The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Health Policy
BILL: SB 264
INTRODUCER: Senator Harrell
SUBJECT: Step-therapy Protocols
DATE: February 17, 2025
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Morgan Brown HP Pre-meeting
2. AHS
3. FP
I. Summary:
SB 264 creates an exception from step-therapy prior authorization requirements within the
Florida Medicaid program for a drug product that is prescribed for the treatment of a serious
mental illness, as that term is defined in the bill, or a medication of a similar drug class if prior
authorization was previously granted for the prescribed drug and the medication was dispensed
to the patient during the previous 12 months.
Upon becoming law, the bill directs the Florida Agency for Health Care Administration (AHCA)
to include the bill’s rate impact within the Statewide Medicaid Managed Care program rates that
take effect October 1, 2025.
The AHCA reports that the bill will have a fiscal impact on the Florida Medicaid program. See
Section V of this analysis.
Except as otherwise expressly provided, the bill takes effect on October 1, 2025.
II. Present Situation:
The Florida Medicaid Program
Florida Medicaid is the health care safety net for low-income Floridians. The national Medicaid
program is a partnership of federal and state governments established to provide coverage for
health services for eligible persons. Florida’s program is administered by the AHCA and
financed through state and federal funds. As of December 2024, the Florida Medicaid program
covers over 4.2 million low-income individuals.
1
1
Florida Agency for Health Care Administration, Senate Bill 264 Analysis (Feb. 5, 2025) (on file with Senate Committee on
Health Policy).
REVISED: BILL: SB 264 Page 2
A Medicaid state plan is an agreement between a state and the federal government describing
how the state administers its Medicaid programs. The state plan establishes groups of individuals
covered under the Medicaid program, services that are provided, payment methodologies, and
other administrative and organizational requirements.
2
In order to participate in Medicaid, federal law requires states to cover certain population groups
(mandatory eligibility groups) and gives states the flexibility to cover other population groups
(optional eligibility groups). States set individual eligibility criteria within federal minimum
standards.
3
The AHCA may seek an amendment to the state plan as necessary to comply with
federal or state laws or to implement program changes.
4
In Florida, the majority of Medicaid recipients receive their services through a managed care
plan contracted with the AHCA under the Statewide Medicaid Managed Care (SMMC) program.
The SMMC program has three components: the Managed Medical Assistance (MMA) program,
the Long-term Care program, and the Prepaid Dental Health program. Among these three
components, Florida’s SMMC program offers a health care package covering acute, preventive,
behavioral health, prescribed drugs, long-term care, and dental services. The SMMC benefits are
authorized by federal authority and are specifically required in ss.409.973 and 409.98, F.S.
5
The AHCA contracts with managed care plans on a regional basis to provide services to eligible
recipients. The MMA program, which covers most medical and acute care services for managed
care plan enrollees, was fully implemented in 2014 and was re-procured for a period beginning
December 2018 and ending in 2023.
6
In 2020, the Legislature extended the allowable term of the
SMMC contracts from five to six years.
7
As a result, the AHCA’s previous contracts recently
ended in December 2024. On February 1, 2025, the AHCA implemented new SMMC contracts,
and the contractual period runs through 2030.
8
Coverage of Prescribed Drugs
Section 409.91195, F.S., establishes the Pharmaceutical and Therapeutics Committee within the
AHCA and tasks it with developing a Florida Medicaid Preferred Drug List (PDL). The
Governor appoints the eleven committee members, including five pharmacists, five physicians,
and one consumer representative.
9
The committee must meet quarterly and must review all drug
classes included in the PDL at least every 12 months.
10
The committee may recommend
additions to and deletions from the PDL, such that the PDL provides for medically appropriate
2
Medicaid.gov, Medicaid State Plan Amendments, available at https://www.medicaid.gov/medicaid-state-plan-
amendments/index.html (last visited Feb. 13, 2025).
3
Centers for Disease Control and Prevention, National Center for Health Statistics, Medicaid, available at
https://www.cdc.gov/nchs/hus/sources-definitions/medicaid.htm (last visited Feb. 13, 2025).
4
Supra note 2.
5
Supra note 1.
6
Agency for Health Care Administration, Statewide Medicaid Managed Care: Overview, available at
https://ahca.myflorida.com/medicaid/statewide_mc/pdf/mma/SMMC_Overview_12042018.pdf (last visited Feb. 13, 2025).
7
Chapter 2020-156, s. 44, Laws of Florida
8
Florida Agency for Health Care Administration, Statewide Medicaid Managed Care 3.0 Overview, available at
https://ahca.myflorida.com/content/download/25090/file/Statewide%20Medicaid%20Managed%20Care%20Full%20Deck_0
9172024.pdf (last visited Feb. 13, 2025).
9
Section 409.91195(1), F.S.
