BILL ANALYSIS Ó SB 1457 Page 1 Date of Hearing: June 24, 2014 ASSEMBLY COMMITTEE ON HEALTH Richard Pan, Chair SB 1457 (Evans) - As Amended: June 4, 2014 SENATE VOTE : 35-0 SUBJECT : Medical care: electronic treatment authorization requests. SUMMARY : Requires requests for authorization of treatment or services in the Medi-Cal, California Children's Services (CCS), and Genetically Handicapped Person's Program (GHPP) to be submitted in an electronic format. Specifically, this bill : 1)Requires, by July 1, 2016, or a subsequent date determined by the Department of Health Care Services (DHCS), Service Authorization Requests (SARs) under the CCS and GHPP programs, and Treatment Authorization Requests (TARs) under the Medi-Cal program, to be submitted electronically to the DHCS Internet Website or other electronic means designated by DHCS. 2)Exempts SARs and TARs submitted by dental providers enrolled in the Medi-Cal Dental program (Denti-Cal) from the requirement for electronic submission. 3)Authorizes DHCS to implement electronic submission requirements in phases. 4)Requires DHCS to designate an alternate format for submitting SARs and TARs when DHCS's Internet Website, or other designated electronic means, are unavailable due to a system disruption. 5)Authorizes DHCS to implement requirements for electronic submission of SARs and TARs, and any applicable waivers and state plan amendments by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions. Thereafter, requires DHCS to adopt regulations by July 1, 2017 in accordance with the Administrative Procedures Act. 6)Requires DHCS to consult with interested parties and appropriate stakeholders in implementing requirements for electronic submission of SARs in the CCS and GHPP programs. SB 1457 Page 2 EXISTING LAW : 1)Establishes the Medi-Cal program, administered by DHCS, under which qualified low-income individuals receive health care benefits. 2)Requires DHCS to administer various health programs, including CCS and GHPP. The CCS program provides diagnostic and treatment services, medical case management, and medical and occupational therapy services to eligible children and young adults less than 21 years of age. Eligibility includes diagnosis of specified medical conditions such as cancer, congenital heart disease, and sickle cell anemia. GHPP provides medical care to individuals with genetically handicapping conditions, including cystic fibrosis, hemophilia, sickle cell anemia, Huntington's disease, Friedrich's Ataxia, and certain hereditary metabolic disorders. 3)Requires the Director of DHCS to require fully documented medical justification from Medi-Cal providers that requested services are medically necessary to prevent significant illness, alleviate severe pain, protect life, or prevent significant disability, on all requests for prior authorization. 4)Requires prior authorization by DHCS or its designee for CCS services provided, except as specified, and makes prior authorization contingent on a determination by DHCS of all of the following: a) The child receiving the services is confirmed to be medically eligible for the CCS program; b) The provider of the services is approved in accordance with the standards of the CCS program; and, c) The services authorized are medically necessary to treat the child's CCS-eligible medical condition. FISCAL EFFECT : According to the Senate Appropriations Committee, one-time costs of less than $100,000 to develop and adopt regulations by DHCS (75% federal funds and 25% General Fund), and unknown long-term cost savings by reducing administrative workload to process paper requests for authorization of treatment (General Fund and federal funds). SB 1457 Page 3 COMMENTS : 1)PURPOSE OF THIS BILL . According to the author, streamlining the current SAR and TAR processes to an electronic submission system would ensure that Medi-Cal patients receive necessary treatment and services in a timely manner by reducing the risk of processing errors, unauthorized disclosure of confidential health information and a potential backlog of paperwork. The author states that the majority of pharmacy and medical TARs are already submitted electronically to DHCS through a secure internet system, but SARs for the CCS and GHPP programs have not yet transitioned to electronic submission. One uniform submission process would allow DHCS to increase efficiency, reduce administrative costs and align procedures to the direction received from the federal government through the Electronic Health Records Incentive Program, which provides federally funded incentive payments to Medi-Cal providers to implement and use electronic health record systems. 2)BACKGROUND . In Medi-Cal certain procedures and services are subject to authorization before reimbursement can be approved. Authorization requests are made when a provider submits a TAR to DHCS. Currently, there are two ways to submit a TAR for review, electronically or by paper. Medi-Cal providers have the ability to electronically submit TARs through the DHCS eTAR system, which is a web-based direct data entry system. Electronic submission of TARs has been made available to providers in California since 2005. Since then, electronic submission has become the primary method of filing TARs with DHCS. In fiscal year 2012-13, DHCS received approximately 2.2 million TARs. As of July 2013, DHCS received approximately 85% of pharmacy TARs and 80% of medical TARs electronically through eTAR. DHCS contracts with Xerox State Healthcare, LLC (Xerox) to perform all fiscal intermediary functions in the Medi-Cal program. When DHCS receives a paper TAR via mail or fax, Xerox staff must first complete an intake process (date/time