disease and ulcerative colitis; cystic fibrosis; eosinophilic enteritis; enteropathy; chronic pancreatitis; and, intestinal malabsorption.

Inherited metabolic disorders are individually rare and estimated to be about 1/3,000 individuals overall. Many of these are diagnosed through newborn screening, which is performed in order to initiate life- and brain-saving treatment early, before irreversible damage or death has occurred. These are often grouped into categories including: disorders of amino acid and protein metabolism (e.g., PKU, for which coverage of formula and special food products is already mandated), disorders of carbohydrate metabolism, and disorders of fatty acid oxidation metabolism. CHBRP assumes that this bill is focused on chronic conditions that may benefit from formula and special food products and would exclude various acute digestive disorders. If any of the assumptions listed above are incorrect, in particular, if the bill were to require coverage of formulas for acute conditions such as reflux, the cost impacts presented in this analysis may be significantly understated.

• 1. Coverage impacts and enrollees covered. Carriers have some coverage for formulas and special food products consumed orally for inherited metabolic disorders or digestive disorders; however, there are exceptions and limitations to when they are covered. Postmandate, all users have coverage for oral formulas and special food products for inherited metabolic and digestive disorders.
     
  2. Medical effectiveness. CHBRP found limited evidence from two Cochrane reviews that nutritional treatment is effective on induction and maintenance of remission in Crohn’s disease and comparatively effective to standard treatment (i.e., drug therapy). CHBRP found insufficient evidence from one systematic review on the efficacy of nutritional treatment for ulcerative colitis. Though the studies in the systematic review provide some evidence regarding the efficacy of nutritional treatment for ulcerative colitis, they were not specific to nutritional treatment alone, but to patients on an enteral nutrition (EN) diet and steroid therapy. CHBRP found insufficient evidence on the efficacy of nutritional treatment for inherited metabolic disorders. No studies were found that examined the effectiveness of nutritional treatment for inherited metabolic disorders, and available evidence on treatment for these disorders are treatment guidelines based on expert opinion. Limiting factors that contribute to this evidence grade are the small number of individuals with these conditions, need for timely treatment, and ethical barriers to conducting other types of studies with this population.
     
  3. Utilization. Postmandate, a total of 4,769 enrollees would have new benefit coverage for these products, including 1,507 enrollees using these products at baseline and an
     additional 3,262 enrollees who begin using these products due to the coverage expansion.
     
  4. Medi-Cal. Although more than 80% of Medi-Cal enrollees are in DMHC-regulated plans, Medi-Cal Rx has taken over the responsibility for administering EN products when billed by a pharmacy on a pharmacy claim. Therefore, CHBRP indicates based on the Medi-Cal Rx provider manual, Medi-Cal beneficiaries who have other inherited metabolic disorders or digestive disorders and are enrolled in DMHC-regulated plans have coverage for formulas and special foods through Medi-Cal Rx, and did not include them in this analysis.
     
  5. CalPERS. For enrollees associated with CalPERS in DMHC-regulated plans, there would be a 0.0227% premium increase, or $0.1579, per member per month (PMPM).
     
  6. Covered California Individual Market Plans. Within the individual DMHC-regulated market, health plans offered by Covered California would experience a 0.0263% premium increase, or $0.1729 PMPM. Covered California individual market plans regulated by CDI would experience a 0.0280% increase in premiums, or
     $0.1500 PMPM.
     
  7. Impact on expenditures. This bill would increase total annual expenditures by $26,928,000 for employers, employees, and families enrolled with DMHC-regulated plans and California CDI-regulated policies. For enrollees using the mandated services should the bill be enacted, there is a $2,741,000 decrease in enrollee expenses for covered and/or noncovered benefits.
  8. Public health. Due to the limited number of enrollees impacted, CHBRP concludes that passage of this bill would have no measurable short-term or long-term public health impact. Although nutritional treatment for inherited metabolic disorders is supported by clinical guidelines, the change in utilization is small, and such disorders are rare. Although utilization of nutritional treatment for digestive disorders would increase, there is:
     1. Limited evidence that this treatment is effective for inducing or maintaining remission compared to standard drug treatment for Crohn’s disease.
     2. Insufficient evidence on the effect on nutritional treatment for ulcerative colitis.
        
  9. Essential health benefits (EHB). This bill does not exceed the definition of EHBs in California because formula and special food products are considered durable medical equipment and would be encompassed within the “rehabilitative and habilitative services and devices” EHB benefit category.
     

1. Prior legislation. AB 163 (Emerson of 2009) would have required health plans and health insurers to provide coverage for amino acid-based elemental formulas for the diagnosis and treatment of eosinophilic disorders. AB 163 was held in the Assembly Appropriations Committee Suspense File.
   

