Bill Text: CA AB1050 | 2021-2022 | Regular Session | Amended

---

Bill Title: Medi-Cal: application for enrollment: prescription drugs.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2022-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1050 Detail]

Download: California-2021-AB1050-Amended.html

---

Amended  IN  Assembly  April 19, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill

No. 1050

---

Introduced by Assembly Member Gray

February 18, 2021

---

An act to amend Sections 14105.46 and 14132.01 of, and to add Section 14011.16 to, add Sections 14011.16 and 14105.461 to the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL'S DIGEST

AB 1050, as amended, Gray. Medi-Cal: application for enrollment: prescription drugs.

(1) Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions. Existing law requires the department to create and implement a simplified application package for children, families, and adults applying for Medi-Cal benefits.

Existing federal law, the Telephone Consumer Protection Act, among other provisions, prohibits any person within the United States, or any person outside the United States if the recipient is within the United States, from making any call to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call, without the prior express consent of the called party, using any automatic telephone dialing system or an artificial or prerecorded voice. Under existing case law, a text message is considered a call for purposes of those provisions.

This bill would require the application for Medi-Cal enrollment to include a statement that if the applicant is approved for Medi-Cal benefits, the applicant agrees that the department, county welfare department, and a managed care organization or health care provider to which the applicant is assigned may communicate with them regarding their care or benefits through all standard forms of communication, including, but not limited to, Free to End User text messaging. appointment reminders or outreach efforts at no more than a 6th grade reading level through Free to End User text messaging unless the applicant opts out.

(2) Existing federal law, known as the 340B discount drug purchasing program, generally requires pharmaceutical manufacturers participating in Medicaid to give discounts on pharmaceutical drugs to covered entities, as defined, serving the Medicaid population. This program is commonly referred to as the 340B program.

Under existing law, the Medi-Cal program requires a covered entity to dispense only drugs purchased through the 340B program to a Medi-Cal beneficiary. Existing law, if a covered entity is unable to purchase a drug for a Medi-Cal beneficiary through the 340B program, authorizes the covered entity to dispense a drug purchased at a regular drug wholesale rate, and limits the amount the covered entity may charge the Medi-Cal program for reimbursement of the purchase of the drug. beneficiary, except under specified circumstances.

This bill would prohibit the Director of Health Care Services from taking action that materially increases the administrative burden or cost of dispensing 340B drugs by federally qualified health centers and rural health clinics, including, but not limited to, changes that adversely impact the use of contract pharmacy arrangements. The bill would require the director to prepare a report, including specified information, before taking any action that materially impacts the 340B program, and to publish the report on the department’s internet website and distribute it to the Assembly Committee on Health and the Senate Committee on Health.

This bill would provide that those reimbursement requirements do not apply to federally qualified health centers (FQHCs) or rural health clinics (RHC) that are subject to federal minimum payment provisions, which calculate payment for services of the FQHCs and RHCs according to a specified formula. The bill would require the department to adopt regulations to establish and implement specified contract pharmacy auditing for the program, to retrospectively identify 340B drugs dispensed to Medi-Cal fee-for-service beneficiaries through a covered entity, as specified. The bill would only apply with respect to 340B drugs dispensed before April 1, 2022, unless the department adopts implementing regulations before that date.

(3)The Medi-Cal program administers a program known as the Family Planning, Access, Care, and Treatment (Family PACT) Program to provide comprehensive clinical family planning services to a person who has a family income at or below 200% of the federal poverty level and who is eligible to receive those services. Existing law requires reimbursement for drugs and supplies covered under the Medi-Cal program and the Family PACT Program by a licensed community clinic or free clinic, or an intermittent clinic, to be the lesser of cost or the clinic’s usual charge made to the general public. Existing law defines “cost” for these purposes as an aggregate amount equivalent to the sum of the actual acquisition cost of a drug or supply plus a clinic dispensing fee not to exceed $12 per billing unit, as specified. Existing law also sets the cost for a take-home drug that is dispensed for use by the patient within a specific timeframe of 5 or fewer days from the date medically indicated at the actual acquisition cost for that drug plus a clinic dispensing fee, not to exceed $17 per prescription.

