BILL ANALYSIS
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THIRD READING
Bill No: AB 2779
Author: Solorio (D)
Amended: 8/11/10 in Senate
Vote: 27 - Urgency
SENATE LAB. & INDUS. RELATIONS COMMITTEE : 4-0, 8/10/10
AYES: DeSaulnier, Ducheny, Leno, Yee
NO VOTE RECORDED: Wyland, Hollingsworth
ASSEMBLY FLOOR : 74-0, 4/29/10 (Consent) - See last page
for vote
SUBJECT : Workers compensation: compound medication
SOURCE : Author
DIGEST : This bill requires that compounded medications
can only be reimbursed through the workers compensation
system if they are medically necessary and that the cost of
the ingredient does not exceed the Medi-Cal fee schedule.
ANALYSIS :
Existing law
1. Establishes a workers' compensation system that provides
benefits to an employee injured at work, irrespective of
fault. This system requires all employers to secure
payment of benefits by either securing the consent of
the Department of Industrial Relations to self insure or
CONTINUED
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by securing insurance against liability from an
insurance company duly authorized by the state.
2. Requires the administrative director of the Division of
Workers' Compensation (DWC) to review the official
medical fee schedules to establish reasonable maximum
medical fees for medical services, but excludes, among
other things, drugs and pharmacy services, which are set
in the relevant Medi-Cal payment system, unless the
pharmacy services and drugs are covered by a Medicare
fee schedule for facilities.
3. Requires every employer, either directly or through the
employer's insurer, to establish a utilization review
process, which would review and approve, modify, delay,
or deny treatment recommendations by physicians and the
provision of medical treatment services for injured
workers. The utilization review process must be
governed by written policies and procedures to ensure
that decisions based on the medical necessity of the
proposed medical treatment services are consistent with
regulations and statute.
This bill:
1. Requires that, until the administrative director of the
DWC creates a fee schedule for compound medicines, a
compound medication may only be reimbursed through the
workers' compensation system if:
A. The compound medication was found to be
medically necessary through the utilization review
process.
B. All active ingredients in the compound
medication are medication ingredients in drug
products that have been approved by the federal
Food and Drug Administration (FDA) or listed by the
United States Pharmacopeia.
C. The compound medication is not a copy or
substitute for an available FDA-approved product.
D. FDA-approved alternatives to the compound
medication have been tried with therapeutic failure
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or patient intolerance.
2. Requires that the maximum reimbursement can not exceed
the sum of the reimbursements allowed under the existing
Medi-Cal fee schedule, and that fees cannot be allowed
unless the billing includes the above-listed
information.
3. Prohibits a non-physician from denying an otherwise
valid compound medication prescription, and requires
that, to the extent applicable, compound medication
requests go through the utilization review process.
4. Empowers the DWC to adopt regulations convenient or
necessary to implement these requirements, and that any
fee schedule developed for compound medicines must be
consistent with these requirements.
Prior Legislation
SB 292 (Speier) of 2005, would have, among other things,
prescribed a formula for reimbursing drugs not by the
Medi-Cal payment system. This bill was held under suspense
by the Assembly Appropriations Committee. Passed the
Senate Floor with a vote of 40-0, on May 26 2005.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/11/10) (per Sen. L&IR Cmte.
analysis)
Association of California Insurance Companies
California Applicants' Attorneys Association
California Association of Joint Powers Authorities
California Chamber of Commerce
California Coalition on Workers' Compensation
California Labor Federation, AFL-CIO
California Manufacturers and Technology Association
California Medical Association
California Professional Firefighters
California Retailers Association
California Special Districts Association
Employers Compensation Insurance Company
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League of California Cities
Regional Council of Rural Counties
OPPOSITION : (Verified 8/11/10) (per Sen. L&IR Cmte.
analysis)
California Society of Industrial Medicine and Surgery
(unless amended)
CA Society of Physical Medicine and Rehabilitation (unless
amended)
CompPharma (unless amended)
ARGUMENTS IN SUPPORT : Proponents argue that while
compound medicines are a necessity for certain injured
workers, there has been a sharp increase in the usage and
costs of compound drugs. Proponents believe that this bill
is a good start at establishing guidelines for the
compounding of drugs and under what circumstances the cost
of those drugs would be reimbursed. Proponents note in
particular that the cap on the maximum allowance on the sum
of the amounts allowed for the ingredient and dispensing
fee, and believe that these guidelines will rein in the
abuse of medical treatment and billing practices specific
to the compounding of drugs.
ARGUMENTS IN OPPOSITION : CompPharma, which represents
pharmacy benefit management (PBMs) firms, has taken an
'oppose unless amended' position. CompPharma believes that
the issues surrounding the cost of pharmaceuticals in the
workers' compensation system are larger than compounding,
and suggests that this bill takes on a more global
perspective, similar to AB 2593 (Bradford), which was
sponsored by CompPharma, but was held in Assembly
Insurance. CompPharma suggests amendments that would
delink reimbursement rates for pharmacy products from the
Medi-Cal system due to the adverse impact of budget cuts
and reimbursement rates by a market-based formula, as well
as language clarifying the role of pharmacy benefit manager
contracts, the fee schedule, and reimbursements.
CompPharma believes that these amendments would result in
additional cost-savings within the workers' compensation
system.
The California Society of Industrial Medicine and Surgery
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(CSIMS) and the California Society of Physical Medicine and
Rehabilitation (CSPMR) have also taken an 'oppose unless
amended' position. CSIMS and CSPMR are concerned that
requiring compound medication to go through the utilization
review process could create unnecessary delays or denial of
treatment if the claims adjuster refuses or neglects to
respond to the doctor's request for approval of compound
medicine. CSIMS and CSPMR report working with the author's
office on a possible amendment, and are optimistic on
hitting upon a solution to this issue.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Bradford, Brownley, Buchanan, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Knight, Lieu, Logue, Ma,
Mendoza, Miller, Monning, Nava, Nestande, Niello,
Nielsen, Norby, V. Manuel Perez, Portantino, Ruskin,
Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Tran, Villines,
Yamada, John A. Perez
NO VOTE RECORDED: Bass, Caballero, Jones, Bonnie Lowenthal,
Torrico, Vacancy
PQ:do 8/11/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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