85R520 KFF-D
 
  By: Shaheen H.B. No. 1206
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  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 [The] commission may adopt
  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 employ the vendor drug program formulary or to
  otherwise adhere to a preferred drug list adopted by the commission
  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 [The] executive commissioner may require prior
  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, 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 and prescription drug formulary 
  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;
                     (B) [(E)]  that complies with the prohibition
  under Section 531.089;
                     (C) [(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;
                     (D) [(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;
                     (E) [(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;
                     (F) [(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;
                     (G) [(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
                     (H) [(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.
         (a-2)  Except as provided by Subsection (a)(23)(H)(viii)
  [(a)(23)(K)(viii)], a maximum allowable cost list specific to a
  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, 2017.