BILL ANALYSIS Ó AB 1162 Page 1 ASSEMBLY THIRD READING AB 1162 (Holden) As Amended June 1, 2015 Majority vote ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+---------------------+---------------------| |Health |18-0 |Bonta, Maienschein, | | | | |Bonilla, Burke, | | | | |Chávez, Chiu, Gomez, | | | | |Gonzalez, Roger | | | | |Hernández, Lackey, | | | | |Patterson, | | | | | | | | | | | | | | |Ridley-Thomas, | | | | |Rodriguez, Santiago, | | | | |Steinorth, Thurmond, | | | | |Waldron, Wood | | | | | | | |----------------+------+---------------------+---------------------| |Appropriations |12-5 |Gomez, Bonta, |Bigelow, Chang, | | | |Calderon, Daly, |Gallagher, Jones, | | | |Eggman, |Wagner | | | | | | | | | | | | | |Eduardo Garcia, | | | | |Gordon, Holden, | | AB 1162 Page 2 | | |Quirk, Rendon, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------- SUMMARY: Requires tobacco cessation services to be a covered benefit under the Medi-Cal program, as specified. Specifically, this bill: 1)Defines tobacco cessation services as: a) At least four tobacco cessation counseling sessions per quit attempt, which may be conducted in-person or by phone, individually or as a group; or, b) A 90-day treatment regimen of any medication approved by the federal Food and Drug Administration (FDA) as of January 1, 2015 for tobacco cessation, including prescription and over-the-counter medications. 2)Requires the Medi-Cal program to cover tobacco cessation services, including unlimited quit attempts and no requirement for a break between attempts for beneficiaries of any age. 3)Exempts coverage of quit attempts from being subject to requirements, including prior authorization, and requires only a prescription from an authorized provider and proof of Medi-Cal coverage as sufficient documentation to fill prescriptions. 4)Prohibits a beneficiary from being required to receive a specific service as a condition of receiving any other form of AB 1162 Page 3 treatment. FISCAL EFFECT: According to the Assembly Appropriations Committee: 1)Costs in the range of $650,000 (General Fund/federal funds) to Medi-Cal annually, based on an approximate 10% increase in utilization of tobacco cessation services. A California Health Benefits Review Program 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 (one to three 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 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. AB 1162 Page 4 COMMENTS: According to the author, tobacco use is the leading preventable cause of death in the United States and, though the dangers of smoking are better understood now than 50 years ago, smoking rates in the Medi-Cal population are still too high. The author states the low success rate of quitting is due to the fact that smokers often try quit without help, which is typically ineffective. 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 author concludes that these barriers, along with the inherent difficulty of quitting, lead many to give up before they even get started. On a previous version of this bill, the American Heart Association/American Stroke Association, the American Lung Association, and the American Cancer Society Cancer Action Network, the sponsors of this bill, stated that the success rate of smokers quitting their addiction to tobacco is still very low, due in part because many smokers try to quit without the assistance of tobacco cessation services. The sponsors noted that although the Affordable Care Act has made tobacco cessation treatments more accessible, current guidelines as to how to implement these treatments are unclear, thereby resulting in differences in coverage between health plans. In addition, the sponsors stated that Medi-Cal patients face barriers to treatment services due to prior authorization and step therapy treatment requirements. Supporters stated this bill provides needed clarity for Medi-Cal participants on tobacco cessation services and ensures access to comprehensive insurance coverage for these services. On a previous version of this bill, the California Association of Health Plans stated the bill will increase costs to the state by AB 1162 Page 5 requiring Medi-Cal managed care plans to pay for tobacco cessation drugs in a manner that is inconsistent with policies of both DHCS and sound medical management. The association also stated Medi-Cal programs already comply with the requirements of the DHCS Policy letter. Opposition also asserted that removing all prior authorization protocols and requiring plans to cover all specific medications would create a new benefit mandate, which would result in higher state costs in Medi-Cal reimbursement rates to plans in order to reflect the benefit expansion. Analysis Prepared by: An-Chi Tsou / HEALTH / (916) 319-2097 FN: 0000846