Bill Text: CA AB804 | 2013-2014 | Regular Session | Introduced
Bill Title: Medi-Cal: pharmacy providers: invoices.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Engrossed - Dead) 2014-06-04 - In committee: Set, first hearing. Hearing canceled at the request of author. [AB804 Detail]
Download: California-2013-AB804-Introduced.html
BILL NUMBER: AB 804 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Lowenthal
FEBRUARY 21, 2013
An act to amend Section 14105.45 of the Welfare and Institutions
Code, relating to Medi-Cal.
LEGISLATIVE COUNSEL'S DIGEST
AB 804, as introduced, Lowenthal. Medi-Cal: pharmacy providers:
invoices.
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 reimbursement to
Medi-Cal pharmacy providers for drugs, as prescribed, and authorizes
the department to establish a new reimbursement methodology based on
average acquisition cost, as defined. Under existing law, Medi-Cal
pharmacy providers are required to submit drug price information,
including invoice prices, to the department or a vendor designated by
the department for the purposes of establishing the average
acquisition cost. Under existing law, drug pricing information is
confidential and exempt from public disclosure, as specified.
This bill would provide that pharmacy invoice information is
confidential and exempt from public disclosure, as specified.
Existing constitutional provisions require that a statute that
limits the right of access to the meetings of public bodies or the
writings of public officials and agencies be adopted with findings
demonstrating the interest protected by the limitation and the need
for protecting that interest.
This bill would make legislative findings to that effect.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 14105.45 of the Welfare and Institutions Code
is amended to read:
14105.45. (a) For purposes of this section, the following
definitions shall apply:
(1) "Average acquisition cost" means the average weighted cost
determined by the department to represent the actual acquisition cost
paid for drugs by Medi-Cal pharmacy providers, including those that
provide specialty drugs. The average acquisition cost shall not be
considered confidential and shall be subject to disclosure pursuant
to the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).
(2) "Average manufacturers price" means the price reported to the
department by the federal Centers for Medicare and Medicaid Services
pursuant to Section 1927 of the Social Security Act (42 U.S.C. Sec.
1396r-8).
(3) "Average wholesale price" means the price for a drug product
listed as the average wholesale price in the department's primary
price reference source.
(4) "Estimated acquisition cost" means the department's best
estimate of the price generally and currently paid by providers for a
drug product sold by a particular manufacturer or principal labeler
in a standard package.
(5) "Federal upper limit" means the maximum per unit reimbursement
when established by the federal Centers for Medicare and Medicaid
Services and published by the department in Medi-Cal pharmacy
provider bulletins and manuals.
(6) "Generically equivalent drugs" means drug products with the
same active chemical ingredients of the same strength and dosage
form, and of the same generic drug name, as determined by the United
States Adopted Names (USAN) Council (USANC)
and accepted by the federal Food and Drug Administration (FDA),
as those drug products having the same chemical ingredients.
(7) "Legend drug" means any drug whose labeling states "Caution:
Federal law prohibits dispensing without prescription," "Rx only," or
words of similar import.
(8) "Maximum allowable ingredient cost" (MAIC) means the maximum
amount the department will reimburse Medi-Cal pharmacy providers for
generically equivalent drugs.
(9) "Innovator multiple source drug," "noninnovator multiple
source drug," and "single source drug" have the same meaning as those
terms are defined in Section 1396r-8(k)(7) of Title 42 of the United
States Code.
(10) "Nonlegend drug" means any drug whose labeling does not
contain the statement referenced in paragraph (7).
(11) "Pharmacy warehouse," as defined in Section 4163 of the
Business and Professions Code, means a physical location licensed as
a wholesaler for prescription drugs that acts as a central warehouse
and performs intracompany sales or transfers of those drugs to a
group of pharmacies under common ownership and control.
(12) "Specialty drugs" means drugs determined by the department
pursuant to subdivision (f) of Section 14105.3 to generally require
special handling, complex dosing regimens, specialized
self-administration at home by a beneficiary or caregiver, or
specialized nursing facility services, or may include extended
patient education, counseling, monitoring, or clinical support.
(13) "Volume weighted average" means the aggregated average volume
for a group of legend or nonlegend drugs, weighted by each drug's
percentage of the group's total volume in the Medi-Cal
fee-for-service program during the previous six months. For purposes
of this paragraph, volume is based on the standard billing unit used
for the legend or nonlegend drugs.
(14) "Wholesaler" means a drug wholesaler that is engaged in
wholesale distribution of prescription drugs to retail pharmacies in
California.
(15) "Wholesaler acquisition cost" means the price for a drug
product listed as the wholesaler acquisition cost in the department's
primary price reference source.
(b) (1) Reimbursement to Medi-Cal pharmacy providers for legend
and nonlegend drugs shall not exceed the lowest of either of the
following:
(A) The estimated acquisition cost of the drug plus a professional
fee for dispensing.
(B) The pharmacy's usual and customary charge as defined in
Section 14105.455.
