PRINTER'S NO. 1274
No. 1022 Session of 2001
INTRODUCED BY CONTI, JUNE 27, 2001
REFERRED TO AGING AND YOUTH, JUNE 27, 2001
AN ACT
1 Amending the act of August 26, 1971 (P.L.351, No.91), entitled
2 "An act providing for a State Lottery and administration
3 thereof; authorizing the creation of a State Lottery
4 Commission; prescribing its powers and duties; disposition of
5 funds; violations and penalties therefor; exemption of prizes
6 from State and local taxation and making an appropriation,"
7 further providing for annual income limitations for PACE and
8 PACENET; providing for best price for pharmaceuticals;
9 establishing the Prescription Drug Access Clearinghouse
10 Authority and providing for its powers and duties; providing
11 for the Medicare Managed Care Fair Share Program; and
12 establishing the Medicare Participation Fund.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. The definition of "maximum annual income" in
16 section 502 of the act of August 26, 1971 (P.L.351, No.91),
17 known as the State Lottery Law, added November 21, 1996
18 (P.L.741, No.134), is amended to read:
19 Section 502. Definitions.
20 The following words and phrases when used in this chapter
21 shall have the meanings given to them in this section unless the
22 context clearly indicates otherwise:
1 * * *
2 "Maximum annual income."
3 (1) For PACE eligibility, the term shall mean annual income
4 which shall not exceed [$14,000] $15,000 in the case of single
5 persons nor [$17,200] $18,200 in the case of the combined annual
6 income of persons married to each other. Persons may, in
7 reporting income to the Department of Aging, round the amount of
8 each source of income and the income total to the nearest whole
9 dollar, whereby any amount which is less than 50¢ is eliminated.
10 (2) The maximum annual income amounts under this definition
11 shall be increased each year after the effective date of this
12 paragraph by the percentage, if any, by which the Consumer Price
13 Index for the most recent calendar year exceeds the Consumer
14 Price Index for the immediate preceding calendar year.
15 * * *
16 Section 2. Sections 509, 515 and 519 of the act, added
17 November 21, 1996 (P.L.741, No.134), are amended to read:
18 Section 509. Program generally.
19 The program shall include the following:
20 (1) Participating pharmacies shall be paid within 21
21 days of the contracting firm receiving the appropriate
22 substantiation of the transaction. Pharmacies shall be
23 entitled to interest for payment not made within the 21-day
24 period at a rate approved by the board.
25 (2) Collection of the copayment by pharmacies shall be
26 mandatory.
27 (3) Senior citizens participating in the program are not
28 required to maintain records of each transaction.
29 (4) A system of rebates or reimbursements to eligible
30 claimants for pharmaceutical expenses shall be prohibited.
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1 (5) PACE shall include a participant copayment schedule
2 for each prescription. The copayment may increase or decrease
3 on an annual basis by the average percent change of
4 ingredient costs for all prescription drugs, plus a
5 differential to raise the copayment to the next highest 25¢
6 increment. In addition, the department may approve a request
7 for increase or decrease in the level of copayment based upon
8 the financial experience and projections of PACE and after
9 consultation with the board. The department is prohibited
10 from approving adjustments to the copayment on more than an
11 annual basis.
12 (6) The program shall consist of payments to pharmacies
13 on behalf of eligible claimants for 90% of the average
14 wholesale costs of prescription drugs which exceed the
15 copayment, plus a dispensing fee of at least $3.50 or the
16 dispensing fee established by the department by regulation,
17 whichever is greater.
18 (7) In no case shall the Commonwealth or any person
19 enrolled in the program be charged more than the price of the
20 drug at the particular pharmacy on the date of the sale.
21 (8) Payments for multiple source drugs, meeting the
22 criteria set forth in 42 C.F.R. 447.332 (relating to upper
23 limits for multiple source drugs) and § 1927(e) of the Social
24 Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), must
25 not exceed an amount based on the limit per unit which the
26 Health Care Financing Administration has determined to be
27 equal to 150% applied to the lowest price listed, in package
28 sizes of 100 units, unless otherwise noted, in any of the
29 published compendia of cost information of drugs.
30 Section 515. Reimbursement.
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1 [For-profit] Health maintenance organizations, for-profit
2 third-party insurers and not-for-profit prescription plans shall
3 be responsible for any payments made by the program to a
4 providing pharmacy or dispensing physician on behalf of a
5 claimant covered by such a third party.
6 Section 519. The Pharmaceutical Assistance Contract for the
7 Elderly Needs Enhancement Tier.
8 (a) Establishment.--There is hereby established within the
9 department a program to be known as the Pharmaceutical
10 Assistance Contract for the Elderly Needs Enhancement Tier
11 (PACENET).
