BILL ANALYSIS                                                                                                                                                                                                    Ó






           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                       AB 1114|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 


                                   THIRD READING 


          Bill No:  AB 1114
          Author:   Eggman (D) 
          Amended:  8/24/16 in Senate
          Vote:     27 - Urgency

           PRIOR VOTES NOT RELEVANT

           SENATE HEALTH COMMITTEE:  7-0, 8/22/16 (pursuant to Senate Rule  
            29.10)
           AYES:  Hernandez, Hall, Mitchell, Monning, Pan, Roth, Wolk
           NO VOTE RECORDED:  Nguyen, Nielsen

           SENATE APPROPRIATIONS COMMITTEE:  6-0, 8/23/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza
           NO VOTE RECORDED:  Nielsen

           SUBJECT:   Medi-Cal:  pharmacist services


          SOURCE:    Author
          
          DIGEST:   This bill requires pharmacist services to be a benefit  
          under the Medi-Cal program, establishes a list of covered  
          pharmacist services that may be provided to a Medi-Cal  
          beneficiary, and requires the Department of Health Care Services  
          (DHCS) to establish a fee schedule for the list of pharmacist  
          services to be 85% of the fee schedule for physician services  
          under the Medi-Cal program.


          ANALYSIS:  










                                                                    AB 1114  
                                                                    Page  2


          Existing law:


           1) Establishes the Medi-Cal program, which is administered by  
             DHCS, under which qualified low-income individuals receive  
             health care services, including certain prescription drugs. 


           2) Establishes a schedule of benefits under the Medi-Cal  
             program, which includes outpatient prescription drugs,  
             subject to utilization controls and the Medi-Cal list of  
             contract drugs. Requires reimbursement to Medi-Cal pharmacy  
             providers for drugs, as prescribed, and authorizes the  
             department to establish a new reimbursement methodology based  
             on average acquisition cost, as defined.


           3) Requires, under the Pharmacy Law, pharmacists to be licensed  
             and regulated by the California State Board of Pharmacy in  
             the Department of Consumer Affairs. Establishes, under the  
             Pharmacy Law, the functions pharmacists are authorized to  
             perform, including administering drugs and biological  
             products that have been ordered by a prescriber, furnishing  
             self-administered hormonal contraceptives, nicotine  
             replacement products, prescription medications not requiring  
             a diagnosis that are recommended for international travelers,  
             and naloxone hydrochloride.


          This bill:


           1) Requires pharmacist services to be a benefit under the  
             Medi-Cal program, subject to approval by the federal Centers  
             for Medicare and Medicaid Services.


           2) Requires the following services are covered pharmacist  
             services that may be provided to a Medi-Cal beneficiary:


              a)    Furnishing travel medications;
              b)    Furnishing naloxone hydrochloride (for opioid  
                overdoes treatment);







                                                                    AB 1114  
                                                                    Page  3


              c)    Furnishing self-administered hormonal  
                contraception;
              d)    Initiating and administering immunizations;  
                and,
              e)    Providing tobacco cessation counseling and  
                furnishing nicotine replacement therapy.


           3) Requires covered pharmacist services to be subject to  
             DHCS protocols and utilization controls.


           4) Requires DHCS to establish a fee schedule for the list  
             of pharmacist services, and requires the rate of  
             reimbursement for pharmacist services to be 85% of the  
             fee schedule for physician services under the Medi-Cal  
             program.


           5) Requires a pharmacist to be enrolled as an ordering,  
             referring, and prescribing provider under the Medi-Cal  
             program prior to rendering a pharmacist service that is  
             submitted by a Medi-Cal pharmacy provider for  
             reimbursement.



           6) Prohibits this bill from restricting or prohibiting any  
             services currently provided by pharmacists as authorized by  
             law, including but not limited to, under the Medi-Cal program  
             or California's Medicaid state plan.


           7) Requires the DHCS director to seek any necessary federal  
             approvals to implement this bill. Implements this bill only  
             when necessary federal approvals are obtained, and only to  
             the extent that federal financial participation is  
             available.


