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AB-1938 Prescription drugs: 340B discount drug purchasing program.(2019-2020)



Current Version: 05/04/20 - Amended Assembly         Compare Versions information image


AB1938:v98#DOCUMENT

Revised  May 11, 2020
Amended  IN  Assembly  May 04, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1938


Introduced by Assembly Member Eggman Members Low and Eggman
(Principal coauthor: Senator Wiener)

January 16, 2020


An act to amend Section 5813.5 of the Welfare and Institutions Code, relating to mental health. add Section 14105.465 to the Welfare and Institutions Code, relating to prescription drugs.


LEGISLATIVE COUNSEL'S DIGEST


AB 1938, as amended, Low. Mental Health Services Act: inpatient treatment funding. Prescription drugs: 340B discount drug purchasing program.
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 federal law requires the United States Secretary of Health and Human Services to enter into an agreement with each manufacturer of covered drugs that are not subject to a rebate under an agreement between the state Medicaid program and the manufacturer under which the amount required to be paid to the manufacturer for covered drugs purchased by a covered entity does not exceed an amount equal to the average manufacturer price for the drug under the federal Medicaid program in the preceding calendar quarter, reduced by the rebate received pursuant to the Medicaid agreement. This program is commonly referred to as the 340B Drug Pricing program or 340B program.
Existing state law requires a covered entity to dispense only the above-described drugs to Medi-Cal beneficiaries, authorizes a covered entity that is unable to purchase the above-described drugs to dispense a drug purchased at regular drug wholesale rates to a Medi-Cal beneficiary if the covered entity maintains documentation of their inability to obtain the drugs, and requires a not-for-profit hospital that participates in the drug discount program established under federal law to enter into an agreement with the department that includes specified terms, including that the not-for-profit hospital continues its historic commitment to the provision of charity care.
This bill would define a “designated entity” as a nonprofit organization, including any subsidiary of that organization, that individually or collectively with one or more of its subsidiaries meets specified requirements, including that the designated entity is a licensed managed care organization that has previously contracted with the department as a primary care case management organization, contracts with the federal Centers for Medicare and Medicaid Services to provide services in the Medicare Program as a Medicare special needs plan, and participates in the 340B program. The bill would prohibit a designated entity from using any revenue from a contract with the department, a contract with the federal Centers for Medicare and Medicaid Services, and from the 340B program on specified activity, such as funding litigation under the California Environmental Quality Act. The bill would require a designated entity, and any subsidiary of that entity, to annually report on its internet website specified information, including the amount of gross revenue generated from a contract with the department, a contract with the federal Centers for Medicare and Medicaid Services, and from the 340B program for the previous year, and would condition the implementation of these provisions to the extent that federal financial participation is available and federal approvals are obtained.

Existing law, the Mental Health Services Act (MHSA), an initiative measure enacted by the voters as Proposition 63 at the November 2, 2004, statewide general election, funds a system of county mental health plans for the provision of mental health services. The MHSA establishes the continuously appropriated Mental Health Services Fund to fund various county mental health programs and specifies the purposes for which those funds may, and may not, be spent by the counties.

This bill would specify, to the extent MHSA funds are otherwise available for use pursuant to the act, those funds may be used to provide inpatient treatment, including involuntary treatment of a patient who is a danger to self or others or gravely disabled, in specified settings, including an acute psychiatric hospital, an institution for mental disease, and a mental health rehabilitation center, as defined. The bill would state that this change is declaratory of existing law.

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

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


SECTION 1.

 (a)  The Legislature hereby finds and declares all of the following:
(1) California’s health care system faces several challenges, including, but not limited to, rising health care costs, workforce shortages, and policy changes at the federal level. As a result of those challenges, the state needs to be very smart on how public health care dollars are used within its borders.
(2) The COVID-19 pandemic has stretched the state’s health care system to its limits, making it even more imperative for public health care dollars in the state to be spent on health care and not on unrelated lobbying efforts or unrelated litigation.
(3) Unfortunately, there are entities that are using those funds for reasons unrelated to health care and in ways that are completely counterproductive to improved health care.
(4) According to the legislative history of the 340B program, revenue from the 340B program should be used to reach more patients and provide more comprehensive coverage, but there is evidence that funds from that program are not expended for that purpose.
(5) In addition to the strain on the health care system, there is a widely acknowledged housing shortage in the state. Some entities have been using their public health care dollars to exacerbate that shortage.
(b) It is the intent of the Legislature to apply limitations on the use of state health care dollars to entities with a unique role in the state’s health care system that are more likely to abuse that role and spend precious public dollars on lobbying and litigation unrelated to health care.

SEC. 2.

 Section 14105.465 is added to the Welfare and Institutions Code, immediately following Section 14105.46, to read:

