2017S0396-1 03/06/17     By: Kolkhorst S.B. No. 1567     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.  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)  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)  under which a contract between the managed   care organization or any subcontracted pharmacy benefit manager and   a pharmacist or pharmacy provider indicates the reimbursement   methodology to be used and, at a minimum, indicates:                            (i)  the amount to be paid for each claim for   ingredient cost as a percentage of the amount that would be paid   under Medicaid fee-for-service; and                            (ii)  the amount to be paid for each claim   for the professional dispensing fee as a percentage of the amount   that would be paid under Medicaid fee-for-service;                       (H)  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;                      (I)[(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;                      (J)[(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;                      (K)[(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                      (L)[(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)(L)(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 2.  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 3.  This Act takes effect March 1, 2018.