BILL ANALYSIS                                                                                                                                                                                                    Ó



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          ASSEMBLY THIRD READING


          AB  
          73 (Waldron)


          As Amended  January 5, 2016


          Majority vote


           ----------------------------------------------------------------- 
          |Committee       |Votes |Ayes                |Noes                |
          |                |      |                    |                    |
          |----------------+------+--------------------+--------------------|
          |Health          |19-0  |Bonta, Maienschein, |                    |
          |                |      |Bonilla, Burke,     |                    |
          |                |      |Chávez, Chiu,       |                    |
          |                |      |Gomez, Gonzalez,    |                    |
          |                |      |                    |                    |
          |                |      |                    |                    |
          |                |      |Roger Hernández,    |                    |
          |                |      |Lackey, Nazarian,   |                    |
          |                |      |Patterson,          |                    |
          |                |      |                    |                    |
          |                |      |                    |                    |
          |                |      |Ridley-Thomas,      |                    |
          |                |      |Rodriguez,          |                    |
          |                |      |Santiago,           |                    |
          |                |      |Steinorth,          |                    |
          |                |      |Thurmond, Waldron,  |                    |
          |                |      |Wood                |                    |
          |                |      |                    |                    |
          |----------------+------+--------------------+--------------------|
          |Appropriations  |17-0  |Gomez, Bigelow,     |                    |
          |                |      |Bloom, Bonilla,     |                    |
          |                |      |Bonta, Calderon,    |                    |








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          |                |      |Chang, Daly,        |                    |
          |                |      |Eggman, Gallagher,  |                    |
          |                |      |Eduardo Garcia,     |                    |
          |                |      |Holden, Jones,      |                    |
          |                |      |Quirk, Wagner,      |                    |
          |                |      |Weber, Wood         |                    |
          |                |      |                    |                    |
          |                |      |                    |                    |
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          SUMMARY:  Establishes the Patient Access to Prescribed  
          Antiretroviral Drugs for human immunodeficiency virus (HIV) /  
          acquired immunodeficiency syndrome (AIDS) Treatment Act which  
          establishes an urgent appeal process if a Medi-Cal managed care  
          (MCMC) plan denies coverage for HIV/AIDS drugs that are prescribed  
          by a treating physician.  Specifically, this bill:  
       1)Provides that the denial by a MCMC plan of a drug prescribed for  
            the treatment of HIV/AIDS is subject to the urgent appeal  
            process if the treating provider demonstrates that the drug is  
            medically necessary and consistent with the federal Food and  
            Drug Administration's (FDA) labeling and use rules and  
            regulations, and the drug is not on the formulary for the MCMC  
            plan.
       2)Requires a MCMC plan to resolve an appeal within 24 hours after the  
            plan receives an oral or written appeal from the beneficiary or  
            treatment provider.  Specifies that the 24-hour period is in  
            addition to any time prescribed by federal law.


       3)States legislative intent for a Medi-Cal beneficiary to have prompt  
            access to medically necessary antiretroviral drugs for use in  
            the treatment of HIV/AIDS, including drugs that are not on the  
            formulary of a MCMC plan or that are subject to prior  
            authorization.


          EXISTING LAW:  









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          1)Establishes in federal law the federal Medicaid program to  
            provide comprehensive health benefits to low income persons.   
            Establishes the Medi-Cal program as California's Medicaid  
            program, administered by the Department of Health Care Services  
            (DHCS).
          2)Requires states, under the federal Medicaid law, to have a drug  
            use review program for covered outpatient prescription drugs, to  
            ensure drugs are appropriate, medically necessary, and not  
            likely to result in adverse medical effects.  Federal law  
            requires the program to assess data on drug use against  
            predetermined standards, consistent with specified factors,  
            including compendia.


          3)Provides a schedule of benefits provided in the Medi-Cal  
            program, including prescription drug benefits.


