BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    AB 68     
           --------------------------------------------------------------- 
          |AUTHOR:        |Waldron                                        |
          |---------------+-----------------------------------------------|
          |VERSION:       |June 1, 2015                                   |
           --------------------------------------------------------------- 
           --------------------------------------------------------------- 
          |HEARING DATE:  |July 15, 2015  |               |               |
           --------------------------------------------------------------- 
           --------------------------------------------------------------- 
          |CONSULTANT:    |Scott Bain                                     |
           --------------------------------------------------------------- 
          
           SUBJECT  :  Medi-Cal.

           SUMMARY  : Requires a Medi-Cal beneficiary to be entitled to an automatic  
          urgent appeal, as defined, when a Medi-Cal managed care plan  
          denies coverage for a drug prescribed for the treatment of  
          seizures and epilepsy that is approved by the Food and Drug  
          Administration (FDA) for the use in the treatment of seizures  
          and epilepsy if the patient's treating provider demonstrates  
          that in his or her reasonable, professional judgment, the drug  
          is medically necessary and consistent with FDA labeling and use  
          rules and regulations, as supported in at least one of the  
          official compendia, and the drug is not on the formulary of the  
          Medi-Cal managed care plan.
          
          Existing law:
          1)Establishes the Medi-Cal program, administered by the  
            Department of Health Care Services (DHCS), under which basic  
            health care services are provided to qualified low-income  
            persons. 

          2)Requires the mandatory enrollment of specified Medi-Cal  
            beneficiaries into Medi-Cal managed care plans. 

          3)Requires a Medi-Cal managed care plan that has prescription  
            drugs as one of its benefits and that enters into a contract  
            with DHCS to ensure the timely and efficient processing of  
            authorization requests for drugs, when prescribed for plan  
            enrollees, that are covered under the terms of the plan's  
            contract with DHCS and which require prior authorization from  
            the plan, by providing both of the following:

                  a)        A response within 24 hours or one business day  
                    to a request for prior authorization made by telephone  







          AB 68 (Waldron)                                    Page 2 of ?
          
          
                    or other telecommunication device.

                  b)        The dispensing of at least a 72-hour supply of  
                    a covered outpatient drug in an emergency situation.

          4)Requires, pursuant to regulation, Medi-Cal applicants or  
            beneficiaries to have the right to a state hearing (known as a  
            "fair hearing") if dissatisfied with any action or inaction of  
            the county department, DHCS or any person or organization  
            acting in behalf of the county or DHCS relating to Medi-Cal  
            eligibility or benefits.
          
          5)Requires each Medi-Cal beneficiary to be informed in writing,  
            at the time of application to Requires health plans licensed  
            under the Knox-Keene Act (Medi-Cal plans, with the exception  
            of county organized health systems [COHS] and PACE plans are  
            required to be Knox-Keene licensed) to do all of the  
            following:

                  a)        Establish and maintain a grievance system  
                    approved by the Department of Managed Health Care  
                    (DMHC), under which enrollees may submit their  
                    grievances to the plan. Requires an expedited plan  
                    review of grievances for cases involving an imminent  
                    and serious threat to the health of the patient,  
                    including, but not limited to, severe pain, potential  
                    loss of life, limb, or major bodily function; 
                  b)        Maintain an expeditious process by which  
                    prescribing providers may obtain authorization for a  
                    medically necessary non-formulary prescription drug;  
                    and,
                  c)        Provide an enrollee with the opportunity to  
                    seek an independent medical review (IMR) whenever  
                    health care services have been denied, modified, or  
                    delayed by the plan, or by one of its contracting  
                    providers, if the decision was based in whole or in  
                    part on a finding that the proposed health care  
                    services are not medically necessary.

          This bill:
          1)Requires, to the extent permitted by federal law, if any drug  
            used in the treatment of seizures and epilepsy is prescribed  
            by a Medi-Cal beneficiary's treating provider for the  
            treatment of seizures and epilepsy, and coverage for that  
            prescribed drug is denied by a Medi-Cal managed care plan in  








          AB 68 (Waldron)                                    Page 3 of ?
          
          
            which the beneficiary is enrolled, that denial to be reviewed  
            in accordance with this bill.

