BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 1162

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          1162 (Holden)

          As Enrolled  September 14, 2015

          2/3 vote

          |ASSEMBLY:  |67-12 |(June 3, 2015) |SENATE: |30-10 |(September 9,    |
          |           |      |               |        |      |2015)            |
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          |ASSEMBLY:  |67-12 |(September 10, |        |      |                 |
          |           |      |2015)          |        |      |                 |
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          Original Committee Reference:  HEALTH

          SUMMARY:  Requires tobacco cessation services to be a covered  
          benefit under the Medi-Cal program, as specified.

          The Senate amendments:


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          1)Require that the tobacco cessation services covered benefit  
            under the Medi-Cal program be subject to utilization controls.

          2)Require tobacco cessation services to include all intervention  
            recommendations assigned a grade A or B by the United States  
            Preventive Services Task Force (USPSTF).

          3)Strikes the inclusion of an unlimited number of quit attempts  
            per year for all Medi-Cal beneficiaries for tobacco cessation  
            services, and instead limits services to include a minimum of  
            four quit attempt per year for beneficiaries 18 years of age  
            and older.  For beneficiaries less than 18 years of age,  
            requires tobacco cessation services to be provided in  
            accordance with the American Academy of Pediatrics guidelines  
            and intervention recommendations assigned a grade A or B by  
            the USPSTF. 

          4)Requires the definition of tobacco cessation services to be  
            consistent with the intervention recommendations assigned a  
            grade A or B by the USPSTF. 

          5)Expands the definition of tobacco cessation services to  
            include 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, and requires at least one prescription medication  
            and all over-the-counter medications to be available without  
            prior authorization.

          6)Strikes from the definition of tobacco cessation services a  
            90-day treatment regimen of any medication approved by the  
            federal FDA for tobacco cessation, including prescription and  
            over-the-counter medications.


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          7)Requires the Department of Health Care Services (DHCS) to seek  
            any federal approvals necessary, and that DHCS determines are  
            necessary, to implement this bill.  Requires this bill to only  
            be implemented to the extent that federal financial  
            participation is available and not otherwise jeopardized, and  
            any necessary federal approvals have been obtained.

          FISCAL EFFECT:  According to the Senate Appropriations  

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


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            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.

          COMMENTS:  According to the author, tobacco use is the leading  
          preventable cause of death in the U.S. and, though the dangers  
          of smoking are better understood now than fifty 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 Patient Protection and 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  


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          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 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 MCPs 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.


          I am returning the following six bills without my signature;

          Assembly Bill 50

          Assembly Bill 858

          Assembly Bill 1162

          Assembly Bill 1231

          Assembly Bill 1261


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          Senate Bill 610

          These bills unnecessarily codify certain existing health care  
          benefits or require the expansion or development of new benefits  
          and procedures in the Medi-Cal program.

          Taken together, these bills would require new spending at a time  
          when there is considerable uncertainty in the funding of this  
          program. Until the fiscal outlook for Medi-Cal is stabilized, I  
          cannot support any of these measures.

          Analysis Prepared by:                                             
                          An-Chi Tsou / HEALTH / (916) 319-2097  FN: