Bill Text: IL SB2420 | 2021-2022 | 102nd General Assembly | Introduced

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Bill Title: Amends the Medical Assistance Article of the Illinois Public Aid Code. Requires all Medicaid managed care organizations to reimburse pharmacy provider dispensing fees and acquisition costs at no less than the amounts established under the fee-for-service program whether the Medicaid managed care organization directly reimburses pharmacy providers or contracts with a pharmacy benefit manager to reimburse pharmacy providers. Provides that the reimbursement requirement applies to all pharmacy services for persons receiving benefits under the Code including pharmacy services. Effective immediately.

Spectrum: Moderate Partisan Bill (Democrat 4-1)

Status: (Introduced - Dead) 2021-05-21 - Rule 3-9(a) / Re-referred to Assignments [SB2420 Detail]

Download: Illinois-2021-SB2420-Introduced.html

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102ND GENERAL ASSEMBLY State of Illinois 2021 and 2022 SB2420 Introduced 2/26/2021, by Sen. Napoleon Harris, III SYNOPSIS AS INTRODUCED:
305 ILCS 5/5-5.12 from Ch. 23, par. 5-5.12
305 ILCS 5/5-36
Amends the Medical Assistance Article of the Illinois Public Aid Code. Requires all Medicaid managed care organizations to reimburse pharmacy provider dispensing fees and acquisition costs at no less than the amounts established under the fee-for-service program whether the Medicaid managed care organization directly reimburses pharmacy providers or contracts with a pharmacy benefit manager to reimburse pharmacy providers. Provides that the reimbursement requirement applies to all pharmacy services for persons receiving benefits under the Code including pharmacy services. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning public aid.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Public Aid Code is amended by
changing Sections 5-5.12 and 5-36 as follows:
(305 ILCS 5/5-5.12) (from Ch. 23, par. 5-5.12)
Sec. 5-5.12. Pharmacy payments.
(a) Every request submitted by a pharmacy for
reimbursement under this Article for prescription drugs
provided to a recipient of aid under this Article shall
include the name of the prescriber or an acceptable
identification number as established by the Department.
(b) Pharmacies providing prescription drugs under this
Article shall be reimbursed at a rate which shall include a
professional dispensing fee as determined by the Illinois
Department, plus the current acquisition cost of the
prescription drug dispensed. The Illinois Department shall
update its information on the acquisition costs of all
prescription drugs no less frequently than every 30 days.
However, the Illinois Department may set the rate of
reimbursement for the acquisition cost, by rule, at a
percentage of the current average wholesale acquisition cost.
All Medicaid managed care organizations must reimburse

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pharmacy provider dispensing fees and acquisition costs at no
less than the amounts established under the fee-for-service
program whether the Medicaid managed care organization
directly reimburses pharmacy providers or contracts with a
pharmacy benefit manager to reimburse pharmacy providers. The
reimbursement requirement specified in this paragraph applies
to all pharmacy services for persons receiving benefits under
this Code including services reimbursed under Section 5-36.
(c) (Blank).
(d) The Department shall review utilization of narcotic
medications in the medical assistance program and impose
utilization controls that protect against abuse.
(e) When making determinations as to which drugs shall be
on a prior approval list, the Department shall include as part
of the analysis for this determination, the degree to which a
drug may affect individuals in different ways based on factors
including the gender of the person taking the medication.
(f) The Department shall cooperate with the Department of
Public Health and the Department of Human Services Division of
Mental Health in identifying psychotropic medications that,
when given in a particular form, manner, duration, or
frequency (including "as needed") in a dosage, or in
conjunction with other psychotropic medications to a nursing
home resident or to a resident of a facility licensed under the
ID/DD Community Care Act or the MC/DD Act, may constitute a
chemical restraint or an "unnecessary drug" as defined by the

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Nursing Home Care Act or Titles XVIII and XIX of the Social
Security Act and the implementing rules and regulations. The
Department shall require prior approval for any such
medication prescribed for a nursing home resident or to a
resident of a facility licensed under the ID/DD Community Care
Act or the MC/DD Act, that appears to be a chemical restraint
or an unnecessary drug. The Department shall consult with the
Department of Human Services Division of Mental Health in
developing a protocol and criteria for deciding whether to
grant such prior approval.
(g) The Department may by rule provide for reimbursement
of the dispensing of a 90-day supply of a generic or brand
name, non-narcotic maintenance medication in circumstances
where it is cost effective.
(g-5) On and after July 1, 2012, the Department may
require the dispensing of drugs to nursing home residents be
in a 7-day supply or other amount less than a 31-day supply.
The Department shall pay only one dispensing fee per 31-day
supply.
(h) Effective July 1, 2011, the Department shall
discontinue coverage of select over-the-counter drugs,
including analgesics and cough and cold and allergy
medications.
(h-5) On and after July 1, 2012, the Department shall
impose utilization controls, including, but not limited to,
prior approval on specialty drugs, oncolytic drugs, drugs for

