This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0183a.HRS
DATE: 4/3/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 183 Medicaid Step-Therapy Protocols for Drugs for Serious Mental Illness Treatments
SPONSOR(S): Healthcare Regulation Subcommittee, Gonzalez Pittman
TIED BILLS: IDEN./SIM. BILLS: SB 112
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Healthcare Regulation Subcommittee 17 Y, 0 N, As CS Guzzo McElroy
2) Health Care Appropriations Subcommittee
3) Health & Human Services Committee
SUMMARY ANALYSIS
Mental illness refers to a wide range of mental health conditions — disorders that affect mood, thinking and
behavior, including depression, anxiety disorders, schizophrenia, eating disorders and addictive behaviors.
Many people have mental health concerns from time to time, but a mental health concern becomes a mental
illness when ongoing signs and symptoms cause frequent stress and affect the ability to function.
A person with a serious mental illness (SMI) is someone over the age of 18 who has, or had within the past
year, a diagnosable mental, behavioral, or emotional disorder that causes serious functional impairment that
substantially interferes with or limits one or more major life activities. SMI is a small subset of the 300 mental
illnesses listed in the Diagnostic and Statistical Manual of Mental Disorders, and includes disorders such as
bipolar disorder, major depressive disorder, schizophrenia, and schizoaffective disorder.
Both commercial and government sector health coverage apply utilization management techniques to reduce
costs, maximize volume pricing arrangements, and prevent catastrophic medical events. Step therapy, is one
such technique, commonly used with prescription drug benefits. Step therapy policies require enrollees to first
try a preferred drug or service before obtaining an alternate drug or service for a particular medical condition.
Step therapy is commonly used in conjunction with prior authorization policies, which require providers to
obtain approval from an insurer before a patient may receive specified prescription drugs under the plan. Step
therapy policies require an insured to try one drug first to treat his or her medical condition before they will
cover another drug for that condition.
CS/HB 183 requires the Medicaid program to approve a drug product for the treatment of a SMI without
meeting the step-therapy and prior authorization criteria if the prescribing physician documents to AHCA that
the drug is medically necessary because:
There is no drug on the PDL to treat the SMI which is an acceptable clinical alternative;
The alternatives have been ineffective in the patient’s SMI treatment;
The drug product or medication of a similar drug class is prescribed for the treatment of a SMI; prior
authorization has been granted previously for the prescribed drug; and the medication was dispensed
to the patient during the previous 12 months; or
Based on historical evidence and known characteristics of the patient and the drug, the drug is likely to
be ineffective, or the number of doses has been ineffective.
The bill directs the Agency for Health Care Administration to include the impact of removing SMI drugs from
step-therapy protocols in the program rates for Medicaid managed medical assistance and long-term care
managed care in the program rates effective on October 1, 2023.
The bill will have a significant negative fiscal impact on the Medicaid program, and no fiscal impact on local
government. See Fiscal Comments.
The bill provides an effective date of July 1, 2023. STORAGE NAME: h0183a.HRS PAGE: 2
DATE: 4/3/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Serious Mental Illness
Mental illness refers to a wide range of mental health conditions — disorders that affect mood, thinking
and behavior, including depression, anxiety disorders, schizophrenia, eating disorders and addictive
behaviors.
1
Many people have mental health concerns from time to time, but a mental health concern
becomes a mental illness when ongoing signs and symptoms cause frequent stress and affect the
ability to function.
2
Signs and symptoms of mental illness can vary, depending on the disorder, circumstances and other
factors. Mental illness symptoms can affect emotions, thoughts and behaviors. Examples of signs and
symptoms include:
Feeling sad or down
Confused thinking or reduced ability to concentrate
Excessive fears or worries, or extreme feelings of guilt
Extreme mood changes of highs and lows
Withdrawal from friends and activities
Significant tiredness, low energy or problems sleeping
Detachment from reality (delusions), paranoia or hallucinations
Inability to cope with daily problems or stress
Trouble understanding and relating to situations and to people
Problems with alcohol or drug use
Major changes in eating habits
Sex drive changes
Excessive anger, hostility or violence
Suicidal thinking
3
Sometimes symptoms of a mental health disorder appear as physical problems, such as stomach pain,
back pain, headaches, or other unexplained aches and pains.
4
A person with a serious mental illness (SMI) is someone over the age of 18 who has, or had within the
past year, a diagnosable mental, behavioral, or emotional disorder that causes serious functional
impairment that substantially interferes with or limits one or more major life activities.
5
SMI is a small
subset of the 300 mental illnesses listed in the Diagnostic and Statistical Manual of Mental Disorders,
and includes disorders such as bipolar disorder, major depressive disorder, schizophrenia, and
schizoaffective disorder.
