BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 447
---------------------------------------------------------------
|AUTHOR: |Allen |
|---------------+-----------------------------------------------|
|VERSION: |April 6, 2015 |
---------------------------------------------------------------
---------------------------------------------------------------
|HEARING DATE: |April 15, 2015 | | |
---------------------------------------------------------------
---------------------------------------------------------------
|CONSULTANT: |Scott Bain |
---------------------------------------------------------------
SUBJECT : Medi-Cal: clinics: drugs and supplies
SUMMARY : Revises the Medi-Cal and Family PACT reimbursement formula for
drugs and supplies dispensed by specified clinics by requiring
the clinic dispensing fee to be the difference between the
actual acquisition cost of a drug or supply and the Medi-Cal
reimbursement rate, and removes the maximum dispensing fee caps
in existing law.
Existing law:
1.Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), under which
qualified low-income individuals receive health care services.
The Medi-Cal program is, in part, governed and funded by
federal Medicaid Program provisions.
2.Establishes the Family Planning Access and Treatment Program
(Family PACT Program) to provide comprehensive clinical family
planning services to individuals who meet specified income
requirements.
3.Requires a community clinic, a free clinic or an intermittent
clinic to be reimbursed for drugs and supplies covered under
the Medi-Cal program and Family PACT Waiver Program from
exceeding the net cost of these drugs or supplies when
provided by retail pharmacies under the Medi-Cal program.
4.Defines "cost" for purposes of 3) above as:
a. An amount equivalent to the sum of the actual
acquisition cost of a drug or supply plus a clinic
dispensing fee not to exceed $12 per billing unit as
identified in either the Family PACT Policies,
SB 447 (Allen) Page 2 of ?
Procedures, and Billing Instructions Manual, or the
Medi-Cal Inpatient/Outpatient Provider Manual
governing outpatient clinic billing for drugs and
supplies, as applicable; and,
b. The actual acquisition cost for that drug plus
a clinic dispensing fee, not to exceed $17 per
prescription for a take-home drug that is dispensed
for use by the patient within a specific timeframe of
five or less days from the date medically indicated
(effectively, emergency contraception).
5.Requires reimbursement to be at the lesser of the amount
billed or the Medi-Cal reimbursement rate. Prohibits
reimbursement from exceeding the net cost of these drugs or
supplies when provided by retail pharmacies under the Medi-Cal
program.
6.Allows federally qualified health centers (FQHCs) and rural
health clinics (RHCs) that are community clinics, free clinics
or intermittent clinics to bill and be reimbursed under the
above-described provisions, upon electing to be reimbursed for
pharmaceutical goods and services on a fee-for-service basis.
This bill:
1.Revises the Medi-Cal and Family PACT reimbursement formula for
drugs and supplies dispensed by specified clinics by requiring
the clinic dispensing fee to be the difference between the
actual acquisition cost of a drug or supply and the Medi-Cal
reimbursement rate.
2.Deletes the $12 and $17 maximum dispensing fee caps in
existing law.
3.Deletes a prohibition on reimbursement exceeding the net cost
of these drugs or supplies when provided by retail pharmacies
under the Medi-Cal program.
4.Requires the actual acquisition cost of drugs and supplies to
be calculated not less than annually.
5.Limits the application of the above-described provisions of
existing law providing reimbursement and a dispensing fee for
physician-administered drugs and supplies in clinics to only
those drugs that are subject to a rebate under the Section
SB 447 (Allen) Page 3 of ?
340b provision of federal law (340b requires drug
manufacturers to provide outpatient drugs to eligible health
care organizations at reduced prices).
6.Clarifies that the authority of FQHCs and RHCs that are
authorized to bill for a dispensing fee under the
above-described provisions of existing law is for
pharmaceutical goods and services dispensed through their
dispensaries.
FISCAL
EFFECT : This bill has not been analyzed by a fiscal committee.
COMMENTS :
1.Author's statement. According to the author, California's
1,152 community health clinics offer a unique option for
low-income patients to receive quality, affordable medical
care. Clinics that dispense medication onsite provide the
added benefit of a "one stop shop" that allows patients to
leave their health care provider with mediation in hand. This
convenience has led to improved access to health care and to
better patient health outcomes. Current law enables these
community clinics to receive a dispensing fee in addition to
the purchasing cost of the medications they dispense to
Medi-Cal and Family PACT patients. This enables and encourages
clinics to dispense medication onsite. However, the current
billing system the clinics must use is overly complex, and
leads to numerous billing errors which require staff time at
both the clinic and the state to resolve. These errors can
take months to resolve and chronically deny the clinics
Medi-Cal fees to which they are entitled.
