This year, many states have continued to pursue federal approval for a range of proposals affecting Medicaid coverage, such as seeking modifications to the Affordable Care Act’s (ACA) Medicaid expansion or adding Medicaid work requirements.
Currently, nine states have implemented expansion through Section 1115 waivers to impose conditions such as monthly premiums, lock-out provisions for non-payment, and work requirements on certain Medicaid enrollees. While some Medicaid waivers approved by the federal government that include work requirements have faced legal challenges, other states — including those that have not implemented Medicaid expansion — are continuing to seek federal approval to condition Medicaid eligibility on work, with nine additional proposals currently pending.
The following is an overview of some of the current state Medicaid coverage waiver activity and other state actions affecting health coverage, including Tennessee’s recent block grant proposal.
State Changes to Medicaid Expansion Passed by Ballot Initiatives
Earlier this year, Idaho’s governor signed into law a number of changes to the Medicaid expansion ballot measure approved by voters in November 2018. One component of the law required the state to seek a 1332 waiver to enroll individuals eligible for expanded Medicaid who had income between 100 to 138 percent of the federal poverty level (FPL) in subsidized exchange coverage, although these individuals could opt for Medicaid coverage instead. However, in late August the Centers for Medicare & Medicaid Services (CMS) rejected the state’s waiver request, citing that it did not meet the deficit neutrality guardrails required of 1332 waivers. State officials have indicated that they will resubmit the application with additional information, although CMS noted in its letter that even a revised application would likely still not demonstrate compliance with those guardrails. Another aspect of Idaho’s law modifying the voter-approved Medicaid expansion directs the state to seek a waiver to implement Medicaid work requirements for most expansion enrollees, and the state recently submitted this 1115 waiver request for federal approval. If the waivers are not approved by Jan. 1, 2020, the state law requires implementation of traditional Medicaid expansion.
Similar to Idaho, voters in Utah passed a measure last November to implement Medicaid expansion, and in February state legislators enacted a law that significantly alters the voter-approved expansion in a number of ways. The law requires the state to seek a series of waivers, outlined in the state’s implementation toolkit, through a potentially four-step process, depending on what CMS approves. In March, CMS approved the state’s first request — the Bridge Plan — to expand Medicaid to only those earning 100 percent of FPL at the state’s regular federal medical assistance percentage (FMAP) rate, include an enrollment cap if projected costs exceed state appropriations, require individuals with access to employer-sponsored insurance (ESI) to enroll in that coverage with Medicaid premium assistance, and add work requirements in 2020. In May, the state submitted the second waiver proposal for the enhanced FMAP that the ACA provides for the expansion population while keeping the expansion eligibility level at 100 percent FPL, but CMS indicated that it would not provide the enhanced FMAP for a partial expansion. This second proposal also maintains the enrollment cap, work requirements, and ESI premium assistance from the initial waiver, adds in 12-month continuous eligibility and lock-out provisions for non-compliance with certain activities, and notably requests to implement a per capita cap model for receiving federal Medicaid funds for the new eligibility group. Although CMS did not approve the enhanced FMAP for the partial Medicaid expansion, the governor issued a statement that the state would move forward with requesting approval of the other proposal components, and the state submitted the waiver request in late July. If CMS does not approve this per capita cap proposal, the state plans to request permission to implement a “fallback” plan — the third step in the state’s implementation plan — that expands Medicaid to the ACA’s 138 percent of FPL eligibility threshold and provides the state with the enhanced expansion FMAP, and includes work requirements, an enrollment cap, and lock-out provisions. The final option – if this third plan is not approved – is implementing traditional Medicaid expansion through a state plan amendment, as was passed by the voters.
Nebraska was the third state in 2018 to pass Medicaid expansion through a ballot initiative, and while state legislators there did not follow the same route as Idaho and Utah, expansion in Nebraska has not yet occurred because the state intends to seek modifications to the expansion. State officials submitted a state plan amendment for expansion this past April, indicating the state would seek a waiver to modify its existing managed care program to include the expansion population and provide different benefit packages based on whether enrollees complete certain wellness requirements. Expansion will occur no later than Oct. 1, 2020, and the plan eventually will also incorporate work requirements for eligible individuals wishing to remain in the “prime” coverage option, which offers more robust benefits such as dental and vision services.
