Amended in Senate June 12, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1474

Introduced by Committee on Budget (Skinner (Chair), Bloom, Campos, Chesbro, Dababneh, Daly, Dickinson, Gordon, Jones-Sawyer, Mullin, Muratsuchi, Nazarian, Rodriguez, Stone, Ting, and Weber)

January 9, 2014

An act begin delete relating to the Budget Act of 2014 end delete begin insert to amend Section 1374.34 of, to add Chapter 13.6 (commencing with Section 121287) to Part 4 of Division 105 of, and to add and repeal Section 128225.5 of, the Health and Safety Code, to amend Sections 14105.33, 14105.436, and 14105.86 of, to amend, repeal, and add Section 14593 of, and to add Sections 14087.9730 and 14132.56 to, the Welfare and Institutions Code, relating to health, and making an appropriation therefor, to take effect immediately, bill related to the budget end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 1474, as amended, Committee on Budget. begin delete Budget Act of 2014. end delete begin insert Health. end insert

begin insert

(1) Existing law makes provisions for programs relating to treatment of persons with human immunodeficiency virus (HIV) and the acquired immunodeficiency syndrome (AIDS). Under existing law, the Office of AIDS, in the State Department of Public Health, is the lead agency within the state responsible for coordinating state programs, services, and activities relating to HIV and AIDS, and AIDS-related conditions.

end insert begin insert

This bill would authorize the department to implement up to 4 demonstration projects that may operate for a period of up to 2 years to allow for innovative, evidence-based approaches to provide outreach, HIV and Hepatitis C screenings, and linkage to, and retention in, quality health care for the most vulnerable and underserved individuals with a high risk for HIV infection. The bill would require, upon appropriation in the annual Budget Act, the department to award funding, on a competitive basis, to a community-based organization or local health jurisdiction to operate a demonstration project, as specified. The bill would require the department, at the conclusion of the demonstration projects, to review the effectiveness of each demonstration project and determine whether the demonstration project model can be implemented on a statewide basis.

end insert begin insert

(2) Existing law, the Song-Brown Health Care Workforce Training Act, establishes a state medical contract program with accredited medical schools, programs that train primary care physician’s assistants, programs that train primary care nurse practitioners and registered nurses, hospitals, and other health care delivery systems.

end insert begin insert

Existing law establishes the California Healthcare Workforce Policy Commission to, among other things, identify specific areas of the state where unmet priority needs for primary care family physicians and registered nurses exist and to make recommendations to the Director of Statewide Health Planning and Development with regard to the funding of specific programs. Existing law requires the director to select and contract on behalf of the state with accredited medical schools and the other above-described entities for the purpose of, among other things, training medical students and residents in the specialty of family practice, subject to criteria established by the commission.

end insert begin insert

This bill would require, only until January 1, 2018, the director to select and contract on behalf of the state with accredited primary care or family medicine residency programs for the purpose of providing grants to support newly created residency positions, and would require the commission to review and make recommendations to the director concerning the provision of those grants. These provisions would be operative only if funds are appropriated for these purposes in the Budget Act of 2014.

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(3) Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Under existing law, one of the methods by which Medi-Cal services are provided is pursuant to contracts with various types of managed care plans.

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This bill would require the department to establish a 3-year pilot program in the County of Los Angeles that enables school districts to allow students enrolled in Medi-Cal managed care plans the ability to receive vision care services at the school site through the use of a mobile vision service provider. The bill would generally require the Medi-Cal managed care plans in the County of Los Angeles to, in consultation with the department, jointly identify and develop standards and participation criteria that the participating mobile vision service provider would be required to meet in order to be deemed qualified to participate in the pilot program. The bill would authorize the Director of Health Care Services to extend the pilot program to Medi-Cal managed care plans in other counties and applicable local jurisdictions, as specified.

end insert begin insert

Existing law provides for a schedule of benefits under the Medi-Cal program, which includes Early and Periodic Screening, Diagnosis, and Treatment for any individual under 21 years of age, consistent with the requirements of federal law.

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This bill would provide, only to the extent required by the federal government and effective no sooner than required by the federal government, that behavioral health treatment (BHT), as defined, is a covered service for individuals under 21 years of age, as specified. The bill would require that the department only implement these provisions, or continue to implement these provisions, if the department receives all necessary federal approvals to obtain federal funds for the service, the department seeks and obtains an appropriation that would provide the necessary state funding estimated to be required for the applicable fiscal year, and the department consults with stakeholders. The bill would state that it is the intent of the Legislature, to the extent the federal government requires BHT to be a covered Medi-Cal service, that the department seek statutory authority to implement this new benefit.

end insert begin insert

Existing law also includes in the schedule of benefits for Medi-Cal prescribed drugs subject to the Medi-Cal list of contract drugs. Existing law authorizes the department to enter into contracts with manufacturers of single-source and multiple-source drugs, on a bid or nonbid basis, for drugs from each major therapeutic category. Existing law requires these contracts to provide for a state rebate to be remitted to the department quarterly. Existing law also requires pharmaceutical manufacturers to provide to the department a state rebate for any drug products that have been added to the Medi-Cal list of contract drugs related to drugs used to treat AIDS and cancer. Existing law requires that the utilization data to determine these rebates exclude data from specified entities and capitated plans. Existing law also requires the department to collect a state rebate for blood factors reimbursed by specified programs.

end insert begin insert

This bill would make those data exclusions inoperative when the department takes specified actions, and would, commencing July 1, 2014, specify that utilization data used to determine the rebates include data from all health plans with specified exceptions. The bill would require the department to develop coverage policies, in consultation with clinical experts, Medi-Cal managed care plans, and other stakeholders, for prescription drugs that the department reimburses managed care plans through separate capitated rate payments or other supplemental payments.

end insert begin insert

Existing federal law establishes the Program of All-Inclusive Care for the Elderly (PACE), which provides specified services for older individuals so that they may continue living in the community. Federal law authorizes states to implement the PACE program as a Medicaid state option. Existing law authorizes the department to enter into contracts with up to 15 PACE organizations, as defined, to implement the PACE program, as specified. Existing law requires the department to establish capitation rates paid to each PACE organization at no less than 90% of the fee-for-service equivalent cost, including the department’s cost of administration, that the department estimates would be payable for all services covered under the PACE organization contract if all those services were to be furnished to Medi-Cal beneficiaries under the fee-for-service program.

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This bill would instead require, on and after April 1, 2015, that the department establish capitation rates paid to each PACE organization at no less than 95% of that amount.

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(4) Existing law, the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act), provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the Knox-Keene Act a crime. Existing law establishes the Independent Medical Review System to make determinations when a health care service that is eligible for coverage has been denied, modified, or delayed by a decision of the plan, or by one of its contracting providers, in whole or in part due to a finding that the service is not medically necessary. Existing law requires the Director of the Department of Managed Health Care to review individual cases submitted for independent medical review to determine whether any enforcement actions, including penalties, may be appropriate.

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This bill would prohibit the director from taking an enforcement action against a plan if the plan provides prescription drugs to a Medi-Cal beneficiary pursuant to State Department of Health Care Services guidelines.

