BILL ANALYSIS Ó
AB 1162
Page 1
Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1162 (Holden) - As Amended April 23, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill requires tobacco cessation services to be a covered
Medi-Cal benefit, and specifies terms of coverage, including
coverage of unlimited quit attempts, no age limits, and no
required breaks between attempts.
AB 1162
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This bill defines "quit attempt" as a 90-day treatment regimen
of any FDA-approved tobacco cessation medication with no
barriers or restrictions, as well as specified counseling
sessions.
FISCAL EFFECT:
1)Costs in the range of $650,000 (GF/federal) to Medi-Cal
annually, based on an approximate 10% increase in utilization
of tobacco cessation services. A California Health Benefits
Review Program (CHBRP) analysis is not available, but certain
assumptions from prior analysis were used to construct this
estimate. The utilization estimate is subject to significant
uncertainty. We estimate 2,500 individuals will attempt to
quit and 100 will successfully quit based on the increased
utilization of services.
2)Potential additional increased costs in the same $650,000
range, or greater, due to increased drug prices. This bill
would reduce the ability of the Department of Health Care
Services (DHCS) to negotiate supplemental rebates with
manufacturers of tobacco cessation products since all tobacco
cessation products would automatically be included in the
Fee-for-Service formulary, and a similar dynamic would exist
for Medi-Cal managed care. In addition, new drugs would
automatically be covered without restriction, leading to
unknown future increased costs.
3)Potential short-term (1-3 year) reductions in health care
costs associated with Medi-Cal enrollees who successfully
quit. A 2012 study of the Massachusetts Medicaid program found
each $1 spent on medications, counseling, and promotion and
outreach for Medicaid smokers was associated with a reduction
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of $3.12 (range $3.00 to $3.25) in Medicaid expenditures for
cardiovascular hospital admissions, resulting in net savings
between $2.00 and $2.25. Long-term cost savings are also
possible, but are subject to significant uncertainty.
Potential long-term savings are also offset by increased
longevity.
COMMENTS:
1)Purpose. The author asserts that FDA-approved tobacco
cessation medications and counseling are very effective
methods of having smokers quit, yet maintains that access to
these services is sometimes difficult for Medi-Cal recipients
due to the many barriers to access, including requiring
prior-authorization and step therapy. The purpose of this
bill is to remove all restrictions on tobacco cessation
services, increasing their availability.
2)Background. According to CDC estimated that approximately 45%
of California's Medi-Cal population smoke. Section 2502 of
the Patient Protection and Affordable Care Act (ACA) requires
Medicaid programs to cover FDA-approved cessation medications,
and further guidance specifies over-the-counter smoking
cessation drugs must also be covered.
DHCS Policy on Tobacco Cessation. On September 3, 2014, DHCS
released policy letter 14-006 to provide Medi-Cal managed care
health plans (MCPs) with minimum requirements for
comprehensive tobacco cessation services. The requirements,
similar to federal guidance on the issue, include:
a) Coverage of all seven FDA-approved tobacco cessation
medications, at least one of which must be available
without prior authorization, and any additional tobacco
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cessation medications once approved by the FDA.
b) Coverage of a 90-day treatment regimen of medications
without other requirements, restrictions, or barriers; and
a minimum of two separate quit attempts per year, with no
mandatory break required between quit attempts.
c) MCPs may not require members to attend counseling
sessions or classes prior to receiving a prescription for
an FDA-approved tobacco cessation medication.
d) Cessation counseling must be offered; four counseling
sessions of at least ten minutes each in length for at
least two separate quit attempts a year without prior
authorization.
Prior CHBRP Analysis. A CHBRP analysis of a related bill, AB
1738 (Huffman) in 2012, indicated the following:
a) The average cost per quit attempt, including counseling
and drug treatment, was around $440.
b) CHBRP estimated a 27.4% increase in utilization of
tobacco cessation services as a result of gaining coverage
for such services.
c) CHBRP attributed between 7 and 12.4 years of life gained
for each quitter to the smoking cessation coverage mandate.
d) CHBRP found clear and convincing evidence that smoking
cessation is a cost-effective preventive treatment that
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results in improvements in multiple long-term health
outcomes and reduces both direct medical costs and indirect
costs associated with smoking.
1)Staff Comments.
a) Cost-effectiveness. In their 2012 analysis of AB 1758,
CHBRP notes: "It is generally accepted that interventions
that cost less than $50,000 per Quality Adjusted Life Year,
such as mammography, are viewed by society as cost
effective. According to these standards, smoking cessation
programs are highly cost effective in the long term,
producing significant reductions in mortality and morbidity
at a net cost that is well below the $50,000/QALY
threshold. In addition, [..] a meta-analysis of the
economic literature found that in nearly every case,
smoking cessation programs are either cost saving or highly
cost effective. This is borne out in the fiscal analysis
above, which estimates costs in the range of low thousands
of dollars per unadjusted life year gained (assuming 7 and
12.4 years of life gained for each quitter). Although not
quality adjusted, this is well below the $50,000/QALY
standard and indicates increased expenditures on tobacco
cessation are highly cost-effective even in spite of
marginally higher drug costs. However, prices of future
drugs are unknown.
b) Potential unintended consequences. Under current law,
health plans and pharmaceutical benefit managers attempt to
meet patient needs for medication in a way that minimizes
costs and meets clinical standards of appropriate care.
Prior authorization, for example, is not only employed to
contain costs, but to allow a clinical review to ensure
medication is prescribed appropriately and to allow
consideration of safer alternatives. Staff notes that
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despite cost-effectiveness of tobacco cessation spending, a
complete prohibition on prior authorization may have
unintended consequences that could increase costs without
providing a benefit to patients. In addition, future
FDA-approved medications may have unknown costs and risks
to patient safety. The author may wish to closely examine
the bill's total prohibition on prior authorization to
ensure the design of this tobacco cessation benefit mandate
does not have unintended consequences, either from a cost
or patient safety perspective. If there are drugs that are
significantly more expensive without commensurate clinical
benefit or patient safety concerns for which prior
authorization would be protective of patient safety, staff
suggests allowing prior authorization or other utilization
review in those cases. Staff suggests the author consider
adding a sunset in order to assess, and address, any
unintended consequences.
c) Evaluation. Furthermore, the author may wish to consider
an evaluation of the impact of this bill on cessation
outcomes, as well as patient safety. Such an evaluation
could provide valuable data as to whether the improved
outcomes the bill seeks actually occur, and could provide
evidence-based best practices for the design of tobacco
cessation benefits.
d) Does this bill accomplish the author's stated intent to
allow coverage without restriction? Finally, the bill is
drafted in a confusing way, specifying coverage of "quit
attempts" and defining quit attempts as including
medication and counseling. However, it appears the bill is
intended to offer broad coverage of tobacco cessation
medication and services in a "whatever it takes" manner,
without conditioning the provision of one service on
acceptance of another. Staff suggests the bill be
re-drafted such that the products and services required to
be covered are clearly listed, and parameters related to
the products or services are listed separately-for example,
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as prohibitions on requiring prior authorization or other
restrictions.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081