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)
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|COMMITTEE VOTE: |13-0 |(March 10, 2014) |RECOMMENDATION: |concur |
|(Health) | | | | |
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|COMMITTEE VOTE: |17-0 |(March 17, 2014) |RECOMMENDATION: |concur |
|(Appr.) | | | | |
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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.
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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 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 : 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
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and been deemed difficult to enforce and this bill would provide
DHCS with the time needed to fully develop their new rate
methodology.
AB 1494 (Budget Committee), Chapter 28, Statutes of 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.
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.
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.
There is no opposition on file.
Analysis Prepared by : Roger Dunstan / HEALTH / (916) 319-2097FN:
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