Activity in Medicaid Expansion States
Montana originally implemented Medicaid expansion through a waiver because the state requires certain individuals to pay premiums. The expansion was scheduled to sunset in July of this year, but in April the legislature passed a bill, signed by the governor in May, to continue expansion that added work requirements for most enrollees. The state’s waiver amendment also seeks to maintain the original waiver’s implementation of 12-month continuous eligibility and modify the monthly premium structure to be based on the amount of time an individual is enrolled. The federal comment period for the waiver amendment recently closed.
In Virginia, Democratic Gov. Ralph Northam and Republican state legislators negotiated a compromise to expand Medicaid with work requirements in 2018. Coverage became effective in January of this year, but the work requirements were not implemented as the state needed to seek federal permission through a waiver. The state is now negotiating to receive federal funding for employment supports, as Northam’s administration has indicated that the state cannot afford to implement the work requirements without these federal dollars. Some Republican state legislators are characterizing the request for this federal funding as an effort to backtrack on the compromise struck last year between them and the governor.
While New Mexico originally implemented the ACA’s traditional Medicaid expansion, the state sought and received approval in December 2018 to add premium and copayment requirements and waive retroactive eligibility for certain expansion enrollees. However, under Gov. Lujan Grisham, the state is now requesting to amend the waiver and remove the copayments, premiums, and waiver of retroactive eligibility.
Activity in Non-Medicaid Expansion States
Like last year, voters in some nonexpansion states will have the chance to consider expansion in 2020. Groups in Oklahoma indicated that they have gathered enough signatures to put expansion before voters in 2020. Medicaid expansion proponents in other states — specifically Missouri and South Dakota — are also attempting to place the issue before voters in 2020. Additionally, in Mississippi’s upcoming gubernatorial election in November, voters will decide between a Republican who opposes expansion and a Democratic who supports it.
North Carolina’s Democratic Gov. Roy Cooper vetoed the state budget in June in part because it did not include Medicaid expansion. However, in mid-September state legislators in the House voted to override the governor’s veto. While the Senate still needs to hold a vote on the veto override, a bill to expand Medicaid with work requirements and premiums has been added back to the legislative calendar.
Georgia is currently drafting two waiver proposals as part of a law signed by the governor in March. The state is expected to submit an 1115 waiver proposal to expand Medicaid to only those earning 100 percent of FPL, as well as seek federal approval through a 1332 waiver to implement a reinsurance program.
Beyond continuing efforts to expand Medicaid or modify laws to do so, block grants have surfaced again. Tennessee has developed a draft proposal to shift federal funding for most of the state’s Medicaid program into a version of a block grant, which would be a significant change and is based on a state law passed earlier this year. Under the plan, the state would receive a capped amount of federal Medicaid funding for low-income parents, children, and individuals with disabilities. Unlike a traditional block grant — which the state acknowledges its plan differs from — the state is requesting additional funding if enrollment rises above a certain threshold, but the funding amount would not be reduced if enrollment declined. Additionally, the funding cap does not include state spending on individuals dually eligible for Medicaid and Medicare, disproportionate share hospital (DSH) payments, outpatient prescription drug expenses, or administrative costs, and any savings achieved from the financing model would be divided evenly between the state and the federal government (the state’s current federal match rate is 65 percent). The state is also requesting additional flexibilities, such as modifying the amount, duration, and scope of benefits without federal approval or public comment and implementing a closed formulary for prescription drugs. The waiver request also proposes to exempt the state from federal regulations for managed care plans. Some policy analysts have identified that federal law does not allow Medicaid’s financing model to be restructured through the 1115 waiver authority, and if CMS does approve the waiver it is expected to face legal challenges. Tennessee also submitted a separate waiver request in December 2018 seeking to implement Medicaid work requirements for low-income parents and caretakers, which is still awaiting federal approval.
Legal Challenges to Medicaid Work Requirements
Medicaid waivers containing work requirements approved by CMS have been halted by court rulings earlier this year in Arkansas, Kentucky, and New Hampshire, and a legal challenge was recently filed against Indiana’s approved work requirements. Earlier this month, a three-judge panel heard oral arguments on the federal government’s appeal of the Arkansas and Kentucky rulings, and the judges noted that the administration had not considered the coverage losses resulting from work requirements. The ruling by this federal appeals court will have significant implications for Medicaid work requirements overall, and while they did not provide specific information about timing for the decision, it is expected before the end of the year. The court challenges are already beginning to have some implications — on Oct. 17, 2019, Arizona informed CMS that it would postpone implementation of the state’s approved Medicaid work requirements due to the litigation in other states. Additionally, a recent study conducted by the Government Accountability Office (GAO) recommended that CMS should improve its oversight of the administrative costs associated with work requirement waivers, which GAO found can be significant, ranging from under $10 million to over $250 million.
