1. Legislative Update 2015 Legislative Session California Clinical Laboratory Association 2015 Annual Conference Arnold and Associates, Inc. Michael J. Arnold & Kristian Foy

2. What We Will Cover Sacramento Environment Key Legislation for 2015 State Budget Second Extraordinary Session on Health Care Medi-Cal Reimbursement Outlook for 2016

3. Sacramento Environment 2015 legislative year was the first year of the 2015-2016 Session Bills that did not make their deadlines have become 2 year bills Fiscal issues on everyone’s minds

4. Final Legislative Status Report Listing of all bills being followed. Shows bill, author, summary, location, hearing date, etc. Available to any member, anytime. Click on the bill number and it takes one to a copy of the bill, analyses, and other information. Shows final location of the bill.

6. 2015 Legislative Highlights

8. Key 2015 Legislation AB 940 (Ridley-Thomas and Waldron) Clinical laboratories. CCLA Sponsored Bill Chapter 341, Statutes of 2015

9. AB 940

10. Key 2015 Legislation AB 599 (Bonilla) Clinical laboratories: cytotechnologists. Chapter 300, Statutes of 2015 This bill expands the scope of practice for a licensed cytotechnologist by authorizing the performance of all tests and procedures pertaining to cytology under the supervision of a laboratory director.

11. Key 2015 Legislation SB 243 (Hernandez) Medi-Cal: reimbursement: provider rates. Held in Senate Appropriations Suspense 2 Year Bill SB 243 would require the Department of Health Care Services to raise a variety of rates paid to Medi-Cal providers and require the Department to rescind existing rate reductions to specified providers.

12. Key 2015 Legislation AB 366 (Bonta) Medi-Cal: annual access monitoring report. Held in Senate Appropriations Suspense 2 Year Bill Requires the Department of Health Care Services (DHCS) to submit to the Legislature, and post on the DHCS’ Internet Web site, a Medi-Cal access monitoring report. Requires the report to present results of DHCS’ ongoing access monitoring efforts in fee-for-service and managed care and to compare the level of access to care and services available through Medi-Cal, to the level of access to care and services available to the general population in different geographic areas of California.

13. 2015 – 2016 State budget Proposition 25 is working – On Time Budget Governor Advised Fiscal Restraint Billions in deficit now in the past Surplus going forward Two Extraordinary Sessions Infrastructure Health Care

14. Second Extraordinary Session on Health Care In June of 2015, the Governor issued proclamations calling for two special extra-ordinary sessions of the Legislature. One on transportation and one on health care. In the proclamation calling the special session on health care, the Governor noted that the purpose of the special session would be to “…consider and act upon legislation necessary to enact permanent and sustainable funding from a new managed care organization tax and/or alternative fund sources that provide: a). At least $1.1 billion annually to stabilize the General Fund’s costs for Medi-Cal; and b). Sufficient funding to continue the 7 % raise restoration of In-Home supportive Services hours beyond 2015-2016; and c). Sufficient funding to provide additional rate increases for providers of Medi- Cal and developmental disabilities services.” Importantly, the proclamation also states that the legislation must “Establish mechanisms so that any additional rate increases expand access to services.”

15. Second Extraordinary Session on Health Care Bills 19 Assembly Bills Introduced ABX2 4 (Levine) Managed Care Organization Provider Tax. ABX 2 13 (Gipson) Medi-Cal: AIDS Medi-Cal Waiver Program. ABX 2 18 (Bonilla) Taxation: distilled spirits: Cocktails for Healthy Outcomes Act. ABX 2 19 (Bonta) Managed care organization provider tax. 14 Senate Bills Introduced

16. Second Extraordinary Session on Health Care Results The only bill that passed the special session and was signed was ABx2 15 This is the “aid in dying bill” This bill permits a competent, qualified individual who is an adult with a terminal disease to receive a prescription for an aid- in-dying drug if certain conditions are met.

17. Second Extraordinary Session on Health Care Results ABX2 15 (Eggman) End of life. Chapter 1, Extraordinary Session 2 2015 This bill permits a competent, qualified individual who is an adult with a terminal disease to receive a prescription for an aid-in-dying drug if certain conditions are met, such as two oral requests, a minimum of 15 days apart, and a written request signed by two witnesses, is provided to his or her attending physician, the attending physician refers the patient to a consulting physician to confirm diagnosis and capacity to make medical decisions, and the attending physician refers the patient to a mental health specialist, if indicated. Sunsets these provisions on January 1, 2026.

18. Medi-Cal Reimbursement 10% fee for service provider payment reduction from 2011 now being applied to virtually all providers Provider groups lost lawsuit DHCS now implementing reduction We have joined with other providers to repeal the 10% cut Applies to fee for service (80% of Medi-Cal now in managed care)

19. Medi-Cal Fee For Service Payment Cut to labs in 2012 – AB 1494 10% cut in lab reimbursement—retroactive to July 1, 2012. (In addition to 2011 10% cut) AB 1494 also required DHCS to produce a new rate development methodology based on data submission DHCS Rate Development staff was overwhelmed by amount of data and variability in rates for lab testing and they were delayed in implementing this.

20. Implementation 10% cut in lab reimbursement. This is retroactive from July 1, 2012 – June 30, 2015 (in addition to 2011 10% cut) New rates went into effect July 1, 2015 State computer system should have started paying the new rate on November 1, 2015. 2 retroactive recoupments starting in February 10% cut from July 1, 2012 – June 30, 2015 @5% The dollar amount difference between the old and new rate per test for July 1, 2015-October 31, 2015 @100%

21. Medi-Cal Lab Provider Moratorium DHCS announced that they will NOT extend the moratorium on the enrollment of clinical laboratory providers. Moratorium expired on October 3, 2015 Six month “high” categorical risk period following the expiration of the moratorium Must submit fingerprints for criminal background check

22. 2016

23. State Level Lab Issues for 2016 Reimbursement from Public Programs Frequency Limits Staffing requirements and standards Licensure regulations and fees Operational issues - e.g. auto verification, use of personnel Phlebotomy certification Specimen lock box mandates Cap on number of tests which may be provided to patients Etc., etc., etc….

24. 2016 Election is Key to Next Decade 2016 could be an election of monumental importance in the state Assembly, where 16 of 80 members will be termed out. After that, no members term out for the next three cycles, meaning that 2016 will likely see the last major changes in that house until the mid 2020s. For the business community, organized labor, environmentalists, education groups and any major interest with business before the legislature, 2016 is the last election cycle in which they could create any significant change in the composition of the lower house. If the Mod Dems can hold or grow their block of votes, then the dynamic we saw this year would solidify into a permanent structure for several years to come.