Bill Text: CA SB43 | 2015-2016 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Health care coverage: essential health benefits.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2015-10-08 - Chaptered by Secretary of State. Chapter 648, Statutes of 2015. [SB43 Detail]

Download: California-2015-SB43-Introduced.html

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BILL NUMBER: SB 43	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Hernandez
   (Coauthor: Senator Monning)

                        DECEMBER 5, 2014

   An act to amend Section 1367.005 of the Health and Safety Code,
and to amend Section 10112.27 of the Insurance Code, relating to
health care coverage.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 43, as introduced, Hernandez. Health care coverage: essential
health benefits.
   Existing federal law, the federal Patient Protection and
Affordable Care Act (PPACA), enacts various health care coverage
market reforms that take effect January 1, 2014. Among other things,
PPACA requires a health insurance issuer that offers coverage in the
small group or individual market to ensure that the coverage includes
the essential health benefits package, as defined. PPACA requires
each state, by January 1, 2014, to establish an American Health
Benefit Exchange that facilitates the purchase of qualified health
plans by qualified individuals and qualified small employers. PPACA
defines a qualified health plan as a plan that, among other
requirements, provides an essential health benefits package. Existing
state law creates the California Health Benefit Exchange (the
Exchange) to facilitate the purchase of qualified health plans by
qualified individuals and qualified small employers.
   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 health insurers by the Department of Insurance.
Existing law requires an individual or small group health care
service plan contract or individual or small group health insurance
policy issued, amended, or renewed on or after January 1, 2015, to
cover essential health benefits, defined to include the health
benefits covered by particular benchmark plans. Existing law
specifies that these provisions do not apply to specified plans,
including grandfathered plans. Existing law authorizes the Department
of Managed Health Care and the Department of Insurance to adopt
emergency regulations implementing these provisions until March 1,
2016.
   This bill would authorize the Department of Managed Health Care
and the Department of Insurance to adopt emergency regulations
implementing amendments made to the above-described provisions during
the 2015-16 Regular Session until July 1, 2018.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1367.005 of the Health and Safety Code, as
amended by Section 7 of Chapter 572 of the Statutes of 2014, is
amended to read:
   1367.005.  (a) An individual or small group health care service
plan contract issued, amended, or renewed on or after January 1,
2014, shall, at a minimum, include coverage for essential health
benefits pursuant to PPACA and as outlined in this section. For
purposes of this section, "essential health benefits" means all of
the following:
   (1) Health benefits within the categories identified in Section
1302(b) of PPACA: ambulatory patient services, emergency services,
hospitalization, maternity and newborn care, mental health and
substance use disorder services, including behavioral health
treatment, prescription drugs, rehabilitative and habilitative
services and devices, laboratory services, preventive and wellness
services and chronic disease management, and pediatric services,
including oral and vision care.
   (2) (A) The health benefits covered by the Kaiser Foundation
Health Plan Small Group HMO 30 plan (federal health product
identification number 40513CA035) as this plan was offered during the
first quarter of 2012, as follows, regardless of whether the
benefits are specifically referenced in the evidence of coverage or
plan contract for that plan:
   (i) Medically necessary basic health care services, as defined in
subdivision (b) of Section 1345 and in Section 1300.67 of Title 28 of
the California Code of Regulations.