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(5) This bill would state the intent of the Legislature that the State Department of Health Care Services continue to monitor access to and utilization of Medi-Cal services in the fee-for-service and managed care settings during the 2014-15 fiscal year, as specified and would require the department to use this information to evaluate current reimbursement levels for Medi-Cal providers and to make recommendations for targeted changes to the extent the department finds those changes appropriate.

end insert begin insert

(6) Item 4300-101-0001 of the Budget Act of 2009, as added by Chapter 1 of the 3rd Extraordinary Session, appropriated $24,553,000 to the State Department of Developmental Services for the support of the department, payable from the General Fund. Item 4300-101-0001 of the Budget Act of 2010, as added by Chapter 712 of the Statutes of 2010, appropriated $24,391,000 to the department for its support, payable from the General Fund.

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This bill would reappropriate the balances of those amounts to the department, subject to specified purposes, and would provide that those funds would be available for liquidation until June 30, 2015.

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The bill also would, for the 2014-15 fiscal year, appropriate $3,200,000 from the Major Risk Medical Insurance Fund to the State Department of Health Care Services for allocation to health benefit plans that meet specified requirements.

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This bill would, for the 2014-15 fiscal year, appropriate $3,750,000 from the Major Risk Medical Insurance Fund to the State Department of Health Care Services for purposes of electronic health records technical assistance in accordance with the State Medicaid Health Information Technology Plan, as specified.

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(7) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

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This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2014.

end delete

Vote: majority. Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 1374.34 of the end insert begin insert Health and Safety Code end insert
begin insert is amended to read: end insert

1374.34.  

(a) Upon receiving the decision adopted by the
director pursuant to Section 1374.33 that a disputed health care
service is medically necessary, the plan shall promptly implement
the decision. In the case of reimbursement for services already
rendered, the plan shall reimburse the provider or enrollee,
whichever applies, within five working days. In the case of services
not yet rendered, the plan shall authorize the services within five
working days of receipt of the written decision from the director,
or sooner if appropriate for the nature of the enrollee’s medical
condition, and shall inform the enrollee and provider of the
authorization in accordance with the requirements of paragraph
(3) of subdivision (h) of Section 1367.01.

(b) A plan shall not engage in any conduct that has the effect
of prolonging the independent review process. The engaging in
that conduct or the failure of the plan to promptly implement the
decision is a violation of this chapter and, in addition to any other
fines, penalties, and other remedies available to the director under
this chapter, the plan shall be subject to an administrative penalty
of not less than five thousand dollars ($5,000) for each day that
the decision is not implemented. The administrative penalties shall
be paid to the Managed Care Administrative Fines and Penalties
Fund and shall be used for the purposes specified in Section
1341.45.

(c) The director shall require the plan to promptly reimburse
the enrollee for any reasonable costs associated with those services
when the director finds that the disputed health care services were
a covered benefit under the terms and conditions of the health care
service plan contract, and the services are found by the independent
medical review organization to have been medically necessary
pursuant to Section 1374.33, and either the enrollee’s decision to
secure the services outside of the plan provider network was
reasonable under the emergency or urgent medical circumstances,
or the health care service plan contract does not require or provide
prior authorization before the health care services are provided to
the enrollee.

(d) In addition to requiring plan compliance regarding
subdivisions (a), (b), and (c) the director shall review individual
cases submitted for independent medical review to determine
whether any enforcement actions, including penalties, may be
appropriate. In particular, where substantial harm, as defined in
Section 3428 of the Civil Code, to an enrollee has already occurred
because of the decision of a plan, or one of its contracting
providers, to delay, deny, or modify covered health care services
that an independent medical review determines to be medically
necessary pursuant to Section 1374.33, the director shall impose
penalties.

(e) Pursuant to Section 1368.04, the director shall perform an
annual audit of independent medical review cases for the dual
purposes of education and the opportunity to determine if any
investigative or enforcement actions should be undertaken by the
department, particularly if a plan repeatedly fails to act promptly
and reasonably to resolve grievances associated with a delay,
denial, or modification of medically necessary health care services
when the obligation of the plan to provide those health care services
to enrollees or subscribers is reasonably clear.

begin insert

(f) A plan’s provision of prescription drugs to a Medi-Cal
beneficiary pursuant to paragraph (5) of subdivision (b) of Section
14105.33 of the Welfare and Institutions Code and in accordance
with the State Department of Health Care Services coverage
policies shall not be a ground for an enforcement action. Nothing
in this article is intended to limit a plan’s responsibility to provide
medically necessary health care services pursuant to this chapter.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Chapter 13.6 (commencing with Section 121287) is
added to Part 4 of Division 105 of the end insert begin insert Health and Safety Code end insert begin insert , to
read: end insert

begin insert

 

Chapter   begin insert 13.6. end insert Public Health Demonstration Projects

 

begin insert 121287. end insert   

(a) There are hereby established public health
demonstration projects to allow for innovative, evidence-based
approaches to provide outreach, HIV and Hepatitis C screenings,
and linkage to, and retention in, quality health care for the most
vulnerable and underserved individuals with a high risk for HIV
infection.

(b) The demonstration projects may operate for a period of up
to two years. The department shall implement up to four
demonstration projects. The demonstration projects shall be
designed to be capable of replication and expansion on a statewide
basis.

(c) After conclusion of the demonstration projects, the
department shall review the effectiveness of each demonstration
project and make a determination of whether the demonstration
project model can be implemented on a statewide basis.

begin insert 121288. end insert   

Upon an appropriation for this purpose in the annual
Budget Act, the department shall award funding, on a competitive
basis, to a community-based organization or local health
jurisdiction to operate a demonstration project pursuant to this
chapter. The department shall determine the funding levels of each
demonstration project based on scope and geographic area. An
applicant shall demonstrate each of the following qualifications:

(a) Leadership on access to HIV care and testing issues and
experience addressing the needs of highly marginalized populations
in accessing medical and HIV care and support.

(b) Experience with the target population or relationships with
community-based organizations or nongovernmental organizations,
or both, that demonstrate expertise, history, and credibility working
successfully in engaging the target population.

(c) Experience working with nontraditional collaborators who
work within and beyond the field of HIV/AIDS education and
outreach, including areas of reproductive health, housing,
immigration, and mental health.

(d) Strong relationships with community-based HIV health care
providers that have the trust of the targeted populations.

(e) Strong relationships with the state and local health
departments.

(f) Capacity to coordinate a communitywide planning phase
involving multiple community collaborators.

(g) Experience implementing evidence-based programs or
generating innovative strategies, or both, with at least preliminary
evidence of program effectiveness.

(h) Administrative systems and accountability mechanisms for
grant management.

(i) Capacity to participate in evaluation activities.

(j) Strong communication systems that are in place to participate
in public relations activities.

begin insert 121289. end insert   

Each demonstration project shall prepare and
disseminate information regarding best practices for, and the
lessons learned regarding, providing outreach and education to
the most vulnerable and underserved individuals with a high risk
for HIV infection for use by providers, the Office of AIDS, State
Department of Public Health, federal departments and agencies,
including the Department of Health and Human Services, and
other national HIV/AIDS groups.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 128225.5 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 128225.5. end insert   

(a) The commission shall review and make
recommendations to the Director of the Office of Statewide Health
Planning and Development concerning the provision of grants
pursuant to this section. In making recommendations, the
commission shall give priority to residency programs that
demonstrate all of the following:

(1)  That the grant will be used to support new primary care
physician slots.