AB 30 (Evans of 2007) would have required health plans and health insurers to cover the testing and treatment of inborn errors of metabolism. AB 30 was vetoed by Governor Schwarzenegger who stated:

The addition of a new mandate, no matter how small, will only serve to increase the overall cost of health care. California currently has 44 mandates on its health care service plans and health insurance policies. While these mandates are well-intentioned, the costs associated with guaranteed coverage for a specific condition or treatment means that these costs are passed through to the purchaser and consumer. These mandates are a significant driver of cost. Every day, a growing number of employers and individuals are struggling to pay for their health care. We cannot afford to increase these costs without enacting other measures that improve efforts aimed at prevention, address affordability of care and share responsibility between individuals, providers, employers and government.

SB 148, (Alpert, Chapter 541 of 1999) requires health insurers to cover food supplements prescribed by physicians for the treatment of phenylketonuria.

1. Support. This bill is sponsored by the Crohn’s and Colitis Foundation which writes current state law requires health plans to cover the treatment of PKU which includes those formulas and special food products that are part of a diet prescribed by a licensed provider. Unfortunately, this requirement is limited and does not apply to patients with Crohn’s and inherited metabolic diseases. Despite studies showing the benefits of medical EN for Crohn’s patients, particularly pediatric patients, health plans are not required to cover their EN, including over the counter. For pediatric patients, over the counter formulas, recommended and prescribed by their provider, could delay a child’s need to begin a more aggressive and more expensive biologic drug. To ensure access to this important treatment option, this bill expands existing coverage requirements for medical nutritional therapy to include patients diagnosed with Crohn’s disease or other digestive or inherited metabolic disorders. EN is a liquid dietary regimen, which is administered orally, as a drink, powder, dessert-like snack, or via a feeding tube, with similar efficacy. EN may be recommended as a maintenance diet during the remission phases of Crohn’s Disease combined with the usual diet. A maintenance enteral diet has been shown to increase the positive effects of biological therapies, thus preventing the relapse of the disease after surgical-induced remission. EN can also be administered as the only nutrition treatment, i.e., exclusive EN (EEN). EEN excludes solid food, providing the full amount of necessary calories. The use of this type of diet is particularly recommended during relapse of the disease, when it is applied for six to eight weeks to induce remission. EEN can be the main therapy for mild-to-moderate Crohn’s Disease in children and adolescents, as this regimen promotes, beside the remission of the illness in 80% to 85% of the cases, a reduced use of steroids, which are known to impair growth. Besides the primary function, EEN provides other beneficial effects, such as improving the nutritional status and bone metabolism/turnover in children.
2. Opposition. The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans write in opposition to this along with 22 other health insurance mandate bills. These bills include mandates for health plans and insurers to cover specific services, as well as bills that eliminate cost sharing and limit utilization management, which have similar cost impacts as coverage mandates. Moreover, they will increase costs, reduce choice and competition, and further incent some employers and individuals to avoid state regulation by seeking alternative coverage options. Taken together, these bills will increase premiums by at least $742,533,000 in 2024 alone, with projected additional increases in out years. Ultimately, these bills will harm affordability and access for small businesses and individual market consumers. State mandates 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. Benefit mandates that do not promote evidence-based medicine can lead to lower quality care, over- or misutilization of services, and higher costs for treatments that may be ineffective, less safe, or higher cost than other, new or trusted services. California is rightly focused on achieving both universal coverage and cost containment at a time when the national conversation has shifted toward lower costs through less comprehensive options.

SUPPORT AND OPPOSITION:

Support: Crohn’s and Colitis Foundation (sponsor)

American GI Forum Education Foundation of Santa Maria

California Life Sciences

California Chronic Care Coalition

San Francisco Marin Medical Society

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

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 620

Author:(Connolly)

As Amended Ver:April 27, 2023

Majority vote

SUMMARY

Expands existing law requiring every health care plan contract or disability insurance to cover the testing and treatment of phenylketonuria (PKU), to also cover the testing and treatment of other chronic digestive diseases and inherited metabolic disorders, on or after January 1, 2024. Requires coverage for treatment of chronic digestive diseases, including, but not limited to, Crohn's disease, and inherited metabolic disorders, to include those formulas 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.

Major Provisions

COMMENTS

This bill amends existing law that requires coverage for the testing and treatment of PKU only to also include the testing and treatment of other digestive and inherited metabolic disorders. According to the California Health Benefits Review Programs (CHBRP), inherited metabolic disorders are genetic disorders that affect an individual's ability to metabolize nutrients due to an enzymatic or transporter deficiency. Typically, these disorders are discussed in three main groups: disorders of amino acid and protein metabolism (e.g., PKU), disorders of carbohydrate metabolism (e.g., classic galactosemia), and disorders of fatty acid oxidation metabolism. In most cases, inherited metabolic disorders, also referred to as inborn errors of metabolism, are present at birth and detected by newborn genetic screening, though some may be identified later as symptoms present. Left untreated, these disorders may result in developmental delays, intellectual disabilities, seizures, coma, or death. Severity of inherited metabolic disorders varies by disorder and how well a patient manages their nutritional needs. Traditional therapies for inherited metabolic disorders include medication, dietary management, and nutritional supplements. Treatment varies by disorder and among individuals with a given disorder based on the severity of the deficiency. For some disorders, persons with severe deficiencies may need to take special formulas and supplements for their entire lives.