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the treatment of HIV or AIDS, immunosuppressant drugs, and
biological products in order to maximize savings on these
drugs. The Department may adjust payment methodologies for
non-pharmacy billed drugs in order to incentivize the
selection of lower-cost drugs. For drugs for the treatment of
AIDS, the Department shall take into consideration the
potential for non-adherence by certain populations, and shall
develop protocols with organizations or providers primarily
serving those with HIV/AIDS, as long as such measures intend
to maintain cost neutrality with other utilization management
controls such as prior approval. For hemophilia, the
Department shall develop a program of utilization review and
control which may include, in the discretion of the
Department, prior approvals. The Department may impose special
standards on providers that dispense blood factors which shall
include, in the discretion of the Department, staff training
and education; patient outreach and education; case
management; in-home patient assessments; assay management;
maintenance of stock; emergency dispensing timeframes; data
collection and reporting; dispensing of supplies related to
blood factor infusions; cold chain management and packaging
practices; care coordination; product recalls; and emergency
clinical consultation. The Department may require patients to
receive a comprehensive examination annually at an appropriate
provider in order to be eligible to continue to receive blood
factor.

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(i) On and after July 1, 2012, the Department shall reduce
any rate of reimbursement for services or other payments or
alter any methodologies authorized by this Code to reduce any
rate of reimbursement for services or other payments in
accordance with Section 5-5e.
(j) On and after July 1, 2012, the Department shall impose
limitations on prescription drugs such that the Department
shall not provide reimbursement for more than 4 prescriptions,
including 3 brand name prescriptions, for distinct drugs in a
30-day period, unless prior approval is received for all
prescriptions in excess of the 4-prescription limit. Drugs in
the following therapeutic classes shall not be subject to
prior approval as a result of the 4-prescription limit:
immunosuppressant drugs, oncolytic drugs, anti-retroviral
drugs, and, on or after July 1, 2014, antipsychotic drugs. On
or after July 1, 2014, the Department may exempt children with
complex medical needs enrolled in a care coordination entity
contracted with the Department to solely coordinate care for
such children, if the Department determines that the entity
has a comprehensive drug reconciliation program.
(k) No medication therapy management program implemented
by the Department shall be contrary to the provisions of the
Pharmacy Practice Act.
(l) Any provider enrolled with the Department that bills
the Department for outpatient drugs and is eligible to enroll
in the federal Drug Pricing Program under Section 340B of the

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federal Public Health Service Services Act shall enroll in
that program. No entity participating in the federal Drug
Pricing Program under Section 340B of the federal Public
Health Service Services Act may exclude Medicaid from their
participation in that program, although the Department may
exclude entities defined in Section 1905(l)(2)(B) of the
Social Security Act from this requirement.
(Source: P.A. 98-463, eff. 8-16-13; 98-651, eff. 6-16-14;
99-180, eff. 7-29-15; revised 9-2-20.)
(305 ILCS 5/5-36)
Sec. 5-36. Pharmacy benefits.
(a)(1) The Department may enter into a contract with a
third party on a fee-for-service reimbursement model for the
purpose of administering pharmacy benefits as provided in this
Section for members not enrolled in a Medicaid managed care
organization; however, these services shall be approved by the
Department. The Department shall ensure coordination of care
between the third-party administrator and managed care
organizations as a consideration in any contracts established
in accordance with this Section. Any managed care techniques,
principles, or administration of benefits utilized in
accordance with this subsection shall comply with State law.
(2) The following shall apply to contracts between
entities contracting relating to the Department's third-party
administrators and pharmacies:

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(A) the Department shall approve any contract between
a third-party administrator and a pharmacy;
(B) the Department's third-party administrator shall
not change the terms of a contract between a third-party
administrator and a pharmacy without written approval by
the Department; and
(C) the Department's third-party administrator shall
not create, modify, implement, or indirectly establish any
fee on a pharmacy, pharmacist, or a recipient of medical
assistance without written approval by the Department.
(b) The provisions of this Section shall not apply to
outpatient pharmacy services provided by a health care
facility registered as a covered entity pursuant to 42 U.S.C.
256b or any pharmacy owned by or contracted with the covered
entity. A Medicaid managed care organization shall, either
directly or through a pharmacy benefit manager, administer and
reimburse outpatient pharmacy claims submitted by a health
care facility registered as a covered entity pursuant to 42
U.S.C. 256b, its owned pharmacies, and contracted pharmacies
in accordance with the contractual agreements the Medicaid
managed care organization or its pharmacy benefit manager has
with such facilities and pharmacies. Any pharmacy benefit
manager that contracts with a Medicaid managed care
organization to administer and reimburse pharmacy claims as
provided in this Section must be registered with the Director
of Insurance in accordance with Section 513b2 of the Illinois