(2)  That priority in filling the position shall be given to
physicians who have graduated from a California-based medical
school.

(3)  That the new primary care physician residency positions
have been, or will be, approved by the Accreditation Council for
Graduate Medical Education prior to the first distribution of grant
funds.

(b) The director shall do both of the following:

(1) Determine whether the residency programs recommended
by the commission meet the standards established by this section.

(2) Select and contract on behalf of the state with accredited
primary care or family medicine residency programs for the
purpose of providing grants for the support of newly created
residency positions.

(c) This section does not apply to funding appropriated in the
annual Budget Act for the Song-Brown Health Care Workforce
Training Act (Article 1 (commencing with Section 128200)).

(d) This section shall be operative only if funds are appropriated
in the Budget Act of 2014 for the purposes described in this section.

(e) This section shall remain in effect only until January 1, 2018,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2018, deletes or extends that date.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 14087.9730 is added to the end insert begin insert Welfare and
Institutions Code end insert begin insert , end insert immediately following Section 14087.9725 begin insert , to
read: end insert

begin insert

begin insert 14087.9730. end insert   

(a) In an effort to determine whether children’s
access to, and utilization of, vision care services can be increased
by providing vision care services at schools, the department shall
establish a pilot program in the County of Los Angeles that enables
school districts to allow students enrolled in Medi-Cal managed
care plans to receive vision care services at the school site through
the use of a mobile vision service provider. The vision care services
available under this pilot program are limited to vision
examinations and providing eyeglasses.

(b) The Medi-Cal managed care plans in the County of Los
Angeles shall jointly identify and develop standards and
participation criteria that the participating mobile vision service
provider shall meet in order to be deemed qualified to participate
in the pilot program, in consultation with the department and
consistent with any applicable federal requirements governing
Medicaid managed care contracts. In the event the Medi-Cal
managed care plans have not developed standards and
participation criteria by January 1, 2015, or by the scheduled start
date of the pilot program if later, the department shall determine
the standards and participating criteria for purposes of this pilot
program.

(c) This section shall not be construed to preclude Los Angeles
County school district students not enrolled in Medi-Cal managed
care from accessing vision care services from a mobile vision
service provider participating in this pilot program.

(d) Under the pilot program, if a school district in the County
of Los Angeles enters into a written memorandum of understanding
with a mobile vision care service provider allowing the provider
to offer the vision care services described in this section to students,
all of the following shall apply:

(1) The two Medi-Cal managed care plans in the County of Los
Angeles shall contract with one or more mobile vision care service
providers that meets the standards and participation criteria
developed pursuant to subdivision (b) for the delivery of those
vision care services to any student enrolled in the Medi-Cal
managed care plan who chooses to receive his or her vision care
services from the provider at that school site. This contracting
requirement is contingent upon agreement between each of the
two Medi-Cal managed care plans in the County of Los Angeles
and a mobile vision care service provider with respect to
reimbursement rates applicable to the services under this pilot.

(2) Neither this pilot program nor the Medi-Cal managed care
plan shall require that a Medi-Cal beneficiary receive the vision
care services described in this section through a mobile vision
care provider on site at the school.

(3) Prior to a Medi-Cal beneficiary receiving mobile vision care
services at the school site, the parents, guardians, or legal
representative of the student shall consent in writing to the
Medi-Cal beneficiary receiving the services through a mobile
vision care provider on site at the school.

(e) An optometrist or ophthalmologist prescribing glasses to a
Medi-Cal managed care beneficiary as part of services provided
at a school site by a mobile vision care service provider pursuant
to this pilot program shall be enrolled in the Medi-Cal program
as an Ordering/Referring/Prescribing provider. For any other
purposes under the pilot program, the licensed health professional
shall satisfy all requirements for enrollment as a provider in the
Medi-Cal program.

(f) (1) The Medi-Cal managed care plan shall compensate the
mobile vision services provider for the cost of the vision
examination, dispensing of the lenses, and eyeglass frames.

(2) Ophthalmic eyeglasses lenses prescribed by optometrists or
ophthalmologists for a Medi-Cal managed care plan enrollee as
part of the services provided at a school site by a mobile vision
services provider shall be fabricated through optical laboratories
the department contracts with pursuant to subdivision (b) of Section
14105.3.

(g) (1) The department shall annually adjust capitation rates
for the Medi-Cal managed care plans operating in the County of
Los Angeles as necessary to account for projected changes in the
costs and utilization of the services provided pursuant to this
section by mobile vision service providers.

(2) Capitation rate adjustments pursuant to this section shall
be actuarially based and developed using projections of contingent
events including targeted populations who will receive these
services, and shall otherwise be in accordance with requirements
necessary to secure federal financial participation.

(3) Capitation rate adjustments pursuant to this section shall
be limited to those related to vision examinations, dispensing of
lenses, and eyeglass frames. The fabrication of optical lenses
pursuant to this section shall be paid on a fee-for-service basis in
accordance with the department’s applicable contract under
subdivision (b) of Section 14105.3.

(h) The pilot program shall last three years, starting no sooner
than January 1, 2015, and concluding December 31, 2017, or
three years from the start date of the pilot if later. The department
shall evaluate the impact of the pilot program on access to, and
utilization of, vision care services by children by monitoring the
managed care plan utilization data for vision services, as well as
the lens fabrication data.

(i) The department may terminate the pilot program at any time
with 90 days advance notice to the Medi-Cal managed care plans
for reasons that include, but are not limited to, any of the following:

(1) The department determines that the pilot program is
resulting in a lower level of access to, or use of, vision care
services for children under the participating health plans.

(2) The department determines that the pilot program is
resulting in fraud, waste, or abuse of Medi-Cal funds.

(3) The department determines there is a lack of funding for the
vision care services provided in the pilot program.

(j) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the department may implement, interpret, or make specific this
section and any applicable federal waivers and state plan
amendments by means of all-county letters, plan letters, plan or
provider bulletins, or similar instructions, without taking
regulatory action.

(k) The department shall obtain any federal approvals necessary
to implement this section and to obtain federal matching funds to
the maximum extent permitted by federal law.

(l) This section shall be implemented only if and to the extent
all federal approvals are obtained and federal financial
participation is available.

(m) This section shall be implemented only to the extent an
annual appropriation is made available to the department each
fiscal year for the specific purpose of implementing this section.

(n) If the department determines, pursuant to subdivision (h),
that the pilot program is having a positive impact on access and
utilization and that additional funds are available, the director
may extend the pilot program described in this section to Medi-Cal
managed care plans in other counties and applicable local
jurisdictions. Any extension shall be implemented only to the extent
that any additional and necessary federal approvals are obtained,
and if sufficient funds are made available to participating plans
for this purpose. The department may accept funding from private
foundations in order to implement an extension under this
subdivision to the extent that federal financial participation is
available.

(o) The department shall post on its Internet Web site a notice
that has terminated or expanded the pilot program, including
identification of the geographic locations, and shall notify
appropriate fiscal and policy committees of both houses of the
Legislature.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 14105.33 of the end insert begin insert Welfare and Institutions Code end insert
begin insert is amended to read: end insert

14105.33.  

(a) The department may enter into contracts with
manufacturers of single-source and multiple-source drugs, on a
bid or nonbid basis, for drugs from each major therapeutic category,
and shall maintain a list of those drugs for which contracts have
been executed.

