BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                       AB 1162|
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                                   THIRD READING 

          Bill No:  AB 1162
          Author:   Holden (D), et al.
          Amended:  9/4/15 in Senate
          Vote:     21  

           SENATE HEALTH COMMITTEE:  8-0, 7/8/15
           AYES:  Hernandez, Nguyen, Hall, Monning, Nielsen, Pan, Roth,  
           NO VOTE RECORDED:  Mitchell

           AYES:  Lara, Beall, Hill, Leyva, Mendoza, Nielsen
           NOES:  Bates

           ASSEMBLY FLOOR:  67-12, 6/3/15 - See last page for vote

           SUBJECT:   Medi-Cal: tobacco cessation

          SOURCE:   American Cancer Society Cancer Action Network
                    American Heart Association/American Stroke Association
                    American Lung Association in California

          DIGEST:  This bill requires tobacco cessation services to be a  
          covered benefit under the Medi-Cal program, and requires tobacco  
          cessation services to include all intervention recommendations,  
          as periodically updated, assigned a grade A or B by the United  
          States Preventive Services Task Force (USPSTF).


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          Senate Floor Amendments of 9/4/15 implement this bill only to  
          the extent that federal financial participation is not  


          Existing law:

          1)Establishes the Medi-Cal program, administered by the  
            Department of Health Care Services (DHCS), under which basic  
            health care services are provided to qualified low-income  

          2)Establishes a schedule of benefits under the Medi-Cal program,  
            which includes the purchase of prescribed drugs, subject to  
            the Medi-Cal List of Contract Drugs and utilization controls.

          3)Requires that preventive services assigned a grade of A or B  
            by the U.S. Preventive Services Task Force be provided to  
            Medi-Cal beneficiaries without any cost sharing by the  
            beneficiary in order for the state to receive increased  
            federal contributions for those services, as specified.
          This bill:

          1)Requires tobacco cessation services to be covered benefits  
            under the Medi-Cal program, subject to utilization controls. 

          2)Requires tobacco cessation services to include all  
            intervention recommendations, as periodically updated, that  
            are assigned a grade A or B by the USPSTF. 

          3)Requires, in addition to 2) above, tobacco cessation services  
            to include a minimum of four quit attempts per year, with no  
            required break between attempts, for all beneficiaries 18 year  
            of age and older who use tobacco. 

          4)Requires, for beneficiaries under 18 years of age, tobacco  
            cessation services to be provided in accordance with the  
            American Academy of Pediatrics guidelines and the intervention  
            recommendations, as periodically updated, assigned a grade A  


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            or B by the USPSTF.

          5)Requires, in addition to the services described above, and  
            only to the extent consistent with the intervention  
            recommendations, as periodically updated, assigned a grade A  
            or B by the USPSTF, tobacco cessation services to include:

             a)   At least four tobacco cessation counseling sessions per  
               quit attempt, which may be conducted in person or by  
               telephone and individually or as part of a group, at the  
               beneficiary's option.

             b)   A 12-week treatment regimen of any medication approved  
               by the federal Food and Drug Administration (FDA) for  
               tobacco cessation, including prescription and  
               over-the-counter medications.

          6)Requires at least one prescription medication and all  
            over-the-counter medications (OTC) to be available without  
            prior authorization.

          7)Requires a prescription from a provider with authority to  
            prescribe and proof of Medi-Cal coverage to be sufficient  
            documentation to fill a prescription for OTC tobacco cessation  

          8)Requires DHCS, effective January 1, 2016, to seek any federal  
            approvals necessary to implement this bill that DHCS  
            determines are necessary to implement its provisions.

          9)Requires this bill to be implemented only to the extent that  
            federal financial participation is available and not  
            jeopardized, and any necessary federal approvals have been  


          1)Author's statement.  According to the author, quitting tobacco  
            products is a difficult feat that many attempt every year but  
            few accomplish. It can cause cancer, respiratory and heart  
            diseases, birth defects and is still the leading preventable  
            cause of death in the United States. Though the dangers of  
            smoking are better understood now than 50 years ago,  
            cigarettes are more addictive than ever and smoking rates in  


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            the Medi-Cal population are still too high. In addition to  
            efforts to discourage people from smoking, this bill fights  
            against tobacco dependence by giving smokers the tools to  
            fight the addiction. The coverage mandated by this bill  
            ensures that Medi-Cal patients have access to clinically  
            proven treatments like counseling, medication, and nicotine  
            replacement treatments. Studies have shown that the  
            comprehensive coverage of these treatments has led to  
            decreases in the smoking population. Tobacco companies make it  
            hard enough for smokers to quit, as a state we must remove all  
            barriers to treatments that make quitting possible.

