(a)

1. (1) The department shall establish a list of medical supplies. The list shall specify utilization controls to be applied to each medical supply product.
2. (2) The utilization controls specified shall include, but not be limited to, those provided by regulation of the department.
3. (3) The department shall notify providers at least 30 days prior to the effective date of a change in utilization controls.

(b)

1. (1) The department shall establish a list of maximum allowable product costs (MAPCS) for medical supplies, which shall be published in provider bulletins.

2. (2) The department shall update existing MAPCS and establish additional MAPCS in accordance with all of the following:

   1. (A) In establishing the MAPCS, the director shall assure that eligible persons shall receive medical supply products that are available to the public generally, without discrimination or segregation based purely on economic disability.
   2. (B) All related medical supply products within each particular medical supply type available for retail distribution shall be reviewed by the department in consultation with representatives from the California Association of Medical Product Suppliers and the California Pharmacists Association.
   3. (C) The department shall base MAPCS on the mean of the wholesale selling price of related medical supply products that are available in California. For purposes of this section, “wholesale selling price” means the price, including discounts and rebates, paid by a provider to a wholesaler, distributor, or manufacturer for a medical supply product.
   4. (D) In establishing the MAPCS, the department shall consider the provider related costs of the product that include, but are not limited to, shipping, handling, storage, and delivery.
   5. (E) The department shall notify Medi-Cal providers at least 30 days prior to the effective date of MAPCS.

(c)

1. (1) In establishing the list of medical supplies, the department may enter into exclusive or nonexclusive contracts on a bid or negotiated basis with manufacturers, distributors, dispensers, or suppliers of medical supplies pursuant to Section 14105.3.

2. (2) To ensure that the health needs of Medi-Cal beneficiaries are met, the department shall, when evaluating a decision to execute a contract, and when evaluating medical supplies for retention on, addition to, or deletion from, the list of medical supplies, consider all of the following criteria:

   1. (A) The safety of the product.
   2. (B) The effectiveness of the product.
   3. (C) The essential need for the product.
   4. (D) The potential for misuse of the product.
   5. (E) The immediate or long-term cost effectiveness of the product.
3. (3) The deficiency of a product when measured by one of the criteria specified in paragraph (2) may be sufficient to support a decision that the product should be deleted from, should not be added to, or should not be retained on, the list of medical supplies. However, the superiority of a product under one criterion may be sufficient to warrant the addition or retention of the product, notwithstanding a deficiency in another criterion.
4. (4) In the evaluation of the effectiveness of a product, the department may require the manufacturer, distributor, dispenser, or supplier to submit its products to testing by an independent laboratory. For the purposes of this section, “independent laboratory” means an analytical laboratory that is not a subsidiary of, affiliated with, or on retainer for, the manufacturer, distributor, dispenser, or supplier. The department shall only utilize this paragraph involving products where there is a demonstrated experience of a significant variation in performance among the products subject to this particular contracting process.