In addition to the next round of court decisions on Medicaid work requirements, states are waiting to see if federal guidance on Medicaid block granting will be issued soon — which is currently under review at the Office of Management and Budget. Similar to how states are seeking to implement Medicaid work requirements despite legal challenges, if CMS provides guidance and approves Tennessee’s block grant proposal, other states may also pursue this financing model, even if the block grant is challenged in court. Also, whether CMS and states that have been hesitant to expand will be able to find a middle ground on Medicaid expansion remains a question, and how decisions play out in Idaho and Utah in particular, will be significant for future actions. Similar to this past year, in 2020 states are expected to continue to seek new ways to test the boundaries of Medicaid coverage waivers and manage their Medicaid programs.
Care coordination is an essential component of care for children and youth with special health care needs (CYSHCN). When successfully implemented, it can improve care, reduce costs, avoid fragmented and duplicative care, and improve family functioning and satisfaction. As states work to provide quality care coordination, many are adopting shared plans of care (SPoC) to enhance patient- and family-centered care delivery, and support improved outcomes and care quality. This issue brief, developed by the National Academy for State Health Policy with support from the Health Resources and Services Administration’s Maternal and Child Health Bureau, identifies approaches and strategies states can use to promote the use of SPoCs as part of care coordination. It also features case studies showcasing how Iowa, Oregon, Utah, and West Virginia are implementing SPoCs for CYSHCN.
Read or download: State Strategies for Shared Plans of Care to Improve Care Coordination for Children and Youth with Special Health Care Needs
Blog: Why Shared Plans of Care Are Critical to Coordinated Care and How States Are Implementing Them
Children and youth with special health care needs (CYSHCN) can require significant care coordination across a continuum of health and social services. Improved care coordination for CYSHCN can lead to better outcomes for CYSHCN, as well as cost savings for states. To achieve those goals, state Medicaid agencies and Title V CYSHCN programs are increasingly using individual, comprehensive plans of care, called shared plans of care (SPoCs), to strengthen care coordination for CYSHCN.
States play a significant role in coordinating care for CYSHCN and in implementing SPoCs. Nationally, state Medicaid agencies and Children’s Health Insurance Program (CHIP) provide health insurance to 48 percent of all CYSHCN, and their Title V programs are an essential resource for care coordination for CYSHCN and can play a central role in supporting and implementing SPoCs.
Health care delivery transformation and other federal and state reforms present key opportunities for states to promote the use of SPoCs. For example, states are now integrating SPoCs into patient-centered medical home (PCMH) initiatives, health home models, Medicaid managed care arrangements, and state accountable care organizations. To implement SPoCs, states are:
- Creating a standardized SPoC document for use or adaptation by Title V CYSHCN program staff, health care providers, health plans, and others that serve CYSHCN;
- Contractually requiring Medicaid managed care organizations to use SPoCs as part of their care coordination services; and
- Working within programs or with outside entities to modify existing care planning processes to accommodate SPoCs and ensure they meet shared care planning standards.
In a new issue brief, State Strategies for Using Shared Plans of Care to Improve Care Coordination for Children and Youth with Special Health Care Needs, the National Academy for State Health Policy (NASHP) outlines state strategies to effectively launch and implement SPoC. The report also features four state case studies that explore how Iowa, Oregon, Utah, and West Virginia are implementing and advancing their SPoC initiatives. Highlights include:
- Iowa’s Title V CYSHCN program developed an electronic SPoC using ACT.md, a web-based platform that serves as the central hub for SPoCs. Iowa uses the SPoCs to support care coordination for a subset CYSHCN who receive services through the state’s Pediatric Integrated Health Home Program or Child Health Specialty Clinics (the state’s community-based public health agencies).
- Oregon is implementing SPoCs for a select group of CYSHCN through its local public health agencies (LPHAs), which it contracts with to provide care coordination services. SPoCs are developed during meetings with all of the child’s providers, which helps ensure that everyone involved in the child’s care receives the same information. To enable LPHAs to better provide cross-sector care coordination and support integration of care in the community, Oregon maintains a resource-rich SPoC website that includes its SPoC Implementation Guide.