          4)Authorizes the DHCS to establish utilization controls for any  
            Medi-Cal services as long as the controls are reasonably related  
            to the purpose of establishing them.  Allows the utilization  
            controls include prior authorization, pre- and post-service  
            audits, limitations on the number of services and review  
            pursuant to professional standards.


          5)Provides that any prescription drug approved by the FDA for the  
            treatment of AIDS or an AIDS-related condition is automatically  
            approved for placement on the contract list of Medi-Cal drugs.   
            Allows the DHCS to apply utilization controls and conditions  
            placement on the contract list on the manufacturer signing a  
            rebate agreement with the federal Centers for Medicare and  
            Medicaid Services. 


          6)Excludes from managed care, by administrative guidance of DHCS,  
            specified prescription drugs including those for HIV/AIDS and  
            antipsychotics.








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          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, this bill will result in a likely minor one-time  
          increase in administrative costs in MCMC, and for DHCS state  
          administrative staff.  Ongoing costs are likely to be fairly  
          minor.  All costs are General Fund/federal funds.


          COMMENTS:  The intent of this bill is to shorten the time frame  
          for urgent appeals when coverage for HIV/AIDS drugs is denied  
          through MCMC.  


          Medicaid (Medi-Cal in California) is a federal-state program that  
          pays for medical assistance for low-income individuals and  
          families.  Although pharmacy coverage is an optional benefit under  
          federal Medicaid law, all states currently cover outpatient  
          prescription drugs for all categorically eligible individuals and  
          most other enrollees in their Medicaid programs.  Most state  
          Medicaid programs have adopted preferred drug lists (PDL, also  
          called formularies), making any medication not deemed preferred  
          subject to prior authorization.  States use prior authorization,  
          in conjunction with a PDL, to encourage the prescribing of the  
          most clinically appropriate and cost-effective drug within a  
          specific therapeutic drug category.  Under federal law,  
          non-preferred products must be made available through a review  
          process that must provide a response within 24 hours and allow for  
          a 72-hour supply of the drug in emergency situations.  


          Medi-Cal is one of the largest drug purchasers in the state.  The  
          program spends about $4 billion on prescription drugs, including  
          indirect expenditures through payment to managed care plans and  
          direct expenditures in fee for service and for prescription drugs  
          that are "carved out" of managed care.  Carved out means that the  
          state pays directly for the drug rather than indirectly through a  
          capitated or fixed rate payment to a MCMC plan.  Examples of drugs  
          that are carved out include HIV/AIDS drugs, psychiatric drugs and  








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          blood factor.   According to the DHCS, only five of the 22 managed  
          care plan contracts require coverage for HIV/AIDS drugs and  
          HIV/AIDS drugs are carved out for the remaining plans.


          Medi-Cal currently has a process in place to appeal coverage  
          denials, both in managed care and fee-for-service.  The expedited  
          appeal process under the managed care system, including denials  
          for HIV/AIDS drugs, is three business days or 72 hours.  


          It should be noted that the prior version of this bill is broader  
          in scope as to the types of drugs that an urgent appeal process  
          would apply to (Antiretroviral drugs for HIV/AIDS, antipsychotics,  
          antirejection drugs and drugs used to treat seizures or epilepsy)  
          and required the appeal to be resolved within 48 hours after  
          denial.  This bill was subsequently amended in the Assembly  
          Appropriations Committee to limit its application to HIV/AIDS  
          drugs and requires the urgent appeal process to be resolved within  
          24 hours.


          The AIDS Health Care Foundation states in support that the urgent  
          appeal process elevates the denial to a degree that ensures a  
          timelier and more scrutinized decision.


          Opponents of the prior, broader version of this bill, including  
          Health Access California, state that MCMC already has appeal and  
          exception processes in place to provide consumers access to  
          medically necessary drugs.  Health Access support standards for  
          formularies and appeal processes that assure the scientific  
          evidence and clinically based standards of care as well as the  
          needs of the individual consumer are taken into account.


          Analysis Prepared by:                        Rosielyn Pulmano /  
          HEALTH / (916) 319-2097                        FN: 0002581









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