BILL ANALYSIS �
SB 1457
Page 1
Date of Hearing: June 24, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 1457 (Evans) - As Amended: June 4, 2014
SENATE VOTE : 35-0
SUBJECT : Medical care: electronic treatment authorization
requests.
SUMMARY : Requires requests for authorization of treatment or
services in the Medi-Cal, California Children's Services (CCS),
and Genetically Handicapped Person's Program (GHPP) to be
submitted in an electronic format. Specifically, this bill :
1)Requires, by July 1, 2016, or a subsequent date determined by
the Department of Health Care Services (DHCS), Service
Authorization Requests (SARs) under the CCS and GHPP programs,
and Treatment Authorization Requests (TARs) under the Medi-Cal
program, to be submitted electronically to the DHCS Internet
Website or other electronic means designated by DHCS.
2)Exempts SARs and TARs submitted by dental providers enrolled
in the Medi-Cal Dental program (Denti-Cal) from the
requirement for electronic submission.
3)Authorizes DHCS to implement electronic submission
requirements in phases.
4)Requires DHCS to designate an alternate format for submitting
SARs and TARs when DHCS's Internet Website, or other
designated electronic means, are unavailable due to a system
disruption.
5)Authorizes DHCS to implement requirements for electronic
submission of SARs and TARs, and any applicable waivers and
state plan amendments by means of all-county letters, plan
letters, plan or provider bulletins, or similar instructions.
Thereafter, requires DHCS to adopt regulations by July 1, 2017
in accordance with the Administrative Procedures Act.
6)Requires DHCS to consult with interested parties and
appropriate stakeholders in implementing requirements for
electronic submission of SARs in the CCS and GHPP programs.
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EXISTING LAW :
1)Establishes the Medi-Cal program, administered by DHCS, under
which qualified low-income individuals receive health care
benefits.
2)Requires DHCS to administer various health programs, including
CCS and GHPP. The CCS program provides diagnostic and
treatment services, medical case management, and medical and
occupational therapy services to eligible children and young
adults less than 21 years of age. Eligibility includes
diagnosis of specified medical conditions such as cancer,
congenital heart disease, and sickle cell anemia. GHPP
provides medical care to individuals with genetically
handicapping conditions, including cystic fibrosis,
hemophilia, sickle cell anemia, Huntington's disease,
Friedrich's Ataxia, and certain hereditary metabolic
disorders.
3)Requires the Director of DHCS to require fully documented
medical justification from Medi-Cal providers that requested
services are medically necessary to prevent significant
illness, alleviate severe pain, protect life, or prevent
significant disability, on all requests for prior
authorization.
4)Requires prior authorization by DHCS or its designee for CCS
services provided, except as specified, and makes prior
authorization contingent on a determination by DHCS of all of
the following:
a) The child receiving the services is confirmed to be
medically eligible for the CCS program;
b) The provider of the services is approved in accordance
with the standards of the CCS program; and,
c) The services authorized are medically necessary to treat
the child's CCS-eligible medical condition.
FISCAL EFFECT : According to the Senate Appropriations
Committee, one-time costs of less than $100,000 to develop and
adopt regulations by DHCS (75% federal funds and 25% General
Fund), and unknown long-term cost savings by reducing
administrative workload to process paper requests for
authorization of treatment (General Fund and federal funds).
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COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, streamlining
the current SAR and TAR processes to an electronic submission
system would ensure that Medi-Cal patients receive necessary
treatment and services in a timely manner by reducing the risk
of processing errors, unauthorized disclosure of confidential
health information and a potential backlog of paperwork. The
author states that the majority of pharmacy and medical TARs
are already submitted electronically to DHCS through a secure
internet system, but SARs for the CCS and GHPP programs have
not yet transitioned to electronic submission. One uniform
submission process would allow DHCS to increase efficiency,
reduce administrative costs and align procedures to the
direction received from the federal government through the
Electronic Health Records Incentive Program, which provides
federally funded incentive payments to Medi-Cal providers to
implement and use electronic health record systems.
2)BACKGROUND . In Medi-Cal certain procedures and services are
subject to authorization before reimbursement can be approved.
Authorization requests are made when a provider submits a TAR
to DHCS. Currently, there are two ways to submit a TAR for
review, electronically or by paper. Medi-Cal providers have
the ability to electronically submit TARs through the DHCS
eTAR system, which is a web-based direct data entry system.
Electronic submission of TARs has been made available to
providers in California since 2005. Since then, electronic
submission has become the primary method of filing TARs with
DHCS. In fiscal year 2012-13, DHCS received approximately 2.2
million TARs. As of July 2013, DHCS received approximately
85% of pharmacy TARs and 80% of medical TARs electronically
through eTAR.
