Bill Text: TX HB3388 | 2019-2020 | 86th Legislature | Comm Sub

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Bill Title: Relating to the reimbursement of prescription drugs under Medicaid and the child health plan program.

Spectrum: Slight Partisan Bill (Republican 15-7)

Status: (Engrossed - Dead) 2019-05-25 - Conf. Comm. Report distributed [HB3388 Detail]

Download: Texas-2019-HB3388-Comm_Sub.html

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By: Sheffield, et al. H.B. No. 3388
(Senate Sponsor - Kolkhorst, Miles)
(In the Senate - Received from the House May 6, 2019;
May 10, 2019, read first time and referred to Committee on Health &
Human Services; May 17, 2019, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 9, Nays 0;
May 17, 2019, sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR H.B. No. 3388 By: Kolkhorst

A BILL TO BE ENTITLED
AN ACT
relating to the reimbursement of prescription drugs under Medicaid
and the child health plan program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. 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;
(B) as a condition of contract retention and
renewal:
(i) continue to comply with the provider
access standards established under Section 533.0061; 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;
(C) pay liquidated damages for each failure, as
determined by the commission, to comply with the provider access
standards established under Section 533.0061 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) 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:
(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 or collect rebates
associated with pharmacy products on the 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) must comply with Section 533.00514 as a
condition of contract retention and renewal [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 drug
reimbursement [maximum allowable cost] price information at least
once every seven days to reflect any modification of [maximum
allowable cost] pricing under the vendor drug program;
(iii) [(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 the reimbursement [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; and
(iv) [(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 drug
reimbursement price [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
reductions [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.
SECTION 2. Subchapter A, Chapter 533, Government Code, is
amended by adding Section 533.00514 to read as follows:
Sec. 533.00514. REIMBURSEMENT METHODOLOGY FOR PRESCRIPTION
DRUGS. (a) In accordance with rules adopted by the executive
commissioner, a managed care organization that contracts with the
commission under this chapter or a pharmacy benefit manager
administering a pharmacy benefit program on behalf of the managed
care organization shall reimburse a pharmacy or pharmacist,
including a Texas retail pharmacy or a Texas specialty pharmacy,
that:
(1) dispenses a prescribed prescription drug, other
than a drug obtained under Section 340B, Public Health Service Act
(42 U.S.C. Section 256b), to a recipient for not less than the
lesser of:
(A) the reimbursement amount for the drug under
the vendor drug program, including a dispensing fee that is not less
than the dispensing fee for the drug under the vendor drug program;
or
(B) the amount claimed by the pharmacy or
pharmacist, including the gross amount due or the usual and
customary charge to the public for the drug; or
(2) dispenses a prescribed prescription drug obtained
at a discounted price under Section 340B, Public Health Service Act
(42 U.S.C. Section 256b) to a recipient for not less than the
reimbursement amount for the drug under the vendor drug program,
including a dispensing fee that is not less than the dispensing fee
for the drug under the vendor drug program.
(b) The methodology adopted by rule by the executive
commissioner to determine Texas pharmacies' actual acquisition
cost (AAC) for purposes of the vendor drug program must be
consistent with the actual prices Texas pharmacies pay to acquire
prescription drugs marketed or sold by a specific manufacturer and
must be based on the National Average Drug Acquisition Cost
published by the Centers for Medicare and Medicaid Services or
another publication approved by the executive commissioner.
(c) The executive commissioner shall develop a process for
the periodic study of Texas retail pharmacies' actual acquisition
cost (AAC) for prescription drugs, Texas specialty pharmacies'
actual acquisition cost (AAC) for prescription drugs, retail
professional dispensing costs, and specialty pharmacy professional
dispensing costs and publish the results of each study on the
commission's Internet website.
(d) The dispensing fees adopted by the executive
commissioner for purposes of:
(1) Subsection (a)(1) must be based on, as
appropriate:
(A) Texas retail pharmacies' professional
dispensing costs for retail prescription drugs; or
(B) Texas specialty pharmacies' professional
dispensing costs for specialty prescription drugs; or
(2) Subsection (a)(2) must be based on Texas
pharmacies' professional dispensing costs for those drugs.
(e) Not less frequently than once every two years, the
commission shall conduct a study of Texas pharmacies' dispensing
costs for retail prescription drugs, specialty prescription drugs,
and drugs obtained under Section 340B, Public Health Service Act
(42 U.S.C. Section 256b). Based on the results of the study, the
executive commissioner shall adjust the minimum amount of the
retail professional dispensing fee and specialty pharmacy
professional dispensing fee under Subsection (a)(1) and the
dispensing fee for drugs obtained under Section 340B, Public Health
Service Act (42 U.S.C. Section 256b).
SECTION 3. Subchapter D, Chapter 62, Health and Safety
Code, is amended by adding Section 62.160 to read as follows:
Sec. 62.160. REIMBURSEMENT METHODOLOGY FOR PRESCRIPTION
DRUGS. A managed care organization providing pharmacy benefits
under the child health plan program or a pharmacy benefit manager
administering a pharmacy benefit program on behalf of the managed
care organization shall comply with Section 533.00514, Government
Code.
SECTION 4. Section 533.005(a-2), Government Code, is
repealed.
SECTION 5. 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 6. The Health and Human Services Commission is
required to implement a provision of this Act only if the
legislature appropriates money specifically for that purpose. If
the legislature does not appropriate money specifically for that
purpose, the Health and Human Services Commission may, but is not
required to, implement a provision of this Act using other
appropriations available for that purpose.
SECTION 7. This Act takes effect March 1, 2020.
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