BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          BILL NO:                    AB 73     
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          |AUTHOR:        |Waldron                                        |
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          |VERSION:       |January 5, 2016                                |
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          |HEARING DATE:  |June 29, 2016  |               |               |
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          |CONSULTANT:    |Scott Bain                                     |
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           SUBJECT  :  Patient Access to Prescribed Antiretroviral Drugs for  
          HIV/AIDS Treatment Act

           SUMMARY  :  Requires the denial by a Medi-Cal managed care plan of a  
          non-formulary drug prescribed for the treatment of HIV/AIDS that  
          is approved by the federal Food and Drug Administration for use  
          in the treatment of HIV/AIDS to be subject to an urgent appeal  
          process established by this bill, if 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 labeling and use rules  
          and regulations.
          
          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  
                    or other telecommunication device; and, 







          AB 73 (Waldron)                                    Page 2 of ?
          
          
                  b)        The dispensing of at least a 72-hour supply of  
                    a covered outpatient drug in an emergency situation.
                       
          1)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.
          
          2)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 a drug  
            used in the treatment of HIV/AIDS is prescribed by a Medi-Cal  
            beneficiary's treating provider for the treatment of HIV/AIDS,  
            and coverage for that prescribed drug is denied by a Medi-Cal  
            managed care plan in 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  
            non-formulary drug prescribed for the treatment of HIV/AIDS  
            that is approved by the federal Food and Drug Administration  








          AB 73 (Waldron)                                    Page 3 of ?
          
          
            (FDA) for use in the treatment of HIV/AIDS to be subject to an  
            urgent appeal process if 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 FDA's labeling and use rules and  
            regulations, as supported in at least one of the official  
            compendia identified in federal Medicaid law.

          3)Requires a beneficiary to be entitled to an urgent appeal in a  
            case in which a plan denies coverage for a drug prescribed for  
            the treatment of HIV/AIDS and approved by the FDA for use in  
            the treatment of HIV/AIDS.

          4)Defines an "urgent appeal" as an appeal in which the  
            beneficiary, or treatment provider with the consent of the  
            beneficiary, requests an appeal either orally or in writing. 

          5)Requires an urgent appeal to be resolved by the plan within 24  
            hours after the plan receives the request. Requires the  
            24-hour period to be in addition to any time prescribed by  
            federal law.

          6)States legislative intent in enacting this bill that a  
            Medi-Cal beneficiary have prompt access to medically necessary  
            antiretroviral drugs for use in the treatment of HIV/AIDS that  
            have been approved by the federal FDA for that purpose,  
            including drugs that are not on the formulary of a Medi-Cal  
            managed care plan or that are subject to prior authorization.

           FISCAL  
          EFFECT  :  According to the Assembly Appropriations Committee,  
          this bill will result in a likely minor one-time increase in  
          administrative costs in MCMC, and for DHCS state administrative  
          staff. Ongoing costs are likely to be fairly minor. All costs  
          are General Fund/federal funds.

           PRIOR  
          VOTES  :  
          
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          |Assembly Floor:                     |77 - 0                      |
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          |Assembly Appropriations Committee:  |17 - 0                      |
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          |Assembly Health Committee:          |19 - 0                      |








          AB 73 (Waldron)                                    Page 4 of ?
          
          
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          COMMENTS  :
          1)Author's statement. According to the author, formularies and  
            step-therapy programs are not always sufficient to treat  
            certain vulnerable populations. The federal government enacted  
            Medicare Part D, which included six protected classes of  
            therapeutic drugs. These categories and classes of drugs meet  
            two criteria: (1) where restrictions on that class would have  
            major or life threatening consequences and/or must be taken  
            for life; and (2) where there is a significant need for  
            disease or disorder to be treated by multiple drugs within a  
            specified class. 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. Antiretroviral Drugs for HIV/AIDS Treatment Act  
            would avoid drug resistance, spread of disease transmission,  
            etc. 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. This bill merely  
            allows Medi-Cal beneficiaries to use an expedited 24 hour  
            appeal process that would give them prompt access to medically  
            necessary drugs for Antiretroviral Drugs for HIV/AIDS  
            Treatment.
          
