A2238

ASSEMBLY, No. 2238

STATE OF NEW JERSEY

INTRODUCED JUNE 24, 1996

By Assemblymen KAVANAUGH and LANCE

An Act to amend "AN ACT making appropriations for the support of the State Government and the several public purposes for the fiscal year ending June 30, 1997 and regulating the disbursement thereof."

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The following provisions in section 1 of P.L.1996, c. , the fiscal year 1997 annual appropriations act (now pending before the Legislature as Assembly, No.1000 of 1996), are amended to read as follows:

GENERAL FUND

DIRECT STATE SERVICES

54 DEPARTMENT OF HUMAN SERVICES

24 Special Health Services

7540 Division of Medical Assistance and Health Services

[An amount not to exceed $100,000 is appropriated from General Assistance pharmaceutical rebate revenue for administration and collection of these rebates by the Division of Medical Assistance and Health Services.]

GRANTS-IN-AID

54 DEPARTMENT OF HUMAN SERVICES

24 Special Health Services

7540 Division of Medical Assistance and Health Services --

Grants-In-Aid Notwithstanding the provisions of any other law or regulation to the contrary, effective July 1, 1996 or at the earliest date thereafter consistent with the notice provisions of 42 CFR §447.205 where applicable, no funds appropriated in the Payments for Medical Assistance Recipients -- Prescription Drugs account and in the Pharmaceutical Assistance to the Aged and Disabled program classification shall be expended except under the following conditions: (a) reimbursement for prescription drugs shall be based on the Average Wholesale Price less a 10% discount, (b) [prescription] legend and non-legend drugs dispensed by a retail pharmacy shall be limited to a 34-day or 100 unit dose supply, whichever is greater, (c) the current prescription drug dispensing fee structure set as a variable rate of $3.73 to $4.07 in effect on June 30, 1996 shall remain in effect through fiscal year 1997, including the current increments for patient consultation, impact allowances, and allowances for 24 hour emergency services, (d) subject to coverage provisions, reimbursement for non-legend drugs including protein replacement supplements, specialized infant formulas and food oils, devices or supplies shall be on the basis of the Estimated Acquisition Cost (EAC), identified in current national price compendia for other appropriate sources, and their supplements, minus the appropriate regression, plus dispensing fee, and (e) reimbursement shall continue for all providers who supply protein nutritional supplements and specialized infant formulas, subject to all applicable regulations established by the Commissioner of Human Services, and provided further, however, that the Commissioner of Human Services may, after an audit or other equivalent documentation demonstrating provider non-compliance, terminate any agreements with such provider.

Notwithstanding the provisions of any other law or regulation to the contrary, effective July 1, 1996, each prescription order dispensed in the Pharmaceutical Assistance to the Aged and Disabled program shall state "Brand Medically Necessary" in the prescriber's own handwriting in order to override generic substitution of Maximum Allowable Cost (MAC) drugs, and each prescription order shall follow the requirements of P.L.1977, c.240 (C.24:6E-1 et seq.). The list of drugs substituted shall conform to the Drug Utilization Review Council approved list of substitutable drugs and [any other] all requirements pertaining to drug substitution and federal upper limits for MAC drugs as [established]administered by the State Medicaid Program.

Notwithstanding the provisions of any law to the contrary, subject to the notice provisions of 42 CFR §447.205, no funds appropriated for Medicaid in-State inpatient hospital services for DRG hospital reimbursement shall be expended in excess of the methodology contained herein. Inpatient hospital reimbursement for Graduate Medical Education (GME) and Indirect Medical Education (IME) is calculated based on Medicare Principles of reimbursement to major teaching hospitals. Major teaching hospitals is defined as those hospitals which had a minimum of 45 resident full-time equivalents (FTEs) in all approved and accredited residences from the 1993 Medicare first finalized audited cost report. The amount calculated shall be distributed to all teaching hospitals based on the hospital-specific percentage to total weighted FTEs, where weighted FTEs equals the hospital-specific current FTEs times the hospital-specific Medicaid fee-for-service days divided by the total Medicaid fee-for-service days for all teaching hospitals. The source for the FTEs and the Medicaid fee-for-services days is the Medicare audited cost report for 1996 for 1996 services and 1997 for 1997 services. Payments for GME and IME will be paid in a monthly lump sum from the appropriation for in-patient hospital services and will be reconciled to 1996 and 1997 cost reports. Therefore, all direct and indirect costs related to the GME program will be excluded from the cost base when calculating the DRG rates. The standard rate for each DRG shall be based on the Statewide Median. These changes shall be effective [July] October 1, 1996, after federally mandated findings and assurances analyses are completed.

