BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 728|
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                              UNFINISHED BUSINESS


          Bill No:  SB 728
          Author:   Negrete McLeod (D)
          Amended:  6/25/12
          Vote:     21

           
          PRIOR VOTES NOT RELEVANT
           
          ASSEMBLY FLOOR  :  79-0, 8/16/12 (Consent) - See last page 
            for vote


           SUBJECT  :    Medi-Cal:  durable medical equipment 
          reimbursement

           SOURCE  :     California Association of Medical Products 
          Suppliers


           DIGEST  :    This bill revises a provision related to 
          determining the maximum allowable reimbursement rate for 
          durable medical equipment (DME) in the Medi-Cal program to 
          use the manufacturer's suggested retail price (MSRP) as 
          documented by a catalogue showing the price on or prior to 
          the date of service (further reduced by a specified 
          percentage) instead of the current requirement that it be 
          determined by using a catalogue showing the price on June 
          1, 2006 as the base. 

           Assembly Amendments  delete the Senate version of the bill, 
          relating to health care coverage, and add the current 
          language dealing with Medi-Cal and medical equipment 
          reimbursement.
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           ANALYSIS  :    Existing law:

          1.Establishes the Medi-Cal program administered by the 
            Department of Health Care Services (DHCS), under which 
            qualified low-income individuals receive health care 
            services. 

          2.Establishes a schedule of benefits and services in the 
            Medi-Cal program, including DME. 

          3.Prohibits through Medi-Cal regulation: 
             A.   A provider from charging for any service or any 
               article more than would have been charged for the same 
               service or article to other purchasers of comparable 
               services or articles under comparable circumstances 
               (this regulation is referred to as the Medi-Cal "Best 
               Price" regulation); and, 

             B.   A provider from billing or submitting a claim for 
               reimbursement for rendering health care services to a 
               Medi-Cal beneficiary in any amount greater or higher 
               than the usual fee charged by the provider to the 
               general public for the same service. 

          1.Requires DHCS to establish maximum allowable rates for 
            DME and provides that if there is no specified rate that 
            it be the lesser of: 

             A.   Usual charges made to the general public or the net 
               purchase price plus a mark-up, as specified by 
               regulation; 

             B.   A negotiated contract price based on the guaranteed 
               acquisition cost; 

             C.   Actual acquisition cost plus a markup; 

             D.   The manufacturer's suggested retail purchase price 
               on June 1, 2006, and documented by a printed catalogue 
               or a hard copy of an electronic catalogue page showing 
               the price on that date, reduced by a percentage 
               discount as specified; or, 


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             E.   A price established through targeted 
               product-specific cost containment provisions developed 
               with providers. 

          This bill revises a provision related to determining the 
          maximum allowable reimbursement rate for DME in the 
          Medi-Cal program to use the MSRP as documented by a 
          catalogue showing the price on or prior to the date of 
          service (further reduced by a specified percentage) instead 
          of the current requirement that it be determined by using a 
          catalogue showing the price on June 1, 2006 as the base. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

          According to the Assembly Appropriations Committee:

           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. 

           Potential minor administrative cost savings to DHCS 
            related to the use of updated catalogues. 

           SUPPORT  :   (Verified 7/3/12) (per Assembly Health Committee 
          analysis - unable to reverify at time of writing)

          California Association of Medical Products Suppliers 
          (source) 
          ATB Rehab

           ARGUMENTS IN SUPPORT  :    According to the California 
          Association of Medical Products Suppliers (CAMPS), at the 
          time this option was added, DHCS was concerned that it 
          might provide an opportunity for an unscrupulous 
          manufacturer to utilize a sham catalogue to inflate their 
          MSRP.  DHCS and CAMPS agreed that insertion of a catalogue 

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          date, i.e. one that already occurred, would prohibit 
          creation of any new catalogue to artificially inflate the 
          MSRP and avoid the effect of the discount. However 
          according the CAMPS, they stated at the time that this 
          fixed date would need to be updated to avoid being stuck in 
          a time warp where MSRP changes would not be recognized. 


           ASSEMBLY FLOOR  :  79-0, 8/16/12
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Charles Calderon, Campos, 
            Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, 
            Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, 
            Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, 
            Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Roger 
            Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, 
            Knight, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza, 
            Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, 
            Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino, 
            Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao, 
            Wagner, Wieckowski, Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Lara


          CTW:nd  8/17/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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