HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 183 Medicaid Step-Therapy Protocols for Drugs for Serious Mental Illness Treatments
SPONSOR(S): Healthcare Regulation Subcommittee, Gonzalez Pittman
TIED BILLS: IDEN./SIM. BILLS: SB 112
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Healthcare Regulation Subcommittee 17 Y, 0 N, As CS Guzzo McElroy
2) Health Care Appropriations Subcommittee 14 Y, 0 N Smith Clark
3) Health & Human Services Committee
SUMMARY ANALYSIS
Mental illness refers to a wide range of mental health conditions — disorders that affect mood, thinking and
behavior, including depression, anxiety disorders, schizophrenia, eating disorders and addictive behaviors.
Many people have mental health concerns from time to time, but a mental health concern becomes a mental
illness when ongoing signs and symptoms cause frequent stress and affect the ability to function.
A person with a serious mental illness (SMI) is someone over the age of 18 who has, or had within the past
year, a diagnosable mental, behavioral, or emotional disorder that causes serious functional impairment that
substantially interferes with or limits one or more major life activities. SMI is a small subset of the 300 mental
illnesses listed in the Diagnostic and Statistical Manual of Mental Disorders, and includes disorders such as
bipolar disorder, major depressive disorder, schizophrenia, and schizoaffective disorder.
Both commercial and government sector health coverage apply utilization management techniques to reduce
costs, maximize volume pricing arrangements, and prevent catastrophic medical events. Step therapy, is one
such technique, commonly used with prescription drug benefits. Step therapy policies require enrollees to first
try a preferred drug or service before obtaining an alternate drug or service for a particular medical condition.
Step therapy is commonly used in conjunction with prior authorization policies, which require providers to
obtain approval from an insurer before a patient may receive specified prescription drugs under the plan. Step
therapy policies require an insured to try one drug first to treat his or her medical condition before they will
cover another drug for that condition.
CS/HB 183 requires the Medicaid program to approve a drug product for the treatment of a SMI without
meeting the step-therapy and prior authorization criteria if the prescribing physician documents to the Agency
for Health Care Administration (AHCA) that the drug is medically necessary because:
 There is no drug on the Florida Medicaid Preferred Drug List (PDL) to treat the SMI which is an
acceptable clinical alternative;
 The alternatives have been ineffective in the patient’s SMI treatment;
 The drug product or medication of a similar drug class is prescribed for the treatment of a SMI; prior
authorization has been granted previously for the prescribed drug; and the medication was dispensed
to the patient during the previous 12 months; or
 Based on historical evidence and known characteristics of the patient and the drug, the drug is likely to
be ineffective, or the number of doses has been ineffective.
The bill directs the AHCA to include the impact of the bill on Medicaid managed medical assistance and long-
term care managed care program rates effective on October 1, 2023.
The bill will have an indeterminate, but likely significant negative fiscal impact on the Medicaid program, and no
fiscal impact on local government. See Fiscal Comments.
The bill provides an effective date of October 1, 2023.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h0183c.HCA
DATE: 4/12/2023
 FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Serious Mental Illness
Mental illness refers to a wide range of mental health conditions — disorders that affect mood, thinking
and behavior, including depression, anxiety disorders, schizophrenia, eating disorders and addictive
behaviors.1 Many people have mental health concerns from time to time, but a mental health concern
becomes a mental illness when ongoing signs and symptoms cause frequent stress and affect the
ability to function.2
Signs and symptoms of mental illness can vary, depending on the disorder, circumstances and other
factors. Mental illness symptoms can affect emotions, thoughts and behaviors. Examples of signs and
symptoms include:
 Feeling sad or down
 Confused thinking or reduced ability to concentrate
 Excessive fears or worries, or extreme feelings of guilt
 Extreme mood changes of highs and lows
 Withdrawal from friends and activities
 Significant tiredness, low energy or problems sleeping
 Detachment from reality (delusions), paranoia or hallucinations
 Inability to cope with daily problems or stress
 Trouble understanding and relating to situations and to people
 Problems with alcohol or drug use
 Major changes in eating habits
 Sex drive changes
 Excessive anger, hostility or violence
 Suicidal thinking3
Sometimes symptoms of a mental health disorder appear as physical problems, such as s tomach pain,
back pain, headaches, or other unexplained aches and pains. 4
A person with a serious mental illness (SMI) is someone over the age of 18 who has, or had within the
past year, a diagnosable mental, behavioral, or emotional disorder that causes serious functional
impairment that substantially interferes with or limits one or more major life activities. 5 SMI is a small
subset of the 300 mental illnesses listed in the Diagnostic and Statistical Manual of Mental Disorders,
and includes disorders such as bipolar disorder, major depressive disorder, schizophrenia, and
schizoaffective disorder.6
Florida Medicaid
1
Mayo Clinic, Patient Care and Health Information, Diseases and Conditions – Mental Illness, available at https://www.mayoclinic.org/diseases-
conditions/mental-illness/symptoms-causes/syc-20374968 (last viewed on April 10, 2023).
