Legislative Update 2017 Legislative Session

1. Legislative Update2017 Legislative Session CCLA Annual Conference Sacramento Public Policy Report Arnold and Associates, Inc. Kristi Foy Michael Arnold

2. What We Will Cover Sacramento Environment Key Legislation for 2017 State Budget Medi-Cal Reimbursement Issues Outlook for 2018 Legislation

3. Sacramento Environment • 2017 legislative year was the first year of the 2017-2018 Session • Democrats have a two-thirds majority in both houses • Assembly: Dems 55; Republicans 25 • Senate: Dems 27; Republicans 13 • Future outlook on politics in Sacramento • Who will be our next Governor?

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.

5. Key 2017 Legislation • AB 658 (Waldron) • 9/10/15 – State Auditor Report: LFS collecting more than it should from labs • Millions in lab fees that LFS has not spent • Proposal: Suspend annual State licensure fee for two years (2018 and 2019). • Bill passed the Legislature. • Bill signed into law by Governor Brown! • Savings of over $8.8 million for California labs

6. Assembly Health Committee ROLL CALL SHEETBill Number: 658 Hearing Date: _3/21/2017

7. AB 658 (Waldron) – Chapter 345, Statutes of 2017 SECTION 1. Section 1300.1 of the Business and Professions Code is amended to read: 1300.1. (a)  The application and renewal fees for clinical laboratory licenses specified in Section 1300 shall be adjusted annually in the manner specified in Section 100450 of the Health and Safety Code. The adjustments shall be rounded off to the nearest whole dollar amount. (b)  The annual renewal fee for clinical laboratory licenses specified in subdivision (g) of Section 1300 shall be suspended for the years 2018 and 2019. (c)  This section shall remain in effect only until January 1, 2020, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2020, deletes or extends that date. SEC. 2. Section 1300.1 is added to the Business and Professions Code, to read: 1300.1. (a)  The application and renewal fees for clinical laboratory licenses specified in Section 1300 shall be adjusted annually in the manner specified in Section 100450 of the Health and Safety Code. The adjustments shall be rounded off to the nearest whole dollar amount. (b)  This section shall become operative on January 1, 2020.

8. Key 2017 Legislation • AB 359 (Ridley-Thomas) • Changes data submission requirement from every year to once every 3 years for rate data • These data are used by DHCS to calculate new fee-for-service Medi-Cal rates • Saves money for labs and the State • Consistent with federal law for data reporting • Should eliminate delays in new rate information from DHCS and the need for retroactive recoupment by Medi-Cal

9. Key 2017 Legislation • AB 1316 – Childhood lead poisoning • Could be important to labs doing lead testing • Changes definition of “lead poisoning” to include concentrations of lead in arterial or cord blood. • Makes other changes to the lead poisoning prevention statutes • Signed by the Governor • Labs doing lead testing should review bill

10. Key 2017 Legislation • AB 1386 – Genomic Cancer Testing Info • Signed by the Governor • Requires DHCS to include information on breast cancer susceptibility gene (BRCA) mutations in written summary given to patients diagnosed with breast cancer. • Labs doing BRCA testing should review the contents of this legislation

11. Key 2017 Legislation • SB 43 (Hill) – Failed to pass. 2-year bill. • Subject: Antimicrobial-resistant infection • The author wanted to include mandatory reporting by labs for “all pathogens.” • We met with author and convinced him to delete the bad language which would have required voluminous data reporting by labs. • Bill died due to costs and concern by DHCS, hospitals and labs. • Would have required annual reporting of an “antibiogram” for the prior year…

12. Medi-Cal Reimbursement 10% provider payment reduction from 2011 (AB 97) now being applied to virtually all providers Provider groups lost lawsuit DHCS now implementing reductions We joined with other providers to repeal the AB 97 10% cut. That would help the calculation under the AB 1494 mechanism to determine lab rates. Lost this fight. New lawsuit by CCLA/Quest: AB 1494 language DOES NOT allow AB 97 10% cut to apply to new rates determined by the AB 1494 rate development mechanism. Status: Still in court.

13. Medi-Cal Payment Cut to labs in 2012 – AB 1494 • 10% cut in lab reimbursement—retroactive to July 1, 2012. (In addition to 2011 AB 97 10% cut—until the new rates are developed—Lawsuit issue) • AB 1494 also required DHCS to produce a new rate development methodology- • Methodology compares rates of other payers • New rates went into effect on July1, 2015. • Second round of new rates went into effect on July 1, 2016. • Third round: July 1, 2017! • We now have 4 retroactive recoupment periods! Crazy!

14. Medi-Cal Recoupment Issues • DHCS is currently seeking retroactive recoupment from labs for “over payments” • AB 1494: 10% cut; 7/1/2012 – 6/30/2015 • July 2015 Rates: 7/2015-2/2016 • July 2016 Rates: 7/2016-2/2017 • July 2017 Rates: 7/2017- ???? • The current situation is a mess! AB 659 should help!

15. 2017 – 2018 State budget On Time Budget -- Prop 25 is working Governor Advised Fiscal Restraint Billions in deficit now in the past Surplus going forward

16. Lab Issues for 2018 Reimbursement from Public Programs Medi-Cal Frequency Limits—still an issue Staffing requirements and standards—Working Group Created Licensure regulations and fees Problems in processing applications for Medi-Cal provider status from labs—now that the moratorium has been lifted PAMA implementation for Medicare CERT audits for Medicare – documentation of intent to order Etc., etc., etc….