COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:0545H.02C Bill No.:HCS for HB 198 Subject:Pharmacy; Insurance - Health Type:Original Date:April 10, 2023Bill Summary:This proposal modifies provisions related to insurance coverage of pharmacy
services, with penalty provisions.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND
AFFECTED
FY 2024FY 2025FY 2026General Revenue
Fund*
(Unknown, could
exceed $854,000)
(Unknown, could
exceed $854,000)
(Unknown, could
exceed $854,000)
Total Estimated
Net Effect on
General
Revenue
(Unknown, could
exceed $854,000)
(Unknown, could
exceed $854,000)
(Unknown, could
exceed $854,000)
* The fiscal impact is unknown, however, MCHCP estimates that it would be greater than $1.4
million split between General Revenue, Other State Funds and Federal Funds.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026
Other State
(Unknown, could
exceed $196,000)
(Unknown, could
exceed $196,000)
(Unknown, could
exceed $196,000)
Total Estimated
Net Effect on
Other State
Funds
(Unknown, could
exceed $196,000)
(Unknown, could
exceed $196,000)
(Unknown, could
exceed $196,000)
Numbers within parentheses: () indicate costs or losses. L.R. No. 0545H.02C
Bill No. HCS for HB 198
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April 10, 2023
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026Federal Funds(Unknown, could
exceed $350,000)
(Unknown, could
exceed $350,000)
(Unknown, could
exceed $350,000)
Total Estimated
Net Effect on All
Federal Funds
(Unknown, could
exceed $350,000)
(Unknown, could
exceed $350,000)
(Unknown, could
exceed $350,000)
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2024FY 2025FY 2026Total Estimated Net
Effect on FTE 000
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Local Government(Unknown)(Unknown)(Unknown) L.R. No. 0545H.02C
Bill No. HCS for HB 198
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FISCAL ANALYSIS
ASSUMPTION
§§376.411 - 376.415 – Insurance coverage of pharmacy services
Officials from the Missouri Consolidated Health Care Plan (MCHCP) estimate there is $12
million in savings associated with the current management of specialty drugs. HCS HB 198 bill
language constrains MCHCP’s ability to manage clinician administered specialty drugs other
than through a review of medical necessity. While MCHCP does have many specialty drugs that
are allowed to be processed through either the pharmacy or medical channels, there are some that
are restricted to the pharmacy channel. There are also certain drugs that are restricted to the
medical channel such as anti-cancer and infused medications. MCHCP updated its fiscal impact
to reflect only the impact to the loss of savings associated with those physician-administered
drugs that are currently administered under the pharmacy benefit. MCHCP did not estimate an
impact to oral or self-administered injectable specialty drugs. Based on an actuarial analysis, the
additional cost to MCHCP is estimated to be unknown but greater than $1.4 million.
Below is a non-exhaustive list of some caveats, assumptions, and other considerations the
actuary made during its analysis.
– There may be other less common physician-administered drugs
within MCHCP’s utilization that are not captured within this analysis.
– The actuary assumed that the gross-cost or point-of-sale
costs of medications are roughly 11% higher under the medical channel than under
pharmacy channel. There could be instances with certain drugs are less costly, or more
costly, than this assumed differential.
– The actuary assumed that rebates for these physician-
administered drugs would not be realized when billed under the medical benefit.
– The actuary assumed a loss of utilization management
savings associated with a move under the medical benefit.
– As more drugs come to market, it’s likely that
there are going to be other physician-administered drugs that could have cost benefits
through white-bagging. The actuary analysis is based on actual MCHCP utilization in
CY2022 trended to CY2024 and does not reflect the possibility of savings from new
physician administered drugs in the future.
– PBMs are able to leverage manufacturer copay
assistance on medications that are dispensed through their specialty pharmacy. These
programs can provide cost savings to both members and plan sponsors. HB 198 would
inhibit the PBM’s ability to offer these programs for physician-administered drugs if the
drug is not dispensed through their specialty pharmacy.
o
manufacturer coupons to fund the cost sharing. Based on the data provided,
members would save roughly $90,000 if MCHCP were to opt-in to this program. L.R. No. 0545H.02C
Bill No. HCS for HB 198
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However, HB 198 would inhibit the PBM’s ability to offer this program on
physician-administered drugs.
o
MCHCP does not currently participate in these programs.