   (ii) The health benefits mandated to be covered by the plan
pursuant to statutes enacted before December 31, 2011, as described
in the following sections: Sections 1367.002, 1367.06, and 1367.35
(preventive services for children); Section 1367.25 (prescription
drug coverage for contraceptives); Section 1367.45 (AIDS vaccine);
Section 1367.46 (HIV testing); Section 1367.51 (diabetes); Section
1367.54 (alpha feto protein testing); Section 1367.6 (breast cancer
screening); Section 1367.61 (prosthetics for laryngectomy); Section
1367.62 (maternity hospital stay); Section 1367.63 (reconstructive
surgery); Section 1367.635 (mastectomies); Section 1367.64 (prostate
cancer); Section 1367.65 (mammography); Section 1367.66 (cervical
cancer); Section 1367.665 (cancer screening tests); Section 1367.67
(osteoporosis); Section 1367.68 (surgical procedures for jaw bones);
Section 1367.71 (anesthesia for dental); Section 1367.9 (conditions
attributable to diethylstilbestrol); Section 1368.2 (hospice care);
Section 1370.6 (cancer clinical trials); Section 1371.5 (emergency
response ambulance or ambulance transport services); subdivision (b)
of Section 1373 (sterilization operations or procedures); Section
1373.4 (inpatient hospital and ambulatory maternity); Section 1374.56
(phenylketonuria); Section 1374.17 (organ transplants for HIV);
Section 1374.72 (mental health parity); and Section 1374.73
(autism/behavioral health treatment).
   (iii) Any other benefits mandated to be covered by the plan
pursuant to statutes enacted before December 31, 2011, as described
in those statutes.
   (iv) The health benefits covered by the plan that are not
otherwise required to be covered under this chapter, to the extent
required pursuant to Sections 1367.18, 1367.21, 1367.215, 1367.22,
1367.24, and 1367.25, and Section 1300.67.24 of Title 28 of the
California Code of Regulations.
   (v) Any other health benefits covered by the plan that are not
otherwise required to be covered under this chapter.
   (B) Where there are any conflicts or omissions in the plan
identified in subparagraph (A) as compared with the requirements for
health benefits under this chapter that were enacted prior to
December 31, 2011, the requirements of this chapter shall be
controlling, except as otherwise specified in this section.
   (C) Notwithstanding subparagraph (B) or any other provision of
this section, the home health services benefits covered under the
plan identified in subparagraph (A) shall be deemed to not be in
conflict with this chapter.
   (D) For purposes of this section, the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008
(Public Law 110-343) shall apply to a contract subject to this
section. Coverage of mental health and substance use disorder
services pursuant to this paragraph, along with any scope and
duration limits imposed on the benefits, shall be in compliance with
the Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008 (Public Law 110-343), and all rules,
regulations, or guidance issued pursuant to Section 2726 of the
federal Public Health Service Act (42 U.S.C. Sec. 300gg-26).
   (3) With respect to habilitative services, in addition to any
habilitative services identified in paragraph (2), coverage shall
also be provided as required by federal rules, regulations, and
guidance issued pursuant to Section 1302(b) of PPACA. Habilitative
services shall be covered under the same terms and conditions applied
to rehabilitative services under the plan contract.
   (4) With respect to pediatric vision care, the same health
benefits for pediatric vision care covered under the Federal
Employees Dental and Vision Insurance Program vision plan with the
largest national enrollment as of the first quarter of 2012. The
pediatric vision care benefits covered pursuant to this paragraph
shall be in addition to, and shall not replace, any vision services
covered under the plan identified in paragraph (2).
   (5) With respect to pediatric oral care, the same health benefits
for pediatric oral care covered under the dental plan available to
subscribers of the Healthy Families Program in 2011-12, including the
provision of medically necessary orthodontic care provided pursuant
to the federal Children's Health Insurance Program Reauthorization
Act of 2009. The pediatric oral care benefits covered pursuant to
this paragraph shall be in addition to, and shall not replace, any
dental or orthodontic services covered under the plan identified in
paragraph (2).
   (b) Treatment limitations imposed on health benefits described in
this section shall be no greater than the treatment limitations
imposed by the corresponding plans identified in subdivision (a),
subject to the requirements set forth in paragraph (2) of subdivision
(a).
   (c) Except as provided in subdivision (d), nothing in this section
shall be construed to permit a health care service plan to make
substitutions for the benefits required to be covered under this
section, regardless of whether those substitutions are actuarially
equivalent.
