Bill Text

PDF |Add To My Favorites |Track Bill | print page

AB-2427 Medi-Cal: anticompetitive conduct.(2017-2018)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
Date Published: 05/01/2018 10:00 AM
AB2427:v97#DOCUMENT

Amended  IN  Assembly  April 30, 2018
Amended  IN  Assembly  March 23, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2427


Introduced by Assembly Member Wood
(Coauthors: Assembly Members Arambula, Chiu, and Friedman)

February 14, 2018


An act to amend Section 14087.4 of add Section 14197.25 to the Welfare and Institutions Code, relating to Medi-Cal.


LEGISLATIVE COUNSEL'S DIGEST


AB 2427, as amended, Wood. Medi-Cal: anticompetitive conduct.
Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and 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 authorizes the Director of Health Care Services to contract, on a bid or nonbid basis, with any qualified individual, organization, or entity to provide services to, arrange for or case manage the care of Medi-Cal beneficiaries.
Existing law authorizes the renewal of a contract if the provider continues to meet the requirements of the Medi-Cal program and the contract. Under existing law, failure to meet those requirements is cause for nonrenewal of the contract. Existing law authorizes the department to terminate or decline to renew a contract, in whole or in part, if the director determines that such action is necessary to protect the health of the beneficiaries or the funds appropriated to carry out the Medi-Cal program.
Under existing law, one of the methods by which Medi-Cal services are provided is pursuant to contracts with various types of managed care plans. Existing law, commencing July 1, 2019, requires a Medi-Cal managed care plan to comply with a minimum 85% medical loss ratio. Existing law requires, effective for contract rating periods commencing on or after July 1, 2023, a Medi-Cal managed care plan to provide a remittance to the state if the ratio does not meet the minimum ratio of 85% for the corresponding reporting year.
This bill would require the department to terminate or decline to renew or award a contract, in whole or in part, of a for-profit health plan or insurer Medi-Cal managed care plan if the Attorney General determines that the for-profit health plan or insurer Medi-Cal managed care plan engaged or engages in anticompetitive conduct or practices, as defined, or if the department determines that the for-profit health plan or insurer Medi-Cal managed care plan has a pattern or practice of not complying with the medical loss ratio, as specified. described above. The bill would specify that nonrenewal or termination of a contract under these provisions would not qualify the applicant for an administrative hearing. The bill would apply these provisions only to new contracts, and renewals of existing contracts, executed on or after January 1, 2019.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 14197.25 is added to the Welfare and Institutions Code, immediately following Section 14197.2, to read:

14197.25.
 (a) The department shall terminate or decline to renew or award a contract, in whole or in part, of a for-profit Medi-Cal managed care plan if the Attorney General determines that the Medi-Cal managed care plan engaged or engages in anticompetitive conduct or practices, or if the department determines that the Medi-Cal managed care plan has a pattern or practice of not complying with the medical loss ratio pursuant to Section 14197.2.
(b) Nonrenewal or termination of a contract under this section shall not qualify the applicant for an administrative hearing, including a hearing pursuant to Section 14123.
(c) This section shall apply only to new contracts, and renewals of existing contracts, entered into by a Medi-Cal managed care plan and the department on or after January 1, 2019.
(d) For purposes of this section, the following definitions apply:
(1) “Medi-Cal managed care plan” shall have the same meaning as described in Section 14197.2.
(2) “Anticompetitive conduct or practices” includes, but is not limited to, any arrangement, agreement, conspiracy, or practice that prohibits or otherwise prevents Medi-Cal managed care plans from entering a market or a specific geographic area, from offering or selling managed care or health care services and benefits, from administering employee benefits, or from contracting with providers.

SECTION 1.Section 14087.4 of the Welfare and Institutions Code is amended to read:
14087.4.

(a)Any contract made pursuant to this article may be renewed if the provider continues to meet the requirements of this chapter, regulations promulgated pursuant thereto, and the contract. Failure to meet these requirements shall be cause for nonrenewal of the contract. The department may condition renewal on timely completion of a mutually agreed upon plan of correction of any deficiencies.

(b)(1)The department may terminate or decline to renew a contract, in whole or in part, when the director determines that such action is necessary to protect the health of the beneficiaries or the funds appropriated to carry out the Medi-Cal program.

(2)(A)The department shall terminate or decline to renew or award a contract, in whole or in part, of a for-profit health plan or insurer if the Attorney General determines that the for-profit health plan or insurer engaged or engages in anticompetitive conduct or practices or if the department determines that the for-profit health plan or insurer has a pattern or practice of not complying with the medical loss ratio pursuant to Section 14197.2.

(B)For purposes of this paragraph, “anticompetitive conduct or practices” includes, but is not limited to, any arrangement, agreement, conspiracy, or practice that prohibits or otherwise prevents health plans, insurers, or entities to enter a market, or a specific geographic area, to offer or sell managed care, health plan, health care, or insurer services and benefits, to administer employee benefits, or to contract with providers, or that prohibits or otherwise prevents others from bidding or contracting to provide services to Medi-Cal beneficiaries.

(3)Nonrenewal or termination under this article shall not qualify the applicant for an administrative hearing including a hearing pursuant to Section 14123.

(c)In order to achieve maximum cost savings, the Legislature hereby determines that an expedited contract process for contracts under this article is necessary. Therefore, contracts under this article shall be exempt from the provisions of Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of the Public Contract Code.

(d)For any contract entered into pursuant to this article, the Director of the Department of Managed Health Care shall, at the director’s request and with all due haste, grant an exemption from the provisions of Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code for purposes of carrying out the contract.