Amended in Assembly June 13, 2014

Senate BillNo. 870


Introduced by Committee on Budget and Fiscal Review

January 9, 2014


begin deleteAn act relating to the Budget Act of 2014. end deletebegin insertAn act 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

SB 870, as amended, Committee on Budget and Fiscal Review. begin deleteBudget Act of 2014. end deletebegin insertHealth.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.

end insert
begin insert

(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.

end insert
begin insert

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.

end insert
begin insert

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 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.

end insert
begin insert

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.

end insert
begin insert

(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.

end insert
begin insert

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.

end insert
begin insert

(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.

end insert
begin insert

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.

end insert
begin insert

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.

end insert
begin insert

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.

end insert
begin insert

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

end insert
begin delete

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 deleteno end deletebegin insertyesend insert. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

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

P5    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 1374.34 of the end insertbegin insertHealth and Safety Codeend insert
2begin insert is amended to read:end insert

P6    1

1374.34.  

(a) Upon receiving the decision adopted by the
2director pursuant to Section 1374.33 that a disputed health care
3service is medically necessary, the plan shall promptly implement
4the decision. In the case of reimbursement for services already
5rendered, the plan shall reimburse the provider or enrollee,
6whichever applies, within five working days. In the case of services
7not yet rendered, the plan shall authorize the services within five
8working days of receipt of the written decision from the director,
9or sooner if appropriate for the nature of the enrollee’s medical
10condition, and shall inform the enrollee and provider of the
11authorization in accordance with the requirements of paragraph
12(3) of subdivision (h) of Section 1367.01.

13(b) A plan shall not engage in any conduct that has the effect
14of prolonging the independent review process. The engaging in
15that conduct or the failure of the plan to promptly implement the
16decision is a violation of this chapter and, in addition to any other
17fines, penalties, and other remedies available to the director under
18this chapter, the plan shall be subject to an administrative penalty
19of not less than five thousand dollars ($5,000) for each day that
20the decision is not implemented. The administrative penalties shall
21be paid to the Managed Care Administrative Fines and Penalties
22Fund and shall be used for the purposes specified in Section
231341.45.

24(c) The director shall require the plan to promptly reimburse
25the enrollee for any reasonable costs associated with those services
26when the director finds that the disputed health care services were
27a covered benefit under the terms and conditions of the health care
28service plan contract, and the services are found by the independent
29medical review organization to have been medically necessary
30pursuant to Section 1374.33, and either the enrollee’s decision to
31secure the services outside of the plan provider network was
32reasonable under the emergency or urgent medical circumstances,
33or the health care service plan contract does not require or provide
34prior authorization before the health care services are provided to
35the enrollee.

36(d) In addition to requiring plan compliance regarding
37subdivisions (a), (b), and (c) the director shall review individual
38cases submitted for independent medical review to determine
39whether any enforcement actions, including penalties, may be
40appropriate. In particular, where substantial harm, as defined in
P7    1Section 3428 of the Civil Code, to an enrollee has already occurred
2because of the decision of a plan, or one of its contracting
3providers, to delay, deny, or modify covered health care services
4that an independent medical review determines to be medically
5necessary pursuant to Section 1374.33, the director shall impose
6penalties.

7(e) Pursuant to Section 1368.04, the director shall perform an
8annual audit of independent medical review cases for the dual
9purposes of education and the opportunity to determine if any
10investigative or enforcement actions should be undertaken by the
11department, particularly if a plan repeatedly fails to act promptly
12and reasonably to resolve grievances associated with a delay,
13denial, or modification of medically necessary health care services
14when the obligation of the plan to provide those health care services
15to enrollees or subscribers is reasonably clear.

begin insert

16(f) A plan’s provision of prescription drugs to a Medi-Cal
17beneficiary pursuant to paragraph (5) of subdivision (b) of Section
1814105.33 of the Welfare and Institutions Code and in accordance
19with the State Department of Health Care Services coverage
20policies shall not be a ground for an enforcement action. Nothing
21in this article is intended to limit a plan’s responsibility to provide
22medically necessary health care services pursuant to this chapter.

end insert
23begin insert

begin insertSEC. 2.end insert  

end insert

begin insertChapter 13.6 (commencing with Section 121287) is
24added to Part 4 of Division 105 of the end insert
begin insertHealth and Safety Codeend insertbegin insert, to
25read:end insert

begin insert

26 

27Chapter  begin insert13.6.end insert Public Health Demonstration Projects
28

 

29

begin insert121287.end insert  

(a) There are hereby established public health
30demonstration projects to allow for innovative, evidence-based
31approaches to provide outreach, HIV and Hepatitis C screenings,
32and linkage to, and retention in, quality health care for the most
33vulnerable and underserved individuals with a high risk for HIV
34infection.

35(b) The demonstration projects may operate for a period of up
36to two years. The department shall implement up to four
37demonstration projects. The demonstration projects shall be
38designed to be capable of replication and expansion on a statewide
39basis.

P8    1(c) After conclusion of the demonstration projects, the
2department shall review the effectiveness of each demonstration
3project and make a determination of whether the demonstration
4project model can be implemented on a statewide basis.

5

begin insert121288.end insert  

Upon an appropriation for this purpose in the annual
6Budget Act, the department shall award funding, on a competitive
7basis, to a community-based organization or local health
8jurisdiction to operate a demonstration project pursuant to this
9chapter. The department shall determine the funding levels of each
10demonstration project based on scope and geographic area. An
11applicant shall demonstrate each of the following qualifications:

12(a) Leadership on access to HIV care and testing issues and
13experience addressing the needs of highly marginalized populations
14in accessing medical and HIV care and support.

15(b) Experience with the target population or relationships with
16community-based organizations or nongovernmental organizations,
17or both, that demonstrate expertise, history, and credibility working
18successfully in engaging the target population.

19(c) Experience working with nontraditional collaborators who
20work within and beyond the field of HIV/AIDS education and
21outreach, including areas of reproductive health, housing,
22immigration, and mental health.

23(d) Strong relationships with community-based HIV health care
24providers that have the trust of the targeted populations.

25(e) Strong relationships with the state and local health
26departments.

27(f) Capacity to coordinate a communitywide planning phase
28involving multiple community collaborators.

29(g) Experience implementing evidence-based programs or
30generating innovative strategies, or both, with at least preliminary
31evidence of program effectiveness.

32(h) Administrative systems and accountability mechanisms for
33grant management.

34(i) Capacity to participate in evaluation activities.

35(j) Strong communication systems that are in place to participate
36in public relations activities.