Digestive disorders are acute or chronic conditions affecting the digestive system which encompasses the gastrointestinal (GI) tract, liver, pancreas, and gallbladder. These conditions affect the body's ability to absorb nutrients, which can result in mild to severe symptoms, disability, or death. Digestive disorders such as inflammatory bowel disease (IBD) typically develop, or are identified, in adolescence and early adulthood, though it is possible for infants and children to be diagnosed with digestive disorders. Current therapies for digestive disorders typically include use of medication, such as steroids, anti-inflammatories, immunosupressives, or biologics, along with dietary management. The primary concern with digestive disorders is that they may lead to malnutrition, which can occur by a variety of mechanisms: symptoms may result in reduced food intake, the body may not sufficiently absorb nutrients taken in orally, loss of nutrients after absorption (enteric nutrient loss), or increased nutritional requirements due to inflammation.

1. CHBRP analysis. CHBRP's analysis of this bill includes the following:
   1. Impact on expenditures. This bill would increase total net annual expenditures by $24,187,000, or 0.02%, for enrollees with Department of Managed Health Care (DMHC)-regulated plans and California Department of Insurance (CDI)-regulated policies. This is primarily due to a $26,928,000 increase in total health insurance premiums paid by employers and enrollees for newly covered benefits, adjusted by a $2,741,000 decrease in enrollee expenses for covered and/or noncovered benefits. Changes in premiums as a result of this bill would vary by market segment, with increases ranging from 0.0227% to 0.0268%. At baseline, for enrollees with inherited metabolic disorders, the annual cost is $6,369 for covered formulas and special food products and $5,846 for noncovered formulas and special food products; for enrollees with digestive disorders, the annual cost is $5,758 for covered formulas and special food products and $2,619 for noncovered formulas and special food products. Postmandate, the 579 enrollees with coverage for formulas and special food products at baseline would experience no change in cost sharing. For the 1,507 enrollees using services at baseline for whom postmandate benefit coverage would be new, enrollees would experience an average decrease in out-of-pocket expenses for noncovered benefits of $2,628. Within the individual DMHC-regulated market, health plans offered by Covered California would experience a 0.0263% premium increase, or $0.1729 per member per month (PMPM). Covered California individual market plans regulated by CDI would experience a 0.0280% increase in premiums, or $0.1500 PMPM.
      1. Medi-Cal. Based on the Medi-Cal Rx provider manual, Medi-Cal beneficiaries who have other inherited metabolic disorders or digestive disorders and are enrolled in DMHC-regulated plans already have coverage for formulas and special foods through Medi-Cal Rx.
      2. California Public Employees Retirement System (CalPERS). For enrollees associated with CalPERS in DMHC regulated plans, there would be a 0.0227% premium increase, or $0.1579 PMPM.
   2. Essential Health Benefits (EHBs). According to CHBRP, this bill does not exceed the definition of EHBs in California because formula and special food products are considered durable medical equipment and would be encompassed with the "rehabilitative and habilitative services and devices."
   3. Utilization. CHBRP estimates 148 commercial and CalPERS enrollees will use formula or special foods for other inherited metabolic disorders that are covered by insurance and an additional four enrollees use them as a noncovered benefit at baseline. Postmandate, 163 enrollees will use formulas or special food products covered by insurance, including the four who used them at baseline and 11 additional enrollees who begin using them due to the coverage expansion. CHBRP estimates 431 commercial and CalPERS enrollees will use formula or special foods for other digestive disorders that are covered by insurance and an additional 1,503 enrollees use them as a noncovered benefit at baseline. Postmandate, 5,185 enrollees will use formulas or special food products covered by insurance, including the 1,503 who used them at baseline and 3,251 additional enrollees who begin using them due to the coverage expansion. At baseline, a total of 579 enrollees with these conditions who use formula and special food products have coverage. Postmandate, a total of 4,769 enrollees would have new benefit coverage for these products, including 1,507 enrollees using these products at baseline and an additional 3,262 enrollees who begin using these products due to the coverage expansion.

According to the Author

This bill would require commercial health plan coverage of enteral foods or medical nutrition therapy. Medical nutrition therapy can be a successful alternative to medication treatment for several diseases, including inflammatory bowel disease (such as Crohn's or Ulcerative Colitis). The author concludes that this therapy particularly benefits pediatric patients (children) because they may not have access to or should not use certain medications.

