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With a tip of the hat to the University of Texas for the headline, we see that our efforts in this legislative and special session are sending ripples throughout the country. Specifically, we are talking about the "Brown Amendment" calling for a clean rap sheet on any HMO, MCO or PBM that wants to spend Texas taxpayer money.
"Texas is the first state to raise the issue of contractor integrity in Medicaid managed care; Maine Senator Margaret Craven modeled her unsuccessful amendment...on Brown's amendment."..Although unable to get the language adopted, Texas legislators did get concessions ...that it is the legislature's 'intent' to take into consideration a contractor's history of paying fines or settlements for Medicaid fraud."
--National Legislative Association on Prescription Drug Prices
For an amendment that ultimately was not included in the final health care bill, it certainly was influential. The House twice passed it overwhelmingly, much to the consternation of the hive of PBM and HMO lobbyists swarming the legislators and their staff.
So let's take it from the top.
As I'm sure you're all aware, this 82nd Legislative Session and subsequent Special Session, were dominated by a massive $20 billion hole in the state budget and opposition to dipping into the state's rainy day fund or to raise taxes. As a result, pharmacy is just one segment of the state's economy that took a hit.
TPBC initiated three bills and one significant amendment, plus kept watch on more than 80 bills that could affect pharmacy in general and independent pharmacy in particular. We rolled up our sleeves and worked alongside other pharmacy groups to achieve significant success and to minimize the ill effects of some of the bills.
However, most of the credit for any success by pharmacy this session goes to the pharmacy owners and pharmacists on the front line who took the time to contact your legislators each time we asked--and we asked a lot!
Medicaid
Halting Medicaid reimbursement cuts and blocking HHSC's plan to hand over the Vendor Drug Program to HMOs and PBMs.
 Reimbursement cuts:
HHSC cut Medicaid pharmacy reimbursement by 1 percent in September 2010 and another 1 percent in February 2011. However, one plus one does not equal two when the Medicaid reimbursement formula is applied. The actual cut in pharmacy reimbursement at that point totaled a 6.32 percent reduction within six months. And both SB 1 and HB 1 included an additional $1 cut! That meant pharmacy reimbursement would be slashed 17.43 percent since Aug. 31, 2010. If that wasn't bad enough, a $2 cut was proposed, undercutting pharmacy by 23 to 28 percent.
The good news is, by the end of the session, pharmacy halted those additional proposed cuts at 85 cents!
It might be interesting and a good exercise to multiply the number of Medicaid Rxs filled by your pharmacy per month by $1.15 to see how much pharmacy advocacy efforts saved your pharmacy per month!
Adding pharmacy to Medicaid managed care:
Now for more detail on the big banana, SB 7 by Sen. Jane Nelson (R-Flower Mound), and ramifications of the "contractor integrity" amendment by Rep. Fred Brown (R-Bryan). SB 7 is the huge bill regarding state health services and funding. It had so many highly controversial parts that we really had to fight hard to keep pharmacy's concerns before the legislators.
Rep. Brown's bill (HB 3678) attempted to preserve the Vendor Drug Program (VDP) and keep pharmacy out of Medicaid managed care. It also required HHSC to implement cost-saving measures such as increasing generic utilization.
No amount of logic could overcome the double-team attack from PhRMA and the HMO/PBM lobbyists who portrayed pharmacists as being greedy and overpaid in the VDP. Talk about the pot calling the kettle black! Considering the margins of profit that PhRMA companies and PBMs enjoy compared to community independent pharmacy, it was a demonstration of unmitigated gall! Primarily the PhRMA companies orchestrated the misinformation campaign (outright lies) about the bill and were able to gain opposition from Texas Medical Association and many patient advocacy groups.
Unfortunately, we fell one vote short of passing HB 3678 out of committee. But from those ashes arose awareness of pharmacy and the opportunity to add significant pharmacy protection measures to SB 7.
- Any willing provider
- Prompt pay to pharmacies
- PBM transparency
- No mandatory mail order
- Affirmation of "pharmacist" in the definition of health care provider.
These pro-pharmacy provisions came about primarily through the efforts of pharmacist-legislators Rep. Chuck Hopson (R-Jacksonville) and Sen. Leticia Van de Putte (D-San Antonio), with strong vocal support from Sen. Glenn Hegar (R-Katy) and many others in both chambers and both political parties.