          2)Requires the denial by a Medi-Cal managed care plan of a drug  
            prescribed for the treatment of seizures and epilepsy that is  
            approved by the FDA for the use in the treatment of seizures  
            and epilepsy to be subject to the automatic urgent appeal  
            process, if:

                  a)        The treating provider demonstrates, consistent  
                    with federal law, that in his or her reasonable,  
                    professional judgment, the drug is medically necessary  
                    and consistent with the federal FDA's labeling and use  
                    rules and regulations, as supported in at least one of  
                    the official compendia; and,
                  b)        The drug is not on the formulary for the  
                    Medi-Cal managed care plan.

          3)Requires a Medi-Cal beneficiary to be entitled to an automatic  
            urgent appeal in a case in which a plan denies coverage for a  
            drug prescribed for the treatment of seizures and epilepsy and  
            approved by the FDA for the use in the treatment of seizures  
            and epilepsy. 

          4)Defines an "automatic urgent appeal" as an appeal in which the  
            Medi-Cal managed care plan immediately notifies DHCS of the  
            denial of coverage, and the beneficiary is not required to  
            take any further action. 

          5)Requires an automatic urgent appeal to be resolved within 48  
            hours after denial by the plan. Requires the 48-hour period to  
            be in addition to any time prescribed by federal law.

          6)States legislative intent that a Medi-Cal beneficiary have  
            prompt access to medically necessary drugs for use in the  
            treatment of seizures and epilepsy that have been approved by  
            the FDA for use in the treatment of seizures or epilepsy,  
            including drugs that are not on the formulary of a Medi-Cal  
            managed care plan or that are subject to prior authorization.  
            Requires this bill be known as the "Patient Access to  
            Prescribed Epilepsy Treatments Act."

           FISCAL  
          EFFECT  : According to the Assembly Appropriations Committee,  
          unknown, likely minor, potential increased administrative costs  








          AB 68 (Waldron)                                    Page 4 of ?
          
          
          for the fee-for-service Medi-Cal, and cost pressure to managed  
          care, for an additional number of appeals.  

           PRIOR  
          VOTES  :  
          
           ----------------------------------------------------------------- 
          |Assembly Floor:                     |78 - 0                      |
          |------------------------------------+----------------------------|
          |Assembly Appropriations Committee:  |17 - 0                      |
          |------------------------------------+----------------------------|
          |Assembly Health Committee:          |19 - 0                      |
          |                                    |                            |
           ----------------------------------------------------------------- 
           
          COMMENTS  :
          1)Author's statement. According to the author, epilepsy is   
            life-threatening and the first treatment is typically the best  
            chance to get the disease under control. Formularies and  
            step-therapy programs are not always sufficient to treat  
            certain vulnerable populations. New pharmaceuticals and  
            treatments are emerging rapidly, while insurance formularies  
            do not have the capacity to keep up. In the meantime, patient  
            care is being affected and individuals are losing access to  
            receive the best pharmaceuticals that may control their  
            condition sooner rather than later. Current formulary  
            restrictions have multiple appeals processes patients have to  
            go through. Step therapy correspondingly delays the patient  
            from obtaining the most suitable drug combinations for their  
            case. 
          

          2)Background on epilepsy. According to the Centers for Disease  
            Control and Prevention, epilepsy is a disorder of the brain  
            that causes seizures. These seizures are not caused by a  
            temporary underlying medical condition such as a high fever.  
            Epilepsy can affect people in very different ways as there are  
            many causes and many different kinds of seizures. Some people  
            may have multiple types of seizures or other medical  
            conditions in addition to epilepsy. These factors play a major  
            role in determining both the severity of the person's  
            condition and the impact it has on his or her life. The way a  
            seizure looks depends on the type of seizure a person is  
            experiencing. Some seizures can look like staring spells.  
            Other seizures can cause a person to collapse, shake, and  








          AB 68 (Waldron)                                    Page 5 of ?
          
          
            become unaware of what is going on around them. Epilepsy can  
            be caused by different conditions that affect a person's  
            brain. For two in three people, the cause of epilepsy is  
            unknown.  Some causes include stroke, brain tumor, traumatic  
            brain injury or head injury or central nervous infection. A  
            person with epilepsy is not contagious and cannot give  
            epilepsy to another person. According to the latest estimates,  
            about 1.8% of adults aged 18 years or older have had a  
            diagnosis of epilepsy or seizure disorder.

