BILL ANALYSIS Ó
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).
AB 68 (Waldron) Page 1 of
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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
AB 68 (Waldron) Page 2 of
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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.
AB 68 (Waldron) Page 3 of
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