37

begin insert121289.end insert  

Each demonstration project shall prepare and
38disseminate information regarding best practices for, and the
39lessons learned regarding, providing outreach and education to
40the most vulnerable and underserved individuals with a high risk
P9    1for HIV infection for use by providers, the Office of AIDS, State
2Department of Public Health, federal departments and agencies,
3including the Department of Health and Human Services, and
4other national HIV/AIDS groups.

end insert
5begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 128225.5 is added to the end insertbegin insertHealth and Safety
6Code
end insert
begin insert, to read:end insert

begin insert
7

begin insert128225.5.end insert  

(a) The commission shall review and make
8recommendations to the Director of the Office of Statewide Health
9Planning and Development concerning the provision of grants
10pursuant to this section. In making recommendations, the
11commission shall give priority to residency programs that
12demonstrate all of the following:

13(1) That the grant will be used to support new primary care
14physician slots.

15(2) That priority in filling the position shall be given to
16physicians who have graduated from a California-based medical
17school.

18(3) That the new primary care physician residency positions
19have been, or will be, approved by the Accreditation Council for
20Graduate Medical Education prior to the first distribution of grant
21funds.

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

23(1) Determine whether the residency programs recommended
24by the commission meet the standards established by this section.

25(2) Select and contract on behalf of the state with accredited
26primary care or family medicine residency programs for the
27purpose of providing grants for the support of newly created
28residency positions.

29(c) This section does not apply to funding appropriated in the
30annual Budget Act for the Song-Brown Health Care Workforce
31Training Act (Article 1 (commencing with Section 128200)).

32(d) This section shall be operative only if funds are appropriated
33in the Budget Act of 2014 for the purposes described in this section.

34(e) This section shall remain in effect only until January 1, 2018,
35and as of that date is repealed, unless a later enacted statute, that
36is enacted before January 1, 2018, deletes or extends that date.

end insert
37begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 14087.9730 is added to the end insertbegin insertWelfare and
38Institutions Code
end insert
begin insert, end insertimmediately following Section 14087.9725begin insert, to
39read:end insert

begin insert
P10   1

begin insert14087.9730.end insert  

(a) In an effort to determine whether children’s
2access to, and utilization of, vision care services can be increased
3by providing vision care services at schools, the department shall
4establish a pilot program in the County of Los Angeles that enables
5school districts to allow students enrolled in Medi-Cal managed
6care plans to receive vision care services at the school site through
7the use of a mobile vision service provider. The vision care services
8available under this pilot program are limited to vision
9examinations and providing eyeglasses.

10(b) The Medi-Cal managed care plans in the County of Los
11Angeles shall jointly identify and develop standards and
12participation criteria that the participating mobile vision service
13provider shall meet in order to be deemed qualified to participate
14in the pilot program, in consultation with the department and
15consistent with any applicable federal requirements governing
16Medicaid managed care contracts. In the event the Medi-Cal
17managed care plans have not developed standards and
18participation criteria by January 1, 2015, or by the scheduled start
19date of the pilot program if later, the department shall determine
20the standards and participating criteria for purposes of this pilot
21program.

22(c) This section shall not be construed to preclude Los Angeles
23County school district students not enrolled in Medi-Cal managed
24care from accessing vision care services from a mobile vision
25service provider participating in this pilot program.

26(d) Under the pilot program, if a school district in the County
27of Los Angeles enters into a written memorandum of understanding
28with a mobile vision care service provider allowing the provider
29to offer the vision care services described in this section to students,
30all of the following shall apply:

31(1) The two Medi-Cal managed care plans in the County of Los
32Angeles shall contract with one or more mobile vision care service
33providers that meets the standards and participation criteria
34developed pursuant to subdivision (b) for the delivery of those
35vision care services to any student enrolled in the Medi-Cal
36managed care plan who chooses to receive his or her vision care
37services from the provider at that school site. This contracting
38requirement is contingent upon agreement between each of the
39two Medi-Cal managed care plans in the County of Los Angeles
P11   1and a mobile vision care service provider with respect to
2reimbursement rates applicable to the services under this pilot.

3(2) Neither this pilot program nor the Medi-Cal managed care
4plan shall require that a Medi-Cal beneficiary receive the vision
5care services described in this section through a mobile vision
6care provider on site at the school.

7(3) Prior to a Medi-Cal beneficiary receiving mobile vision care
8services at the school site, the parents, guardians, or legal
9representative of the student shall consent in writing to the
10Medi-Cal beneficiary receiving the services through a mobile
11vision care provider on site at the school.

12(e) An optometrist or ophthalmologist prescribing glasses to a
13Medi-Cal managed care beneficiary as part of services provided
14at a school site by a mobile vision care service provider pursuant
15to this pilot program shall be enrolled in the Medi-Cal program
16as an Ordering/Referring/Prescribing provider. For any other
17purposes under the pilot program, the licensed health professional
18shall satisfy all requirements for enrollment as a provider in the
19Medi-Cal program.

20(f) (1) The Medi-Cal managed care plan shall compensate the
21mobile vision services provider for the cost of the vision
22examination, dispensing of the lenses, and eyeglass frames.

23(2) Ophthalmic eyeglasses lenses prescribed by optometrists or
24ophthalmologists for a Medi-Cal managed care plan enrollee as
25part of the services provided at a school site by a mobile vision
26services provider shall be fabricated through optical laboratories
27the department contracts with pursuant to subdivision (b) of Section
2814105.3.

29(g) (1) The department shall annually adjust capitation rates
30for the Medi-Cal managed care plans operating in the County of
31Los Angeles as necessary to account for projected changes in the
32costs and utilization of the services provided pursuant to this
33section by mobile vision service providers.

34(2) Capitation rate adjustments pursuant to this section shall
35be actuarially based and developed using projections of contingent
36events including targeted populations who will receive these
37services, and shall otherwise be in accordance with requirements
38necessary to secure federal financial participation.

39(3) Capitation rate adjustments pursuant to this section shall
40be limited to those related to vision examinations, dispensing of
P12   1lenses, and eyeglass frames. The fabrication of optical lenses
2pursuant to this section shall be paid on a fee-for-service basis in
3accordance with the department’s applicable contract under
4subdivision (b) of Section 14105.3.

5(h) The pilot program shall last three years, starting no sooner
6 than January 1, 2015, and concluding December 31, 2017, or
7three years from the start date of the pilot if later. The department
8shall evaluate the impact of the pilot program on access to, and
9utilization of, vision care services by children by monitoring the
10managed care plan utilization data for vision services, as well as
11the lens fabrication data.

12(i) The department may terminate the pilot program at any time
13with 90 days advance notice to the Medi-Cal managed care plans
14for reasons that include, but are not limited to, any of the following:

15(1) The department determines that the pilot program is
16resulting in a lower level of access to, or use of, vision care
17services for children under the participating health plans.

18(2) The department determines that the pilot program is
19resulting in fraud, waste, or abuse of Medi-Cal funds.

20(3) The department determines there is a lack of funding for the
21vision care services provided in the pilot program.

22(j) Notwithstanding Chapter 3.5 (commencing with Section
2311340) of Part 1 of Division 3 of Title 2 of the Government Code,
24the department may implement, interpret, or make specific this
25section and any applicable federal waivers and state plan
26amendments by means of all-county letters, plan letters, plan or
27provider bulletins, or similar instructions, without taking
28regulatory action.

