Illinois General Assembly - Full Text of SB2420
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Full Text of SB2420  102nd General Assembly




State of Illinois
2021 and 2022


Introduced 2/26/2021, by Sen. Napoleon Harris, III


305 ILCS 5/5-5.12  from Ch. 23, par. 5-5.12
305 ILCS 5/5-36

    Amends the Medical Assistance Article of the Illinois Public Aid Code. Requires all Medicaid managed care organizations to reimburse pharmacy provider dispensing fees and acquisition costs at no less than the amounts established under the fee-for-service program whether the Medicaid managed care organization directly reimburses pharmacy providers or contracts with a pharmacy benefit manager to reimburse pharmacy providers. Provides that the reimbursement requirement applies to all pharmacy services for persons receiving benefits under the Code including pharmacy services. Effective immediately.

LRB102 13202 KTG 18546 b






SB2420LRB102 13202 KTG 18546 b

1    AN ACT concerning public aid.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Public Aid Code is amended by
5changing Sections 5-5.12 and 5-36 as follows:
6    (305 ILCS 5/5-5.12)  (from Ch. 23, par. 5-5.12)
7    Sec. 5-5.12. Pharmacy payments.
8    (a) Every request submitted by a pharmacy for
9reimbursement under this Article for prescription drugs
10provided to a recipient of aid under this Article shall
11include the name of the prescriber or an acceptable
12identification number as established by the Department.
13    (b) Pharmacies providing prescription drugs under this
14Article shall be reimbursed at a rate which shall include a
15professional dispensing fee as determined by the Illinois
16Department, plus the current acquisition cost of the
17prescription drug dispensed. The Illinois Department shall
18update its information on the acquisition costs of all
19prescription drugs no less frequently than every 30 days.
20However, the Illinois Department may set the rate of
21reimbursement for the acquisition cost, by rule, at a
22percentage of the current average wholesale acquisition cost.
23    All Medicaid managed care organizations must reimburse



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1pharmacy provider dispensing fees and acquisition costs at no
2less than the amounts established under the fee-for-service
3program whether the Medicaid managed care organization
4directly reimburses pharmacy providers or contracts with a
5pharmacy benefit manager to reimburse pharmacy providers. The
6reimbursement requirement specified in this paragraph applies
7to all pharmacy services for persons receiving benefits under
8this Code including services reimbursed under Section 5-36.
9    (c) (Blank).
10    (d) The Department shall review utilization of narcotic
11medications in the medical assistance program and impose
12utilization controls that protect against abuse.
13    (e) When making determinations as to which drugs shall be
14on a prior approval list, the Department shall include as part
15of the analysis for this determination, the degree to which a
16drug may affect individuals in different ways based on factors
17including the gender of the person taking the medication.
18    (f) The Department shall cooperate with the Department of
19Public Health and the Department of Human Services Division of
20Mental Health in identifying psychotropic medications that,
21when given in a particular form, manner, duration, or
22frequency (including "as needed") in a dosage, or in
23conjunction with other psychotropic medications to a nursing
24home resident or to a resident of a facility licensed under the
25ID/DD Community Care Act or the MC/DD Act, may constitute a
26chemical restraint or an "unnecessary drug" as defined by the



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1Nursing Home Care Act or Titles XVIII and XIX of the Social
2Security Act and the implementing rules and regulations. The
3Department shall require prior approval for any such
4medication prescribed for a nursing home resident or to a
5resident of a facility licensed under the ID/DD Community Care
6Act or the MC/DD Act, that appears to be a chemical restraint
7or an unnecessary drug. The Department shall consult with the
8Department of Human Services Division of Mental Health in
9developing a protocol and criteria for deciding whether to
10grant such prior approval.
11    (g) The Department may by rule provide for reimbursement
12of the dispensing of a 90-day supply of a generic or brand
13name, non-narcotic maintenance medication in circumstances
14where it is cost effective.
15    (g-5) On and after July 1, 2012, the Department may
16require the dispensing of drugs to nursing home residents be
17in a 7-day supply or other amount less than a 31-day supply.
18The Department shall pay only one dispensing fee per 31-day
20    (h) Effective July 1, 2011, the Department shall
21discontinue coverage of select over-the-counter drugs,
22including analgesics and cough and cold and allergy
24    (h-5) On and after July 1, 2012, the Department shall
25impose utilization controls, including, but not limited to,
26prior approval on specialty drugs, oncolytic drugs, drugs for



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1the treatment of HIV or AIDS, immunosuppressant drugs, and
2biological products in order to maximize savings on these
3drugs. The Department may adjust payment methodologies for
4non-pharmacy billed drugs in order to incentivize the
5selection of lower-cost drugs. For drugs for the treatment of
6AIDS, the Department shall take into consideration the
7potential for non-adherence by certain populations, and shall
8develop protocols with organizations or providers primarily
9serving those with HIV/AIDS, as long as such measures intend
10to maintain cost neutrality with other utilization management
11controls such as prior approval. For hemophilia, the
12Department shall develop a program of utilization review and
13control which may include, in the discretion of the
14Department, prior approvals. The Department may impose special
15standards on providers that dispense blood factors which shall
16include, in the discretion of the Department, staff training
17and education; patient outreach and education; case
18management; in-home patient assessments; assay management;
19maintenance of stock; emergency dispensing timeframes; data
20collection and reporting; dispensing of supplies related to
21blood factor infusions; cold chain management and packaging
22practices; care coordination; product recalls; and emergency
23clinical consultation. The Department may require patients to
24receive a comprehensive examination annually at an appropriate
25provider in order to be eligible to continue to receive blood



