BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1124
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 1124 (Muratsuchi)
          As Amended February 14, 2014
          2/3 vote. Urgency
           
          
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          |ASSEMBLY:  |     |(May 30, 2013)  |SENATE: |31-0 |(March 3,      |
          |           |     |                |        |     |2014)          |
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               (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  








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            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  








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            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.










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           Analysis Prepared by  :    Roger Dunstan / HEALTH / (916) 319-2097  
                      


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