BILL ANALYSIS Ó AB 73 Page 1 Date of Hearing: May 20, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 73 (Waldron) - As Amended January 5, 2016 ----------------------------------------------------------------- |Policy |Health |Vote:|19 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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. AB 73 Page 2 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 AB 73 Page 3 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 AB 73 Page 4 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 AB 73 Page 5