29(k) The department shall obtain any federal approvals necessary
30to implement this section and to obtain federal matching funds to
31the maximum extent permitted by federal law.

32(l) This section shall be implemented only if and to the extent
33all federal approvals are obtained and federal financial
34participation is available.

35(m) This section shall be implemented only to the extent an
36annual appropriation is made available to the department each
37fiscal year for the specific purpose of implementing this section.

38(n) If the department determines, pursuant to subdivision (h),
39that the pilot program is having a positive impact on access and
40utilization and that additional funds are available, the director
P13   1may extend the pilot program described in this section to Medi-Cal
2managed care plans in other counties and applicable local
3jurisdictions. Any extension shall be implemented only to the extent
4that any additional and necessary federal approvals are obtained,
5and if sufficient funds are made available to participating plans
6for this purpose. The department may accept funding from private
7foundations in order to implement an extension under this
8subdivision to the extent that federal financial participation is
9available.

10(o) The department shall post on its Internet Web site a notice
11that has terminated or expanded the pilot program, including
12identification of the geographic locations, and shall notify
13appropriate fiscal and policy committees of both houses of the
14Legislature.

end insert
15begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 14105.33 of the end insertbegin insertWelfare and Institutions Codeend insert
16begin insert is amended to read:end insert

17

14105.33.  

(a) The department may enter into contracts with
18manufacturers of single-source and multiple-source drugs, on a
19bid or nonbid basis, for drugs from each major therapeutic category,
20and shall maintain a list of those drugs for which contracts have
21been executed.

22(b) (1) Contracts executed pursuant to this section shall be for
23the manufacturer’s best price, as defined in Section 14105.31,
24which shall be specified in the contract, and subject to agreed-upon
25price escalators, as defined in that section. The contracts shall
26provide for a state rebate, as defined in Section 14105.31, to be
27remitted to the department quarterly. The department shall submit
28an invoice to each manufacturer for the state rebate, including
29supporting utilization data from the department’s prescription drug
30paid claims tapes within 30 days of receipt of the federal Centers
31for Medicare and Medicaid Services’ file of manufacturer rebate
32information. In lieu of paying the entire invoiced amount, a
33manufacturer may contest the invoiced amount pursuant to
34procedures established by the federal Centers for Medicare and
35Medicaid Services’ Medicaid Drug Rebate Program Releases or
36regulations by mailing a notice, that shall set forth its grounds for
37contesting the invoiced amount, to the department within 38 days
38of the department’s mailing of the state invoice and supporting
39utilization data. For purposes of state accounting practices only,
40the contested balance shall not be considered an accounts receivable
P14   1amount until final resolution of the dispute pursuant to procedures
2established by the federal Centers for Medicare and Medicaid
3Services’ Medicaid Drug Rebate Program Releases or regulations
4that results in a finding of an underpayment by the manufacturer.
5Manufacturers may request, and the department shall timely
6provide, at cost, Medi-Cal provider level drug utilization data, and
7other Medi-Cal utilization data necessary to resolve a contested
8department-invoiced rebate amount.

9(2) The department shall provide for an annual audit of
10utilization data used to calculate the state rebate to verify the
11accuracy of that data. The findings of the audit shall be documented
12in a written audit report to be made available to manufacturers
13within 90 days of receipt of the report from the auditor. Any
14manufacturer may receive a copy of the audit report upon written
15request. Contracts between the department and manufacturers shall
16provide for any equalization payment adjustments determined
17necessary pursuant to an audit.

18(3) begin insert(A)end insertbegin insertend insert Utilization data used to determine the state rebate shall
19exclude data from both of the following:

begin delete

20(A)

end delete

21begin insert(i)end insert Health maintenance organizations, as defined in Section
22300e(a) of Title 42 of the United States Code, including those
23organizations that contract under Section 1396b(m) of Title 42 of
24the United States Code.

begin delete

25(B)

end delete

26begin insert(ii)end insert Capitated plans that include a prescription drug benefit in
27the capitated rate, and that have negotiated contracts for rebates
28or discounts with manufacturers.

begin insert

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

end insert

30(4) begin deleteExcept as provided in paragraph (3), end deletebegin insertCommencing July 1,
312014, end insert
utilization data used to determine the state rebate shall
32include data from allbegin delete programsend deletebegin insert programs, including, but not limited
33to, fee-for-service Medi-Cal, and utilization data, as limited in
34paragraph (5), from health plans contracting with the department
35to provide services to beneficiaries pursuant to this chapter,
36Chapter 8 (commencing with Section 14200), or Chapter 8.75
37(commencing with Section 14591),end insert
that qualify for federal drug
38rebates pursuant to Section 1927 of the federal Social Security Act
39(42 U.S.C. Sec. 1396r-8) or that otherwise qualify for federal funds
P15   1under Title XIX of the federal Social Security Act (42 U.S.C. Sec.
21396 et seq.) pursuant to the Medicaid state plan or waivers.

begin insert

3(5) Health plan utilization data shall be limited to those drugs
4for which a health plan is authorizing a prescription drug described
5in subparagraph (A), and pursuant to the coverage policies
6established in subparagraph (B):

end insert
begin insert

7(A) A prescription drug for which the department reimburses
8the health plan through a separate capitated payment or other
9supplemental payment. Payment shall not be withheld for decisions
10determined pursuant to Section 1374.34 of the Health and Safety
11Code.

end insert
begin insert

12(B) The department shall develop coverage policies, consistent
13with the criteria set forth in paragraph (1) of subdivision (c) of
14Section 14105.39 and in consultation with clinical experts,
15Medi-Cal managed care plans, and other stakeholders, for
16prescription drugs described in subparagraph (A). These coverage
17policies shall apply to the entire Medi-Cal program, including
18fee-for-service and Medi-Cal managed care, through the Medi-Cal
19List of Contract Drugs or through provider bulletins, all plan
20letters, or similar instructions. Coverage policies developed
21pursuant to this section shall be revised on a semiannual basis or
22upon approval by the Food and Drug Administration of a new
23drug subject to subparagraph (A). For the purposes of this section,
24“coverage policies” include, but are not limited to, clinical
25guidelines and treatment and utilization policies.

end insert
begin insert

26(6) For prescription drugs not subject to the requirements of
27paragraph (5), utilization data used to determine the state rebate
28shall include all data from health plans, except for health
29maintenance organizations, as defined in Section 300e(a) of Title
30 42 of the United States Code, including those organizations that
31contract pursuant to Section 1396b(m) of Title 42 of the United
32States Code.

end insert
begin insert

33(7) Notwithstanding Chapter 3.5 (commencing with Section
3411340) of Part 1 of Division 3 of Title 2 of the Government Code,
35the department, without taking any further regulatory action, shall
36implement, interpret, or make specific paragraph (5) by means of
37all-county letters, plan letters, plan or provider bulletins, or similar
38instructions, until the time regulations are adopted. The department
39shall adopt regulations by October 1, 2017, in accordance with
40the requirements of Chapter 3.5 (commencing with Section 11340)
P16   1of Part 1 of Division 3 of Title 2 of the Government Code.
2Notwithstanding Section 10231.5 of the Government Code,
3beginning six months after the effective date of this section, the
4 department shall provide a status report to the Legislature on a
5semiannual basis, in compliance with Section 9795 of the
6Government Code, until regulations have been adopted.

end insert

7(c) In order that Medi-Cal beneficiaries may have access to a
8comprehensive range of therapeutic agents, the department shall
9ensure that there is representation on the list of contract drugs in
10all major therapeutic categories. Except as provided in subdivision
11(a) of Section 14105.35, the department shall not be required to
12contract with all manufacturers who negotiate for a contract in a
13particular category. The department shall ensure that there is
14sufficient representation of single-source and multiple-source
15drugs, as appropriate, in each major therapeutic category.