14105.465.
 (a) The following definitions apply for purposes of this section:
(1) “Designated entity” means a nonprofit organization, including any subsidiary of that organization, that individually or collectively with one or more of its subsidiaries meets all of the following requirements:
(A) Is a managed care organization licensed under Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code that has previously contracted with the department as a primary care case management organization pursuant to Article 2.9 (commencing with Section 14088).
(B) Contracts with the federal Centers for Medicare and Medicaid Services to provide services in the Medicare Program as a Medicare special needs plan.
(C) Participates in the 340B program.
(D) Has one or more licenses to operate as a pharmacy pursuant to Chapter 9 (commencing with Section 4000) of Division 2 of the Business and Professions Code.
(2) “Influence any ballot measure action” means promoting, supporting, influencing, modifying, opposing, or delaying any ballot measure by any means, including, but not limited to, the provision or use of information, statistics, studies, or analyses. The term does not include testifying or making other appropriate communication if that activity is performed under either of the following circumstances:
(A) Upon the formal request of a legislative body, committee, or a member thereof.
(B) In connection with any ballot measure action that directly affects the activities of the designated entity.
(3) “Ballot measure action” means the drafting, introduction, consideration, modification, enactment, or defeat of any state or local ballot measure.
(4) “Person” means any natural person, partnership, corporation, limited liability company, company, trust, association, or other entity, however organized.
(5) “340B program” means the discount drug purchasing program described in Section 256b of Title 42 of the United States Code.
(b) (1) A designated entity shall not use any revenue from a contract with the department, a contract with the federal Centers for Medicare and Medicaid Services, and from the 340B program to do any of the following:
(A) Fund litigation under the California Environmental Quality Act.
(B) Influence any ballot measure action relating to housing.
(C) Fund any efforts to influence any ballot measure action relating to housing.
(2) The revenue described in paragraph (1) shall not be diverted through any means to any person for use for any of the purposes specified in subparagraph (A), (B), or (C) of paragraph (1).
(3) For purposes of this section, revenue from the 340B program includes, but is not limited to, any savings generated from that program.
(c) (1) A designated entity, and any subsidiary of that entity, shall annually report on its internet website, in a publicly accessible manner, both of the following:
(A) The amount of gross revenue described in paragraph (1) of subdivision (b) that was generated for the previous year.
(B) A description on how the revenue described in paragraph (1) of subdivision (b) was spent during that year.
(2) Any unspent revenues shall be reflected in the reports for subsequent years until expended.
(d) The director shall seek any necessary federal approvals to implement this section. This section shall not be implemented until the necessary federal approval is obtained, and only to the extent federal financial participation is available.

SECTION 1.Section 5813.5 of the Welfare and Institutions Code is amended to read:
5813.5.

Subject to the availability of funds from the Mental Health Services Fund, the state shall distribute funds for the provision of services under Sections 5801, 5802, and 5806 to county mental health programs. Services shall be available to adults and seniors with severe illnesses who meet the eligibility criteria in subdivisions (b) and (c) of Section 5600.3. For purposes of this act, “seniors” means older adult persons identified in Part 3 (commencing with Section 5800) of this division.

(a)Funding shall be provided at sufficient levels to ensure that counties can provide each adult and senior served pursuant to this part with the medically necessary mental health services, medications, and supportive services set forth in the applicable treatment plan.

(b)The funding shall only cover the portions of those costs of services that cannot be paid for with other funds, including other mental health funds, public and private insurance, and other local, state, and federal funds.

(c)Each county mental health program’s plan shall provide for services in accordance with the system of care for adults and seniors who meet the eligibility criteria in subdivisions (b) and (c) of Section 5600.3.

(d)Planning for services shall be consistent with the philosophy, principles, and practices of the Recovery Vision for mental health consumers:

(1)To promote concepts key to the recovery for individuals who have mental illness: hope, personal empowerment, respect, social connections, self-responsibility, and self-determination.

(2)To promote consumer-operated services as a way to support recovery.

(3)To reflect the cultural, ethnic, and racial diversity of mental health consumers.

(4)To plan for each consumer’s individual needs.

(e)The plan for each county mental health program shall indicate, subject to the availability of funds as determined by Part 4.5 (commencing with Section 5890) of this division, and other funds available for mental health services, adults and seniors with a severe mental illness being served by this program are either receiving services from this program or have a mental illness that is not sufficiently severe to require the level of services required of this program.

(f)Each county plan and annual update pursuant to Section 5847 shall consider ways to provide services similar to those established pursuant to the Mentally Ill Offender Crime Reduction Grant Program. Funds shall not be used to pay for persons incarcerated in state prison. Funds may be used to provide services to persons who are participating in a presentencing or postsentencing diversion program or who are on parole, probation, postrelease community supervision, or mandatory supervision. When included in county plans pursuant to Section 5847, funds may be used for the provision of mental health services under Sections 5347 and 5348 in counties that elect to participate in the Assisted Outpatient Treatment Demonstration Project Act of 2002 (Article 9 (commencing with Section 5345) of Chapter 2 of Part 1).

(g)To the extent the funds are otherwise available for use pursuant to this act, funds may be used to provide inpatient treatment, including involuntary treatment of a patient who is a danger to self or others or gravely disabled, in the following settings:

(1)An acute psychiatric hospital, as defined in subdivision (b) of Section 1250 of the Health and Safety Code.

(2)An institution for mental disease, as described in Chapter 1 (commencing with Section 5900) of Part 5 of Division 5.

(3)A psychiatric health facility, as defined in Section 1250.2 of the Health and Safety Code.

(4)A mental health rehabilitation center, as described in Section 5675.

(5)A skilled nursing facility with a special treatment program, as described in Sections 72443 to 72475, inclusive, of Title 22 of the California Code of Regulations.

(h)The department shall contract for services with county mental health programs pursuant to Section 5897. After November 2, 2004, the term “grants,” as used in Sections 5814 and 5814.5, shall refer to those contracts.

SEC. 2.

The addition of subdivision (g) to Section 5813.5 of the Welfare and Institutions Code made by this act does not constitute a change in, but is declaratory of, existing law.

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REVISIONS:
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