– MCHCP has slight differences in the
OOPM under the medical and pharmacy benefits. If the drugs are shifted to the medical
benefit, which has a lower OOPM for members, the members may hit their OOPM limit
sooner by paying more out-of-pocket moving from copayments under the pharmacy
channel to coinsurance under the medical channel, and more residual costs may shift to
MCHCP. The actuary did not calculate this potential impact as part of this analysis.
Oversight contacted MCHCP officials about the term “white bagging”. MCHCP stated white-
bagging blocks certain drugs under the medical benefit and routes those prescriptions to the
specialty pharmacy. The specialty pharmacy then ships the drugs to the physician’s
office/facility where it is then administered to the patient. All of the transitioned drugs are then
billed under the pharmacy benefit. This process of white-bagging prevents physicians/facilities
from purchasing the drugs themselves from a pharmacy of their choosing, administering to the
patient, and then billing the medical carrier for costs that are generally higher than under the
pharmacy benefit. This type of billing is referred to as a “buy-and-bill” method by physicians.
Oversight will reflect MCHCP’s unknown, but greater than $1.4 million annual cost to the
General Revenue Fund, Other State Funds and Federal Funds.
General RevenueGreater than
$854,000
61%Federal FundsGreater than
$350,000
25%Other FundsGreater than
$196,000
14%TotalGreater
than
$1,400,000
100%
*MCHCP Fund Split Percentages provided by Budget & Planning
Oversight assumes this provision could have a fiscal impact on local government health plans
and, therefore, will reflect an unknown loss to local political subdivisions.
Officials from the Missouri Department of Transportation (MoDOT) assume the proposal
will have no fiscal impact on their organization or the MoDOT/DPS-MSHP health plan.
Officials from the Department of Commerce and Insurance, the Department of Social
ServicesMissouri Department of Conservation and the City of Springfield each assume
the proposal will have no fiscal impact on their respective organizations. Oversight does not L.R. No. 0545H.02C
Bill No. HCS for HB 198
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have any information to the contrary. Therefore, Oversight will reflect a zero impact in the fiscal
note for these agencies.
In response to the previous version of this proposal, officials the City of Kansas City assumed
the proposal would have no fiscal impact on their organization.
Officials from the Department of Public Safety, Missouri Highway Patrol defer to the
MoDOT/MHP Health Care Board for response relating to the fiscal impact of this proposal on
their organization.
Rule Promulgation
Officials from the Joint Committee on Administrative Rules assume this proposal is not
anticipated to cause a fiscal impact beyond its current appropriation.
Officials from the Office of the Secretary of State (SOS) note many bills considered by the
General Assembly include provisions allowing or requiring agencies to submit rules and
regulations to implement the act. The SOS is provided with core funding to handle a certain
amount of normal activity resulting from each year's legislative session. The fiscal impact for
this fiscal note to the SOS for Administrative Rules is less than $5,000. The SOS recognizes that
this is a small amount and does not expect that additional funding would be required to meet
these costs. However, the SOS also recognizes that many such bills may be passed by the
General Assembly in a given year and that collectively the costs may be in excess of what the
office can sustain with its core budget. Therefore, the SOS reserves the right to request funding
for the cost of supporting administrative rules requirements should the need arise based on a
review of the finally approved bills signed by the governor.
Oversight only reflects the responses received from state agencies and political subdivisions;
however, other cities and various county officials were requested to respond to this proposed
legislation but did not. A listing of political subdivisions included in the Missouri Legislative
Information System (MOLIS) database is available upon request. L.R. No. 0545H.02C
Bill No. HCS for HB 198
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FISCAL IMPACT – State
Government
FY 2024
(10 Mo.)