12 (b) PACENET eligibility.--A claimant with an annual income
13 of not less than $14,000 and not more than [$16,000] $17,000 in
14 the case of a single person and of not less than $17,200 and not
15 more than [$19,200] $20,200 in the case of the combined income
16 of persons married to each other shall be eligible for enhanced
17 pharmaceutical assistance under this section. A person may, in
18 reporting income to the department, round the amount of each
19 source of income and the income total to the nearest whole
20 dollar, whereby any amount which is less than 50¢ is eliminated.
21 (c) Deductible.--Upon enrollment in PACENET, eligible
22 claimants in the income ranges set forth in subsection (b) shall
23 be required to meet [an annual] monthly deductible in
24 unreimbursed prescription drug expenses of [$500] $40 per
25 person. To qualify for the deductible set forth in this
26 subsection the prescription drug must be purchased for the use
27 of the eligible claimant from a provider as defined in this
28 chapter. The department, after consultation with the board, may
29 approve an adjustment in the deductible on an annual basis.
30 (d) Copayment.--For eligible claimants under this section,
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1 the copayment schedule, which may be adjusted by the department
2 on an annual basis after consultation with the board, shall be:
3 (i) eight dollars for noninnovator multiple source
4 drugs as defined in section 702; or
5 (ii) fifteen dollars for single-source drugs and
6 innovator multiple-source drugs as defined in section
7 702.
8 (e) Annual increase in eligibility limits.--The maximum
9 annual income amounts for PACENET eligibility under subsection
10 (b) shall be increased each year after the effective date of
11 this subsection by the percentage, if any, by which the Consumer
12 Price Index for the most recent calendar year exceeds the
13 Consumer Price Index for the immediate preceding calendar year.
14 Section 3. The act is amended by adding chapters to read:
15 CHAPTER 7-A
16 BEST PRICE FOR PHARMACEUTICALS
17 Section 701-A. Short title of chapter.
18 This chapter shall be known and may be cited as the Best
19 Price for Pharmaceuticals Act.
20 Section 702-A. Definitions.
21 The following words and phrases when used in this chapter
22 shall have the meanings given to them in this section unless the
23 context clearly indicates otherwise:
24 "A-rated generically equivalent drug." A drug product that
25 the Commissioner of Food and Drugs of the Food and Drug
26 Administration has approved as safe and effective and has
27 determined to be equivalent as listed in "The Approved Drug
28 Products with Therapeutic Equivalence Evaluations" (Food and
29 Drug Administration "Orange Book"), with a specific "A" code
30 designation only.
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1 "Committee." A drug utilization review committee formed in
2 accordance with section 705-A.
3 "DESI drug." A drug product for which Federal financial
4 participation is not available under 42 CFR 441.25 (relating to
5 prohibition on FFP for certain prescribed drugs).
6 "Experimental drug." A drug or product currently being
7 investigated under an investigational or new drug application
8 filed with the Food and Drug Administration to determine its
9 safety and effectiveness.
10 "Licensed prescriber." A person currently licensed under the
11 law of a state to order medication for patient treatment.
12 "PACE." As defined in section 502.
13 "PACENET." As defined in section 502.
14 "Participant." A person who receives pharmacy services from
15 PACE or PACENET.
16 "Pharmaceutical manufacturer." A manufacturer of
17 prescription drugs, insulin, insulin needles or insulin
18 syringes.
19 "Pharmacy." A pharmacy licensed by the Commonwealth.
20 "Pharmacy services." Medically necessary prescription drugs
21 and other pharmacy services furnished directly to eligible
22 participants by pharmacies.
23 "Prescription drug." A drug requiring a prescription in this
24 Commonwealth, insulin, insulin syringes and insulin needles.
25 Experimental drugs or drugs prescribed for wrinkle removal or
26 hair growth are excluded.
27 "Prior authorization." A procedure established by the
28 Secretary of Aging under which the delivery of a pharmacy
29 service is either conditioned upon or delayed by a prior
30 determination by the Secretary of Aging or his agent that a
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1 person is eligible for a particular pharmacy service, that there
2 is medical necessity for a particular pharmacy service or that a
3 particular pharmacy service is suitable to a particular
4 participant.
5 "Private contracted entity." An entity under contract with
6 the Secretary of Aging to administer PACE and PACENET.
7 "Provider." A pharmacy or licensed prescriber who provides
8 pharmacy services to a PACE or PACENET recipient.
9 "Secretary." The Secretary of Aging of the Commonwealth.