16(d) The department shall select the therapeutic categories to be
17included on the list of contract drugs, and the order in which it
18seeks contracts for those categories. The department may establish
19different contracting schedules for single-source and
20multiple-source drugs within a given therapeutic category.

21(e) (1) In order to fully implement subdivision (d), the
22department shall, to the extent necessary, negotiate or renegotiate
23contracts to ensure there are as many single-source drugs within
24each therapeutic category or subcategory as the department
25determines necessary to meet the health needs of the Medi-Cal
26population. The department may determine in selected therapeutic
27categories or subcategories that no single-source drugs are
28necessary because there are currently sufficient multiple-source
29drugs in the therapeutic category or subcategory on the list of
30contract drugs to meet the health needs of the Medi-Cal population.
31However, in no event shall a beneficiary be denied continued use
32of a drug which is part of a prescribed therapy in effect as of
33September 2, 1992, until the prescribed therapy is no longer
34prescribed.

35(2) In the development of decisions by the department on the
36required number of single-source drugs in a therapeutic category
37or subcategory, and the relative therapeutic merits of each drug in
38a therapeutic category or subcategory, the department shall consult
39with the Medi-Cal Contract Drug Advisory Committee. The
40committee members shall communicate their comments and
P17   1recommendations to the department within 30 business days of a
2request for consultation, and shall disclose any associations with
3pharmaceutical manufacturers or any remuneration from
4pharmaceutical manufacturers.

5(f) In order to achieve maximum cost savings, the Legislature
6declares that an expedited process for contracts under this section
7is necessary. Therefore, contracts entered into on a nonbid basis
8shall be exempt from Chapter 2 (commencing with Section 10290)
9of Part 2 of Division 2 of the Public Contract Code.

10(g) In no event shall a beneficiary be denied continued use of
11a drug that is part of a prescribed therapy in effect as of September
122, 1992, until the prescribed therapy is no longer prescribed.

13(h) Contracts executed pursuant to this section shall be
14confidential and shall be exempt from disclosure under the
15California Public Records Act (Chapter 3.5 (commencing with
16Section 6250) of Division 7 of Title 1 of the Government Code).

17(i) The department shall provide individual notice to Medi-Cal
18beneficiaries at least 60 calendar days prior to the effective date
19of the deletion or suspension of any drug from the list of contract
20drugs. The notice shall include a description of the beneficiary’s
21right to a fair hearing and shall encourage the beneficiary to consult
22a physician to determine if an appropriate substitute medication
23is available from Medi-Cal.

24(j) In carrying out the provisions of this section, the department
25may contract either directly, or through the fiscal intermediary,
26for pharmacy consultant staff necessary to initially accomplish the
27treatment authorization request reviews.

28(k) (1) Manufacturers shall calculate and pay interest on late
29or unpaid rebates. The interest shall not apply to any prior period
30adjustments of unit rebate amounts or department utilization
31adjustments.

32(2) For state rebate payments, manufacturers shall calculate and
33pay interest on late or unpaid rebates for quarters that begin on or
34after the effective date of the act that added this subdivision.

35(3) Following final resolution of any dispute pursuant to
36procedures established by the federal Centers for Medicare and
37Medicaid Services’ Medicaid Drug Rebate Program Releases or
38regulations regarding the amount of a rebate, any underpayment
39by a manufacturer shall be paid with interest calculated pursuant
40to subdivisions (m) and (n), and any overpayment, together with
P18   1interest at the rate calculated pursuant to subdivisions (m) and (n),
2shall be credited by the department against future rebates due.

3(l) Interest pursuant to subdivision (k) shall begin accruing 38
4calendar days from the date of mailing of the invoice, including
5supporting utilization data sent to the manufacturer. Interest shall
6continue to accrue until the date of mailing of the manufacturer’s
7payment.

8(m) Except as specified in subdivision (n), interest rates and
9calculations pursuant to subdivision (k) for Medicaid rebates and
10state rebates shall be identical and shall be determined by the
11federal Centers for Medicare and Medicaid Services’ Medicaid
12Drug Rebate Program Releases or regulations.

13(n) If the date of mailing of a state rebate payment is 69 days
14or more from the date of mailing of the invoice, including
15supporting utilization data sent to the manufacturer, the interest
16rate and calculations pursuant to subdivision (k) shall be as
17specified in subdivision (m), however the interest rate shall be
18increased by 10 percentage points. This subdivision shall apply to
19payments for amounts invoiced for any quarters that begin on or
20after the effective date of the act that added this subdivision.

21(o) If the rebate payment is not received, the department shall
22send overdue notices to the manufacturer at 38, 68, and 98 days
23after the date of mailing of the invoice, and supporting utilization
24data. If the department has not received a rebate payment, including
25interest, within 180 days of the date of mailing of the invoice,
26including supporting utilization data, the manufacturer’s contract
27with the department shall be deemed to be in default and the
28contract may be terminated in accordance with the terms of the
29contract. For all other manufacturers, if the department has not
30received a rebate payment, including interest, within 180 days of
31the date of mailing of the invoice, including supporting utilization
32data, all of the drug products of those manufacturers shall be made
33available only through prior authorization effective 270 days after
34the date of mailing of the invoice, including utilization data sent
35to manufacturers.

36(p) If the manufacturer provides payment or evidence of
37payment to the department at least 40 days prior to the proposed
38date the drug is to be made available only through prior
39authorization pursuant to subdivision (o), the department shall
P19   1terminate its actions to place the manufacturers’ drug products on
2prior authorization.

3(q) The department shall direct the state’s fiscal intermediary
4to remove prior authorization requirements imposed pursuant to
5subdivision (o) and notify providers within 60 days after payment
6by the manufacturer of the rebate, including interest. If a contract
7was in place at the time the manufacturers’ drugs were placed on
8prior authorization, removal of prior authorization requirements
9shall be contingent upon good faith negotiations and a signed
10contract with the department.