   (d) To the extent permitted under Section 1302 of PPACA and any
rules, regulations, or guidance issued pursuant to that section, and
to the extent that substitution would not create an obligation for
the state to defray costs for any individual, a plan may substitute
its prescription drug formulary for the formulary provided under the
plan identified in subdivision (a) as long as the coverage for
prescription drugs complies with the sections referenced in clauses
(ii) and (iv) of subparagraph (A) of paragraph (2) of subdivision (a)
that apply to prescription drugs.
   (e) No health care service plan, or its agent, solicitor, or
representative, shall issue, deliver, renew, offer, market,
represent, or sell any product, contract, or discount arrangement as
compliant with the essential health benefits requirement in federal
law, unless it meets all of the requirements of this section.
   (f) This section shall apply regardless of whether the plan
contract is offered inside or outside the California Health Benefit
Exchange created by Section 100500 of the Government Code.
   (g) Nothing in this section shall be construed to exempt a plan or
a plan contract from meeting other applicable requirements of law.
   (h) This section shall not be construed to prohibit a plan
contract from covering additional benefits, including, but not
limited to, spiritual care services that are tax deductible under
Section 213 of the Internal Revenue Code.
   (i) Subdivision (a) shall not apply to any of the following:
   (1) A specialized health care service plan contract.
   (2) A Medicare supplement plan.
   (3) A plan contract that qualifies as a grandfathered health plan
under Section 1251 of PPACA or any rules, regulations, or guidance
issued pursuant to that section.
   (j) Nothing in this section shall be implemented in a manner that
conflicts with a requirement of PPACA.
   (k) This section shall be implemented only to the extent essential
health benefits are required pursuant to PPACA.
   (l) An essential health benefit is required to be provided under
this section only to the extent that federal law does not require the
state to defray the costs of the benefit.
   (m) Nothing in this section shall obligate the state to incur
costs for the coverage of benefits that are not essential health
benefits as defined in this section.
   (n) A plan is not required to cover, under this section, changes
to health benefits that are the result of statutes enacted on or
after December 31, 2011.
   (o) (1) The department may adopt emergency regulations
implementing this section. The department may, on a one-time basis,
readopt any emergency regulation authorized by this section that is
the same as, or substantially equivalent to, an emergency regulation
previously adopted under this section.
   (2) The initial adoption of emergency regulations implementing
this section and the readoption of emergency regulations authorized
by this subdivision shall be deemed an emergency and necessary for
the immediate preservation of the public peace, health, safety, or
general welfare. The initial emergency regulations and the readoption
of emergency regulations authorized by this section shall be
submitted to the Office of Administrative Law for filing with the
Secretary of State and each shall remain in effect for no more than
180 days, by which time final regulations may be adopted. 
   (3) The initial adoption of emergency regulations implementing
amendments to this section made during the 2015-16 Regular Session
and the readoption of emergency regulations authorized by this
subdivision shall be deemed an emergency and necessary for the
immediate preservation of the public peace, health, safety, or
general welfare. The initial emergency regulations and the readoption
of emergency regulations authorized by this section shall be
submitted to the Office of Administrative Law for filing with the
Secretary of State and each shall remain in effect for no more than
180 days, by which time final regulations may be adopted.

   (3) 
    (4)  The director shall consult with the Insurance
Commissioner to ensure consistency and uniformity in the development
of regulations under this subdivision. 
   (4) 
    (5)  This subdivision shall become inoperative on
 March 1, 2016.   July 1, 2018. 
   (p) For purposes of this section, the following definitions shall
apply:
   (1) "Habilitative services" means medically necessary health care
services and health care devices that assist an individual in
partially or fully acquiring or improving skills and functioning and
that are necessary to address a health condition, to the maximum
extent practical. These services address the skills and abilities
needed for functioning in interaction with an individual's
environment. Examples of health care services that are not
habilitative services include, but are not limited to, respite care,
day care, recreational care, residential treatment, social services,
custodial care, or education services of any kind, including, but not
limited to, vocational training. Habilitative services shall be
covered under the same terms and conditions applied to rehabilitative
services under the plan contract.
