Sponsored by:
Senator STEPHEN M. SWEENEY
District 3 (Cumberland, Gloucester and Salem)
Senator LINDA R. GREENSTEIN
District 14 (Mercer and Middlesex)
Co-Sponsored by:
Senator Gopal
SYNOPSIS
Requires DHS to transition Medicaid prescription drug services from managed care to fee-for-service; provides for procurement by State of pharmacy benefits manager to administer Medicaid fee-for-service prescription drug services.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning prescription drug services provided under the Medicaid program and supplementing Title 30 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The Legislature finds and declares:
a. The State has a continuing responsibility to ensure that funds expended under the Medicaid program are used appropriately and efficiently to promote the public health;
b. Currently, prescription drug services provided under the Medicaid program are delivered via managed care organizations (MCOs) who contract with the Division of Medical Assistance and Health Services in the Department of Human Services to provide those Medicaid benefits at a fixed annual fee per patient;
c. Under the State s current delivery model, each MCO contracts with a pharmacy benefits manager (PBM) to administer the prescription drug benefit;
d. Experience in other states, however, has demonstrated that transitioning this benefit to a fee-for-service (FFS) delivery system, in which the state reimburses pharmacies directly, potentially via a single PBM, generates significant prescription drug savings due to lower overall spending and a reduction in program administration costs;
e. For example, the West Virginia Medicaid Agency realized a savings of $54.4 million in the first year of such a transition;
f. Such savings has the potential to grow with the implementation of a reverse auction for the State s PBM contract to administer the FFS Medicaid prescription drug benefit, similar to the reduced costs of prescription drugs achieved within the State Health Benefits Program and School Employees Health Benefits Program through the PBM reverse auction conducted in 2017; and
g. As prescription drug prices continue to rise, the State must employ innovative policy initiatives that help cover the costs of Medicaid services and prevent harmful benefit reductions for Medicaid recipients; and
h. Therefore, it is in the best interest of the State to transition Medicaid prescription drug services from a managed care to a FFS delivery system and to procure the most cost-effective PBM to administer such benefits.
2. a. The Division of Medical Assistance and Health Services in the Department of Human Services shall take all necessary actions to transition the prescription drug services provided under the Medicaid program, established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), via a managed care delivery system to a fee-for-service delivery system by December 31, 2020. This section shall not apply to the provision of prescription drug benefits under section 340B of the federal Public Health Service Act (42 U.S.C. s.2566).
b. Beginning January 1, 2021, the division shall provide all prescription drug services under the Medicaid program, except those benefits exempt pursuant to subsection a. of this section, via a fee-for-service delivery system.
3. The Commissioner of Human Services shall apply for such State plan amendments or waivers as may be necessary to implement the provisions of this act and to secure federal financial participation for State Medicaid expenditures under the federal Medicaid program.
4. The Commissioner of Human Services shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to effectuate the purposes of this act.
5. a. Notwithstanding the provisions of any other law to the contrary, the Division of Purchase and Property in the Department of the Treasury shall conduct a reverse auction for the purposes of awarding a contract to a Pharmacy Benefits Manager (PBM) to administer the prescription drug services provided under fee-for-service delivery system of the Medicaid program, established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.). To effectuate the purpose of this subsection, the division shall procure from qualified vendors the following services based upon price and other factors:
(1) a technology platform required to conduct a reverse auction and any related professional services through an expedited procurement process, as provided in subsection b. and subsection c. of this section, no later than July 1, 2020. The contract for such services shall not be awarded to a vendor that is a PBM, is a subsidiary or affiliate of a PBM, is managed by a PBM, or receives remuneration from a PBM for aggregating clients into a contractual relationship with a PBM. The vendor may not outsource any part of the reverse auction or the automated, real-time, electronic, line-by-line, review of PBM prescription drug reimbursements.
The technology platform shall, at a minimum, possess the ability to:
(i) conduct an automated, online, reverse auction of PBM services;
(ii) automate re-pricing of PBM proposals for Medicaid prescription drug spending using Medicaid claims data and other nationally-accepted data sources, as determined by the Commissioner of Human Services, for comparisons of the costs of PBM proposals;
(iii) produce an automated report and analysis of PBM bids, including the ranking of bids, based on the comparative costs and qualitative aspects thereof, within a 48-hour time period following close of each round of reverse auction bidding;
(iv) perform real-time, electronic, line-by-line, review of PBM Medicaid prescription drug reimbursements using an automated technology platform that allows for online comparison of PBM reimbursements and auditing of other aspects of the services provided by the PBM; and
(v) conform to pricing restrictions of federal and State government.
Related professional services shall include, at a minimum, technical assistance to the State to evaluate the qualifications of bidders on a PBM procurement, to provide online automated reverse auction services to support the Department of the Treasury in comparing the pricing for the PBM procurement, and any other services deemed necessary by the Department of Treasury; and
(2) a PBM and related services via a reverse auction process through the expedited procurement process, as provided in subsection b. and subsection c. of this section, no later than January 1, 2021.
b. Except as otherwise provided in subsection c. of this section, the division shall procure the services outlined in subsection a. of this section without the need for formal advertisement, but through the solicitation of proposals from professional services vendors.