6
Florida Medicaid
1
Mayo Clinic, Patient Care and Health Information, Diseases and Conditions – Mental Illness, available at
https://www.mayoclinic.org/diseases-conditions/mental-illness/symptoms-causes/syc-20374968 (last viewed on March 28, 2023).
2
Id.
3
Id.
4
Id.
5
American Psychiatric Association and Substance Abuse and Mental Health Services Administration, SMIAdviser, What Is Serious
Mental Illness?, available at https://smiadviser.org/about/serious-mental-illness (last viewed on March 28, 2023).
6
Id. STORAGE NAME: h0183a.HRS PAGE: 3
DATE: 4/3/2023
Medicaid is the health care safety net for low-income Floridians. Medicaid is a partnership of the federal
and state governments established to provide coverage for health services for eligible persons. The
program is administered by the Agency for Health Care Administration (AHCA) and financed by federal
and state funds.
The structure of each state’s Medicaid program varies, but what states must pay for is largely
determined by the federal government, as a condition of receiving federal funds.
7
The federal
government sets the minimum mandatory populations to be included in every program, and the
minimum mandatory benefits to be covered. These mandatory benefits include physician services,
hospital services, home health services, and family planning, but do not include prescription drugs.
8
States can add benefits, with federal approval. Florida has added many optional benefits, including
prescription drug coverage.
9
The Florida Medicaid program covers approximately 4.1 million low-income individuals in Florida.
10
Medicaid is the largest single program in the state, representing more than 44 percent of the total Fiscal
Year 2022-2023 state budget.
11
Florida’s program is the 4th largest in the nation by enrollment and, for
FY 2020-2021, the program is the 4th largest in terms of expenditures.
12
Florida delivers medical assistance to most Medicaid recipients - approximately 78% - using a
comprehensive managed care model.
13
While current law requires provision of all Medicaid covered
services for these recipients through this managed care model,
14
AHCA retains control over
prescription drug benefits for both the managed care and the remaining fee-for-service populations.
Medicaid Prescribed Drug Benefits – Cost Control
Federal law requires state Medicaid programs to cover every drug for which the federal Department of
Health and Human Services (HHS) has negotiated a manufacturer rebate.
15
Florida law requires AHCA
to have a spending control program for this benefit, including a state-negotiated supplemental rebate,
which is in addition to the federal rebate.
16
AHCA contracts with a pharmacy benefit manager to
negotiate those rebates. Total federal and state rebate revenue for Fiscal Year 2021-2022 is projected
to be $2.15 billion, which is 58 percent of the total Medicaid prescription drug spend of $3.7 billion this
year. These revenues are reinvested in the Medicaid program.
Part of the spending control program is a Medicaid Preferred Drug List (PDL). The PDL is a list of drugs
which are the most cost-effective options in each therapeutic class.
17
AHCA establishes the PDL based
on the clinical efficacy and safety of the drug, as well as the price of the drug and the price of
competing products, taking into account the federal and state rebates.
18
In developing the PDL, AHCA
must consider the recommendations of the Medicaid Pharmacy and Therapeutics Committee, a
committee of clinicians which reviews drugs for clinical efficacy, safety and cost-effectiveness.
19
7
Title 42 U.S.C. §§ 1396-1396w-5; Title 42 C.F.R. Part 430-456 (§§ 430.0-456.725).
8
S. 409.905, F.S.
9
S. 409.906, F.S.
10
Agency for Health Care Administration, Florida Statewide Medicaid Monthly Enrollment Report, Feb. 2023, available at
https://ahca.myflorida.com/medicaid/Finance/data_analytics/enrollment_report/index.shtml (last viewed on March 28, 2023). United
States Census Bureau, QuickFacts, Florida, https://www.census.gov/quickfacts/fact/table/FL/PST045221 (last viewed on March 28,
2023).
11
Ch. 2022-156, L.O.F. See also Fiscal Analysis in Brief: 2022 Legislative Session, available at
http://edr.state.fl.us/content/revenues/reports/fiscal-analysis-in-brief/FiscalAnalysisinBrief2022.pdf (last viewed on March 28, 2023).
12
The Henry J. Kaiser Family Foundation, State Health Facts, Total Medicaid Spending FY 2021 and Total Monthly Medicaid and CHIP
Enrollment Nov. 2022, available at http://kff.org/statedata/ (last viewed on March 28, 2023).
13
S. 409.964, F.S.
14
S. 409.964, F.S.
15
Title 42 U.S.C. § 1396r-8. State Medicaid programs are authorized to cover non-rebated drugs with HHS approval, under certain
circumstances.
