BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 447|
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THIRD READING
Bill No: SB 447
Author: Allen (D)
Amended: 6/1/15
Vote: 21
SENATE HEALTH COMMITTEE: 9-0, 4/15/15
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen,
Pan, Roth, Wolk
SENATE APPROPRIATIONS COMMITTEE: 5-1, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Nielsen
NO VOTE RECORDED: Bates
SUBJECT: Medi-Cal: clinics: drugs and supplies
SOURCE: Planned Parenthood Affiliates of California
DIGEST: This bill revises the Medi-Cal and Family Planning
Access and Treatment 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.
ANALYSIS:
Existing law:
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Page 2
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, 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
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Page 3
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)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.
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 contraception and birth control patches and rings) and
antibiotics.
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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) |
|------------+-----------+------------+------------+------------|
|Oral | $12 | $22 | $12 | $12 |
|Contraceptiv| | | | |
|e | | | | |
|------------+-----------+------------+------------+------------|
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|Emergency | $31 | $22.75 | $22.75 | $31 |
|contraceptiv| | | | |
|e | | | | |
---------------------------------------------------------------
Comments
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. Existing 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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, increased
annual costs of at least $6 million (General Fund) and $19
million (federal funds) per year to pay increased reimbursement
rates for drugs covered by Medi-Cal. This bill modifies the
existing statutory limits on Medi-Cal reimbursement for drugs
dispensed by certain clinics. In doing so, this bill will
increase the payment rates by the state for certain drugs. The
cost estimates above are based on 2013-14 expenditures for
contraceptive drugs and drugs covered under the Medi-Cal and
Family PACT Program for contraceptive drugs and drugs related to
family-planning services. Because this bill does not
specifically limit the increased reimbursement to those types of
drugs, it is possible that actual costs could be lager. Minor
administrative costs to revise existing payment rules and
procedures by the DHCS (General Fund and federal funds).
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SUPPORT: (Verified5/28/15)
Planned Parenthood Affiliates of California (source)
American Federation of State, County and Municipal Employees,
AFL-CIO
California Family Health Council
California Primary Care Association
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 Northern California Action Fund
Planned Parenthood Pasadena and San Gabriel Valley
OPPOSITION: (Verified5/28/15)
None received
ARGUMENTS IN SUPPORT: This bill is sponsored by Planned
Parenthood Affiliates of California (PPAC), which argues this
bill will 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
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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.
Prepared by: Scott Bain / HEALTH /
6/1/15 13:53:34
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