STATE AID

54 DEPARTMENT OF HUMAN SERVICES50 Economic Planning, Development and Security

53 Economic Assistance and Security -- State Aid

7550 Division of Family Development

Notwithstanding the provisions of any other law or regulation to the contrary, effective July 1, 1996, the following provisions shall apply to the dispensing of prescription drugs through the Payments to Municipalities for Cost of General Assistance account: (a) all prescription drugs dispensed shall state "Brand Medically Necessary" in the prescriber's own handwriting in order to override generic substitution of Maximum Allowable Cost (MAC) drugs, and (b) each prescription order shall follow the requirements of P.L.1977, c.240 (C.24:6E-1 et seq.). The list of drugs substituted shall conform to the Drug Utilization Review Council approved list of substitutable drugs and [any other] all requirements pertaining to drug substitution and federal upper limits for MAC drugs as [established]adminsteredi by the State Medicaid Program.

CASINO REVENUE FUND

GRANTS-IN-AID

54 DEPARTMENT OF HUMAN SERVICES

20 Physical and Mental Health

24 Special Health Services

7540 Division of Medical Assistance and Health Services --

Grants-In-AidNotwithstanding the provisions of any other law or regulation to the contrary, effective July 1, 1996 no funds appropriated in the Pharmaceutical Assistance for the Aged and Disabled program classification shall be expended except under the following conditions: (a) reimbursement for prescription drugs shall be based on the Average Wholesale Price less a 10% discount, (b) [prescription] legend and non-legend drugs dispensed by a retail pharmacy shall be limited to a 34-day or 100 unit dose supply, whichever is greater, (c) the current prescription drug dispensing fee structure set as a variable rate of $3.73 to $4.07 in effect on June 30, 1996 shall remain in effect through fiscal year 1997, including the current increments for patient consultation, impact allowances, and allowances for 24 hour emergency services, (d) subject to coverage provisions, reimbursement for non-legend drugs including protein replacement supplements, specialized infant formulas and food oils, devices or supplies shall be on the basis of the Estimated Acquisition Cost (EAC), identified in current national price compendia for other appropriate sources, and their supplements, minus the appropriate regression, plus dispensing fee, and (e) reimbursement will continue for all providers who supply protein nutritional supplements and specialized infant formulas, subject to all applicable regulations established by the Commissioner of Human Services, and provided further, however, that the Commissioner of Human Services may, after an audit or other equivalent documentation demonstrating provider non-compliance, terminate any agreements with such provider.

(cf: P.L.1996, c. , s.1)

2. This act shall take effect July 1, 1996 and if enacted after that date shall be retroactive to July 1, 1996.

STATEMENT

This bill makes technical corrections to the fiscal year annual appropriations bill in program conditions placed upon the appropriations for certain programs in the Department of Human Services as follows: (1) changes in the Medicaid and Pharmaceutical Assistance to the Aged and Disabled (PAAD) drug programs clarify that the maximum supply of 34-day or 100 unit doses under the programs apply to both legend and non-legend drugs, (2) changes in those programs' provisions to indicate that reimbursement for protein replacement supplements are subject to program coverage provisions, (3) corrects the effective date for changes to the Medicaid inpatient hospital reimbursement methodology for Graduate Medical Education (GME) and Indirect Medical Education (IME), (4) deletes an administrative cost appropriation of certain General Assistance (GA) pharmaceutical rebate revenue as no authority exists in the appropriations act for this rebate program or revenue, and (5) and clarifies that the Maximum Allowable Cost (MAC) program for PAAD and GA will be identical with the current MAC program administered by Medicaid with respect to drug substitution and costs.

Makes technical corrections in programmatic conditions upon the annual appropriations for certain programs in the Department of Human Services.