BILL ANALYSIS �
AB 969
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 969 (Atkins)
As Amended June 26, 2012
Majority vote
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|ASSEMBLY: |73-0 |(January 26, |SENATE: |37-0 |(August 23, |
| | |2012) | | |2012) |
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Original Committee Reference: HEALTH
SUMMARY : Prohibits the Department of Health Care Services
(DHCS) from considering the cost of donated or discounted
services provided to federally qualified health centers (FQHC)
for care of the uninsured as a basis for reducing the rates paid
for laboratory services in the Medi-Cal Program.
The Senate amendments limit the services that may be considered
to those provided to the uninsured instead of all FQHC services.
EXISTING LAW :
1)Establishes the Medi-Cal Program, administered by DHCS, which
provides comprehensive health benefits to low-income children,
their parents or caretaker relatives, pregnant women, elderly,
blind or disabled persons, nursing home residents, and
refugees who meet specified eligibility criteria.
2)Defines in federal law an FQHC and requires the Medicare and
Medicaid programs to reimburse FQHCs at enhanced rates of
payment.
3)Prohibits, in state regulation, a provider to charge the
Medi-Cal Program 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 (also known as the "best price
regulation").
4)Imposes a 10% budget reduction for laboratory rates in
Medi-Cal for fiscal year 2102-13, suspends the existing best
price regulation for 12 months and directs DHCS to develop a
new methodology for determining the rates Medi-Cal will pay
AB 969
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for laboratory services. Under the new methodology, Medi-Cal
will pay rates based on the average of what other payers and
other state Medicaid programs are paying for similar services.
5)Prohibits reimbursement for clinical laboratory services to
exceed 80% of the maximum rate established by the federal
Medicare program.
AS PASSED BY THE ASSEMBLY , this bill specified that donation of
or discounts for any clinical laboratory services provided to an
FQHC is not to be considered as a basis of reduction of Medi-Cal
payments below the reimbursement rate established under existing
law.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill is not likely to have a significant impact
on Medi-Cal costs for laboratory services.
COMMENTS : According to the author, this bill is needed to
ensure that FQHC clinics may continue to enjoy the benefit of
discount arrangements for lab services. In 2009, the Attorney
General (AG) filed a lawsuit against seven large clinical
reference laboratories contending they had been systematically
overcharging the Medi-Cal Program over the past 15 years. The
suit uses, as examples, lower charges to Medicare, insurance
companies and patients. The suit alleged that laboratories have
been engaging in discriminatory billing practices in violation
of Medi-Cal regulations that require them to provide services to
Medi-Cal patients at their most favorable rates (low price rule)
and have engaged in practices in violation of California's
anti-kickback law. In May of 2011, the AG announced a $241
million settlement of one of the lawsuits-against Quest
Diagnostics, the state's biggest provider of medical laboratory
testing. According to the AG, this is the largest recovery in
the history of the California False Claims Act. The AG stated
that Quest charged Medi-Cal up to six times as much as it was
charging other customers even though state law prohibits a
provider from charging Medi-Cal any more than other purchasers
would be charged. Based on the allegations, DHCS performed an
independent statewide audit of medical laboratories. According
to the AG at the time of the settlement, reform of industry
pricing practices stemming from this case was expected to save
hundreds of millions of dollars. In July of 2011, the lawsuit
against the other laboratory companies was also settled. The
second largest Medi-Cal provider, LabCorp, settled for $49.5
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million.
This bill, as it passed the Assembly Health Committee provided
that the discounts or donated services could not be considered
as part of the usual and customary charges. At the suggestion
of the California Clinical Laboratory Association, it was
subsequently amended to allow a specific exemption for FQHCs
instead. In the Senate, it was further amended to limit the
exemption to services provided to uninsured patients served by
the FQHCs.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
FN: 0004620