10
Section 409.91195(3), F.S. BILL: SB 264 Page 3
drug therapies for Medicaid patients which achieve cost savings contained in the General
Appropriations Act.
11
The committee considers the amount of rebates drug manufacturers are offering if their drug is
placed on the PDL.
12
These state-negotiated supplemental rebates, along with federally
negotiated rebates, can reduce the per-prescription cost of a brand name drug to below the cost of
its generic equivalent.
13
In 2021, the AHCA reported that Florida collects over $2 billion per
year in federal and supplemental rebates for drugs dispensed to Medicaid recipients. These funds
are used to offset the cost of Medicaid services.
14
Medicaid managed care plans are required by the AHCA to provide all prescription drugs listed
on the AHCA’s PDL. As a result, the managed care plans have not implemented their own plan-
specific formularies or PDLs. Medicaid managed care plans are required to provide a link to the
AHCA’s PDL on their websites.
15
Florida Medicaid covers all Food and Drug Administration
(FDA) approved prescription medications.
16
Those not included on the PDL must be prior
approved by Medicaid or the health plans.
17
The AHCA also manages the federally required Florida Medicaid Drug Utilization Review
Board, which meets quarterly and develops and reviews clinical prior authorization criteria,
including step-therapy protocols, for certain drugs that are not on the AHCA’s Medicaid PDL.
18
Prescribed Drugs Prior Authorization Requirements, Step-Therapy Protocols
Prior authorization means a process by which a health care provider must qualify for payment
coverage by obtaining advance approval from an insurer before a specific service is delivered to
the patient.
19
Within the Florida Medicaid program, only care, goods, and services that are
medically necessary will obtain prior authorization. The AHCA must respond to prior
authorization requests for prescribed drugs within 24 hours of receipt of the request. Medicaid
managed care plans are contractually required to respond to prior authorization requests for
prescribed drugs within 24 hours of receipt of the request.
20
11
Section 409.91195(4), F.S.
12
Section 409.91195(7), F.S.
13
Supra note 1.
14
Florida Agency for Health Care Administration, Senate Bill 534 Analysis (Nov. 11, 2021) (on file with Senate Committee
on Health Policy).
15
Supra note 1.
16
Florida Agency for Health Care Administration, Florida Medicaid Preferred Drug List (Jan. 1, 2025), available at
https://ahca.myflorida.com/content/download/22289/file/December%20P%26T%20PDL%2001.15.2025.pdf (last visited Feb.
13, 2025).
17
Supra note 1.
18
Id.
19
Riley, Hannah, Gistia Healthcare, Making Sense of Prior Authorization, What is it? (Apr. 21, 2020) available at
https://f.hubspotusercontent00.net/hubfs/6718559/downloadables/Making%20Sense%20of%20Prior%20Authorization%20W
hat%20is%20it%20_Gistia%20Healthcare.pdf (last visited Feb. 13, 2025).
20
Supra note 1. BILL: SB 264 Page 4
Section 409.912(5)(a)14., F.S., requires the AHCA to implement a step-therapy
21
prior
authorization process for prescribed drugs excluded from the PDL. The recipient must try the
prescribed drug on the PDL within the 12 months before a non-PDL drug is approved. However,
a non-PDL drug may be approved without meeting the step-therapy prior authorization criteria if
the prescribing physician provides additional written medical documentation that the non-PDL
product is medically necessary because:
22
• There is not a drug on the PDL to treat the disease or medical condition which is an
acceptable clinical alternative;
• The alternative drugs have been ineffective in the treatment of the recipient’s disease;
• The drug product or medication of a similar drug class is prescribed for the treatment of
schizophrenia or schizotypal or delusional disorders; 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 AHCA must work with the physician to determine the best alternative for the recipient.
23
Regardless of whether a drug is listed on the PDL, a Medicaid managed care plan’s prior
authorization criteria and protocols related to prescribed drugs cannot be more restrictive than
the criteria established by the AHCA for Fee-for-Service Delivery System prior authorizations.
24
Medicaid managed care plans must ensure that the prior authorization process for prescribed
drugs is readily accessible to health care providers and must provide timely responses to
providers.
25
Coverage of Prescription Drugs for Serious Mental Illness
Drugs treating serious mental illness accounted for over $200 million in paid claims in the
Medicaid program from October 2023 to September 2024. Antidepressants compose one of the
largest drug classes and are responsible for over $20 million in paid claims per year.
26
Tricyclic Antidepressants
As of October 2024, 99.9 percent of the paid claims in this class were for preferred drugs.
27
The
net cost of non-preferred drugs can be 10 times greater than the net cost of preferred drugs with
the same mechanism of action.
