SB149 - Revises provisions governing the administration of pharmacy benefits under Medicaid. (BDR 38-224)

S.B. 149 - *SB149* SENATE BILL NO. 149–SENATOR STONE PREFILED JANUARY 30, 2025 ____________ Referred to Committee on Health and Human Services SUMMARY—Revises provisions governing the administration of pharmacy benefits under Medicaid. (BDR 38-224) FISCAL NOTE: Effect on Local Government: No. Effect on the State: Yes. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to Medicaid; requiring the Department of Health and Human Services to select and contract with a state pharmacy benefit manager to manage pharmacy benefits for Medicaid and certain other health benefit plans; prescribing certain duties of the state pharmacy benefit manager; requiring that the Department approve certain contracts entered into by the state pharmacy benefit manager; prohibiting the state pharmacy benefit manager from engaging in certain activities; providing monetary penalties for certain violations; requiring a Medicaid managed care organization to contract with and utilize the state pharmacy benefit manager to manage pharmacy benefits; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law authorizes the Department of Health and Human Services to enter 1 into a contract with a pharmacy benefit manager or a health maintenance 2 organization to manage coverage of prescription drugs under the State Plan for 3 Medicaid, the Children’s Health Insurance Program and certain other health benefit 4 plans that elect to use the list of preferred prescription drugs established for 5 Medicaid as their formulary. (NRS 422.4025, 422.4053) 6 Section 13 of this bill instead requires the Department to enter into a contract 7 with one pharmacy benefit manager, known as the state pharmacy benefit manager, 8 to manage all such coverage of prescription drugs. Sections 13 and 14 of this bill 9 prescribe certain required terms of such a contract. Section 4 of this bill prescribes 10 the required contents of an application to serve as the state pharmacy benefit 11 manager. Section 5 of this bill requires the Department to adopt regulations 12 establishing: (1) the criteria that a pharmacy benefit manager must meet in order to 13 – 2 – - *SB149* serve as the state pharmacy benefit manager; and (2) certain requirements relating 14 to the payment of pharmacies for services rendered under the contract between the 15 Department and the state pharmacy benefit manager. Section 9 of this bill requires 16 a Medicaid managed care organization to contract with and utilize the state 17 pharmacy benefit manager to administer all pharmacy benefits for recipients of 18 Medicaid who receive such benefits through the Medicaid managed care 19 organization. 20 Section 6 of this bill requires that the Department approve any contract 21 between the state pharmacy benefit manager and a pharmacy or an entity that 22 contracts on behalf of a pharmacy if the contract is for the provision of benefits 23 under the contract between the state pharmacy benefit manager and the 24 Department, or any revision, suspension or termination of such a contract, in order 25 for the contract, revision, suspension or termination to become effective. Section 6 26 also authorizes the Department to change certain payment arrangements as 27 necessary to comply with federal requirements. Finally, section 6 prohibits the state 28 pharmacy benefit manager from entering into, renewing or amending a contract that 29 conflicts with the obligations of the state pharmacy benefit manager under the 30 provisions of this bill. Section 7 of this bill: (1) prohibits the state pharmacy benefit 31 manager from taking certain actions to avoid paying reimbursement owed to 32 pharmacies; and (2) authorizes the Department to impose a monetary penalty on the 33 state pharmacy benefit manager for violating that prohibition. 34 Sections 2 and 3 of this bill define certain terms, and section 8 of this bill 35 establishes the applicability of those definitions. Section 10 of this bill applies 36 certain other definitions in existing law to sections 4-7. Sections 11, 12 and 15 of 37 this bill make conforming changes to transfer certain duties to the state pharmacy 38 benefit manager and revise certain references in accordance with the provisions of 39 this bill. 40 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 422 of NRS is hereby amended by adding 1 thereto the provisions set forth as sections 2 to 7, inclusive, of this 2 act. 3 Sec. 2. “Medicaid managed care organization” means a 4 health maintenance organization with which the Department 5 enters into a contract pursuant to NRS 422.273 to provide health 6 care services through managed care to recipients of Medicaid. 