          2)Background on tobacco. According to the Centers for Disease  
            Control and Prevention, tobacco use is the leading preventable  
            cause of death in the United States. Every year, smoking kills  
            480,000 Americans and costs the nation at least $130 billion  
            in medical care costs for adults and more than $150 billion in  
            lost productivity, imposing a heavy economic burden on private  
            employers, private health plans, and federal, state, and local  
            governments. The cost of tobacco use to California is  
            estimated to be $18.1 billion annually. According to data from  
            2001 to 2010 published by the Centers for Disease Control and  
            Prevention in 2011, most smokers want to quit smoking (69%),  
            and over half (52%) tried to quit in the previous year, but  
            only 6% were successful.

          3)Affordable Care Act Changes to Tobacco Cessation Coverage.  
            Section 2502 of the Patient Protection and Affordable Care Act  
            (ACA) prohibited drugs used to promote smoking cessation,  
            including agents approved by the FDA for over-the-counter for  
            purposes of promoting tobacco cessation, from being excluded  
            from Medicaid coverage. In addition, Section 4107 of the ACA  
            required Medicaid coverage of tobacco cessation counseling and  
            pharmacotherapy (FDA-approved OTC and prescription drugs) for  
            pregnant women, and prohibited cost-sharing for these  

          The seven FDA-approved medications include five forms of  
            nicotine replacement therapy (NRT): the patch, gum, inhaler,  
            nasal spray, and lozenge, as well as two non-NRT medications,  
            bupropion SR (brand name Zyban if used for tobacco cessation  
            and Wellbutrin if used as an antidepressant), and varenicline  
            (brand name Chantix). Three forms of NRT - the patch, gum, and  
            the lozenge - are available OTC. The other two forms of NRT  


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            (the inhaler and the nasal spray), as well as the two non-NRT  
            medications, are available by prescription. The patch is  
            available by prescription as well as OTC.

          4)Tobacco use prevalence and current Medi-Cal coverage of  
            tobacco cessation. Medi-Cal beneficiaries have a higher  
            prevalence of tobacco use than the general California  
            population. In the 2011-12 California Health Interview Survey,  
            16.1% of adult and teen Medi-Cal beneficiaries were current  
            smokers, as compared to 12.1% of adults and teens not covered  
            by Medi-Cal. DHCS indicates expenditures on smoking deterrents  
            in 2014 was $1 million in FFS and $3.1 million in managed  
            care. Coverage of tobacco cessation medication varies,  
            depending upon whether the beneficiary is in FFS Medi-Cal or  
            Medi-Cal managed care plan, and the particular Medi-Cal  
            managed care plan the beneficiary is enrolled in. In 2015-16,  
            Medi-Cal is projected to enroll 12.4 million individuals, of  
            whom 76.6% (9.5 million people) are projected to be in managed  
            care plans. For FFS Medi-Cal, DHCS is required to use the  
            following criteria when adding a drug to the Medi-Cal contract  
            drug list: (a) the safety of the drug; (b) the effectiveness  
            of the drug; (c) the essential need for the drug; (d) the  
            potential for misuse of the drug; and, (e) the cost of the  

          In September 2014, DHCS released Policy Letter 14-006 to provide  
            Medi-Cal managed care health plans with minimum requirements  
            for comprehensive tobacco cessation services. The main  
            differences between current DHCS policy and this bill is this  
            requires coverage for more quit attempts (4 quit attempts per  
            years vs. 2 per year in DHCS policy) and has broader coverage  
            of FDA-approved OTC products without prior authorization (this  
            bill requires coverage for all OTC products without prior  
            authorization, while DHCS policy requires coverage of at least  
            one OTC).
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee:

          1)Minor administrative costs to update existing Medi-Cal  
            policies for the provision of smoking cessation services  


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            (General Fund and federal funds).

