84R10167 EES-F
	By: Kolkhorst	S.B. No. 1612

	A BILL TO BE ENTITLED
	AN ACT
	relating to the reimbursement of prescription drugs under the
	Medicaid managed care and child health plan programs.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 533.005(a), Government Code, is amended
	to read as follows:
	(a)  A contract between a managed care organization and the
	commission for the organization to provide health care services to
	recipients must contain:
	(1)  procedures to ensure accountability to the state
	for the provision of health care services, including procedures for
	financial reporting, quality assurance, utilization review, and
	assurance of contract and subcontract compliance;
	(2)  capitation rates that ensure the cost-effective
	provision of quality health care;
	(3)  a requirement that the managed care organization
	provide ready access to a person who assists recipients in
	resolving issues relating to enrollment, plan administration,
	education and training, access to services, and grievance
	procedures;
	(4)  a requirement that the managed care organization
	provide ready access to a person who assists providers in resolving
	issues relating to payment, plan administration, education and
	training, and grievance procedures;
	(5)  a requirement that the managed care organization
	provide information and referral about the availability of
	educational, social, and other community services that could
	benefit a recipient;
	(6)  procedures for recipient outreach and education;
	(7)  a requirement that the managed care organization
	make payment to a physician or provider for health care services
	rendered to a recipient under a managed care plan on any claim for
	payment that is received with documentation reasonably necessary
	for the managed care organization to process the claim:
	(A)  not later than:
	(i)  the 10th day after the date the claim is
	received if the claim relates to services provided by a nursing
	facility, intermediate care facility, or group home;
	(ii)  the 30th day after the date the claim
	is received if the claim relates to the provision of long-term
	services and supports not subject to Subparagraph (i); and
	(iii)  the 45th day after the date the claim
	is received if the claim is not subject to Subparagraph (i) or (ii);
	or
	(B)  within a period, not to exceed 60 days,
	specified by a written agreement between the physician or provider
	and the managed care organization;
	(7-a)  a requirement that the managed care organization
	demonstrate to the commission that the organization pays claims
	described by Subdivision (7)(A)(ii) on average not later than the
	21st day after the date the claim is received by the organization;
	(8)  a requirement that the commission, on the date of a
	recipient's enrollment in a managed care plan issued by the managed
	care organization, inform the organization of the recipient's
	Medicaid certification date;
	(9)  a requirement that the managed care organization
	comply with Section 533.006 as a condition of contract retention
	and renewal;
	(10)  a requirement that the managed care organization
	provide the information required by Section 533.012 and otherwise
	comply and cooperate with the commission's office of inspector
	general and the office of the attorney general;
	(11)  a requirement that the managed care
	organization's usages of out-of-network providers or groups of
	out-of-network providers may not exceed limits for those usages
	relating to total inpatient admissions, total outpatient services,
	and emergency room admissions determined by the commission;
	(12)  if the commission finds that a managed care
	organization has violated Subdivision (11), a requirement that the
	managed care organization reimburse an out-of-network provider for
	health care services at a rate that is equal to the allowable rate
	for those services, as determined under Sections 32.028 and
	32.0281, Human Resources Code;
	(13)  a requirement that, notwithstanding any other
	law, including Sections 843.312 and 1301.052, Insurance Code, the
	organization:
	(A)  use advanced practice registered nurses and
	physician assistants in addition to physicians as primary care
	providers to increase the availability of primary care providers in
	the organization's provider network; and
	(B)  treat advanced practice registered nurses
	and physician assistants in the same manner as primary care
	physicians with regard to:
	(i)  selection and assignment as primary
	care providers;
	(ii)  inclusion as primary care providers in
	the organization's provider network; and
	(iii)  inclusion as primary care providers
	in any provider network directory maintained by the organization;
	(14)  a requirement that the managed care organization
	reimburse a federally qualified health center or rural health
	clinic for health care services provided to a recipient outside of
	regular business hours, including on a weekend day or holiday, at a
	rate that is equal to the allowable rate for those services as
	determined under Section 32.028, Human Resources Code, if the
	recipient does not have a referral from the recipient's primary
	care physician;
	(15)  a requirement that the managed care organization
	develop, implement, and maintain a system for tracking and
	resolving all provider appeals related to claims payment, including
	a process that will require:
	(A)  a tracking mechanism to document the status
	and final disposition of each provider's claims payment appeal;
