ARIZONA STATE SENATE
prescription
medication; coverage
(NOW: coverage; prescription; medication)
Establishes, subject to the availability of monies, a prescription medication subsidy pilot program under the Arizona Health Care Cost Containment System (AHCCCS) for certain eligible persons. Appropriates $8.8 million over the biennium from the state general fund to AHCCCS for the 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.
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-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 a report by the Kaiser Family Foundation, PBMs manage over 70 percent of all retail pharmacy prescriptions involving third party payers.
H.B. 2607 provides limited prescription medication coverage to Medicare beneficiaries whose income is between 100 and 250 percent of the federal poverty level (FPL) ($8,590-$20,875 for a household of one) and who reside in a county without Medicare HMO prescription drug coverage. The prescription medication subsidy pilot program requires an eligible person to spend $2,000 on medications during the calendar year to receive a 50% discount on additional prescription medication purchases during the same calendar year. H.B. 2607 also allows AHCCCS to contract with a PBM to administer the program. Lastly, H.B. 2607 appropriates $8.8 million from the state general fund to AHCCCS over the next two fiscal years for the program.
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 percent and 250 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 AHCCCS to cover one-half of the cost of an eligible person’s prescription medication that exceeds the $2,000 deductible each calendar year.
5. Requires, beginning December 30, 2001, AHCCCS to adjust the deductible each calendar year by 50 percent of the medical inflation rate.
6. Allows AHCCCS to reduce the deductible up to $500 if less than 75 percent of the previous year’s appropriation has not been spent.
7. Requires an eligible person to provide AHCCCS or the PBM with proof of meeting the deductible amount.
8. Requires AHCCCS or the PBM to reimburse eligible persons on a quarterly basis.
9. Limits reimbursement to prescription medications approved by the federal drug administration and purchased within the United States.
10. Prohibits AHCCCS or the PBM from purchasing or distributing medication for eligible persons.
11. Requires AHCCCS or the PBM to reimburse eligible persons retroactively to January 1, 2001.
12. Appropriates $3.9 million in FY 2001-2002 and $4.1 million in FY 2002-2003 from the state general fund to AHCCCS for the prescription medication subsidy pilot program.
13. Appropriates $400,000 in FY 2001-2002 and FY 2002-2003 from the state general fund to AHCCCS for administrative costs associated with implementing the program.
14. Prohibits AHCCCS from paying claims until the next fiscal year if FY 2001-2002 monies are exhausted.
15. Exempts the appropriations from lapsing.
16. Exempts AHCCCS from the administrative rule making process for the program and requires AHCCCS to provide the public with at least two opportunities to comment on the proposed rules.
17. Repeals the program on December 30, 2002 or on enactment of federal legislation that provides prescription medication coverage greater or equal to that provided by the state program.
18. Requires AHCCCS to provide reimbursement for 90 days after the program is repealed.
19. Requires AHCCCS to deposit any unspent monies in the state general fund when the program is repealed.
20. Provides for a general effective date.
Approp 3/06/01 DPA/SE 14-0-0-2-0
3rd Read 3/13/01 54-4-2-0
Prepared by Senate Staff
March 22, 2001