FOR CAUCUS & FLOOR ACTION
REVISED
As Amended by Appropriations Committee
|
|
ARIZONA STATE SENATE
|
KATHY SEEGLITZ ASSISTANT
ANALYST HEALTH COMMITTEE ASSISTANT
RESEARCH STAFF
DIRECTOR APPROPRIATIONS COMMITTEE Telephone: (602) 542-3171 Facsimile: (602) 542-7833 |
RESEARCH STAFF
DATE: March 12, 2001
SUBJECT: Appropriations Committee Strike
Everything Amendment to S.B. 1110
AHCCCS; prescription
drugs
Purpose
Allows, beginning January 1, 2002, eligible persons to receive financial subsidies for prescription drugs through the Arizona Health Care Cost Containment System (AHCCCS). Requires, beginning January 1, 2002, AHCCCS to provide prescription medication coverage to low-income Medicare beneficiaries. Appropriates $7 million in FY 2001-2002 and $5 million in FY 2002-2003 from the medically needy account for both programs.
Background
Prescription Drug Subsidy Program
According to 1999 federal Health Care Financing Administration (HCFA) national health expenditure data, the costs of prescription medications grew 17 percent in 1999. Also, the average cost per senior was $1,196 per year. In response to the prescription medication needs of seniors and disabled individuals, particularly those with low income, 23 states have implemented some type of pharmaceutical assistance program. A recent state trend is to lower pharmaceutical prices for broader categories of consumers, such as Vermont and Maine have enacted.
Vermont’s plan uses their Medicaid program to extend discounts on prescription drugs to all seniors and other adults who are without prescription drug coverage and whose income is below 300 percent of the federal poverty level (FPL). Maine’s program includes state price controls for public consumer purchases and is scheduled to begin on April 1, 2001.
The strike everything amendment to S.B. 1110 allows, beginning January 1, 2002, an eligible person to receive a financial subsidy from AHCCCS for prescription drugs equal to the average rebate pharmaceutical manufacturers pay AHCCCS pursuant to federal law. Additionally, the amendment appropriates $4 million in FY 2001-2002 from the medically needy account to AHCCCS for start up costs for the prescription drug financial subsidy program and the state match for the initial reimbursement to participating pharmacies.
Prescription Drug Discount Program
According to the State Health Insurance Assistance Program, as of January 1, 2001, some health care insurers dropped coverage of their Medicare health maintenance organization (HMO) plans for approximately 31,000 Arizona Medicare beneficiaries. Medicare HMOs continue to serve Maricopa, Pima, Pinal and Santa Cruz counties. The remaining plans have set maximum brand-name drug benefits or have removed brand names from formularies, raised co-payment requirements or have eliminated prescription medication benefits completely.
The strike everything amendment to S.B. 1110 expands, as of January 1, 2002, Medicaid prescription drug coverage to beneficiaries whose income is at or below 175% FPL ($13,778 for a household of one) and who reside in an area without Medicare HMO coverage. The prescription drug discount program requires participants to pay a monthly premium and a co-payment for each prescription. If the federal government enacts legislation with prescription medication coverage equivalent to or greater than the coverage under this program, the program is repealed. Additionally, the amendment appropriates $3 million in FY 2001-2002 and $5 million in FY 2002-2003 from the medically needy account to AHCCCS for the program.
Provisions
Prescription Drug Subsidy Program
1. Allows, beginning January 1, 2002 and conditional upon HCFA approval, an eligible person to receive a financial subsidy from AHCCCS for prescription drugs that is equal to the average rebate pharmaceutical manufacturers pay AHCCCS pursuant to federal law.
2. Limits eligibility to persons who do not qualify for AHCCCS, have a household income of up to 300 percent FPL and do not have prescription drug coverage.
3. Requires AHCCCS to apply for a waiver from HCFA by October 1, 2001 and allows AHCCCS to negotiate for expanded coverage if the waiver request is denied.
4. Prescribes a formula for participating pharmacies to charge for prescription drugs to eligible persons.
5. Requires AHCCCS to reimburse pharmacies the amount of the average rebate paid by pharmaceutical manufacturers for each prescription drug.
6. Allows AHCCCS to charge a maximum annual fee of $25 to cover administrative costs.
7. Establishes the Arizona prescription discount fund consisting of annual fees, rebate payments from pharmaceutical manufacturers, legislative appropriations and federal matching funds.
8. Requires fund monies to be used for the program and specifies the fund monies are continuously appropriated and nonlapsing, unless HCFA denies the waiver by June 30, 2003.
9. Appropriates $4 million in FY 2001-2002 from the medically needy account to the AHCCCS administration for the prescription drug subsidy program, including start up costs and initial reimbursement to participating pharmacies.
Prescription Drug Discount
Program
10. Requires AHCCCS, beginning January 1, 2002 and subject to the availability of funds, to provide prescription medication coverage to Medicare beneficiaries who have an income at or below 175% FPL and resides in an area without Medicare HMO coverage.
11. Specifies the program is not an entitlement program.
12. Requires AHCCCS to charge participants a $25 monthly premium and a maximum co-payment of $5 for generic medications and $10 for name-brand medications if a generic equivalent is not available.
13. Specifies a beneficiary who chooses a brand-name medication is responsible for the difference in cost between the generic and brand-name medications.
14. Requires AHCCCS to use a simplified eligibility form that also screens applicants for other AHCCCS programs.
15. Establishes the prescription medication coverage fund under the administration of AHCCCS and consisting of monies from premiums and legislative appropriations.
16. Specifies fund monies are continuously appropriated and do not revert to the state general fund.
17. Authorizes AHCCCS to spend up to five percent of the fund monies for administrative costs.
18. Appropriates $3 million in FY 2001-2002 and $5 million in FY 2002-2003 from the medically needy account to the prescription medication coverage fund. Exempts the appropriation from lapsing.
19. Repeals the program on July 1, 2011 or on enactment of federal legislation that provides prescription medication coverage greater or equal to that provided by the state program.
Miscellaneous
20. Defines “federal poverty guidelines”.
21. Exempts AHCCCS from rule making requirements to implement this act.
22. Contains conforming changes.
23. Provides for a general effective date, except as noted.
Amendments
Adopted by Appropriations Committee
1. Adopted the strike everything amendment.
2. Changed the Prescription Drug Subsidy Program appropriation from $4.5 million to $4 million.
Amendments
Adopted by Health Committee
See 'REVISED – As Amended by Health Committee" striker memo.
Senate Action
HEA 2/27/91 DPA/SE 5-2-1-0
APPROP 3/9/01 DPA/SE 7-3-2-0
KS/DJ/ac