Bill Text: TX HB437 | 2019-2020 | 86th Legislature | Introduced

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Bill Title: Relating to allowing Medicaid managed care organizations to adopt their own drug formularies.

Sponsorship: Partisan Bill (Republican 1)

Status: (Introduced - Dead) 2019-02-20 - Referred to Public Health [HB437 Detail]

Download: Texas-2019-HB437-Introduced.html

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86R717 KFF-D
By: Shaheen H.B. No. 437

A BILL TO BE ENTITLED
AN ACT
relating to allowing Medicaid managed care organizations to adopt
their own drug formularies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 531.072(a), Government Code, is amended
to read as follows:
(a) In a manner that complies with applicable state and
federal law, the commission shall adopt preferred drug lists for
the Medicaid vendor drug program and for prescription drugs
purchased through the child health plan program. Except as
provided by Section 531.0721, the [The] commission may adopt
preferred drug lists for community mental health centers, state
mental health hospitals, and any other state program administered
by the commission or a state health and human services agency.
SECTION 2. Subchapter B, Chapter 531, Government Code, is
amended by adding Section 531.0721 to read as follows:
Sec. 531.0721. ADOPTION OF PRESCRIPTION DRUG FORMULARY BY
MEDICAID MANAGED CARE ORGANIZATION. A managed care organization
providing an outpatient pharmacy benefit plan for its Medicaid
enrolled recipients may adopt its own drug formulary and is not
required to:
(1) employ the vendor drug program formulary; or
(2) otherwise adhere to a preferred drug list the
commission adopts under Section 531.072.
SECTION 3. Section 531.073, Government Code, is amended by
amending Subsection (a) and adding Subsection (j) to read as
follows:
(a) The executive commissioner, in the rules and standards
governing the Medicaid vendor drug program and the child health
plan program, shall require prior authorization for the
reimbursement of a drug that is not included in the appropriate
preferred drug list adopted under Section 531.072, except as
provided by Subsection (j) and for any drug exempted from prior
authorization requirements by federal law. Except as provided by
Subsection (j), the [The] executive commissioner may require prior
authorization for the reimbursement of a drug provided through any
other state program administered by the commission or a state
health and human services agency, including a community mental
health center and a state mental health hospital if the commission
adopts preferred drug lists under Section 531.072 that apply to
those facilities and the drug is not included in the appropriate
list. The executive commissioner shall require that the prior
authorization be obtained by the prescribing physician or
prescribing practitioner.
(j) This section does not apply to a managed care
organization that elects to adopt its own drug formulary under
Section 531.0721.
SECTION 4. Sections 533.005(a) and (a-2), Government Code,
are 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 complies with the provider access
standards established under Section 533.0061;
(B) as a condition of contract retention and
renewal:
(i) continue to comply with the provider
access standards established under Section 533.0061; and
(ii) make substantial efforts, as
determined by the commission, to mitigate or remedy any
noncompliance with the provider access standards established under
Section 533.0061;
(C) pay liquidated damages for each failure, as
determined by the commission, to comply with the provider access
standards established under Section 533.0061 in amounts that are
reasonably related to the noncompliance; and
(D) 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 Section 533.0061(a) and specific data with respect to access
to primary care, specialty care, long-term services and supports,
nursing services, and therapy services on the average length of
time between:
(i) the date a provider requests prior
authorization for the care or service and the date the organization
approves or denies the request; and
(ii) the date the organization approves a
request for prior authorization 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, subject to the
provider access standards established under Section 533.0061:
(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 and prescription drug formulary
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 Medicaid;
[(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;
(B) [(E)] that comply [complies] with the
prohibition under Section 531.089;
(C) [(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;
(D) [(G)] that allow [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;
(E) [(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;
(F) [(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;
(G) [(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
(H) [(K)] under which the managed care
organization or pharmacy benefit manager, as applicable:
(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;
(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
reductions [reduction]; or
(B) the rate reductions are based on changes to
the Medicaid fee schedule or cost containment initiatives
implemented by the commission; and
(26) a requirement that the managed care organization
make initial and subsequent primary care provider assignments and
changes.
(a-2) Except as provided by Subsection (a)(23)(H)(viii)
[(a)(23)(K)(viii)], a maximum allowable cost list specific to a
provider and maintained by a managed care organization or pharmacy
benefit manager is confidential.
SECTION 5. Section 533.005(a-1), Government Code, is
repealed.
SECTION 6. As soon as practicable after the effective date
of this Act, the executive commissioner of the Health and Human
Services Commission shall adopt necessary rules to implement the
changes in law made by this Act.
SECTION 7. 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 8. This Act takes effect September 1, 2019.