BILL ANALYSIS �
AB 1124
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CONCURRENCE IN SENATE AMENDMENTS
AB 1124 (Muratsuchi)
As Amended February 14, 2014
2/3 vote. Urgency
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|ASSEMBLY: | |(May 30, 2013) |SENATE: |31-0 |(March 3, |
| | | | | |2014) |
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(vote not relevant)
Original Committee Reference: HEALTH
SUMMARY : Extends the exemption for laboratory (lab) providers
from complying with the existing Medi-Cal comparable price
regulation until July 1, 2015.
The Senate amendments delete the Assembly-approved provisions of
this bill, and instead:
1)Delay the requirement that the Department of Health Care
Services (DHCS) adopt emergency regulations for the new lab
reimbursement methodologies from July 1, 2014, to June 30,
2016.
2)Add an urgency clause to ensure the provisions of this bill
become effective immediately upon enactment.
EXISTING LAW :
1)Establishes the Medi-Cal program, administered by DHCS, under
which health care services are provided to qualified
low-income persons. Lab services are a covered benefit under
the Medi-Cal program.
2)States legislative intent that DHCS develop reimbursement
rates for Medi-Cal lab services that are comparable to the
payment amounts other entities pay for lab services.
3)Prohibits, by regulation, a health care 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 known as the "comparable
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price" regulation.
4)Exempts lab providers from compliance with the Medi-Cal
comparable price regulation when the lab provider is subject
to specified Medi-Cal payment reductions for 21 months after
the reduction is implemented.
5)Allows DHCS to implement the new lab reimbursement procedures
by provider bulletins until regulations are developed.
Requires DHCS to adopt emergency regulations by July 1, 2014.
AS PASSED BY THE ASSEMBLY , this bill required DHCS to use the
federal Public Assistance and Reporting Information System on a
statewide basis to identify veterans and their dependents or
survivors who are enrolled in the Medi-Cal program and assist
them in obtaining federal veterans' health care benefits.
FISCAL EFFECT : According to the Senate Appropriations
Committee, because this bill extends the exemption from the
comparable price regulation for lab 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 lab 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.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, DHCS has
projected that they will not be able to complete the
development of a new rate methodology for reimbursing clinical
lab services under Medi-Cal by the April 1, 2014, deadline and
has requested additional time to complete the required work.
If the extension is not granted, the comparable price
regulation would go back into effect. According to the
author, comparable price regulation has resulted in lawsuits
and been deemed difficult to enforce and this bill would
provide DHCS with the time needed to fully develop their new
rate methodology.
2)BACKGROUND . AB 1494 (Budget Committee), Chapter 28, Statutes of
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2012, altered the Medi-Cal reimbursement methodology for lab
services, stating legislative intent that DHCS develop
reimbursement rates for lab services that are comparable to what
other entities pay for lab services. AB 1494 also capped Medi-Cal
reimbursement for lab providers at specified levels.
AB 1494 exempted labs from the Medi-Cal comparable price
regulation for 12 months when the labs were subject to a 10%
Medi-Cal rate reduction. The exemption from the comparable price
requirement was intended to give lab providers a financial
incentive to agree to a new rate methodology. The comparable
price requirement has been the subject of litigation, and the
California Department of Justice has reached multi-million dollar
settlements with lab providers.
To develop the new Medi-Cal lab rates, DHCS has had to collect
rate data from lab providers and develop a new methodology based
on those rate submissions. This process has taken longer than
originally envisioned and would have resulted in labs again being
subject to the comparable price regulation because the new
Medi-Cal rate methodology was not yet implemented.
3)PREVIOUS LEGISLATION . AB 82 (Budget Committee), Chapter 23,
Statutes of 2013, delayed the re-imposition of the comparable
price regulation an additional nine months (until April 2014)
to allow DHCS more time to develop the new rate methodology.
4)SUPPORT . The California Clinical Laboratory Association
(CCLA) and Quest Diagnostics support extending the deadline
for exemption from the comparable price regulation until July
1, 2015. CCLA states DHCS has been working with stakeholders
on the development of a new rate methodology, but the process
has taken a long time and the new rate methodology has not yet
been developed by DHCS or approved by the Centers for Medicare
and Medicaid Services. CCLA argues this bill is necessary
because the process to develop the new methodology has taken
longer than anticipated.
5)OPPOSITION . There is no opposition on file.
6)AS AMENDED IN THE SENATE . The subject matter of this bill as
amended in the Senate has not been heard in an Assembly policy
committee this legislative session.
AB 1124
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Analysis Prepared by : Roger Dunstan / HEALTH / (916) 319-2097
FN:
0003051