   (2) (A) "Health benefits," unless otherwise required to be defined
pursuant to federal rules, regulations, or guidance issued pursuant
to Section 1302(b) of PPACA, means health care items or services for
the diagnosis, cure, mitigation, treatment, or prevention of illness,
injury, disease, or a health condition, including a behavioral
health condition.
   (B) "Health benefits" does not mean any cost-sharing requirements
such as copayments, coinsurance, or deductibles.
   (3) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued thereunder.
   (4) "Small group health care service plan contract" means a group
health care service plan contract issued to a small employer, as
defined in Section 1357.500.
  SEC. 2.  Section 10112.27 of the Insurance Code, as amended by
Section 14 of Chapter 572 of the Statutes of 2014, is amended to
read:
   10112.27.  (a) An individual or small group health insurance
policy issued, amended, or renewed on or after January 1, 2014,
shall, at a minimum, include coverage for essential health benefits
pursuant to PPACA and as outlined in this section. This section shall
exclusively govern what benefits a health insurer must cover as
essential health benefits. For purposes of this section, "essential
health benefits" means all of the following:
   (1) Health benefits within the categories identified in Section
1302(b) of PPACA: ambulatory patient services, emergency services,
hospitalization, maternity and newborn care, mental health and
substance use disorder services, including behavioral health
treatment, prescription drugs, rehabilitative and habilitative
services and devices, laboratory services, preventive and wellness
services and chronic disease management, and pediatric services,
including oral and vision care.
   (2) (A) The health benefits covered by the Kaiser Foundation
Health Plan Small Group HMO 30 plan (federal health product
identification number 40513CA035) as this plan was offered during the
first quarter of 2012, as follows, regardless of whether the
benefits are specifically referenced in the plan contract or evidence
of coverage for that plan:
   (i) Medically necessary basic health care services, as defined in
subdivision (b) of Section 1345 of the Health and Safety Code and in
Section 1300.67 of Title 28 of the California Code of Regulations.
   (ii) The health benefits mandated to be covered by the plan
pursuant to statutes enacted before December 31, 2011, as described
in the following sections of the Health and Safety Code: Sections
1367.002, 1367.06, and 1367.35 (preventive services for children);
Section 1367.25 (prescription drug coverage for contraceptives);
Section 1367.45 (AIDS vaccine); Section 1367.46 (HIV testing);
Section 1367.51 (diabetes); Section 1367.54 (alpha feto protein
testing); Section 1367.6 (breast cancer screening); Section 1367.61
(prosthetics for laryngectomy); Section 1367.62 (maternity hospital
stay); Section 1367.63 (reconstructive surgery); Section 1367.635
(mastectomies); Section 1367.64 (prostate cancer); Section 1367.65
(mammography); Section 1367.66 (cervical cancer); Section 1367.665
(cancer screening tests); Section 1367.67 (osteoporosis); Section
1367.68 (surgical procedures for jaw bones); Section 1367.71
(anesthesia for dental); Section 1367.9 (conditions attributable to
diethylstilbestrol); Section 1368.2 (hospice care); Section 1370.6
(cancer clinical trials); Section 1371.5 (emergency response
ambulance or ambulance transport services); subdivision (b) of
Section 1373 (sterilization operations or procedures); Section 1373.4
(inpatient hospital and ambulatory maternity); Section 1374.56
(phenylketonuria); Section 1374.17 (organ transplants for HIV);
Section 1374.72 (mental health parity); and Section 1374.73
(autism/behavioral health treatment).
   (iii) Any other benefits mandated to be covered by the plan
pursuant to statutes enacted before December 31, 2011, as described
in those statutes.
   (iv) The health benefits covered by the plan that are not
otherwise required to be covered under Chapter 2.2 (commencing with
Section 1340) of Division 2 of the Health and Safety Code, to the
extent otherwise required pursuant to Sections 1367.18, 1367.21,
1367.215, 1367.22, 1367.24, and 1367.25 of the Health and Safety
Code, and Section 1300.67.24 of Title 28 of the California Code of
Regulations.