7 Sec. 3. “State pharmacy benefit manager” means the 8 pharmacy benefit manager that enters into a contract with the 9 Department pursuant to NRS 422.4053. 10 Sec. 4. 1. A pharmacy benefit manager that meets the 11 eligibility requirements established pursuant to section 5 of this 12 act may apply to become the state pharmacy benefit manager by 13 submitting an application to the Department on a form prescribed 14 by the Department. The application must include, without 15 limitation: 16 (a) Any activity, policy, practice, contract or agreement of the 17 applicant that may directly or indirectly present a conflict of 18 – 3 – - *SB149* interest in the relationship between the applicant and the 1 Department or a Medicaid managed care organization, including, 2 without limitation, any such activity, policy, practice, contract or 3 agreement that operates solely or partially outside this State; 4 (b) Any direct or indirect fees, charges or assessments that the 5 applicant imposes on any pharmacy in this State: 6 (1) With which the applicant shares common ownership, 7 management or control; 8 (2) Which is owned, managed or controlled by any 9 management, parent or subsidiary of the applicant, any company 10 jointly held by the applicant or any company otherwise affiliated 11 with the applicant by a common owner, manager or holding 12 company; 13 (3) For which the board of directors of the pharmacy 14 shares any members in common with the board of directors of the 15 applicant; or 16 (4) Which shares any manager in common with the 17 applicant; 18 (c) Any direct or indirect fees, charges or assessments that the 19 applicant imposes on pharmacies and pharmacists in this State; 20 and 21 (d) All common ownership, common management, common 22 members of a board of directors, shared managers or shared 23 control between: 24 (1) The applicant, or any management, parent, subsidiary 25 or jointly held company of the applicant or any company otherwise 26 affiliated by a common owner, manager or holding company with 27 the applicant; and 28 (2) Any of the following entities: 29 (I) A managed care organization or a company affiliated 30 with a managed care organization; 31 (II) A pharmacy services administrative organization, 32 any other entity that contracts on behalf of a pharmacy or any 33 company affiliated with a pharmacy services administrative 34 organization or such an entity; 35 (III) A wholesaler, as defined in NRS 639.016, or any 36 company affiliated with a wholesaler; 37 (IV) A third party or any company affiliated with a third 38 party; and 39 (V) A pharmacy or any company affiliated with a 40 pharmacy. 41 2. As used in this section, “third party” means any insurer or 42 organization providing health coverage or benefits in accordance 43 with state or federal law. 44 – 4 – - *SB149* Sec. 5. 1. The Department shall adopt regulations 1 establishing: 2 (a) The criteria that a pharmacy benefit manager must meet in 3 order to be eligible to enter into a contract with the Department 4 pursuant to NRS 422.4053 to serve as the state pharmacy benefit 5 manager. 6 (b) The methodology for reimbursement to the pharmacies for 7 providing benefits under the contract entered into pursuant to 8 NRS 422.4053. The methodology for reimbursement must not 9 discriminate against pharmacies owned or contracted by a health 10 care facility that is registered as a covered entity pursuant to 42 11 U.S.C. § 256b, except where required by the Centers for Medicare 12 and Medicaid Services of the United States Department of Health 13 and Human Services. 14 (c) Dispensing fees paid to pharmacies and pharmacists for 15 providing benefits under the contract entered into pursuant to 16 NRS 422.4053. In establishing those dispensing fees, the 17 Department may consider applicable guidance promulgated by the 18 Centers for Medicare and Medicaid Services of the United States 19 Department of Health and Human Services. 20 2. To the extent authorized by federal law, the dispensing fees 21 established pursuant to paragraph (c) of subsection 1 may vary by 22 pharmacy type, including, without limitation, rural and 23 independently owned pharmacies, pharmacies owned by a 24 corporation operating in multiple states and pharmacies owned 25 and contracted by a health care facility that is registered as a 26 covered entity pursuant to 42 U.S.C. § 256b. 27 Sec. 6. 1. The state pharmacy benefit manager shall submit 28 to the Department for review: 29 (a) Each contract for the provision of benefits under the 30 contract entered into pursuant to NRS 422.4053 between the state 31 pharmacy benefit manager and a pharmacy or an entity that 32 contracts on behalf of such a pharmacy; 33 (b) Each revision to the terms and conditions of a contract 34 described in paragraph (a); and 35 (c) Each suspension or termination of a contract described in 36 paragraph (a). 