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1    (i) On and after July 1, 2012, the Department shall reduce
2any rate of reimbursement for services or other payments or
3alter any methodologies authorized by this Code to reduce any
4rate of reimbursement for services or other payments in
5accordance with Section 5-5e.
6    (j) On and after July 1, 2012, the Department shall impose
7limitations on prescription drugs such that the Department
8shall not provide reimbursement for more than 4 prescriptions,
9including 3 brand name prescriptions, for distinct drugs in a
1030-day period, unless prior approval is received for all
11prescriptions in excess of the 4-prescription limit. Drugs in
12the following therapeutic classes shall not be subject to
13prior approval as a result of the 4-prescription limit:
14immunosuppressant drugs, oncolytic drugs, anti-retroviral
15drugs, and, on or after July 1, 2014, antipsychotic drugs. On
16or after July 1, 2014, the Department may exempt children with
17complex medical needs enrolled in a care coordination entity
18contracted with the Department to solely coordinate care for
19such children, if the Department determines that the entity
20has a comprehensive drug reconciliation program.
21    (k) No medication therapy management program implemented
22by the Department shall be contrary to the provisions of the
23Pharmacy Practice Act.
24    (l) Any provider enrolled with the Department that bills
25the Department for outpatient drugs and is eligible to enroll
26in the federal Drug Pricing Program under Section 340B of the



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1federal Public Health Service Services Act shall enroll in
2that program. No entity participating in the federal Drug
3Pricing Program under Section 340B of the federal Public
4Health Service Services Act may exclude Medicaid from their
5participation in that program, although the Department may
6exclude entities defined in Section 1905(l)(2)(B) of the
7Social Security Act from this requirement.
8(Source: P.A. 98-463, eff. 8-16-13; 98-651, eff. 6-16-14;
999-180, eff. 7-29-15; revised 9-2-20.)
10    (305 ILCS 5/5-36)
11    Sec. 5-36. Pharmacy benefits.
12    (a)(1) The Department may enter into a contract with a
13third party on a fee-for-service reimbursement model for the
14purpose of administering pharmacy benefits as provided in this
15Section for members not enrolled in a Medicaid managed care
16organization; however, these services shall be approved by the
17Department. The Department shall ensure coordination of care
18between the third-party administrator and managed care
19organizations as a consideration in any contracts established
20in accordance with this Section. Any managed care techniques,
21principles, or administration of benefits utilized in
22accordance with this subsection shall comply with State law.
23    (2) The following shall apply to contracts between
24entities contracting relating to the Department's third-party
25administrators and pharmacies:



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1        (A) the Department shall approve any contract between
2    a third-party administrator and a pharmacy;
3        (B) the Department's third-party administrator shall
4    not change the terms of a contract between a third-party
5    administrator and a pharmacy without written approval by
6    the Department; and
7        (C) the Department's third-party administrator shall
8    not create, modify, implement, or indirectly establish any
9    fee on a pharmacy, pharmacist, or a recipient of medical
10    assistance without written approval by the Department.
11    (b) The provisions of this Section shall not apply to
12outpatient pharmacy services provided by a health care
13facility registered as a covered entity pursuant to 42 U.S.C.
14256b or any pharmacy owned by or contracted with the covered
15entity. A Medicaid managed care organization shall, either
16directly or through a pharmacy benefit manager, administer and
17reimburse outpatient pharmacy claims submitted by a health
18care facility registered as a covered entity pursuant to 42
19U.S.C. 256b, its owned pharmacies, and contracted pharmacies
20in accordance with the contractual agreements the Medicaid
21managed care organization or its pharmacy benefit manager has
22with such facilities and pharmacies. Any pharmacy benefit
23manager that contracts with a Medicaid managed care
24organization to administer and reimburse pharmacy claims as
25provided in this Section must be registered with the Director
26of Insurance in accordance with Section 513b2 of the Illinois



