ARIZONA STATE SENATE
Phoenix, Arizona
prescription medication
program
Requires the Arizona Health
Care Cost Containment System (AHCCCS) administration to provide prescription medication
coverage to certain Medicare beneficiaries.
Establishes a prescription medication purchasing program for Arizonans
who are Medicare eligible or at least 60 years old. Contains appropriations for both programs.
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.
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.
S.B. 1234 creates two
prescription medication assistance programs under the administration of
AHCCCS. The first expands Medicaid
prescription medication coverage to Medicare beneficiaries whose income is at
or below 200 of the federal poverty level (FPL), currently $16,700 for a
household of one, and who reside in a county without a Medicare HMO or have
exhausted all prescription drug benefits under a Medicare HMO. This Medicaid prescription medication
coverage 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 Medicaid
prescription medication coverage program is repealed.
The second prescription medication program is a statewide prescription medications purchasing program for Arizonans who are Medicare eligible due to a disability or are at least 60 years old. This program attempts to provide access to prescription medications at the lowest market rate to eligible persons by employing pharmaceutical benefits management companies (PBMs). 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 a report by the Kaiser Family Foundation, PBMs manage over 70 percent of all retail pharmacy prescriptions involving third party payers. Under S.B. 1234, AHCCCS is required to develop the formulary in consultation with a senior consumer coalition and a PBM. Lastly, the prescription medications purchasing program includes funding for outreach and education efforts regarding prescription medication assistance programs.
S.B. 1234 appropriates $13.1 million in FY 2001-2002 and $14.5 million in FY 2002-
2003 from the medically needy account for the Medicaid prescription medication coverage program. The bill also appropriates $185,000 in FY 2001-2002 from the state general fund to AHCCCS to implement the prescription medications purchasing program, and appropriates $15,000 from the state general fund in both fiscal years of the biennium for the outreach and education efforts.
1. Requires AHCCCS to apply to HCFA for a state plan amendment to provide prescription medication coverage to Medicare beneficiaries who have a household income at or below 200 percent FPL, and either reside in a county without a Medicare HMO or have exhausted all prescription drug benefits under a Medicare HMO.
2. Requires AHCCCS to administer the prescription medication program as a state-funded program until it receives HCFA approval.
3. Requires AHCCCS to charge a $25 monthly premium for each participant and a maximum co-payment of $5 for each generic prescription medication or $10 for each name-brand prescription medication.
4. Specifies prescription coverage is for the cost of generic prescription medication unless a generic equivalent does not exist or the beneficiary’s physician specifies the generic prescription medication may not be substituted for the brand-name prescription medication.
5. Specifies a beneficiary who chooses a brand-name medication is responsible for the difference in cost between the generic and brand-name medications.
6. Requires AHCCCS to use a simplified eligibility form that also screen applicants for eligibility in other AHCCCS programs.
7. Establishes the prescription medication coverage fund under the administration of AHCCCS and consisting of monies from premiums and legislative appropriations.
8. Specifies fund monies are continuously appropriated and do not revert.
9. Authorizes AHCCCS to spend up to five percent of the fund monies for administrative costs.
10. Appropriates $13.1 million in FY 2001-2002 and $14.5 million in FY 2002-2003 from the medically needy account to the prescription medication coverage fund. Exempts the appropriation from lapsing.
11. 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.
12. Requires AHCCCS to establish a statewide prescription medications purchasing program to provide access to a variety of prescription medications at the lowest market rate for Arizonans who are Medicare eligible because of a disability or are at least age 60.
13. Requires AHCCCS to contract with at least two PBMs to administer the program unless only one PBM responds to the request for proposal.
14. Allows eligible persons to purchase prescription medication through the mail or through a pharmacy network.
15. Requires AHCCCS to distribute a grant to a senior consumer coalition for statewide outreach and education for prescription medication assistance programs. Defines “senior consumer coalition”.
16. Appropriates $185,000 in FY 2001-2002 from the state general fund to AHCCCS to implement the prescription medication purchasing program. Exempts the appropriation from lapsing.
17. Appropriates $15,000 in each of FYs 2001-2002 and 2002-2003 from the state general fund to AHCCCS for the outreach and education efforts. Exempts the appropriations from lapsing.
18. Requires AHCCCS to consult with a senior consumer coalition and a PBM to develop a formulary.
19. Terminates the prescription medications purchasing program on July 1, 2011.
20. Exempts AHCCCS from the administrative rule making process for both programs.
21. Requires AHCCCS to provide the public with at least two opportunities to comment on the proposed rules.
22. Provides for a general effective date.
Prepared by Senate Staff
February 9, 2001