Bill Text: NJ A3125 | 2024-2025 | Regular Session | Introduced
Bill Title: Requires prescription drug services covered under Medicaid program to be provided via fee-for-service delivery system.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-01-09 - Introduced, Referred to Assembly Aging and Human Services Committee [A3125 Detail]
Download: New_Jersey-2024-A3125-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Assemblyman CRAIG J. COUGHLIN
District 19 (Middlesex)
SYNOPSIS
Requires prescription drug services covered under Medicaid program to be provided via fee-for-service delivery system.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning prescription drug services provided under the Medicaid program and supplementing Title 30 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. Prescription drug services provided under the Medicaid program, established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), shall be administered by the Division of Medical Assistance and Health Services in the Department of Human Services under a fee-for-service delivery system.
b. Reimbursement for covered outpatient brand name and generic drugs, as well as covered outpatient specialty drugs dispensed by a mail order pharmacy, shall be calculated based on the lower of:
(1) the National Average Drug Acquisition Cost (NADAC) Retail Price Survey, in accordance with section 1927(f) of the federal Social Security Act or the Wholesale Acquisition Cost in the absence of a NADAC price, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(2) the federal upper limit, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(3) the State Maximum Allowable Cost, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(4) the State submitted ingredient cost, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92; or
(5) the provider's usual and customary charge, including any discount price which may be in effect on the date the drug is dispensed to the Medicaid beneficiary.
c. Reimbursement for covered outpatient drugs dispensed by a covered entity as defined in section 340B(a)(4) of the federal Public Health Service Act shall be calculated based on the lower of:
(1) the Actual Acquisition Cost, which shall not exceed the federal 340B program ceiling price, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(2) the federal upper limit, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(3) the State Maximum Allowable Cost, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(4) the State submitted ingredient cost, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92; or
(5) the provider's usual and customary charge, including any discount price which may be in effect on the date the drug is dispensed to the Medicaid beneficiary.
d. Reimbursement for covered clotting factors dispensed by a specialty pharmacy or a Hemophilia Treatment Center shall be based on the NADAC Retail Price Survey, in accordance with section 1927(f) of the federal Social Security Act or the Wholesale Acquisition Cost in the absence of a NADAC price, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92. Clotting factors shall be billed through a Point of Sale System as of January 1, 2020.
2. The Commissioner of Human Services shall apply for such State plan amendments or waivers as may be necessary to implement the provisions of this act and to secure federal financial participation for State Medicaid expenditures under the federal Medicaid program.
3. The Commissioner of Human Services shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to effectuate the purposes of this act.
4. This act shall take effect on the 90TH day next following the date of enactment, but the Commissioner of Human Services may take such anticipatory administrative action in advance thereof as may be necessary for the implementation of this act.
STATEMENT
This bill requires prescription drug services covered under the Medicaid program to be provided via fee-for-service delivery system. Currently, the majority of prescription drug services are provided through managed care delivery system.
Specifically, the bill requires that the reimbursement for covered outpatient brand name and generic drugs, as well as covered outpatient specialty drugs dispensed by a mail order pharmacy, is calculated based on the lower of:
(1) the National Average Drug Acquisition Cost (NADAC) Retail Price Survey, in accordance with section 1927(f) of the federal Social Security Act or the Wholesale Acquisition Cost in the absence of a NADAC price, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(2) the federal upper limit, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(3) the State Maximum Allowable Cost, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(4) the State submitted ingredient cost, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92; or
(5) the provider's usual and customary charge, including any discount price which may be in effect on the date the drug is dispensed to the Medicaid beneficiary.
Furthermore, the bill requires that the reimbursement for covered outpatient drugs dispensed by a covered entity as defined in section 340B(a)(4) of the federal Public Health Service Act is be calculated based on the lower of:
(1) the Actual Acquisition Cost, which shall not exceed the federal 340B program ceiling price, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(2) the federal upper limit, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(3) the State Maximum Allowable Cost, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92;
(4) the State submitted ingredient cost, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92; or
(5) the provider's usual and customary charge, including any discount price which may be in effect on the date the drug is dispensed to the Medicaid beneficiary.
And finally, the bill requires that the reimbursement for covered clotting factors dispensed by a specialty pharmacy or a Hemophilia Treatment Center is based on the NADAC Retail Price Survey, in accordance with section 1927(f) of the federal Social Security Act or the Wholesale Acquisition Cost in the absence of a NADAC price, plus the State professional dispensing fee, as defined at 42 CFR 447.502, of $10.92. Under the bill, clotting factors are required to be billed through a Point of Sale System as of January 1, 2020.
The transition is expected to generate significant State prescription drug savings, to increase access and savings to prescription drugs for Medicaid patients, and to create a fairer system for pharmacy providers, as demonstrated by other states implementing similar policies. For example, in March 2019, the West Virginia Bureau for Medical Services released a report showing savings of $54.4 million to the state Medicaid program due to the carve out of the prescription drug benefit from Medicaid managed care. The report also notes that in addition to the savings, the program resulted in $122 million paid to West Virginia pharmacies in the form of fixed dispensing fees, money that had formerly gone to out-of-state pharmacy benefit managers. Moreover, on April 1, 2023 New York shifted the Medicaid prescription drug benefit from managed care to a fee-for-service Medicaid Pharmacy Program. According to the New York Executive, this program is anticipated to generate a net state savings of $40.0 million in the first year of implementation, and $180.0 million in subsequent years.
