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



Current Version: 08/29/18 - Enrolled

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AB2427:v92#DOCUMENT

Enrolled  August 29, 2018
Passed  IN  Senate  August 23, 2018
Passed  IN  Assembly  August 27, 2018
Amended  IN  Senate  July 02, 2018
Amended  IN  Senate  June 19, 2018
Amended  IN  Senate  June 07, 2018
Amended  IN  Assembly  May 25, 2018
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 add Section 14197.25 to the Welfare and Institutions Code, relating to Medi-Cal.


LEGISLATIVE COUNSEL'S DIGEST


AB 2427, 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 the 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 authorize the department to terminate a for-profit Medi-Cal managed care plan contract if the Attorney General determines that the Medi-Cal managed care plan engaged or engages in anticompetitive conduct or practices, as specified, 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, as described above. The bill would specify that nonrenewal 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 include a contract provision in each for-profit Medi-Cal managed care plan contract that authorizes the department to terminate the contract under either of the following circumstances:
(1) If the Attorney General determines that the Medi-Cal managed care plan engaged or engages in anticompetitive conduct or practices, based on existing state or federal law, including, but not limited to, the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code), the Unfair Practices Act (Chapter 4 (commencing with Section 17000) of Part 2 of Division 7 of the Business and Professions Code), the federal Sherman Antitrust Act (Sections 1 to 7, inclusive, of Title 15 of the United States Code), and the federal Clayton Act (Sections 12 to 27, inclusive, of Title 15 of the United States Code).
(2) 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) If the department elects to extend or renew a contract with a for-profit Medi-Cal managed care plan that either engages in anticompetitive conduct or practices pursuant to paragraph (1) of subdivision (a), or that violates the provisions of paragraph (2) of subdivision (a), the contract extension amendment or the renewal contract shall contain provisions to address noncompliance and contractual remedies and penalties to ensure plan accountability and contract compliance during the contract extension or contract renewal period.
(c) Nonrenewal of a contract under this section shall not qualify the applicant for an administrative hearing, including a hearing pursuant to Section 100171 of the Health and Safety Code.
(d) 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.
(e) For purposes of this section, “Medi-Cal managed care plan” shall have the same meaning as described in Section 14197.2.