PRINTER'S NO. 1518
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
825
Session of
2020
INTRODUCED BY J. WARD, K. WARD, PHILLIPS-HILL, VOGEL, BLAKE,
LEACH, AUMENT, FARNESE, STEFANO, MARTIN AND SABATINA,
FEBRUARY 6, 2020
REFERRED TO HEALTH AND HUMAN SERVICES, FEBRUARY 6, 2020
AN ACT
Amending the act of June 13, 1967 (P.L.31, No.21), entitled "An
act to consolidate, editorially revise, and codify the public
welfare laws of the Commonwealth," in medical assistance,
providing for financial disclosures for pharmacy services,
for medical assistance reimbursement for pharmacies, for
medical assistance reimbursement for specialty drugs, for
pharmacy benefit manager networks, for cost transparency, for
pharmacy benefit manager reimbursement, for pay for
performance program and for audits and limitations.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of June 13, 1967 (P.L.31, No.21), known
as the Human Services Code, is amended by adding sections to
read:
Section 449.1. Financial Disclosures for Pharmacy
Services.-- (a) Any pharmacy benefit manager that contracts with
a medical assistance managed care organization under contract
with the department shall be prohibited from utilizing any
confidentiality provisions which would in effect prohibit
disclosure of information to the medical assistance managed care
organization and the department upon the department's request.
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(b) Requests by the department may include the payment
methodology for the pharmacy benefit manager, which must include
the actual amount paid by the pharmacy benefit manager to a
pharmacy for dispensing an outpatient covered drug or medical
supply item, including, at a minimum, the ingredient cost and
dispensing fee and any other administrative fee.
(c) (1) A medical assistance managed care organization that
assigns financial responsibility for determining the dispensing
pharmacy payment methodology, including the ingredient cost and
dispensing fee, shall disclose to the department all financial
terms and payment arrangements that apply between the medical
assistance managed care organization and the pharmacy benefit
manager on request and within ten days of any changes to the
financial terms and payment arrangements.
(2) For the purposes of this section, a pharmacy benefit
manager that contracts with a medical assistance managed care
organization shall:
(i) maintain records sufficient to provide information for
pharmaceuticals dispensed and paid for by medical assistance to
the department; and
(ii) ensure compliance, including the information required
under Chapter 7 of the act of November 21, 2016 (P.L.1318,
No.169), known as the "Pharmacy Audit Integrity and Transparency
Act."
(d) Information disclosed or produced by a pharmacy benefit
manager or a medical assistance managed care organization to the
department under this section shall not be subject to the act of
February 14, 2008 (P.L.6, No.3), known as the "Right-to-Know
Law."
(e) The department may perform an audit of subcontracts with
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pharmacy benefit managers in medical assistance to ensure
pharmacies are paid in accordance with section 449.2.
(f) A medical assistance managed care organization may use a
pharmacy benefit manager to process prescription claims only if
the medical assistance managed care organization has received
advanced written approval by the department.
(g) A medical assistance managed care organization utilizing
a pharmacy benefit manager shall:
(i) include on each outpatient drug claim the amount paid to
the pharmacy benefit manager by the managed care organization
and the amount received by the dispensing pharmacy or
prescribing provider;
(ii) report differences between the amount paid by the
managed care organization to the pharmacy benefit manager and
the amount paid by the pharmacy benefit manager to the providers
of covered outpatient drugs as administrative fees;
(iii) if the pharmacy benefit manager is owned wholly or in
part by the medical assistance managed care organization, a
retail pharmacy provider or a pharmaceutical manufacturer, the
managed care organization shall submit a written description of
the assurances and procedures that will be implemented under the
proposed pharmacy benefit manager subcontract, including, but
not limited to, an independent audit to assure that all
pharmacies are reimbursed under the same terms and conditions
and assure confidentiality of proprietary information. These
assurances and procedures must be submitted and receive advance
written approval by the department prior to initiating the
pharmacy benefit manager subcontract;
(iv) report all administrative fees charged by the pharmacy
benefit manager, including the difference in amounts paid as
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prescribed under this subsection, in a format as designated by
the department;
(v) submit a written description of the procedures that the
managed care organization will implement to monitor the pharmacy
benefit manager to comply with this s ection; and
(vi) all contracts between a medical assistance managed care
organization and pharmacy benefit managers shall use a pass-
through arrangement by which the pharmacy benefit manager is
paid a negotiated fee per prescription for administration. The
administration fee shall be paid by the medical assistance
managed care organization to the pharmacy benefit manager. The
fee may not be passed to pharmacy providers. Spread pricing
arrangements shall not be permitted.