10 "Wholesaler." A licensed person or entity within this
11 Commonwealth which legally purchases pharmaceuticals for resale
12 or distribution to persons other than recipients or consumers.
13 Section 703-A. Private contracted entities.
14 (a) Administration.--The secretary shall administer a
15 pharmacy benefits management program for all participants.
16 (b) Request for proposal.--Not later than 90 days from the
17 effective date of this chapter, the secretary shall issue a
18 request for proposal for a three-year contract with four private
19 contracted entities to administer pharmacy services for
20 participants Statewide.
21 (c) Requirements.--The proposal shall require the private
22 contracted entities to perform prospective, concurrent and
23 retrospective drug utilization review and education of providers
24 and participants.
25 (d) Criteria.--The selection process shall include criteria
26 designed to choose the private contracted entities best able to
27 provide a prescription drug benefit program for participants in
28 a way that maximizes savings for the Commonwealth and
29 participants without reducing the quality of prescription drug
30 benefits now being provided to the participants.
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1 (e) Decision.--All participants may choose the private
2 contracted entity of their preference for the delivery of their
3 pharmacy services. Each private contracted entity shall make
4 available information to all potential participants so an
5 informed decision may be made. Participants shall have the
6 option of changing the private contracted entity at their
7 discretion in an open enrollment period every 12 months.
8 (f) Execution.--The contracts under this section shall be
9 executed within six months from the effective date of this
10 chapter.
11 Section 704-A. Private contracted entity functions.
12 (a) Requirements.--The secretary shall require each private
13 contracted entity to:
14 (1) develop and update a formulary of drugs with the
15 advice of the DURC utilizing disease and care management;
16 (2) manage a drug formulary;
17 (3) ensure that any pharmacy licensed in this
18 Commonwealth which is willing to accept the terms and
19 conditions of the private contracted entity is eligible to
20 provide pharmacy services according to any regulations in
21 effect on the effective date of this chapter and that
22 regulate pharmacy providers;
23 (4) negotiate drug rebates with manufacturers;
24 (5) in accordance with the act of November 24, 1976
25 (P.L.1163, No.259), referred to as the Generic Equivalent
26 Drug Law, make provisions for generic substitutions and
27 require pharmacists to disclose any affiliation with a
28 generic manufacturer;
29 (6) provide for prospective drug utilization review
30 which precludes overriding alerts without intervention;
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1 (7) provide for prior authorization in accordance with
2 regulations of the secretary;
3 (8) provide for prospective and concurrent and
4 retrospective drug utilization review to ensure that
5 prescriptions are appropriate, medically necessary and not
6 likely to result in adverse medical results and to educate
7 providers and participants and to correct and report
8 misutilization and abuse by licensed prescribers and
9 participants and provide for fraud and abuse audits,
10 coordinating its activities with the secretary to support
11 compliance with applicable laws and regulations;
12 (9) educate providers on disease and care management;
13 (10) provide educational materials for participants on
14 disease and care management;
15 (11) seek best price from pharmaceutical manufacturers
16 under prevailing private market conditions;
17 (12) negotiate with drug manufacturers to maximize
18 savings to the Commonwealth in a way that does not reduce the
19 quality of existing prescription drug services for
20 participants;
21 (13) adjudicate claims through a Statewide point-of-sale
22 electronic verification and claims processing system which
23 will allow for intervention upon receipt of a prospective
24 drug utilization review alert and will allow for an emergency
25 supply of prescribed medication in the event of equipment
26 failures;
27 (14) create an audit and recoupment system for providers
28 and participants, and third-party medical resources; and
29 (15) reimburse pharmacies on a fee-for-service basis.
30 (b) Formulary.--The private contracted entities, with the
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1 advice of the drug utilization review committee created in
2 section 705-A, shall prepare a formulary of drugs and, in
3 accordance with the Generic Equivalent Drug Law, include
4 generically equivalent drugs to be used in PACE or PACENET. In
5 evaluating drugs for the formulary, each private contracted
6 entity shall consider their therapeutic efficacy and take into
7 consideration all discounts, rebates or other concessions
8 provided by manufacturers. The formulary must indicate that
9 drugs will not be reimbursed if they are experimental or on the
10 Drug Efficacy Study Implementation list (DESI) prepared by the
11 Health Care Financing Administration. The formulary shall
12 provide for a medical exception for a drug on the latter list
13 upon a handwritten declaration of its necessity on the
14 prescription by the treating prescriber.