- Utah’s SPoC initiative targets CYSHCN living in rural areas who receive direct clinical services from the state’s Title V CYSHCN program, with the Title V care coordinators leading the development and oversight of SPoCs. SPoCs are housed in the state’s electronic medical record system (Cadurx). Families can access their children’s SPoCs through a patient portal and they also receive a printed copy. Training, tools, and information on care coordination and SPoCs are available to providers and care coordinators through the Utah Children’s Care Coordination Network.
- West Virginia’s Title V program developed its SPoC initiative when it redesigned its care coordination program for CYSHCN. The care coordinators within the state’s Title V CYSHCN program lead the development of SPoCs and collaborate with the Medicaid managed care organizations’ (MCOs) medical case managers, foster care services agencies, and primary care physicians to provide care coordination. The strong partnership between the state Medicaid agency and state Title V program helped the Title V program established memos of understanding (MOUs) with the four state Medicaid MCOs. Through the MOU, MCOs and the Title V program are required to coordinate the care planning process for CYSHCN, including the use of SPoCs.
As states pursue a wide range of legislation to address rising drug costs, four more states have joined Utah and Vermont to introduce bills to import prescription drugs from Canada through a state-run, wholesale operation.
This market-based approach to providing more affordable medicines from Canada, where prescription drugs cost on average 30 percent less than in the United States, is appealing to a politically diverse group of states, and is currently under review by legislators in:
- Colorado (S 80);
- Missouri bill studies the creation of an importation program (SB 722);
- Oklahoma (SB 1381);
- Utah (HB 163);
- Vermont (S 175); and
- West Virginia (HB 4294).
A fiscal analysis recently completed in Utah indicated the potential for millions in reduced spending due to the significant price differences between certain products sold in the United States and Canada. This month, NASHP is convening state legislative sponsors to share information and expertise about the importation policies in their states. Many of the importation bills currently under review are based on National Academy for State Health Policy’s (NASHP) model legislation.
If an importation bill passes in a state legislature and is signed into law by the governor, the next step is to seek certification from the US Health and Human Services Secretary Alex Azar by proving that the state’s importation program meets federal requirements to ensure both product safety and consumer savings.
NASHP’s model legislation was designed to meet federal requirements by taking the form of a state-administered system of wholesale importation and distribution limited to pharmaceuticals from Canada. States can decide whether to purchase lower-cost drugs for public programs only, or to expand the importation initiative to also serve commercial health plans.
The program’s imported drugs would be safe and would produce savings because a state would:
- Select only Canadian suppliers who are licensed and regulated under Canadian law;
- Select only drugs to be imported that are already approved for the Canadian market;
- Provide the drugs only to distributors, pharmacies and other dispensers, and health plans, that volunteer to participate in the program. Participants would agree to purchase and reimburse drugs at the import price and patients would share the cost savings and pay the import price as well. The imported drug costs would be made publicly available to create greater drug pricing transparency for consumers;
- Ensure that the imported products are distributed in-state only; and
- Monitor/audit the system for compliance, safety, and savings.
Salt Lake City, Utah: Today, Republican state legislator Norman Thurston introduced groundbreaking legislation to create a safe, state-run prescription drug importation program that would import high-cost drugs from Canada, where prescription drugs cost 30 percent less than in the United States.
The proposal for a whole-sale importation program of select, higher-cost drugs that are already licensed for sale in Canada would be among the first in the nation and promises to generate significant cost savings for the state of Utah and its consumers. The Utah bill closely follows model legislation developed by the National Academy for State Health Policy (NASHP), a nonpartisan group that works closely with state policymakers to develop state legislative and regulatory strategies to rein in pharmaceutical costs.
For more than a decade, Thurston, a respected health care advocate and member of NASHP’s Pharmacy Cost Work Group, has worked tirelessly to reduce state spending on prescription drugs. Aware of his “red” state’s concerns about regulations and the complexity of drug price transparency legislation implemented in other states, Thurston took a different approach to rein in drug costs by proposing drug importation.
