BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 2084

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         Date of Hearing:  May 4, 2016


                               Lorena Gonzalez, Chair

         2084 (Wood) - As Introduced February 17, 2016

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         Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


         This bill provides Medi-Cal coverage for comprehensive medication  
         management (CMM), which is defined as the process of care that  
         ensures each beneficiary's medications are appropriate, safe, and  
         effective, and are being used as intended.  It also defines  


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         beneficiaries, goals, and related requirements, and requires DHCS  
         to study the effectiveness and costs.


         1)Unknown net cost pressure to Medi-Cal managed care for CMM  
           services.  Return on investment (ROI) could range from positive  
           (net savings) to negative (net costs), but the bill appears  
           likely to result in a net cost based on the bill's broad  
           definition of who is eligible and the comprehensive nature of  
           the service.  Costs would depend on utilization and actual ROI.  
            For example, if 20,000 used the service per year at a cost of  
           $300 annually and the ROI was 0.8, Medi-Cal managed care plans  
           would experience a net cost increase of $480,000, which would  
           be reflected in rates paid to managed care plans (GF/federal).   

         2)Unknown net costs to FFS Medi-Cal for CMM services.  Similarly,  
           if 10,000 used the service per year at a cost of $300 annually  
           and the ROI was 0.8, FFS Medi-Cal would experience a net cost  
           increase of $240,000 (GF/federal).   

         3)Significant administrative costs, likely in the low hundreds of  
           thousands of dollars in staff costs, in the FFS Medi-Cal  
           program to develop this program in FFS (GF/federal).      
           According to DHCS, pharmacists currently do not bill Medi-Cal  
           directly, but reimbursement is provided to a pharmacy.  For FFS  
           Medi-Cal, this bill might necessitate a new payment arrangement  
           for pharmacist services. 


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         4)Costs in the range of $100,000 (GF/federal) to DHCS to contract  
           for an assessment of the effectiveness of CMM on care quality,  
           patient outcomes, and total program costs, including cost  


         1)Purpose. The California Pharmacists Association, sponsor of  
           this bill, believes this bill will assist patients with chronic  
           conditions who may visit an array of health care providers and  
           take multiple medications.  Insufficient coordination among  
           those providers has resulted in an overwhelming need for  
           ongoing assessment of patients' medications, which this bill  
           would provide to Medi-Cal enrollees.  


         2)CHBRP Analysis. CHBRP analyzed this bill and noted the  

              a)     Medical Effectiveness: CHBRP could not assess CMM as  
                proposed in this bill because the eligibility criteria is  
                so broad and there were few studies available.  CHBRP  
                notes overall that related, less comprehensive  
                pharmacist-led interventions such as Medication Therapy  
                Management (MTM) improve care and decrease utilization,  
                cost, and mortality, but these findings may not generalize  
                to CMM.  

              b)     Costs: CHBRP could not assess costs of CMM as  


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                proposed in this bill.  CHBRP notes a potential return on  
                investment for MTM was 0.8:10 (a slight net cost) to  
                3.5:1.0 (significant cost savings). The higher ROI figures  
                are for more narrowly targeted interventions with stricter  
                eligibility criteria; the lower figures are for programs  
                with broad eligibility criteria and higher costs to  
                identify beneficiaries.  CHBRP did not conclude that MTM  
                programs are consistently  
                cost-effective-cost-effectiveness depends on the target  
                populations and administrative costs and burden.  

         3)High-Cost Medi-Cal Enrollees.  The Department of Health Care  
           Services' Research and Analytic Studies Division released a  
           study in March 2015 examining high-cost populations in  
           Medi-Cal.  They found that a small percentage of individuals  
           accounted for a disproportionately large share of Medi-Cal's  
           total spending; generally, care for individuals with chronic  
           conditions that impact multiple body systems generated the most  
           cost.  In 2011, 5% of enrollees accounted for over 50% of the  
           total program costs.  

         4)Interaction with Medicare. Medicare offers a MTM program, for  
           those enrolled in a Medicare drug plan and who take multiple  
           medications for different medical conditions.  In these  
           programs, a pharmacist or other health professional gives  
           patients a comprehensive review of all medications.  Patients  
           receive a written summary of discussion, including an action  
           plan that recommends how to make the best use of medications.   
           CMM is different from MTM in that CMM services, as defined in  
           this bill, are more comprehensive than MTM.  Also, CMM services  
           are designed to provide ongoing disease-oriented care, with a  
           requirement to:  1) assess or obtain the patient's clinical  
           status and goals of therapy; 2) develop a treatment plan; and;  
           3) provide ongoing follow-up to monitor and adjust the  
           treatment plan as necessary.  


