BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                 UNFINISHED BUSINESS


          Bill No:  SB 1457
          Author:   Evans (D)
          Amended:  6/30/14
          Vote:     21


           SENATE HEALTH COMMITTEE  :  7-0, 3/26/14
          AYES:  Hernandez, Anderson, Beall, DeSaulnier, Evans, Monning,  
            Wolk
          NO VOTE RECORDED:  De León, Nielsen

           SENATE APPROPRIATIONS COMMITTEE  :  5-0, 4/28/14
          AYES:  De León, Gaines, Hill, Lara, Steinberg
          NO VOTE RECORDED:  Walters, Padilla

           SENATE FLOOR  :  35-0, 5/1/14
          AYES:  Anderson, Berryhill, Block, Cannella, Corbett, Correa, De  
            León, DeSaulnier, Evans, Fuller, Gaines, Galgiani, Hancock,  
            Hernandez, Hill, Hueso, Huff, Knight, Lara, Leno, Lieu, Liu,  
            Mitchell, Monning, Morrell, Nielsen, Padilla, Pavley, Roth,  
            Steinberg, Torres, Vidak, Walters, Wolk, Wyland
          NO VOTE RECORDED:  Beall, Calderon, Jackson, Wright, Yee

           ASSEMBLY FLOOR  :  78-0, 8/14/14 (Consent) - See last page for  
            vote


           SUBJECT  :    Medical care:  electronic treatment authorization  
          requests

           SOURCE  :     Department of Health Care Services


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           DIGEST  :    This bill requires requests for authorization for  
          treatment or services in the Medi-Cal program, California  
          Children's Services (CCS) Program, and the Genetically  
          Handicapped Persons Program (GHPP), excluding those submitted by  
          dental providers enrolled in the Medi-Cal Dental Program, to be  
          submitted in an electronic format determined by the Department  
          of Health Care Services (DHCS) via DHCS' Internet Web site or  
          other electronic means designated by DHCS.  Requires DHCS to  
          implement an alternate format for submission when DHCS' Internet  
          Web site is unavailable due to a system disruption.  Implements  
          this requirement by July 1, 2015, or a subsequent date  
          determined by DHCS.

           Assembly Amendments  (1) change the implementation date for  
          requests for authorization for treatment or services to be  
          submitted electronically from 2015 to 2016, and (2) clarify that  
          DHCS consider the capacity of independent and rural providers to  
          comply with this bill's provisions.

           ANALYSIS  :    

          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  
            the CCS Program and the 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 disease, Huntington's  
            disease, Friedreich'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  

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            significant disability, on all requests for prior  
            authorization.

          4.Requires prior authorization by DHCS or its designee for CCS  
            services provided, except as specified.  Makes prior  
            authorization contingent on determination by DHCS or its  
            designee 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 Program-eligible medical condition.

          This bill:

          1.Requires, by July 1, 2016, or a subsequent date determined by  
            DHCS, requests for authorization for treatment or services in  
            CCS Program, GHPP, and Medi-Cal, excluding requests for  
            authorization of services submitted by dental providers  
            enrolled in the Medi-Cal Dental Program, to be submitted in an  
            electronic format determined by DHCS via DHCS' Internet Web  
            site or other electronic means designated by DHCS.  Permits  
            DHCS to implement this requirement in phases.

          2.Requires DHCS to designate an alternate format for submitting  
            requests for authorization of services when DHCS' Internet Web  
            site or other electronic means designated in #1 above are  
            unavailable due to an unplanned disruption.

          3.Permits DHCS, without taking regulatory action, to implement,  
            interpret, or make specific this bill and any applicable  
            waivers and state plan amendments by means of all-county  
            letters, plan letters, plan or provider bulletins, or similar  
            instructions.  Requires DHCS to adopt regulations by July 1,  
            2017, in accordance with the requirements of the  
            Administrative Procedure Act.  Requires DHCS to consult with  
            interested parties and appropriate stakeholders in  
            implementing these provisions.  

          4.Requires DHCS to consider the capacity of independent sole  

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            practitioners, small independent provider-owned clinics, and  
            rural providers to comply with the requirements of these  
            provisions, and requires implementation of the electronic  
            submission process to be in a manner that offers these  
            providers both of the following:

             A.   Reasonable time to establish the infrastructure  
               necessary for the generation of electronic treatment  
               authorization requests.

             B.   An opportunity to participate in education and training  
               regarding the generation and submission of electronic  
               treatment authorization requests provided by DHCS or its  
               agents.

          1.Requires DHCS to consult with interested parties and  
            appropriate stakeholders in implementing these provisions.

