[First Reprint]

SENATE, No. 234

STATE OF NEW JERSEY

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Senator INVERSO

An Act concerning Medicaid prescription drug benefits and supplementing P.L.1968, c.413 (C.30:4D-1 et seq.) ¹[and Title 17 of the Revised Statutes]¹.

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

    1. This act shall be known and may be cited as the "Medicaid Prescription Drug Benefit Act."

    2. The Legislature finds and declares that:

    a. The Medicaid program in New Jersey is currently in the process of shifting its AFDC-eligible recipient population into managed care arrangements on a mandatory basis under a federal government waiver pursuant to section 1915(b) of the federal Social Security Act (42 U.S.C.§1396n) and is seeking to enroll other recipients by application for a waiver pursuant to section 1115 of the Social Security Act (42 U.S.C.§1315).

    b. The managed care capitated payment methodology is very different from the current Medicaid reimbursement system for pharmacies which pays for every prescription dispensed to a Medicaid recipient; however, the Medicaid program has been able to effectively manage the provision of comprehensive pharmaceutical services for its recipients under its current fee-for-service reimbursement system.

    c. The current federal Medicaid program provides for a rebate to be paid to the State by pharmaceutical manufacturers wishing to have their products utilized in the State Medicaid program; however, rebates from the pharmaceutical manufacturers will be eliminated if Medicaid prescription drugs are provided to recipients under a managed care plan, and the net effect would be a reduction in State revenues.

    d. Preserving the current Medicaid fee-for-service reimbursement system for pharmacies will ensure Medicaid recipients' continued access to cost-effective pharmaceutical services, which would otherwise be impeded by the inclusion of prescription drug benefits in managed care plans that restrict a Medicaid recipient's choice of pharmacy.

    e. There is no proof that managed care plans effectively contain drug costs and no compelling reason to dismantle the existing Medicaid fee-for-service reimbursement system for pharmacies; and it is, therefore, in the best interest of the State and its Medicaid recipients to prohibit ¹[from the inclusion of] the Medicaid program from requiring Medicaid recipients to accept¹ prescription drug benefits ¹[in any] through a¹ managed care plan which provides services to Medicaid recipients.

    3. As used in this act:

    "Managed care plan" means a health benefits plan that integrates the financing and delivery of appropriate health care services to covered persons by arrangements with participating providers, who are selected to participate on the basis of explicit standards, to furnish a comprehensive set of health care services and financial incentives for covered persons to use the participating providers and procedures provided for in the plan. Managed care includes, but is not limited to, a health maintenance organization or HMO, a preferred provider organization or PPO, an exclusive provider organization or EPO, a point-of-service plan or POS, or any other similar health benefits delivery system, whether issued by or through a carrier.

    "Prescription drug" means any drug which requires a prescription in this State, including insulin, insulin syringes and insulin needles, and does not include experimental drugs as designated by the federal Food and Drug Administration.

    4. Prescription drug benefits under the Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.) shall be provided ¹to Medicaid recipients¹ on a fee-for service basis based upon reimbursement formulas established by the Commissioner of Human Services [and shall not be included in] unless the Medicaid recipient specifically requests in writing to receive prescription drug benefits through a managed care plan offered in this State ¹, which may be selected by the program or may be voluntarily selected by the recipient, in accordance with regulations adopted by the commissioner¹.

    ¹Each current Medicaid recipient shall be notified in writing within 30 days after the effective date of P.L. , c. (C. )(now pending before the legislature as this bill), that the recipient may elect to receive prescription drug benefits through a managed care plan, and that if the recipient does not elect in writing to receive prescription drug benefits through a managed care plan, the recipient will receive prescription drug benefits through the fee-for-service reimbursement system of the State Medicaid program. The recipient shall be required to notify the program within 30 days after receipt of the notice. The department shall promptly notify each person who becomes eligible to receive Medicaid after the effective date of P.L.       , c. (C. )(now pending before the Legislature as this bill), of the option to receive prescription drug benefits through a managed care plan.¹

    ¹[5. The Commissioner of Insurance shall not approve for utilization in the Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.) a health benefits plan offered by an insurance company, health service corporation, hospital service corporation, medical service corporation or health maintenance organization which provides prescription drug benefits.]¹

    ¹[6.] 5.¹ This act shall take effect on the 60th day after enactment.

Designated the "Medicaid Prescription Drug Benefit Act."