BILL ANALYSIS Ó SB 728 Page 1 Date of Hearing: August 8, 2012 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 728 (Negrete McLeod) - As Amended: June 25, 2012 Policy Committee: HealthVote:14-0 Urgency: No State Mandated Local Program: No Reimbursable: No SUMMARY This bill revises a provision related to the maximum allowable reimbursement rate for durable medical equipment (DME) in the Medi-Cal program. Specifically, it allows the manufacturer's suggested retail price (MSRP), upon which Medi-Cal reimbursement is based, to be documented by a catalogue showing the price on or prior to the date of service, instead of a 2006 catalogue. FISCAL EFFECT 1)Likely minor increased Medi-Cal costs for the small number of fee-for-service claims reimbursed with the methodology changed by this bill. Potential increased costs related to usage of updated catalogues are unknown, but are likely to be under $150,000 annually (50% GF, 50% federal funds), given the small number of reimbursement claims to which this bill applies and the shrinking proportion of Medi-Cal enrollees in the fee-for-service delivery system. 2)Potential minor administrative cost savings to DHCS related to the use of updated catalogues. COMMENTS Rationale . According to the author, this bill is necessary because it is difficult for providers to comply with Medi-Cal claiming requirements, since current law requires submission of outdated manufacturer catalogue pages. The author points out that the current system of reimbursing certain DME that lacks a Medicare benchmark reimbursement rate is based on a "lesser of" SB 728 Page 2 methodology. One of the "lesser of" benchmarks is to establish the MSRP, and then apply a discount. Current law requires that the MSRP be documented by a catalogue from June 1, 2006 or earlier. According to the author, this has become difficult for providers to do since the old catalogues contain equipment where configurations of equipment might have changed. The author also argues that it is unfair because the MSRP for the item is now at least six years old. The author argues that since one of the other statutory benchmarks for determining the "lesser of" methodology uses a review of the provider invoice plus a mark-up, there are built in protections to assure appropriate reimbursement. Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081