11(r) A beneficiary may obtain drugs placed on prior authorization
12pursuant to subdivision (o) if the beneficiary qualifies for
13continuing care status. To be eligible for continuing care status, a
14beneficiary must be taking the drug when its manufacturer is placed
15on prior authorization status. Additionally, the department shall
16have received a claim for the drug with a date of service that is
17within 100 days prior to the date the manufacturer was placed on
18prior authorization.

19(s) A beneficiary may remain eligible for continuing care status,
20provided that a claim is submitted for the drug in question at least
21every 100 days and the date of service of the claim is within 100
22days of the date of service of the last claim submitted for the same
23drug.

24(t) Drugs covered pursuant to Sections 14105.43 and 14133.2
25shall not be subject to prior authorization pursuant to subdivision
26(o), and any other drug may be exempted from prior authorization
27by the department if the director determines that an essential need
28exists for that drug, and there are no other drugs currently available
29without prior authorization that meet that need.

30(u) It is the intent of the Legislature in enacting subdivisions
31(k) to (t), inclusive, that the department and manufacturers shall
32cooperate and make every effort to resolve rebate payment disputes
33within 90 days of notification by the manufacturer to the
34department of a dispute in the calculation of rebate payments.

35begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 14105.436 of the end insertbegin insertWelfare and Institutions Codeend insert
36begin insert is amended to read:end insert

37

14105.436.  

(a) Effective July 1, 2002, all pharmaceutical
38manufacturers shall provide to the department a state rebate, in
39addition to rebates pursuant to other provisions of state or federal
40law, for any drug products that have been added to the Medi-Cal
P20   1list of contract drugs pursuant to Section 14105.43 or 14133.2 and
2reimbursed through the Medi-Cal outpatient fee-for-service drug
3program. The state rebate shall be negotiated as necessary between
4the department and the pharmaceutical manufacturer. The
5negotiations shall take into account offers such as rebates,
6discounts, disease management programs, and other cost savings
7offerings and shall be retroactive to July 1, 2002.

8(b) The department may use existing administrative mechanisms
9for any drug for which the department does not obtain a rebate
10pursuant to subdivision (a). The department may only use those
11mechanisms in the event that, by February 1, 2003, the
12manufacturer refuses to provide the additional rebate. This
13subdivision shall become inoperative on January 1, 2010.

14(c) For purposes of this section, “Medi-Cal utilization data”
15means the data used by the department to reimburse providers
16under all programs that qualify for federal drug rebates pursuant
17to Section 1927 of the federal Social Security Act (42 U.S.C. Sec.
181396r-8) or that otherwise qualify for federal funds under Title
19XIX of the federal Social Security Act (42 U.S.C. Sec. 1396 et
20seq.) pursuant to the Medicaid state plan or waivers. Medi-Cal
21utilization data excludes data from covered entities identified in
22Section 256b(a)(4) of Title 42 of the United States Code in
23accordance with Sections 256b(a)(5)(A) and 1396r-8(a)(5)(C) of
24Title 42 of the United States Code, and those capitated plans that
25include a prescription drug benefit in the capitated rate and that
26have negotiated contracts for rebates or discounts with
27manufacturers.

begin insert

28(d) Subdivision (c) shall become inoperative when the
29department implements paragraphs (4) and (5) of subdivision (b)
30of Section 14105.33. The department shall post on its Internet Web
31site a notice that it has implemented paragraphs (4) and (5) of
32subdivision (b) of Section 14105.33.

end insert
begin delete

33(d)

end delete

34begin insert(e)end insert Effective July 1, 2009, all pharmaceutical manufacturers
35shall provide to the department a state rebate, in addition to rebates
36pursuant to other provisions of state or federal law, equal to an
37amount not less than 10 percent of the average manufacturer price
38based on Medi-Cal utilization data for any drug products that have
39been added to the Medi-Cal list of contract drugs pursuant to
40Section 14105.43 or 14133.2.

begin delete

P21   1(e)

end delete

2begin insert(f)end insert Pharmaceutical manufacturers shall, by January 1, 2010,
3enter into a supplemental rebate agreement for the rebate required
4in subdivision (d) for drug products added to the Medi-Cal list of
5contract drugs on or before December 31, 2009.

begin delete

6(f)

end delete

7begin insert(g)end insert Effective January 1, 2010, all pharmaceutical manufacturers
8who have not entered into a supplemental rebate agreement
9pursuant to subdivisions (d) and (e), shall provide to the department
10a state rebate, in addition to rebates pursuant to other provisions
11of state or federal law, equal to an amount not less than 20 percent
12of the average manufacturer price based on Medi-Cal utilization
13data for any drug products that have been added to the Medi-Cal
14list of contract drugs pursuant to Section 14105.43 or 14133.2
15prior to January 1, 2010. If the pharmaceutical manufacturer does
16not enter into a supplemental rebate agreement by March 1, 2010,
17the manufacturer’s drug product shall be made available only
18 through an approved treatment authorization request pursuant to
19subdivision (h).

begin delete

20(g)

end delete

21begin insert(h)end insert For a drug product added to the Medi-Cal list of contract
22drugs pursuant to Section 14105.43 or 14133.2 on or after January
231, 2010, a pharmaceutical manufacturer shall provide to the
24department a state rebate pursuant to subdivision (d). If the
25pharmaceutical manufacturer does not enter into a supplemental
26rebate agreement within 60 days after the addition of the drug to
27the Medi-Cal list of contract drugs, the manufacturer shall provide
28to the department a state rebate equal to not less than 20 percent
29of the average manufacturers price based on Medi-Cal utilization
30data for any drug products that have been added to the Medi-Cal
31list of contract drugs pursuant to Section 14105.43 or 14133.2. If
32 the pharmaceutical manufacturer does not enter into a supplemental
33rebate agreement within 120 days after the addition of the drug to
34the Medi-Cal list of contract drugs, the pharmaceutical
35manufacturer’s drug product shall be made available only through
36an approved treatment authorization request pursuant to subdivision
37(h). For supplemental rebate agreements executed more than 120
38days after the addition of the drug product to the Medi-Cal list of
39contract drugs, the state rebate shall equal an amount not less than
4020 percent of the average manufacturers price based on Medi-Cal
P22   1utilization data for any drug products that have been added to the
2Medi-Cal list of contract drugs pursuant to Section 14105.43 or
314133.2.

begin delete

4(h)

end delete

5begin insert(i)end insert Notwithstanding any other provision of law, drug products
6added to the Medi-Cal list of contract drugs pursuant to Section
714105.43 or 14133.2 of manufacturers who do not execute an
8agreement to pay additional rebates pursuant to this section, shall
9be available only through an approved treatment authorization
10request.

begin delete

11(i)

end delete

12begin insert(j)end insert For drug products added on or before December 31, 2009,
13a beneficiary may obtain a drug product that requires a treatment
14authorization request pursuant to subdivision (h) if the beneficiary
15qualifies for continuing care status. To be eligible for continuing
16care status, a beneficiary must be taking the drug product and the
17department must have record of a reimbursed claim for the drug
18product with a date of service that is within 100 days prior to the
19date the drug product was placed on treatment authorization request
20status. A beneficiary may remain eligible for continuing care status,
21provided that a claim is submitted for the drug product in question
22at least every 100 days and the date of service of the claim is within
23100 days of the date of service of the last claim submitted for the
24same drug product.

begin delete

25(j)

end delete

26begin insert(k)end insert Changes made to the Medi-Cal list of contract drugs under
27this section shall be exempt from the requirements of the
28Administrative Procedure Act (Chapter 3.5 (commencing with
29Section 11340), Chapter 4 (commencing with Section 11370), and
30Chapter 5 (commencing with Section 11500) of Part 1 of Division
313 of Title 2 of the Government Code), and shall not be subject to
32the review and approval of the Office of Administrative Law.

