BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 728
                                                                  Page  1

          Date of Hearing:   August 8, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                SB 728 (Negrete McLeod) - As Amended:  June 25, 2012 

          Policy Committee:                             HealthVote:14-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              No

           SUMMARY  

          This bill revises a provision related to the maximum allowable 
          reimbursement rate for durable medical equipment (DME) in the 
          Medi-Cal program. Specifically, it allows the manufacturer's 
          suggested retail price (MSRP), upon which Medi-Cal reimbursement 
          is based, to be documented by a catalogue showing the price on 
          or prior to the date of service, instead of a 2006 catalogue.

           FISCAL EFFECT  

          1)Likely minor increased Medi-Cal costs for the small number of 
            fee-for-service claims reimbursed with the methodology changed 
            by this bill.  

            Potential increased costs related to usage of updated 
            catalogues are unknown, but are likely to be under $150,000 
            annually (50% GF, 50% federal funds), given the small number 
            of reimbursement claims to which this bill applies and the 
            shrinking proportion of Medi-Cal enrollees in the 
            fee-for-service delivery system. 

          2)Potential minor administrative cost savings to DHCS related to 
            the use of updated catalogues.

           COMMENTS  

           Rationale  . According to the author, this bill is necessary 
          because it is difficult for providers to comply with Medi-Cal 
          claiming requirements, since current law requires submission of 
          outdated manufacturer catalogue pages.  The author points out 
          that the current system of reimbursing certain DME that lacks a 
          Medicare benchmark reimbursement rate is based on a "lesser of" 








                                                                  SB 728
                                                                  Page  2

          methodology.  One of the "lesser of" benchmarks is to establish 
          the MSRP, and then apply a discount. Current law requires that 
          the MSRP be documented by a catalogue from June 1, 2006 or 
          earlier.  According to the author, this has become difficult for 
          providers to do since the old catalogues contain equipment where 
          configurations of equipment might have changed.  The author also 
          argues that it is unfair because the MSRP for the item is now at 
          least six years old.  The author argues that since one of the 
          other statutory benchmarks for determining the "lesser of" 
          methodology uses a review of the provider invoice plus a 
          mark-up, there are built in protections to assure appropriate 
          reimbursement.  


           Analysis Prepared by  :    Lisa Murawski / APPR. / (916) 319-2081