15 (c) Conflicts.--In developing the formulary, the private
16 contracted entity shall demonstrate how it will avoid a conflict
17 of interest with any pharmaceutical manufacturer, wholesaler or
18 drug store chain that holds an interest in the private
19 contracted entity or in which the private contracted entity has
20 an interest and shall indicate how it will prevent the sharing
21 of nonpublic information concerning other drug manufacturers'
22 bids, proposals, contracts, prices, rebates or discounts.
23 (d) Considerations.--In preparing and managing the
24 formulary, the private contracted entity shall ensure that they
25 will consider all discounts, rebates or other concessions
26 offered by manufacturers, drug chains or wholesale drug
27 companies.
28 (e) Continuation.--Upon making changes to the formulary the
29 private contracted entities shall allow a participant to
30 continue to receive a drug which is part of an ongoing treatment
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1 regimen for a period of up to 60 days.
2 (f) Nontermination.--The private contracted entities shall
3 not terminate any contract currently in existence with any
4 agency or program which cannot be favorably renegotiated.
5 Section 705-A. Drug utilization review committee.
6 (a) Requirement.--The secretary shall require each private
7 contracted entity to form a drug utilization review committee.
8 (b) Composition.--Each committee shall be comprised of nine
9 members, five of whom shall be actively practicing physicians
10 licensed in this Commonwealth and four of whom shall be actively
11 practicing pharmacists licensed in this Commonwealth. None of
12 the members may hold a 5% or greater interest in the private
13 contracted entity, its parent company or companies, or in a
14 company or companies owned by the private contracted entity.
15 (c) Functions.--
16 (1) The committees shall develop a system that provides
17 prospective, concurrent and retrospective review of drug
18 utilization to ensure that pharmacy services provided are or
19 were appropriate and medically necessary and not likely to
20 result in adverse medical results. The review program shall
21 be designed to educate licensed prescribers and pharmacists
22 as provided in paragraph (4) on the proper utilization of
23 drugs in disease and care management. In reviewing drug
24 utilization, the committee shall assess data on drug use
25 against predetermined standards consistent with the American
26 Hospital Formulary Service Drug Information, the United
27 States Pharmacopoeia-Drug Information, American Medical
28 Association Drug Evaluations or peer-reviewed medical
29 literature.
30 (2) The committees shall develop a system to utilize the
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1 compendia and literature referred to in paragraph (1) as its
2 source of standards to screen for potential drug problems
3 before a prescription is filled or delivered to a
4 participant. Prospective drug use review shall include
5 consultation with participants by pharmacists.
6 (3) The secretary and the private contracted entities
7 shall provide data to the committees, through mechanized drug
8 claims processing and retrieval systems, for the ongoing
9 periodic examination of claims data and other records in
10 order to identify patterns of fraud, abuse, gross overuse or
11 inappropriate or medically unnecessary care among licensed
12 prescribers, pharmacists and participants or associated with
13 specific drugs or groups of drugs. The committee shall, on an
14 ongoing basis, assess data on drug use against explicit
15 predetermined standards using the compendia and literature
16 referred to in this subsection and to introduce, as
17 necessary, remedial strategies to improve the quality of care
18 and to conserve program funds or patient expenditures.
19 (4) The committees shall, using drug use data on common
20 therapy problems, develop active and ongoing educational
21 outreach programs to disseminate information to providers on
22 common drug therapy problems with the aim of improving
23 prescribing or dispensing practices. The educational programs
24 shall include interventions for providers targeting therapy
25 problems or individuals identified in the course of
26 retrospective drug reviews. The committees shall reevaluate
27 interventions from time to time to determine if the
28 interventions were successful in improving the quality of
29 drug therapy and shall make modifications as necessary.
30 Intervention programs shall include:
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1 (i) information dissemination sufficient to ensure
2 the ready availability to providers of information
3 concerning the committees' duties, powers and basis for
4 their standards;
5 (ii) written, oral or electronic reminders
6 containing patient-specific and/or drug-specific
7 information and suggested changes in prescribing or
8 dispensing practices, communicated in a manner designed
9 to ensure the privacy of patient-related information;
10 (iii) use of communication between health care
11 professionals who are experts in rational drug therapy
12 and selected prescribers and pharmacists who have been
13 targeted for educational intervention, including
14 discussion of optimal prescribing, dispensing or pharmacy
15 care practices and follow-up communications; and
16 (iv) intensified review or monitoring of selected
17 prescribers or dispensers.
18 (d) Misutilization.--Should licensed prescribers or
19 participants continue to misutilize drugs or abuse the system,
20 the committee shall provide information to the secretary for
21 corrective action. In the case of prescribers, the committee
22 shall submit a report and recommendations to the secretary for
23 appropriate action. The secretary shall inform the private
24 contracted entity and the appropriate Commonwealth licensing
25 body of any final administrative sanctions.