	(B)  the contracting with physicians who are not
	network providers and who are of the same or related specialty as
	the appealing physician to resolve claims disputes related to
	denial on the basis of medical necessity that remain unresolved
	subsequent to a provider appeal;
	(C)  the determination of the physician resolving
	the dispute to be binding on the managed care organization and
	provider; and
	(D)  the managed care organization to allow a
	provider with a claim that has not been paid before the time
	prescribed by Subdivision (7)(A)(ii) to initiate an appeal of that
	claim;
	(16)  a requirement that a medical director who is
	authorized to make medical necessity determinations is available to
	the region where the managed care organization provides health care
	services;
	(17)  a requirement that the managed care organization
	ensure that a medical director and patient care coordinators and
	provider and recipient support services personnel are located in
	the South Texas service region, if the managed care organization
	provides a managed care plan in that region;
	(18)  a requirement that the managed care organization
	provide special programs and materials for recipients with limited
	English proficiency or low literacy skills;
	(19)  a requirement that the managed care organization
	develop and establish a process for responding to provider appeals
	in the region where the organization provides health care services;
	(20)  a requirement that the managed care organization:
	(A)  develop and submit to the commission, before
	the organization begins to provide health care services to
	recipients, a comprehensive plan that describes how the
	organization's provider network will provide recipients sufficient
	access to:
	(i)  preventive care;
	(ii)  primary care;
	(iii)  specialty care;
	(iv)  after-hours urgent care;
	(v)  chronic care;
	(vi)  long-term services and supports;
	(vii)  nursing services; and
	(viii)  therapy services, including
	services provided in a clinical setting or in a home or
	community-based setting; and
	(B)  regularly, as determined by the commission,
	submit to the commission and make available to the public a report
	containing data on the sufficiency of the organization's provider
	network with regard to providing the care and services described
	under Paragraph (A) and specific data with respect to Paragraphs
	(A)(iii), (vi), (vii), and (viii) on the average length of time
	between:
	(i)  the date a provider makes a referral for
	the care or service and the date the organization approves or denies
	the referral; and
	(ii)  the date the organization approves a
	referral for the care or service and the date the care or service is
	initiated;
	(21)  a requirement that the managed care organization
	demonstrate to the commission, before the organization begins to
	provide health care services to recipients, that:
	(A)  the organization's provider network has the
	capacity to serve the number of recipients expected to enroll in a
	managed care plan offered by the organization;
	(B)  the organization's provider network
	includes:
	(i)  a sufficient number of primary care
	providers;
	(ii)  a sufficient variety of provider
	types;
	(iii)  a sufficient number of providers of
	long-term services and supports and specialty pediatric care
	providers of home and community-based services; and
	(iv)  providers located throughout the
	region where the organization will provide health care services;
	and
	(C)  health care services will be accessible to
	recipients through the organization's provider network to a
	comparable extent that health care services would be available to
	recipients under a fee-for-service or primary care case management
	model of Medicaid managed care;
	(22)  a requirement that the managed care organization
	develop a monitoring program for measuring the quality of the
	health care services provided by the organization's provider
	network that:
	(A)  incorporates the National Committee for
	Quality Assurance's Healthcare Effectiveness Data and Information
	Set (HEDIS) measures;
	(B)  focuses on measuring outcomes; and
	(C)  includes the collection and analysis of
	clinical data relating to prenatal care, preventive care, mental
	health care, and the treatment of acute and chronic health
	conditions and substance abuse;
	(23)  subject to Subsection (a-1), a requirement that
	the managed care organization develop, implement, and maintain an
	outpatient pharmacy benefit plan for its enrolled recipients:
	(A)  that exclusively employs the vendor drug
	program formulary and preserves the state's ability to reduce
	waste, fraud, and abuse under the Medicaid program;
	(B)  that adheres to the applicable preferred drug
	list adopted by the commission under Section 531.072;
	(C)  that includes the prior authorization
	procedures and requirements prescribed by or implemented under
	Sections 531.073(b), (c), and (g) for the vendor drug program;
	(D)  for purposes of which the managed care
	organization:
	(i)  may not negotiate or collect rebates
	associated with pharmacy products on the vendor drug program
	formulary; and
	(ii)  may not receive drug rebate or pricing
	information that is confidential under Section 531.071;
	(E)  that complies with the prohibition under
	Section 531.089;
	(F)  under which the managed care organization may
	not prohibit, limit, or interfere with a recipient's selection of a
	pharmacy or pharmacist of the recipient's choice for the provision
