Introduced by Committee on Human Services
Subject: Health; prescription drugs; pharmaceuticals; Medicare Modernization Act
Statement of purpose: This bill proposes to provide Vermonters eligible for Medicare with pharmaceutical coverage equivalent to the current coverage of
Vermont’s prescription drug programs and recodify the existing statutory authority for state pharmaceutical programs.
AN ACT RELATING TO MEDICARE PART D PRESCRIPTION DRUG WRAP-AROUND COVERAGE
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 33 V.S.A. chapter 19, subchapter 6 is added to read:
Subchapter 6. Vermont Pharmaceutical Assistance Programs
§ 2021. DEFINITIONS
For purposes of this subchapter:
(1) “Individual with disabilities” means an individual who is under age 65 and is entitled, under the federal Social Security Act, to disability insurance benefits or is eligible for Medicare.
(2) “Maintenance drug” is a pharmaceutical used to treat a chronic medical condition on a regular or long-term basis and excludes:
(A) a drug within therapeutic classifications primarily associated with the treatment of acute medical conditions; and
(B) a central nervous system agent other than:
(i) agents used for treatment of convulsive disorders;
(ii) nonsteroidal anti-inflammatory agents for arthritis; and
(iii) agents used primarily for control of psychotic conditions diagnosed under current classifications of the Diagnostic Statistical Manual.
(3) “Medicare part D” means the prescription drug program established under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173, including the prescription drug plans offered pursuant to the act.
(4) “OVHA” means the office of Vermont health access.
(5) “Pharmaceutical” means a drug that may not be dispensed unless prescribed by a health care provider as defined by subdivision 9402(8) of Title 18 acting within the scope of the provider’s license. The term includes insulin, an insulin syringe, and an insulin needle. The term excludes a drug determined less than effective under the federal Food, Drug and Cosmetics Act.
(6) “Pharmacy” means a retail or institutional drug outlet licensed by the Vermont state board of pharmacy pursuant to chapter 36 of Title 26, or by an equivalent board in another state, in which pharmaceuticals are sold at retail and which has entered into a written agreement with the state to dispense pharmaceuticals in accordance with the provisions of this chapter.
§ 2022. GENERAL ELIGIBILITY
(a) An individual shall be eligible for assistance under this subchapter if the individual:
(1) is a resident of Vermont at the time of application for benefits;
(2) is at least 65 years of age or is an individual with disabilities as defined in subdivision 2021(1) of this title; and
(3) has a household income, when calculated in accordance with the rules adopted for the Vermont health access plan under No. 14 of the Acts of 1995, as amended, no greater than 225 percent of the federal poverty level.
(b) An individual whose pharmaceutical expenses are paid or reimbursable, either in whole or in part, by any plan of assistance or insurance, other than Title XVIII of the Social Security Act (Medicare), shall not be eligible for pharmaceutical assistance under this subchapter. No assistance shall be provided under this subchapter with respect to an individual pharmaceutical purchase that may be covered in whole by Title XVIII.
§ 2023. V-PHARM ASSISTANCE PROGRAM
(a) Effective January 1, 2006, the V-Pharm program is established as a state pharmaceutical assistance program to provide supplemental pharmaceutical coverage to Medicare beneficiaries.
(b) Any individual with income no greater than 225 percent of the federal poverty guidelines participating in Medicare part D and meeting the general eligibility requirements established in section 2022 of this title shall be eligible for V-Pharm.
(c) V-Pharm shall provide supplemental benefits to enrolled individuals by paying or subsidizing:
(1) any Medicare part D premium established by a Medicare part D prescription drug program, except for any late enrollment penalties, and any other cost-sharing required by Medicare part D;
(2) payment for the following pharmaceuticals that are not covered by Medicare part D: benzodiazepines, medications to treat weight loss where the weight loss is due to a medical condition or due to the treatment for a medical condition, contraceptives, barbiturates, smoking cessation products, and
over-the-counter medications pursuant to section 2026 of this title;
(3) payment for a pharmaceutical that an individual was receiving under VHAP-Pharmacy, VSCRIPT, or VSCRIPT-Expanded as of December 31, 2005 but which has been denied for coverage by Medicare part D because the pharmaceutical is not on the Medicare part D prescription drug plan formulary; and
(4) should funding permit, payment for a pharmaceutical prescribed for any other eligible individual which has been denied for coverage by Medicare part D because the pharmaceutical is not on the Medicare part D prescription drug plan formulary, except that coverage shall be limited to maintenance drugs if the individual’s income is over 150 percent of the federal poverty guidelines. Priority under this subdivision shall be given to individuals who are prescribed pharmaceuticals for psychiatric conditions.
