BILL ANALYSIS
AB 613
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Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 613 (Beall) - As Amended: May 5, 2009
Policy Committee: Health Vote:18-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the Department of Health Care Services (DHCS)
to to improve and streamline the treatment authorization request
(TAR) process in Medi-Cal. TARs are the route by which providers
receive prior authorization for specified treatments and
services provided on behalf of Medi-Cal patients. Specifically,
this bill:
1)Shortens several current law TAR processing times:
a) From five working days to two working days when not
contraindicated.
b) From five working days to two working days when not
subject to objective medical criteria.
c) From up to 90 days to up to 15 days for deferral
decisions on elective, non-urgent services.
d) From 10 working days to 5 working days for deferral
decisions on non-urgent services.
2)Requires DHCS to perform a cost-benefit analysis for each
procedure requiring a TAR and reduce the number of TARs,
develop alternative approaches for fraud and abuse detection
through targeted analysis of utilization baselines for each
drug or service that identify potential anomalies. Develop an
alternative to the requirement that a patient obtain a TAR for
each individual day of his or her stay in the hospital and
consider adopting a single TAR for the entire length of a
patient's hospital stay.
FISCAL EFFECT
1)This bill puts more than $300 million in Medi-Cal savings at
risk. Medi-Cal drug rebates, not addressed in this bill,
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reflect discounts provided by manufacturers to the Medi-Cal
program. When manufacturers agree to provide a rebate to
Medi-Cal, medications are subjected to fewer TARs . The TAR
process is a barrier to prescription drug providers getting
medications to patients. Being released from TAR requirements
creates an incentive to provide a discount. This bill, by
reducing this incentive bill puts these rebate savings at
risk.
2)DHCS staffing costs of $5 million (50% GF) to $10 million (50%
GF) to reduce TAR timelines significantly. According to prior
research about the TAR process, more than 11 million TARs are
processed each year and the current law staffing is
approximately 600, accounting for both DHCS and contracted
staff. This bill requires expedited processing which may
require 50 to 100 additional staff. Costs would decrease once
DHCS established new TAR processes, but that may take several
years to occur.
3)One-time costs of $500,000 (50% GF) to $1 million (50% GF) to
DHCS to evaluate TAR processes and make recommendations
accordingly.
COMMENTS
1)Rationale . This bill is sponsored by the California Hospital
Association to improve the TAR process for providers who find
the system arcane and burdensome. For example, hospitals are
required to submit TARs for numerous treatments and procedures
for in-patient hospital stays, instead of a bundled, daily
TAR. According to the author and sponsor, this bill builds on
recommendations made by the California HealthCare Foundation
(CHCF) in a report published in 2003.
2)CHCF TAR Report . The CHCF report establishes several criteria
for an effective prior authorization tool, like TARs: (a) to
review medical necessity and quality (b) to ensure cost
control by providing treatment at contracted/approved rates
and (c) to detect fraud by monitoring providers requesting an
unusual quantity of services or patients receiving unusual
services.
According to CHCF, Medi-Cal's TAR process generally does not
meet these objectives because TARs are often submitted after
the service has been delivered, which places Medi-Cal patients
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at risk if patients are receiving unnecessary procedures or
inappropriate care. The report also indicates Medi-Cal fails
to perform routine cost-benefit analyses to identify whether a
particular service warrants a TAR and concludes that fraud is
better detected through reviewing claims before payments are
made..
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081