FY 2025FY 2026GENERAL REVEUE
FUND
Loss – MCHCP
Elimination of channel
management programs
(§376.411)
(Unknown, could
exceed $854,000)
(Unknown, could
exceed $854,000)
(Unknown, could
exceed $854,000)
ESTIMATED NET
EFFECT TO THE
GENERAL REVENUE
FUND
(Unknown, could
exceed $854,000)
(Unknown, could
exceed $854,000)
(Unknown, could
exceed $854,000)
OTHER STATE FUNDSLoss – MCHCP
Elimination of channel
management programs
(§376.411)
(Unknown, could
exceed $196,000)
(Unknown, could
exceed $196,000)
(Unknown, could
exceed $196,000)
ESTIMATED NET
EFFECT TO OTHER
FUNDS
(Unknown, could
exceed $196,000)
(Unknown, could
exceed $196,000)
(Unknown, could
exceed $196,000)
FEDERAL FUNDSLoss – MCHCP
Elimination of channel
management programs
(§376.411)
(Unknown, could
exceed $350,000)
(Unknown, could
exceed $350,000)
(Unknown, could
exceed $350,000)
ESTIMATED NET
EFFECT TO FEDERAL
FUNDS
(Unknown, could
exceed $350,000)
(Unknown, could
exceed $350,000)
(Unknown, could
exceed $350,000) L.R. No. 0545H.02C
Bill No. HCS for HB 198
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FISCAL IMPACT – Local GovernmentFY 2024
(10 Mo.)
FY 2025FY 2026LOCAL POLITICAL
SUBDIVISIONS
Loss – Local Political Subdivisions
Elimination of channel management
programs (§376.411)(Unknown)(Unknown)(Unknown)
ESTIMATED NET EFFECT TO
LOCAL POLITICAL
SUDBVISIONS(Unknown)(Unknown)(Unknown)
FISCAL IMPACT – Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
FISCAL DESCRIPTION
This bill establishes requirements for insurance coverage of certain pharmacy services. This bill
provides that a health carrier, pharmacy benefits manager, or agent of such entities are prohibited
from imposing any penalty, impediment, differentiation, or limitation on:
(1) Participating providers for providing medically necessary clinician-administered drugs,
regardless of whether the participating provider obtains such drugs from a provider that is in the
network;
(2) A person who is administered medically necessary clinician administered drugs regardless of
whether the participating provider obtains such drugs from a provider that is in the network; or
(3) Any pharmacy, including any class B hospital pharmacy as defined in Section 338.220,
RSMo, which is dispensing medically necessary clinician-administered drugs regardless of
whether the participating provider obtains such drugs from a provider that is in the network.
This prohibition does not apply if the clinician-administered drug is not otherwise covered by the
health carrier or pharmacy benefits manager. L.R. No. 0545H.02C
Bill No. HCS for HB 198
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April 10, 2023
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A health carrier, pharmacy benefits manager, or agent of such entities may not discriminate,
lower the reimbursement, or impose any separate contract terms upon an entity based upon that
entity's participation in the 340B drug pricing program, described in 42 U.S.C. Section 256b, or
limit a patient's freedom to use any such entity, as described in the bill.
All pharmacy claims processed by a pharmacy that participates in the 340B drug pricing program
are final at the point of adjudication.
This bill defines "biological product", "biosimilar product", and "reference product" as having
the same meaning as given to the terms under federal law. A health carrier, pharmacy benefits
manager, or agent of such entities that provides coverage for a reference product or biosimilar
biological product must provide coverage for the reference product and all biological products
that have been deemed biosimilar to the reference product. (§§376.411 – 376.414)
A health carrier, pharmacy benefit manager, or an agent or affiliate of such entity that provides
coverage for a similar product or a biological product that is biosimilar to the reference product
shall provide coverage for the reference products that have been deemed biosimilar. The scope,
extent, and amount of the required coverage shall be the same including, but not limited to, any
payment limitations or cost-sharing obligations. (§376.415)
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Commerce and Insurance
Department of Public Safety –
Missouri Highway Patrol
Department of Social Services
Missouri Department of Conservation
Missouri Department of Transportation
Office of the Secretary of State
Missouri Consolidated Health Care Plan
City of Kansas City
City of Springfield
Joint Committee on Administrative Rules
Julie MorffRoss StropeDirectorAssistant DirectorApril 10, 2023April 10, 2023