          
          3)Prescription drug coverage and appeal rights in managed care.  
            The 2015-16 DHCS budget assumes average monthly enrollment in  
            Medi-Cal of 12.4 million individuals, of whom 9.5 million  
            individuals, or 76.6%, will enroll in Medi-Cal managed care  
            plans. By contract, Medi-Cal managed care plans are required  
            to cover prescription drugs except for those drugs which are  
            "carved out" and reimbursed through fee-for-service (FFS)  
            Medi-Cal ("carved out" drugs are typically costly). Plans are  
            contractually required to submit to DHCS a complete formulary,  
            and to report changes to the formulary to DHCS upon request  
            and on an annual basis. A plan's formulary is required to be  
            "comparable" to the Medi-Cal FFS list of contract drugs, with  
            "comparable" defined as the plan's formulary must contain  
            drugs which represent each mechanism of action sub-class  
            within all major therapeutic categories of prescription drugs  
            included in the Medi-Cal FFS List of Contract Drugs. Medi-Cal  
            managed care plans (and their contracting pharmacy benefit  
            managers) use formularies, prior authorization and utilization  
            controls to control costs, ensure appropriate utilization and  
            obtain rebates from drug manufacturers. Medi-Cal managed care  
            plans are required to meet state law, federal law and  
            contractual provisions relating to prescription drug coverage  
            and appeal rights. This includes an expedited process for the  
            plan grievance process for cases involving an imminent and  
            serious threat to the health of the enrollee, and through the  
            Department of Social Services (DSS) fair hearing process. 

          4)Related legislation. AB 73 (Waldron), would have required a  
            drug from one of four classes of drugs to be covered by  
            Medi-Cal if the treating provider demonstrates, that in his or  
            her reasonable, professional judgment, the drug is medically  
            necessary and consistent with the FDA's labeling and use rules  
            and regulations, and the drug is not on the formulary for the  
            Medi-Cal managed care plan. AB 73 was held on the Assembly  








          AB 68 (Waldron)                                    Page 6 of ?
          
          
            Appropriations Committee Suspense File.
          
            AB 339 (Gordon) requires health plans and health insurers that  
            provide coverage for outpatient prescription drugs to  
            demonstrate that their formularies do not discourage the  
            enrollment of individuals with health conditions. Requires for  
            combination drug treatments that include antiretrovirals,  
            coverage of a single-tablet that is as effective as a  
            multitablet regimen unless a plan or insurer can demonstrate  
            that the multitablet regimen is clinically equally or more  
            effective and more likely to result in adherence to a drug  
            regimen.  Requires individual market formulary coverage to be  
            the same or comparable to formularies maintained in the group  
            market. Places in state law, federal requirements related to  
            prior authorization response times, pharmacy and therapeutics  
            committees, access to in-network retail pharmacies,  
            standardized formulary requirements. Applies step therapy  
            requirements to health insurers that are currently applicable  
            to health plans through state regulations. Places in state law  
            formulary tier requirements similar but slightly different  
            than those required of health plans and insurers participating  
            in Covered California and copayment caps of $250 for a supply  
            of up to 30 days for an individual prescription, as specified,  
            consistent with those adopted by Covered California. AB 339 is  
            scheduled to be heard in the Senate Health Committee on July  
            15, 2015. 
            
            AB 374 (Nazarian) prohibits a health plan or insurer that  
            provides coverage for medications pursuant to a step therapy  
            or fail-first protocol from applying that requirement to a  
            patient who has made a step therapy override determination  
            request if, in the professional judgment of the prescribing  
            provider, the step therapy or fail-first requirement would be  
            medically inappropriate for that patient, as specified. AB 374  
            is scheduled to be heard in the Senate Health Committee on  
            July 15, 2015. 

            AB 1162 (Holden), requires tobacco cessation services to be a  
            covered benefit under the Medi-Cal program. Requires the  
            benefit to include unlimited quit attempts with no required  
            break between attempts, at least four tobacco cessation  
            counseling sessions per quit attempt, and a 90-day treatment  
            regimen of any prescription or over-the-counter medication  
            approved by the federal Food and Drug Administration for  
            tobacco cessation that was covered under the Medi-Cal program  








          AB 68 (Waldron)                                    Page 7 of ?
          
          
            as of January 1, 2015. Prohibits tobacco cessation medication  
            coverage for drugs covered under Medi-Cal as of January 1,  
            2015, from being subject to any barriers, requirements, or  
            restrictions, including, but not limited to, prior  
            authorization. AB 1162 is in the Senate Appropriations  
            Committee.
            