37 2. The Department shall review each submission received 38 pursuant to subsection 1 and approve or deny the contract, 39 revision, suspension or termination, as applicable. A contract, 40 revision, suspension or termination is not effective until the 41 contract, revision, suspension or termination, as applicable, is 42 approved by the Department. 43 3. The Department may change a payment arrangement 44 between the Department and a Medicaid managed care 45 – 5 – - *SB149* organization, the Department and the state pharmacy benefit 1 manager or a Medicaid managed care organization and the state 2 pharmacy benefit manager in order to comply with federal or state 3 law or regulations or any other agreement between the 4 Department and the Federal Government. 5 4. The state pharmacy benefit manager shall not enter into, 6 renew or amend any contract that is inconsistent with: 7 (a) The terms and conditions of the contract between the state 8 pharmacy benefit manager and the Department; or 9 (b) The reimbursement methodologies and dispensing fees 10 established by the Department pursuant to subsection 1 of section 11 5 of this act. 12 5. Any contract entered into by the state pharmacy benefit 13 manager in violation of subsection 4 is void and unenforceable. 14 Sec. 7. 1. In the course of providing benefits under the 15 contract entered into pursuant to NRS 422.4053, the state 16 pharmacy benefit manager: 17 (a) Shall not enter into a contract with a pharmacy that 18 authorizes the release of the state pharmacy benefit manager from 19 any payment owed to the pharmacy or remove the pharmacy from 20 a network after the pharmacy has rendered services; 21 (b) Must not be released from an obligation to make a payment 22 owed to a pharmacy for services performed before the termination 23 of a contract between the state pharmacy benefit manager and a 24 Medicaid managed care organization or pharmacy, as applicable; 25 and 26 (c) Shall administer, adjudicate and, when appropriate, 27 reimburse any claim for services performed before the termination 28 of the contract between the state pharmacy benefit manager and a 29 Medicaid managed care organization in accordance with the 30 contract between the state pharmacy benefit manager and the 31 Medicaid managed care organization. 32 2. The Department may impose a fine of $25,000 per day that 33 a violation occurs for any violation of subsection 1. 34 Sec. 8. NRS 422.001 is hereby amended to read as follows: 35 422.001 As used in this chapter, unless the context otherwise 36 requires, the words and terms defined in NRS 422.003 to 422.054, 37 inclusive, and sections 2 and 3 of this act have the meanings 38 ascribed to them in those sections. 39 Sec. 9. NRS 422.273 is hereby amended to read as follows: 40 422.273 1. To the extent that money is available, the 41 Department shall: 42 (a) Establish a Medicaid managed care program to provide 43 health care services to recipients of Medicaid in all geographic areas 44 of this State. The program is not required to provide services to 45 – 6 – - *SB149* recipients of Medicaid who are aged, blind or disabled pursuant to 1 Title XVI of the Social Security Act, 42 U.S.C. §§ 1381 et seq. 2 (b) Conduct a statewide procurement process to select health 3 maintenance organizations to provide the services described in 4 paragraph (a). 5 2. For any Medicaid managed care program established in the 6 State of Nevada, the Department shall contract only with a health 7 maintenance organization that has: 8 (a) Negotiated in good faith with a federally-qualified health 9 center to provide health care services for the health maintenance 10 organization; 11 (b) Negotiated in good faith with the University Medical Center 12 of Southern Nevada to provide inpatient and ambulatory services to 13 recipients of Medicaid; 14 (c) Negotiated in good faith with the University of Nevada 15 School of Medicine to provide health care services to recipients of 16 Medicaid; and 17 (d) Complied with the provisions of subsection 2 of 18 NRS 695K.220. 19  Nothing in this section shall be construed as exempting a 20 federally-qualified health center, the University Medical Center of 21 Southern Nevada or the University of Nevada School of Medicine 22 from the requirements for contracting with the health maintenance 23 organization. 24 3. During the development and implementation of any 25 Medicaid managed care program, the Department shall cooperate 26 with the University of Nevada School of Medicine by assisting in 27 [Text truncated for display. Full text available on LegiScan.]