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Minnesota Legislature

Office of the Revisor of Statutes

SF 1778

as introduced - 91st Legislature (2019 - 2020) Posted on 02/27/2019 03:48pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to human services; modifying provisions governing drug payments under
medical assistance;amending Minnesota Statutes 2018, sections 256.969,
subdivision 9; 256B.0625, subdivisions 13, 13e, 13f; 256B.064, subdivision 1a.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2018, section 256.969, subdivision 9, is amended to read:


Subd. 9.

Disproportionate numbers of low-income patients served.

(a) For admissions
occurring on or after July 1, 1993, the medical assistance disproportionate population
adjustment shall comply with federal law and shall be paid to a hospital, excluding regional
treatment centers and facilities of the federal Indian Health Service, with a medical assistance
inpatient utilization rate in excess of the arithmetic mean. The adjustment must be determined
as follows:

(1) for a hospital with a medical assistance inpatient utilization rate above the arithmetic
mean for all hospitals excluding regional treatment centers and facilities of the federal Indian
Health Service but less than or equal to one standard deviation above the mean, the
adjustment must be determined by multiplying the total of the operating and property
payment rates by the difference between the hospital's actual medical assistance inpatient
utilization rate and the arithmetic mean for all hospitals excluding regional treatment centers
and facilities of the federal Indian Health Service; and

(2) for a hospital with a medical assistance inpatient utilization rate above one standard
deviation above the mean, the adjustment must be determined by multiplying the adjustment
that would be determined under clause (1) for that hospital by 1.1. The commissioner shall
report annually on the number of hospitals likely to receive the adjustment authorized by
this paragraph. The commissioner shall specifically report on the adjustments received by
public hospitals and public hospital corporations located in cities of the first class.

(b) Certified public expenditures made by Hennepin County Medical Center shall be
considered Medicaid disproportionate share hospital payments. Hennepin County and
Hennepin County Medical Center shall report by June 15, 2007, on payments made beginning
July 1, 2005, or another date specified by the commissioner, that may qualify for
reimbursement under federal law. Based on these reports, the commissioner shall apply for
federal matching funds.

(c) Upon federal approval of the related state plan amendment, paragraph (b) is effective
retroactively from July 1, 2005, or the earliest effective date approved by the Centers for
Medicare and Medicaid Services.

(d) Effective July 1, 2015, disproportionate share hospital (DSH) payments shall be paid
in accordance with a new methodology using 2012 as the base year. Annual payments made
under this paragraph shall equal the total amount of payments made for 2012. A licensed
children's hospital shall receive only a single DSH factor for children's hospitals. Other
DSH factors may be combined to arrive at a single factor for each hospital that is eligible
for DSH payments. The new methodology shall make payments only to hospitals located
in Minnesota and include the following factors:

(1) a licensed children's hospital with at least 1,000 fee-for-service discharges in the
base year shall receive a factor of 0.868. A licensed children's hospital with less than 1,000
fee-for-service discharges in the base year shall receive a factor of 0.7880;

(2) a hospital that has in effect for the initial rate year a contract with the commissioner
to provide extended psychiatric inpatient services under section 256.9693 shall receive a
factor of 0.0160;

(3) a hospital that has received payment from the fee-for-service program for at least 20
transplant services in the base year shall receive a factor of 0.0435;

(4) a hospital that has a medical assistance utilization rate in the base year between 20
percent up to one standard deviation above the statewide mean utilization rate shall receive
a factor of 0.0468;

(5) a hospital that has a medical assistance utilization rate in the base year that is at least
one standard deviation above the statewide mean utilization rate but is less than three standard
deviations above the mean shall receive a factor of 0.2300; and

(6) a hospital that has a medical assistance utilization rate in the base year that is at least
three standard deviations above the statewide mean utilization rate shall receive a factor of
0.3711.

