ARIZONA STATE SENATE
Phoenix, Arizona
state archives
building
(NOW: prescription drug coverage)
Creates a prescription medication subsidy pilot program. Appropriates $8.8 million over the biennium from the medically needy account for both program and administrative costs.
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 service 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 coverage completely.
According to the 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 incomes, 23 states have implemented some type of pharmaceutical assistance program.
Pharmaceutical benefits management companies (PBMs) are intermediaries that administer prescription drug programs for third party payers, managed care organizations and others. A PBM’s primary function is to design formularies, handle reimbursements, manage and review drug utilization and negotiate rebates and discounts from pharmaceutical manufacturers and retail pharmacies. According to the Kaiser Family Foundation, PBMs manage over 70 percent of all retail pharmacy prescriptions involving third party payers.
S.B. 1118 creates a pilot program to provide limited prescription medication coverage to Medicare beneficiaries who reside in a county without Medicare HMO prescription medication coverage and whose incomes are between 100 and 200 percent of the federal poverty level (FPL: $8,590-$17,180 for a household of one). The pilot program requires an eligible person to spend a specified amount on medications during the calendar year to receive a 50 percent discount on subsequent prescription medication purchases during the same calendar year. S.B. 1118 appropriates $8.8 million from the medically needy account to the state general fund to the Arizona Health Care Cost Containment System (AHCCCS) over the next two fiscal years for the program.
The provisions of this measure were originally contained in the Senate engrossed version of H.B. 2424.
1. Establishes, subject to the availability of monies, an AHCCCS pilot program to provide limited prescription medication subsidies for eligible persons.
2. Requires an eligible person to qualify for Medicare; have an income between 100 and 200 percent FPL and be a resident of either a county without a Medicare HMO or with a Medicare HMO that does not provide prescription benefits.
3. Allows AHCCCS to contract with a PBM to provide the prescription drug coverage.
4. Requires a person to pay an enrollment fee established by AHCCCS in order to receive an enrollment card.
5. Specifies an enrollment card expires one year from the date of issue except cards issued after July 1, 2002, which expire on July 1, 2003.
6. Prohibits AHCCCS from issuing enrollment cards after December 30, 2002.
7. Requires the use of enrollment cards to track pharmacy purchases and to provide benefits at pharmacies after the deductible is paid.
8. Requires AHCCCS to cover one-half of the cost of a person’s prescription medication that exceeds the following deductibles each calendar year:
9. Allows AHCCCS to reduce the deductible up to $300 if less than 75 percent of the previous year’s appropriation has not been spent.
10. Requires AHCCCS or the PBM to reimburse pharmacies upon receipt of claims.
11. Limits reimbursement to prescription medications that are both approved by the federal drug administration and purchased within the United States.
12. Requires AHCCCS to use a simplified eligibility form to screen eligible persons for other programs.
13. Prohibits AHCCCS or the PBM from purchasing or distributing medication under the program.
14. Requires AHCCCS or the PBM to reimburse eligible persons retroactively to January 1, 2001.
15. Establishes the prescription medication coverage fund consisting of enrollment fees and legislative appropriations.
16. Appropriates $3.9 million in FY 2001-2002 and $4.1 million in FY 2002-2003 from the medically needy account to AHCCCS for the pilot program.
17. Appropriates $400,000 in FY 2001-2002 and FY 2002-2003 from the medically needy account to AHCCCS for administrative costs associated with implementing the pilot program.
18. Prohibits AHCCCS from paying claims until the next fiscal year if FY 2001-2002 monies are exhausted.
19. Exempts the appropriations from lapsing.
20. Repeals the program on October 1, 2003 or on enactment of federal legislation that provides prescription medication coverage greater or equal to that provided by the state program.
21. Requires AHCCCS to provide reimbursement until the expiration of any active enrollment cards.
22. Requires AHCCCS to deposit any unspent monies in the medically needy account when the program is repealed.
23. Exempts AHCCCS from rule making requirements for the pilot program and requires AHCCCS to provide the public with at least two opportunities to comment on the proposed rules.
24. Provides for a general effective date.
3rd Read 4/25/01 54-3-3-0
Signed by Governor 5/7/01
Chapter 347
Prepared by Senate Staff
May 22, 2001