Contractor integrity:
Rep. Brown submitted an amendment that addressed the history of Medicaid fraud and other state and federal violations resulting in millions of dollars for Medicaid fraud settlements and penalties. It appeared that many HMOs and PBMs treated these payouts as simply a cost of doing business. His amendment, dubbed the "contractor integrity" amendment, was attached to HB 1 (the appropriations bill), SB 23 (Sen. Nelson's expansion of Medicaid managed care bill) and SB 7 (Sen. Nelson's bill as renumbered for the special session).
This amendment was a clear-cut, unadorned statement that HHSC should contract only with "good guys." You can imagine who was opposed to this.
The amendment said HHSC may not contract with a managed care organization, including a health maintenance organization, or a pharmacy benefit manager if, in the preceding three years, the organization or pharmacy benefit manager, in connection with a bid, proposal, or contract with a governmental entity.
- Made a material misrepresentation or committed fraud
- was convicted of violating a state or federal law
- or was assessed a penalty or fine in the amount of $500,000 or more in a state or federal administrative proceeding.
This was hugely popular with the House, passed twice for a total vote of 276-8. However, each time the conference committee, chaired by Sen. Nelson and Rep. John Zerwas (R-Simonton), got their hands on it, the language was weakened or actually written to block non-existent actions.
We already are reviewing the final language of the Brown amendment to see how we can affect some review and oversight of HMOs and PBMs by HHSC in the Medicaid managed care process. This legislation still has merit to protect Texas taxpayers, Medicaid recipients and community pharmacies from unscrupulous business practices and fraud by HMOs and PBMs.
Sen. Van de Putte sent a letter this week to HHSC Commissioner Tom Suehs encouraging him to include provisions for contractor integrity in the RFP for upcoming Medicaid managed care contracts. She notes that SB 7 "language prohibits entities that have been convicted of a criminal offense from contracting with the state; however, many PBMs and HMOs that have been accused of committing Medicaid fraud are not tried in court and, ultimately, never convicted of a crime." She urges Commissioner Suehs to exclude entities that have committed Medicaid fraud from the RFP.
Prompt pay and audit
HB 2292 by Reps. Todd Hunter (R-Corpus Christi) and Chuck Hopson (R-Jacksonville) and Sen. Leticia Van de Putte. The governor has signed this bill into law. It is a great success and a classic example of how TPBC works on a bill, session after session, until we achieve what independent pharmacy wants and needs.
- Requires HMOs, PPOs and PBMs to pay all affirmatively adjudicated electronically (EFT) submitted pharmacy claims within 18 days from the date of adjudication of the claim. Affirmatively adjudicated paper claims must be paid not later than 21 days after the adjudication date.
- Prohibits using extrapolation to complete a pharmacist or pharmacy audit by an HMO or PBM that administers pharmacy claims for the HMO.
- Requires notice of an audit be in writing and be sent by certified mail to the provider not later than 15 day prior to date of the onsite audit.
- Requires the auditor to accommodate the provider's schedule to the greatest degree possible.
Mail order parity verification audit
HB 3266 by Rep. Sid Miller (R-Stephenville) failed to pass out of the House Insurance Committee. It required state auditors to conduct a biennial audit of pharmacy claims for prescriptions of a 90-day supply of drugs to verify parity between retail and mail-order pharmacies. The state auditor's office (SAO) misinterpreted the bill and put a large fiscal not on it. Naturally, this was a bill killer in this money-starved legislative session. In the interim, TPBC and Rep. Miller's staff will work with TRS, ERS and the SAO to resolve this issue of compliance with the mail order parity law.
Other pharmacy-related bills
Click here for information about bills initiated by other parties that have the potential to affect independent pharmacy.
Summary
This 82nd Legislative session and the subsequent special session were intense from Day 1. Your legislative consultants were always anticipating possible outcomes and coming up with alternatives should the first approach not work. That's why, even if a bill or amendment did not pass, much of its content found its way into law.
And now that the sessions are over, we already are working on rule making and other regulatory actions to help steer agencies in the right direction.
The successes are due in a large part to our Pharmacy Phriends in the Texas legislature. Soon we will send you more information about them and their great work on behalf of independent pharmacy.
Stay tuned!
Richard E. Beck, RPh
Executive Director | 
