BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 68 (Waldron) - Medi-Cal
          
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          |Version: August 18, 2015        |Policy Vote: HEALTH 9 - 0       |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date:  August 24, 2015  |Consultant: Brendan McCarthy    |
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          This bill meets the criteria for referral to the Suspense File.

          Bill  
          Summary:  AB 68 would entitle Medi-Cal beneficiaries to an  
          urgent appeal when a Medi-Cal managed care plan denies coverage  
          for a drug prescribed to treat seizures or epilepsy because the  
          drug is not on the managed care plan's drug formulary.


          Fiscal  
          Impact:  
           Likely one-time costs of up to $150,000 to make administrative  
            changes by the Department of Health Care Services (General  
            Fund and federal funds). The Department indicates that it  
            would need to update existing regulations, managed care plan  
            contracts, Notice of Action forms, and appeals reporting  
            templates.

           Likely minor costs to monitor Medi-Cal managed care plan  
            compliance with the bill's requirements by the Department of  
            Health Care Services.

           Unknown impact on the cost to provide prescription drugs by  
            Medi-Cal managed care plans (General Fund and federal funds).  







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            Managed care plans create drug formularies as a way to control  
            costs, by selecting low cost drugs and by increasing their  
            bargaining power with drug companies. By creating a new  
            appeals process to provide increased access to drugs that are  
            not on Medi-Cal manage care plans' drug formularies, the bill  
            may increase patient access to more expensive drugs and/or  
            reduce the managed care plans' ability to negotiate discounts  
            and rebates with drug manufacturers. The extent to which this  
            will increase spending on prescription drugs is unknown.


          Background:  The Medi-Cal program is a health care program for low-income  
          individuals and families who meet defined eligibility  
          requirements. Medi-Cal coordinates and directs the delivery of  
          health care services to approximately 12 million qualified  
          individuals, including low-income families, seniors and persons  
          with disabilities, children in families with low-incomes or in  
          foster care, pregnant women, low-income people with specific  
          diseases, and, as of January 1, 2014, due to the Affordable Care  
          Act, childless adults up to 138% of the federal poverty level.

          About 80% of Medi-Cal beneficiaries are enrolled in Medi-Cal  
          managed care plans.  Medi-Cal managed care plans are required by  
          federal and state law and contracts with the Department of  
          Health Care Services to cover medically necessary prescription  
          drugs. In general, Medi-Cal managed care plans are required to  
          provide coverage for each mechanism of action sub-class within  
          all major therapeutic categories of prescription drugs. In other  
          words, Medi-Cal managed care plans must provide coverage for at  
          least one type of drug in each category for specific uses.  
          Medi-Cal managed care plans are not required to cover every  
          single FDA approved drug for each approved use. Medi-Cal managed  
          care plans, like most managed care plans, use a variety of  
          methods to control the cost of providing prescription drug  
          coverage. Medi-Cal managed care plans use drug formularies, in  
          which the plan lists the specific drugs that are covered for  
          specific conditions. By developing a drug formulary, the managed  
          care plan can select lower cost drugs in specific categories  
          and/or increase the plan's ability to negotiate discounts or  
          rebates with drug companies in exchange for listing  a specific  
          drug on the formulary. Similarly, Medi-Cal managed care plans  
          may use a prior authorization process for certain, high cost  
          drugs or may require beneficiaries to try less expensive drugs  
          before being given access to more expensive drugs (referred to  








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          as "step therapy" or "fail first protocols").

          Under current law and contracts with the Department, Medi-Cal  
          managed care plans and the state have several appeals processes  
          in place to allow Medi-Cal beneficiaries to contest a decision  
          by a Medi-Cal managed care plan. For example, a dissatisfied  
          beneficiary can file a grievance with the managed care plan,  
          request a fair hearing from the Department, or can file a  
          grievance with the Department of Managed Health Care (for  
          Medi-Cal managed care plans regulated by that department, which  
          does not include most county operated health systems).


          Proposed Law:  
            AB 68 would entitle Medi-Cal beneficiaries to an urgent appeal  
          when a Medi-Cal managed care plan denies coverage for a drug  
          prescribed to treat seizures or epilepsy because the drug is not  
          on the managed care plan's drug formulary. An urgent appeal  
          could be requested by the beneficiary or the prescribing  
          provider on the beneficiary's behalf. The bill would require the  
          Medi-Cal managed care plan to resolve the appeal within 24  
          hours.


          Related  
          Legislation:  
           AB 73 (Waldron) would have required a drug from one of four  
            classes to be covered by Medi-Cal if the drug was not on a  
            Medi-Cal managed care plan's formulary. That bill was held on  
            the Assembly Appropriations Committee's Suspense File.
           AB 339 (Gordon) would make several changes to existing law  
            regarding prescription drug coverage and cost sharing for  
            patients. That bill is on this committee's Suspense File.
           AB 374 (Nazarian) would prohibit health plans or insurers from  
            using step therapy or fail first protocols to beneficiaries  
            who have made an override request. That bill is on this  
            committee's Suspense File.
           AB 1162 (Holden) would require tobacco cessation services to  
            be a covered benefit in the Medi-Cal program. That bill is on  
            this committee's Suspense File.












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