(2) The professional fee shall be seven dollars and twenty-five
cents ($7.25) per dispensed prescription. The professional fee for
legend drugs dispensed to a beneficiary residing in a skilled nursing
facility or intermediate care facility shall be eight dollars ($8)
per dispensed prescription. For purposes of this paragraph "skilled
nursing facility" and "intermediate care facility" shall have the
same meaning as defined in Division 5 (commencing with Section 70001)
of Title 22 of the California Code of Regulations. If the department
determines that a change in dispensing fee is necessary pursuant to
this section, the department shall establish the new dispensing fee
through the budget process and implement the new dispensing fee
pursuant to subdivision (d).
(3) The department shall establish the estimated acquisition cost
of legend and nonlegend drugs as follows:
(A) For single source and innovator multiple source drugs, the
estimated acquisition cost shall be equal to the lowest of the
average wholesale price minus 17 percent, the average acquisition
cost, the federal upper limit, or the MAIC.
(B) For noninnovator multiple source drugs, the estimated
acquisition cost shall be equal to the lowest of the average
wholesale price minus 17 percent, the average acquisition cost, the
federal upper limit, or the MAIC.
(C) Average wholesale price shall not be used to establish the
estimated acquisition cost once the department has determined that
the average acquisition cost methodology has been fully implemented.
(4) For purposes of paragraph (3), the department shall establish
a list of MAICs for generically equivalent drugs, which shall be
published in pharmacy provider bulletins and manuals. The department
shall establish a MAIC only when three or more generically equivalent
drugs are available for purchase and dispensing by retail pharmacies
in California. The department shall update the list of MAICs and
establish additional MAICs in accordance with all of the following:
(A) The department shall base the MAIC on the mean of the average
manufacturer's price of drugs generically equivalent to the
particular innovator drug plus a percent markup determined by the
department to be necessary for the MAIC to represent the average
purchase price paid by retail pharmacies in California.
(B) If average manufacturer prices are unavailable, the department
shall establish the MAIC in one of the following ways:
(i) Based on the volume weighted average of wholesaler acquisition
costs of drugs generically equivalent to the particular innovator
drug plus a percent markup determined by the department to be
necessary for the MAIC to represent the average purchase price paid
by retail pharmacies in California.
(ii) Pursuant to a contract with a vendor for the purpose of
surveying drug price information, collecting data, and calculating a
proposed MAIC.
(iii) Based on the volume weighted average acquisition cost of
drugs generically equivalent to the particular innovator drug
adjusted by the department to represent the average purchase price
paid by Medi-Cal pharmacy providers.
(C) The department shall update MAICs at least every three months
and notify Medi-Cal providers at least 30 days prior to the effective
date of a MAIC.
(D) The department shall establish a process for providers to seek
a change to a specific MAIC when the providers believe the MAIC does
not reflect current available market prices. If the department
determines a MAIC change is warranted, the department may update a
specific MAIC prior to notifying providers.
(E) In determining the average purchase price, the department
shall consider the provider-related costs of the products that
include, but are not limited to, shipping, handling, storage, and
delivery. Costs of the provider that are included in the costs of the
dispensing shall not be used to determine the average purchase
price.
(5) (A) The department may establish the average acquisition cost
in one of the following ways:
(i) Based on the volume weighted average acquisition cost adjusted
by the department to ensure that the average acquisition cost
represents the average purchase price paid by retail pharmacies in
California.
(ii) Based on the proposed average acquisition cost as calculated
by the vendor pursuant to subparagraph (B).
(iii) Based on a national pricing benchmark obtained from the
federal Centers for Medicare and Medicaid Services or on a similar
benchmark listed in the department's primary price reference source
adjusted by the department to ensure that the average acquisition
cost represents the average purchase price paid by retail pharmacies
in California.
(B) For the purposes of paragraph (3), the department may contract
with a vendor for the purposes of surveying drug price information,
collecting data from providers, wholesalers, or drug manufacturers,
and calculating a proposed average acquisition cost.
(C) (i) Medi-Cal pharmacy providers shall submit drug price
information to the department or a vendor designated by the
department for the purposes of establishing the average acquisition
cost. The information submitted by pharmacy providers shall include,
but not be limited to, invoice prices and all discounts, rebates, and
refunds known to the provider that would apply to the acquisition
cost of the drug products purchased during the calendar quarter.
Pharmacy warehouses shall be exempt from the survey process, but
shall provide drug cost information upon audit by the department for
the purposes of validating individual pharmacy provider acquisition
costs. Pharmacy invoice information shall be confidential and
shall be exempt from disclosure under the California Public Records
Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code).
(ii) Pharmacy providers that fail to submit drug price information
to the department or the vendor as required by this subparagraph
shall receive notice that if they do not provide the required
information within five working days, they shall be subject to
suspension under subdivisions (a) and (c) of Section 14123.