16
S. 409.912(5)(a), F.S.
17
S. 409.912(5)(a), F.S.; Agency for Health Care Administration, Florida Medicaid Preferred Drug List, March 8, 2023, available at
https://ahca.myflorida.com/medicaid/prescribed_drug/pharm_thera/fmpdl.shtml (last viewed on March 28, 2023).
18
SS. 409.912(5)(a)7., 409.91195(7), F.S.
19
S. 409.91195, F.S. The P&T Committee is comprised of 11 gubernatorial appointees, including four physicians, five pharmacists and
a consumer member. It must meet at least quarterly, and must review all drug classes every 12 months. Meetings are open to the STORAGE NAME: h0183a.HRS PAGE: 4
DATE: 4/3/2023
Another component of the spending control program is prior authorization. Current law allows AHCA to
condition reimbursement on prior authorization; that is, the prescriber or dispenser must obtain AHCA
(or managed care plan) approval prior to dispensing, or Medicaid will not pay for the drug.
20
AHCA may
require prior authorization:
21
For an indication not approved in labeling;
To comply with clinical guidelines; or
If the product has the potential for overuse, misuse, or abuse.
In the prior authorization process, the prescriber may be required to provide the rationale and
supporting medical evidence for the use of a drug.
22
For prior authorized PDL drugs, the prior
authorization system must guarantee a response within 24 hours, and cover a 72-hour supply of the
drug if that time is exceeded.
23
Prescribed Drug Step Therapy
Both commercial and government sector health coverage apply utilization management techniques to
reduce costs, maximize volume pricing arrangements, and prevent catastrophic medical events. Step
therapy, is one such technique, commonly used with prescription drug benefits. Step therapy policies
require enrollees to first try a preferred drug or service before obtaining an alternate drug or service for
a particular medical condition.
Step therapy is commonly used in conjunction with prior authorization policies, which require providers
to obtain approval from an insurer before a patient may receive specified prescription drugs under the
plan. For example, most insurers have a formulary or preferred drug list, which is an established list of
one or more prescription drugs within a therapeutic class deemed clinically equivalent and cost
effective. Prior authorization would limit an insured’s ability to obtain another drug within the therapeutic
class that is not part of the PDL without the insurer authorizing that drug.
Step therapy policies require an insured to try one drug first to treat his or her medical condition before
they will cover another drug for that condition. For example, if Drug A and Drug B both treat a medical
condition, a plan may require doctors to prescribe the most cost-effective drug, Drug A, first. If Drug A
does not work for a beneficiary, then the plan will cover Drug B. Step therapy is also known as “fail-
first”, as the insurer restricts coverage of expensive therapies unless patients have already failed
treatment with a lower-cost alternative.
Step therapy and prior authorization are enforcement mechanisms for an insurer’s preferred drug list or
formulary. They ensure that actual transaction volumes and manufacturer rebate levels align with the
actuarial assumptions that generated the price of the insurance coverage, while accommodating
clinically justified exceptions.
Researchers report that there is mixed evidence on the impact of step therapy policies.
24
A review of
the literature found that there is little good empirical evidence for or against cost savings and utilization
reduction.
25
Some studies suggest that step therapy policies have been effective at reducing drug costs
without increasing the use of other medical services,
26
while other studies have found that step therapy
public, and the committee is required to receive public testimony from interested parties; however, portions of meetings during which
rebates and other trade secrets are discussed are closed, pursuant to s. 409.91196, F.S., and 42 U.S.C. 1396r-8(b)(3)(D).
20
S. 409.91195(5), F.S.
21
S. 409.912(5)(a)12., F.S.
22
Id.
23
S. 409.912(5)(a), F.S.
24
Rahul K. Nayak and Steven D. Pearson, The Ethics Of 'Fail First’: Guidelines and Practical Scenarios for Step Therapy Coverage
Policies, Health Affairs 33, No.10 (2014):1779-1785, https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2014.0516 (last viewed on
March 28, 2023).
25
Motheral, B.R., Pharmaceutical Step Therapy Interventions: A Critical Review of the Literature, Journal of Managed Care Pharmacy
17, no. 2 (2011) 143-55, http://www.jmcp.org/doi/pdf/10.18553/jmcp.2011.17.2.143 (last viewed on March 28, 2023).
26
Supra, FN 24 at pg. 1780. STORAGE NAME: h0183a.HRS PAGE: 5
DATE: 4/3/2023
can increase total utilization costs over time because of increased inpatient admissions and emergency
department visits.