   (v) Any other health benefits covered by the plan that are not
otherwise required to be covered under Chapter 2.2 (commencing with
Section 1340) of Division 2 of the Health and Safety Code.
   (B) Where there are any conflicts or omissions in the plan
identified in subparagraph (A) as compared with the requirements for
health benefits under Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code that were enacted prior to
December 31, 2011, the requirements of Chapter 2.2 (commencing with
Section 1340) of Division 2 of the Health and Safety Code shall be
controlling, except as otherwise specified in this section.
   (C) Notwithstanding subparagraph (B) or any other provision of
this section, the home health services benefits covered under the
plan identified in subparagraph (A) shall be deemed to not be in
conflict with Chapter 2.2 (commencing with Section 1340) of Division
2 of the Health and Safety Code.
   (D) For purposes of this section, the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008
(Public Law 110-343) shall apply to a policy subject to this section.
Coverage of mental health and substance use disorder services
pursuant to this paragraph, along with any scope and duration limits
imposed on the benefits, shall be in compliance with the Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity
Act of 2008 (Public Law 110-343), and all rules, regulations, and
guidance issued pursuant to Section 2726 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-26).
   (3) With respect to habilitative services, in addition to any
habilitative services identified in paragraph (2), coverage shall
also be provided as required by federal rules, regulations, or
guidance issued pursuant to Section 1302(b) of PPACA. Habilitative
services shall be covered under the same terms and conditions applied
to rehabilitative services under the policy.
   (4) With respect to pediatric vision care, the same health
benefits for pediatric vision care covered under the Federal
Employees Dental and Vision Insurance Program vision plan with the
largest national enrollment as of the first quarter of 2012. The
pediatric vision care services covered pursuant to this paragraph
shall be in addition to, and shall not replace, any vision services
covered under the plan identified in paragraph (2).
   (5) With respect to pediatric oral care, the same health benefits
for pediatric oral care covered under the dental plan available to
subscribers of the Healthy Families Program in 2011-12, including the
provision of medically necessary orthodontic care provided pursuant
to the federal Children's Health Insurance Program Reauthorization
Act of 2009. The pediatric oral care benefits covered pursuant to
this paragraph shall be in addition to, and shall not replace, any
dental or orthodontic services covered under the plan identified in
paragraph (2).
   (b) Treatment limitations imposed on health benefits described in
this section shall be no greater than the treatment limitations
imposed by the corresponding plans identified in subdivision (a),
subject to the requirements set forth in paragraph (2) of subdivision
(a).
   (c) Except as provided in subdivision (d), nothing in this section
shall be construed to permit a health insurer to make substitutions
for the benefits required to be covered under this section,
regardless of whether those substitutions are actuarially equivalent.

   (d) To the extent permitted under Section 1302 of PPACA and any
rules, regulations, or guidance issued pursuant to that section, and
to the extent that substitution would not create an obligation for
the state to defray costs for any individual, an insurer may
substitute its prescription drug formulary for the formulary provided
under the plan identified in subdivision (a) as long as the coverage
for prescription drugs complies with the sections referenced in
clauses (ii) and (iv) of subparagraph (A) of paragraph (2) of
subdivision (a) that apply to prescription drugs.
   (e) No health insurer, or its agent, producer, or representative,
shall issue, deliver, renew, offer, market, represent, or sell any
product, policy, or discount arrangement as compliant with the
essential health benefits requirement in federal law, unless it meets
all of the requirements of this section. This subdivision shall be
enforced in the same manner as Section 790.03, including through the
means specified in Sections 790.035 and 790.05.
   (f) This section shall apply regardless of whether the policy is
offered inside or outside the California Health Benefit Exchange
created by Section 100500 of the Government Code.
   (g) Nothing in this section shall be construed to exempt a health
insurer or a health insurance policy from meeting other applicable
requirements of law.
   (h) This section shall not be construed to prohibit a policy from
covering additional benefits, including, but not limited to,
spiritual care services that are tax deductible under Section 213 of
the Internal Revenue Code.