(e) Any payments or portion of payments made to a hospital under this subdivision that
are subsequently returned to the commissioner because the payments are found to exceed
the hospital-specific DSH limit for that hospital shall be redistributed, proportionate to the
number of fee-for-service discharges, to other DSH-eligible non-children's hospitals that
have a medical assistance utilization rate that is at least one standard deviation above the
mean.

new text begin (f) An additional payment adjustment shall be established by the commissioner under
this subdivision for a hospital that provides high levels of administering high-cost drugs to
enrollees in fee-for-service medical assistance. The commissioner shall consider factors
including fee-for-service medical assistance utilization rates and payments made for drugs
purchased through the 340B drug purchasing program and administered to fee-for-service
enrollees. If any part of this adjustment exceeds a hospital's hospital-specific disproportionate
share hospital limit, the commissioner shall make a payment to the hospital that equals the
nonfederal share of the amount that exceeds the limit. The total nonfederal share of the
amount of the payment adjustment under this paragraph shall not exceed $1,500,000.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for discharges on or after April 1, 2019.
new text end

Sec. 2.

Minnesota Statutes 2018, section 256B.0625, subdivision 13, is amended to read:


Subd. 13.

Drugs.

(a) Medical assistance covers drugs, except for fertility drugs when
specifically used to enhance fertility, if prescribed by a licensed practitioner and dispensed
by a licensed pharmacist, by a physician enrolled in the medical assistance program as a
dispensing physician, or by a physician, physician assistant, or a nurse practitioner employed
by or under contract with a community health board as defined in section 145A.02,
subdivision 5
, for the purposes of communicable disease control.

(b) The dispensed quantity of a prescription drug must not exceed a 34-day supply,
unless authorized by the commissioner.

(c) For the purpose of this subdivision and subdivision 13d, an "active pharmaceutical
ingredient" is defined as a substance that is represented for use in a drug and when used in
the manufacturing, processing, or packaging of a drug becomes an active ingredient of the
drug product. An "excipient" is defined as an inert substance used as a diluent or vehicle
for a drug. The commissioner shall establish a list of active pharmaceutical ingredients and
excipients which are included in the medical assistance formulary. Medical assistance covers
selected active pharmaceutical ingredients and excipients used in compounded prescriptions
when the compounded combination is specifically approved by the commissioner or when
a commercially available product:

(1) is not a therapeutic option for the patient;

(2) does not exist in the same combination of active ingredients in the same strengths
as the compounded prescription; and

(3) cannot be used in place of the active pharmaceutical ingredient in the compounded
prescription.

(d) Medical assistance covers the following over-the-counter drugs when prescribed by
a licensed practitioner or by a licensed pharmacist who meets standards established by the
commissioner, in consultation with the board of pharmacy: antacids, acetaminophen, family
planning products, aspirin, insulin, products for the treatment of lice, vitamins for adults
with documented vitamin deficiencies, vitamins for children under the age of seven and
pregnant or nursing women, and any other over-the-counter drug identified by the
commissioner, in consultation with the Formulary Committee, as necessary, appropriate,
and cost-effective for the treatment of certain specified chronic diseases, conditions, or
disorders, and this determination shall not be subject to the requirements of chapter 14. A
pharmacist may prescribe over-the-counter medications as provided under this paragraph
for purposes of receiving reimbursement under Medicaid. When prescribing over-the-counter
drugs under this paragraph, licensed pharmacists must consult with the recipient to determine
necessity, provide drug counseling, review drug therapy for potential adverse interactions,
and make referrals as needed to other health care professionals. deleted text beginOver-the-counter medications
must be dispensed in a quantity that is the lowest of: (1) the number of dosage units contained
in the manufacturer's original package; (2) the number of dosage units required to complete
the patient's course of therapy; or (3) if applicable, the number of dosage units dispensed
from a system using retrospective billing, as provided under subdivision 13e, paragraph
(b).
deleted text end

(e) Effective January 1, 2006, medical assistance shall not cover drugs that are coverable
under Medicare Part D as defined in the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, Public Law 108-173, section 1860D-2(e), for individuals eligible
for drug coverage as defined in the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, Public Law 108-173, section 1860D-1(a)(3)(A). For these
individuals, medical assistance may cover drugs from the drug classes listed in United States
Code, title 42, section 1396r-8(d)(2), subject to this subdivision and subdivisions 13a to
13g, except that drugs listed in United States Code, title 42, section 1396r-8(d)(2)(E), shall
not be covered.

