BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1124 (Muratsuchi) - Medi-Cal: reimbursement rates.
Amended: February 14, 2014 Policy Vote: Health 7-0
Urgency: Yes Mandate: No
Hearing Date: February 24, 2014
Consultant: Brendan McCarthy
This bill may meet the criteria for referral to the Suspense
File.
Bill Summary: AB 1124, an urgency measure, would extend the
deadline for the Department of Health Care Services to develop a
new methodology for setting rates paid to laboratory service
providers in the Medi-Cal program. The bill would also extend
the existing exemption for such providers from the requirement
that laboratory service providers charge Medi-Cal no more than
the "comparable price" paid by other payers.
Fiscal Impact:
Unknown potential loss of savings due to higher Medi-Cal
costs for laboratory services than would occur under the
comparable price regulation (General Fund and Federal
Funds).
Because the bill extends the exemption from the comparable
price regulation for laboratory services providers, it is
possible that the state would pay more for those services
than would occur if providers were subject to the comparable
price requirement. However, enforcement of the comparable
price regulation has been difficult (owing to the complexity
of pricing for health care services). Therefore it is
unknown whether continuing to exempt laboratory service
providers from the comparable price regulation would
actually increase state costs between enactment of this bill
and the adoption of the new rate methodology.
Background: Under current law, providers of outpatient medical
laboratory services to the Medi-Cal program are paid rates equal
to 80% of the Medicare rate. Also, existing regulations
prohibit any Medi-Cal provider from charging the program more
than is charged to other payers for similar services, referred
AB 1124 (Muratsuchi)
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to as the "comparable price" regulation.
In addition, providers of laboratory services are subject to
both a 10% rate reduction applied to most Medi-Cal providers
(under AB 97, Statutes of 2012) and an additional 10% rate
reduction specific to providers of laboratory services (under AB
1494, Statutes of 2012). These rate reductions have not yet
been implemented by the Department of Health Care Services. AB
1494 also requires the Department of Health Care Services to
develop a new rate methodology for laboratory services
comparable to the average of the lowest amount paid by other
payers or other state Medicaid programs for similar services. AB
1494 exempts laboratory providers from the comparable price
regulation until April 2014 and/or once the new rate methodology
has been implemented.
According to the Department of Health Care Services, the new
rate methodology has not been fully developed yet. Therefore,
without this bill, providers of laboratory services would once
again be subject to the comparable price regulation.
Proposed Law: AB 1124 would extend the deadline for the
Department of Health Care Services to develop a new methodology
for setting rates paid to laboratory service providers in the
Medi-Cal program.
The bill would extend the existing exemption for such providers
from the requirement that laboratory service providers charge
Medi-Cal no more than the "comparable price" paid by other
payers until July 1, 2015.
The bill would require the Department of Health Care Services to
adopt regulations implementing the new rate methodology for
laboratory services by June 30, 2016.
This bill is an urgency measure.
Staff Comments: As noted above, enforcement of the comparable
price requirement has been difficult in the past. However, some
providers of laboratory services have been subject to litigation
by the state when it was found that the Medi-Cal program had
been paying rates above those paid by other payers.
AB 1124 (Muratsuchi)
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