   (i) Subdivision (a) shall not apply to any of the following:
   (1) A policy that provides excepted benefits as described in
Sections 2722 and 2791 of the federal Public Health Service Act (42
U.S.C. Sec. 300gg-21; 42 U.S.C. Sec. 300gg-91).
   (2) A policy that qualifies as a grandfathered health plan under
Section 1251 of PPACA or any binding rules, regulation, or guidance
issued pursuant to that section.
   (j) Nothing in this section shall be implemented in a manner that
conflicts with a requirement of PPACA.
   (k) This section shall be implemented only to the extent essential
health benefits are required pursuant to PPACA.
   (l) An essential health benefit is required to be provided under
this section only to the extent that federal law does not require the
state to defray the costs of the benefit.
   (m) Nothing in this section shall obligate the state to incur
costs for the coverage of benefits that are not essential health
benefits as defined in this section.
   (n) An insurer is not required to cover, under this section,
changes to health benefits that are the result of statutes enacted on
or after December 31, 2011.
   (o) (1) The commissioner may adopt emergency regulations
implementing this section. The commissioner may, on a one-time basis,
readopt any emergency regulation authorized by this section that is
the same as, or substantially equivalent to, an emergency regulation
previously adopted under this section.
   (2) The initial adoption of emergency regulations implementing
this section and the readoption of emergency regulations authorized
by this subdivision shall be deemed an emergency and necessary for
the immediate preservation of the public peace, health, safety, or
general welfare. The initial emergency regulations and the readoption
of emergency regulations authorized by this section shall be
submitted to the Office of Administrative Law for filing with the
Secretary of State and each shall remain in effect for no more than
180 days, by which time final regulations may be adopted. 
   (3) The initial adoption of emergency regulations implementing
amendments to this section made during the 2015-16 Regular Session
and the readoption of emergency regulations authorized by this
subdivision shall be deemed an emergency and necessary for the
immediate preservation of the public peace, health, safety, or
general welfare. The initial emergency regulations and the readoption
of emergency regulations authorized by this section shall be
submitted to the Office of Administrative Law for filing with the
Secretary of State and each shall remain in effect for no more than
180 days, by which time final regulations may be adopted. 

   (3) 
    (4)  The commissioner shall consult with the Director of
the Department of Managed Health Care to ensure consistency and
uniformity in the development of regulations under this subdivision.

   (4) 
    (   5)  This subdivision shall become
inoperative on  March 1, 2016.   July 1, 2018.

   (p) Nothing in this section shall impose on health insurance
policies the cost sharing or network limitations of the plans
identified in subdivision (a) except to the extent otherwise required
to comply with provisions of this code, including this section, and
as otherwise applicable to all health insurance policies offered to
individuals and small groups.
   (q) For purposes of this section, the following definitions shall
apply:
   (1) "Habilitative services" means medically necessary health care
services and health care devices that assist an individual in
partially or fully acquiring or improving skills and functioning and
that are necessary to address a health condition, to the maximum
extent practical. These services address the skills and abilities
needed for functioning in interaction with an individual's
environment. Examples of health care services that are not
habilitative services include, but are not limited to, respite care,
day care, recreational care, residential treatment, social services,
custodial care, or education services of any kind, including, but not
limited to, vocational training. Habilitative services shall be
covered under the same terms and conditions applied to rehabilitative
services under the policy.
   (2) (A) "Health benefits," unless otherwise required to be defined
pursuant to federal rules, regulations, or guidance issued pursuant
to Section 1302(b) of PPACA, means health care items or services for
the diagnosis, cure, mitigation, treatment, or prevention of illness,
injury, disease, or a health condition, including a behavioral
health condition.
   (B) "Health benefits" does not mean any cost-sharing requirements
such as copayments, coinsurance, or deductibles.
   (3) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued thereunder.
   (4) "Small group health insurance policy" means a group health
insurance policy issued to a small employer, as defined in Section
10753.