          2)Unknown costs due to increased utilization of smoking  
            cessation services. Under current practice, about 30,000  
            Medi-Cal beneficiaries access smoking cessation services at a  
            total annual cost of about $4 million per year. Assuming that  
            the expanded benefits required in the bill result in increased  
            demand for smoking cessation services of 10% to 20%, the bill  
            would result in increased costs of $400,000 to $800,000 per  
            year (General Fund and federal funds).

          3)Unknown short term cost savings due to reduced smoking-related  
            health care costs for Medi-Cal beneficiaries. A review of a  
            new smoking cessation benefit in the Massachusetts Medicaid  
            program indicates that reducing smoking by beneficiaries led  
            to a net reduction in health care costs of about $2 for each  
            $1 spent on the program. Using the assumptions for utilization  
            increase above, potential cost savings of $800,000 to $1.7  
            million per year. The long-term health care spending impacts  
            of reduced tobacco use are less clear, because reduced health  
            care spending on smoking-related conditions will be offset by  
            increased longevity.

          SUPPORT:   (Verified9/4/15)

          American Cancer Society Cancer Action Network (co-source)
          American Heart Association/American Stroke Association  
          American Lung Association in California (co-source)
          Association of California Healthcare Districts
          Association of Northern California Oncologists
          California Academy of Physician Assistants
          California Academy of Preventative Medicine
          California Black Health Network
          California Chapter of the American College of Emergency  
          California Chronic Care Coalition
          California Dental Association
          California Healthcare Institute
          California Life Sciences Association
          California Medical Association


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          California Pan-Ethnic Health Network
          California Society of Addiction Medicine
          Community Clinic Association of Los Angeles County
          County Health Executives Association of California
          First 5 California
          Health Officers Association of California
          March of Dimes California Chapter
          Medical Oncology Association of Southern California
          Tobacco Education and Research Oversight Committee
          Western Center on Law and Poverty

          OPPOSITION:   (Verified9/4/15)

          California Association of Health Plans

          ARGUMENTS IN SUPPORT:     This bill is jointly sponsored by the  
          American Heart Association/American Stroke Association, the  
          American Lung Association, and the American Cancer Society  
          Cancer Action Network to ensure all Medi-Cal patients are able  
          to access tobacco cessation treatments. The sponsors argue 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 ACA 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 argue this bill provides  
          needed clarity for Medi-Cal participants on tobacco cessation  
          services and ensures access to comprehensive insurance coverage  
          for these services. Supporters conclude that increased access to  
          smoking cessation treatments and eliminating barriers will  
          reduce the incidence of tobacco-related diseases and will lower  
          health care costs.

          ARGUMENTS IN OPPOSITION:     The California Association of  
          Health Plans (CAHP) writes in opposition that this bill will  
          increase costs to the state by requiring Medi-Cal managed care  


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          plans to pay for tobacco cessation drugs in a manner that is  
          inconsistent with policies of DHCS. CAHP argues Medi-Cal managed  
          care plans already comply with the requirements of the DHCS  
          policy letter, and this bill will result in higher state costs  
          in Medi-Cal reimbursement rates to plans in order to reflect the  
          benefit expansion.

          ASSEMBLY FLOOR:  67-12, 6/3/15
          AYES:  Achadjian, Alejo, Baker, Bloom, Bonilla, Bonta, Brown,  
            Burke, Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley,  
            Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier,  
            Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
            Gomez, Gonzalez, Gordon, Gray, Hadley, Harper, Roger  
            Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine,  
            Linder, Lopez, Low, Maienschein, Mathis, McCarty, Medina,  
            Melendez, Mullin, Nazarian, O'Donnell, Olsen, Perea, Quirk,  
            Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth,  
            Mark Stone, Ting, Waldron, Weber, Wilk, Williams, Wood, Atkins
          NOES:  Travis Allen, Bigelow, Brough, Chang, Beth Gaines, Grove,  
            Jones, Kim, Mayes, Obernolte, Patterson, Wagner
          NO VOTE RECORDED:  Thurmond

          Prepared by:Scott Bain / HEALTH / 
          9/9/15 9:26:56

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