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         5)CDPH Paper. A CDPH report on CMM Pilot Programs in Southern  
           California noted improvements in clinical, fiscal, and quality  
           measures among participants, but also notes challenges to  
           implementing CMM related to reimbursement mechanisms, alignment  
           of financial incentives, robust electronic health information  
           exchange, outcomes and quality tracking, patient and provider  
           awareness, and adequate staffing.

         6)Staff Comments. 

              a)     Applicability to Fee for Service? The construct of  
                this bill appears to suffer from trying to fit a square  
                peg (CMM) into a round hole (fee-for-service payment  
                system). Ideally, CMM appears to be less a one-time  
                service and more a best practice- an integrated, ongoing  
                part of team-based health care delivery for high-risk  
                patients with multiple chronic conditions. In other words,  
                philosophically it seems CMM is addressing more a question  
                of "how" (ensuring medications are optimized and meeting  
                clinical goals) than "what" (delivering CMM as a distinct  
                service).  Thus, it does not appear to be something that  
                is neatly defined and billed on a FFS basis.  If the  
                author wishes to move forward with including CMM in FFS  
                Medi-Cal, it may need further clarification to separately  
                describe the implementation of CMM on a FFS basis.   
                However, it should also be noted as Medicare Part D is the  
                primary payer for drug costs for dually eligible  
                enrollees, many of whom are in FFS, and there could be a  
                misalignment between costs and benefits from a state  
                perspective.  Medi-Cal would incur the cost for the  
                medication management services, but Medicare would reap  
                the cost savings from reduced spending on drug and medical  


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              b)     Drafting issues. This bill contains two sets of  
                definitions of covered services: the first, a definition  
                of CMM as a "process of care," as well as another  
                definition of services that are covered.  Consolidating  
                these definitions may provide better clarity as to what is  
                proposed for coverage.  Also, the bill contains  
                requirements that are unclear and could be redrafted. For  
                example, the bill requires that CMM services "shall be  
                offered" to a beneficiary who meets specified criteria,  
                instead of stating that Medi-Cal will reimburse for  
                services delivered to beneficiaries who meet one of the  
                specified criteria.  In another example, the bill states  
                the typical intervention "shall include" an average of  
                three to four visits per year.   It is not clear how this  
                could be measured nor who would enforce it, and appears to  
                be more a description of how these programs tend to  
                function than a requirement.  

              c)     Return on Investment.  There would be a higher  
                likelihood of positive ROI if services were focused on  
                individuals with higher drug costs, or conditions that  
                made people at high risk of negative health outcomes based  
                on poor medication management. The target population as  
                defined by this bill is broad, only requiring three drugs  
                for one or more chronic conditions.  Another current  
                program in use by a Medi-Cal managed care plan, as  
                reviewed by CHBRP, has a minimum criteria of six or more  
                medications for six or more chronic disease states, and  
                quarterly drug spending of $784, for example.  Medi-Cal  
                data on high-cost populations, along with CHBRP's  
                assessment of ROI, suggest a highly targeted program could  
                be quite cost-effective.  


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              d)     CMM as defined here is intensive and broad.  CHBRP  
                compared CMM to medication therapy management (MTM)  
                programs, about which more research has been conducted.   
                MTM, which Medicare requires to be provided through Part D  
                drug plans, consists of an annual comprehensive medication  
                review, and targeted quarterly medication reviews, as  
                needed.  The criteria for inclusion are narrower than  
                proposed in this bill, and the services are more narrowly  
                defined as well.  At this time, Medi-Cal beneficiaries do  
                not systemically have access to MTM programs, which are  
                better studied and less expensive than CMM, in addition to  
                being available to a more narrowly defined eligible  
                population.  This bill's definition of CMM and eligibility  
                criteria in Medi-Cal would essentially leapfrog over these  
                narrower, better-studied MTM programs to require something  
                that is much more robust and comprehensive, and available  
                to a lot more beneficiaries.  Given the lack of published  
                research on CMM programs, it is worth considering either a  
                narrower, less ambitious offering or a pilot project that  
                can test a comprehensive offering.  It should also be  
                noted that, as discussed above in the CDPH paper,  
                significant implementation challenges remain for CMM as an  
                ongoing, comprehensive part of care delivery.   
         Analysis Prepared by:Lisa Murawski / APPR. / (916)