33begin insert

begin insertSEC. 7.end insert  

end insert

begin insertSection 14105.86 of the end insertbegin insertWelfare and Institutions Codeend insert
34begin insert is amended to read:end insert

35

14105.86.  

(a) For the purposes of this section, the following
36definitions apply:

37(1) (A) “Average sales price” means the price reported to the
38federal Centers for Medicare and Medicaid Services by the
39manufacturer pursuant to Section 1847A of the federal Social
40Security Act (42 U.S.C. Sec. 1395w-3a).

P23   1(B) “Average manufacturer price” means the price reported to
2the federal Centers for Medicare and Medicaid Services pursuant
3to Section 1927 of the federal Social Security Act (42 U.S.C. Sec.
41396r-8).

5(2) “Blood factors” means plasma protein therapies and their
6recombinant analogs. Blood factors include, but are not limited
7to, all of the following:

8(A) Coagulation factors, including:

9(i) Factor VIII, nonrecombinant.

10(ii) Factor VIII, porcine.

11(iii) Factor VIII, recombinant.

12(iv) Factor IX, nonrecombinant.

13(v) Factor IX, complex.

14(vi) Factor IX, recombinant.

15(vii) Antithrombin III.

16(viii) Anti-inhibitor factor.

17(ix) Von Willebrand factor.

18(x) Factor VIIa, recombinant.

19(B) Immune Globulin Intravenous.

20(C) Alpha-1 Proteinase Inhibitor.

21(b) The reimbursement for blood factors shall be by national
22drug code number and shall not exceed 120 percent of the average
23sales price of the last quarter reported.

24(c) The average sales price for blood factors of manufacturers
25or distributors that do not report an average sales price pursuant
26to subdivision (a) shall be identical to the average manufacturer
27price. The average sales price for new products that do not have
28a calculable average sales price or average manufacturer price
29shall be equal to a projected sales price, as reported by the
30manufacturer to the department. Manufacturers reporting a
31projected sales price for a new product shall report the first monthly
32average manufacturer price reported to the federal Centers for
33Medicare and Medicaid Services. The reporting of an average sales
34price that does not meet the requirement of this subdivision shall
35result in that blood factor no longer being considered a covered
36benefit.

37(d) The average sales price shall be reported at the national drug
38code level to the department on a quarterly basis.

39(e) (1) Effective July 1, 2008, the department shall collect a
40state rebate, in addition to rebates pursuant to other provisions of
P24   1state or federal law, for blood factors reimbursed pursuant to this
2section by programs that qualify for federal drug rebates pursuant
3to Section 1927 of the federal Social Security Act (42 U.S.C. Sec.
41396r-8) or otherwise qualify for federal funds under Title XIX
5of the federal Social Security Act (42 U.S.C. Sec. 1396 et seq.)
6pursuant to the medicaid state plan or waivers and the programs
7authorized by Article 5 (commencing with Section 123800) of
8Chapter 3 of Part 2 of, and Article 1 (commencing with Section
9125125) of Chapter 2 of Part 5 of, Division 106 of the Health and
10Safety Code.begin delete The state rebate shall be negotiated as necessary
11between the department and the manufacturer. Manufacturers who
12do not execute an agreement to pay additional rebates pursuant to
13this section shall have their blood factors available only through
14an approved treatment or service authorization request. All blood
15factors that meet the definition of a covered outpatient drug
16pursuant to Section 1927 of the federal Social Security Act (42
17U.S.C. Sec. 1396r-8) shall remain a benefit subject to the utilization
18controls provided for in this section.end delete

begin insert

19(2) Paragraph (1) shall become inoperative when the department
20implements paragraphs (4) and (5) of subdivision (b) of Section
2114105.33. The department shall post on its Internet Web site a
22notice that it has implemented paragraphs (4) and (5) of
23subdivision (b) of Section 14105.33.

end insert
begin insert

24(3) The state rebate shall be negotiated as necessary between
25the department and the manufacturer. Manufacturers who do not
26execute an agreement to pay additional rebates pursuant to this
27section shall have their blood factors available only through an
28approved treatment or service authorization request. All blood
29factors that meet the definition of a covered outpatient drug
30pursuant to Section 1927 of the federal Social Security Act (42
31U.S.C. Sec. 1396r-8) shall remain a benefit subject to the utilization
32controls provided for in this section.

end insert
begin delete

33(2)

end delete

34begin insert(4)end insert In reviewing authorization requests, the department shall
35approve the lowest net cost product that meets the beneficiary’s
36medical need. The review of medical need shall take into account
37a beneficiary’s clinical history or the use of the blood factor
38pursuant to payment by another third party, or both.

39(f) A beneficiary may obtain blood factors that require a
40treatment or service authorization request pursuant to subdivision
P25   1(e) if the beneficiary qualifies for continuing care status. To be
2eligible for continuing care status, a beneficiary must be taking
3the blood factor and the department has reimbursed a claim for
4the blood factor with a date of service that is within 100 days prior
5to the date the blood factor was placed on treatment authorization
6request status. A beneficiary may remain eligible for continuing
7care status, provided that a claim is submitted for the blood factor
8in question at least every 100 days and the date of service of the
9claim is within 100 days of the date of service of the last claim
10submitted for the same blood factor.

11(g) Changes made to the list of covered blood factors under this
12or any other section shall be exempt from the requirements of the
13Administrative Procedure Act (Chapter 3.5 (commencing with
14Section 11340), Chapter 4 (commencing with Section 11370), and
15Chapter 5 (commencing with Section 11500) of Part 1 of Division
163 of Title 2 of the Government Code), and shall not be subject to
17the review and approval of the Office of Administrative Law.

18begin insert

begin insertSEC. 8.end insert  

end insert

begin insertSection 14132.56 is added to the end insertbegin insertWelfare and
19Institutions Code
end insert
begin insert, to read:end insert

begin insert
20

begin insert14132.56.end insert  

(a) (1) Only to the extent required by the federal
21government and effective no sooner than required by the federal
22government, behavioral health treatment (BHT), as defined by
23Section 1374.73 of the Health and Safety Code, shall be a covered
24Medi-Cal service for individuals under 21 years of age.

