BILL ANALYSIS SENATE HEALTH COMMITTEE ANALYSIS Senator Elaine K. Alquist, Chair BILL NO: AB 2352 A AUTHOR: John A. Perez B AMENDED: As Introduced HEARING DATE: June 23, 2010 2 CONSULTANT: 3 Dunstan/jl 5 2 SUBJECT Medi-Cal: organ transplants: antirejection medication SUMMARY Requires Medi-Cal beneficiaries to remain eligible to receive Medi-Cal coverage for anti-rejection medication for up to two years following an organ transplant, unless during that time the beneficiary becomes eligible for Medicare or private health insurance that would cover the medication. CHANGES TO EXISTING LAW Existing federal law: Establishes the Medicaid program to provide comprehensive health benefits to low-income persons. Mandates states that elect to provide Medicaid benefits to cover certain eligibility groups, such as low-income children, those receiving supplemental security income (SSI) and others. Allows states the option of providing Medicaid benefits to other groups, including disabled persons who are not eligible for SSI or children in families with incomes above the mandatory coverage level. Continued--- STAFF ANALYSIS OF ASSEMBLY BILL 2352 (John A. Perez) Page 2 Existing state law: Establishes the Medi-Cal program as California's Medicaid program, administered by the Department of Health Care Services (DHCS), which provides comprehensive health care coverage for low-income individuals and their families; pregnant women; elderly, blind, or disabled persons; nursing home residents; and refugees who meet specified eligibility criteria. Establishes that the Medi-Cal program comprises a uniform schedule of health care benefits, including transplants for eligible beneficiaries, subject to utilization controls. Provides limited Medi-Cal benefits for specified life-sustaining treatments, including dialysis. Establishes eligibility criteria for dialysis-only benefits related to diagnosis, net worth and absence of other coverage. Provides that eligible beneficiaries for dialysis benefits shall pay a share of cost based on their net worth. STAFF ANALYSIS OF ASSEMBLY BILL 2352 (John A. Perez) Page 3 This bill: Requires Medi-Cal beneficiaries to remain eligible to receive Medi-Cal coverage for anti-rejection medication for up to two years following an organ transplant unless during that time the beneficiary becomes eligible for Medicare or private health insurance that would cover the medication. FISCAL IMPACT According to the Assembly Appropriations Committee analysis, this bill would result in annual costs of $500,000 (100 percent General Fund) to provide post-transplant anti-rejection medication to Medi-Cal beneficiaries who had formerly been on dialysis-only Medi-Cal and who would either return to that program or require a new kidney transplant. In addition, this bill would result in reduced Medi-Cal costs to the extent this bill reduces the need for a return to Medi-Cal for the purposes of receiving dialysis or a new transplant. An additional transplant or continuation of dialysis-only treatment costs between $50,000 and $100,000 per year. BACKGROUND AND DISCUSSION According to the author, there are currently some patients that qualify for Medi-Cal under a federal rule allowing coverage for patients with end-stage renal disease (on dialysis). The author notes that those patients, if they are able to receive a kidney and have an organ transplant, will only receive coverage for their immunosuppressive medication for one year post-transplant, as the person's Medi-Cal eligibility ends when he or she no longer meets the eligibility requirement of end-stage renal disease. The author states that patients in this particular group may not be eligible for Medi-Cal under any other eligibility criteria, and they may also be ineligible for Medicare, either because they have not paid into Social Security for a sufficient time or because of their immigration status. The author states that if these patients were dual-eligible for Medicare and Medi-Cal, Medicare would pay for immunosuppressive coverage for an additional two years, so the patient would have immunosuppressive drugs for a total of three years STAFF ANALYSIS OF ASSEMBLY BILL 2352 (John A. Perez) Page 4 post-transplant. The author says that because patients who have had a kidney transplant must have immunosuppressive drugs or their body will naturally reject the organ, they have a medical need for the antirejection medication to prevent kidney failure, being placed back on dialysis or, in a worst-case scenario, death. The author argues the state has already paid for the organ transplant surgery (the cost of transplant surgery is $50,000 to $100,000 according to the author) and it makes no sense to drop Medi-Cal coverage for these patients after only a year when many organ transplant patients are not yet stable or ready to enter the workforce. Background This bill would address the situation of a Medi-Cal beneficiary who has received an organ transplant. The beneficiary may have gained Medi-Cal eligibility through the special treatment eligibility option for persons with end stage renal disease, or by meeting other Medi-Cal eligibility criteria. The renal disease eligibility is not full scope and covers only dialysis and related services. As the renal disease advances, the beneficiary is likely to become disabled and then become eligible for full scope Medi-Cal. Medi-Cal covers the cost of the major organ transplant procedure and the anti-rejection medication. However, as the beneficiary improves, they may lose their Medi-Cal eligibility if they no longer meet the criteria for disability, as determined by a review team. If the beneficiary no longer is considered disabled, they will lose their Medi-Cal eligibility, unless they retain eligibility by meeting other criteria. Once they have lost their eligibility, they will not have their antirejection medicines covered by Medi-Cal. While the beneficiary is enrolled in Medi-Cal, the