BILL ANALYSIS Ó
SB 447
Page 1
Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 447
(Allen) - As Amended August 1, 2016
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|Policy |Health |Vote:|18 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill revises the Medi-Cal reimbursement methodology for
community clinics, free clinics, and intermittent clinics
(clinics) that dispense drugs, with different methodologies for
contraceptive versus non-contraceptive drugs. Specifically, this
bill makes the following changes:
1)For contraceptive drugs, devices, and supplies, changes the
reimbursement methodology from a more complicated methodology
(which accounts for the acquisition cost of a drug, various
dispensing fees, and defines allowable billing and
reimbursement amounts as "the lesser of" specified amounts),
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to one that simply reimburses for contraceptive drugs,
devices, and supplies at the Medi-Cal rate.
2)For non-contraceptive drugs, devices, and supplies:
a) Removes current limits on dispensing fees, and leaves
dispensing fee amounts at the discretion of the Department
of Health Care Services (DHCS) (current law specifies a
limit of $12).
b) Specifies if DHCS does not identify dispensing fees in
certain provider manuals, the dispensing fee is the
difference between the actual acquisition cost and the
Medi-Cal reimbursement rate, which essentially allows for
reimbursement at the Medi-Cal rate.
3)Expands the section governing clinic reimbursement to
"devices" (current law only specifies drugs and supplies).
4)Requires DHCS to seek federal approval, authorizes
non-regulatory means of implementing the changes, and
specifies the section is only to be implemented if, and to the
extent, federal funds are available and federal approvals have
been obtained.
FISCAL EFFECT:
1)For contraceptive drugs, devices, and supplies, increased
Medi-Cal drug costs projected at $49 million ($11 million GF)
plus an additional $3.9 million GF impact from lost rebate
revenue based on an assumption that a slightly higher number
of drugs will be dispensed by clinics instead of being filled
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via prescription in pharmacies.
2)For all other non-contraceptive drugs, devices, and supplies,
the bill could result in additional unknown cost pressure to
the extent dispensing fees are increased. This bill removes
limits on dispensing fees and authorizes DHCS to define fee
amounts (GF/federal).
COMMENTS:
1)Purpose. The author states the current billing system for
drugs dispensed on-site at clinics is overly complex and
burdensome. In addition, the author contends the system 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. This bill seeks to simplify
reimbursement rates for family planning drugs. In so doing, it
also increases reimbursement overall. This bill is sponsored
by Planned Parenthood Affiliates of California.
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.
In 2004, legislation provided for 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. 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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Current law sets limits on both what clinics are allowed to
bill, and what DHCS must reimburse. 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 amount
billed is limited to the lesser of (a) the acquisition cost
plus a dispensing fee or (b) the usual amount billed to the
public. 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. The
Medi-Cal rate is higher in many cases that what clinics are
allowed to bill based on their drug acquisition costs.
This bill eliminates entirely the reimbursement structure
described above with respect to contraceptive drugs, and makes
changes to the dispensing fees for all other drugs.
3)Recent Amendments. This bill was heard in substantially the
same form in the Assembly Health Committee on July 8, 2015.
Since that date, it was amended to a different subject but
never heard in this committee, and was subsequently amended on
August 1, 2016, back to a form very similar to the version
heard in the Assembly Health Committee. Today is the bill's
first hearing in this committee.
4)Related Budget Action. A substantially similar proposal was
adopted by the Assembly Budget Subcommittee #1 on Health and
Human Services this year. The proposal was discussed in the
Budget Conference Committee but was not included in the final
2016-17 budget.
SB 447
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Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081