SECTIONS 14195-14196 - California Statutes

WELFARE AND INSTITUTIONS CODE

SECTION 14195-14196

14195. It is the intent of the Legislature to provide medical
assistance, including prescribed drugs, to the state's eligible poor
in a manner consistent with the provisions of the federal Medicaid
Act, provided for under Title XIX of the Social Security Act (42
U.S.C. Sec. 1396 et seq.). It is the further intent of the
Legislature to test the effectiveness of an open formulary drug
therapy program. In order to help achieve this goal, the Legislature
hereby establishes an open drug formulary under the Medi-Cal program
wherein a beneficiary may receive the most appropriate, most
effective, and most cost-efficient drug available for the treatment
of his or her illness. It is also the intent of the Legislature in
enacting this article to establish a drug utilization review system
which will evaluate and enhance the therapeutic outcome of drugs
prescribed for persons eligible for Medi-Cal pursuant to this
chapter.

14195.2. The open drug formulary, as established pursuant to this
article, shall be implemented in one pilot project site. The site
shall be located in a northern California test area, comprised of
Sacramento and Placer Counties which includes urban, suburban, and
rural settings. This pilot project shall not be implemented until
federal approval is secured and full federal financial participation
is assured.

14195.3. (a) For purposes of the open drug formulary pilot project
as established by this article, a provider may be reimbursed for any
drug prescribed to a beneficiary if the drug is prescribed by a
licensed provider within the scope of his or her practice, as defined
by law, and if the drug is approved for use by the federal Food and
Drug Administration.
(b) Controlled substances shall be prescribed pursuant to the
requirements of federal laws and regulations and the requirements set
forth in Chapter 4 (commencing with Section 11150) of Division 10 of
the Health and Safety Code.
(c) For purposes of the open drug formulary pilot project as
established by this article, there shall be no requirement that prior
authorization be obtained by a provider before prescribing any drug
to a beneficiary if the provider determines the drug to be a medical
necessity in the treatment of the beneficiary.
(d) For purposes of the open drug formulary pilot project as
established by this article, a drug determined to be a medical
necessity shall be one whose use in the treatment is reasonable and
consistent with the objectives of the federal Medicaid Act as set
forth in Title XIX of the Social Security Act (42 U.S.C. Sec. 1396 et
seq.).

14195.4. A Medi-Cal Therapeutic Drug Utilization and Review
Committee is hereby established. The committee shall be composed of
17 members who shall serve at the pleasure of the appointing powers
as follows:
(a) The Governor shall appoint two representatives from the State
Department of Health Services, one representative from the Health and
Welfare Agency, and two representatives from schools of pharmacy.
(b) The Governor, the Speaker of the Assembly, and the Senate
Rules Committee shall each appoint one representative from the
following groups:
(1) Licensed pharmacists.
(2) Licensed physicians.
(3) Drug manufacturers.
(4) Medi-Cal beneficiaries.

14195.5. The Medi-Cal Therapeutic Drug Utilization and Review
Committee shall set standards for evaluation of the therapeutic
outcomes of prescribed drugs to be applied by an expert contractor to
the department. The committee shall have the following
responsibilities:
(a) Developing policy for monitoring and controlling
therapeutically inappropriate drug utilization.
(b) Overseeing the establishment of a computer-based information
system using the State Medicaid MMIS System, which shall provide
timely information on drug prescription and consumption and shall be
capable of tracking prescriptions by drug, by illness, by
beneficiary, and by provider.
The committee shall consult with expert contractors experienced in
therapeutically oriented drug utilization review in the discharge of
this responsibility.
(c) Establishing standards, in consultation with an expert
contractor experienced in the therapeutically oriented drug
utilization review, for dosage, duration, and effectiveness of
medications with respect to a particular diagnosis.
(d) Setting standards to serve as guidelines on misprescribing,
overprescribing, and contraindicated drug use, and protocols for
informing prescribers of inappropriate prescribing.

14195.6. The department shall develop a request for a proposal, and
may award a contract to an expert contractor to implement the
standards and practices established by the Medi-Cal Therapeutic Drug
Utilization Review System through use of a therapeutically oriented
drug utilization review system by July 1, 1989. The contract shall
include a requirement to analyze the therapeutic outcomes of the
Medi-Cal Drug Program using the California MMIS for the period of
July 1, 1987, through the date the standards established by this
article are implemented. Thereafter, the contractor shall submit
quarterly reports to the department and the Legislature analyzing
therapeutic outcomes in a manner that will allow comparisons with the
experience analyzed for the period of July 1, 1987, until
implementation of the standards established by this article. The
analysis shall include reports on at least the following items:
(a) Compatibility of medication to diagnosis.
(b) Overprescribing of drugs.
(c) Prescription of contraindicated or incompatible drugs.
(d) Number of days of drug-induced hospitalization and
institutionalizati on in nursing facilities or all categories of
intermediate care for the developmentally disabled occurring because
of the factors specified in subdivisions (a) to (c), inclusive.
(e) Number of days of drug-induced hospitalization and
institutionalizati on in nursing facilities or any category of
intermediate care facility for the developmentally disabled avoided
due to changes in drug regimes which result from compliance by
prescribers and beneficiaries with the standards established pursuant
to this article.
The department is authorized to require the contractor to phase in
implementation of the prescriber notification, as established by
protocols for informing prescribers of inappropriate prescribing.

14195.7. This article shall not apply to any service rendered by a
provider in conjunction with any capitated rate or primary care case
contract negotiated pursuant to this chapter or Chapter 8 (commencing
with Section 14200) by either the department or the California
Medical Assistance Commission unless both parties to the contract
mutually agree that application of the standards established by this
article would be beneficial to the Medi-Cal eligibles enrolled in
plans operating pursuant to capitated rate contracts.

14195.9. In no case shall the director's discretion under Section
14120 be exercised to reduce reimbursement to providers of
pharmaceutical services because of increased costs in the drug
component of the Medi-Cal program arising from the implementation of
the open formulary concept.

14196. (a) The department shall adopt any regulations necessary to
implement this article. These regulations shall be adopted as
emergency regulations in accordance with Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, and, for the purposes of the Administrative Procedure Act,
shall be deemed an emergency, and necessary for the immediate
preservation of the public peace, health and safety, or general
welfare.
(b) Any provision of this article which is in conflict with any
federal statute or regulation shall be inapplicable to the extent of
that conflict but the remainder of the provisions shall be in effect
to the extent no conflict exists.
The department shall seek all federal waivers necessary to
implement this article. The provisions for which federal waivers
cannot be obtained shall not be implemented, but provisions for which
waivers are either obtained or found to be unnecessary shall be
unaffected by the inability to obtain federal waivers for the other
provisions.
(c) The department shall seek maximum federal reimbursement for
the MMIS-based Drug Establishment Review System established by this
article.