26 (e) Nonliability.--Any person rendering service as a member
27 of a utilization review committee for this program shall not be
28 liable for any civil damages as a result of any acts or
29 omissions in rendering the service as a member of any such
30 committee except any acts or omissions intentionally designed to
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1 harm or any grossly negligent acts or omissions which result in
2 harm to the person receiving such service.
3 (f) Report.--The secretary shall require the committees to
4 provide an annual report describing the committees' activities,
5 including the nature and scope of the prospective, concurrent
6 and retrospective drug reviews, a summary of interventions used,
7 an assessment of the impact of these educational interventions
8 on quality of care and an estimate of the cost savings generated
9 as a result of the program.
10 Section 706-A. Copayments.
11 Except for services which are excluded under the
12 Commonwealth's medical assistance program, a participant is
13 liable for a copayment in an amount set by the secretary, and
14 collection of the copayment by pharmacies shall be mandatory.
15 The amount of the copayment paid to pharmacy providers by
16 participants shall be deducted from the Commonwealth's fee to
17 pharmacy providers.
18 Section 707-A. Administration of contract.
19 (a) Secretary.--The secretary shall administer the contract
20 with the private contracted entities and shall promulgate rules
21 and regulations, as necessary, to carry out the provisions of
22 this chapter.
23 (b) Data.--The secretary and the private contracted entities
24 shall provide data necessary to the committees to develop
25 provider prescribing profiles and participant utilization
26 profiles to perform utilization review and disease and care
27 management through the coordination of health care and pharmacy
28 services to ensure that participants are receiving and complying
29 with appropriate therapies.
30 Section 708-A. Studies required.
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1 (a) General.--
2 (1) The secretary shall select a competent contractor to
3 analyze and compare expenditures, utilization rates and
4 utilization patterns for pharmacy services provided to PACE
5 or PACENET.
6 (2) To effectuate the purposes of this chapter, all
7 participating pharmacy providers, manufacturers, drug chains
8 and wholesalers shall, as a condition of participation, be
9 required to cooperate with the secretary in preparing the
10 required report.
11 (3) The secretary shall report preliminary findings to
12 the President pro tempore of the Senate and the Speaker of
13 the House of Representatives by September 30, 2002. The
14 secretary shall report finally on June 30, 2004.
15 (b) Report.--The Legislative Budget and Finance Committee
16 shall evaluate and prepare a report to be submitted no later
17 than June 30, 2004, to the General Assembly on the best price
18 for pharmaceuticals program under this chapter.
19 Section 709-A. Applicability of chapter.
20 This chapter shall apply to PACE and PACENET.
21 Section 710-A. Prohibited activities.
22 It shall be unlawful for any individual, partnership or
23 corporation to solicit, receive, offer or pay any kickback,
24 bribe or rebate in cash or in kind from or to any person in
25 connection with the furnishing of services under this chapter.
26 Section 711-A. Expiration of chapter.
27 This chapter shall expire December 31, 2004, unless
28 reauthorized by the General Assembly.
29 CHAPTER 7-B
30 PRESCRIPTION DRUG ACCESS CLEARINGHOUSE AUTHORITY
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1 Section 701-B. Definitions.
2 The following words and phrases when used in this chapter
3 shall have the meanings given to them in this section unless the
4 context clearly indicates otherwise:
5 "Authority." The Prescription Drug Access Clearinghouse
6 Authority established by this chapter.
7 "Board." The board of directors of the Prescription Drug
8 Access Clearinghouse Authority.
9 "Discount plan." A prescription drug discount plan.
10 "Discount program." The Prescription Drug Discount Program
11 under section 707-B.
12 "PACE." As defined in section 502.
13 "PACENET." As defined in section 502.
14 Section 702-B. Establishment and duties of authority.
15 (a) Authority established.--The Prescription Drug Access
16 Clearinghouse Authority is hereby established to assist citizens
17 with accessing prescription drug services at affordable prices.
18 (b) Duties of authority.--The authority shall:
19 (1) Disseminate information and advertise programs that
20 will assist citizens with purchasing prescription drugs at a
21 lower cost.
22 (2) Provide specific assistance to State residents to
23 facilitate greater participation in the PACE and PACENET
24 programs.
25 (3) Assist State residents with enrolling in programs
26 such as PACE, PACENET and Medicaid and that may provide for
27 prescription drug coverage for which they may be eligible.
28 (4) Assist residents of this Commonwealth with assessing
29 discount programs or insurance programs that may be of
30 benefit to them.