Arguments in Support

The Crohn's & Colitis Foundation writes that IBD, which includes Crohn's disease and Ulcerative Colitis, causes chronic inflammation in the GI tract, the area of the body where digestion and absorption of nutrients take place. Normally, the immune system helps to protect the body from harmful infections and irritants. In IBD, however, the immune system reacts inappropriately, causing inflammation, which leads to symptoms such as abdominal pain and cramping, diarrhea, bleeding, weight loss, and/or fatigue. If left untreated, or when a patient is nonresponsive to treatment, complications can occur, which include malabsorption of nutrients, growth delays, and low bone mass. Some complications could lead to infection and then surgery, including removal of parts of the colon. Despite significant advances in medical care, complications are common, and ultimately occur in about 70% of Crohn's Disease patients. Nutritional support, including enteral nutrition, is an important part of managing Crohn's disease in particular, as it reduces the inflammatory process of the gut, leading to bowel rest and improving postoperative prognosis for those who require surgery. Enteral nutrition is a liquid dietary regimen, which is administered orally, as a drink, powder, dessert-like snack, or via a feeding tube, with similar efficacy. EN may be recommended as a maintenance diet during the remission phases of Crohn's Disease combined with the usual diet. Despite studies showing the benefits of medical enteral nutrition for Crohn's patients, particularly pediatric patients, health plans are not required to cover their enteral nutrition, including over the counter. For pediatric patients, over the counter formulas, recommended and prescribed by their provider, could delay a child's need to begin a more aggressive and more expensive biologic drug. To ensure access to this important treatment option, this bill expands existing coverage requirements for medical nutritional therapy to include patients diagnosed with Crohn's disease or other digestive or inherited metabolic disorders.

Arguments in Opposition

The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America's Health Insurance Plans write that state mandates 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. Health plans compete for business based on innovative benefit designs that increase access to care, improve quality, and contain costs. All federal Patient Protection and Affordable Care Act (ACA)-compliant plans provide a robust package of EHBs in the large group, small business, and individual markets (both on and off the Exchange). In the individual market, the ACA sought to preserve the balance between comprehensive coverage and affordability by requiring states to bear the cost for new mandates that exceed the EHB package. The Centers for Medicaid and Medicare Services recently affirmed that states are still responsible for defraying the cost of new mandates. The opposition states all of these bills will increase costs and limit flexibility for employers. Faced with higher costs, employers must make difficult decisions about whether to absorb premium increases or seek alternative coverage options.

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

1. No costs to CDI.
2. Minor and absorbable costs to DMHC.
3. CHBRP estimates this bill will increase total premiums for CalPERS health plans and insurance policies by $1.4 million; roughly 60% of these premiums are for state enrollees, and an unknown percentage is paid for by the state. For health plans and contracts offered through Covered California, CHBRP estimates the bill will increase premiums by $4.3 million, with state subsidies making up an unknown portion of premiums. Total state costs for this bill will likely exceed $150,000 (General Fund and other funds).
4. CHBRP estimates this bill will increase total net annual health plan and insurance expenditures by $24.2 million, or 0.02%, for enrollees with DMHC-regulated plans and CDI-regulated policies. This is primarily due to a $26.9 million increase in total health insurance premiums paid by employers and enrollees for newly covered benefits, adjusted by a $2.7 million decrease in enrollee expenses for covered and noncovered benefits.

VOTES

ASM HEALTH: 14-1-0

YES: Wood, Waldron, Aguiar-Curry, Arambula, Boerner, Wendy Carrillo, Vince Fong, Maienschein, McCarty, Joe Patterson, Rodriguez, Santiago, Villapudua, Weber

NO: Flora

ASM APPROPRIATIONS: 13-2-1

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Sanchez, Weber, Ortega

NO: Megan Dahle, Dixon

ABS, ABST OR NV: Robert Rivas

UPDATED

VERSION: February 9, 2023

CONSULTANT: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0000578

Date of Hearing: May 17, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 620

Author:(Connolly) – As Amended Ver:April 27, 2023

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

SUMMARY:

This bill requires every health plan or insurance contract to cover the testing and treatment of chronic digestive diseases and inherited metabolic disorders.

FISCAL EFFECT:

1. No costs to the California Department of Insurance (CDI).
2. Minor and absorbable costs to the Department of Managed Health Care (DMHC).
3. The California Health Benefits Review Program (CHBRP) estimates this bill will increase total premiums for California Public Employees Retirement System health plans and insurance policies by $1.4 million; roughly 60% of these premiums are for state enrollees, and an unknown percentage is paid for by the state. For health plans and contracts offered through Covered California, CHBRP estimates the bill will increase premiums by $4.3 million, with state subsidies making up an unknown portion of premiums. Total state costs for this bill will likely exceed $150,000 (General Fund and other funds).
4. CHBRP estimates this bill will increase total net annual health plan and insurance expenditures by $24.2 million, or 0.02%, for enrollees with DMHC-regulated plans and CDI-regulated policies. This is primarily due to a $26.9 million increase in total health insurance premiums paid by employers and enrollees for newly covered benefits, adjusted by a $2.7 million decrease in enrollee expenses for covered and noncovered benefits.

