BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 68 (Waldron) - Medi-Cal ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 18, 2015 |Policy Vote: HEALTH 9 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 24, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- 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). AB 68 (Waldron) Page 1 of ? 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 AB 68 (Waldron) Page 2 of ? 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. AB 68 (Waldron) Page 3 of ? -- END --