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Legislative Update February 2007

Ohio's Best Rx (HB 468), Pharmacists Immunization (HB 524) and more...

Kelly Vyzral, Director of Government Affairs

Managed Care Plans Must Follow Federal Prompt Payment Standards
Receiving prompt payment of Medicaid claims is important to all Medicaid providers of health care services, and it is an issue in both the fee-for-service and managed care service delivery systems. Ohio Department of Job and Family Services (ODJFS) is responsible for paying fee-for-service providers, but Medicaid Managed Care Plans (MCPs) have sole responsibility for ensuring health care providers receive their payments in a timely way.

Oversight of prompt payment for health care claims in Ohio is regulated by the Ohio Department of Insurance (ODI) and ODJFS. ODJFS's oversight is specific to Medicaid payments; whereas, ODI's oversight is within the commercial health care marketplace for other non-Medicaid claims. The state and federal standards for prompt payment are different, and some health care insiders consider the federal standards (from the US Centers for Medicare and Medicaid Services - CMS) more stringent than the standards in Ohio law.

Amended House Bill 66, passed in 2005, enacted statutory changes regarding the standards for what constitutes prompt payment within Medicaid Managed Care. These changes were intended to exempt Medicaid MCPs from federal prompt pay standards and make them subject only to state standards. However, a legal review of the language conducted by both ODJFS and ODI indicated that, due to the way the language was crafted, MCPs would be subject to both state and federal standards.

Because this was not the original intent, the Ohio General Assembly further revised the affected code sections in Amended Substitute House Bill 530, Ohio's Budget Corrections Bill, and instructed ODJFS to seek a waiver from CMS so MCPs would be subject only to state requirements. Upon seeking guidance from CMS, ODJFS was informed that federal prompt pay requirements may not be waived. Therefore, the standards and processes for prompt payment will remain the same as they were prior to the implementation of HB 66 and HB 530.

In short, MCPs will still be subject to federal prompt pay requirements. These standards, which apply to both electronic and paper claims, require MCPs to pay 90 percent of all "clean claims" within 30 days of receipt. In addition, 99 percent of such claims must be paid within 90 days of receipt. MCPs are only exempt from this standard if the provider contractually agreed to a different payment schedule. Ohio Medicaid MCPs were notified of this outcome on December 21, 2006.

Community Meetings in Each ABD Medicaid Managed Care Region
ODJFS will hold regional informational meetings for service providers and community organizations currently serving Medicaid consumers who are aged, blind or have a disability (also known as "ABD"). In particular, the forums will facilitate communication among ODJFS staff, Medicaid managed care plans (MCP), and boards and providers from each county's behavioral health and MR/DD systems. The first meeting was held on December 15 at Northcoast Behavioral Health Care in Northfield, Ohio for counties in the Northeast region. Additional information will be provided as more meetings are scheduled.

Medicaid Fraud Initiatives (Section 6031)
On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005. As pharmacists know all too well, the legislation addresses ways to reduce spending on issues such as Medicare and Medicaid. The Act also includes a number of provisions intended to combat Medicaid fraud. Among them is a provision that implicitly mandates the establishment of compliance programs. Every entity that receives at least $5 million in Medicaid payments per year is required to establish a fraud and abuse awareness program by January 1, 2007 for all its employees, agents and contractors. The training program must include "detailed information" concerning the federal False Claims Act, federal administrative remedies for false claims and statements, state laws pertaining to civil or criminal penalties for false claims and statements, and whistleblower protections under these laws.

The written materials must also include the entity's policies and procedures for detecting and preventing fraud, waste and abuse, and any employee handbook provided by the entity must contain a discussion of these laws and the rights and protections afforded to employees as whistleblowers.

Although the federal government has been recommending for years that providers have compliance programs, this is the first time that the government has, in effect, required providers to adopt them.