(d)(1) The secretary of the agency of human services shall develop by rule the manner by which an individual shall contribute the individual’s cost established in subdivision (2) of this section. The rule shall seek to minimize the possibility of inadvertent loss of eligibility for Medicare part D and
V-Pharm benefits. Prior to filing the rule, the secretary shall seek approval of the proposed rule from the health access oversight committee established in Sec. 13(e) of No. 14 of the Acts of 1995, as amended.
(2) An individual shall contribute the following amounts:
(A) $13.00 per month or $156.00 per year in the case of recipients with income greater than the income eligibility level for Medicaid and no greater than 150 percent of the federal poverty level.
(B) $17.00 per month or $204.00 per year in the case of recipients whose household income is greater than 150 percent of the federal poverty level and no greater than 175 percent of the federal poverty level.
(C) $35.00 per month or $420.00 per year in the case of recipients whose household income is greater than 175 percent of the federal poverty level and no greater than 225 percent of the federal poverty level.
(e) In order to ensure the appropriate payment of claims, OVHA may expand the Medicare advocacy program established under chapter 67 of this title to individuals receiving benefits from the V-Pharm program.
§ 2024. VERMONT-Rx PROGRAM
(a) Effective January 1, 2006, Vermont-Rx, a pharmaceutical assistance program for elderly individuals and individuals with disabilities who are not receiving Medicare, is established within the office of Vermont health access and shall be the continuation of the state pharmaceutical programs in existence upon passage of this subchapter.
(1) The program shall be administered by OVHA which, to the extent funding permits, shall establish application, eligibility, coverage and payment standards. In addition to the general eligibility requirements established in section 2022 of this title, an individual must not be enrolled in Medicare in order to be eligible for benefits under Vermont‑Rx.
(2) To the extent necessary under federal law, OVHA shall administer Vermont-Rx in such a manner as to ensure that any permissible federal funding may be received to support the program. OVHA may establish a division of the Vermont-Rx program to administer federal Medicaid funds separately in accordance with a federal waiver pursuant to section 1115 of the Social Security Act.
(3) If permissible under federal law, OVHA shall use the same forms and application process for individuals to enroll in Vermont-Rx, regardless of the funding source for the program.
(b) Vermont-Rx shall provide:
(1) the same pharmaceutical coverage as the Medicaid program to elderly individuals and individuals with disabilities no greater than 150 percent of the federal poverty guidelines; and
(2) maintenance drugs to elderly individuals and individuals with disabilities whose income is greater than 150 percent and no greater than 225 percent of the federal poverty guidelines.
(c) Benefits under Vermont‑Rx shall be subject to payment of a premium amount by the recipient in accordance with the provisions of this section.
(1) In the case of recipients with income greater than the income eligibility level for Medicaid and no greater than 150 percent of the federal poverty level, such premium shall be $13.00 per month.
(2) In the case of recipients whose household income is greater than 150 percent of the federal poverty level and no greater than 175 percent of the federal poverty level, the premium shall be $17.00 per month.
(3) In the case of recipients whose household income is greater than 175 percent of the federal poverty level and no greater than 225 percent of the federal poverty level, the premium shall be $35.00 per month.
(d) Any manufacturer of pharmaceuticals purchased by individuals receiving assistance from Vermont-Rx established under this section shall pay to OVHA, as a condition of participation in the program, a rebate in an amount at least as favorable as the rebate paid to OVHA in connection with the Medicaid program.
(e) Under Vermont-Rx, a pharmaceutical may be dispensed to an eligible recipient provided such dispensing is pursuant to and in accordance with any contractual arrangement that OVHA may enter into or approve for the group discount purchase of pharmaceuticals. When a person or business located in Vermont and employing citizens of this state has submitted a bid for the group discount purchase of pharmaceuticals and has not been selected, the director of OVHA shall record the reason for nonselection. The director’s report shall be a public record available to any interested person. All bids or quotations shall be kept on file in the director’s office and open to public inspection.
§ 2025. ASSISTANCE IN ENROLLING IN MEDICARE PART D
(a) OVHA shall seek permission from the Center for Medicare and Medicaid Services to auto-enroll individuals eligible for Medicare part D and V-Pharm in the low income subsidy and the most appropriate Medicare part D plan available, considering the individual’s past pharmaceutical usage and the individual’s expressed choice of a plan. If federal approval is given, OVHA shall evaluate the operational feasibility of auto-enrolling eligible individuals and the financial costs and benefits of an auto-enrollment process. OVHA shall report to the general assembly no later than January 1, 2006 with the results of the evaluation and any recommendations on auto-enrollment.