COMMENTS:

1. Purpose. This bill is sponsored by the Crohn’s & Colitis Foundation. According to the author:

This bill would require commercial health plan coverage of enteral foods, or medical nutrition therapy. Medical nutrition therapy can be a successful alternative to medication treatment for several diseases, including inflammatory bowel disease (such as Crohn’s or Ulcerative Colitis). This therapy particularly benefits pediatric patients because they may not have access to or should not use certain medications.

1. Background.
   
   Inherited Metabolic Disorders. Inherited metabolic disorders are genetic disorders that affect an individual's ability to metabolize nutrients due to an enzymatic or transporter deficiency. Typically, these disorders are discussed in three main groups: disorders of amino acid and protein metabolism, such as phenylketonuria (PKU), disorders of carbohydrate metabolism, and disorders of fatty acid oxidation metabolism. In most cases, inherited metabolic disorders are present at birth and detected by newborn genetic screening, though some may be identified later as symptoms present. Left untreated, these disorders may result in developmental delays, intellectual disabilities, seizures, coma, or death. Severity of inherited metabolic disorders varies by disorder and how well a patient manages their nutritional needs.
   
   Traditional therapies for inherited metabolic disorders include medication, dietary management, and nutritional supplements. For some disorders, persons with severe deficiencies may need to take special formulas and supplements for their entire lives. Enteral nutrition refers to oral nutritional formulas or tube feeding that may supplement or replace dietary modifications in order to restore nutritional requirements. Enteral nutrition involves delivery methods in which absorption occurs through the intestines; parenteral nutrition is delivered via the bloodstream using an intravenous tube.

Digestive Disorders. Digestive disorders are acute or chronic conditions affecting the digestive system which encompasses the gastrointestinal (GI) tract, liver, pancreas, and gallbladder. These conditions affect the body’s ability to absorb nutrients, which can result in mild to severe symptoms, disability, or death. Digestive disorders such as inflammatory bowel disease (IBD) typically develop, or are identified, in adolescence and early adulthood, though it is possible for infants and children to be diagnosed with digestive disorders.

Current therapies for digestive disorders typically include medication, such as steroids, anti-inflammatories, immunosupressives, or biologics, along with dietary management. The primary concern with digestive disorders is that they may lead to malnutrition, which can occur by a variety of mechanisms. Symptoms may result in reduced food intake, the body not sufficiently absorbing nutrients taken in orally, loss of nutrients after absorption (enteric nutrient loss), or increased nutritional requirements due to inflammation.

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

Date of Hearing: April 25, 2023

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 620

Author:(Connolly) – As Introduced Ver:February 9, 2023

SUBJECT: Health care coverage for metabolic disorders.

SUMMARY: Expands existing law requiring every health care plan contract or disability insurance to cover the testing and treatment of phenylketonuria (PKU), to also cover the testing and treatment of other digestive and inherited metabolic disorders, on or after January 1, 2024.

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 (CDI) to regulate health insurers. [Health and Safety Code (HSC) § 1340, et seq., and (Insurance Code (INS) § 106, et seq.]
2. Establishes as California's essential health benefits (EHBs) benchmark under the Affordable Care Act (ACA), the Kaiser Small Group Health Maintenance Organization, existing California health insurance mandates, and the 10 ACA mandated benefits, including prescription drug coverage. [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, as specified. [HSC § 1345]
4. Requires every health plan contract or disability insurance, on or after January 1, 2000, to provide coverage and treatment of PKU. Requires coverage for PKU treatment to include those formulas and special food products 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 metabolic disease who participates in or is authorized by the plan, 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 PKU. Specifies that coverage is not required except to the extent that the cost of the necessary formulas and special food products exceeds the cost of a normal diet. Defines the following:
   1. Formula to mean an enteral product or enteral products for use at home that are prescribed by a physician or nurse practitioner, or ordered by a registered dietician upon referral by a health care provider authorized to prescribe dietary treatments, as medically necessary for the treatment of PKU; and,
   2. Special food product to mean a food product that is both of the following:
      1. Prescribed by a physician or nurse practitioner for the treatment of PKU consistent with the recommendations and best practices of qualified health professionals with expertise germane to, and experience in the treatment and care of, PKU, and does not include a food that is naturally low in protein, but may include a food product that is specially formulated to have less than one gram of protein per serving; and,
      2. Used in place of normal food products, such as grocery store foods, used by the general population. [HSC § 1374.56 and INS § 10123.89]