stamp, sorting, routing, etc.) and then manually enter data from the TAR into the Service Utilization Review, Guidance, and Evaluation (SURGE) application that DHCS uses to adjudicate TARs. In addition, there may be medical documentation, such as medical records, that accompanies the TAR. This documentation cannot be entered or uploaded into SB 1457 Page 4 SURGE, and is instead provided to DHCS staff. When Xerox staff has entered the TAR data into SURGE and DHCS staff has the medical documentation, the TAR can be adjudicated. When adjudicated, Xerox staff must file the paper TAR and the accompanying documentation in a secured storage location. In July 2015, DHCS intends to implement a new electronic TAR submission system. According to DHCS, all costs for electronic submissions are part of the Xerox contract, and the contractor is expected to have the IT architecture to support electronic submissions of additional TARs. Under CCS and GHPP, providers must submit SARs for procedures and services subject to authorization by DHCS. County CCS offices are responsible for adjudicating SARs. Providers currently submit SARs via mail or fax, not electronically. CCS provides a web-based tool, called CMSNet, through which providers may electronically access a SAR in order to check on its status. However, CMSNet does not allow providers to electronically submit a SAR, thus, all SARs are processed manually. Most of the providers who have access to CMSNet are providers based in hospitals or special care centers, and these providers work directly with County CCS offices for SAR approvals. According to DHCS, CMSNet will be programmed to accept electronic SARs for the CCS and GHPP programs upon enactment of this bill. Providers in the Denti-Cal program also submit TARs to DHCS in order to obtain authorization for services. However, according to DHCS, the Denti-Cal program does not use the same fiscal intermediary as the Medi-Cal program, and thus is not equipped to require all dental TARs to be submitted electronically. Thus, dental providers are excluded from the provisions of this bill. 3)SUPPORT . According to DHCS, the bill's sponsor, the current TAR and SAR submission methods require different processing methods, reducing the overall efficiency of the TAR and SAR review process. DHCS states that paper submissions (by mail or fax) place clients at an increased risk for unauthorized disclosure of confidential protected health information because the data is not directly transmitted from the provider to the DHCS system. DHCS argues that delays in adjudicating TARs and SARs negatively affect both providers who may not be promptly reimbursed, and beneficiaries who may not receive SB 1457 Page 5 services in a timely manner. DHCS states that this bill would allow DHCS to have one uniform submission and adjudication system, as opposed to the current separate electronic and paper-based systems, that will improve efficiency and consistency of TAR and SAR processing, and will reduce the risk of information security breaches. DHCS concludes by stating that through this bill, administrative costs associated with paper and fax submissions of SARs and TARs will be reduced or eliminated. 4)PREVIOUS LEGISLATION . SB 945 (Committee on Health), Chapter 433, Statutes of 2011, requires DHCS to establish and administer the Medi-Cal Electronic Health Records Incentive Program. 5)POLICY COMMENTS . a) Under this bill, providers may be required to comply with electronic submission requirements prior to the adoption of regulations. Further, while the bill requires DHCS to consult with interested parties and appropriate stakeholders in implementing electronic submission of SARs in CCS and GHPP, which could take place post-implementation during the regulatory process, it does not require DHCS to consult with stakeholders in the Medi-Cal program. It would seem that Medi-Cal providers should have the same opportunity as providers in CCS and GHPP to provide input to the department on the impact of this bill, particularly in light of provisions that authorize DHCS to implement the electronic submission requirements prior to the adoption of regulations. The Committee may wish to consider an amendment to add a requirement for stakeholder consultation in the section of the bill pertaining to Medi-Cal providers. b) Providers in rural areas or underserved communities are more likely to face challenges in conforming to changes involving health information technology for a variety of reasons, including insufficient resources for investments in technology, time and expense on staff training, insufficient access to broadband services, and others. Further, due to low reimbursement in the Medi-Cal program, small providers in underserved communities who serve higher volumes of Medi-Cal patients can be disproportionately impacted by the cost of making investments in health SB 1457 Page 6 information technology. According to DHCS, providers will need a computer and internet access to comply with electronic submission requirements. However, even this seemingly minimal investment may pose a hardship, particularly in rural areas where internet access may be a challenge. The Committee may wish to seek an amendment to require DHCS take into consideration the potential compliance challenges by small and/or rural providers when implementing the bill's requirements, and to authorize DHCS to allow small and/or rural providers unable to comply with the bill's requirement to come into compliance. REGISTERED SUPPORT / OPPOSITION : Support Department of Health Care Services (sponsor) California Society of Health-System Pharmacists Opposition None on file. Analysis Prepared by : Kelly Green / HEALTH / (916) 319-2097