(b) Until such time as an auto-enrollment system is implemented, OVHA or the department for children and families may act, if permissible under federal law, as an individual’s agent to enroll the individual in a Medicare part D prescription drug plan and a low income subsidy if the individual has not enrolled prior to the application for V‑Pharm. OVHA and the department for children and families shall provide applicants for V-Pharm with information on Medicare part D, the low income subsidy if applicable, and on how to obtain assistance in enrolling in Medicare part D or the subsidy.
§ 2026. OVER‑THE‑COUNTER AND GENERIC MEDICATIONS
(a) All public pharmaceutical assistance programs shall provide coverage for those over‑the‑counter pharmaceuticals on the preferred drug list developed under section 1998 of this title, provided the pharmaceuticals are authorized as part of the medical treatment of a specific disease or condition, and they are a less costly, medically appropriate substitute for currently covered pharmaceuticals.
(b) All public pharmaceutical assistance programs shall comply with the provisions regarding generic drugs established in chapter 91 of Title 18.
(c) OVHA shall seek any waivers of federal law, rule, or regulation necessary to implement the provisions of this section.
§ 2027. ADMINISTRATION
(a) The programs established under this subchapter shall be designed to provide maximum access to program participants, to incorporate mechanisms that are easily understood and require minimum effort for applicants and health care providers, and to promote quality, efficiency and effectiveness through cost controls and utilization review. OVHA may contract with a fiscal agent for the purpose of processing claims and performing related functions required in the administration of the pharmaceutical programs established under this subchapter.
(b) Upon determining that an applicant is eligible under this subchapter, OVHA shall issue an identification card to the applicant.
(c) A pharmacy which dispenses a pharmaceutical to an individual eligible for a pharmaceutical program established under this subchapter shall collect payment for the pharmaceutical from OVHA.
§ 2028. EDUCATION AND OUTREACH
The department of aging and independent living shall conduct ongoing education and outreach to inform elderly Vermonters and Vermonters with disabilities of the benefits they may be entitled to pursuant to this subchapter, make available information concerning pharmaceutical assistance programs, and minimize any confusion and duplication of pharmaceutical coverage resulting from a multiplicity of pharmaceutical programs.
§ 2029. CONSTRUCTION
The benefits provided by the pharmaceutical assistance programs established under this subchapter constitute medical services for purposes of section 141 of this title.
§ 2030. VERMONT PRESCRIPTION DRUG PRICING AND CONSUMER
The secretary of the agency of human services shall administer this subchapter in conformity with the pharmacy best practices and cost control program established under subchapter 5 of this chapter to enable the citizens of Vermont to purchase necessary prescription pharmaceuticals at the lowest possible price, to ensure access to such pharmaceuticals, and to support Vermont pharmacies, consistent with the time frames, standards, and procedures established by the general assembly.
§ 2031. RULES AND LEGISLATIVE OVERSIGHT
(a) The agency of human services shall adopt rules necessary to implement and administer the provisions of this subchapter, including standards and schedules establishing coverage and exclusion of pharmaceuticals, and maximum quantities of pharmaceuticals to be dispensed, and to comply with the requirements of the Medicare Modernization Act. The agency of human services shall provide the health access oversight committee the draft rules for approval prior to the publication of the rules for notice and comment.
(b) OVHA shall report on the status of the pharmaceutical assistance programs established by this subchapter to the health access oversight committee in accordance with Sec. 13(e) of No. 14 of the Acts of 1995, as amended.
Sec. 2. FEDERAL APPROVAL
If required by federal law, the agency of human services shall apply to the Center for Medicare and Medicaid Services to establish the V‑Pharm program established in Sec. 1 of this act as a state pharmaceutical assistance program eligible to provide supplemental pharmaceutical benefits to Medicare beneficiaries. If allowable under federal law, the agency of human services shall continue to operate the VHAP-Pharmacy and VScript programs as a Medicaid waiver program in order to secure federal contributions.
Sec. 3. TRANSITIONAL PROVISIONS
(a) The programs established under subchapter 6 of chapter 19 of Title 33 shall be the successor to and continuation of the VHAP-Pharmacy, VScript, and VScript Expanded programs.
(b) The office of Vermont health access (OVHA) shall develop necessary rules to ensure that individuals do not lose coverage for necessary pharmaceuticals at the beginning of coverage under Medicare part D as a result of the premiums, of cost‑sharing, or by operation of Medicare part D rules. OVHA shall cover pharmaceuticals for current beneficiaries of
VHAP-Pharmacy, VScript, and VScript Expanded until April 1, 2006 or until the individual has obtained the needed pharmaceuticals through Medicare part D.
