BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 969|
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CONSENT
Bill No: AB 969
Author: Atkins (D)
Amended: 6/26/12 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 8-0, 6/20/12
AYES: Hernandez, Harman, Alquist, Anderson, Blakeslee, De
Le�n, DeSaulnier, Wolk
NO VOTE RECORDED: Rubio
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/6/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
ASSEMBLY FLOOR : 73-0, 1/26/12 - See last page for vote
SUBJECT : Medi-Cal: clinical laboratory and laboratory
services
SOURCE : California Primary Care Association
Council of Community Clinics
DIGEST : This bill prohibits the Department of Health
Care Services (DHCS) from reducing rates paid for
laboratory services, based on donations or discounts
provided to federally qualified health centers for care of
the insured.
ANALYSIS :
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Existing law:
1. Establishes the Medi-Cal program, administered by DHCS,
under which qualified low-income individuals receive
health care services.
2. Establishes a schedule of benefits of the Medi-Cal
program, which includes outpatient laboratory services.
3. Prohibits Medi-Cal reimbursement for clinical laboratory
or laboratory services from exceeding 80% of the lowest
maximum allowance established by the federal Medicare
program for the same or similar services. Establishes,
through Medi-Cal regulation, reimbursement for
laboratory services as the least of the following:
A. The amount billed;
B. The charge to the general public; or
C. Medicare's maximum allowance.
4. Prohibits, through Medi-Cal regulation:
A. A provider from charging for any service or any
article more than would have been charged for the
same service or article to other purchasers of
comparable services or articles under comparable
circumstances (this regulation is referred to as the
Medi-Cal "Best Price" regulation);
B. A provider from billing or submitting a claim for
reimbursement for rendering health care services to a
Medi-Cal beneficiary in any amount greater or higher
than the usual fee charged by the provider to the
general public for the same service.
5. Establishes, for federally qualified health centers
(FQHCs), a state and federal "safe harbor" exception to
the anti-kickback statutes that prohibit health care
providers from receiving rebates, refunds, discounts,
commissions or other consideration for referring
patients, clients, or customers, subject to specified
conditions contained in federal regulation. The
conditions specified in federal regulation include that
the arrangement contributes to the FQHC's ability to
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maintain or increase the availability of services
provided to a medically underserved population served by
the FQHC.
This bill prohibits DHCS from reducing rates paid for
laboratory services, based on donations or discounts
provided to federally qualified health centers for care of
the insured.
Background
Litigation involving violations of "Best Price regulation"
and anti-kickback statutes . In 2008, the state Attorney
General (AG) brought a lawsuit against several
laboratories, alleging the laboratories submitted false
claims for payment to the Medi-Cal program by charging
Medi-Cal more for laboratory tests than they charged other
purchasers of "comparable services" under "comparable
circumstances," in violation of several regulations,
including the Best Price regulation. The AG alleged that
labs fraudulently billed Medi-Cal some of the highest
rates, while deeply discounting many of their fees charged
to private payors to attract Medi-Cal business and
referrals from physicians, clinics, and hospitals. In
addition, the AG's lawsuit alleged the discounts provided
on laboratory tests for non-Medi-Cal services was done to
induce health care providers, clinics and hospitals to
refer Medi-Cal business to the laboratories in violation of
federal, state and Medi-Cal specific anti-kickback
statutes. The AG has reached settlement agreements with
seven laboratories for a total of $299.6 million, of which
$213 million will go to the state and federal government.
Following the filing of the AG lawsuit, DHCS directed
laboratories to self-audit to identify all instances where
their pricing was below the Medi-Cal rate. DHCS indicated
the required self-audit was the result of DHCS' Laboratory
Price Sweeps Special Project, where it was discovered that
laboratory providers had routinely charged and been
reimbursed by Medi-Cal with rates higher than the rates
charged to other payors for the same services under
comparable circumstances.
In meetings with DHCS and in a memo to the California
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Health and Human Services Secretary, the California Primary
Care Association (CPCA) argued DHCS' actions jeopardized
FQHCs' ability to negotiate discounted pricing for
laboratory services for the uninsured. CPCA argued that if
DHCS did not provide an exemption from the Best Price
regulation for laboratory services for FQHC patients, the
most likely outcome was that labs would increase their
charges to FQHCs to be in line with Medi-Cal rates. CPCA
also argued DHCS' interpretation of the Best Price
regulation undercut a "safe harbor" provision in state and
federal law that exempted discounts provided to FQHC
patients from prosecution under state and federal
anti-kickback statutes.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, this bill
is not likely to have a significant impact on Medi-Cal
costs for laboratory services.
SUPPORT : (Verified 8/7/12)
California Primary Care Association (co-source)
Council of Community Clinics (co-source)
Community Clinic Association of Los Angeles County
Family Health Centers of San Diego
Latino Coalition for a Healthy California
Salud Para La Gente
ARGUMENTS IN SUPPORT : This bill is sponsored by the
California Primary Care Association (CPCA) to clarify that
Medi-Cal Best Pricing regulations do not apply when
discounts are provided for services to the uninsured
through arrangements with FQHCs that are protected by the
federal anti-kickback safe harbor rule. CPCA states the
FQHC safe harbor rule was designed to protect arrangements
between health center grantees and other providers,
suppliers, and vendors for no-cost, low-cost, and
discounted services furnished to the health center's
underserved and uninsured patients without the risk of
prosecution under the anti-kickback laws. Due to recent
action by the state as related to discounted lab services,
FQHCs have become exceedingly concerned that the current
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arrangements between clinical laboratories and the health
centers to provide essential discounted pricing for
uninsured patients may be at risk. This bill will allow
FQHCs to obtain discounted pricing for laboratory services
by providing an exception from the Best Pricing regulation.
CPCA argues this bill is imperative to the success and
sustainability of California's community health centers.
ASSEMBLY FLOOR : 73-0, 1/26/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Campos, Carter, Cedillo,
Chesbro, Conway, Cook, Dickinson, Donnelly, Eng, Feuer,
Fletcher, Fong, Fuentes, Furutani, Beth Gaines, Galgiani,
Garrick, Gatto, Gordon, Grove, Hagman, Hall, Hayashi,
Roger Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries,
Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma,
Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell,
Nestande, Nielsen, Olsen, Pan, Perea, V. Manuel P�rez,
Portantino, Silva, Skinner, Solorio, Swanson, Torres,
Valadao, Wagner, Wieckowski, Williams, Yamada, John A.
P�rez
NO VOTE RECORDED: Charles Calderon, Davis, Gorell,
Halderman, Harkey, Norby, Smyth
CTW:m 8/17/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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