27
Commercial Insurance Step Therapy Regulation
Currently, Florida law limits the use of step therapy in commercial health insurance. Insurers and health
maintenance organizations (HMOs) may not require a step therapy protocol for a covered individual if
they:
Were previously approved to receive a specific drug through completion of a step therapy
protocol by another health insurance plan; and,
Can provide documentation from the other health insurance plan indicating that the specific
drug was paid for on the individual’s behalf within the past 90 days.
28
Medicaid Step Therapy Requirements
While Florida Medicaid covers all federally-rebated drugs, the use of drugs which are not on the PDL is
subject to additional scrutiny. Current law requires reimbursement for non-PDL drugs to be subject to a
step-therapy prior authorization process; specifically, PDL-listed drugs must have been used at some
point within the last 12 months before a non-listed drug can be used.
29
The step-therapy policy does not
apply if the prescriber provides medical or clinical documentation showing:
30
There is no drug on the PDL to treat the disease or medical condition which is an acceptable
clinical alternative;
The alternatives have been ineffective in the treatment of the beneficiary’s disease; or
Based on historic evidence and known characteristics of the patient and the drug, the drug is
likely to be ineffective, or the number of doses has been ineffective.
Medicaid Step Therapy Exception for Drugs for Schizophrenia, Schizotypal, or Delusion
Disorders
The Medicaid PDL includes numerous generic and brand name drugs for the treatment of serious
mental illness, including schizophrenia, schizotypal or delusional disorders. If the drug is not on the
PDL, the prescriber must obtain prior authorization before dispensing the medication.
When conducting prior authorization for mental health medications, AHCA uses guidelines developed
by the University of South Florida
31
, and includes those guidelines with the prior authorization criteria it
publishes online for prescribers.
32
In 2022, the Legislature added an exception to the requirement to use step therapy for non-PDL drugs
for medications used to treat schizophrenia, schizotypal or delusional disorders. The exception applies
if the prescriber provides clinical documentation that the product is medically necessary because the
patient had recently used it within the Medicaid program; that is:
Prior authorization was granted previously for the same drug; and
The medication was dispensed to the patient in the last 12 months.
Effect of Proposed Bill
27
Id.
28
Ss. 627.42393 and 641.31(46), F.S.
29
S. 409.912(5)(a)14., F.S.
30
Id.
31
University of South Florida, Florida Center for Behavioral Health Improvements and Solutions, Psychotherapeutic Medication
Guidelines 2019-2020, available at Florida Center for Behavioral Health Improvements and Solutions (floridabhcenter.org) (last viewed
on March 28, 2023).
32
Agency for Health Care Administration, Drug Criteria, available at Drug Criteria (myflorida.com) (last viewed on March 28, 2023). STORAGE NAME: h0183a.HRS PAGE: 6
DATE: 4/3/2023
CS/HB 183 requires the Medicaid program to approve a drug product for the treatment of a SMI without
meeting the step-therapy and prior authorization criteria if the prescribing physician documents to
AHCA that the drug is medical necessary because:
There is no drug on the PDL to treat the SMI which is an acceptable clinical alternative;
The alternatives have been ineffective in the patient’s SMI treatment;
The drug product or medication of a similar drug class is prescribed for the treatment of a SMI;
prior authorization has been granted previously for the prescribed drug; and the medication was
dispensed to the patient during the previous 12 months; or
Based on historical evidence and known characteristics of the patient and the drug, the drug is
likely to be ineffective, or the number of doses has been ineffective.
For the purposes of the bill, SMI means any of the following psychiatric disorders, defined by the
American Psychiatric Association in the Diagnostic and Statistical Manual of Mental Disorders, Fifth
Edition:
Bipolar disorders, including hypomanic, manic, depressive, and mixed-feature episodes.
Depression in childhood or adolescence.
Major depressive disorders, including single and recurrent depressive episodes.
Obsessive-compulsive disorders.
Paranoid personality disorder or other psychotic disorders.
Schizoaffective disorders, including bipolar or depressive symptoms.
Schizophrenia
By removing the step-therapy and prior authorization controls for drugs that treat SMI, a physician is
free to prescribe any drug for the treatment of SMI and, as long as the prescription includes one of the
criteria list above, the Medicaid must cover the drug. A significant reduction in the use of PDL drugs will
result in lower manufacturer rebate revenue to AHCA. It is currently unknown how many Medicaid
recipients were subject to step therapy for prescription drugs to treat these conditions. However, the
vast majority of prior authorization requests for non-PDL drugs are approved, which indicates the
number may be insignificant. Similarly, while 457 prior authorization requests resulted in a change in
therapy (over a three-year period), it is unknown how many were for drugs to treat these conditions or
how many were due to the step therapy policy.