(h) As used in this section, the term "spread pricing" shall
mean any amount charged or claimed by a pharmacy benefit manager
to a managed care organization that is in excess of the amount
paid to the pharmacy that filled the prescription.
Section 449.2. Medical Assistance Reimbursement for
Pharmacies.--(a) The department shall reimburse pharmacies in
the fee-for-service delivery systems and pharmacies within a
managed care organization's network as follows:
(1) If the NADAC per unit is available, the payment to the
pharmacy shall be the lower of the following amounts:
(i) The NADAC per unit with the addition of a professional
dispensing fee no less than the established fee-for-service
dispensing fee approved by the Centers for Medicare and Medicaid
Services.
(ii) The pharmacy's usual and customary charge for the drug
dispensed.
(2) If the NADAC per unit is unavailable, the payment to the
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pharmacy shall be the lower of the following amounts:
(i) The wholesale acquisition cost plus 3.2% with the
addition of a professional dispensing fee no less than the
established fee-for-service dispensing fee approved by the
Centers for Medicare and Medicaid Services.
(ii) The pharmacy's usual and customary charge for the drug
dispensed.
(b) (1) If a pharmacy benefit manager approves a claim
through adjudication, the pharmacy benefit manager may not
retroactively deny or modify reimbursement based on information
accompanying the original claim or information available to the
pharmacy benefit manager at the time of adjudication, unless the
claim was fraudulent, the pharmacy or pharmacists had been
reimbursed for the claim previously or the services reimbursed
were not rendered by the pharmacy or pharmacist.
(2) This subsection shall not apply to overpayments.
(c) As used in this section, unless the context clearly
indicates otherwise:
"NADAC per unit" means the current National Average Drug
Acquisition Cost per unit.
"Pharmacy benefit management" means any of the following:
(1) Procurement of prescription drugs at a negotiated
contracted rate for distribution within this Commonwealth to
covered individuals.
(2) Administration or management of prescription drug
benefits provided by a covered entity for the benefit of covered
individuals.
(3) Administration of pharmacy benefits, including:
(i) Operating a mail-service pharmacy.
(ii) Processing claims.
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(iii) Managing a retail pharmacy network.
(iv) Paying claims to pharmacies for prescription drugs
dispensed to covered individuals via retail or mail-order
pharmacy.
(v) Developing and managing a clinical formulary,
utilization management and quality assurance programs.
(vi) Rebate contracting and administration.
(vii) Managing a patient compliance, therapeutic
intervention and generic substitution program.
(viii) Operating a disease management program.
(ix) Setting pharmacy reimbursement pricing and
methodologies, including maximum allowable cost, and determining
single or multiple source drugs.
"Pharmacy benefit manager" means a person, business or other
entity that performs pharmacy benefit management.
Section 449.3. Medical Assistance Reimbursement for
Specialty Drugs.--(a) Pharmacies shall be reimbursed by the
department through the medical assistance program for specialty
medications dispensed to medical assistance-eligible patients at
a rate based upon a national survey-based reference price,
including, but not limited to, the WAC, AWP or NADAC to be
selected by the department, plus a variable care management fee
to be determined by the department based on the disease state
being treated with a specialty medication.
(b) The department shall determine the activities,
interventions, data gathering and reporting that must be
completed by each pharmacy before the pharmacy may invoice a
variable care management fee related to the dispensing of a
specialty medication.
(c) As used in this section, unless the context clearly
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indicates otherwise:
"AWP" means the Average Wholesale Price.
"NADAC" means the current national average drug acquisition
cost.
"Specialty medication" means an oral or injectable drug that
is used to treat chronic and life-threatening diseases, is
difficult to administer, may cause adverse reactions and
requires temperature control or other specialized handling to be
annually determined by the department.
"Variable care management fee" means a fee to be established
by the department to compensate pharmacies for dispensing and
other special attention, care and management in the provision
and/or administration of specialty medications.
"WAC" means the wholesale acquisition cost.
Section 449.4. Pharmacy Benefit Manager Networks.--(a) A
pharmacy benefit manager may not mandate that a medical
assistance enrollee use a specific retail pharmacy, mail order
pharmacy, specialty pharmacy or other pharmacy or entity if the
pharmacy benefit manager has an ownership interest in the
pharmacy, practice site or entity or the pharmacy, practice site
or entity has ownership interest in the pharmacy benefit
manager.