This bill would instead define “cost” for these purposes as a $35 dispensing fee, established by the bill, plus the National Average Drug Acquisition Cost (NADAC) of the drug, or if a NADAC is not available, the Wholesale Acquisition Cost of the drug (WAC) plus zero.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

---

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 14011.16 is added to the Welfare and Institutions Code, to read:

14011.16.

 The application for enrollment for benefits under this chapter shall include the following statement, in a conspicuous location:

“I agree that if I am approved to receive Medi-Cal benefits, the State Department of Health Care Services, the county welfare department, and a managed care organization or health care provider to which I am assigned may communicate with me regarding my care or benefits through all standard forms of communication, including, but not limited to, Free to End User (FTEU) text messaging.” appointment reminders or outreach efforts at no more than a sixth grade reading level through Free to End User (FTEU) text messaging unless I opt out.”

SEC. 2.Section 14105.46 of the Welfare and Institutions Code is amended to read:

14105.46.

(a)For purposes of this section:

(1)“Covered entity” means a provider defined as a covered entity in Section 256b of Title 42 of the United States Code.

(2)“340B” means the discount drug purchasing program described in Section 256b of Title 42 of the United States Code.

(b)A covered entity shall dispense only 340B drugs to Medi-Cal beneficiaries.

(c)If a covered entity is unable to purchase a specific 340B drug, the covered entity may dispense a drug purchased at regular drug wholesale rates to a Medi-Cal beneficiary. If a covered entity dispenses a drug purchased at regular drug wholesale rates pursuant to this subdivision, the covered entity is required to maintain documentation of their inability to obtain the 340B drug.

(d)A covered entity shall bill an amount not to exceed the entity’s actual acquisition cost for the drug, as charged by the manufacturer at a price consistent with Section 256b of Title 42 of the United States Code plus the professional fee pursuant to Section 14105.45 or the dispensing fee pursuant to Section 14132.01.

(e)A covered entity shall identify a 340B drug on the claim submitted to the Medi-Cal program for reimbursement.

(f)The reimbursement mechanism provided for in subdivisions (b) to (e), inclusive, shall not apply to a federally qualified health center (FQHC) or rural health clinic (RHC) that is subject to the minimum payment requirements set forth in Section 1396a(bb) of Title 42 of the United States Code.

(g)The department shall adopt regulations to establish and implement establishing a mechanism to retrospectively identify 340B drugs dispensed to Medi-Cal fee-for-service beneficiaries through a covered entity’s contract pharmacies, including those of FQHCs and RHCs, dispensing drugs on a replenishment basis, where the drug stock is segregated from the pharmacy’s other drug stock by electronic means, as described in subdivision (b) of Section 4126 of the Business and Professions Code. The mechanism shall not be implemented in a manner that increases the administrative burden or costs of dispensing 340B drugs through a contract pharmacy.

(h)This section shall only apply with respect to 340B drugs dispensed before April 1, 2022, unless the department adopts regulations to implement this section, including subdivision (g), before that date.

SEC. 3.Section 14132.01 of the Welfare and Institutions Code is amended to read:

14132.01.

(a)Notwithstanding any other law, a community clinic or free clinic licensed pursuant to subdivision (a) of Section 1204 of the Health and Safety Code or an intermittent clinic operating pursuant to subdivision (h) of Section 1206 of the Health and Safety Code, that has a valid license pursuant to Article 13 (commencing with Section 4180) of Chapter 9 of Division 2 of the Business and Professions Code, shall bill and be reimbursed, as described in this section, for drugs and supplies covered under the Medi-Cal program and Family PACT Waiver Program.