           Background
           
           Current authorization process  .  DHCS made electronic submissions  
          of Treatment Authorization Requests (TARs) available to Medi-Cal  
          providers statewide starting in 2005.  Since then, the use of  
          the internet-based submittal process has steadily grown.  In  
          fiscal year 2012-13, DHCS received approximately 2.2 million  
          TARs requiring adjudication.  As of July 2013, DHCS received 84%  
          of pharmacy TARs and 70% of medical TARs electronically.

          Medi-Cal providers can submit TARs electronically through a  
          secure DHCS internet-based system, via mail, or by fax.  When  
          providers electronically submit TARs, the accompanying documents  
          can be uploaded along with the TAR.  DHCS staff can then review  
          the documentation directly from their computers and adjudicate  
          the TAR, and there is no paper for Xerox staff (DHCS' fiscal  
          intermediary) to prepare, route, or file.

          In contrast, under CCS and GHPP, providers/counties submit all  
          Service Authorization Requests (SARs) via mail or fax, which  
          requires staff to manually log and convert the files to a  
          portable document format.  Although CCS uses a web-based tool  
          that allows providers to electronically access SARs (referred to  
          as the Children's Medical Services Network or CMS Net), CMS Net  
          does not allow for electronic submission of required medical  
          justification.  As a result, all CCS Program medical eligibility  

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          reviews are performed manually.

          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 SURGE, and is instead made available to DHCS  
          staff when the TAR is adjudicated.  When Xerox staff has entered  
          the TAR data into SURGE and DHCS staff has the medical  
          documentation, the TAR can be adjudicated.  Once the TAR is  
          adjudicated, Xerox staff must then file the paper TAR and the  
          accompanying documentation.  This process requires additional  
          staff resources and maintaining a secured storage location.   
          DHCS is planning to implement a new electronic TAR submission  
          system, with a tentative implementation date of July 1, 2015.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Assembly Appropriations Committee:

           One-time costs to DHCS of less than $100,000 to develop and  
            adopt policies and regulations (25% General Fund / 75%  
            federal).  DHCS indicates that the existing contract with  
            their fiscal intermediary requires it to be able to process  
            additional electronic submissions and provide any training or  
            customer service needed by health care providers during the  
            transition to electronic requests, so no additional  
            administrative or information technology costs are expected.

           Unknown, likely significant ongoing cost savings by reducing  
            administrative workload to process paper requests for  
            treatment authorizations in Medi-Cal (General Fund/federal).

           SUPPORT  :   (Verified  8/15/14)

          Department of Health Care Services (source)
          California Society of Health-System Pharmacists

           ARGUMENTS IN SUPPORT  :    This bill is sponsored by DHCS to  
          streamline the current TAR/SAR process by requiring all Medi-Cal  

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          providers, excluding dental providers enrolled in the Denti-Cal  
          Program, to submit TARs and SARs electronically.  DHCS argues  
          the current TAR and SAR submission methods involving different  
          processing methods reduces the overall efficiency of the TAR and  
          SAR review process as DHCS staff will have the ability to route  
          all incoming TARs/SARs to the appropriate office for  
          adjudication based on workload, volumes, and staff availability.  
           Additionally, 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 computer system.  The  
          proposed statutory change would allow DHCS to have one uniform  
          submission and adjudication system, as opposed to the current  
          separate electronic and paper-based systems.  The uniform system  
          will improve efficiency and consistency of TAR/SAR processing  
          including the adjudication timeframes, and there will be a  
          reduced risk of information security breaches because fewer  
          individuals will view or handle documents and the possibility of  
          losing, misfiling, or incorrectly mailing or faxing the TAR/SAR  
          or related documents will also be reduced.  Finally, DHCS  
          anticipates that it will be able to reduce or eliminate  
          administrative costs associated with paper and fax submissions  
          of TARs/SARs, such as fax machines and toner, fax machine  
          maintenance agreements, storage space, paper purchases, postage  
          costs, and support staff.

           ASSEMBLY FLOOR  :  78-0, 8/14/14
          AYES:  Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,  
            Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian  
            Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,  
            Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,  
            Gorell, Gray, Grove, Hagman, Hall, Harkey, Holden, Jones,  
            Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,  
            Mansoor, Medina, Melendez, Mullin, Muratsuchi, Nazarian,  
            Nestande, Olsen, Pan, Patterson, Perea, John A. Pérez, V.  
            Manuel Pérez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,  
            Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,  
            Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
          NO VOTE RECORDED:  Roger Hernández, Vacancy


          JL:e  8/15/14   Senate Floor Analyses 


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                           SUPPORT/OPPOSITION:  SEE ABOVE

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