(b) A pharmacy benefit manager may not provide incentives to
beneficiaries to encourage the use of a specific pharmacy if
only applicable to a pharmacy benefit manager-owned or pharmacy
benefit manager-affiliated facility.
(c) A pharmacy benefit manager may not require that a
pharmacist or retail pharmacy participate in a network managed
by the pharmacy benefit manager as a condition for the retail
pharmacy to participate in another network managed by the same
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pharmacy benefit manager.
(d) A pharmacy benefit manager may not exclude an otherwise
qualified pharmacist or retail pharmacy from participation in a
particular network if the pharmacist or pharmacy accepts the
terms, conditions and reimbursement rates of the pharmacy
benefit manager, meets all applicable Federal and State
licensure and permit requirements and has not been excluded from
participation in any Federal or State program.
(e) A managed care organization or pharmacy benefit manager
shall provide payment for a health care service that is a
covered benefit and is performed by a licensed pharmacist if:
(1) the service performed is within the scope of practice of
the licensed pharmacist; and
(2) the insurer would cover the service if the service was
performed by a physician, an advanced practice registered nurse
or a physician assistant.
(f) A pharmacy benefit manager may not automatically enroll
or disenroll a retail pharmacy without cause in a contract or
modify an existing agreement without written agreement of the
pharmacist or retail pharmacy.
Section 449.5. Cost Transparency.--(a) The department shall
direct a managed care organization utilizing a pharmacy benefit
manager to extract transaction information specific to the
department's medical assistance program from a national pharmacy
provider contract or agreement.
(b) A pharmacy benefit manager may not charge or retain a
differential between what is billed to a managed care
organization as reimbursement for prescription drugs and what is
paid to pharmacies by the pharmacy benefit manager for the
prescription drug.
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Section 449.6. Pharmacy Benefit Manager Reimbursement.--(a)
Pharmacy benefit managers shall receive a reimbursement fee of
one dollar ($1) per claim in a pass-through program. Spread
pricing arrangements shall not be permitted.
(b) Administration fees shall not be passed on to pharmacy
providers.
(c) Transmission fees shall not be billed to pharmacy
providers.
(d) As used in this section, the term "spread pricing" shall
mean any amount charged or claimed by a pharmacy benefit manager
to a managed care organization that is in excess of the amount
paid to the pharmacy that filled the prescription.
Section 449.7. Pay for Performance Program.--(a) The
department shall establish a value-based program to incentivize
pharmacy providers and pharmacy benefit managers to meet agreed
upon quality metrics to optimize patient outcomes such as
medication adherence for disease states, including, but not
limited to:
(1) Diabetes.
(2) Hypertension.
(3) Cholesterol.
(b) The department may designate additional disease states
and quality metrics for the purposes of the program established
under subsection (a).
Section 449.8 Audits and limitations.--(a) If the correct
patient received the correct drug, on audit a pharmacy may not
be subject to a clawback any more than the professional fee for
errors that can be corrected internally, such as days supply,
origin code, early refill, transposed DEA or NPI number or other
scrivener's errors.
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(b) Pharmacy benefit managers may not impose contractual
restrictions on pharmacies licensed in this Commonwealth to make
product deliveries and mail prescriptions to patients.
(c) A pharmacy benefit manager may not impose accreditation
requirements more stringent than those required by the State
Board of Pharmacy.
(d) Retroactive fees are prohibited and all fees must be
charged at the point of sale.
(e) A pharmacy benefit manager may not charge pharmacy
transmission fees.
(f) A pharmacy benefit manager may not mandate the use of a
pharmacy benefit manager-owned or affiliated mail-order facility
or offer concessions to use mail-order that all pharmacies may
not be permitted to offer, such as a ninety-day supply at a
reduced copayment.
(g) As used in this section, the term "clawback" shall mean
a claim or aggregate of claims for pharmacist services which are
directly or indirectly retroactively denied or reduced after
adjudication of the claim or aggregate of claims. The term does
not include denials or reductions if:
(1) the original claim was submitted fraudulently;
(2) the original claim payment was incorrect because the
pharmacy or pharmacist had already been paid for the pharmacist
services; or
(3) the pharmacist services were not properly rendered by
the pharmacy or pharmacist.
Section 2. This act shall take effect immediately.
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