(b)(1)A clinic described in subdivision (a) shall be reimbursed by the Medi-Cal program and Family PACT Waiver Program for drugs and supplies covered under those programs at the lesser of cost or the clinic’s usual charge made to the general public.

(2)For purposes of this section, “cost” means the dispensing fee described in paragraph (3) plus the National Average Drug Acquisition Cost (NADAC) of the drug, or if no NADAC is available, the Wholesale Acquisition Cost (WAC) plus zero.

(3)The dispensing fee shall be thirty-five dollars ($35).

(c)A clinic described in subdivision (a) that furnishes services free of charge, or at a nominal charge, as defined in subsection (a) of Section 413.13 of Title 42 of the Code of Federal Regulations, or that can demonstrate to the department, upon request, that it serves primarily low-income patients, and its customary practice is to charge patients on the basis of their ability to pay, shall not be subject to reimbursement reductions based on its usual charge to the general public.

(d)Federally qualified health centers and rural health clinics that are clinics as described in subdivision (a) may bill and be reimbursed as described in this section, upon electing to be reimbursed for pharmaceutical goods and services on a fee-for-service basis, as permitted by subdivision (k) of Section 14132.100.

(e)A clinic that otherwise meets the qualifications set forth in subdivision (a), that is eligible to, but that has elected not to, utilize drugs purchased under the 340B Discount Drug Program for its Medi-Cal patients, shall provide notification to the Health Resources and Services Administration’s Office of Pharmacy Affairs that it is utilizing non-340B drugs for its Medi-Cal patients in the manner and to the extent required by federal law. A clinic that utilizes 340B drugs for its patients shall not be required to dispense 340B drugs to Medi-Cal beneficiaries.

SEC. 2.

 Section 14105.461 is added to the Welfare and Institutions Code, to read:

14105.461.

 (a)  The Legislature finds and declares all of the following:

(1) California’s federally qualified health centers (FQHCs) and rural health clinics (RHCs)are essential partners with the state in providing a health care safety net for underserved, uninsured, and underinsured populations in a cost-effective manner.

(2) California’s FQHCs and RHCs generate significant savings to the state and to local communities by providing primary and preventive care that responds to patients’ needs before medical problems become serious or life threatening, and by reducing the reliance of patients, including the uninsured and underinsured, on costly emergency room care, inpatient treatment, and specialty care.

(3) California’s FQHCs and RHCs are critical to the community providers that serve low-income patients, and are more necessary than ever now as many of these Americans are also the hardest hit by the COVID-19 pandemic.

(4) Supporting and ensuring the stability of California’s FQHCs and RHCs, and their continued ability to provide pharmaceutical services, is necessary if California is to ensure access to health care services for the low-income and minority patients served by these health centers and clinics.

(5) A substantial number of covered entities enrolled in the 340B discount drug purchasing program (340B program) are financially constrained and have to rely on contract pharmacies to access the program. Forcing these clinics and health centers to convert their services to onsite pharmacies would result in a significant waste of taxpayer and community resources that could otherwise be devoted to patient care.

(6) It is the intent of the Legislature that no changes in the coverage of pharmacy services be made by the State Department of Health Care Services that would undermine its ability to provide pharmacy services to California’s low-income and minority patients.

(b) (1) Notwithstanding any other law, the director shall not take any action that materially increases the administrative burden or cost of dispensing 340B drugs by federally qualified health centers and rural health clinics, including, but not limited to, changes that adversely impact the use of contract pharmacy arrangements.

(2) Before taking an action that materially impacts the 340B drug program, the director shall prepare a detailed report describing the proposed action, including a determination that the action does not violate paragraph (1). The director shall publish the report on the department’s internet website and distribute it to the Assembly Committee on Health and the Senate Committee on Health.

(3) For purposes of this subdivision, “340B drugs” means drugs covered by the 340B program, as described in Section 256b of Title 42 of the United States Code.