(f) Medical assistance covers drugs acquired through the federal 340B Drug Pricing
Program and dispensed by 340B covered entities and ambulatory pharmacies under common
ownership of the 340B covered entity. Medical assistance does not cover drugs acquired
through the federal 340B Drug Pricing Program and dispensed by 340B contract pharmacies.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 1, 2019, or upon federal approval,
whichever is later. The commissioner of human services shall notify the revisor of statutes
when federal approval is obtained.
new text end

Sec. 3.

Minnesota Statutes 2018, section 256B.0625, subdivision 13e, is amended to read:


Subd. 13e.

Payment rates.

(a) The basis for determining the amount of payment shall
be the lower of the deleted text beginactual acquisitiondeleted text endnew text begin ingredientnew text end costs of the drugs deleted text beginor the maximum allowable
cost by the commissioner
deleted text end plus the deleted text beginfixeddeleted text endnew text begin professionalnew text end dispensing fee; or the usual and
customary price charged to the public. new text beginThe usual and customary price means the lowest
price charged by the provider to a patient who pays for the prescription by cash, check, or
charge account and includes prices the pharmacy charges to a patient enrolled in a
prescription savings club or prescription discount club administered by the pharmacy or
pharmacy chain.
new text endThe amount of payment basis must be reduced to reflect all discount
amounts applied to the charge by any new text beginthird-party new text endprovider/insurer agreement or contract for
submitted charges to medical assistance programs. The net submitted charge may not be
greater than the patient liability for the service. The deleted text beginpharmacydeleted text endnew text begin professionalnew text end dispensing fee
shall be deleted text begin$3.65deleted text endnew text begin $10.48new text end for deleted text beginlegend prescription drugs, except thatdeleted text endnew text begin prescriptions filled with
legend drugs meeting the definition of "covered outpatient drugs" according to United States
Code, title 42, section 1396r-8(k)(2).
new text end The dispensing fee for intravenous solutions deleted text beginwhichdeleted text endnew text begin
that
new text end must be compounded by the pharmacist shall be deleted text begin$8deleted text endnew text begin $10.48new text end per bagdeleted text begin, $14 per bag for
cancer chemotherapy products, and $30 per bag for total parenteral nutritional products
dispensed in one liter quantities, or $44 per bag for total parenteral nutritional products
dispensed in quantities greater than one liter
deleted text end. new text begin The professional dispensing fee for
prescriptions filled with over-the-counter drugs meeting the definition of covered outpatient
drugs shall be $10.48 for dispensed quantities equal to or greater than the number of units
contained in the manufacturer's original package. The professional dispensing fee shall be
prorated based on the percentage of the package dispensed when the pharmacy dispenses
a quantity less than the number of units contained in the manufacturer's original package.
new text end The pharmacy dispensing fee for new text beginprescribed new text endover-the-counter drugs new text beginnot meeting the definition
of covered outpatient drugs
new text endshall be $3.65deleted text begin, except that the fee shall be $1.31 for
retrospectively billing pharmacies when billing for quantities less than the number of units
contained in the manufacturer's original package. Actual acquisition cost includes quantity
and other special discounts except time and cash discounts. The actual acquisition cost of
a drug shall be estimated by the commissioner at wholesale acquisition cost plus four percent
for independently owned pharmacies located in a designated rural area within Minnesota,
and at wholesale acquisition cost plus two percent for all other pharmacies. A pharmacy is
"independently owned" if it is one of four or fewer pharmacies under the same ownership
nationally. A "designated rural area" means an area defined as a small rural area or isolated
rural area according to the four-category classification of the Rural Urban Commuting Area
system developed for the United States Health Resources and Services Administration.
Effective January 1, 2014, the actual acquisition
deleted text endnew text begin for quantities equal to or greater than the
number of units contained in the manufacturer's original package and shall be prorated based
on the percentage of the package dispensed when the pharmacy dispenses a quantity less
than the number of units contained in the manufacturer's original package. The ingredient
new text end
cost of a drug deleted text beginacquired throughdeleted text endnew text begin for a provider participating innew text end the federal 340B Drug Pricing
Program shall be deleted text beginestimated by the commissioner at wholesale acquisition cost minus 40
percent
deleted text endnew text begin either the 340B Drug Pricing Program ceiling price established by the Health
Resources and Services Administration or the National Average Drug Acquisition Cost
(NADAC), whichever is lower
new text end. Wholesale acquisition cost is defined as the manufacturer's
list price for a drug or biological to wholesalers or direct purchasers in the United States,
not including prompt pay or other discounts, rebates, or reductions in price, for the most
recent month for which information is available, as reported in wholesale price guides or
other publications of drug or biological pricing data. The maximum allowable cost of a
multisource drug may be set by the commissioner and it shall be comparable todeleted text begin, butdeleted text endnew text begin the
actual acquisition cost of the drug product and
new text end no higher thandeleted text begin, the maximum amount paid
by other third-party payors in this state who have maximum allowable cost programs
deleted text endnew text begin the
NADAC of the generic product
new text end. Establishment of the amount of payment for drugs shall
not be subject to the requirements of the Administrative Procedure Act.