“Utah will control which drugs are imported and will monitor this program so the savings make it all the way down to consumers when they fill prescriptions,” said Thurston. “The State of Utah pays for drug benefits for a quarter of its population, including state and local government employees and retirees, teachers, and Medicaid enrollees. At some point, we need to ask ourselves, ‘as a major drug purchaser, why aren’t we getting a better deal?’ Other major purchasers such as Canada and Europe get a much better deal than us.”
“The time is right for a well-run state importation program, considering the US drug market already relies heavily on pharmaceutical drug importation,” observed NASHP Executive Director Trish Riley. Currently:
- 80 percent of raw ingredients for drugs made in the United States are imported from China and other countries;
- 40 percent of finished drugs used in the United States are manufactured in other countries;
- The U.S. Food and Drug Administration (FDA) has had a cooperative agreement addressing drug regulatory matters with Canada for years, more than 30 Canadian drug manufacturers are FDA-registered to produce drugs for US markets; and
- About 20 percent of drugs licensed for the Canadian market are made in the United States.
“Consumers continue to be outraged by the price of necessary prescription drugs, and the federal government has not acted to stem the cost of drugs,” noted Riley. “States can be great laboratories for innovation and this is a great opportunity for Utah to be a national leader and develop new approaches that can be adopted by other states and ultimately by the federal government.”
Early in 2017, Thurston convened a working group of Utah stakeholders, including state agencies that pay for prescription drugs, commercial health plans, pharmacists, community clinics and others, to outline how a Utah wholesale importation should operate. The Utah work group tailored the bill closely after NASHP’s model.
The group’s recommendation culminated in the bill Thurston introduced today. Thurston developed the bill in compliance with federal regulations governing drug importation that require guarantees of drug safety and consumer savings. The legislation also requires federal approval from the Secretary of the US Department of Health and Human Services. Thurston and members of his stakeholder group indicated they are confident the federal government will approve the Utah program.
The legislation will safeguard the quality and safety of imported drugs by:
- Contracting with licensed, regulated drug wholesalers and distributors in Utah and Canada;
- Importing only drugs licensed for sale in Canada;
- Testing imported products for purity on a sample basis if needed; and
- Limiting distribution of imported drugs to only Utah.
The legislation will deliver significant consumer savings by:
- Monitoring market competition among Utah wholesalers;
- Ensuring that consumers pay similar prices to those charged in Canada; and
- Widely publicizing the prices of the imported products so consumers know what they can expect to pay.
Utah is one of several states currently considering drug importation legislation.
NASHP’s Center for State Drug Price Action: Provides technical and strategic assistance to states to reduce their prescription drug spending and regularly convenes its Pharmacy Costs Work Group to address policy and strategic issues. The work group is made up of leaders from governors’ staff, state legislatures, Medicaid programs, public employees, attorney generals’ offices, state-based insurance exchanges, comptrollers’ offices, and corrections departments. The group explores new approaches to limit pharmaceutical costs by examining the many levers state governments have as policymakers, regulators, and purchasers.
About NASHP: The National Academy for State Health Policy (NASHP) is an independent academy of state health policymakers. It is dedicated to helping states achieve excellence in health policy and practice. A non-profit and non-partisan organization, NASHP is the “United Nations of state health policy,” providing a forum for constructive work across branches and agencies of state government on critical health issues.
As states transform their health systems, many are turning to community health workers (CHWs) to improve health outcomes and access to care, address social determinants of health, and help control costs of care. While state definitions vary, CHWs are typically frontline workers who are trusted members of and/or have a unique and intimate understanding of the communities they serve. NASHP has produced a number of resources, below, to support state efforts to incorporate CHWs into their health and health equity improvement work. If you would like to suggest a resource or share your state’s efforts, please contact Malka Berro at firstname.lastname@example.org.
- Innovative Community Health Worker Strategies: Medicaid Payment Models for Community Health Worker Home Visits, December 2017. This case study examines Medicaid payment models from Minnesota, New York, Utah, and Washington for CHWs providing in-home services that address healthy home environments.
- Innovative Community Health Worker Strategies: My Health GPS in Washington, DC, Seeks to Achieve Sustainable Funding and Whole-Person Care, November 2017. This case study explores the financing and roles of CHWs in My Health GPS, the District of Columbia’s health home program.
- Community Health Workers: Policy Opportunities for Population Health and Patient-Centered Health Care, October 2017. This NASHP conference session highlighted state strategies and experiences in CHW financing, training, and oversight. Speakers from Oregon, Texas, and Wisconsin discussed the national CHW landscape and policy opportunities that could be explored to advance the CHW workforce in states. Please click on the speakers’ names to access their conference slides.
