By: Schwertner S.B. No. 1922
A BILL TO BE ENTITLED
AN ACT
relating to prescription drug benefits in the Medicaid managed care
program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. (a) 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 complies with the provider access
standards established under Section 533.0061, as added by Chapter
1272 (S.B. 760), Acts of the 84th Legislature, Regular Session,
2015;
(B) as a condition of contract retention and
renewal:
(i) continue to comply with the provider
access standards established under Section 533.0061, as added by
Chapter 1272 (S.B. 760), Acts of the 84th Legislature, Regular
Session, 2015; 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, as added by Chapter 1272 (S.B. 760), Acts of the
84th Legislature, Regular Session, 2015;
(C) pay liquidated damages for each failure, as
determined by the commission, to comply with the provider access
standards established under Section 533.0061, as added by Chapter
1272 (S.B. 760), Acts of the 84th Legislature, Regular Session,
2015, 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), as added by Chapter 1272 (S.B. 760),
Acts of the 84th Legislature, Regular Session, 2015, 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, as
added by Chapter 1272 (S.B. 760), Acts of the 84th Legislature,
Regular Session, 2015:
(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 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 with and [or]
collect rebates from labelers and manufacturers, as those terms are
defined by Section 531.070, that are associated with pharmacy
products on the managed care organization's [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:
(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
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.
(b) This section takes effect September 1, 2018.
SECTION 2. Chapter 533, Government Code, is amended by
adding Subchapter B to read as follows:
SUBCHAPTER B. PRESCRIPTION DRUG BENEFITS
Sec. 533.051. DEFINITIONS. In this subchapter:
(1) "Labeler" and "manufacturer" have the meanings
assigned by Section 531.070.
(2) "Recipient" means a Medicaid recipient.
(3) "Step therapy protocol" means a protocol that
requires a recipient to use a prescription drug or sequence of
prescription drugs other than the drug that the recipient's
physician recommends for the recipient's treatment before a managed
care organization provides coverage for the recommended drug.
Sec. 533.052. APPLICABILITY OF SUBCHAPTER. (a) This
subchapter applies to an outpatient pharmacy benefit plan
implemented by a managed care organization that contracts with the
commission to provide health care benefits to recipients.
(b) To the extent of a conflict between the requirements for
an outpatient pharmacy benefit plan for a managed care
organization's enrolled recipients specified by Sections
533.005(a)(23)(A), (B), and (C) and the requirements for that plan
specified by this subchapter, the requirements specified by
Sections 533.005(a)(23)(A), (B), and (C) prevail. This subsection
expires August 31, 2018.
Sec. 533.053. STEP THERAPY PROTOCOL EXCEPTION REQUESTS.
(a) A managed care organization shall establish a process in a
user-friendly format through which an exception request under this
section may be submitted by a prescribing provider. The process
must be readily accessible to:
(1) a recipient who enrolls in a managed care plan
offered by the managed care organization or transfers to a managed
care plan offered by the managed care organization from a managed
care plan offered by another managed care organization; and
(2) the provider.
(b) A prescribing provider on behalf of a recipient may
submit in written or electronic form or by telephone to the
recipient's managed care organization an exception request for a
step therapy protocol required by the recipient's managed care
organization.
(c) A managed care organization shall review and, if
clinically appropriate, grant an exception request under
Subsection (b) if the request includes a statement by the
prescribing provider stating that:
(1) the drug required under the step therapy protocol:
(A) is contraindicated;
(B) will likely cause an adverse reaction in or
physical or mental harm to the recipient; or
(C) is expected to be ineffective based on the
known clinical characteristics of the recipient and the known
characteristics of the prescription drug regimen;
(2) the recipient previously discontinued taking the
drug required under the step therapy protocol:
(A) while enrolled in a managed care plan offered
by the recipient's current managed care organization or while
enrolled in a managed care plan offered by another managed care
organization; and
(B) because the drug was not effective or had a
diminished effect or because of an adverse event;
(3) the drug required under the step therapy protocol
is not in the best interest of the recipient, based on clinical
appropriateness, because the recipient's use of the drug is
expected to:
(A) cause a significant barrier to the
recipient's adherence to or compliance with the recipient's plan of
care;
(B) worsen a comorbid condition of the recipient;
or
(C) decrease the recipient's ability to achieve
or maintain reasonable functional ability in performing daily
activities; or
(4) the drug that is subject to the step therapy
protocol was prescribed for the recipient's condition while
enrolled in a managed care plan offered by the recipient's current
managed care organization or while enrolled in a managed care plan
offered by a previous managed care organization and the recipient
is stable on the drug.