           8) Permits DHCS to implement, interpret, or make specific this  
             bill, and any applicable federal waivers and state plan  
             amendments, by means of all-county letters, plan letters,  
             plan or provider bulletins, or similar instructions, without  







                                                                    AB 1114  
                                                                    Page  4


             taking regulatory action. 


           9) Requires DHCS, by July 1, 2021, to adopt regulations in  
             accordance with the requirements of the Administrative  
             Procedure Act. Requires DHCS, commencing July 1, 2017, to  
             provide a status report to the Legislature on a semiannual  
             basis until regulations have been adopted.


           10)Contains an urgency clause that will make this bill  
             effective upon enactment.


          Background


          Medi-Cal reimbursement to pharmacies currently consists of two  
          components: (a) a professional dispensing fee and (b) payment  
          for the drug dispensed (referred to as "drug ingredient costs").  
          The dispensing fee is currently $7.25 per prescription and $8  
          per prescription for drugs dispensed to beneficiaries in skilled  
          nursing and intermediate care facilities. The purpose of this  
          bill is to require Medi-Cal to establish a separate  
          reimbursement structure for pharmacist services. 


          The Pharmacy Law provides for the licensing and regulation of  
          pharmacists by the California State Board of Pharmacy in the  
          Department of Consumer Affairs. The law specifies the scope of  
          practice pharmacists are authorized to perform, including to  
          administer, orally or topically, drugs and biologicals pursuant  
          to a prescriber's order, and to administer immunizations  
          pursuant to a protocol with a prescriber. Pharmacists may also  
          furnish emergency contraception drug therapy pursuant to  
          standardized procedures if they have completed a training  
          program. 


          SB 493 (Hernandez, Chapter 469, Statutes of 2013) and AB 1535  
          (Bloom, Chapter 326, Statutes of 2014), expanded the scope of  
          practice of pharmacists. Among other provisions, SB 493  
          authorizes pharmacists to furnish self-administered hormonal  
          contraceptives, nicotine replacement products, and prescription  







                                                                    AB 1114  
                                                                    Page  5


          medications not requiring a diagnosis that are recommended for  
          international travelers, as specified. Additionally, SB 493  
          authorized pharmacists to order and interpret tests for the  
          purpose of monitoring and managing the efficacy and toxicity of  
          drug therapies, and to independently initiate and administer  
          routine vaccinations, as specified. AB 1535 authorized a  
          pharmacist to furnish naloxone hydrochloride in accordance with  
          standardized procedures or protocols developed and approved by  
          both Pharmacy Board and the Medical Board of California, in  
          consultation with specified entities. Board of Pharmacy  
          regulations implementing these bills took effect in 2016.


          DHCS has provided technical assistance on the language in this  
          bill. As drafted, DHCS indicates this bill would only apply to  
          fee-for-service (FFS), as the change is being made to the  
          provisions of the Welfare and Institutions Code specific to the  
          Medi-Cal FFS benefit, and describes Medi-Cal direct  
          reimbursement to FFS pharmacy providers. DHCS' criteria for an  
          item to be added as a pharmacist-reimbursable service is the  
          service must already a Medi-Cal benefit (currently paid as a  
          medical service and the billing codes would remain the same),  
          and the service must be within the pharmacist's scope of  
          practice.


          DHCS indicates the proposed pharmacist services currently  
          include the medical evaluation and consultation (and  
          prescription, if appropriate) for hormonal contraception,  
          smoking cessation, and the opioid antagonist naloxone. DHCS will  
          identify the list of pharmacist services in a provider bulletin  
          and all-plan letter (if applicable), then follow up with updated  
          regulations. 


          DHCS indicates if a pharmacist counsels the patient under their  
          expanded scope of practice and prescribes a medication under  
          their current scope of practice, and then dispenses the  
          prescribed drug, these would be two billable services.  Under  
          this bill, the pharmacy will be reimbursed for a medical service  
          provided by a pharmacist. DHCS indicates this service is  
          separate and distinct from the dispensing of the drug, for which  
          they also would be reimbursed for the drug ingredient cost, plus  
          the $7.25 dispensing fee.