- State Community Health Worker Models Map, last updated August 2017. This map highlights state-level activities and policies to integrate CHWs into evolving health care systems in key areas such as financing, education and training, certification, and state definitions, roles and scope of practice. The map includes enacted state CHW legislation and provides links to state CHW associations, state agencies, and other leading organizations working on CHW policy in states. An instructional video, designed with support from the National Center for Healthy Housing (NCHH) and the W.K. Kellogg Foundation, is available to facilitate use of the map.
- Community Health Workers in the Wake of Health Care Reform: Considerations for State and Federal Policymakers, December 2015. This brief captures key themes that emerged during an October 2015 meeting of state and federal leaders to identify areas in which state and federal policy can align around the use of CHWs in transforming health systems to achieve better care, lower costs, and improved population health.
These resources were produced and updated with support from the Robert Wood Johnson Foundation, The W.K. Kellogg Foundation, the National Center for Healthy Housing, and The Commonwealth Fund.
For more than a decade, Utah State Legislator and Director of the Office of Health Care Statistics Norman Thurston has worked to reform his state’s health care system, including its Medicaid program, and is considered one of the state’s “go-to” health care policymakers.
Thurston, a Republican, has worked to reduce state spending on prescription drugs and is a member of the National Academy for State Health Policy’s (NASHP) Pharmacy Cost Work Group and its Health Care Access and Financing Committee. Sensitive to his state’s aversion to regulations, he is taking a unique approach to reining in drug costs by proposing legislation to import prescription drugs from Canada.
Recently, NASHP caught up with Thurston at its 30th Annual State Health Policy Conference in Portland, OR, to ask him about his prescription drug initiative.
How did you get interested in health care policy?
When I was in graduate school for applied microeconomics looking for field of emphasis, someone suggested I look into heath care because of the expected growth in health economics research. It turned out to be excellent advice. (Thurston, a Utah native, has a masters and PhD in economics from Princeton.)
How did you come to work for lower prescription drug costs?
NASHP suggested that states look at this. In the health care statistics world we are of course always looking at costs, and I love looking at data, so this was naturally an interesting question.
You have sponsored a bill to import drugs from Canada, where most prescription drugs cost a fraction of what they do in the United States. Why did you choose that approach instead of proposing a bill to regulate drug costs?
First, federal law already allows importation of drugs to happen, and passing a rate-setting bill (with a cost control commission that regulates drug costs like a public utility) may be fine for some blue states, but it’s not very appealing to a red state like Utah. We decided to look at something creative, and importing drugs fit our abilities.
Utah is unique in its politics and approach. We’re dealing with an industry that has a lot of market power, and you need to address market power with market power. The State of Utah pays for drug benefits for a quarter of its population (including state and local government employees and retirees, teachers, and Medicaid enrollees.) At some point, we need to say, ‘as a major drug purchaser, why aren’t we getting a better deal?’ Other major purchasers such as Canada and Europe are getting a much better deal than us.
Where does the bill stand today?
We’re drafting it now and working with stakeholders, including payors, public employee health plans, regional health carriers, retail pharmacists, and pharmacy benefit managers. Drug manufacturers are interested too, though perhaps not in the way we want them to be just yet.
The constituency I worry the most about in terms of how they will react to this idea is the free market conservatives, many of them are not sure how to react. Drug manufacturers are given a patent on their product and they have a monopoly. So how much latitude should we give someone as a monopolist? How should we approach this and talk about it?
Then why not take a rate-setting approach toward this monopoly?
Politically, it wouldn’t fly in Utah, far more people would have a problem with it and would wonder how would state government would know what’s a fair drug price? But when it comes to importing drugs from Canada, there are drugs that cost more in Canada and there are some that cost 10 percent of what they cost here. We need to figure out what they are and how to gain some real savings.
What’s the hardest aspect about convincing Utah to import drugs from Canada?
Most of it is logistics, how do we get them here, labelled correctly, and distributed to patients? It’s a logistics issue, not a philosophical one, and there are ways of addressing it. Our next session starts in late January. I’d like to have a solid draft of the bill in mid-December and start circulating it for comment and feedback.
Could you have done this without NASHP?
