BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  May 20, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          73 (Waldron) - As Amended January 5, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill creates an expedited review process that applies if a  
          Medi-Cal managed care plan denies coverage of a prescription  
          drug used to treat HIV/AIDS.  









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          The expedited review, which must be resolved by a plan within 24  
          hours, applies in cases where the drug is not on a plan  
          formulary and a physician demonstrates medical necessity and  
          consistency with federal guidelines.  


          FISCAL EFFECT:


          This bill will result in a likely minor one-time increase in  
          administrative costs in Medi-Cal managed care, and for DHCS  
          state administrative staff.  Ongoing costs are likely to be  
          fairly minor.  All costs are GF/federal. 


          COMMENTS:


          1)Purpose. The intent of this bill is to shorten the time frame  
            for urgent appeals when coverage for HIV/AIDS drugs is denied  
            through Medi-Cal managed care.


          2)Background.  Many Medi-Cal enrollees receive health care  
            through Medi-Cal managed care plans, which are private or  
            locally or regionally administered public entities that  
            contract with the state to manage the health care services of  
            beneficiaries. Contracts between the state and the plan govern  
            the specific products and services for which managed care  
            plans must pay.  Certain Medi-Cal covered services are carved  
            out from managed care plan contracts, meaning the plan does  
            not pay for them.  Selected drugs in certain classes are  
            generally carved out; these classes include HIV/AIDS drugs,  
            detoxification and dependency treatment drugs, blood factor,  
            and psychiatric drugs.  Providing HIV drugs in this manner has  
            allowed the state to leverage its size for greater rebates.  
            For these drugs, instead of seeking reimbursement from plans,  
            providers are directed to bill the Medi-Cal FFS system.  Five  








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            of 22 managed care plan contracts require coverage for  
            HIV/AIDS drugs, while HIV/AIDS drugs are carved out for the  
            remaining plans.  Enrollment in the five plans that cover  
            HIV/AIDS drugs makes up less than 9% of the enrollment in  
            Medi-Cal managed care, according to November 2015 figures.





            Medi-Cal has processes in place to appeal coverage denials,  
            both in managed care and in fee-for-service. The current time  
            frame in managed care for an urgent appeal is 72 hours.  





          3)Related Legislation. 



             a)   AB 68 (Waldron) was very similar to this bill but  
               applied to epilepsy drugs.  The bill was vetoed, with a  
               message stating, "This bill would grant a Medi-Cal  
               beneficiary the right to an urgent appeal when a Medi-Cal  
               managed care plan denies coverage for a drug prescribed for  
               the treatment of epilepsy. The health plans are already  
               required to have effective up-to-date drug formularies and  
               expedited appeal processes to cover situations when health  
               care services, including epilepsy drugs, are denied. I  
               believe establishing a separate urgent appeal for this  
               specific medical condition is unnecessary."



             b)   AB 1814 (Waldron) of 2014 implemented a "prescriber  
               prevails" approach to various drug classes in Medi-Cal,  
               whereby a prescriber's medical judgment would prevail over  








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               a health plan denial.  AB 1814 was held on the Assembly  
               Appropriations Suspense file.



          1)Staff Comments.  This bill does not appear to address the veto  
            message to AB 68, a very similar bill.  It also sets up a  
            drug-specific appeals process, which increases administrative  
            costs, for uncertain benefit.  Specifically, this bill applies  
            an urgent appeal process for coverage denials of drugs that  
            most plans are not required to cover in the first place.  The  
            existence of such appeals for plans not obligated to cover  
            HIV/AIDS drugs appear to provide no benefit.  



            For the few and smaller plans to which the urgent appeal would  
            logically apply, while a theoretical individual could receive  
            a quicker response to an appeal of a coverage denial under  
            this bill, staff is not in possession of data documenting a  
            problem with timeliness of access to HIV/AIDS drugs for these  
            Medi-Cal enrollees, nor proof the current 72-hour time frame  
            is inadequate or causes harm, nor a reasoned defense of why  
            HIV/AIDS drugs should be singled out in the fashion proposed  
            by this bill.


          


          Analysis Prepared by:Lisa Murawski / APPR. / (916)  
          319-2081















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