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 would require commercial health plan coverage of enteral foods or medical nutrition therapy. Medical nutrition therapy can be a successful alternative to medication treatment for several diseases, including inflammatory bowel disease (such as Crohn’s or Ulcerative Colitis). The author concludes that this therapy particularly benefits pediatric patients (children) because they may not have access to or should not use certain medications.
2. BACKGROUND. This bill amends existing law that requires coverage for the testing and treatment of PKU only to also include the testing and treatment of other digestive and inherited metabolic disorders. According to the California Health Benefits Review Programs (CHBRP), inherited metabolic disorders are genetic disorders that affect an individual's ability to metabolize nutrients due to an enzymatic or transporter deficiency. Typically, these disorders are discussed in three main groups: disorders of amino acid and protein metabolism (e.g., PKU), disorders of carbohydrate metabolism (e.g., classic galactosemia), and disorders of fatty acid oxidation metabolism. In most cases, inherited metabolic disorders, also referred to as inborn errors of metabolism, are present at birth and detected by newborn genetic screening, though some may be identified later as symptoms present. Left untreated, these disorders may result in developmental delays, intellectual disabilities, seizures, coma, or death. Severity of inherited metabolic disorders varies by disorder and how well a patient manages their nutritional needs. Traditional therapies for inherited metabolic disorders include medication, dietary management, and nutritional supplements. Dietary management can include protein restriction, avoidance of fasting, special formulas, and food products manufactured specifically for these conditions. Supplements can include amino acid compounds and B vitamins. Treatment varies by disorder and among individuals with a given disorder based on the severity of the deficiency. For some disorders, persons with severe deficiencies may need to take special formulas and supplements for their entire lives. Enteral nutrition refers to oral nutritional formulas or tube feeding that may supplement or replace dietary modifications in order to restore nutritional requirements. Enteral nutrition involves delivery methods in which absorption occurs through the intestines; parenteral nutrition is delivered via the bloodstream using an intravenous tube.

Digestive disorders are acute or chronic conditions affecting the digestive system which encompasses the gastrointestinal (GI) tract, liver, pancreas, and gallbladder. These conditions affect the body’s ability to absorb nutrients, which can result in mild to severe symptoms, disability, or death. Digestive disorders such as inflammatory bowel disease (IBD) typically develop, or are identified, in adolescence and early adulthood, though it is possible for infants and children to be diagnosed with digestive disorders. Current therapies for digestive disorders typically include use of medication, such as steroids, anti-inflammatories, immunosupressives, or biologics, along with dietary management. The primary concern with digestive disorders is that they may lead to malnutrition, which can occur by a variety of mechanisms: symptoms may result in reduced food intake, the body may not sufficiently absorb nutrients taken in orally, loss of nutrients after absorption (enteric nutrient loss), or increased nutritional requirements due to inflammation.

