Report 2000-009 Summary - August 2000

Department of Health Services:

Drug Treatment Authorization Requests Continue to Increase


The Bureau of State Audits presents the 16th in a series of semiannual reports evaluating the manner in which the Department of Health Services (department) processes reimbursement requests for certain prescribed drugs under the California Medical Assistance Program (Medi-Cal). These requests are known as drug treatment authorization requests (TARs).

From December 1999 through May 2000, the last 6-month interval in our current 24-month review period of June 1998 through May 2000, the department received 659,328 drug TARs. This amount represents an increase of 580,830 (740 percent) over that of our first 6-month review period 10 years ago, from June 1990 through November 1990. There are four major reasons for the increase. First, in November 1994, the law reduced the limit of prescriptions from 10 to 6 per month before a drug TAR must be submitted for an individual beneficiary. Second, although the number of Medi-Cal beneficiaries has decreased from its high point in 1995, the number of beneficiaries is still higher than it was during the first review period. Third, according to the chief of the department's Northern Pharmacy Section, drug TARs have increased because beneficiaries with more severe illnesses remain with Medi-Cal's fee-for-service program instead of transferring to the managed care program, which does not require drug TARs. According to the chief, there is also a trend toward receiving medication and care outside of a hospital setting.

The department processed 662,288 drug TARs from December 1999 through May 2000, an increase of 585,006 (757 percent) over the number processed during the first six-month period we reviewed. This amount represents the most activity since that initial review period. The increase in TARs processed corresponds to the increase in TARs received.

Although the number of processed drug TARs has grown substantially since June 1990, the percentage of backlogged drug TARs has fluctuated, ranging from a high of 34 percent of the TARs received in May 1992 to a low of 1.6 percent in November 1995. Backlogged drug TARs are those that the department receives and logs in but does not fully process as of 5 p.m. on the specific workday that the TARs are received. The average month-end backlog of 11.6 percent for the current 24-month review period does not vary greatly from the 11.9 percent reported during our previous review. However, this average represents a significant improvement over some previous periods.

The department's policy is to process all drug TARs within one workday. However, the department was unable to accomplish this goal for all TARs we sampled during this audit. The Stockton drug unit could not process all drug TARs within one workday because of the increase in TARs received, and because of a lack of available data-entry staff during this review period. The unit took up to three workdays to fully process 591 of the 2,711 drug TARs we sampled that were either mailed or faxed. According to the chief of the Northern Pharmacy Section, the department's contractor, Electronic Data Systems (EDS), responsible for entering each TAR into a database, lacked available data-entry staff. Although staff had not fully processed the TARs, they entered the decisions for 225 requests into the Provider Telecommunications Network within one workday. However, the decisions for the remaining 366 drug TARs, 13 percent of our sample, were not available to providers in one workday. The Los Angeles drug unit took up to five workdays to fully process 24 of the drug TARs we sampled; however, the consultant's decisions for these TARs were available to drug providers within one workday.

In addition to delays due to staffing problems, processing is slow because the present contract does not require EDS to process drug TARs in the time period required by department policy. A new system that the department expects to implement in the fall of 2000 should shorten processing times and improve the department's monitoring of processing times.

From December 1999 through May 2000, beneficiaries submitted to the Department of Social Services 103 fair-hearing requests regarding decisions on drug TARs that were denied or deferred. This figure represents a decrease of 22 (17.6 percent) over the previous review period of December 1997 through May 1998.


As recommended in our previous report, the department should take the following steps to ensure that it is promptly processing drug TARs:

  • Continue to more closely monitor the scheduling of data-entry staff to ensure that the department can process within the required time frame the estimated number of drug TARs it will receive.

  • When the current contract with EDS expires, negotiate a new contract with a turnaround time for drug TARs of one workday.

  • Ensure that its new system includes comprehensive procedures for monitoring processing times.

The department concurs with our findings and recommendations. In addition, the department provides information concerning TARs processing. The department also states that it has taken steps to address the staffing problems of the Northern Pharmacy Section.

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