(b) (1) Contracts executed pursuant to this section shall be for
the manufacturer’s best price, as defined in Section 14105.31,
which shall be specified in the contract, and subject to agreed-upon
price escalators, as defined in that section. The contracts shall
provide for a state rebate, as defined in Section 14105.31, to be
remitted to the department quarterly. The department shall submit
an invoice to each manufacturer for the state rebate, including
supporting utilization data from the department’s prescription drug
paid claims tapes within 30 days of receipt of the federal Centers
for Medicare and Medicaid Services’ file of manufacturer rebate
information. In lieu of paying the entire invoiced amount, a
manufacturer may contest the invoiced amount pursuant to
procedures established by the federal Centers for Medicare and
Medicaid Services’ Medicaid Drug Rebate Program Releases or
regulations by mailing a notice, that shall set forth its grounds for
contesting the invoiced amount, to the department within 38 days
of the department’s mailing of the state invoice and supporting
utilization data. For purposes of state accounting practices only,
the contested balance shall not be considered an accounts receivable
amount until final resolution of the dispute pursuant to procedures
established by the federal Centers for Medicare and Medicaid
Services’ Medicaid Drug Rebate Program Releases or regulations
that results in a finding of an underpayment by the manufacturer.
Manufacturers may request, and the department shall timely
provide, at cost, Medi-Cal provider level drug utilization data, and
other Medi-Cal utilization data necessary to resolve a contested
department-invoiced rebate amount.

(2) The department shall provide for an annual audit of
utilization data used to calculate the state rebate to verify the
accuracy of that data. The findings of the audit shall be documented
in a written audit report to be made available to manufacturers
within 90 days of receipt of the report from the auditor. Any
manufacturer may receive a copy of the audit report upon written
request. Contracts between the department and manufacturers shall
provide for any equalization payment adjustments determined
necessary pursuant to an audit.

(3)  begin insert (A) end insert begin insert   end insert Utilization data used to determine the state rebate shall
exclude data from both of the following:

begin delete

(A)

end delete

begin insert (i) end insert  Health maintenance organizations, as defined in Section
300e(a) of Title 42 of the United States Code, including those
organizations that contract under Section 1396b(m) of Title 42 of
the United States Code.

begin delete

(B)

end delete

begin insert (ii) end insert  Capitated plans that include a prescription drug benefit in
the capitated rate, and that have negotiated contracts for rebates
or discounts with manufacturers.

begin insert

(B) This paragraph shall become inoperative on July 1, 2014.

end insert

(4)  begin delete Except as provided in paragraph (3), end delete begin insert Commencing July 1,
2014, end insert utilization data used to determine the state rebate shall
include data from all programs begin insert , including, but not limited to,
fee-for-service Medi-Cal, and utilization data, as limited in
paragraph (5), from health plans contracting with the department
to provide services to beneficiaries pursuant to this chapter,
Chapter 8 (commencing with Section 14200), or Chapter 8.75
(commencing with Section 14591), end insert that qualify for federal drug
rebates pursuant to Section 1927 of the federal Social Security Act
(42 U.S.C. Sec. 1396r-8) or that otherwise qualify for federal funds
under Title XIX of the federal Social Security Act (42 U.S.C. Sec.
1396 et seq.) pursuant to the Medicaid state plan or waivers.

begin insert

(5) Health plan utilization data shall be limited to those drugs
for which a health plan is authorizing a prescription drug described
in subparagraph (A), and pursuant to the coverage policies
established in subparagraph (B):

end insert begin insert

(A) A prescription drug for which the department reimburses
the health plan through a separate capitated payment or other
supplemental payment. Payment shall not be withheld for decisions
determined pursuant to Section 1374.34 of the Health and Safety
Code.

end insert begin insert

(B) The department shall develop coverage policies, consistent
with the criteria set forth in paragraph (1) of subdivision (c) of
Section 14105.39 and in consultation with clinical experts,
Medi-Cal managed care plans, and other stakeholders, for
prescription drugs described in subparagraph (A). These coverage
policies shall apply to the entire Medi-Cal program, including
fee-for-service and Medi-Cal managed care, through the Medi-Cal
List of Contract Drugs or through provider bulletins, all plan
letters, or similar instructions. Coverage policies developed
pursuant to this section shall be revised on a semiannual basis or
upon approval by the Food and Drug Administration of a new
drug subject to subparagraph (A). For the purposes of this section,
“coverage policies” include, but are not limited to, clinical
guidelines and treatment and utilization policies.

end insert begin insert

(6) For prescription drugs not subject to the requirements of
paragraph (5), utilization data used to determine the state rebate
shall include all data from health plans, except for health
maintenance organizations, as defined in Section 300e(a) of Title
42 of the United States Code, including those organizations that
contract pursuant to Section 1396b(m) of Title 42 of the United
States Code.

end insert begin insert

(7) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the department, without taking any further regulatory action, shall
implement, interpret, or make specific paragraph (5) by means of
all-county letters, plan letters, plan or provider bulletins, or similar
instructions, until the time regulations are adopted. The department
shall adopt regulations by October 1, 2017, in accordance with
the requirements of Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code.
Notwithstanding Section 10231.5 of the Government Code,
beginning six months after the effective date of this section, the
department shall provide a status report to the Legislature on a
semiannual basis, in compliance with Section 9795 of the
Government Code, until regulations have been adopted.

end insert

(c) In order that Medi-Cal beneficiaries may have access to a
comprehensive range of therapeutic agents, the department shall
ensure that there is representation on the list of contract drugs in
all major therapeutic categories. Except as provided in subdivision
(a) of Section 14105.35, the department shall not be required to
contract with all manufacturers who negotiate for a contract in a
particular category. The department shall ensure that there is
sufficient representation of single-source and multiple-source
drugs, as appropriate, in each major therapeutic category.

(d) The department shall select the therapeutic categories to be
included on the list of contract drugs, and the order in which it
seeks contracts for those categories. The department may establish
different contracting schedules for single-source and
multiple-source drugs within a given therapeutic category.

(e) (1) In order to fully implement subdivision (d), the
department shall, to the extent necessary, negotiate or renegotiate
contracts to ensure there are as many single-source drugs within
each therapeutic category or subcategory as the department
determines necessary to meet the health needs of the Medi-Cal
population. The department may determine in selected therapeutic
categories or subcategories that no single-source drugs are
necessary because there are currently sufficient multiple-source
drugs in the therapeutic category or subcategory on the list of
contract drugs to meet the health needs of the Medi-Cal population.
However, in no event shall a beneficiary be denied continued use
of a drug which is part of a prescribed therapy in effect as of
September 2, 1992, until the prescribed therapy is no longer
prescribed.

(2) In the development of decisions by the department on the
required number of single-source drugs in a therapeutic category
or subcategory, and the relative therapeutic merits of each drug in
a therapeutic category or subcategory, the department shall consult
with the Medi-Cal Contract Drug Advisory Committee. The
committee members shall communicate their comments and
recommendations to the department within 30 business days of a
request for consultation, and shall disclose any associations with
pharmaceutical manufacturers or any remuneration from
pharmaceutical manufacturers.

(f) In order to achieve maximum cost savings, the Legislature
declares that an expedited process for contracts under this section
is necessary. Therefore, contracts entered into on a nonbid basis
shall be exempt from Chapter 2 (commencing with Section 10290)
of Part 2 of Division 2 of the Public Contract Code.