28
21
Step therapy means trying less expensive options before "stepping up" to drugs that cost more. Blue Cross Blue Shield
Blue Care Network of Michigan, How does step therapy work?, available at https://www.bcbsm.com/index/health-insurance-
help/faqs/plan-types/pharmacy/what-is-step-therapy.html (last visited Feb. 13, 2025).
22
Section 409.912(5)(a)14, F.S.
23
Id.
24
Supra note 1.
25
Section 409.967(2)(c)2, F.S.
26
Supra note 1.
27
Id.
28
Florida Agency for Health Care Administration, 2023 Agency Legislative Bill Analysis: SB 112, (Feb. 17, 2023) (on file
with the Senate Committee on Health Policy). BILL: SB 264 Page 5
Selective Serotonin Reuptake Inhibitors (SSRI) Antidepressants
As of October 2024, 99.4 percent of the paid claims in this class were for preferred drugs.
29
The
cost of non-preferred drugs can be 22 times greater than the cost of preferred drugs within the
same therapeutic class.
30
Other Antidepressants
As of October 2024, 99.2 percent of the paid claims in this class were for preferred drugs. This
class contains oral and injectable antidepressant drugs.
31
The cost of oral non-preferred drugs can
be 17 times greater than the cost of preferred drugs within the review class, which includes all
oral antidepressants that are not tricyclic or SSRIs.
32
Antipsychotics
As of October 2024, 98.9 percent of the paid claims in this class were for preferred drugs. PDL
compliance results in significant savings annually in the antipsychotic class.
33
The Medicaid PDL includes numerous generic and brand name drugs for the treatment of serious
mental illness. If a drug is not on the PDL, the prescriber must obtain prior authorization before
dispensing the medication. The AHCA and Medicaid managed care plans are required to respond
to prior authorization requests within 24 hours of receipt. Prior authorization requests for mental
health medications are reviewed using the Psychotherapeutic Medication Guidelines established
by the University of South Florida.
34
The AHCA maintains prior authorization criteria and automated edits.
35
Prescription Drugs Used in the Treatment of Schizophrenia for Medicaid Recipients
In the 2022 Regular Legislative Session, the Legislature enacted SB 534, which amended
s.409.912, F.S., to create an exception from step-therapy prior authorization requirements within
the Florida Medicaid program for a drug product if the prescribing physician provides the AHCA
with written medical or clinical documentation that the product is medically necessary. Under SB
534, medical necessity is created when the drug product or a medication of a similar drug class is
being prescribed for the treatment of schizophrenia or schizotypal or delusional disorders, prior
authorization has previously been granted to the patient for the prescribed drug, and the
medication had been dispensed to the patient during the previous 12 months.
36
After the step therapy requirement was mitigated by the enactment of SB 534 in 2022 for
schizophrenia-related medications, the PDL compliance decreased 0.1 percent in the
29
Supra note 1.
30
Supra note 28.
31
Supra note 1.
32
Supra note 28.
33
Supra note 1.
34
Id.
35
Id.
36
See Chapter 2022-27, Laws of Florida. BILL: SB 264 Page 6
antipsychotic class. This decrease in compliance results in a reduction in collection of
manufacturer rebates that offset the cost of Medicaid drug spending.
37
III. Effect of Proposed Changes:
Section 1 amends s.409.901, F.S., to create a definition of the term “serious mental illness”
pertaining to the Florida Medicaid program. The bill defines that term to mean any of the
following psychiatric disorders as defined by the American Psychiatric Association in the
Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition:
38
• 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.
Section 2 amends s.409.912(5)(a), F.S., to create an exception from step-therapy prior
authorization requirements within the Florida Medicaid program for a drug product that is
prescribed for the treatment of a serious mental illness or a medication of a similar drug class if
prior authorization was previously granted for the prescribed drug and the medication was
dispensed to the patient during the previous 12 months. The bill requires that in cases involving
drugs for the treatment of a serious mental illness, the exception must be approved, as opposed to
the AHCA being authorized to approve the exception as in current law.
Section 3 amends s.409.910(20)(a), F.S., to make a conforming change.
Section 4 directs the AHCA, upon the bill becoming law, to include the bill’s rate impact within
the Statewide Medicaid Managed Care program rates that take effect October 1, 2025.
Section 5 provides an effective date of October 1, 2025, except as otherwise provided.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
37
Supra note 28.
38
According to the American Psychiatric Association, The Diagnostic and Statistical Manual of Mental Disorders, Fifth
Edition, Text Revision (DSM-5-TR), not the original Fifth Edition, is the Association’s latest version of the manual. The
Association indicates that “DSM-5-TR features the most current text updates based on scientific literature with contributions
from more than 200 subject matter experts. The revised version includes a new diagnosis (prolonged grief disorder),
clarifying modifications to the criteria sets for more than 70 disorders, addition of International Classification of Diseases,
Tenth Revision, Clinical Modification (ICD-10-CM) symptom codes for suicidal behavior and nonsuicidal self-injury, and
updates to descriptive text for most disorders based on extensive review of the literature. In addition, DSM-5-TR includes a
comprehensive review of the impact of racism and discrimination on the diagnosis and manifestations of mental disorders.