(c) The commissioner of aging and independent living and the director of the office of Vermont health access shall continue to convene the working group of individuals with disabilities, elderly individuals, advocates, and providers established under Sec. 128j of No. 122 of the Acts of the 2003 Adj. Sess. (2004). The working group shall meet monthly or more frequently as needed and shall:
(1) revise as necessary and implement a plan which at a minimum shall include outreach, education, and assistance to Vermont Medicare beneficiaries in order to minimize confusion and duplication of coverage caused by the introduction of the new, federally mandated Medicare part D pharmacy program. The plan shall focus on those individuals who may also be eligible for another program which provides supplemental pharmacy benefits, including Medicaid, VHAP‑Pharmacy, VScript, VScript Expanded, Healthy Vermonters, or the programs established under this act;
(2) plan for the implementation of Medicare part D in the state beginning January 1, 2006. Such planning shall include both monitoring and advocacy on federal policy as it relates to Vermont state pharmaceutical assistance programs with a goal of minimizing any reduction of assistance to these beneficiaries. The plan shall analyze fully the potential gains and losses to Vermont and to its state pharmaceutical assistance beneficiaries resulting from Medicare part D and the balance of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173, and shall provide ongoing cost projections and identify sources of funding for holding these beneficiaries harmless from pharmacy benefit cuts once Medicare part D is implemented; and
(3) report as requested to the House committee on human services, the Senate committee on health and welfare or, outside the legislative session, to the health access oversight committee.
Sec. 4. LONG-TERM CARE RULES
The agency of human services shall adjust rates as necessary to insure that residents in nursing homes, residential care homes, and assisted living residences have sufficient income each month to cover any cost-sharing required by Medicare part D or a state pharmaceutical program established under subchapter 6 of chapter 19 of Title 33 and are held harmless from the transition to the Medicare part D pharmaceutical program and by the consolidation of the state pharmaceutical programs under this act.
Sec. 5. CHANGES TO ASSET AND INCOME RULES
Subject to any required federal approval, the agency of human services shall eliminate the asset requirements and raise the income limits for individuals who qualify as qualified Medicare beneficiaries (QMB), specified low income Medicare beneficiaries (SLMB), and qualifying individuals (QI) in order to maximize the eligibility of these individuals for the low income subsidy program under Medicare part D, provided that the agency finds that the elimination of the asset test and the increase in the income limits will be, at a minimum, cost neutral to the state in that the costs of the resulting increased Medicaid participation would not exceed the benefits from greater participation in the low income subsidy program as it relates to the Medicare Part D program and the administrative savings from simplifying eligibility.
Sec. 6. MEDICARE PART D EMPLOYER SUBSIDY
(a) The commissioner of human resources shall investigate and evaluate the costs and benefits of the state’s electing to receive the employer subsidy under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173 and, upon expiration of the current collective bargaining agreement, the state’s modifying the state employee and retiree pharmaceutical benefits to wrap around the Medicare part D prescription drug program. The commissioner shall consider the benefits and costs to state retirees, taxpayers, and beneficiaries of the state pharmaceutical programs. The commissioner shall report on the investigation and evaluation to the general assembly no later than January 15, 2006. The report shall include information regarding the current employee and retiree pharmaceutical benefits, the cost-sharing requirements for employees, retirees, and the state, the projected subsidy to be received, and any other information considered by the commissioner in the evaluation.
(b) The state treasurer shall report to the general assembly no later than January 15, 2006 regarding the amount of any expected employer subsidy to be received by the state under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173.
Sec. 7. STATUTORY REVISION
The legislative council shall make such technical revisions to the Vermont Statutes Annotated to reflect the consolidation of the state pharmaceutical programs and the creation of V-Pharm, including revisions to the names of programs and to statutory citations.
Sec. 8. APPROPRIATION
Fiscal year 2005 designated balance (waterfall).
Sec. 263(a) of H.516 of 2005 is amended by inserting a new subdivision after subdivision (7) to read as follows:
(8) Eighth, $250,000.00 shall be appropriated to the office of Vermont health access for the purpose of providing education and outreach to the public on the low income subsidies for the Medicare prescription drug program provisions of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173 and the education and outreach provisions of Sec. 3 of this act.
and by renumbering the remaining subdivisions to be numerically correct
Sec. 9. REPEAL
Subchapter 4 of chapter 19 of Title 33 is repealed as of January 1, 2006. Any other provisions in session law enacted prior to this act which established premiums or other cost-sharing for state pharmaceutical programs are repealed by the codification of cost-sharing in this act.
Sec. 10. EFFECTIVE DATE
This act shall take effect upon passage.
The Vermont General Assembly
115 State Street