(g) In no event shall a beneficiary be denied continued use of
a drug that is part of a prescribed therapy in effect as of September
2, 1992, until the prescribed therapy is no longer prescribed.

(h) Contracts executed pursuant to this section shall be
confidential and shall be exempt from disclosure under the
California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).

(i) The department shall provide individual notice to Medi-Cal
beneficiaries at least 60 calendar days prior to the effective date
of the deletion or suspension of any drug from the list of contract
drugs. The notice shall include a description of the beneficiary’s
right to a fair hearing and shall encourage the beneficiary to consult
a physician to determine if an appropriate substitute medication
is available from Medi-Cal.

(j) In carrying out the provisions of this section, the department
may contract either directly, or through the fiscal intermediary,
for pharmacy consultant staff necessary to initially accomplish the
treatment authorization request reviews.

(k) (1) Manufacturers shall calculate and pay interest on late
or unpaid rebates. The interest shall not apply to any prior period
adjustments of unit rebate amounts or department utilization
adjustments.

(2) For state rebate payments, manufacturers shall calculate and
pay interest on late or unpaid rebates for quarters that begin on or
after the effective date of the act that added this subdivision.

(3) Following final resolution of any dispute pursuant to
procedures established by the federal Centers for Medicare and
Medicaid Services’ Medicaid Drug Rebate Program Releases or
regulations regarding the amount of a rebate, any underpayment
by a manufacturer shall be paid with interest calculated pursuant
to subdivisions (m) and (n), and any overpayment, together with
interest at the rate calculated pursuant to subdivisions (m) and (n),
shall be credited by the department against future rebates due.

(l) Interest pursuant to subdivision (k) shall begin accruing 38
calendar days from the date of mailing of the invoice, including
supporting utilization data sent to the manufacturer. Interest shall
continue to accrue until the date of mailing of the manufacturer’s
payment.

(m) Except as specified in subdivision (n), interest rates and
calculations pursuant to subdivision (k) for Medicaid rebates and
state rebates shall be identical and shall be determined by the
federal Centers for Medicare and Medicaid Services’ Medicaid
Drug Rebate Program Releases or regulations.

(n) If the date of mailing of a state rebate payment is 69 days
or more from the date of mailing of the invoice, including
supporting utilization data sent to the manufacturer, the interest
rate and calculations pursuant to subdivision (k) shall be as
specified in subdivision (m), however the interest rate shall be
increased by 10 percentage points. This subdivision shall apply to
payments for amounts invoiced for any quarters that begin on or
after the effective date of the act that added this subdivision.

(o) If the rebate payment is not received, the department shall
send overdue notices to the manufacturer at 38, 68, and 98 days
after the date of mailing of the invoice, and supporting utilization
data. If the department has not received a rebate payment, including
interest, within 180 days of the date of mailing of the invoice,
including supporting utilization data, the manufacturer’s contract
with the department shall be deemed to be in default and the
contract may be terminated in accordance with the terms of the
contract. For all other manufacturers, if the department has not
received a rebate payment, including interest, within 180 days of
the date of mailing of the invoice, including supporting utilization
data, all of the drug products of those manufacturers shall be made
available only through prior authorization effective 270 days after
the date of mailing of the invoice, including utilization data sent
to manufacturers.

(p) If the manufacturer provides payment or evidence of
payment to the department at least 40 days prior to the proposed
date the drug is to be made available only through prior
authorization pursuant to subdivision (o), the department shall
terminate its actions to place the manufacturers’ drug products on
prior authorization.

(q) The department shall direct the state’s fiscal intermediary
to remove prior authorization requirements imposed pursuant to
subdivision (o) and notify providers within 60 days after payment
by the manufacturer of the rebate, including interest. If a contract
was in place at the time the manufacturers’ drugs were placed on
prior authorization, removal of prior authorization requirements
shall be contingent upon good faith negotiations and a signed
contract with the department.

(r) A beneficiary may obtain drugs placed on prior authorization
pursuant to subdivision (o) if the beneficiary qualifies for
continuing care status. To be eligible for continuing care status, a
beneficiary must be taking the drug when its manufacturer is placed
on prior authorization status. Additionally, the department shall
have received a claim for the drug with a date of service that is
within 100 days prior to the date the manufacturer was placed on
prior authorization.

(s) A beneficiary may remain eligible for continuing care status,
provided that a claim is submitted for the drug in question at least
every 100 days and the date of service of the claim is within 100
days of the date of service of the last claim submitted for the same
drug.

(t) Drugs covered pursuant to Sections 14105.43 and 14133.2
shall not be subject to prior authorization pursuant to subdivision
(o), and any other drug may be exempted from prior authorization
by the department if the director determines that an essential need
exists for that drug, and there are no other drugs currently available
without prior authorization that meet that need.

(u) It is the intent of the Legislature in enacting subdivisions
(k) to (t), inclusive, that the department and manufacturers shall
cooperate and make every effort to resolve rebate payment disputes
within 90 days of notification by the manufacturer to the
department of a dispute in the calculation of rebate payments.

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 14105.436 of the end insert begin insert Welfare and Institutions Code end insert
begin insert is amended to read: end insert

14105.436.  

(a) Effective July 1, 2002, all pharmaceutical
manufacturers shall provide to the department a state rebate, in
addition to rebates pursuant to other provisions of state or federal
law, for any drug products that have been added to the Medi-Cal
list of contract drugs pursuant to Section 14105.43 or 14133.2 and
reimbursed through the Medi-Cal outpatient fee-for-service drug
program. The state rebate shall be negotiated as necessary between
the department and the pharmaceutical manufacturer. The
negotiations shall take into account offers such as rebates,
discounts, disease management programs, and other cost savings
offerings and shall be retroactive to July 1, 2002.

(b) The department may use existing administrative mechanisms
for any drug for which the department does not obtain a rebate
pursuant to subdivision (a). The department may only use those
mechanisms in the event that, by February 1, 2003, the
manufacturer refuses to provide the additional rebate. This
subdivision shall become inoperative on January 1, 2010.

(c) For purposes of this section, “Medi-Cal utilization data”
means the data used by the department to reimburse providers
under all programs that qualify for federal drug rebates pursuant
to Section 1927 of the federal Social Security Act (42 U.S.C. Sec.
1396r-8) or that otherwise qualify for federal funds under Title
XIX of the federal Social Security Act (42 U.S.C. Sec. 1396 et
seq.) pursuant to the Medicaid state plan or waivers. Medi-Cal
utilization data excludes data from covered entities identified in
Section 256b(a)(4) of Title 42 of the United States Code in
accordance with Sections 256b(a)(5)(A) and 1396r-8(a)(5)(C) of
Title 42 of the United States Code, and those capitated plans that
include a prescription drug benefit in the capitated rate and that
have negotiated contracts for rebates or discounts with
manufacturers.

begin insert

(d) Subdivision (c) shall become inoperative when the
department implements paragraphs (4) and (5) of subdivision (b)
of Section 14105.33. The department shall post on its Internet Web
site a notice that it has implemented paragraphs (4) and (5) of
subdivision (b) of Section 14105.33.