(D) (i) For new drugs or new formulations of existing drugs,
where if drug price information is
unavailable pursuant to clause (i) of subparagraph (C), drug
manufacturers and wholesalers shall submit drug price information to
the department or a vendor designated by the department for the
purposes of establishing the average acquisition cost. Drug price
information shall include, but not be limited to, net unit sales of a
drug product sold to retail pharmacies in California divided by the
total number of units of the drug sold by the manufacturer or
wholesaler in a specified period of time determined by the
department.
(ii) Drug products from manufacturers and wholesalers that fail to
submit drug price information to the department or the vendor as
required by this subparagraph may not be a reimbursable benefit of
the Medi-Cal program for those manufacturers and wholesalers until
the department has established the average acquisition cost for those
drug products.
(E) Drug pricing information provided to the department or a
vendor designated by the department for the purposes of establishing
the average acquisition cost pursuant to this section shall be
confidential and shall be exempt from disclosure under the California
Public Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code).
(F) Prior to the implementation of an average acquisition cost
methodology, the department shall collect data through a survey of
pharmacy providers for purposes of establishing a professional fee
for dispensing in compliance with federal Medicaid requirements.
(i) The department shall seek stakeholder input on the retail
pharmacy factors and elements used for the pharmacy survey relative
to both average acquisition costs and dispensing costs. Any
adjustment to the dispensing fee shall not exceed the aggregate
savings associated with the implementation of the average acquisition
cost methodology.
(ii) For drug products provided by pharmacy providers pursuant to
subdivision (f) of Section 14105.3, a differential professional fee
or payment for services to provide specialized care may be considered
as part of the contracts established pursuant to that section.
(G) When the department implements the average acquisition cost
methodology, the department shall update the Medi-Cal claims
processing system to reflect the average acquisition cost of drugs
not later than 30 days after the department has established average
acquisition cost pursuant to subparagraph (A).
(H) Notwithstanding any other provision of law, if the department
implements average acquisition cost pursuant to clause (i) or (ii) of
subparagraph (A), the department shall update actual acquisition
costs at least every three months and notify Medi-Cal providers at
least 30 days prior to the effective date of any change in an actual
acquisition cost.
(I) The department shall establish a process for providers to seek
a change to a specific average acquisition cost when the providers
believe the average acquisition cost does not reflect current
available market prices. If the department determines an average
acquisition cost change is warranted, the department may update a
specific average acquisition cost prior to notifying providers.
(c) The director shall implement this section in a manner that is
consistent with federal Medicaid law and regulations. The director
shall seek any necessary federal approvals for the implementation of
this section. This section shall be implemented only to the extent
that federal approval is obtained.
(d) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement, interpret, or make specific this section by
means of a provider bulletin or notice, policy letter, or other
similar instructions, without taking regulatory action.
(e) The department may enter into contracts with a vendor for the
purposes of implementing this section on a bid or nonbid basis. In
order to achieve maximum cost savings, the Legislature declares that
an expedited process for contracts under this section is necessary.
Therefore, contracts entered into to implement this section, and all
contract amendments and change orders, shall be exempt from Chapter 2
(commencing with Section 10290) of Part 2 of Division 2 of the
Public Contract Code.
(f) (1) The rates provided for in this section shall be
implemented only if the director determines that the rates will
comply with applicable federal Medicaid requirements and that federal
financial participation will be available.
(2) In determining whether federal financial participation is
available, the director shall determine whether the rates comply with
applicable federal Medicaid requirements, including those set forth
in Section 1396a(a)(30)(A) of Title 42 of the United States Code.
(3) To the extent that the director determines that the rates do
not comply with applicable federal Medicaid requirements or that
federal financial participation is not available with respect to any
rate of reimbursement described in this section, the director retains
the discretion not to implement that rate and may revise the rate as
necessary to comply with federal Medicaid requirements.
(g) The director shall seek any necessary federal approvals for
the implementation of this section.
(h) This section shall not be construed to require the department
to collect cost data, to conduct cost studies, or to set or adjust a
rate of reimbursement based on cost data that has been collected.
(i) Adjustments to pharmacy drug product payment pursuant to
Section 14105.192 shall no longer apply when the department
determines that the average acquisition cost methodology has been
fully implemented and the department's pharmacy budget reduction
targets, consistent with payment reduction levels pursuant to Section
14105.192, have been met.
(j) Prior to implementation of this section, the department shall
provide the appropriate fiscal and policy committees of the
Legislature with information on the department's plan for
implementation of the average acquisition cost methodology pursuant
to this section.
SEC. 2. The Legislature finds and declares that Section 1 of this
act imposes a limitation on the public's right of access to meetings
of public bodies or the writings of public officials and agencies
within the meaning of Section 3 of Article I of the California
Constitution. Pursuant to that constitutional provision, the
Legislature makes the following finding to demonstrate the interest
protected by this limitation and the need for protecting that
interest: the Legislature finds and declares that in order to protect
the privacy of pharmacy providers who disclose sensitive
information, it is necessary to treat that information as
confidential.