SB2420- 8 -LRB102 13202 KTG 18546 b

1Insurance Code.
2    (c) On at least an annual basis, the Director of the
3Department of Healthcare and Family Services shall submit a
4report beginning no later than one year after January 1, 2020
5(the effective date of Public Act 101-452) this amendatory Act
6of the 101st General Assembly that provides an update on any
7contract, contract issues, formulary, dispensing fees, and
8maximum allowable cost concerns regarding a third-party
9administrator and managed care. The requirement for reporting
10to the General Assembly shall be satisfied by filing copies of
11the report with the Speaker, the Minority Leader, and the
12Clerk of the House of Representatives and with the President,
13the Minority Leader, and the Secretary of the Senate. The
14Department shall take care that no proprietary information is
15included in the report required under this Section.
16    (d) A pharmacy benefit manager shall notify the Department
17in writing of any activity, policy, or practice of the
18pharmacy benefit manager that directly or indirectly presents
19a conflict of interest that interferes with the discharge of
20the pharmacy benefit manager's duty to a managed care
21organization to exercise its contractual duties. "Conflict of
22interest" shall be defined by rule by the Department.
23    (e) A pharmacy benefit manager shall, upon request,
24disclose to the Department the following information:
25        (1) whether the pharmacy benefit manager has a
26    contract, agreement, or other arrangement with a



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1    pharmaceutical manufacturer to exclusively dispense or
2    provide a drug to a managed care organization's enrollees,
3    and the aggregate amounts of consideration of economic
4    benefits collected or received pursuant to that
5    arrangement;
6        (2) the percentage of claims payments made by the
7    pharmacy benefit manager to pharmacies owned, managed, or
8    controlled by the pharmacy benefit manager or any of the
9    pharmacy benefit manager's management companies, parent
10    companies, subsidiary companies, or jointly held
11    companies;
12        (3) the aggregate amount of the fees or assessments
13    imposed on, or collected from, pharmacy providers; and
14        (4) the average annualized percentage of revenue
15    collected by the pharmacy benefit manager as a result of
16    each contract it has executed with a managed care
17    organization contracted by the Department to provide
18    medical assistance benefits which is not paid by the
19    pharmacy benefit manager to pharmacy providers and
20    pharmaceutical manufacturers or labelers or in order to
21    perform administrative functions pursuant to its contracts
22    with managed care organizations.
23    (f) The information disclosed under subsection (e) shall
24include all retail, mail order, specialty, and compounded
25prescription products. All information made available to the
26Department under subsection (e) is confidential and not



SB2420- 10 -LRB102 13202 KTG 18546 b

1subject to disclosure under the Freedom of Information Act.
2All information made available to the Department under
3subsection (e) shall not be reported or distributed in any way
4that compromises its competitive, proprietary, or financial
5value. The information shall only be used by the Department to
6assess the contract, agreement, or other arrangements made
7between a pharmacy benefit manager and a pharmacy provider,
8pharmaceutical manufacturer or labeler, managed care
9organization, or other entity, as applicable.
10    (g) A pharmacy benefit manager shall disclose directly in
11writing to a pharmacy provider or pharmacy services
12administrative organization contracting with the pharmacy
13benefit manager of any material change to a contract provision
14that affects the terms of the reimbursement, the process for
15verifying benefits and eligibility, dispute resolution,
16procedures for verifying drugs included on the formulary, and
17contract termination at least 30 days prior to the date of the
18change to the provision. The terms of this subsection shall be
19deemed met if the pharmacy benefit manager posts the
20information on a website, viewable by the public. A pharmacy
21service administration organization shall notify all contract
22pharmacies of any material change, as described in this
23subsection, within 2 days of notification. As used in this
24Section, "pharmacy services administrative organization" means
25an entity operating within the State that contracts with
26independent pharmacies to conduct business on their behalf



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1with third-party payers. A pharmacy services administrative
2organization may provide administrative services to pharmacies
3and negotiate and enter into contracts with third-party payers
4or pharmacy benefit managers on behalf of pharmacies.
5    (h) A pharmacy benefit manager shall not include the
6following in a contract with a pharmacy provider:
7        (1) a provision prohibiting the provider from
8    informing a patient of a less costly alternative to a
9    prescribed medication; or
10        (2) a provision that prohibits the provider from
11    dispensing a particular amount of a prescribed medication,
12    if the pharmacy benefit manager allows that amount to be
13    dispensed through a pharmacy owned or controlled by the
14    pharmacy benefit manager, unless the prescription drug is
15    subject to restricted distribution by the United States
16    Food and Drug Administration or requires special handling,
17    provider coordination, or patient education that cannot be
18    provided by a retail pharmacy.
19    (i) Nothing in this Section shall be construed to prohibit
20a pharmacy benefit manager from requiring the same
21reimbursement and terms and conditions for a pharmacy provider
22as for a pharmacy owned, controlled, or otherwise associated
23with the pharmacy benefit manager. Reimbursement must not be
24less than the dispensing fees and acquisition costs under the
25fee-for-service program as required under subsection (b) of
26Section 5-5.12.



SB2420- 12 -LRB102 13202 KTG 18546 b

1    (j) A pharmacy benefit manager shall establish and
2implement a process for the resolution of disputes arising out
3of this Section, which shall be approved by the Department.
4    (k) The Department shall adopt rules establishing
5reasonable dispensing fees for fee-for-service payments in
6accordance with guidance or guidelines from the federal
7Centers for Medicare and Medicaid Services.
8(Source: P.A. 101-452, eff. 1-1-20; revised 10-22-19.)
9    Section 99. Effective date. This Act takes effect upon
10becoming law.