end insert begin delete

(d)

end delete

begin insert (e) end insert  Effective July 1, 2009, all pharmaceutical manufacturers
shall provide to the department a state rebate, in addition to rebates
pursuant to other provisions of state or federal law, equal to an
amount not less than 10 percent of the average manufacturer price
based on Medi-Cal utilization data for any drug products that have
been added to the Medi-Cal list of contract drugs pursuant to
Section 14105.43 or 14133.2.

begin delete

(e)

end delete

begin insert (f) end insert  Pharmaceutical manufacturers shall, by January 1, 2010,
enter into a supplemental rebate agreement for the rebate required
in subdivision (d) for drug products added to the Medi-Cal list of
contract drugs on or before December 31, 2009.

begin delete

(f)

end delete

begin insert (g) end insert  Effective January 1, 2010, all pharmaceutical manufacturers
who have not entered into a supplemental rebate agreement
pursuant to subdivisions (d) and (e), shall provide to the department
a state rebate, in addition to rebates pursuant to other provisions
of state or federal law, equal to an amount not less than 20 percent
of the average manufacturer price based on Medi-Cal utilization
data for any drug products that have been added to the Medi-Cal
list of contract drugs pursuant to Section 14105.43 or 14133.2
prior to January 1, 2010. If the pharmaceutical manufacturer does
not enter into a supplemental rebate agreement by March 1, 2010,
the manufacturer’s drug product shall be made available only
through an approved treatment authorization request pursuant to
subdivision (h).

begin delete

(g)

end delete

begin insert (h) end insert  For a drug product added to the Medi-Cal list of contract
drugs pursuant to Section 14105.43 or 14133.2 on or after January
1, 2010, a pharmaceutical manufacturer shall provide to the
department a state rebate pursuant to subdivision (d). If the
pharmaceutical manufacturer does not enter into a supplemental
rebate agreement within 60 days after the addition of the drug to
the Medi-Cal list of contract drugs, the manufacturer shall provide
to the department a state rebate equal to not less than 20 percent
of the average manufacturers price based on Medi-Cal utilization
data for any drug products that have been added to the Medi-Cal
list of contract drugs pursuant to Section 14105.43 or 14133.2. If
the pharmaceutical manufacturer does not enter into a supplemental
rebate agreement within 120 days after the addition of the drug to
the Medi-Cal list of contract drugs, the pharmaceutical
manufacturer’s drug product shall be made available only through
an approved treatment authorization request pursuant to subdivision
(h). For supplemental rebate agreements executed more than 120
days after the addition of the drug product to the Medi-Cal list of
contract drugs, the state rebate shall equal an amount not less than
20 percent of the average manufacturers price based on Medi-Cal
utilization data for any drug products that have been added to the
Medi-Cal list of contract drugs pursuant to Section 14105.43 or
14133.2.

begin delete

(h)

end delete

begin insert (i) end insert  Notwithstanding any other provision of law, drug products
added to the Medi-Cal list of contract drugs pursuant to Section
14105.43 or 14133.2 of manufacturers who do not execute an
agreement to pay additional rebates pursuant to this section, shall
be available only through an approved treatment authorization
request.

begin delete

(i)

end delete

begin insert (j) end insert  For drug products added on or before December 31, 2009,
a beneficiary may obtain a drug product that requires a treatment
authorization request pursuant to subdivision (h) if the beneficiary
qualifies for continuing care status. To be eligible for continuing
care status, a beneficiary must be taking the drug product and the
department must have record of a reimbursed claim for the drug
product with a date of service that is within 100 days prior to the
date the drug product was placed on treatment authorization request
status. A beneficiary may remain eligible for continuing care status,
provided that a claim is submitted for the drug product in question
at least every 100 days and the date of service of the claim is within
100 days of the date of service of the last claim submitted for the
same drug product.

begin delete

(j)

end delete

begin insert (k) end insert  Changes made to the Medi-Cal list of contract drugs under
this section shall be exempt from the requirements of the
Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340), Chapter 4 (commencing with Section 11370), and
Chapter 5 (commencing with Section 11500) of Part 1 of Division
3 of Title 2 of the Government Code), and shall not be subject to
the review and approval of the Office of Administrative Law.

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 14105.86 of the end insert begin insert Welfare and Institutions Code end insert
begin insert is amended to read: end insert

14105.86.  

(a) For the purposes of this section, the following
definitions apply:

(1) (A) “Average sales price” means the price reported to the
federal Centers for Medicare and Medicaid Services by the
manufacturer pursuant to Section 1847A of the federal Social
Security Act (42 U.S.C. Sec. 1395w-3a).

(B) “Average manufacturer price” means the price reported to
the federal Centers for Medicare and Medicaid Services pursuant
to Section 1927 of the federal Social Security Act (42 U.S.C. Sec.
1396r-8).

(2) “Blood factors” means plasma protein therapies and their
recombinant analogs. Blood factors include, but are not limited
to, all of the following:

(A) Coagulation factors, including:

(i) Factor VIII, nonrecombinant.

(ii) Factor VIII, porcine.

(iii) Factor VIII, recombinant.

(iv) Factor IX, nonrecombinant.

(v) Factor IX, complex.

(vi) Factor IX, recombinant.

(vii) Antithrombin III.

(viii) Anti-inhibitor factor.

(ix) Von Willebrand factor.

(x) Factor VIIa, recombinant.

(B) Immune Globulin Intravenous.

(C) Alpha-1 Proteinase Inhibitor.

(b) The reimbursement for blood factors shall be by national
drug code number and shall not exceed 120 percent of the average
sales price of the last quarter reported.

(c) The average sales price for blood factors of manufacturers
or distributors that do not report an average sales price pursuant
to subdivision (a) shall be identical to the average manufacturer
price. The average sales price for new products that do not have
a calculable average sales price or average manufacturer price
shall be equal to a projected sales price, as reported by the
manufacturer to the department. Manufacturers reporting a
projected sales price for a new product shall report the first monthly
average manufacturer price reported to the federal Centers for
Medicare and Medicaid Services. The reporting of an average sales
price that does not meet the requirement of this subdivision shall
result in that blood factor no longer being considered a covered
benefit.

(d) The average sales price shall be reported at the national drug
code level to the department on a quarterly basis.

(e) (1) Effective July 1, 2008, the department shall collect a
state rebate, in addition to rebates pursuant to other provisions of
state or federal law, for blood factors reimbursed pursuant to this
section by programs that qualify for federal drug rebates pursuant
to Section 1927 of the federal Social Security Act (42 U.S.C. Sec.
1396r-8) or otherwise qualify for federal funds under Title XIX
of the federal Social Security Act (42 U.S.C. Sec. 1396 et seq.)
pursuant to the medicaid state plan or waivers and the programs
authorized by Article 5 (commencing with Section 123800) of
Chapter 3 of Part 2 of, and Article 1 (commencing with Section
125125) of Chapter 2 of Part 5 of, Division 106 of the Health and
Safety Code. begin delete The end delete

begin insert

(2) Paragraph (1) shall become inoperative when the department
implements paragraphs (4) and (5) of subdivision (b) of Section
14105.33. The department shall post on its Internet Web site a
notice that it has implemented paragraphs (4) and (5) of
subdivision (b) of Section 14105.33.

end insert

begin insert (3) end insert begin insert   end insert begin insert The end insert state rebate shall be negotiated as necessary between
the department and the manufacturer. Manufacturers who do not
execute an agreement to pay additional rebates pursuant to this
section shall have their blood factors available only through an
approved treatment or service authorization request. All blood
factors that meet the definition of a covered outpatient drug
pursuant to Section 1927 of the federal Social Security Act (42
U.S.C. Sec. 1396r-8) shall remain a benefit subject to the utilization
controls provided for in this section.

begin delete

(2)

end delete

begin insert (4) end insert  In reviewing authorization requests, the department shall
approve the lowest net cost product that meets the beneficiary’s
medical need. The review of medical need shall take into account
a beneficiary’s clinical history or the use of the blood factor
pursuant to payment by another third party, or both.