(d) Except as provided by Subsection (e), if a managed care
organization does not deny an exception request under Subsection
(b) before 72 hours after the managed care organization receives
the request, the request is considered granted.
(e) If a statement described by Subsection (c) also states
that the prescribing provider reasonably believes that denial of
the exception request makes the death of or serious harm to the
recipient probable, the request is considered granted if the
managed care organization does not deny the request before 24 hours
after the managed care organization receives the request.
(f) A managed care organization may not require a
prescribing provider to submit a subsequent exception request under
Subsection (b) for a drug for treatment of a recipient's condition
for which the managed care organization has already granted an
exception to a step therapy protocol for the recipient unless the
managed care organization's medical director determines that the
drug for treatment under the previously granted exception request
will likely cause physical or mental harm to the recipient.
Sec. 533.054. CONTINUITY OF CARE. (a) A managed care
organization shall provide coverage to a recipient who enrolls in a
managed care plan offered by the managed care organization or
transfers to a managed care plan offered by the managed care
organization from a managed care plan offered by another managed
care organization for a prescription drug prescribed for the
recipient before the enrollment or transfer for a 90-day period
following the date of the enrollment or transfer, regardless of
whether the prescription drug is on the managed care organization's
preferred drug list.
(b) To promote continuity of care for recipients who
transfer to a managed care plan offered by a managed care
organization from a managed care plan offered by another managed
care organization, the executive commissioner by rule or the
commission in its contracts with managed care organizations shall:
(1) require a managed care organization that offers
the managed care plan from which a recipient transfers enrollment
to provide to the managed care organization that offers the managed
care plan to which the recipient transfers enrollment the
prescription drug information necessary to promote the recipient's
continuity of care to the extent allowed by law; and
(2) establish an electronic process that facilitates
the transfer of the information described by Subdivision (1)
between managed care organizations.
Sec. 533.055. ACCESS TO INFORMATION REGARDING PRESCRIPTION
DRUG REBATES, PRICING, AND NEGOTIATIONS. (a) The commission may
require the submission of and review information obtained or
maintained by a managed care organization regarding prescription
drug rebate negotiations or a supplemental Medicaid or other rebate
agreement, including the rebate amount, rebate percentage, and
manufacturer or labeler pricing.
(b) Subject to Subsections (c), (d), and (e), information
described by Subsection (a) that a managed care organization
submits to the commission as required by the commission is
confidential and not subject to disclosure under Chapter 552.
(c) Subsection (b) does not:
(1) authorize the commission to withhold from
individual members, agencies, or committees of the legislature for
use for legislative purposes information described by Subsection
(a) that a managed care organization submits to the commission; or
(2) affect the applicability of Section 552.008.
(d) The commission may not release information that is
confidential under 42 U.S.C. Section 1396r-8(b)(3)(D) unless the
legislative request for information is accompanied by a written
affidavit from the requestor providing a detailed description of
the legislative purpose for the request and describing how the
request is within the exception to confidentiality described by 42
U.S.C. Section 1396r-8(b)(3)(D)(iv).
(e) The commission may not disclose information described
by Subsection (a) until each legislative recipient of the
information signs a nondisclosure agreement acknowledging that the
information is subject to, and the recipient agrees to comply with,
the confidentiality provisions in 42 U.S.C. Section
1396r-8(b)(3)(D) and Section 531.071. The nondisclosure agreement
must also contain an acknowledgement of applicable civil and
criminal penalties for improper disclosure.
Sec. 533.056. PREFERRED DRUG LIST; SEARCHABLE DATABASE OF
PREFERRED DRUGS AND RESTRICTIONS. (a) A managed care organization
shall provide for the distribution of current copies of the managed
care organization's preferred drug list by posting the list on the
managed care organization's Internet website.