(b) Pharmacies dispensing prescriptions to residents of long-term care facilities using
an automated drug distribution system meeting the requirements of section 151.58, or a
packaging system meeting the packaging standards set forth in Minnesota Rules, part
6800.2700, that govern the return of unused drugs to the pharmacy for reuse, may employ
retrospective billing for prescription drugs dispensed to long-term care facility residents. A
retrospectively billing pharmacy must submit a claim only for the quantity of medication
used by the enrolled recipient during the defined billing period. A retrospectively billing
pharmacy must use a billing period not less than one calendar month or 30 days.

(c) deleted text beginAn additional dispensing fee of $.30 may be added to the dispensing fee paid to
pharmacists for legend drug prescriptions dispensed to residents of long-term care facilities
when a unit dose blister card system, approved by the department, is used. Under this type
of dispensing system, the pharmacist must dispense a 30-day supply of drug. The National
Drug Code (NDC) from the drug container used to fill the blister card must be identified
on the claim to the department. The unit dose blister card containing the drug must meet
the packaging standards set forth in Minnesota Rules, part 6800.2700, that govern the return
of unused drugs to the pharmacy for reuse.
deleted text end A pharmacy provider using packaging that meets
the standards set forth in Minnesota Rules, part 6800.2700, is required to credit the
department for the actual acquisition cost of all unused drugs that are eligible for reuse,
unless the pharmacy is using retrospective billing. The commissioner may permit the drug
clozapine to be dispensed in a quantity that is less than a 30-day supply.

(d) deleted text beginWhenever a maximum allowable cost has been set fordeleted text endnew text begin If a pharmacy dispensesnew text end a
multisource drug, deleted text beginpayment shall be the lower of the usual and customary price charged to
the public or
deleted text endnew text begin the ingredient cost shall be the NADAC of the generic product ornew text end the maximum
allowable cost established by the commissioner unless prior authorization for the brand
name product has been granted according to the criteria established by the Drug Formulary
Committee as required by subdivision 13f, paragraph (a), and the prescriber has indicated
"dispense as written" on the prescription in a manner consistent with section 151.21,
subdivision 2
.

(e) The basis for determining the amount of payment for drugs administered in an
outpatient setting shall be the lower of the usual and customary cost submitted by the
provider, 106 percent of the average sales price as determined by the United States
Department of Health and Human Services pursuant to title XVIII, section 1847a of the
federal Social Security Act, the specialty pharmacy rate, or the maximum allowable cost
set by the commissioner. If average sales price is unavailable, the amount of payment must
be lower of the usual and customary cost submitted by the provider, the wholesale acquisition
cost, the specialty pharmacy rate, or the maximum allowable cost set by the commissioner.
deleted text begin Effective January 1, 2014,deleted text end The commissioner shall discount the payment rate for drugs
obtained through the federal 340B Drug Pricing Program by deleted text begin20deleted text endnew text begin 28.6new text end percent. The payment
for drugs administered in an outpatient setting shall be made to the administering facility
or practitioner. A retail or specialty pharmacy dispensing a drug for administration in an
outpatient setting is not eligible for direct reimbursement.