          5)Prior legislation. AB 889 (Frazier, 2013), would have  
            prohibited plans and health insurers from requiring a patient  
            to try and fail on two medications before allowing the patient  
            access to the medication originally prescribed by the  
            patient's medical provider. AB 889 was held on the Suspense  
            File of the Senate Appropriations Committee. 

            AB 369 (Huffman, 2012), would have prohibited health plans and  
            insurers that restrict medications for the treatment of pain  
            from requiring a patient to try and fail on more than two pain  
            medications before allowing the patient access to the pain  
            medication, or generically equivalent drug, prescribed by the  
            provider. The Governor vetoed AB 369 because it did not strike  
            "the right balance between physician discretion and health  
            plan or insurer oversight. A doctor's judgment and a health  
            plan's clinical protocols both have a role in ensuring the  
            prudent prescribing of pain medications. Independent medical  
            reviews are available to resolve differences in clinical  
            judgment when they occur, even on an expedited basis.  If  
            current law does not suffice - and I am not certain that it  
            doesn't, any limitations on the practice of "step therapy"  
            should better reflect a health plan or insurer's legitimate  
            role in determining the allowable steps."

            AB 1826 (Huffman, 2010), would have required plans and health  
            insurers that cover outpatient prescription drug benefits to  
            provide coverage for a drug that has been prescribed for the  
            treatment of pain. AB 1826 would have prohibited health plans  
            and insurers from requiring the subscriber or enrollee to  
            first use an alternative prescription drug or an  
            over-the-counter drug, as specified. AB 1826 was held on the  
            Suspense File of the Senate Appropriations Committee. 

            AB 1144 (Price, 2009), would have required plans and health  
            insurers that provide prescription drug benefits to submit  
            written reports about step therapy each year to DMHC and CDI.  
            AB 1144 was held on the Suspense File of the Assembly  
            Appropriations Committee.








          AB 68 (Waldron)                                    Page 8 of ?
          
          
          
          6)Support. Epilepsy California writes in support that for the  
            majority of people living with epilepsy, anti-epilepsy  
            medications (anticonvulsants) are the most common and most  
            cost effective treatment for controlling and/or reducing  
            seizures. But there is no "one-size fits all" treatment option  
            for epilepsy, and the response to epilepsy medications can be  
            different for each person. Physicians must be able to use  
            their reasonable, professional judgment to prescribe  
            FDA-approved medications that are best for each patient, and  
            patients must gain timely access to these medications without  
            enduring a lengthy appeal process. Epilepsy California writes  
            that timely access to the most appropriate medications to  
            control their seizures will go a long way to reduce Medi-Cal  
            patients' admissions for emergency room intervention.
          
            Sunovion Pharmaceuticals (Sunovion) writes in support that  
            this measure will help ensure patient access to medically  
            necessary treatment and care for seizures and epilepsy and  
            establishes a clear policy that will translate across all  
            managed care plans and help ensure that Medi-Cal patients have  
            equal access to drugs best suited to treat this serious  
            condition. Sunovion writes that without access to medically  
            necessary medications, patients are subjected to uncoordinated  
            and inappropriate treatment patterns often leading to  
            non-adherence and ultimately hospitalization. Sunovion states  
            that numerous studies have found that limiting access to  
            treatment options for epilepsy does not reduce overall health  
            care costs. Studies have shown that the primary driver of  
            direct costs associated with epilepsy treatment are attributed  
            to medical costs rather than anti-epileptic drug costs.  
            Sunovion writes that maintaining seizure control requires  
            careful evaluation and monitoring by the physician and  
            patient, and physicians treating epilepsy must be able to  
            prescribe drugs that are best for each patient, based on  
            independent clinical judgment, and this bill would establish a  
            policy where a prescriber's reasonable professional judgment  
            has the opportunity to prevail when prescribing a product for  
            such a serious condition. This measure will help ensure  
            patients in the Medi-Cal program will be able to promptly  
            access the most effective treatment - generic or branded - for  
            epilepsy and seizures, by ensuring that patient needs prevail  
            over "one size fits all" approaches to medication management.










          AB 68 (Waldron)                                    Page 9 of ?
          
          
          7)Oppose unless amended. The California Association of Health  
            Plans (CAHP) writes it is opposed unless amended to this bill.  
            CAHP states this bill allows for an expedited appeal process;  
            however, no additional information regarding the enrollee is  
            required to be submitted by the physician. CAHP states that,  
            in order to appropriate and effectively re-evaluate the use of  
            the non-formulary drug, health plans require additional  
            supporting documentation from the physician. The absence of  
            additional supporting documentation during the expedited  
            review deflates the integrity of the expedited review process  
            because pharmacy managers will not have any new and relevant  
            supporting documentation. CAHP concludes that, in order for  
            health plans to vigorously review non-formulary requests  
            additional information must be required from physicians.

