BILL ANALYSIS �
AB 1814
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Date of Hearing: May 14, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1814 (Waldron) - As Amended: May 12, 2014
Policy Committee: HealthVote:18-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill establishes "prescriber prevails" for purposes of
certain drug classes covered by the Medi-Cal program.
Specifically, this bill:
1)Requires, if any drug from a specified therapeutic drug class is
prescribed by a Medi-Cal beneficiary's provider, the drug to
be covered in the Medi-Cal program.
2)Specifies the affected drug classes are antiretrovirals for
AIDS/HIV, antipsychotics, immunosuppressants for
anti-rejection, and epilepsy/anti-convulsants.
3)Requires a Medi-Cal managed care plan to cover a drug in the
named drug classes if prescribed by a beneficiary's provider.
Requires the provider to demonstrate reasonable professional
judgment and that the drug is medically necessary and
consistent with the federal Food and Drug Administration (FDA)
labeling and use rules and regulations as described in at
least one of the official compendia named in federal law.
4)Provides that if a Medi-Cal managed care plan chooses not to
cover the specified drugs, the drugs are to be carved out of
the plan and covered on a fee-for-service basis and the plan's
contracted rate shall be reduced accordingly.
FISCAL EFFECT
Costs and lost revenues likely exceeding $10 million to the
Medi-Cal program. There would likely be significant increased
direct costs to Medi-Cal for drugs provided through the
fee-for-service (FFS) program, as well as cost pressure on
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Medi-Cal managed care rates for pharmaceutical benefits. It is
unclear how this will impact utilization of drugs that are not
on Medi-Cal's preferred drug list, so cost could vary
dramatically depending on how this policy was operationalized.
A prescriber prevails rule could lead to Medi-Cal costs in
several ways: higher prices for drugs, reduced revenue from
federal and state-negotiated rebates, and reduced revenue from
the state's managed care tax if drugs were carved out of managed
care.
COMMENTS
1)Purpose . According to the author, this bill strengthens the
doctor and patient relationship by legislating that a doctor's
professional and reasonable judgment prevails, for purposes of
specific and therapeutic drug classes within the Medi-Cal
program. The author argues new pharmaceuticals and treatments
are emerging rapidly and individuals are losing access to
pharmaceuticals that may best control their condition.
2)Background . Drug benefits are provided through the Medi-Cal
fee-for-service delivery system, and through managed care.
Managed care enrollees generally get their drugs through their
managed care plan, which often subcontracts with a
pharmaceutical benefits manager for provision of the drug
benefit. Some drugs are carved out of managed care and only
offered through the FFS system. Both managed care plans and
the state maintain separate lists of preferred drugs, or
formularies, and impose utilization controls on drugs not
contained on the formulary. The most common controls include
prior authorization (a request to a plan for coverage of a
drug, which must be approved in order to fill a prescription)
and step therapy (where the patient must try a different,
often less expensive or more proven, drug before being
prescribed the drug of choice). Utilization controls function
in a variety of ways but are generally designed to impose
friction between the prescribing of a drug and the filling of
a prescription, offering the health plan the ability to
examine cost-effectiveness and clinical appropriateness.
This bill would require Medi-Cal FFS and managed care plans to
cover drugs for which a prescriber prescribes a drug in a
manner consisted with FDA guidelines for use of the drug, and
for which the prescriber demonstrates reasonable professional
judgment that the drug is medically necessary. In this way,
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it allows the prescriber to potentially sidestep a plan's or
the state's utilization controls.
3)Current Protections . Plans, and FFS Medi-Cal, are required to
pay for all drugs deemed medically necessary, regardless of
the formulary. Patients can contest denials of service
through various means, including the state fair
hearing/grievance process and through independent medical
review. 2013 data indicates there were an estimated 550
annual state fair hearings held specific to prescription drug
issues, out of a total of 5.8 million managed care enrollees,
a rate of about one in 10,500 enrollees.
4)Drug Classes Affected. The specific drug classes to which
this bill would apply are for conditions that are clinically
complex, for which prescribing physicians are generally
specialists with advanced knowledge of the conditions being
treated, and that are expensive.
5)Statewide Contract Drug List (CDL) Budget Proposal . The
Governor's 2014-15 budget includes a proposal to implement
more uniformity in drug formularies through a statewide CDL
that would apply to managed care as well as FFS, to which it
currently applies. DHCS states its proposal is intended to
maximize the state's revenue from supplemental rebates, as
well as encourage more standardization of formularies between
plans. Budget subcommittee staff has noted this proposal is
complex and requires careful consideration of potential
tradeoffs.
Although it encourages more standardization, the statewide CDL
proposal does not necessarily conflict with prescriber
prevails. In New York State, a prescriber prevails law was
precipitated by a policy decision to "carve in" prescription
drugs to managed care plans, which forced changes to many
enrollee's prescription drug regimens. Specifically, provider
prevails was adopted as a patient protection in NY, based on
concerns similar to those raised with respect to the statewide
CDL proposal, in terms of enrollees being forced to change
medications.
6)Support . The California Medical Association (CMA) argues this
bill would help eliminate barriers to medically necessary
treatment and services. CMA states for those patients
receiving drugs in the designated categories, this bill will
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help ensure patients in the Medi-Cal program will be able to
access these products. The Pharmaceutical Research and
Manufacturers of America argues that the selection by a
patients physician cannot be overridden by the patients
managed care plan and reinforces the prescriber's autonomy in
the selection of a patient's drug regimen.
7)Staff Comments . This bill addresses an inherent tension
between the state's interest in cost-effective provision of
health care services and clinical oversight, and a
prescriber's professional judgment on what will be optimal for
each of his or her patients. The essential questions are
whether these opposing concerns are appropriately balanced,
and whether current policies and practices result in patient
harm and the denial of needed care in a timely way.
Under current law, the state, health plans, and pharmaceutical
benefit managers attempt to balance the medical needs of the
patient and prescriber preferences with the provision of
affordable benefits that meet clinical standards of
appropriate care. In so doing, controls such as prior
authorization, step therapy, and utilization review are
employed. Prior authorization, for example, is not only
employed to contain costs, but to allow a clinical review to
ensure medication is prescribed appropriately and to allow
consideration of safer alternatives. In some instances,
inappropriate prescribing can be identified. Staff notes a
prescriber prevails policy may help certain patients in
individual cases, but also has a potential for unintended
consequences that could increase costs without providing a
benefit to patients. For example, it may remove safeguards
that prevent overprescribing or inappropriate prescribing.
There does not appear to be a crisis of access to
pharmaceuticals in Medi-Cal. The author argues, however, that
new, emerging drugs will be restricted by plans on concerns
about high cost, even though they may be more effective.
The actual operation of a "prescriber prevails" law as it
pertains to the Medi-Cal program is unclear and would likely
have to be clarified through regulation. The ease and
convenience of the process to document medical necessity would
have a direct impact on drug utilization and costs. For
example, if the very act of prescribing a drug that meets the
FDA's labeling and use requirements is deemed adequate to meet
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medical necessity, there would likely be large utilization and
cost impacts. To the extent additional controls are put in,
it would have a lesser effect on utilization and cost.
8)Technical note . This bill essentially allows managed care
plans to choose which drugs they will cover, and requires FFS
Medi-Cal to cover them if the managed care plan doesn't.
However, managed care plans are required to cover drugs that
are medically necessary, subject to certain authorization
procedures. The application of prescriber prevails in these
cases would need to be clarified.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081