(f) The commissioner may deleted text beginnegotiate lower reimbursementdeleted text endnew text begin establish maximum allowable
cost
new text end rates for specialty pharmacy products deleted text beginthan the ratesdeleted text endnew text begin that are lower than the ingredient
cost formulas
new text end specified in paragraph (a). The commissioner may require individuals enrolled
in the health care programs administered by the department to obtain specialty pharmacy
products from providers with whom the commissioner has negotiated lower reimbursement
rates. Specialty pharmacy products are defined as those used by a small number of recipients
or recipients with complex and chronic diseases that require expensive and challenging drug
regimens. Examples of these conditions include, but are not limited to: multiple sclerosis,
HIV/AIDS, transplantation, hepatitis C, growth hormone deficiency, Crohn's Disease,
rheumatoid arthritis, and certain forms of cancer. Specialty pharmaceutical products include
injectable and infusion therapies, biotechnology drugs, antihemophilic factor products,
high-cost therapies, and therapies that require complex care. The commissioner shall consult
with the Formulary Committee to develop a list of specialty pharmacy products subject to
deleted text begin this paragraphdeleted text endnew text begin maximum allowable cost reimbursementnew text end. In consulting with the Formulary
Committee in developing this list, the commissioner shall take into consideration the
population served by specialty pharmacy products, the current delivery system and standard
of care in the state, and access to care issues. The commissioner shall have the discretion
to adjust the deleted text beginreimbursement ratedeleted text endnew text begin maximum allowable costnew text end to prevent access to care issues.

(g) Home infusion therapy services provided by home infusion therapy pharmacies must
be paid at rates according to subdivision 8d.

new text begin (h) The commissioner shall contract with a vendor to conduct a cost of dispensing survey
for all pharmacies that are physically located in the state of Minnesota that dispense outpatient
drugs under medical assistance. The commissioner shall ensure that the vendor has prior
experience in conducting cost of dispensing surveys. Each pharmacy enrolled with the
department to dispense outpatient prescription drugs to fee-for-service members must
respond to the cost of dispensing survey. The commissioner may sanction a pharmacy under
section 256B.064 for failure to respond. The commissioner shall require the vendor to
measure a single statewide cost of dispensing for all responding pharmacies to measure the
mean, mean weighted by total prescription volume, mean weighted by medical assistance
prescription volume, median, median weighted by total prescription volume, and median
weighted by total medical assistance prescription volume. The commissioner shall post a
copy of the final cost of dispensing survey report on the department's website. The initial
survey must be completed no later than January 1, 2021, and repeated every three years.
The commissioner shall provide a summary of the results of each cost of dispensing survey
and provide recommendations for any changes to the dispensing fee to the chairs and ranking
members of the legislative committees with jurisdiction over medical assistance pharmacy
reimbursement.
new text end

new text begin (i) The commissioner shall increase the ingredient cost reimbursement calculated in
paragraphs (a) and (f) by two percent for prescription and nonprescription drugs subject to
the wholesale drug distributor tax under section 295.52.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 1, 2019, or upon federal approval,
whichever is later. Paragraph (i) expires if federal approval is denied. The commissioner
of human services shall inform the revisor of statutes when federal approval is obtained or
denied.
new text end

Sec. 4.

Minnesota Statutes 2018, section 256B.0625, subdivision 13f, is amended to read:


Subd. 13f.

Prior authorization.

(a) The Formulary Committee shall review and
recommend drugs which require prior authorization. The Formulary Committee shall
establish general criteria to be used for the prior authorization of brand-name drugs for
which generically equivalent drugs are available, but the committee is not required to review
each brand-name drug for which a generically equivalent drug is available.