Lastly, the bill directs AHCA to include the rate impact of removing SMI drugs from step-therapy
protocols in program rates for Medicaid managed medical assistance and long-term care managed
care, effective October 1, 2023.
The bill provides an effective date of July 1, 2023.
B. SECTION DIRECTORY:
Section 1: Amends s. 409.901, F.S., relating to definitions; ss. 409.901-409.920.
Section 2: Amends s. 409.912, F.S., relating to cost-effective purchasing of health care.
Section 3: Amends s. 409.910, F.S., relating to responsibility for payments on behalf of Medicaid-
eligible persons when other parties are liable.
Section 4: Creates an unnumbered section of law directing AHCA to include the impact of removing
SMI drugs from step-therapy protocols on program rates for Medicaid managed medical
assistance and long-term care managed care, effective October 1, 2023.
Section 5: Provides an effective date of October 1, 2023.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT: STORAGE NAME: h0183a.HRS PAGE: 7
DATE: 4/3/2023
1. Revenues:
The bill limits on use of step therapy for drugs for serious mental illness will result in lower drug
manufacturer rebates revenues to AHCA, due to reduced rebate negotiation power for all drugs.
The Medicaid PDL includes many brand and generic medications with robust federal rebates and
additional supplemental rebates offered by manufacturers which reduce costs to the Medicaid
budget. If numerous physicians prescribe drugs for serious mental illnesses that are not on the
PDL, it will result in an increase to drug costs in therapeutic classes for serious mental illness due to
a loss of rebate revenues. See Fiscal Comments.
2. Expenditures:
The bill requirements to pay for drugs currently subject to step therapy requirements means AHCA
will pay for more expensive drugs more often, rather than less expensive drugs. See Fiscal
Comments.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None.
D. FISCAL COMMENTS:
Drugs treating serious mental illness accounted for over $131 million in paid claims in the Medicaid
program in 2022.
33
Antidepressants alone were responsible for $30 million in paid claims, or 23 percent
of total paid claims.
34
Antipsychotics are projected to bring $13 million in rebates in 2023, with a total
spend of $70 million.
35
AHCA has estimated the difference in cost between drugs for serious mental illness on the PDL and
nonpreferred drugs for four major categories of medications:
Tricyclic antidepressants: As of March 2022, 99.9 percent of paid claims in this class were for
preferred drugs. Nonpreferred drugs in this therapeutic class can cost 10 times more than the
drugs on the PDL.
Selective Serotonin Reuptake Inhibitor (SSRI) antidepressants: As of June 2022, 99.3 percent
of paid claims in this class were for preferred drugs. Nonpreferred drugs in this therapeutic class
can cost 22 times more than the drugs on the PDL.
Other antidepressants: As of June 2022, 99.9 percent of paid claims in this class were for
preferred drugs, including oral and injectable medications. The oral nonpreferred
antidepressants can be more than 17 times more than drugs on the PDL.
Antipsychotics: As of September 2022, 98.3 percent of paid claims in this class were for
preferred drugs. The step therapy requirement for schizophrenia, schizotypal, and delusional
disorder drugs was removed in 2022. After removal, PDL compliance decreased 0.1 percent in
33
Agency for Health Care Administration, 2023 Agency Legislative Bill Analysis – HB 183, Jan. 5, 2023, pg. 4.
34
Id.
35
Id., pg. 6. STORAGE NAME: h0183a.HRS PAGE: 8
DATE: 4/3/2023
this class of drugs. The decrease in compliance resulted in reduced manufacturer rebates,
which offset the cost of spending.
36
AHCA completed an analysis using Florida data modeled to reflect utilization trends in states that are
unable to manage the serious mental illness class of drugs. AHCA estimates an increase in drug spend
between $33.7 million and $53.12 million annually, due to shifts in utilization trends and loss of
supplemental rebates.
37
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to impact county or municipal government.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
Current law provides AHCA sufficient rulemaking authority to implement the provisions of the bill.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On April 3, 2023, the Healthcare Regulation Subcommittee adopted one strike-all amendment and reported
the bill favorably as a committee substitute. The amendment:
Matched the House bill with the Senate CS bill version.
Required AHCA to include in the program rates effective October 1, 2023, the rate impact of
removing SMI drugs from the step-therapy protocols to Medicaid managed medical assistance and
long-term care managed care programs.
Changed the effective date to October 1, 2023.
The bill was reported favorable as amended. The analysis is drafted to the amendment bill as passed by
the Healthcare Regulation Subcommittee.
36
Id.
37
Id., pg. 8.