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1 (5) Perform studies to identify additional strategies
2 that may help improve access by Commonwealth residents to
3 prescription drugs and provide appropriate reports to the
4 Governor and General Assembly.
5 (6) Serve as a general resource responsible for
6 promoting the interest of residents of this Commonwealth on
7 prescription drug access issues.
8 Section 703-B. Authority board of directors.
9 (a) Membership.--The authority shall be governed by a 13-
10 member board of directors as follows:
11 (1) Four members appointed by the Governor, one of whom
12 shall be a consumer representative and one of whom shall have
13 knowledge of pharmaceutical benefit programs.
14 (2) Two members appointed by the Majority Leader of the
15 Senate, one of whom shall be a practicing pharmacist.
16 (3) Two members appointed by the Minority Leader of the
17 Senate, one of whom shall have knowledge of group procurement
18 practices.
19 (4) Two members appointed by the Majority Leader of the
20 House of Representatives, one of whom shall have experience
21 in operations of group health plans.
22 (5) Two members appointed by the Minority Leader of the
23 House of Representatives, one of whom shall represent
24 individuals in this Commonwealth who are elderly or have
25 disabilities.
26 (6) The executive director of the authority, to be
27 selected by the other members of the board, who shall serve
28 as an ex officio, voting member of the board.
29 (b) Executive director.--The executive director of the
30 authority shall be the chief executive officer of the authority
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1 and presiding officer of the board of directors.
2 (c) Compensation.--Except for the executive director,
3 members of the board shall receive no compensation for their
4 services but shall be reimbursed for their necessary expenses
5 incurred while serving as board members.
6 (d) Vacancies.--A vacancy on the board shall be filled by
7 the appointing authority for the balance of the term.
8 (e) Terms of members.--
9 (1) Initial terms of appointed members shall be as
10 follows:
11 (i) The Governor shall appoint one member for two
12 years.
13 (ii) The Majority Leader of the Senate shall appoint
14 one member for two years.
15 (iii) The Minority Leader of the Senate shall
16 appoint one member for two years.
17 (iv) The Majority Leader of the House of
18 Representatives shall appoint one member for two years.
19 (v) The Minority Leader of the House of
20 Representatives shall appoint one member for two years.
21 (vi) The remaining members shall be appointed for
22 four years.
23 (2) Each subsequent term of a member shall be for four
24 years and until a successor is appointed and qualified.
25 Except for the executive director, members may serve only two
26 consecutive full terms. Any member of the board may be
27 removed by the Governor or by a majority of the other board
28 members for malfeasance in office, failure to attend
29 regularly scheduled meetings, or for any cause that renders
30 the member incapable of for unfit to discharge the duties of
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1 a director.
2 (f) Meetings.--Meetings of the board shall be subject to 65
3 Pa.C.S. Ch. 7 (relating to open meetings) and the act of June
4 21, 1957 (P.L.390, No.212), referred to as the Right-to-Know
5 Law. A quorum for a meeting shall be a majority of the total
6 membership of the board. Any action of the board of directors
7 requires the affirmative vote of a majority of a quorum.
8 (g) Conflicts of interest.--No part of the revenues or
9 assets of the authority may inure to the benefit of, or be
10 distributed to, its board of directors or officers or any other
11 private person or entity. Any member of the board of directors
12 and any employee or other agent or advisor of the authority, who
13 has a direct or indirect interest in a pharmaceutical
14 manufacturer, pharmacy, discount program, insurance program or
15 in any contract or transaction with the authority, must disclose
16 this interest to the authority. If a board member has an
17 interest in a transaction, then the member may not participate
18 in the deliberations or voting on such a transaction. The status
19 of the authority's chief executive officer, in and of itself,
20 does not constitute a conflicting interest.
21 (h) Personnel.--A State employee who elects to become an
22 employee of the authority shall receive full credit from the
23 authority for sick leave and annual leave accrued while employed
24 by the State. The authority may establish and administer its own
25 personnel program, including a wage and benefit structure for
26 authority employees. Authority employees may participate in and
27 be eligible for enrollment in the Commonwealth retirement system
28 established pursuant to 71 Pa.C.S. Pt. XXV (relating to
29 retirement for State employees and officers).
30 Section 704-B. General powers of authority.
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1 The authority shall have the general powers of an independent
2 corporate entity, including the following:
3 (1) To have the duties, privileges, immunities, rights,
4 powers, liabilities and obligations of a body corporate and
5 politic.
6 (2) To enroll residents in State programs offering a
7 prescription drug benefit after entering into a memorandum of
8 understanding with the relevant agency regarding coordination
9 of enrollment procedures.