(b) Prior authorization may be required by the commissioner before certain formulary
drugs are eligible for payment. The Formulary Committee may recommend drugs for prior
authorization directly to the commissioner. The commissioner may also request that the
Formulary Committee review a drug for prior authorization. Before the commissioner may
require prior authorization for a drug:

(1) the commissioner must provide information to the Formulary Committee on the
impact that placing the drug on prior authorization may have on the quality of patient care
and on program costs, information regarding whether the drug is subject to clinical abuse
or misuse, and relevant data from the state Medicaid program if such data is available;

(2) the Formulary Committee must review the drug, taking into account medical and
clinical data and the information provided by the commissioner; and

(3) the Formulary Committee must hold a public forum and receive public comment for
an additional 15 days.

The commissioner must provide a 15-day notice period before implementing the prior
authorization.

(c) Except as provided in subdivision 13j, prior authorization shall not be required or
utilized for any atypical antipsychotic drug prescribed for the treatment of mental illness
if:

(1) there is no generically equivalent drug available; and

(2) the drug was initially prescribed for the recipient prior to July 1, 2003; or

(3) the drug is part of the recipient's current course of treatment.

This paragraph applies to any multistate preferred drug list or supplemental drug rebate
program established or administered by the commissioner. Prior authorization shall
automatically be granted for 60 days for brand name drugs prescribed for treatment of mental
illness within 60 days of when a generically equivalent drug becomes available, provided
that the brand name drug was part of the recipient's course of treatment at the time the
generically equivalent drug became available.

deleted text begin (d) Prior authorization shall not be required or utilized for any antihemophilic factor
drug prescribed for the treatment of hemophilia and blood disorders where there is no
generically equivalent drug available if the prior authorization is used in conjunction with
any supplemental drug rebate program or multistate preferred drug list established or
administered by the commissioner.
deleted text end

deleted text begin (e)deleted text endnew text begin (d)new text end The commissioner may require prior authorization for brand name drugs whenever
a generically equivalent product is available, even if the prescriber specifically indicates
"dispense as written-brand necessary" on the prescription as required by section 151.21,
subdivision 2
.

deleted text begin (f)deleted text endnew text begin (e)new text end Notwithstanding this subdivision, the commissioner may automatically require
prior authorization, for a period not to exceed 180 days, for any drug that is approved by
the United States Food and Drug Administration on or after July 1, 2005. The 180-day
period begins no later than the first day that a drug is available for shipment to pharmacies
within the state. The Formulary Committee shall recommend to the commissioner general
criteria to be used for the prior authorization of the drugs, but the committee is not required
to review each individual drug. In order to continue prior authorizations for a drug after the
180-day period has expired, the commissioner must follow the provisions of this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2018, section 256B.064, subdivision 1a, is amended to read:


Subd. 1a.

Grounds for sanctions against vendors.

new text begin(a) new text endThe commissioner may impose
sanctions against a vendor of medical care for any of the following: (1) fraud, theft, or abuse
in connection with the provision of medical care to recipients of public assistance; (2) a
pattern of presentment of false or duplicate claims or claims for services not medically
necessary; (3) a pattern of making false statements of material facts for the purpose of
obtaining greater compensation than that to which the vendor is legally entitled; (4)
suspension or termination as a Medicare vendor; (5) refusal to grant the state agency access
during regular business hours to examine all records necessary to disclose the extent of
services provided to program recipients and appropriateness of claims for payment; (6)
failure to repay an overpayment or a fine finally established under this section; (7) failure
to correct errors in the maintenance of health service or financial records for which a fine
was imposed or after issuance of a warning by the commissioner; and (8) any reason for
which a vendor could be excluded from participation in the Medicare program under section
1128, 1128A, or 1866(b)(2) of the Social Security Act.

new text begin (b) The commissioner may impose sanctions against a pharmacy provider for failure to
respond to a cost of dispensing survey under section 256B.0625, subdivision 13e, paragraph
(h).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective April 1, 2019.
new text end