The manual will help clinicians and researchers define and classify mental disorders, which can improve diagnoses,
treatment, and research.” See https://www.psychiatry.org/psychiatrists/practice/dsm (last visited Feb. 14, 2025). BILL: SB 264 Page 7
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
None.
C. Government Sector Impact:
The Agency for Health Care Administration (AHCA) reports that:
39
• SB 264 will have an operational impact on both the Florida Medicaid fee-for-service
delivery system and Statewide Medicaid Managed Care due to changes that will need
to be made to all coding related to drugs used to treat serious mental illness.
• In addition to the operational impact, the bill could have adverse impact on the state
Medicaid budget. The Florida Medicaid Prescribed Drug List (PDL) includes many
effective generic and brand-name medications with robust federal rebates and
additional supplemental rebates offered by drug manufacturers, resulting in reduced
cost to the Florida Medicaid program. If numerous prescribing physicians elect to
prescribe drugs that are not on the PDL under the bill, it may lead to an increase in
net drug cost in therapeutic classes related to serious mental illness. The AHCA
estimates a significant overall fiscal increase to the Florida Medicaid program of up
to $50 million per year could be possible due to utilization changes and potential loss
of supplemental rebates.
• After the enactment of SB 534 (2022) on July 1, 2022, the Florida Medicaid program
observed a relative decrease in the amount of rebates collected for the treatment of
schizophrenia. A substantial decrease in rebates relative to the large number of drugs
used to treat serious mental illness could be expected if SB 264 takes effect as
written. In 2023, the AHCA projected that antipsychotics alone would result in the
39
Supra note 1. BILL: SB 264 Page 8
collection of over $13 million in rebates during the 2022-2023 fiscal year, with a total
spend of more than $70 million.
40
The loss of rebates for a class this size could
increase the overall cost of pharmacy spending in the Florida Medicaid program.
In terms of numbers, the AHCA indicates that the fiscal impact of the bill could be
significant.
41
According to the fiscal year 2020-2021 data, the Florida Medicaid program
spent over $117 million on medications for the treatment of serious mental illness. If
numerous prescribing physicians elect to prescribe drugs that are not on the PDL, and the
bill’s provisions are applied, it may lead to an increase in drug cost in therapeutic classes
related to serious mental illness due to the loss of the AHCA’s bargaining power in terms
of negotiating rebates. Every one-percent loss in the rate of PDL compliance could
generate a $1.1 million increase in Florida Medicaid program expenses. The extent of
such noncompliance under the bill is unknown.
42
The bill could also mitigate costs to the Florida Medicaid program or other state
expenditures in indirect ways. For example, if Medicaid recipients needing certain drugs
for serious mental illness experience a delay in access to those drugs due to the step-
therapy protocol, such delay could lead to the need for other costly treatments, such as
the costs of involuntary evaluation during a mental health crisis.
43
The bill could mitigate
the need for those other costly treatments. Such impact is also indeterminate.
VI. Technical Deficiencies:
None.
VII. Related Issues:
The bill’s list of psychiatric disorders as defined by the American Psychiatric Association in the
Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5), includes
“paranoid personality disorder or other psychotic disorders.” The DSM-5 categorizes the
following disorders under Schizophrenia and “other psychotic disorders”:
44
• Schizotypal (Personality) Disorder;
• Delusional Disorder;
• Brief Psychotic Disorder;
• Schizophreniform Disorder;
• Schizophrenia;
• Schizoaffective Disorder;
• Substance/Medication-Induced Psychotic Disorder;
• Psychotic Disorder Due to Another Medical Condition;
• Catatonia;
• Other Specified Schizophrenia Spectrum and Other Psychotic Disorder; and
40
Supra note 28.
41
Supra note 1.
42
Supra note 28.
43
See s. 394.463, F.S., within the Florida Mental Health Act.
44
Wiregrass Georgia Technical College, DSM-5: Schizophrenia Spectrum and Other Psychotic Disorders, available at
https://wiregrass.libguides.com/c.php?g=1044445&p=7583272 (last visited Feb. 14, 2025). BILL: SB 264 Page 9
• Unspecified Schizophrenia Spectrum and Other Psychotic Disorder.
With the exception of schizophrenia and schizoaffective disorder, the bill includes these
disorders by reference to the DSM-5 as “other psychotic disorders” but does not list them by
name. It’s possible that the DSM-5 might someday classify other disorders as psychotic disorders
that do not appear in this list.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 409.901, 409.912,
and 409.910.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.