I think some things would have happened without NASHP, but NASHP has found a way to bring us together and move the dial forward and ramp it up. I like the 11-point report we produced on drug price controls that has gotten a lot of people’s attention and I’m surprised at the number of states that are doing things.
Thurston can be both a state lawmaker and employee because, he explained, the Office of Health Care Statistics performs objective tasks such as collecting and analyzing data about health care cost and quality and therefore avoids any conflict of interest when it comes to policymaking.
With 80 bills introduced in 2017, there is a high level of interest in pharmaceutical pricing among state legislators. However, despite legislative sessions wrapping up, very few laws have been enacted. To date, bills have passed in Maryland, Montana, New Mexico, New York, and Utah.
In 2016, Vermont led the way with a price transparency law that, in brief, requires the state to identify up to 15 drugs that account for significant state spending and which have seen price increases of either 50 percent over five years or 15 percent over one year. Manufacturers of those products have to submit price increase justifications to the Attorney General and that information will be made public.
2017 legislation built on Vermont’s first initiative and went a bit further to address drug pricing.
Legislation in Utah directs the Department of Health to study the feasibility of a prescription drug importation program that could be certified by the Secretary of the U.S. Department of Health and Human Services. The Utah Department is to report back to the Legislature by November 2017. Similarly, in Montana a bill directs the State Legislative Council to establish an interagency committee to study drug pricing and state drug spending trends, and make recommendations about drug spending by September 2018.
In New Mexico, the bill would have created an interagency group of state agencies to explore ways of reducing the cost of prescription drugs on state programs. The bill provided direction for what the group should explore but did not require the individual agencies to adopt any of the recommendations. It died on the Governor’s desk.
Maryland’s bill, which is awaiting the Governor’s signature, will give the State Attorney General and Circuit Courts authority to penalize the makers of essential generic and essential off-patent medications for excessive price increases.
This bill permits the Medicaid agency to notify the attorney general when an essential generic medication or off-patent brand drug has an excessive price increase. There are several criteria for what may constitute an excessive price increase among drugs where total cost of 30-day supply is greater than $80 or where the drug price increased more than 50 percent in a year. For these drugs, the attorney general can request manufacturer and wholesaler documentation of product cost increases, or costs associated with increased access and health benefits. If the increase is found to be unjustified, the Circuit Court may impose civil penalties of $10,000 for each violation, roll back the increase, refund to all public and private payers and consumers the excess price and extend to pre-increase drug price for all state health programs for up to one year.
The New York legislation, which passed as part of the state budget and was approved by the Governor, imposes a Medicaid prescription drug spending growth cap. When it appears the Medicaid spending cap will be breached, the Commissioner of Health may select a drug for referral to the state Drug Utilization Review Board (DURB). The DURB is given new authority to assess product value and recommend back to the Commissioner a target Medicaid supplemental rebate amount which would be in addition to the federal Medicaid minimum rebate amount.
If the Commissioner cannot negotiate a rebate for Medicaid that is at least 75 percent of the recommended target amount, the Commissioner is authorized to place the drug on Medicaid prior authorization requiring prescriber justification. It appears that these Medicaid supplemental rebates can be in addition to existing Medicaid supplemental rebate agreements. The law is not specific about how the Commissioner would select a Medicaid drug for referral to the DURB. And the Commissioner could negotiate a Medicaid supplemental rebate with the manufacturer after the manufacturer has received notice of the pending referral to the DURB. The provision is estimated to save $55 million in SFY 2017-2018 and $85 million in SFY 2018-2019.
These legislative milestones are exciting developments in states’ quest to constrain spending on prescription drugs that result from high prices. States are acting in the absence of federal action and attempting a variety of approaches. Since legislatures are still in session in a number of states where drug pricing is a topic of debate, there may be more legislation passed and enacted as these sessions wrap up. For instance, California SB 17 is moving through the State Senate. It is a price transparency bill that goes further than many other proposals and is generating a lot of interest.
NASHP is tracking legislative and executive branch state activity on prescription drug pricing and spending. And we can provide states with expert technical and policy resources to facilitate drug price policy work. Key to the effort is the NASHP state official’s Work Group on Pharmacy Costs, which is building on its 2016 work by developing model legislation and model program design for any state interested in pursuing any of a variety of concrete actions to stem rising drug prices.
Interested state officials should contact Jane Horvath for more information at email@example.com or 202-238-3337.