BILL ANALYSIS Ó
AB 73
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Date of Hearing: May 20, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
73 (Waldron) - As Amended January 5, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill creates an expedited review process that applies if a
Medi-Cal managed care plan denies coverage of a prescription
drug used to treat HIV/AIDS.
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The expedited review, which must be resolved by a plan within 24
hours, applies in cases where the drug is not on a plan
formulary and a physician demonstrates medical necessity and
consistency with federal guidelines.
FISCAL EFFECT:
This bill will result in a likely minor one-time increase in
administrative costs in Medi-Cal managed care, and for DHCS
state administrative staff. Ongoing costs are likely to be
fairly minor. All costs are GF/federal.
COMMENTS:
1)Purpose. The intent of this bill is to shorten the time frame
for urgent appeals when coverage for HIV/AIDS drugs is denied
through Medi-Cal managed care.
2)Background. Many Medi-Cal enrollees receive health care
through Medi-Cal managed care plans, which are private or
locally or regionally administered public entities that
contract with the state to manage the health care services of
beneficiaries. Contracts between the state and the plan govern
the specific products and services for which managed care
plans must pay. Certain Medi-Cal covered services are carved
out from managed care plan contracts, meaning the plan does
not pay for them. Selected drugs in certain classes are
generally carved out; these classes include HIV/AIDS drugs,
detoxification and dependency treatment drugs, blood factor,
and psychiatric drugs. Providing HIV drugs in this manner has
allowed the state to leverage its size for greater rebates.
For these drugs, instead of seeking reimbursement from plans,
providers are directed to bill the Medi-Cal FFS system. Five
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of 22 managed care plan contracts require coverage for
HIV/AIDS drugs, while HIV/AIDS drugs are carved out for the
remaining plans. Enrollment in the five plans that cover
HIV/AIDS drugs makes up less than 9% of the enrollment in
Medi-Cal managed care, according to November 2015 figures.
Medi-Cal has processes in place to appeal coverage denials,
both in managed care and in fee-for-service. The current time
frame in managed care for an urgent appeal is 72 hours.
3)Related Legislation.
a) AB 68 (Waldron) was very similar to this bill but
applied to epilepsy drugs. The bill was vetoed, with a
message stating, "This bill would grant a Medi-Cal
beneficiary the right to an urgent appeal when a Medi-Cal
managed care plan denies coverage for a drug prescribed for
the treatment of epilepsy. The health plans are already
required to have effective up-to-date drug formularies and
expedited appeal processes to cover situations when health
care services, including epilepsy drugs, are denied. I
believe establishing a separate urgent appeal for this
specific medical condition is unnecessary."
b) AB 1814 (Waldron) of 2014 implemented a "prescriber
prevails" approach to various drug classes in Medi-Cal,
whereby a prescriber's medical judgment would prevail over
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a health plan denial. AB 1814 was held on the Assembly
Appropriations Suspense file.
1)Staff Comments. This bill does not appear to address the veto
message to AB 68, a very similar bill. It also sets up a
drug-specific appeals process, which increases administrative
costs, for uncertain benefit. Specifically, this bill applies
an urgent appeal process for coverage denials of drugs that
most plans are not required to cover in the first place. The
existence of such appeals for plans not obligated to cover
HIV/AIDS drugs appear to provide no benefit.
For the few and smaller plans to which the urgent appeal would
logically apply, while a theoretical individual could receive
a quicker response to an appeal of a coverage denial under
this bill, staff is not in possession of data documenting a
problem with timeliness of access to HIV/AIDS drugs for these
Medi-Cal enrollees, nor proof the current 72-hour time frame
is inadequate or causes harm, nor a reasoned defense of why
HIV/AIDS drugs should be singled out in the fashion proposed
by this bill.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081
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