• 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. 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’s analysis of this bill includes the following:
     1. Assumptions. CHBRP states that it appears that formula and special food products administered via tube feeding are already covered in existing law. CHBRP also notes that it appears as if treatments specified in this bill is already covered under Medi-Cal. For this analysis, CHBRP considers the following to be the most common digestive diseases that may benefit from formula and special food products: IBD including Crohn’s disease and ulcerative colitis, cystic fibrosis, eosinophilic enteritis, enteropathy, chronic pancreatitis, and intestinal malabsorption. Inherited metabolic disorders are individually rare and estimated to be about 1/3,000 individuals overall. Many of these are diagnosed through newborn screening, which is performed in order to initiate life- and brain-saving treatment early, before irreversible damage or death has occurred. These are often grouped into categories including: disorders of amino acid and protein metabolism (e.g., PKU, for which coverage of formula and special food products is already mandated), disorders of carbohydrate metabolism, and disorders of fatty acid oxidation metabolism. CHBRP assumes that this bill is focused on chronic conditions that may benefit from formula and special food products and would exclude various acute digestive disorders. CHBRP notes that if any of the assumptions listed above are incorrect, in particular, if this bill were to require coverage of formulas for acute conditions such as reflux, the cost impacts presented in this analysis may be significantly understated.
     2. Impact on expenditures. This bill would increase total net annual expenditures by $24,187,000, or 0.02%, for enrollees with DMHC-regulated plans and CDI-regulated policies. This is primarily due to a $26,928,000 increase in total health insurance premiums paid by employers and enrollees for newly covered benefits, adjusted by a $2,741,000 decrease in enrollee expenses for covered and/or noncovered benefits. Changes in premiums as a result of this bill would vary by market segment, with increases ranging from 0.0227% to 0.0268%. At baseline, for enrollees with inherited metabolic disorders, the annual cost is $6,369 for covered formulas and special food products and $5,846 for noncovered formulas and special food products; for enrollees with digestive disorders, the annual cost is $5,758 for covered formulas and special food products and $2,619 for noncovered formulas and special food products. Postmandate, the 579 enrollees with coverage for formulas and special food products at baseline would experience no change in cost sharing. For the 1,507 enrollees using services at baseline for whom postmandate benefit coverage would be new, enrollees would experience an average decrease in out-of-pocket expenses for noncovered benefits of $2,628. Within the individual DMHC-regulated market, health plans offered by Covered California would experience a 0.0263% premium increase, or $0.1729 per member per month (PMPM). Covered California individual market plans regulated by CDI would experience a 0.0280% increase in premiums, or $0.1500 PMPM.
        1. Medi-Cal. Based on the Medi-Cal Rx provider manual, Medi-Cal beneficiaries who have other inherited metabolic disorders or digestive disorders and are enrolled in DMHC-regulated plans already have coverage for formulas and special foods through Medi-Cal Rx.
        2. CalPERS. For enrollees associated with CalPERS in DMHC regulated plans, there would be a 0.0227% premium increase, or $0.1579 PMPM.
        3. Number of Uninsured in California. Since the change in average premiums does not exceed 1% for any market segment, CHBRP estimates this bill would have no measurable impact on the number of uninsured persons.
     3. EHBs. According to CHBRP, this bill does not exceed the definition of EHBs in California because formula and special food products are considered durable medical equipment and would be encompassed with the “rehabilitative and habilitative services and devices.”
     4. Medical effectiveness. CHBRP found limited evidence from two reviews that nutritional treatment is effective on induction and maintenance of remission in Crohn’s disease and comparatively effective to standard treatment (i.e., drug therapy). CHBRP found insufficient evidence from one systematic review on the efficacy of nutritional treatment for ulcerative colitis. Though the studies in the systematic review provide some evidence regarding the efficacy of nutritional treatment for ulcerative colitis, they were not specific to nutritional treatment alone, but to patients on an enteral nutrition diet and steroid therapy. CHBRP found insufficient evidence on the efficacy of nutritional treatment for inherited metabolic disorders. No studies were found that examined the effectiveness of nutritional treatment for inherited metabolic disorders, and available evidence on treatment for these disorders are treatment guidelines based on expert opinion. Limiting factors that contribute to this evidence grade are the small number of individuals with these conditions, need for timely treatment, and ethical barriers to conducting other types of studies with this population.
     5. Utilization. CHBRP estimates 148 commercial and CalPERS enrollees will use formula or special foods for other inherited metabolic disorders that are covered by insurance and an additional four enrollees use them as a noncovered benefit at baseline. Postmandate, 163 enrollees will use formulas or special food products covered by insurance, including the four who used them at baseline and 11 additional enrollees who begin using them due to the coverage expansion. CHBRP estimates 431 commercial and CalPERS enrollees will use formula or special foods for other digestive disorders that are covered by insurance and an additional 1,503 enrollees use them as a noncovered benefit at baseline. Postmandate, 5,185 enrollees will use formulas or special food products covered by insurance, including the 1,503 who used them at baseline and 3,251 additional enrollees who begin using them due to the coverage expansion. At baseline, a total of 579 enrollees with these conditions who use formula and special food products have coverage. Postmandate, a total of 4,769 enrollees would have new benefit coverage for these products, including 1,507 enrollees using these products at baseline and an additional 3,262 enrollees who begin using these products due to the coverage expansion.
     6. Public health. Due to the limited number of enrollees impacted, CHBRP concludes that this bill would have no measurable short-term or long-term public health impact. Although nutritional treatment for inherited metabolic disorders is supported by clinical guidelines, the change in utilization is small, and such disorders are rare. Although utilization of nutritional treatment for digestive disorders would increase, there is limited evidence that this treatment is effective for inducing or maintaining remission compared to standard drug treatment for Crohn’s disease and insufficient evidence on the effect of nutritional treatment for ulcerative colitis. Due to no measurable public health impact, CHBRP concludes that this bill would also have no impact on disparities in health outcomes. This bill would also have no measurable long term impact on public health, premature death, or societal economic losses.
     7. Long-term impacts. CHBRP estimates utilization after the initial 12 months from the enactment of this bill would likely stay similar to utilization estimates during the first 12 months postmandate. Utilization changes may occur if new prescription medications or other advancements change the treatment options available for enrollees with digestive or other inherited metabolic disorders. Similarly, utilization may be greater than estimated if detection capabilities improve or overall prevalence increases such that more enrollees are diagnosed with digestive or other inherited metabolic disorders; however, CHBRP is unable to predict these types of changes. In addition, health care utilization may change if effective management of a condition through increased use of newly covered formulas and special food products allows enrollees with digestive or other inherited metabolic disorders to delay use of other treatments such as prescription medications and surgery.

