Amended in Senate February 14, 2014

Amended in Senate January 17, 2014

Amended in Senate July 2, 2013

Amended in Assembly May 24, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1124

Introduced by Assembly Member Muratsuchi

February 22, 2013

An act to amend Section 14105.22 of the Welfare and Institutions Code, relating to Medi-Cal, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 1124, as amended, Muratsuchi. Medi-Cal: reimbursement rates.

Existing law states the intent of the Legislature that the State Department of Health Care Services develop Medi-Cal reimbursement rates for clinical laboratory or laboratory services in accordance with specified criteria. Existing law exempts from compliance with a specified regulation laboratory providers reimbursed pursuant to any payment reductions implemented pursuant to these provisions for 21 months following the date of implementation of this reduction, and requires the department to adopt emergency regulations by July 1, 2014.

This bill would instead exempt these laboratory providers from compliance with the specified regulation until July 1, 2015, and would require the department to adopt emergency regulations by begin delete January 1, 2015. end delete begin insert June 30, 2016. end insert

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 14105.22 of the Welfare and Institutions
Code is amended to read:

14105.22.  

(a) (1) Reimbursement for clinical laboratory or
laboratory services, as defined in Section 51137.2 of Title 22 of
the California Code of Regulations, shall not exceed 80 percent
of the lowest maximum allowance established by the federal
Medicare Program for the same or similar services.

(2) This subdivision shall be implemented only until the new
rate methodology under subdivision (b) is approved by the federal
Centers for Medicare and Medicaid Services (CMS).

(b) (1) It is the intent of the Legislature that the department
develop reimbursement rates for clinical laboratory or laboratory
services that are comparable to the payment amounts received
from other payers for clinical laboratory or laboratory services.
Development of these rates will enable the department to reimburse
clinical laboratory or laboratory service providers in compliance
with state and federal law.

(2) (A) The provisions of Section 51501(a) of Title 22 of the
California Code of Regulations shall not apply to laboratory
providers reimbursed under the new rate methodology developed
for clinical laboratories or laboratory services pursuant to this
subdivision.

(B) In addition to subparagraph (A), laboratory providers
reimbursed under any payment reductions implemented pursuant
to this section shall not be subject to the provisions of Section
51501(a) of Title 22 of the California Code of Regulations until
July 1, 2015.

(3) Reimbursement to providers for clinical laboratory or
laboratory services shall not exceed the lowest of the following:

(A) The amount billed.

(B) The charge to the general public.

(C) Eighty percent of the lowest maximum allowance established
by the federal Medicare Program for the same or similar services.

(D) A reimbursement rate based on an average of the lowest
amount that other payers and other state Medicaid programs are
paying for similar clinical laboratory or laboratory services.

(4) (A) In addition to the payment reductions implemented
pursuant to Section 14105.192, payments shall be reduced by up
to 10 percent for clinical laboratory or laboratory services, as
defined in Section 51137.2 of Title 22 of the California Code of
Regulations, for dates of service on and after July 1, 2012. The
payment reductions pursuant to this paragraph shall continue until
the new rate methodology under this subdivision has been approved
by CMS.

(B) Notwithstanding subparagraph (A), the Family Planning,
Access, Care, and Treatment (Family PACT) Program pursuant
to subdivision (aa) of Section 14132 shall be exempt from the
payment reduction specified in this section.

(5) (A) For purposes of establishing reimbursement rates for
clinical laboratory or laboratory services based on the lowest
amounts other payers are paying providers for similar clinical
laboratory or laboratory services, laboratory service providers shall
submit data reports within 11 months of the date the act that added
this paragraph becomes effective and annually thereafter. The data
initially provided shall be for the 2011 calendar year, and for each
subsequent year, shall be based on the previous calendar year and
shall specify the provider’s lowest amounts other payers are paying,
including other state Medicaid programs and private insurance,
minus discounts and rebates. The specific data required for
submission under this subparagraph and the format for the data
submission shall be determined and specified by the department
after receiving stakeholder input pursuant to paragraph (7).