Legislation Update
Ohio's Best Rx (HB 468).
Legislation making changes to the Ohio's Best Rx prescription drug discount program was signed by outgoing Governor Taft. As reported previously, the bill:

  • Expands participant eligibility by raising the income threshold from 250 percent of the FPL to 300 percent. This means that a family of four earning $60,000 would be eligible for the program.
  • Allows the Department to delegate virtually any of its powers and duties to the PBM administering the program.
  • Eliminates the pricing formula whereby the program was supposed toobtain pricing and rebate information from the state employee benefit program and the state retirement systems' benefit programs. The bill directs ODJFS to annually designate the formulas for the program, which basically means that the PBM administering the program will be setting the formulas.
  • Mandates that the PBM that does the most business with the stateserve for one year as the "consulting PBM" for the program for free. The consulting PBM will have to advise the program on pricing based on their pricing with their other state customers, but without giving any actual pricing. Not more than once every three years, the program can ask the consulting PBM whether or not the manufacturer rebates on ten drugs chosen by the programthat had rebates the previous yearare within two percent of the rebate amount the manufacturers are giving the state benefit programs. That's for brand drugs. For generics, it is whether or not the weighted average base price for the state programs is more than two percent less than theBest Rx base price.
  • Merges the Best Rxand the Golden Buckeye prescription discount program. Basically, Golden Buckeyewill begone and everything will be done through Best Rx. The bill also transfers administration of the program to the Ohio Department of Aging beginning July 1, 2007. Pharmacies will maintain the $3.00 dispensing fee for the Best Rx program, and all prescriptions filled through the former Golden Buckeye program will go from $2.50 to $3.00.

OPA was successful in amending the bill to prohibit the PBM administering the program from sharing patient identifying information from pharmacy claims with the program's mail order entity. There is still absolutely nothing that would generate increased manufacturer participation. The bill will go into effect 90 days after the Governor's signature,which should beapproximately the end of March.

OPA is very disappointed in the outcome of this legislation, but the fact remains that it is a relatively small program and pharmacy participation remains completely voluntary.

Pharmacists Immunization (HB 524). During the last day of the lame duck session, a Senator decided that he wanted to amend House Bill 524,which would expand the list of immunizations that pharmacists and interns can administer, to include licensure of pharmacy technicians. The Senator had a young girl die in his district when a hospital pharmacy technician allegedly prepared an IV solution with a lethal dose of saline.

When the bill, which had already passed unanimously through the House and the Senate Health & Human Services Committee, was not put on the Senate calendar on the last day of Senate session, OPA asked why it was not on the agenda. We were told of the potential amendment and the fear that it would pass if offered. OPA worked to get the bill brought up and to get a commitment from the Senator that he would not offer the amendment.

Unfortunately at 3:00 a.m., another controversial amendment that would allow clinical social workers to take custody of patients and transport them to a hospital was added to the bill on the Senate floor, and the House refused to concur on Senate amendments, so the bill died.

OPA has already spoken to a legislator who will sponsor the legislation, and plans are to introduce the legislation as soon as possible. We have informed the interested legislator of the time-sensitive nature of this legislation.

In the following few weeks, we will be contacting our members to ask for support in arranging witnesses for proponent testimony. We will also be asking you to contact your legislators to let them know how vital this legislation is to the health of Ohioans and your profession.

Medicaid Audit
Outgoing State Auditor Betty Montgomery's office released an 800-page audit of Ohio's Medicaid program that included 109 recommendations projected to save up to $403.5 million, about 3 percent of program spending based on 2004 levels. For pharmacy the three main recommendations are:

  • State Medicaid agency should work with pharmacy providers, patients and physicians to develop a Medication Therapy Management pilot program for the Medicaid ABD population.
  • State Medicaid agency should use an independent party, such as the state medical or pharmacy association, or state university for its DUR program.
  • State Medicaid agency should implement a regular process for the periodic evaluation of all Medicaid service rates, use Medicare rates as a benchmark, and offer proposals for periodic future adjustments to rates based on analysis. The audit recognizes that ignoring the inequities and inefficiencies in Ohio's Medicaid payment approach endangers the well-being of the overall healthcare system.

We are hopeful that Governor Strickland and the new director of ODJFS recognize the importance of these recommendations.

If you have any questions or comments, please contact Kelly Vyzral, Director of Government Affairs at 614.586.1497 or

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