1. OTHER STATES. The National Organization for Rare Disorders (NORD) publishes a state report card on coverage for medical nutrition, and for people with private insurance, the 2022 NORD report card shows that nine states mandate coverage for formula only, 27 states mandate coverage for medical nutrition more broadly, and 15 states do not mandate coverage. For people with state-funded insurance, 37 states mandate some degree of coverage for medical nutrition and 14 states do not mandate this coverage. New York law requires health insurers that cover prescription drugs to cover the cost of enteral formulas for home use, whether administered orally or via tube feeding, for which a physician or other licensed health care provider has issued a written order stating that the enteral formula is clearly medically necessary and has been proven effective as a disease-specific treatment regimen. The law lists specific diseases and disorders for which enteral formulas have been proven effective, including inherited diseases of amino acid or organic acid metabolism and Crohn's Disease. Introduced in 2023, New York Senate Bill 1234 would expand coverage and require health insurance policies that cover prescription drugs to include coverage for the cost of enteral, infant, and baby formulas subject to the same provisions as the current law. On March 22, 2023, the state of Virginia passed S 1399 that requires the state Bureau of Insurance to select a new EHB benchmark plan for the 2025 plan year that includes coverage for formula and enteral nutrition products to be classified as “medicine” and to provide coverage for these products on the same terms and subject to the same conditions as for other medicines. In Massachusetts, proposed 2023 legislation (House Bill 1015) to require coverage for any active or retired employee of the commonwealth who is insured under the group insurance commission for the cost of enteral formulas for home use, whether administered orally or via tube feeding, for which a physician has issued a written order stating that the enteral formula is clearly medically necessary and has been proven effective as a disease-specific treatment regimen.
2. SUPPORT. The Crohn’s & Colitis Foundation writes that IBD, which includes Crohn’s disease and Ulcerative Colitis, causes chronic inflammation in the GI tract, the area of the body where digestion and absorption of nutrients take place. Normally, the immune system helps to protect the body from harmful infections and irritants. In IBD, however, the immune system reacts inappropriately, causing inflammation, which leads to symptoms such as abdominal pain and cramping, diarrhea, bleeding, weight loss, and/or fatigue. If left untreated, or when a patient is nonresponsive to treatment, complications can occur, which include malabsorption of nutrients, growth delays, and low bone mass. Some complications could lead to infection and then surgery, including removal of parts of the colon. Despite significant advances in medical care, complications are common, and ultimately occur in about 70% of Crohn’s Disease patients. Nutritional support, including enteral nutrition, is an important part of managing Crohn’s disease in particular, as it reduces the inflammatory process of the gut, leading to bowel rest and improving postoperative prognosis for those who require surgery. Enteral nutrition is a liquid dietary regimen, which is administered orally, as a drink, powder, dessert-like snack, or via a feeding tube, with similar efficacy. EN may be recommended as a maintenance diet during the remission phases of Crohn’s Disease combined with the usual diet. Despite studies showing the benefits of medical enteral nutrition for Crohn’s patients, particularly pediatric patients, health plans are not required to cover their enteral nutrition, including over the counter. For pediatric patients, over the counter formulas, recommended and prescribed by their provider, could delay a child’s need to begin a more aggressive and more expensive biologic drug. To ensure access to this important treatment option, this bill expands existing coverage requirements for medical nutritional therapy to include patients diagnosed with Crohn’s disease or other digestive or inherited metabolic disorders.
3. OPPOSITION. The California Association of Health Plans, the Association of California Life and Health Insurance Companies, and America’s Health Insurance Plans write that state mandates 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. Health plans compete for business based on innovative benefit designs that increase access to care, improve quality, and contain costs. All ACA-compliant plans provide a robust package of EHBs in the large group, small business, and individual markets (both on and off the Exchange). In the individual market, the ACA sought to preserve the balance between comprehensive coverage and affordability by requiring states to bear the cost for new mandates that exceed the EHB package. The Centers for Medicaid and Medicare Services recently affirmed that states are still responsible for defraying the cost of new mandates. The opposition states all of these bills will increase costs and limit flexibility for employers. Faced with higher costs, employers must make difficult decisions about whether to absorb premium increases or seek alternative coverage options.
4. RELATED LEGISLATION. AB 1644 (Bonta) requires coverage of medically supportive food and nutrition intervention plans, as defined, under the Medi-Cal program, upon issuance of final guidance by the Department of Health Care Services. Requires medically supportive food and nutrition intervention plans be covered when determined to be medically necessary by a health care provider or health care plan. AB 1644 is pending in Assembly Health Committee.
5. AMENDMENTS. The author is proposing the following amendments to clarify the assumptions in the CHBRP analysis:
   1. To limit this bill to chronic conditions; and,
   2. To clarify that this bill applies to formulas and not solid foods.
6. POLICY COMMENTS.
   1. New mandate and impact to EHBs. CHBRP’s analysis notes that this bill does not exceed the definition of EHBs in California because formula and special food products are considered durable medical equipment and would be encompassed with the “rehabilitative and habilitative services and devices.” It is unclear whether the appropriate state regulators have conducted this analysis.

REGISTERED SUPPORT / OPPOSITION:

Support

American GI Forum Education Foundation of Santa Maria, CA

California Chronic Care Coalition

California Life Sciences

Crohns and Colitis Foundation

San Francisco Marin Medical Society

Opposition

America's Health Insurance Plans (AHIP)

Association of California Life & Health Insurance Companies

California Association of Health Plans

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