(b) A managed care organization shall maintain on the
managed care organization's Internet website a searchable database
to allow a provider to search the managed care organization's
preferred drug list and easily determine whether a prescription
drug or drug class is subject to any prior authorization
requirements, clinical edits, or other clinical restrictions. A
managed care organization shall make reasonable efforts to ensure
that the database contains current information.
Sec. 533.057. PRIOR AUTHORIZATION AND STEP THERAPY
PROTOCOLS FOR CERTAIN PRESCRIPTION DRUGS. (a) Except as provided
by Subsection (b), a managed care organization may not require
prior authorization or a step therapy protocol for prescription
drugs that, as determined by the executive commissioner by rule or
by the commission in a contract with a managed care organization,
are used to treat patients with illnesses that:
(1) are life-threatening;
(2) are chronic; and
(3) require complex medical management strategies.
(b) Subsection (a) applies only to a drug that is prescribed
for a use approved by the United States Food and Drug
Administration. A managed care organization may require prior
authorization for a drug prescribed for a use that is not approved
by the United States Food and Drug Administration, provided that
the prior authorization requirement is not solely based on the drug
manufacturer's package insert.
(c) Once every 10 years, the commission shall conduct a
study to evaluate and determine the classes of prescription drugs
for which prior authorizations or step therapy protocols are
prohibited under Subsection (a).
(d) A managed care organization shall ensure that a drug
prescribed before the managed care organization implements a prior
authorization requirement or step therapy protocol for that drug is
not subject to the prior authorization requirement or step therapy
protocol until the expiration of a period of at least 90 days
beginning on the date the prior authorization requirement or step
therapy protocol is implemented, as specified by the managed care
organization.
(e) Notwithstanding Subsection (a), a managed care
organization may require prior authorization for a prescription
drug for patient safety purposes, including a drug that is
clinically contraindicated.
Sec. 533.058. PRIOR AUTHORIZATION PROCEDURES. Each managed
care organization shall establish a procedure for prior
authorizations, including step therapy protocols, to ensure
compliance with 42 U.S.C. Section 1396r-8(d)(5). The procedure
must ensure that:
(1) a prior authorization requirement for a drug is
not imposed before the drug has been submitted for review to the
managed care organization's drug utilization review board or
pharmacy and therapeutics committee;
(2) a response to a request for prior authorization
will be provided by telephone or other telecommunications device
not later than 24 hours after the request is made; and
(3) a 72-hour supply of a covered prescribed drug will
be provided in an emergency or if a response is not provided within
the period required by Subdivision (2).
Sec. 533.059. REDUCING ADMINISTRATIVE BURDENS ASSOCIATED
WITH NATIONAL DRUG CODES. (a) A managed care organization shall
ensure that a prescribing provider is not required to provide the
national drug code number on a prescription for a generic
equivalent of a prescribed drug, except as required by federal law.
(b) As soon as practicable after receiving notice from the
Centers for Medicare and Medicaid Services that a national drug
code number for a rebate-eligible prescription drug has been
changed or newly added to a list of rebate-eligible prescription
drugs maintained by the Centers for Medicare and Medicaid Services
or a prescription drug has been removed from that list, the
commission and each managed care organization shall provide notice
of the change, addition, or removal to providers by updating the
commission's or managed care organization's electronic database of
national drug code numbers for rebate-eligible prescription drugs,
as applicable.
Sec. 533.060. ANNUAL REPORT. Each managed care
organization shall annually report to the commission:
(1) the total number of prescriptions dispensed to
recipients enrolled in a managed care plan offered by the managed
care organization;
(2) the percentage of prescription drugs described by
Subdivision (1) for which prior authorization was required;
(3) the percentage of prescription drugs described by
Subdivision (1) for which a step therapy protocol was required; and
(4) the number of exceptions and appeals sought and
granted for prior authorizations, step therapy protocols, and other
formulary requests.
SECTION 3. Not later than September 1, 2018, the Health and
Human Services Commission shall conduct the initial study required
by Section 533.057(c), Government Code, as added by this Act. The
commission or a managed care organization may not change a prior
authorization requirement or step therapy protocol for a
prescription drug to which that section applies until the
commission has completed the study.
SECTION 4. 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 5. Except as otherwise provided by this Act, this
Act takes effect September 1, 2017.