25(2) It is the intent of the Legislature that, to the extent the federal
26government requires BHT to be a covered Medi-Cal service, the
27department shall seek statutory authority to implement this new
28benefit in Medi-Cal.

29(b) The department shall implement, or continue to implement,
30this section only after all of the following occurs or has occurred:

31(1) The department receives all necessary federal approvals to
32obtain federal funds for the service.

33(2) The department seeks an appropriation that would provide
34the necessary state funding estimated to be required for the
35applicable fiscal year.

36(3) The department consults with stakeholders.

37(c) The department shall develop and define eligibility criteria,
38provider participation criteria, utilization controls, and delivery
39system structure for services under this section, subject to
P26   1limitations allowable under federal law, in consultation with
2stakeholders.

3(d) Notwithstanding Chapter 3.5 (commencing with Section
411340) of Part 1 of Division 3 of Title 2 of the Government Code,
5the department, without taking any further regulatory action, shall
6implement, interpret, or make specific this section by means of
7all-county letters, plan letters, plan or provider bulletins, or similar
8instructions until regulations are adopted. The department shall
9adopt regulations by July 1, 2017, in accordance with the
10requirements of Chapter 3.5 (commencing with Section 11340) of
11Part 1 of Division 3 of Title 2 of the Government Code.
12Notwithstanding Section 10231.5 of the Government Code,
13beginning six months after the effective date of this section, the
14department shall provide semiannual status reports to the
15Legislature, in compliance with Section 9795 of the Government
16Code, until regulations have been adopted.

17(e) For the purposes of implementing this section, the
18department may enter into exclusive or nonexclusive contracts on
19a bid or negotiated basis, including contracts for the purpose of
20obtaining subject matter expertise or other technical assistance.
21Contracts may be statewide or on a more limited geographic basis.
22Contracts entered into or amended under this subdivision shall
23be exempt from Part 2 (commencing with Section 10100) of
24Division 2 of the Public Contract Code and Chapter 6
25(commencing with Section 14825) of Part 5.5 of Division 3 of the
26Government Code, and shall be exempt from the review or
27approval of any division of the Department of General Services.

28(f) The department may seek approval of any necessary state
29plan amendments or waivers to implement this section. The
30department shall make any state plan amendments or waiver
31requests public at least 30 days prior to submitting to the federal
32Centers for Medicare and Medicaid Services, and the department
33shall work with stakeholders to address the public comments in
34the state plan amendment or waiver request.

35(g) This section shall be implemented only to the extent that
36federal financial participation is available and any necessary
37federal approvals have been obtained.

end insert
38begin insert

begin insertSEC. 9.end insert  

end insert

begin insertSection 14593 of the end insertbegin insertWelfare and Institutions Codeend insertbegin insert is
39amended to read:end insert

P27   1

14593.  

(a) (1) The department may enter into contracts with
2public or private nonprofit organizations for implementation of
3the PACE program, and also may enter into separate contracts
4with PACE organizations, to fully implement the single state
5agency responsibilities assumed by the department in those
6contracts, Section 14132.94, and any other state requirement found
7necessary by the department to provide comprehensive
8community-based, risk-based, and capitated long-term care services
9to California’s frail elderly.

10(2) The department may enter into separate contracts as specified
11in subdivision (a) with up to 15 PACE organizations.

12(b) The requirements of the PACE model, as provided for
13pursuant to Section 1894 (42 U.S.C. Sec. 1395eee) and Section
141934 (42 U.S.C. Sec. 1396u-4) of the federal Social Security Act,
15shall not be waived or modified. The requirements that shall not
16be waived or modified include all of the following:

17(1) The focus on frail elderly qualifying individuals who require
18the level of care provided in a nursing facility.

19(2) The delivery of comprehensive, integrated acute and
20long-term care services.

21(3) The interdisciplinary team approach to care management
22and service delivery.

23(4) Capitated, integrated financing that allows the provider to
24pool payments received from public and private programs and
25individuals.

26(5) The assumption by the provider of full financial risk.

27(6) The provision of a PACE benefit package for all participants,
28regardless of source of payment, that shall include all of the
29following:

30(A) All Medicare-covered items and services.

31(B) All Medicaid-covered items and services, as specified in
32the state’s Medicaid plan.

33(C) Other services determined necessary by the interdisciplinary
34team to improve and maintain the participant’s overall health status.

35(c) Sections 14002, 14005.12, 14005.17, and 14006 shall apply
36when determining the eligibility for Medi-Cal of a person receiving
37the services from an organization providing services under this
38chapter.

39(d) Provisions governing the treatment of income and resources
40of a married couple, for the purposes of determining the eligibility
P28   1of a nursing-facility certifiable or institutionalized spouse, shall
2be established so as to qualify for federal financial participation.

3(e) (1) The department shall establish capitation rates paid to
4each PACE organization at no less than 90 percent of the
5fee-for-service equivalent cost, including the department’s cost of
6administration, that the department estimates would be payable
7for all services covered under the PACE organization contract if
8all those services were to be furnished to Medi-Cal beneficiaries
9under the fee-for-service Medi-Cal program provided for pursuant
10to Chapter 7 (commencing with Section 14000).

11(2) This subdivision shall be implemented only to the extent
12that federal financial participation is available.

13(f) Contracts under this chapter may be on a nonbid basis and
14shall be exempt from Chapter 2 (commencing with Section 10290)
15of Part 2 of Division 2 of the Public Contract Code.

begin insert

16(g) This section shall remain in effect only until April 1, 2015,
17and as of that date is repealed, unless a later enacted statute, that
18is enacted before April 1, 2015, deletes or extends that date.

end insert
19begin insert

begin insertSEC. 10.end insert  

end insert

begin insertSection 14593 is added to the end insertbegin insertWelfare and Institutions
20Code
end insert
begin insert, to read:end insert

begin insert
21

begin insert14593.end insert  

(a) (1) The department may enter into contracts with
22public or private nonprofit organizations for implementation of
23the PACE program, and also may enter into separate contracts
24with PACE organizations, to fully implement the single state agency
25responsibilities assumed by the department in those contracts,
26Section 14132.94, and any other state requirement found necessary
27by the department to provide comprehensive community-based,
28risk-based, and capitated long-term care services to California’s
29frail elderly.

30(2) The department may enter into separate contracts as
31specified in subdivision (a) with up to 15 PACE organizations.

32(b) The requirements of the PACE model, as provided for
33pursuant to Section 1894 (42 U.S.C. Sec. 1395eee) and Section
341934 (42 U.S.C. Sec. 1396u-4) of the federal Social Security Act,
35shall not be waived or modified. The requirements that shall not
36be waived or modified include all of the following:

37(1) The focus on frail elderly qualifying individuals who require
38the level of care provided in a nursing facility.

39(2) The delivery of comprehensive, integrated acute and
40long-term care services.

P29   1(3) The interdisciplinary team approach to care management
2and service delivery.

3(4) Capitated, integrated financing that allows the provider to
4pool payments received from public and private programs and
5individuals.

