BILL ANALYSIS Ó AB 73 Page 1 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, | | AB 73 Page 2 | | |Chang, Daly, | | | | |Eggman, Gallagher, | | | | |Eduardo Garcia, | | | | |Holden, Jones, | | | | |Quirk, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | ----------------------------------------------------------------- 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: AB 73 Page 3 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. AB 73 Page 4 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 AB 73 Page 5 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 AB 73 Page 6