2.Background. A physician-administered drug is any covered
outpatient drug provided or administered to a Medi-Cal
beneficiary and billed by a provider other than a pharmacy. AB
2151 (Jackson), Chapter 2051, Statutes of 2004, provided a
dispensing fee through Medi-Cal and Family PACT for
physician-administered drugs dispensed by a community clinic,
a free clinic or an intermittent clinic. Prior to the
enactment of AB 2151, Medi-Cal regulations prohibited a
dispensing fee or mark-up for take-home drugs dispensed by a
clinic. The reimbursement provisions of AB 2151 were modified
the following year by SB 77 (Frommer), Chapter 503, Statutes
of 2005. Drugs reimbursed under these provisions are typically
birth control medication (oral contraception, emergency
SB 447 (Allen) Page 4 of ?
contraception and birth control patches and rings) and
antibiotics.
3.Change in reimbursement made by bill. This bill redefines
"cost" for purposes of the physician administered drugs and
supplies in clinics affected by this bill. Under existing law,
clinics bill at the lower of cost or the usual charge to the
public. "Cost" is defined to include a maximum dispensing fee
amount per unit of $12 (an example of a unit would be calendar
month's supply). There is a separate maximum dispensing fee
amount of $17 for emergency contraception.
Under existing law, DHCS reimburses at the lower of the amount
billed or the Medi-Cal reimbursement rate, except that
reimbursement cannot exceed the net cost of these drugs or
supplies when provided by retail pharmacies under the Medi-Cal
program. The sponsor of this bill (Planned Parenthood
Affiliates of California) indicates this bill deletes the
reference to the retail pharmacy cap as DHCS has not
implemented this cap. The acquisition cost can vary by the
type of clinic purchasing (for example, some clinics may
receive volume discounts from drug manufacturers). Dispensing
fees vary by the type of drug or supply, but not by type of
clinic.
Under this bill, the clinic dispensing fee is the difference
between the actual acquisition cost of a drug or supply and
the Medi-Cal reimbursement rate. One example, provided by an
affiliate clinic of the sponsor, of the change in
reimbursement for two types of drugs dispensed by clinics and
how the reimbursement would change under this bill is as
follows:
----------------------------------------------------------------
| Type of | Medi-Cal | Current | Current | Amount |
| Medication | rate on |reimbursemen|reimbursemen| billed and |
| | file | t amount | t | reimbursed |
| | | billed | | under SB |
| | | (cost + | | 447 (the |
| | | dispensing | | Medi-Cal |
| | | fee) | | rate on |
| | | | | file) |
|------------+------------+------------+------------+------------|
SB 447 (Allen) Page 5 of ?
|Oral | $12 | $22 | $12 | $12 |
|Contraceptiv| | | | |
|e | | | | |
|------------+------------+------------+------------+------------|
|Emergency | $31 | $22.75 | $22.75 | $31 |
|contraceptiv| | | | |
|e | | | | |
----------------------------------------------------------------
4.Prior legislation. AB 2340 (C. Garcia), of 2014, was gutted
and amended last year in this committee with the contents of
the introduced version of this bill, but was never heard.
5.Support. This bill is sponsored by Planned Parenthood
Affiliates of California (PPAC), which argues it would
streamline the process that community clinics use to bill and
be reimbursed for medications that are dispensed onsite. PPAC
states community clinics that dispense drugs offer a "one stop
shop" that removes barriers to care, improving access and
patient health outcomes, but the complicated system that
denies clinics a dispensing fee undermines their ability to
provide quality, low cost care to those who need it. PPAC
states the actual acquisition cost of a drug and the Medi-Cal
rate are reevaluated at least quarterly, and these shifting
amounts, along with the "lesser of" standard in existing law
for both billing and reimbursement, makes it nearly impossible
for its clinics to budget, and it stringently limits the
reimbursement received for medications dispensed. PPAC states
this complexity has led to massive billing errors that require
an inordinate amount of time by both its clinics and the state
to resolve, and the reconciliation process is very complicated
and often takes months to complete, leaving its clinics with
millions of dollars in outstanding reimbursements. PPAC argues
it is unconscionable that clinics be expected to shoulder the
burden of delayed payments resulting from these errors,
essentially subsidizing the state's promise of health care to
low-income Medi-Cal enrollees. PPAC states that this bill will
simplify the system by setting the dispensing fee at the
difference between the acquisition cost and the Medi-Cal
reimbursement rate, allowing clinics to bill and be reimbursed
at one rate. PPAC concludes that this simplification will go a
long way towards providing consistent and equitable
reimbursement for the health care services clinics provide and
reduce the administration burden clinics face when dispensing
medication.
SB 447 (Allen) Page 6 of ?
SUPPORT AND OPPOSITION :
Support:
Planned Parenthood Affiliates of California (sponsor)
California Family Health Council
Community Action Fund of Planned Parenthood of Orange and San
Bernardino Counties
Planned Parenthood Action Fund of the Pacific Southwest
Planned Parenthood Los Angeles
Planned Parenthood Mar Monte
Planned Parenthood Pasadena and San Gabriel Valley
Oppose: None received
-- END --