2
Id.
3
Id.
4
Id.
5
American Psychiatric Association and Substance Abuse and Mental Health Services Administration, SMIAdviser, What Is Serious Mental Illness?,
available at https://smiadviser.org/about/serious-mental-illness (last viewed on April 10, 2023).
6
Id.
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DATE: 4/12/2023
 Medicaid is the health care safety net for low-income Floridians. Medicaid is a partnership of the federal
and state governments established to provide coverage for health services for eligible persons. The
program is administered by the Agency for Health Care Administration (AHCA) and financed by federal
and state funds.
The structure of each state’s Medicaid program varies, but what states must pay for is largely
determined by the federal government, as a condition of receiving federal funds. 7 The federal
government sets the minimum mandatory populations to be included in every program, and the
minimum mandatory benefits to be covered. These mandatory benefits include physician services,
hospital services, home health services, and family planning, but do not include prescription drugs.8
States can add benefits, with federal approval. Florida has added many optional benefits, including
prescription drug coverage.9
The Florida Medicaid program covers approximately 5.7 million low-income individuals in Florida.10
Medicaid is the largest single program in the state, representing more than 44 percent of the total Fiscal
Year 2022-2023 General Appropriations Act.11 Florida’s program is the 4th largest in the nation by
enrollment and, for FY 2020-2021, the program is the 4th largest in terms of expenditures.12
Florida delivers medical assistance to most Medicaid recipients - approximately 78% - using a
comprehensive managed care model.13 While current law requires provision of all Medicaid covered
services for these recipients through this managed care model, 14 AHCA retains control over
prescription drug benefits for both the managed care and the remaining fee-for-service populations.
Medicaid Prescribed Drug Benefits – Cost Control
Federal law requires state Medicaid programs to cover every drug for which the federal Department of
Health and Human Services (HHS) has negotiated a manufacturer rebate. 15 Florida law requires AHCA
to have a spending control program for this benefit, including a state-negotiated supplemental rebate,
which is in addition to the federal rebate.16 AHCA contracts with a pharmacy benefit manager to
negotiate those rebates. Revenues generated from the rebates are reinvested in the Medicaid program.
Part of the spending control program is a Medicaid Preferred Drug List (PDL). The PDL is a list of drugs
which are the most cost-effective options in each therapeutic class.17 AHCA establishes the PDL based
on the clinical efficacy and safety of the drug, as well as the price of the drug and the price of
competing products, taking into account the federal and state rebates. 18 In developing the PDL, AHCA
must consider the recommendations of the Medicaid Pharmacy and Therapeutics Committee, a
committee of clinicians which reviews drugs for clinical efficacy, safety and cost-effectiveness.19
Another component of the spending control program is prior authorization. Current law allows AHCA to
condition reimbursement on prior authorization; that is, the prescriber or dispenser must obtain AHCA
7
Title 42 U.S.C. §§ 1396-1396w -5; Title 42 C.F.R. Part 430-456 (§§ 430.0-456.725).
8
S. 409.905, F.S.
9
S. 409.906, F.S.
10
Agency for Health Care Administration, Florida Statewide Medicaid Monthly Enrollment Report, Feb. 2023, available at
https://ahca.myflorida.com/medicaid/Finance/data_analytics/enrollment_report/index.shtml (last viewed on April 10, 2023).
11
Ch. 2022-156, Law s of Fla. See also Fiscal Analysis in Brief: 2022 Legislative Session, available at
http://edr.state.fl.us/content/revenues/reports/fiscal-analysis-in-brief/FiscalAnalysisinBrief2022.pdf (last viewed on April 10, 2023).
12
The Henry J. Kaiser Family Foundation, State Health Facts, Total Medicaid Spending FY 2021 and Total Monthly Medicaid and CHIP Enrollment Nov.
2022, available at http://kff.org/statedata/ (last viewed on April 10, 2023).
13
S. 409.964, F.S.
14
S. 409.964, F.S.
15
Title 42 U.S.C. § 1396r-8. State Medicaid programs are authorized to cover non-rebated drugs with HHS approval, under certain circumstances.
16
S. 409.912(5)(a), F.S.
17
S. 409.912(5)(a), F.S.; Agency for Health Care Administration, Florida Medicaid Preferred Drug List, March 8, 2023, available at
https://ahca.myflorida.com/medicaid/prescribed_drug/pharm_thera/fmpdl.shtml (last view ed on April 10, 2023).
18
SS. 409.912(5)(a)7., 409.91195(7), F.S.
