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CLSA Wire

Legislative Informational Hearings in Sacramento Focus on Healthcare Access and Affordability

By Brett Johnson
Feb 18, 2019

Two major joint legislative informational hearings focused on various aspects of access and affordability across California’s healthcare coverage landscape, providing an early look at what the legislature thinks of the governor’s plans on healthcare and what, if any, role it sees itself having in implementing his vision. If these hearings were any indication, it appears the legislature is on board.

On Tuesday, February 12th, the Assembly Health Committee, Assembly Budget Subcommittee 1, Senate Health Committee, and Senate Budget Subcommittee 3 held a joint informational hearing entitled “Health Insurance Affordability Assistance for Californians: Options and Funding”. The central focus of the hearing was on the impact of federal policies affecting healthcare coverage and how California may reduce their negative impact on the state.

 The federal policies of most concern included the elimination of the individual coverage mandate and the reduction of advance premium tax credits (APTC). Panelists, including Peter Lee, the Executive Director for Covered California, and Ryan Woolsey of the LAO, discussed the significant negative impacts these policies were having on Californians’ ability to afford health insurance premiums and their intent to seek such coverage when affordability is a concern.

 The options to improve coverage and affordability largely focused on the governor’s proposals to increase healthcare coverage: (1) To implement a state-based individual coverage mandate that would help fund enhanced and broadened premium subsidies for coverage through Covered California for those between 250 and 600 percent of the federal poverty level ($154,500 for a family of 4) and (2) to expand Medi-Cal coverage to undocumented young adults up to age 25.

The following are links to the February 12th hearing documents:

On Thursday, February 14th, the Senate Committee on Budget and Fiscal Review held an informational hearing entitled “Prescription Drug Affordability and Expanding Medi-Cal Coverage”. The hearing was divided into two parts. The first part discussed the governor’s proposal to expand Medi-Cal coverage to undocumented young adults up to age 25, while the second part covered the governor’s executive order (EO) to reduce the state’s prescription drug costs. The first part took up a majority of the hearing’s time, though much of the material was covered in the previous joint informational hearing (see above).

During part two, the state bulk purchasing initiative was covered first. The EO requires the Department of General Services (DGS), in collaboration with the California Pharmaceutical Collaborative (CPC) to review all state purchasing initiatives and additional options to maximize the state’s bargaining power, including within the Medi-Cal program. DGS testified about current purchasing practices, collaboration with the CPC, and the timeline for implementation of the Governor’s bulk purchasing initiatives.

Matt Bender from DGS largely drove the discussion on the state’s bulk purchasing efforts. He stated nearly all of DGS’ current purchasing activities relate to procurement contracts by which the state takes physical possession of the medicine and dispense it within state-run facilities. A very small portion of DGS’ activities involve pharmacy reimbursements, which is the model in most traditional public and private healthcare coverage.

One recommendation proposed by Senator Jeff Stone was well received by a number of stakeholders in attendance: establishing a state-run PBM to drive joint pharmacy reimbursement arrangements. Because little detail exists on how the EO may impact DGS’ current purchasing efforts, no other concrete recommendations to changing the current system were put forward.

The Medi-Cal transition to a fee-for-service pharmacy benefit was covered second. The EO directs DHCS to complete the transition of the Medi-Cal pharmacy benefit away from managed care organizations (MCO) to the state fee-for-service (FFS) drug program by January 2021 – with a DHCS review of state drug purchasing initiatives due on July 12, 2019.

According to the Administration, the transition would standardize the Medi-Cal drug benefit, reducing confusion among beneficiaries. In addition, the Administration contends collecting supplemental rebates for all 13.2 million lives would result in hundreds of millions of dollars in additional savings beginning in 2021-22. The Director of the DHCS, Jennifer Kent, testified on the proposal.

Ben Johnson from the LAO stated that its analysis of the EO is ongoing but they did have concerns about the transition’s impact on 340B providers. Generally, the LAO stated there were reasons to be cautious and deliberative about the transition from a managed care pharmacy benefit to a fee-for-service one.

Among stakeholders, significant concerns were raised regarding the transition’s impact on managed care organizations’ ability to coordinate care by Dr. Brad Gilbert of the Inland Empire Health Plan (IEHP), asserting care would suffer if IEHP could not maintain the same level of clinical assessments in prescribing at the point of service. The California Hospital Association and a number of provider organizations reliant on the federal 340B Drug Discount Program expressed significant concerns with the transition’s impact on their ability to provide care to underserved patients.

The documents for the February 14th hearing can be found here.

CLSA will, of course, be closely monitoring the activities of the legislature and Governor’s Office with regards to healthcare access and affordability going forward. Any CLSA members who would like to provide input or would like further information on anything discussed herein are asked to reach out to Oliver Rocroi, CLSA’s Senior Director, State Government Relations (orocroi@califesciences.org) or Brett Johnson, CLSA’s Senior Director, Policy & Regulatory Affairs (bjohnson@califesciences.org).