	of pharmaceutical services under the plan through the imposition of
	different copayments;
	(G)  that allows the managed care organization or
	any subcontracted pharmacy benefit manager to contract with a
	pharmacist or pharmacy providers separately for specialty pharmacy
	services, except that:
	(i)  the managed care organization and
	pharmacy benefit manager are prohibited from allowing exclusive
	contracts with a specialty pharmacy owned wholly or partly by the
	pharmacy benefit manager responsible for the administration of the
	pharmacy benefit program; and
	(ii)  the managed care organization and
	pharmacy benefit manager must adopt policies and procedures for
	reclassifying prescription drugs from retail to specialty drugs,
	and those policies and procedures must be consistent with rules
	adopted by the executive commissioner and include notice to network
	pharmacy providers from the managed care organization;
	(H)  under which the managed care organization may
	not prevent a pharmacy or pharmacist from participating as a
	provider if the pharmacy or pharmacist agrees to comply with the
	financial terms and conditions of the contract as well as other
	reasonable administrative and professional terms and conditions of
	the contract;
	(I)  under which the managed care organization may
	include mail-order pharmacies in its networks, but may not require
	enrolled recipients to use those pharmacies, and may not charge an
	enrolled recipient who opts to use this service a fee, including
	postage and handling fees;
	(J)  under which the managed care organization or
	pharmacy benefit manager, as applicable, must pay claims in
	accordance with Section 843.339, Insurance Code; and
	(K)  under which the managed care organization or
	pharmacy benefit manager, as applicable, must comply with Section
	533.00512 as a condition of contract retention and renewal[:
	[(i)     to place a drug on a maximum allowable
	cost list, must ensure that:
	[(a)     the drug is listed as "A" or "B"
	rated in the most recent version of the United States Food and Drug
	Administration's Approved Drug Products with Therapeutic
	Equivalence Evaluations, also known as the Orange Book, has an "NR"
	or "NA" rating or a similar rating by a nationally recognized
	reference; and
	[(b)     the drug is generally available
	for purchase by pharmacies in the state from national or regional
	wholesalers and is not obsolete;
	[(ii)     must provide to a network pharmacy
	provider, at the time a contract is entered into or renewed with the
	network pharmacy provider, the sources used to determine the
	maximum allowable cost pricing for the maximum allowable cost list
	specific to that provider;
	[(iii)     must review and update maximum
	allowable cost price information at least once every seven days to
	reflect any modification of maximum allowable cost pricing;
	[(iv)     must, in formulating the maximum
	allowable cost price for a drug, use only the price of the drug and
	drugs listed as therapeutically equivalent in the most recent
	version of the United States Food and Drug Administration's
	Approved Drug Products with Therapeutic Equivalence Evaluations,
	also known as the Orange Book;
	[(v)     must establish a process for
	eliminating products from the maximum allowable cost list or
	modifying maximum allowable cost prices in a timely manner to
	remain consistent with pricing changes and product availability in
	the marketplace;
	[(vi)  must:
	[(a)     provide a procedure under which a
	network pharmacy provider may challenge a listed maximum allowable
	cost price for a drug;
	[(b)     respond to a challenge not later
	than the 15th day after the date the challenge is made;
	[(c)     if the challenge is successful,
	make an adjustment in the drug price effective on the date the
	challenge is resolved, and make the adjustment applicable to all
	similarly situated network pharmacy providers, as determined by the
	managed care organization or pharmacy benefit manager, as
	appropriate;
	[(d)     if the challenge is denied,
	provide the reason for the denial; and
	[(e)     report to the commission every 90
	days the total number of challenges that were made and denied in the
	preceding 90-day period for each maximum allowable cost list drug
	for which a challenge was denied during the period;
	[(vii)     must notify the commission not later
	than the 21st day after implementing a practice of using a maximum
	allowable cost list for drugs dispensed at retail but not by mail;
	and
	[(viii)     must provide a process for each of
	its network pharmacy providers to readily access the maximum
	allowable cost list specific to that provider];
	(24)  a requirement that the managed care organization
	and any entity with which the managed care organization contracts
	for the performance of services under a managed care plan disclose,
	at no cost, to the commission and, on request, the office of the
	attorney general all discounts, incentives, rebates, fees, free
	goods, bundling arrangements, and other agreements affecting the
	net cost of goods or services provided under the plan; and
	(25)  a requirement that the managed care organization
	not implement significant, nonnegotiated, across-the-board
	provider reimbursement rate reductions unless:
	(A)  subject to Subsection (a-3), the
	organization has the prior approval of the commission to make the
	reduction; or
	(B)  the rate reductions are based on changes to
	the Medicaid fee schedule or cost containment initiatives
	implemented by the commission.
