BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                      AB 1162

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          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,      |                     |


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          |                |      |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  


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          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  

          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.


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          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  

          On a previous version of this bill, the California Association of  
          Health Plans stated the bill will increase costs to the state by  


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          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