          2)Medi-Cal coverage of HIV/AIDS medication and appeal rights in  
            managed care. The 2016-17 DHCS budget assumes average monthly  
            enrollment in Medi-Cal of over 14 million individuals, of whom  
            nearly three-fourths 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  








          AB 73 (Waldron)                                    Page 5 of ?
          
          
            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. 

            DHCS indicates HIV/AIDS drugs listed in the Medi-Cal Provider  
            Manuals are "carved out" of most Medi-Cal care plans and are  
            instead covered by Medi-Cal Fee-For-Service (FFS). This  
            includes Medi-Cal managed care plans in the two-plan model  
            counties, geographic managed care, county organized health  
            system (COHS) and primary care case management arrangements.  
            Exceptions to the "carve out" are two COHS plans (CalOptima  
            and Health Plan of San Mateo), and three specialty programs  
            also carve in some or all drugs in (AIDS Healthcare Foundation  
            has a subset of HIV/AIDS drugs carved-in to managed care,  
            while Senior Care Action Network (SCAN) and the Program for  
            All-Inclusive Care for the Elderly have all HIV/AIDS drugs  
            carved-in. DHCS indicates it has not received complaints  
            regarding health plans denying coverage for HIV/AIDS  
            medications.                  


          3)Prior legislation. AB 68 (Waldron of 2015) would have required  
            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 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. AB 68 was vetoed by Governor Brown. In this his veto  
            message, the Governor stated "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." Governor  
            Brown stated he believed "establishing a separate urgent  








          AB 73 (Waldron)                                    Page 6 of ?
          
          
            appeal for this specific medical condition is unnecessary".


          4)Support.  AIDS Healthcare Foundation (AHF) writes in support  
            that providers of medical care to persons with HIV/AIDS often  
            grapple with cost containment measures that can interfere with  
            the provider's decision about the best drug treatment for a  
            particular patient. However, ultimately a degree of deference  
            must be paid to the clinical decision by the provider.  
            Moreover, the patient is generally in need of swift  
            introduction of the drug in order to have a meaningful impact  
            on the patient's medical condition. AHF concludes that while  
            bill would ensure that the plan maintains authority to make  
            the ultimate decision, the urgent appeal process elevates the  
            denial to a degree that ensures a more timely and hopefully  
            more scrutinized decision.

          5)Opposition. The Local Health Plans of California (LHPC) writes  
            in opposition that, while 
            LHPC agrees that consumers should be able to access medically  
            necessary medications, they do not believe a special process  
            for one set of drugs is necessary. In addition, Medi-Cal  
            health plans already have processes in place for expedited  
            appeals. LHPC also notes that HIV/AIDS drugs are carved out  
            for most of the Medi-Cal plans and provided through FFS  
            Medi-Cal, and as a result, they are uncertain whether this  
            bill will have any practical effect.

          6)Policy question. Are denials of HIV/AIDS medications and  
            current appeal timeframes a problem? In most areas of the  
            state, HIV/AIDS drugs are "carved out" of Medi-Cal managed  
            care and are instead reimbursed through the Medi-Cal FFS  
            program, and DHCS indicates it has not had complaints  
            regarding Medi-Cal managed care plan denials of HIV/AIDS  
            medications.
           
          SUPPORT AND OPPOSITION  :
          Support:  AIDS Healthcare Foundation
                    California Life Sciences Association 
                    Positive Resource Center
                    Retired Public Employees Association 
                    Sunburst Projects
                    Two individuals
          
          Oppose:   California Association of Health Plans








          AB 73 (Waldron)                                    Page 7 of ?
          
          
                    Local Health Plans of California 



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