BILL ANALYSIS Ó AB 1124 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1124 (Muratsuchi) As Amended February 14, 2014 2/3 vote. Urgency ----------------------------------------------------------------- |ASSEMBLY: | |(May 30, 2013) |SENATE: |31-0 |(March 3, | | | | | | |2014) | ----------------------------------------------------------------- (vote not relevant) Original Committee Reference: HEALTH SUMMARY : Extends the exemption for laboratory (lab) providers from complying with the existing Medi-Cal comparable price regulation until July 1, 2015. The Senate amendments delete the Assembly-approved provisions of this bill, and instead: 1)Delay the requirement that the Department of Health Care Services (DHCS) adopt emergency regulations for the new lab reimbursement methodologies from July 1, 2014, to June 30, 2016. 2)Add an urgency clause to ensure the provisions of this bill become effective immediately upon enactment. EXISTING LAW : 1)Establishes the Medi-Cal program, administered by DHCS, under which health care services are provided to qualified low-income persons. Lab services are a covered benefit under the Medi-Cal program. 2)States legislative intent that DHCS develop reimbursement rates for Medi-Cal lab services that are comparable to the payment amounts other entities pay for lab services. 3)Prohibits, by regulation, a health care 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 known as the "comparable AB 1124 Page 2 price" regulation. 4)Exempts lab providers from compliance with the Medi-Cal comparable price regulation when the lab provider is subject to specified Medi-Cal payment reductions for 21 months after the reduction is implemented. 5)Allows DHCS to implement the new lab reimbursement procedures by provider bulletins until regulations are developed. Requires DHCS to adopt emergency regulations by July 1, 2014. AS PASSED BY THE ASSEMBLY , this bill required DHCS to use the federal Public Assistance and Reporting Information System on a statewide basis to identify veterans and their dependents or survivors who are enrolled in the Medi-Cal program and assist them in obtaining federal veterans' health care benefits. FISCAL EFFECT : According to the Senate Appropriations Committee, because this bill extends the exemption from the comparable price regulation for lab services providers, it is possible that the state would pay more for those services than would occur if providers were subject to the comparable price requirement. However, enforcement of the comparable price regulation has been difficult (owing to the complexity of pricing for health care services). Therefore it is unknown whether continuing to exempt lab service providers from the comparable price regulation would actually increase state costs between enactment of this bill and the adoption of the new rate methodology. COMMENTS : 1)PURPOSE OF THIS BILL . According to the author, DHCS has projected that they will not be able to complete the development of a new rate methodology for reimbursing clinical lab services under Medi-Cal by the April 1, 2014, deadline and has requested additional time to complete the required work. If the extension is not granted, the comparable price regulation would go back into effect. According to the author, comparable price regulation has resulted in lawsuits and been deemed difficult to enforce and this bill would provide DHCS with the time needed to fully develop their new rate methodology. 2)BACKGROUND . AB 1494 (Budget Committee), Chapter 28, Statutes of AB 1124 Page 3 2012, altered the Medi-Cal reimbursement methodology for lab services, stating legislative intent that DHCS develop reimbursement rates for lab services that are comparable to what other entities pay for lab services. AB 1494 also capped Medi-Cal reimbursement for lab providers at specified levels. AB 1494 exempted labs from the Medi-Cal comparable price regulation for 12 months when the labs were subject to a 10% Medi-Cal rate reduction. The exemption from the comparable price requirement was intended to give lab providers a financial incentive to agree to a new rate methodology. The comparable price requirement has been the subject of litigation, and the California Department of Justice has reached multi-million dollar settlements with lab providers. To develop the new Medi-Cal lab rates, DHCS has had to collect rate data from lab providers and develop a new methodology based on those rate submissions. This process has taken longer than originally envisioned and would have resulted in labs again being subject to the comparable price regulation because the new Medi-Cal rate methodology was not yet implemented. 3)PREVIOUS LEGISLATION . AB 82 (Budget Committee), Chapter 23, Statutes of 2013, delayed the re-imposition of the comparable price regulation an additional nine months (until April 2014) to allow DHCS more time to develop the new rate methodology. 4)SUPPORT . The California Clinical Laboratory Association (CCLA) and Quest Diagnostics support extending the deadline for exemption from the comparable price regulation until July 1, 2015. CCLA states DHCS has been working with stakeholders on the development of a new rate methodology, but the process has taken a long time and the new rate methodology has not yet been developed by DHCS or approved by the Centers for Medicare and Medicaid Services. CCLA argues this bill is necessary because the process to develop the new methodology has taken longer than anticipated. 5)OPPOSITION . There is no opposition on file. 6)AS AMENDED IN THE SENATE . The subject matter of this bill as amended in the Senate has not been heard in an Assembly policy committee this legislative session. AB 1124 Page 4 Analysis Prepared by : Roger Dunstan / HEALTH / (916) 319-2097 FN: 0003051