10 (3) To provide counseling and guidance to residents of
11 this Commonwealth regarding existing Federal, State or
12 private programs, including manufacturer assistance programs,
13 that may be available to help address individual needs.
14 (4) To evaluate or rate prescription drug programs,
15 insurance programs and discount programs according to
16 criteria determined by the authority in advance, so long as
17 the authority deems the evaluation or ratings useful to
18 members of the public.
19 (5) To advertise the availability of any public or
20 private program offering prescription drug benefits to
21 members of the public in accordance with criteria the
22 authority determines will advance the public's ability to
23 acquire quality prescription drugs at lower cost.
24 (6) To enter into any contract, agreement or other
25 instrument necessary or convenient in the exercise of the
26 powers and functions of the authority that are not
27 inconsistent with the laws of this Commonwealth.
28 (7) To manage its own finances and deposit funds into
29 independent banking accounts.
30 (8) To contract for and to accept any grants and loans
20010S1022B1274 - 20 -
1 of funds, property or any other aid in any form from the
2 Federal or State government sources, or any other source, or
3 any combination thereof.
4 (9) To appoint agents, employees and professional and
5 business advisers as may from time to time be necessary in
6 its judgment to accomplish the purposes of the authority and
7 to fix the compensation of its officers, employees, agents
8 and advisers, and to establish the powers and duties of its
9 agents, officers, employees and other persons contracting
10 with the authority.
11 Section 705-B. Construction.
12 Nothing in this chapter shall be construed as a restriction
13 or limitation upon any other powers which the authority might
14 otherwise have under any other law of this Commonwealth.
15 Section 706-B. Exemption from taxation.
16 Any real property acquired, maintained and operated by the
17 authority under this act shall not be subject to taxation by any
18 political subdivision or local taxing authority. The authority
19 is exempt from sales and use taxes imposed under Article II of
20 the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform
21 Code of 1971, for purchases acquired and used for its public
22 purposes.
23 Section 707-B. Availability of discount programs.
24 (a) General rule.--The authority shall administer a
25 prescription drug discount program. The authority shall
26 establish public-private partnerships using a process to
27 identify multiple-private sector prescription drug discount
28 plans that will accept enrollment from any eligible resident of
29 this Commonwealth; provide enrollees with enhanced access to
30 prescription drugs; and engage in ongoing competition for
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1 enrollees on the basis of access, cost and quality of service
2 and product offered.
3 (b) Contract standards.--The authority shall issue requests
4 for proposals for participation by private sector prescription
5 drug discount plans on an annual or biannual basis as necessary,
6 to ensure that residents of this Commonwealth have access to
7 multiple plans throughout this Commonwealth.
8 (c) Eligibility.--Any resident of this Commonwealth is
9 eligible for the discount program under this chapter.
10 (d) Subsidy.--The Commonwealth shall subsidize
11 administrative costs associated with the discount program,
12 including the authority's efforts to actively endorse and
13 promote the selected discount plans. The Commonwealth is not
14 responsible for subsidizing the direct cost of prescription
15 drugs under this discount program.
16 (e) Out-of-pocket costs.--Enrollees in the discount program
17 are responsible for all costs of prescription drugs that they
18 may purchase at discounted rates as available under competing
19 prescription drug plans participating in the discount program.
20 (f) Enrollment.--Participation in the discount program is
21 contingent upon enrollment and selection of a discount plan. The
22 authority shall establish an annual open enrollment period and
23 may prevent residents from changing plans during the course of a
24 year unless a discount plan's contract is revoked or the
25 discount plan becomes unable to deliver services.
26 (g) Participation.--Participation in the discount program is
27 voluntary. Enrollees are permitted to purchase prescription
28 drugs outside of the discount program at any time.
29 (h) Enrollment fee.--The authority may authorize discount
30 plans to collect a modest enrollment fee up to $25 from each
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1 individual enrolling in the discount plans on a sliding fee
2 schedule.
3 (i) Consumer choice.--Eligible residents shall be given a
4 choice of discount plans in which to participate. The authority
5 may, at its discretion, create categories of plans to address
6 different consumer needs.
7 (j) Nonexclusivity.--Residents of this Commonwealth may
8 enroll in a discount plan regardless of whether they have other
9 prescription drug insurance coverage or other coverage.