federal government is paying its share, generally 50 percent, of the medical costs. This bill's eligibility expansion is not a mandatory or optional coverage under federal law. Because there is no federal match, the bill creates a program for which the state pays the entire costs, also known as a "state only" program. Federal matching funds would only be available if the state were to pursue what is known as a waiver. Under federal law, certain federal requirements can be waived and federal matching funds obtained. The state already has a number of waivers in its STAFF ANALYSIS OF ASSEMBLY BILL 2352 (John A. Perez) Page 5 Medi-Cal program, but these do not include the population addressed by this bill. Transplants under the Medi-Cal program. DHCS indicates fee-for-service Medi-Cal provided coverage for 2,447 major organ transplants in 2008. Medi-Cal managed care provides coverage for additional procedures. Major organ transplants are heart, heart and lung, lung, kidney and liver, of which kidney is the most common transplanted organ. Because of the high cost and the complex nature of the procedures, the state has taken important steps to ensure that Medi-Cal patients are protected and the state's funds are well spent. DHCS convenes panels of medical and surgical experts that provide written standards for Medi-Cal coverage and develop criteria for facility and patient selection. These standards and criteria are continually revised and updated for use by the program. According to DHCS, some third-party health-care payers use Medi-Cal's organ transplant criteria for their own coverage decisions. Through the use of the developed standards, DHCS identifies "centers of excellence" where DHCS will permit and reimburse for transplants performed under the Medi-Cal program. To be a center, facilities must demonstrate that they have the professional staff and hospital infrastructure to ensure the greatest success for organ transplants. In addition, a transplant center must demonstrate performance of a specific number of transplants annually with the requisite survival rate, along with other detailed criteria. DHCS regularly updates adopted criteria and reviews the operations of the centers, in conjunction with panels of medical and surgical experts. To receive continuing approval as a Medi-Cal center of excellence, facilities must provide DHCS with annual performance and survival data as well as information regarding major staff changes in their transplant programs. According to DHCS, they routinely access and review this information in order to ensure compliance. Medical professionals define end stage renal disease (ESRD) as that stage of kidney impairment which is irreversible, STAFF ANALYSIS OF ASSEMBLY BILL 2352 (John A. Perez) Page 6 cannot be controlled by conservative management alone, and requires dialysis or kidney transplantation to maintain life. Dialysis is a substitute for the normal functioning of the kidneys. It filters waste products from the blood. Following a kidney transplant, these patients no longer require dialysis and are no longer deemed disabled for the purposes of their very narrow Medi-Cal coverage. If a patient has no Medi-Cal, private insurance, or Medicare coverage, they are at risk for organ failure, a return to dialysis, death, or a new transplant. The author indicates a significant investment has already been made via the transplant and patients should be afforded continuity of care at a much lower costs than alternatives. Prior legislation AB 998 (John A. Perez) of 2009, was substantially similar to AB 2352, but would have provided that Medi-Cal beneficiaries remain eligible to receive Medi-Cal coverage for antirejection medication for up to a period of three years, instead of two years. AB 998 died on the Assembly Appropriations Committee suspense file. Arguments in support Supporters argue that that access to antirejection drugs is necessary and must be a priority in the health care delivery system for transplant patients because they help to suppress the immune system rejection of the new organ. They also note that advances in antirejection medications have decreased the incidence of adverse reactions to a donated organ significantly, but it still remains one of the gravest dangers facing transplant recipients. They argue that extending the Medi-Cal coverage period gives transplant recipients another year of guaranteed access to these products, and they can continue to recover and grow stronger. COMMENTS The Department of Health Care Services is not granted customary statutory authority to implement this bill. This bill is not self implementing. For example, the coverage added by this bill would end when the beneficiary becomes eligible for private health insurance that would cover the medication. The term "cover" is not defined, so it is left STAFF ANALYSIS OF ASSEMBLY BILL 2352 (John A. Perez) Page 7 to the judgment of DHCS to determine the appropriate standard. Would the appropriate standard be insurance that would pay for 50 percent of the drug cost or would a larger share be required to meet the statute? Absent the grant of authority, DHCS would have to develop regulations which would require at least several years. Proposed amendment Page 2, line 3 (b) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section by means of all-county letters, provider bulletins, or other instructions, without taking any further regulatory action. PRIOR ACTIONS Assembly Health: 17- 0 Assembly Appropriations: 12- 0 Assembly Floor: 62-12 POSITIONS Support: American Federation of State, County and Municipal Employees, AFL-CIO Astellas Pharma, U.S., Inc. California Healthcare Institute California Medical Association California Transplant Donor Network Donate Life California National Kidney Foundation Western Center on Law & Poverty An individual Oppose: None received -- END -- STAFF ANALYSIS OF ASSEMBLY BILL 2352 (John A. Perez) Page 8