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Insurance Code.
(c) On at least an annual basis, the Director of the
Department of Healthcare and Family Services shall submit a
report beginning no later than one year after January 1, 2020
(the effective date of Public Act 101-452) this amendatory Act
of the 101st General Assembly that provides an update on any
contract, contract issues, formulary, dispensing fees, and
maximum allowable cost concerns regarding a third-party
administrator and managed care. The requirement for reporting
to the General Assembly shall be satisfied by filing copies of
the report with the Speaker, the Minority Leader, and the
Clerk of the House of Representatives and with the President,
the Minority Leader, and the Secretary of the Senate. The
Department shall take care that no proprietary information is
included in the report required under this Section.
(d) A pharmacy benefit manager shall notify the Department
in writing of any activity, policy, or practice of the
pharmacy benefit manager that directly or indirectly presents
a conflict of interest that interferes with the discharge of
the pharmacy benefit manager's duty to a managed care
organization to exercise its contractual duties. "Conflict of
interest" shall be defined by rule by the Department.
(e) A pharmacy benefit manager shall, upon request,
disclose to the Department the following information:
(1) whether the pharmacy benefit manager has a
contract, agreement, or other arrangement with a

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pharmaceutical manufacturer to exclusively dispense or
provide a drug to a managed care organization's enrollees,
and the aggregate amounts of consideration of economic
benefits collected or received pursuant to that
arrangement;
(2) the percentage of claims payments made by the
pharmacy benefit manager to pharmacies owned, managed, or
controlled by the pharmacy benefit manager or any of the
pharmacy benefit manager's management companies, parent
companies, subsidiary companies, or jointly held
companies;
(3) the aggregate amount of the fees or assessments
imposed on, or collected from, pharmacy providers; and
(4) the average annualized percentage of revenue
collected by the pharmacy benefit manager as a result of
each contract it has executed with a managed care
organization contracted by the Department to provide
medical assistance benefits which is not paid by the
pharmacy benefit manager to pharmacy providers and
pharmaceutical manufacturers or labelers or in order to
perform administrative functions pursuant to its contracts
with managed care organizations.
(f) The information disclosed under subsection (e) shall
include all retail, mail order, specialty, and compounded
prescription products. All information made available to the
Department under subsection (e) is confidential and not

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subject to disclosure under the Freedom of Information Act.
All information made available to the Department under
subsection (e) shall not be reported or distributed in any way
that compromises its competitive, proprietary, or financial
value. The information shall only be used by the Department to
assess the contract, agreement, or other arrangements made
between a pharmacy benefit manager and a pharmacy provider,
pharmaceutical manufacturer or labeler, managed care
organization, or other entity, as applicable.
(g) A pharmacy benefit manager shall disclose directly in
writing to a pharmacy provider or pharmacy services
administrative organization contracting with the pharmacy
benefit manager of any material change to a contract provision
that affects the terms of the reimbursement, the process for
verifying benefits and eligibility, dispute resolution,
procedures for verifying drugs included on the formulary, and
contract termination at least 30 days prior to the date of the
change to the provision. The terms of this subsection shall be
deemed met if the pharmacy benefit manager posts the
information on a website, viewable by the public. A pharmacy
service administration organization shall notify all contract
pharmacies of any material change, as described in this
subsection, within 2 days of notification. As used in this
Section, "pharmacy services administrative organization" means
an entity operating within the State that contracts with
independent pharmacies to conduct business on their behalf

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with third-party payers. A pharmacy services administrative
organization may provide administrative services to pharmacies
and negotiate and enter into contracts with third-party payers
or pharmacy benefit managers on behalf of pharmacies.
(h) A pharmacy benefit manager shall not include the
following in a contract with a pharmacy provider:
(1) a provision prohibiting the provider from
informing a patient of a less costly alternative to a
prescribed medication; or
(2) a provision that prohibits the provider from
dispensing a particular amount of a prescribed medication,
if the pharmacy benefit manager allows that amount to be
dispensed through a pharmacy owned or controlled by the
pharmacy benefit manager, unless the prescription drug is
subject to restricted distribution by the United States
Food and Drug Administration or requires special handling,
provider coordination, or patient education that cannot be
provided by a retail pharmacy.
(i) Nothing in this Section shall be construed to prohibit
a pharmacy benefit manager from requiring the same
reimbursement and terms and conditions for a pharmacy provider
as for a pharmacy owned, controlled, or otherwise associated
with the pharmacy benefit manager. Reimbursement must not be
less than the dispensing fees and acquisition costs under the
fee-for-service program as required under subsection (b) of
Section 5-5.12.

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(j) A pharmacy benefit manager shall establish and
implement a process for the resolution of disputes arising out
of this Section, which shall be approved by the Department.
(k) The Department shall adopt rules establishing
reasonable dispensing fees for fee-for-service payments in
accordance with guidance or guidelines from the federal
Centers for Medicare and Medicaid Services.
(Source: P.A. 101-452, eff. 1-1-20; revised 10-22-19.)
Section 99. Effective date. This Act takes effect upon
becoming law.