Bill Text: TX HB437 | 2019-2020 | 86th Legislature | Introduced
Bill Title: Relating to allowing Medicaid managed care organizations to adopt their own drug formularies.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2019-02-20 - Referred to Public Health [HB437 Detail]
Download: Texas-2019-HB437-Introduced.html
86R717 KFF-D | ||
By: Shaheen | H.B. No. 437 |
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relating to allowing Medicaid managed care organizations to adopt | ||
their own drug formularies. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 531.072(a), Government Code, is amended | ||
to read as follows: | ||
(a) In a manner that complies with applicable state and | ||
federal law, the commission shall adopt preferred drug lists for | ||
the Medicaid vendor drug program and for prescription drugs | ||
purchased through the child health plan program. Except as | ||
provided by Section 531.0721, the [ |
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preferred drug lists for community mental health centers, state | ||
mental health hospitals, and any other state program administered | ||
by the commission or a state health and human services agency. | ||
SECTION 2. Subchapter B, Chapter 531, Government Code, is | ||
amended by adding Section 531.0721 to read as follows: | ||
Sec. 531.0721. ADOPTION OF PRESCRIPTION DRUG FORMULARY BY | ||
MEDICAID MANAGED CARE ORGANIZATION. A managed care organization | ||
providing an outpatient pharmacy benefit plan for its Medicaid | ||
enrolled recipients may adopt its own drug formulary and is not | ||
required to: | ||
(1) employ the vendor drug program formulary; or | ||
(2) otherwise adhere to a preferred drug list the | ||
commission adopts under Section 531.072. | ||
SECTION 3. Section 531.073, Government Code, is amended by | ||
amending Subsection (a) and adding Subsection (j) to read as | ||
follows: | ||
(a) The executive commissioner, in the rules and standards | ||
governing the Medicaid vendor drug program and the child health | ||
plan program, shall require prior authorization for the | ||
reimbursement of a drug that is not included in the appropriate | ||
preferred drug list adopted under Section 531.072, except as | ||
provided by Subsection (j) and for any drug exempted from prior | ||
authorization requirements by federal law. Except as provided by | ||
Subsection (j), the [ |
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authorization for the reimbursement of a drug provided through any | ||
other state program administered by the commission or a state | ||
health and human services agency, including a community mental | ||
health center and a state mental health hospital if the commission | ||
adopts preferred drug lists under Section 531.072 that apply to | ||
those facilities and the drug is not included in the appropriate | ||
list. The executive commissioner shall require that the prior | ||
authorization be obtained by the prescribing physician or | ||
prescribing practitioner. | ||
(j) This section does not apply to a managed care | ||
organization that elects to adopt its own drug formulary under | ||
Section 531.0721. | ||
SECTION 4. Sections 533.005(a) and (a-2), Government Code, | ||
are 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) [ |
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the managed care organization develop, implement, and maintain an | ||
outpatient pharmacy benefit plan and prescription drug formulary | ||
for its enrolled recipients: | ||
(A) [ |
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organization[ |
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pricing information that is confidential under Section 531.071; | ||
(B) [ |
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prohibition under Section 531.089; | ||
(C) [ |
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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; | ||
(D) [ |
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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; | ||
(E) [ |
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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; | ||
(F) [ |
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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; | ||
(G) [ |
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organization or pharmacy benefit manager, as applicable, must pay | ||
claims in accordance with Section 843.339, Insurance Code; and | ||
(H) [ |
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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[ |
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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 | ||
reductions [ |
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(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. | ||
(a-2) Except as provided by Subsection (a)(23)(H)(viii) | ||
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provider and maintained by a managed care organization or pharmacy | ||
benefit manager is confidential. | ||
SECTION 5. Section 533.005(a-1), Government Code, is | ||
repealed. | ||
SECTION 6. As soon as practicable after the effective date | ||
of this Act, the executive commissioner of the Health and Human | ||
Services Commission shall adopt necessary rules to implement the | ||
changes in law made by this Act. | ||
SECTION 7. 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 8. This Act takes effect September 1, 2019. |