	SECTION 2.  Subchapter A, Chapter 533, Government Code, is
	amended by adding Section 533.00512 to read as follows:
	Sec. 533.00512.  REIMBURSEMENT METHODOLOGY FOR PRESCRIPTION
	DRUGS. (a)  A managed care organization that contracts with the
	commission under this chapter or a pharmacy benefit manager
	administering a pharmacy benefit program on behalf of the managed
	care organization shall reimburse a pharmacy or pharmacist that
	dispenses a prescribed prescription drug to a recipient for:
	(1)  subject to Subsection (b), the drug ingredient
	cost using the National Average Drug Acquisition Cost published by
	the Centers for Medicare and Medicaid Services; and
	(2)  except as provided by Subsection (e), the cost of
	dispensing the drug by paying the pharmacy or pharmacist, as
	applicable, a dispensing fee equal to the greater of $7.93 plus an
	amount equal to 1.96 percent of the amount paid under Subdivision
	(1) or Subsection (b), as applicable.
	(b)  If a National Average Drug Acquisition Cost is not
	available to determine the ingredient cost of a prescription drug
	for the purpose of Subsection (a)(1), the managed care organization
	or pharmacy benefit manager shall reimburse the pharmacy or
	pharmacist for the drug ingredient cost using:
	(1)  the wholesale acquisition cost, less an amount
	equal to two percent of that cost; or
	(2)  an amount equal to the amount paid for the drug
	under the traditional fee-for-service arrangement.
	(c)  A managed care organization that contracts with the
	commission under this chapter or a pharmacy benefit manager
	administering a pharmacy benefit program on behalf of the managed
	care organization shall review and update cost information at least
	once every seven days to reflect any modification of the National
	Average Drug Acquisition Cost or wholesale acquisition cost for a
	prescription drug.
	(d)  Not later than December 1, 2016, the commission shall
	complete a study of the average cost of dispensing prescription
	drugs for pharmacies and pharmacists participating in the Medicaid
	managed care and child health plan programs.  The commission may
	contract with a third party to conduct the study required by this
	subsection.  This subsection expires September 1, 2017.
	(e)  If the executive commissioner finds, as a result of the
	study conducted under Subsection (d), that the average cost of
	dispensing prescription drugs under the Medicaid managed care and
	child health plan programs is greater than $10.12, the executive
	commissioner by rule may establish a dispensing fee greater than
	the fee required by Subsection (a)(2).
	SECTION 3.  Subchapter D, Chapter 62, Health and Safety
	Code, is amended by adding Section 62.160 to read as follows:
	Sec. 62.160.  REIMBURSEMENT METHODOLOGY FOR PRESCRIPTION
	DRUGS. A managed care organization providing pharmacy benefits
	under the child health plan program or a pharmacy benefit manager
	administering a pharmacy benefit program on behalf of the managed
	care organization shall comply with Section 533.00512, Government
	Code.
	SECTION 4.  Section 533.005(a-2), Government Code, is
	repealed.
	SECTION 5.  If before implementing any provision of this Act
	a state agency determines that a waiver or authorization from a
	federal agency is necessary for implementation of that provision,
	the agency affected by the provision shall request the waiver or
	authorization and may delay implementing that provision until the
	waiver or authorization is granted.
	SECTION 6.  This Act takes effect September 1, 2015.