                                                                    AB 1114  
                                                                    Page  6




          Comments


          Author's statement.  According to the author, according to the  
          author, regulations finalized in 2016 allow California  
          pharmacists to provide hormonal contraceptives, the opioid  
          overdose drug naloxone, and nicotine replacing products for  
          smoking cessation directly to patients. This bill will improve  
          access to these vital health services by authorizing DHCS to  
          establish a system for pharmacists to provide services in the  
          Medi-Cal program.




          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee:


          1)One-time costs of $400,000 to $600,000 to make changes to the  
            system for processing Medi-Cal payments to allow pharmacist  
            services to be reimbursed at the rate level specified in the  
            bill (25% General Fund and 75% federal funds). 


          2)Unknown cost savings due to a shift from services being  
            provided by physicians to those services being provided by  
            pharmacists (General Fund and federal funds). Under this bill,  
            Medi-Cal beneficiaries would be able to access certain  
            services from a pharmacist without the need to see a physician  
            to get a prescription. This bill requires pharmacists to be  
            reimbursed at 85% of the rate paid to physicians. The extent  
            of the cost savings from shifting from physician services to  
            pharmacist services is unknown. 


          3)Likely overall cost savings to the Medi-Cal program due to  
            increased utilization of certain drugs prescribed and  
            dispensed by pharmacists (General Fund and federal funds).  







                                                                    AB 1114  
                                                                    Page  7


            Under this bill, it is likely that there will be increased  
            utilization of certain drugs, because it will be easier for  
            some Medi-Cal beneficiaries to access those drugs directly  
            from pharmacist without the need for a physician visit. Under  
            current law, the drugs that can be provided by a pharmacist in  
            this manner include smoking cessation drugs, contraceptives,  
            naloxone (a drug that prevents opioid overdoses), and  
            immunizations. These types of drugs have been shown to result  
            in overall health care cost savings, so it is likely that any  
            overall increase in their utilization by Medi-Cal  
            beneficiaries is likely to reduce long-term Medi-Cal spending.


          SUPPORT:   (Verified  8/23/16)


          California Pharmacists Association
          California Retailers Association
          National Association of Chain Drug Stores
          Rite Aid Pharmacies


          OPPOSITION:   (Verified8/23/16)


          None received

          ARGUMENTS IN SUPPORT:  The California Pharmacists Association  
          (CPhA) writes in support that this bill will establish a system  
          for pharmacists to provide services in the Medi-Cal program.  
          CPhA argues this bill will expand access to a number of  
          important preventative health care services for Medi-Cal  
          beneficiaries. CPhA argues regulations finalized this year  
          provide pharmacists with new authority, including furnishing  
          hormonal contraceptives, certain tobacco cessation drugs,  
          recommended travel medicines, and the opioid overdose drug  
          naloxone directly to patients. These authorities allow  
          pharmacists to provide patients with direct access to important  
          health care services. CPhA argues this bill ensures that  
          Medi-Cal patients can benefit from the direct access to these  
          health care services envisioned by the Legislature.  Under  
          existing law, pharmacists are not eligible "providers" in  
          Medi-Cal and their services cannot be reimbursed. Pharmacies are  
          reimbursed for drugs and a limited dispensing fee to cover the  







                                                                    AB 1114  
                                                                    Page  8


          cost of dispensing. Federal rules do not allow a dispensing fee  
          to cover the costs associated with these new pharmacist  
          services.

          This bill allows pharmacies to bill for services provided by  
          pharmacists to Medi-Cal patients.  Pharmacies would be  
          reimbursed at 85% of the physician reimbursement rate, offering  
          increased access to patients and savings to the state.  As the  
          state looks to manage the cost, quality of care, and access  
          challenges posed by the over 12 million Californians enrolled in  
          the Medi-Cal program, CPhA concludes the state needs to  
          concentrate its efforts on smart solutions such as this bill.
           

          Prepared by:Scott Bain / HEALTH / (916) 651-4111
          8/24/16 18:31:51


                                   ****  END  ****