6(5) The assumption by the provider of full financial risk.

7(6) The provision of a PACE benefit package for all participants,
8regardless of source of payment, that shall include all of the
9following:

10(A) All Medicare-covered items and services.

11(B) All Medicaid-covered items and services, as specified in the
12state’s Medicaid plan.

13(C) Other services determined necessary by the interdisciplinary
14team to improve and maintain the participant’s overall health
15status.

16(c) Sections 14002, 14005.12, 14005.17, and 14006 shall apply
17when determining the eligibility for Medi-Cal of a person receiving
18the services from an organization providing services under this
19chapter.

20(d) Provisions governing the treatment of income and resources
21of a married couple, for the purposes of determining the eligibility
22of a nursing-facility certifiable or institutionalized spouse, shall
23be established so as to qualify for federal financial participation.

24(e) (1) The department shall establish capitation rates paid to
25each PACE organization at no less than 95 percent of the
26fee-for-service equivalent cost, including the department’s cost of
27administration, that the department estimates would be payable
28for all services covered under the PACE organization contract if
29all those services were to be furnished to Medi-Cal beneficiaries
30under the fee-for-service Medi-Cal program provided for pursuant
31to Chapter 7 (commencing with Section 14000).

32(2) This subdivision shall be implemented only to the extent that
33federal financial participation is available.

34(f) Contracts under this chapter may be on a nonbid basis and
35shall be exempt from Chapter 2 (commencing with Section 10290)
36of Part 2 of Division 2 of the Public Contract Code.

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

end insert
38begin insert

begin insertSEC. 11.end insert  

end insert
begin insert

(a) With regard to Section 4 of this act, the
39Legislature finds and declares all of the following:

end insert
begin insert

P30   1(1) The County of Los Angeles has the largest number of school
2districts in the state and a correspondingly large Medi-Cal
3population with a lower than statewide average on utilization of
4Medi-Cal vision services.

end insert
begin insert

5(2) The state contracts with two managed care health plans in
6the County of Los Angeles, which results in the delivery of
7Medi-Cal services to approximately 76 percent of the over 2.3
8million Medi-Cal beneficiaries in that county.

end insert
begin insert

9(3) These 2.3 million beneficiaries are 24 percent of the state’s
10total number of Medi-Cal beneficiaries. Approximately one-half
11are under 21 years of age.

end insert
begin insert

12(b) It is therefore the intent of the Legislature, in an effort to
13determine whether children’s access to, and utilization of, vision
14care services can be increased by providing vision care services
15at schools, that the State Department of Health Care Services
16establish a pilot program in the County of Los Angeles that enables
17school districts to allow students enrolled in Medi-Cal managed
18care plans to receive vision care services at the school site through
19the use of a mobile vision service provider. It is the intent of the
20Legislature that the vision care services available under this pilot
21be limited to vision examinations and providing eyeglasses.

end insert
22begin insert

begin insertSEC. 12.end insert  

end insert
begin insert

It is the intent of the Legislature that the State
23Department of Health Care Services shall continue to monitor
24access to and utilization of Medi-Cal services in the fee-for-service
25and managed care settings during the 2014-15 fiscal year, in
26conjunction with the department’s federally approved plan to
27monitor health care access for Medi-Cal beneficiaries and any
28other methods deemed appropriate by the director. The department
29shall use this information to evaluate current reimbursement levels
30for Medi-Cal providers and to make recommendations for targeted
31changes to the reductions in reimbursement levels made pursuant
32to Chapter 3 of the Statutes of 2011 to the extent the department
33finds those changes appropriate.

end insert
34begin insert

begin insertSEC. 13.end insert  

end insert
begin insert

The balances of the reappropriations provided by
35Item 4300-490 of Section 2.00 of the Budget Act of 2013, as added
36by Chapters 20 and 354 of the Statutes of 2013, payable from the
37General Fund (Item 4300-101-0001, Budget Act of 2009 (Ch. 1,
382009-10 3rd Ex. Sess., as revised by Ch. 1, 2009-10 4th Ex. Sess.)
39and Item 4300-101-0001, Budget Act of 2010 (Ch. 712, Stats.
402010)), are hereby reappropriated for the purposes of, and subject
P31   1to that Item 4300-490, and, notwithstanding any other law, shall
2be available for liquidation until June 30, 2015.

end insert
3begin insert

begin insertSEC. 14.end insert  

end insert
begin insert

(a) For the 2014-15 fiscal year, the sum of three
4million two hundred thousand dollars ($3,200,000) is hereby
5appropriated from the Major Risk Medical Insurance Fund to the
6State Department of Health Care Services for allocation to health
7benefit plans that meet all of the following requirements:

end insert
begin insert

8(1) The health benefit plan has a valid exemption letter from
9the Internal Revenue Service pursuant to Section 501(c) (9) of the
10Internal Revenue Code.

end insert
begin insert

11(2) The health benefit plan is a multiemployer plan, as defined
12in Section 3(37) of the federal Employee Retirement Income
13Security Act of 1974 (29 U.S.C. Sec. 1002(37)(A)).

end insert
begin insert

14(3) The health benefit plan is funded by contributions made by
15agricultural employers, as defined in subdivision (c) of the Section
161140.4 of the Labor Code, where 85 percent or more of the plan’s
17eligible participants are agricultural employees, as defined in
18subdivision (b) of Section 1140.4 of the Labor Code, for work
19performed and covered under a collective bargaining agreement.

end insert
begin insert

20(b) On or before September 1, 2014, the State Department of
21Health Care Services shall pay the funds allocated pursuant to
22this section to the health plan that meets the criteria set forth in
23this section. The funds shall be used to provide health care
24coverage for agricultural employees and dependents.

end insert
begin insert

25(c) The payment set forth in subdivision (b) shall not require
26the State Department of Health Care Services to contract with the
27recipient of the funds nor shall the payment of funds be subject to
28the requirements of Part 2 (commencing with Section 10100) of
29Division 2 of the Public Contract Code.

end insert
30begin insert

begin insertSEC. 15.end insert  

end insert
begin insert

For the 2014-15 fiscal year, the sum of three million
31seven hundred fifty thousand dollars ($3,750,000) is hereby
32appropriated from the Major Risk Medical Insurance Fund to the
33State Department of Health Care Services for purposes of
34electronic health records technical assistance in accordance with
35the State Medicaid Health Information Technology Plan as
36specified in Section 14046.1 of the Welfare and Institutions Code.

end insert
37begin insert

begin insertSEC. 16.end insert  

end insert
begin insert

This act is a bill providing for appropriations related
38to the Budget Bill within the meaning of subdivision (e) of Section
3912 of Article IV of the California Constitution, has been identified
P32   1as related to the budget in the Budget Bill, and shall take effect
2immediately.

end insert
begin delete
3

SECTION 1.  

It is the intent of the Legislature to enact statutory
4changes relating to the Budget Act of 2014.

end delete


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