(f) A beneficiary may obtain blood factors that require a
treatment or service authorization request pursuant to subdivision
(e) if the beneficiary qualifies for continuing care status. To be
eligible for continuing care status, a beneficiary must be taking
the blood factor and the department has reimbursed a claim for
the blood factor with a date of service that is within 100 days prior
to the date the blood factor was placed on treatment authorization
request status. A beneficiary may remain eligible for continuing
care status, provided that a claim is submitted for the blood factor
in question at least every 100 days and the date of service of the
claim is within 100 days of the date of service of the last claim
submitted for the same blood factor.

(g) Changes made to the list of covered blood factors under this
or any other section shall be exempt from the requirements of the
Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340), Chapter 4 (commencing with Section 11370), and
Chapter 5 (commencing with Section 11500) of Part 1 of Division
3 of Title 2 of the Government Code), and shall not be subject to
the review and approval of the Office of Administrative Law.

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 14132.56 is added to the end insert begin insert Welfare and
Institutions Code end insert begin insert , to read: end insert

begin insert

begin insert 14132.56. end insert   

(a) (1) Only to the extent required by the federal
government and effective no sooner than required by the federal
government, behavioral health treatment (BHT), as defined by
Section 1374.73 of the Health and Safety Code, shall be a covered
Medi-Cal service for individuals under 21 years of age.

(2) It is the intent of the Legislature that, to the extent the federal
government requires BHT to be a covered Medi-Cal service, the
department shall seek statutory authority to implement this new
benefit in Medi-Cal.

(b) The department shall implement, or continue to implement,
this section only after all of the following occurs or has occurred:

(1) The department receives all necessary federal approvals to
obtain federal funds for the service.

(2) The department seeks and obtains an appropriation that
would provide the necessary state funding estimated to be required
for the applicable fiscal year.

(3) The department consults with stakeholders.

(c) The department shall develop and define eligibility criteria,
provider participation criteria, utilization controls, and delivery
system structure for services under this section, subject to
limitations allowable under federal law, in consultation with
stakeholders.

(d) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the department, without taking any further regulatory action, shall
implement, interpret, or make specific this section by means of
all-county letters, plan letters, plan or provider bulletins, or similar
instructions until regulations are adopted. The department shall
adopt regulations by July 1, 2017, in accordance with the
requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.
Notwithstanding Section 10231.5 of the Government Code,
beginning six months after the effective date of this section, the
department shall provide semiannual status reports to the
Legislature, in compliance with Section 9795 of the Government
Code, until regulations have been adopted.

(e) For the purposes of implementing this section, the
department may enter into exclusive or nonexclusive contracts on
a bid or negotiated basis, including contracts for the purpose of
obtaining subject matter expertise or other technical assistance.
Contracts may be statewide or on a more limited geographic basis.
Contracts entered into or amended under this subdivision shall
be exempt from Part 2 (commencing with Section 10100) of
Division 2 of the Public Contract Code and Chapter 6
(commencing with Section 14825) of Part 5.5 of Division 3 of the
Government Code, and shall be exempt from the review or
approval of any division of the Department of General Services.

(f) The department may seek approval of any necessary state
plan amendments or waivers to implement this section. The
department shall make any state plan amendments or waiver
requests public at least 30 days prior to submitting to the federal
Centers for Medicare and Medicaid Services, and the department
shall work with stakeholders to address the public comments in
the state plan amendment or waiver request.

(g) This section shall be implemented only to the extent that
federal financial participation is available and any necessary
federal approvals have been obtained.

end insert

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 14593 of the end insert begin insert Welfare and Institutions Code end insert begin insert is
amended to read: end insert

14593.  

(a) (1) The department may enter into contracts with
public or private nonprofit organizations for implementation of
the PACE program, and also may enter into separate contracts
with PACE organizations, to fully implement the single state
agency responsibilities assumed by the department in those
contracts, Section 14132.94, and any other state requirement found
necessary by the department to provide comprehensive
community-based, risk-based, and capitated long-term care services
to California’s frail elderly.

(2) The department may enter into separate contracts as specified
in subdivision (a) with up to 15 PACE organizations.

(b) The requirements of the PACE model, as provided for
pursuant to Section 1894 (42 U.S.C. Sec. 1395eee) and Section
1934 (42 U.S.C. Sec. 1396u-4) of the federal Social Security Act,
shall not be waived or modified. The requirements that shall not
be waived or modified include all of the following:

(1) The focus on frail elderly qualifying individuals who require
the level of care provided in a nursing facility.

(2) The delivery of comprehensive, integrated acute and
long-term care services.

(3) The interdisciplinary team approach to care management
and service delivery.

(4) Capitated, integrated financing that allows the provider to
pool payments received from public and private programs and
individuals.

(5) The assumption by the provider of full financial risk.

(6) The provision of a PACE benefit package for all participants,
regardless of source of payment, that shall include all of the
following:

(A) All Medicare-covered items and services.

(B) All Medicaid-covered items and services, as specified in
the state’s Medicaid plan.

(C) Other services determined necessary by the interdisciplinary
team to improve and maintain the participant’s overall health status.

(c) Sections 14002, 14005.12, 14005.17, and 14006 shall apply
when determining the eligibility for Medi-Cal of a person receiving
the services from an organization providing services under this
chapter.

(d) Provisions governing the treatment of income and resources
of a married couple, for the purposes of determining the eligibility
of a nursing-facility certifiable or institutionalized spouse, shall
be established so as to qualify for federal financial participation.

(e) (1) The department shall establish capitation rates paid to
each PACE organization at no less than 90 percent of the
fee-for-service equivalent cost, including the department’s cost of
administration, that the department estimates would be payable
for all services covered under the PACE organization contract if
all those services were to be furnished to Medi-Cal beneficiaries
under the fee-for-service Medi-Cal program provided for pursuant
to Chapter 7 (commencing with Section 14000).

(2)  This subdivision shall be implemented only to the extent
that federal financial participation is available.

(f) Contracts under this chapter may be on a nonbid basis and
shall be exempt from Chapter 2 (commencing with Section 10290)
of Part 2 of Division 2 of the Public Contract Code.

begin insert

(g) This section shall remain in effect only until April 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before April 1, 2015, deletes or extends that date.

end insert

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 14593 is added to the end insert begin insert Welfare and Institutions
Code end insert begin insert , to read: end insert

begin insert

begin insert 14593. end insert   

(a) (1) The department may enter into contracts with
public or private nonprofit organizations for implementation of
the PACE program, and also may enter into separate contracts
with PACE organizations, to fully implement the single state agency
responsibilities assumed by the department in those contracts,
Section 14132.94, and any other state requirement found necessary
by the department to provide comprehensive community-based,
risk-based, and capitated long-term care services to California’s
frail elderly.