DHCS contracts with Xerox State Healthcare, LLC (Xerox) to
perform all fiscal intermediary functions in the Medi-Cal
program. When DHCS receives a paper TAR via mail or fax,
Xerox staff must first complete an intake process (date/time
stamp, sorting, routing, etc.) and then manually enter data
from the TAR into the Service Utilization Review, Guidance,
and Evaluation (SURGE) application that DHCS uses to
adjudicate TARs. In addition, there may be medical
documentation, such as medical records, that accompanies the
TAR. This documentation cannot be entered or uploaded into
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SURGE, and is instead provided to DHCS staff. When Xerox
staff has entered the TAR data into SURGE and DHCS staff has
the medical documentation, the TAR can be adjudicated. When
adjudicated, Xerox staff must file the paper TAR and the
accompanying documentation in a secured storage location.
In July 2015, DHCS intends to implement a new electronic TAR
submission system. According to DHCS, all costs for
electronic submissions are part of the Xerox contract, and the
contractor is expected to have the IT architecture to support
electronic submissions of additional TARs.
Under CCS and GHPP, providers must submit SARs for procedures
and services subject to authorization by DHCS. County CCS
offices are responsible for adjudicating SARs. Providers
currently submit SARs via mail or fax, not electronically.
CCS provides a web-based tool, called CMSNet, through which
providers may electronically access a SAR in order to check on
its status. However, CMSNet does not allow providers to
electronically submit a SAR, thus, all SARs are processed
manually. Most of the providers who have access to CMSNet are
providers based in hospitals or special care centers, and
these providers work directly with County CCS offices for SAR
approvals. According to DHCS, CMSNet will be programmed to
accept electronic SARs for the CCS and GHPP programs upon
enactment of this bill.
Providers in the Denti-Cal program also submit TARs to DHCS in
order to obtain authorization for services. However,
according to DHCS, the Denti-Cal program does not use the same
fiscal intermediary as the Medi-Cal program, and thus is not
equipped to require all dental TARs to be submitted
electronically. Thus, dental providers are excluded from the
provisions of this bill.
3)SUPPORT . According to DHCS, the bill's sponsor, the current
TAR and SAR submission methods require different processing
methods, reducing the overall efficiency of the TAR and SAR
review process. DHCS states that paper submissions (by mail
or fax) place clients at an increased risk for unauthorized
disclosure of confidential protected health information
because the data is not directly transmitted from the provider
to the DHCS system. DHCS argues that delays in adjudicating
TARs and SARs negatively affect both providers who may not be
promptly reimbursed, and beneficiaries who may not receive
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services in a timely manner. DHCS states that this bill would
allow DHCS to have one uniform submission and adjudication
system, as opposed to the current separate electronic and
paper-based systems, that will improve efficiency and
consistency of TAR and SAR processing, and will reduce the
risk of information security breaches. DHCS concludes by
stating that through this bill, administrative costs
associated with paper and fax submissions of SARs and TARs
will be reduced or eliminated.
4)PREVIOUS LEGISLATION . SB 945 (Committee on Health), Chapter
433, Statutes of 2011, requires DHCS to establish and
administer the Medi-Cal Electronic Health Records Incentive
Program.
5)POLICY COMMENTS .
a) Under this bill, providers may be required to comply
with electronic submission requirements prior to the
adoption of regulations. Further, while the bill requires
DHCS to consult with interested parties and appropriate
stakeholders in implementing electronic submission of SARs
in CCS and GHPP, which could take place post-implementation
during the regulatory process, it does not require DHCS to
consult with stakeholders in the Medi-Cal program. It
would seem that Medi-Cal providers should have the same
opportunity as providers in CCS and GHPP to provide input
to the department on the impact of this bill, particularly
in light of provisions that authorize DHCS to implement the
electronic submission requirements prior to the adoption of
regulations. The Committee may wish to consider an
amendment to add a requirement for stakeholder consultation
in the section of the bill pertaining to Medi-Cal
providers.
b) Providers in rural areas or underserved communities are
more likely to face challenges in conforming to changes
involving health information technology for a variety of
reasons, including insufficient resources for investments
in technology, time and expense on staff training,
insufficient access to broadband services, and others.
Further, due to low reimbursement in the Medi-Cal program,
small providers in underserved communities who serve higher
volumes of Medi-Cal patients can be disproportionately
impacted by the cost of making investments in health
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information technology. According to DHCS, providers will
need a computer and internet access to comply with
electronic submission requirements. However, even this
seemingly minimal investment may pose a hardship,
particularly in rural areas where internet access may be a
challenge. The Committee may wish to seek an amendment to
require DHCS take into consideration the potential
compliance challenges by small and/or rural providers when
implementing the bill's requirements, and to authorize DHCS
to allow small and/or rural providers unable to comply with
the bill's requirement additional time to come into
compliance.
REGISTERED SUPPORT / OPPOSITION :
Support
Department of Health Care Services (sponsor)
California Society of Health-System Pharmacists
Opposition
None on file.
Analysis Prepared by : Kelly Green / HEALTH / (916) 319-2097