10 (k) Plan selection.--Subject to public notice and comment
11 and in consultation with industry representatives, the authority
12 shall issue requests for proposals from discount plans, such as
13 discount card programs, pharmacy chain discount programs,
14 pharmaceutical benefit managers and other qualifying entities
15 capable of delivering lower prices to residents of this
16 Commonwealth. In designing the criteria for evaluating the
17 responses, the authority shall take into account the quality of
18 the services to be provided and the savings generated for
19 residents of this Commonwealth. The authority may take into
20 account other factors, including geographic coverage, product
21 differentiation, the need to target different populations within
22 this Commonwealth, mail order service, coverage of rural areas
23 and other factors as determined by the authority. If the
24 authority receives multiple qualifying proposals in a category,
25 the authority must approve at least two contractors in each
26 category, but may, at its sole discretion, limit the maximum
27 number of contractors in each category.
28 (l) Applicability.--The discount program applies to
29 medically necessary prescription drugs and biologicals provided
30 to patients in outpatient pharmacies. Under all circumstances,
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1 there must be at least two drugs equally available to enrollees
2 in each therapeutic class or subclass of pharmaceutical agents.
3 The authority, through the contracting process, shall ensure
4 adequate access to medically necessary prescription drugs.
5 CHAPTER 7-C
6 MEDICARE MANAGED CARE FAIR SHARE PROGRAM
7 Section 701-C. Short title of chapter.
8 This chapter shall be known and may be cited as the Medicare
9 Managed Care Fair Share Program.
10 Section 702-C. Declaration of policy.
11 The General Assembly finds and declares as follows:
12 (1) The PACE program provides prescription drug coverage
13 to this Commonwealth's low-income seniors who do not qualify
14 for Medicaid.
15 (2) Presently, out of the 11 Medicare managed care
16 providers who operate in this Commonwealth, one Medicare
17 managed care provider does not provide prescription drug
18 coverage to its Medicare beneficiaries.
19 (3) A total of 43,300 low-income Medicare beneficiaries
20 who are enrolled in Medicare managed care receive their
21 prescription drug benefit through the State-administered PACE
22 program.
23 (4) A Medicare managed care provider who does not
24 provide prescription drug coverage to its Medicare enrollees
25 benefits from the Commonwealth's provision of a
26 pharmaceutical benefit through the PACE program.
27 (5) Prescription drugs are a cost-effective therapy that
28 has been shown to offer significant savings in other aspects
29 of health care, particularly in the hospital and urgent-care
30 setting.
20010S1022B1274 - 24 -
1 (6) Medicare managed care providers who directly benefit
2 in terms of cost savings as a result of healthier seniors who
3 participate in the PACE program should be required to
4 contribute their fair share of costs presently borne by the
5 Commonwealth in its administration of the PACE program.
6 Section 703-C. Definitions.
7 The following words and phrases when used in this chapter
8 shall have the meanings given to them in this section unless the
9 context clearly indicates otherwise:
10 "Contribution amount." The amount due to the Commonwealth
11 under the Medicare Managed Care Fair Share Program.
12 "Covered Medicare manage care provider." A managed care
13 entity, plan or provider that participates in the Medicare
14 program and does not provide outpatient prescription drug
15 coverage as a covered benefit to its Medicare beneficiaries.
16 "Department." The Department of Aging of the Commonwealth.
17 "Fund." The Medicare Participation Fund established under
18 section 705-C.
19 "Program." The Medicare Managed Care Fair Share Program
20 established under this chapter.
21 Section 704-C. Program administration.
22 The program shall be administered by the department. The
23 department shall promulgate and adopt rules and regulations as
24 are necessary to implement the program in a cost-effective
25 manner and that are consistent with the purposes outlined in
26 this chapter.
27 Section 705-C. Contribution amount and fund.
28 (a) Fund.--There is hereby established a separate account in
29 the State Treasury to be known as the Medicare Participation
30 Fund. Moneys collected from covered Medicare managed care
20010S1022B1274 - 25 -
1 providers under subsection (b) shall be deposited in the fund.
2 All moneys in the fund are continuously appropriated to the
3 department solely for purposes of the PACE program. The
4 department shall collect the contributions under subsection (b)
5 on a quarterly basis.
6 (b) Collection of contribution.--The department shall
7 collect a contribution amount from covered Medicare managed care
8 providers in an amount equal to a $20 charge per patient per
9 month for each patient who is:
10 (1) enrolled and participates in a covered Medicare
11 managed care provider plan; and
12 (2) enrolled and participates in the PACE program.
13 (c) Adjustments.--The department may consider adjustments to
14 the contribution amount on an annual basis.
15 Section 706-C. Annual report.
16 The department shall prepare and submit annually a report to
17 the Governor and General Assembly which shall include the
18 department's findings and recommendations relating to the
19 program's cost and effectiveness, including recommended
20 adjustments to the contribution amount.
21 Section 4. This act shall take effect in 60 days.
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