(B) The data submitted pursuant to subparagraph (A) may be
used to determine reimbursement rates by procedure code based
on an average of the lowest amount other payers are paying
providers for similar clinical laboratory or laboratory services,
excluding significant deviations of cost or volume factors and with
consideration to geographical areas. The department shall have
the discretion to determine the specific methodology and factors
used in the development of the lowest average amount under this
subparagraph to ensure compliance with federal Medicaid law and
regulations as specified in paragraph (10).

(C) For purposes of subparagraph (B), the department may
contract with a vendor for the purposes of collecting payment data
reports from clinical laboratories, analyzing payment information,
and calculating a proposed rate.

(D) The proposed rates calculated by the vendor described in
subparagraph (C) may be used in determining the lowest
reimbursement rate for clinical laboratories or laboratory services
in accordance with paragraph (3).

(E) Data reports submitted to the department shall be certified
by the provider’s certified financial officer or an authorized
individual.

(F) Clinical laboratory providers that fail to submit data reports
within 30 working days from the time requested by the department
shall be subject to the suspension provisions of subdivisions (a)
and (c) of Section 14123.

(6) Data reports provided to the department pursuant to this
section shall be confidential and shall be exempt from disclosure
under the California Public Records Act (Chapter 3.5 (commencing
with Section 6250) of Division 7 of Title 1 of the Government
Code).

(7) The department shall seek stakeholder input on the
ratesetting methodology.

(8) (A) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the department shall, without taking any further regulatory action,
implement, interpret, or make specific this section by means of
provider bulletins or similar instructions until regulations are
adopted. It is the intent of the Legislature that the department have
temporary authority as necessary to implement program changes
until completion of the regulatory process.

(B) The department shall adopt emergency regulations no later
than begin delete January 1, 2015. end delete begin insert June 30, 2016. end insert The department may readopt
any emergency regulation authorized by this section that is the
same as or substantially equivalent to an emergency regulation
previously adopted pursuant to this section. The initial adoption
of emergency regulations implementing the amendments to this
section and the one readoption of emergency regulations authorized
by this section shall be deemed an emergency and necessary for
the immediate preservation of the public peace, health, safety, or
general welfare. Initial emergency regulations and the one
readoption of emergency regulations authorized by this section
shall be exempt from review by the Office of Administrative Law.

(C) The initial emergency regulations and the one readoption
of emergency regulations authorized by this section shall be
submitted to the Office of Administrative Law for filing with the
Secretary of State and each shall remain in effect for no more than
180 days, by which time final regulations may be adopted.

(9) To the extent that the director determines that the new
methodology or payment reductions are not consistent with the
requirements of Section 1396a(a)(30)(A) of Title 42 of the United
States Code, the department may revert to the methodology under
subdivision (a) to ensure access to care is not compromised.

(10) (A) The department shall implement this section in a
manner that is consistent with federal Medicaid law and
regulations. The director shall seek any necessary federal approvals
for the implementation of this section. This section shall be
implemented only to the extent that federal approval is obtained.

(B) In determining whether federal financial participation is
available, the director shall determine whether the rates and
payments comply with applicable federal Medicaid requirements,
including those set forth in Section 1396a(a)(30)(A) of Title 42 of
the United States Code.

(C) To the extent that the director determines that the rates and
payments do not comply with applicable federal Medicaid
requirements or that federal financial participation is not available
with respect to any reimbursement rate, the director retains the
discretion not to implement that rate or payment and may revise
the rate or payment as necessary to comply with federal Medicaid
requirements. The department shall notify the Joint Legislative
Budget Committee 10 days prior to revising the rate or payment
to comply with federal Medicaid requirements.

SEC. 2.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to ensure that the State Department of Health Care
Services can establish a new pricing methodology by the statutory
deadline, it is necessary that this act take effect immediately.