Health care coverage: out-of-pocket expenses.
If enacted, AB 874 will significantly alter the way prescription drug costs are managed within California's health care system. By requiring that any discounts or reductions provided to the insured are accounted for in their out-of-pocket expense calculations, the bill aims to ensure that patients benefit directly from these savings. It is designed to promote transparency and fairness in health care costs and may improve affordability for enrollees. The law will also apply to health care service plans and insurance policies issued or renewed after January 1, 2024, thereby mandating compliance from health insurers and pharmacy benefit managers.
Assembly Bill No. 874, introduced by Assembly Member Weber on February 14, 2023, seeks to amend the Health and Safety Code to establish requirements regarding the handling of out-of-pocket expenses for health care coverage in California. Specifically, the bill mandates that health care service plans, health insurance policies, and pharmacy benefit managers must apply any discounts or reductions provided to enrollees toward their overall cost-sharing obligations. This includes contributions to out-of-pocket maximums, deductibles, and copayment responsibilities.
One notable aspect of AB 874 is its provision for penalties against health care service plans for non-compliance, as willful violations are deemed a criminal offense. This introduces a layer of accountability but also may be viewed as contentious by stakeholders who feel that the imposition of criminal penalties could have unintended consequences, such as limiting the willingness of insurers to provide discounts. Additionally, the exclusion of self-insured employer plans governed by ERISA may raise questions about the bill's impact on various health coverage structures and its comprehensive ability to address the overall reform intended in prescription drug pricing.