(2) The department may enter into separate contracts as
specified in subdivision (a) with up to 15 PACE organizations.

(b) The requirements of the PACE model, as provided for
pursuant to Section 1894 (42 U.S.C. Sec. 1395eee) and Section
1934 (42 U.S.C. Sec. 1396u-4) of the federal Social Security Act,
shall not be waived or modified. The requirements that shall not
be waived or modified include all of the following:

(1) The focus on frail elderly qualifying individuals who require
the level of care provided in a nursing facility.

(2) The delivery of comprehensive, integrated acute and
long-term care services.

(3) The interdisciplinary team approach to care management
and service delivery.

(4) Capitated, integrated financing that allows the provider to
pool payments received from public and private programs and
individuals.

(5) The assumption by the provider of full financial risk.

(6) The provision of a PACE benefit package for all participants,
regardless of source of payment, that shall include all of the
following:

(A) All Medicare-covered items and services.

(B) All Medicaid-covered items and services, as specified in the
state’s Medicaid plan.

(C) Other services determined necessary by the interdisciplinary
team to improve and maintain the participant’s overall health
status.

(c) Sections 14002, 14005.12, 14005.17, and 14006 shall apply
when determining the eligibility for Medi-Cal of a person receiving
the services from an organization providing services under this
chapter.

(d) Provisions governing the treatment of income and resources
of a married couple, for the purposes of determining the eligibility
of a nursing-facility certifiable or institutionalized spouse, shall
be established so as to qualify for federal financial participation.

(e) (1) The department shall establish capitation rates paid to
each PACE organization at no less than 95 percent of the
fee-for-service equivalent cost, including the department’s cost of
administration, that the department estimates would be payable
for all services covered under the PACE organization contract if
all those services were to be furnished to Medi-Cal beneficiaries
under the fee-for-service Medi-Cal program provided for pursuant
to Chapter 7 (commencing with Section 14000).

(2) This subdivision shall be implemented only to the extent that
federal financial participation is available.

(f) Contracts under this chapter may be on a nonbid basis and
shall be exempt from Chapter 2 (commencing with Section 10290)
of Part 2 of Division 2 of the Public Contract Code.

(g) This section shall become operative on April 1, 2015.

end insert

begin insert

begin insert SEC. 11. end insert   

end insert begin insert

(a) With regard to Section 4 of this act, the
Legislature finds and declares all of the following:

end insert begin insert

(1) The County of Los Angeles has the largest number of school
districts in the state and a correspondingly large Medi-Cal
population with a lower than statewide average on utilization of
Medi-Cal vision services.

end insert begin insert

(2) The state contracts with two managed care health plans in
the County of Los Angeles, which results in the delivery of
Medi-Cal services to approximately 76 percent of the over 2.3
million Medi-Cal beneficiaries in that county.

end insert begin insert

(3) These 2.3 million beneficiaries are 24 percent of the state’s
total number of Medi-Cal beneficiaries. Approximately one-half
are under 21 years of age.

end insert begin insert

(b) It is therefore the intent of the Legislature, in an effort to
determine whether children’s access to, and utilization of, vision
care services can be increased by providing vision care services
at schools, that the State Department of Health Care Services
establish a pilot program in the County of Los Angeles that enables
school districts to allow students enrolled in Medi-Cal managed
care plans to receive vision care services at the school site through
the use of a mobile vision service provider. It is the intent of the
Legislature that the vision care services available under this pilot
be limited to vision examinations and providing eyeglasses.

end insert

begin insert

begin insert SEC. 12. end insert   

end insert

begin insert It is the intent of the Legislature that the State
Department of Health Care Services shall continue to monitor
access to and utilization of Medi-Cal services in the fee-for-service
and managed care settings during the 2014- end insert begin insert 15 fiscal year, in
conjunction with the department’s federally approved plan to
monitor health care access for Medi-Cal beneficiaries and any
other methods deemed appropriate by the director. The department
shall use this information to evaluate current reimbursement levels
for Medi-Cal providers and to make recommendations for targeted
changes to the reductions in reimbursement levels made pursuant
to Chapter 3 of the Statutes of 2011 to the extent the department
finds those changes appropriate. end insert

begin insert

begin insert SEC. 13. end insert   

end insert begin insert

The balances of the reappropriations provided by
Item 4300-490 of Section 2.00 of the Budget Act of 2013, as added
by Chapters 20 and 354 of the Statutes of 2013, payable from the
General Fund (Item 4300-101-0001, Budget Act of 2009 (Ch. 1,
2009-10 3rd Ex. Sess., as revised by Ch. 1, 2009-10 4th Ex. Sess.)
and Item 4300-101-0001, Budget Act of 2010 (Ch. 712, Stats.
2010)), are hereby reappropriated for the purposes of, and subject
to that Item 4300-490, and, notwithstanding any other law, shall
be available for liquidation until June 30, 2015.

end insert

begin insert

begin insert SEC. 14. end insert   

end insert begin insert

(a) For the 2014-15 fiscal year, the sum of three
million two hundred thousand dollars ($3,200,000) is hereby
appropriated from the Major Risk Medical Insurance Fund to the
State Department of Health Care Services for allocation to health
benefit plans that meet all of the following requirements:

end insert begin insert

(1) The health benefit plan has a valid exemption letter from
the Internal Revenue Service pursuant to Section 501(c) (9) of the
Internal Revenue Code.

end insert begin insert

(2) The health benefit plan is a multiemployer plan, as defined
in Section 3(37) of the federal Employee Retirement Income
Security Act of 1974 (29 U.S.C. Sec. 1002(37)(A)).

end insert begin insert

(3) The health benefit plan is funded by contributions made by
agricultural employers, as defined in subdivision (c) of the Section
1140.4 of the Labor Code, where 85 percent or more of the plan’s
eligible participants are agricultural employees, as defined in
subdivision (b) of Section 1140.4 of the Labor Code, for work
performed and covered under a collective bargaining agreement.

end insert begin insert

(b) On or before September 1, 2014, the State Department of
Health Care Services shall pay the funds allocated pursuant to
this section to the health plan that meets the criteria set forth in
this section. The funds shall be used to provide health care
coverage for agricultural employees and dependents.

end insert begin insert

(c) The payment set forth in subdivision (b) shall not require
the State Department of Health Care Services to contract with the
recipient of the funds nor shall the payment of funds be subject to
the requirements of Part 2 (commencing with Section 10100) of
Division 2 of the Public Contract Code.

end insert

begin insert

begin insert SEC. 15. end insert   

end insert

begin insert For the 2014-15 fiscal year, the sum of three million
seven hundred fifty thousand dollars ($3,750,000) is hereby
appropriated from the Major Risk Medical Insurance Fund to the
State Department of Health Care Services for purposes of
electronic health records technical assistance in accordance with
the State Medicaid Health Information Technology Plan as
specified in Section 14046.1 of the Welfare and Institutions Code. end insert

begin insert

begin insert SEC. 16. end insert   

end insert begin insert

This act is a bill providing for appropriations related
to the Budget Bill within the meaning of subdivision (e) of Section
12 of Article IV of the California Constitution, has been identified
as related to the budget in the Budget Bill, and shall take effect
immediately.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact statutory
changes relating to the Budget Act of 2014.

end delete