19
S. 409.91195, F.S. The P&T Committee is comprised of 11 gubernatorial appointees, including four physicians, five pharmacists and a consumer
member. It must meet at least quarterly, and must review all drug classes every 12 months. Meetings are open to the public, and the committee is
required to receive public testimony from interested parties; how ever, portions of meetings during w hich rebates and other tr ade secrets are discussed
are closed, pursuant to s. 409.91196, F.S., and 42 U.S.C. 1396r-8(b)(3)(D).
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 (or managed care plan) approval prior to dispensing, or Medicaid will not pay for the drug. 20 AHCA may
require prior authorization:21
 For an indication not approved in labeling;
 To comply with clinical guidelines; or
 If the product has the potential for overuse, misuse, or abuse.
In the prior authorization process, the prescriber may be required to provide the rationale and
supporting medical evidence for the use of a drug. 22 For prior authorized PDL drugs, the prior
authorization system must guarantee a response within 24 hours, and cover a 72-hour supply of the
drug if that time is exceeded.23
Prescribed Drug Step Therapy
Both commercial and government sector health coverage apply utilization management techniques to
reduce costs, maximize volume pricing arrangements, and prevent catastrophic medical events. Step
therapy, is one such technique, commonly used with prescription drug benefits. Step therapy policies
require enrollees to first try a preferred drug or service before obtaining an alternate drug or service for
a particular medical condition.
Step therapy is commonly used in conjunction with prior authorization policies, which require providers
to obtain approval from an insurer before a patient may receive specified prescription drugs under the
plan. For example, most insurers have a formulary or preferred drug list, which is an established list of
one or more prescription drugs within a therapeutic class deemed clinically equivalent and cost
effective. Prior authorization would limit an insured’s ability to obtain another drug within the therapeutic
class that is not part of the PDL without the insurer authorizing that drug.
Step therapy policies require an insured to try one drug first to treat his or her medical condition before
they will cover another drug for that condition. For example, if Drug A and Drug B both treat a medical
condition, a plan may require doctors to prescribe the most cost-effective drug, Drug A, first. If Drug A
does not work for a beneficiary, then the plan will cover Drug B. Step therapy is also known as “fail-
first”, as the insurer restricts coverage of expensive therapies unless patients have already failed
treatment with a lower-cost alternative.
Step therapy and prior authorization are enforcement mechanisms for an insurer’s preferred drug list or
formulary. They ensure that actual transaction volumes and manufacturer rebate levels align with the
actuarial assumptions that generated the price of the insurance coverage, while accommodating
clinically justified exceptions.
Researchers report that there is mixed evidence on the impact of step therapy policies. 24 A review of
the literature found that there is little good empirical evidence for or against cost savings and utilization
reduction.25 Some studies suggest that step therapy policies have been effective at reducing drug costs
without increasing the use of other medical services, 26 while other studies have found that step therapy
can increase total utilization costs over time because of increased inpatient admissions and emergency
department visits.27
Commercial Insurance Step Therapy Regulation
20
S. 409.91195(5), F.S.
21
S. 409.912(5)(a)12., F.S.
22
Id.
23
S. 409.912(5)(a), F.S.
24
Rahul K. Nayak and Steven D. Pearson, The Ethics Of 'Fail First’: Guidelines and Practical Scenarios for Step Therapy Coverage Policies, Health
Affairs 33, No.10 (2014):1779-1785, https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2014.0516 (last viewed on April 10, 2023).
25
Motheral, B.R., Pharmaceutical Step Therapy Interventions: A Critical Review of the Literature, Journal of Managed Care Pharmacy 17, no. 2 (2011)
143-55, http://www.jmcp.org/doi/pdf/10.18553/jmcp.2011.17.2.143 (last viewed on April 10, 2023).
26
Supra note 24, at pg. 1780.
27
Id.
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 Currently, Florida law limits the use of step therapy in commercial health insurance. Insurers and health
maintenance organizations (HMOs) may not require a step therapy protocol for a covered individual if
they:
 Were previously approved to receive a specific drug through completion of a step therapy
protocol by another health insurance plan; and,
 Can provide documentation from the other health insurance plan indicating that the specific
drug was paid for on the individual’s behalf within the past 90 days. 28
Medicaid Step Therapy Requirements
While Florida Medicaid covers all federally-rebated drugs, the use of drugs which are not on the PDL is
subject to additional scrutiny. Current law requires reimbursement for non-PDL drugs to be subject to a
step-therapy prior authorization process; specifically, PDL-listed drugs must have been used at some
point within the last 12 months before a non-listed drug can be used.29 The step-therapy policy does not
apply if the prescriber provides medical or clinical documentation showing: 30
 There is no drug on the PDL to treat the disease or medical condition which is an acceptable
clinical