          8)Policy issues. 
               a)     Automatic urgent appeal and 48 hour timeframe.  
                 Medi-Cal beneficiaries can appeal a Knox-Keene licensed  
                 health plan denial by filing a grievance with the plan or  
                 by filing a fair hearing request. The grievance process  
                 includes an expedited process for a case involving an  
                 imminent and serious threat to the health of the enrollee  
                 (known as an urgent grievance). Plans are required to  
                 provide a written statement to DMHC and the complainant  
                 on the disposition or pending status of the urgent  
                 grievance within three calendar days of receipt of the  
                 grievance by the Plan. In addition, enrollees can appeal  
                 urgent grievances directly to DMHC. 

               Medi-Cal managed care plans which require prior  
                 authorization for prescription drugs are required to  
                 provide a response within 24 hours or one business day to  
                 a request for prior authorization made by telephone or  
                 other telecommunication device. In addition, Medi-Cal  
                 managed care plans are required to provide for the  
                 dispensing of at least a 72-hour supply of a covered  
                 outpatient drug in an emergency situation.
          
                 This bill has a 48-hour timeframe. In addition, under the  
                 current appeals process, the burden is on the patient to  
                 appeal the decision. Under this bill, when a drug has  
                 been prescribed for the treatment of seizures and  
                 epilepsy that is approved by the federal FDA for use in  
                 the treatment of seizures and epilepsy that is denied by  
                 a plan, there would be an automatic appeal. 
                              







          AB 68 (Waldron)                                    Page 10 of ?
          
          

                 The automatic appeal would benefit Medi-Cal beneficiaries  
                 in that they would be relieved of the burden of filing  
                 grievances and appeals. The author's office indicates the  
                 reason for this provision is that, for a patient with  
                 epilepsy who is potentially experiencing breakthrough  
                 seizures resulting from impeded access to medically  
                 necessary medication, none of the current appeal options  
                 is timely following the denial by the plan. In addition,  
                 the author indicates this bill is focused on unique and  
                 critical disease states that are not like other medical  
                 conditions because a breakthrough epileptic seizure can  
                 have significant psychosocial and physical consequences  
                 in employment, driving, and could lead to injury.  
                 However, the automatic appeal approach raises several  
                 policy questions, including:

                     i.          Is there evidence the existing Medi-Cal  
                      appeal mechanisms for the denial of prescription  
                      medication are inadequate to warrant an automatic  
                      appeal as this bill proposes? 
                     ii.         Should an automatic appeal only apply to  
                      FDA-approved drugs for the treatment of seizures and  
                      epilepsy? 
                     iii.        If drug denials are subject to an  
                      automatic appeal, how does this affect Medi-Cal  
                      managed care plan cost control measures?

               b)     Entity making decision on the appeal unclear. Under  
                 this bill, if a plan denies coverage for an FDA-approved  
                 drug prescribed for the treatment of seizures and  
                 epilepsy, the beneficiary is entitled to an automatic  
                 urgent appeal. The "automatic urgent appeal" means the  
                 plan must immediately notify DHCS of the denial of  
                 coverage, and the beneficiary is not required to take any  
                 further action. An automatic urgent appeal is required to  
                 be resolved within 48 hours after denial by the plan.  
                 While DHCS is required to be notified of the denial, it  
                 is unclear if the entity making the determination on the  
                 automatic urgent appeal is DHCS or the plan. DHCS does  
                 not have an automatic urgent appeal mechanism for  
                 Medi-Cal managed care denials, and Medi-Cal fair hearing  
                 appeals are handled by DSS. Amendments are needed to  
                 clarify this provision.
           








          AB 68 (Waldron)                                    Page 11 of ?
          
          
          SUPPORT AND OPPOSITION  :
          Support:  American Federation of State, County and Municipal  
          Employees, AFL-CIO
                    Association of Regional Center Agencies
                    Biocom
                    California Chronic Care Coalition
                    California Healthcare Institute
                    California Life Sciences Association
                    Child Neurology Foundation
                    Disability Rights California
                    Epilepsy California
                    Sunovion Pharmaceuticals
                    
          Oppose:   California Association of Health Plans (unless  
                    amended)

                                      -- END --