FY 2016 Appropriation

The Pharmacy Program manages prescription drugs for all Medicaid members. For prescriptions issued by a doctor to Medicaid clients, Utah Medicaid will pay for covered medications. There are no known Utah pharmacies that do not accept Medicaid reimbursement for prescription drugs. Most non-pregnant adults pay a $3 co-pay per prescription with some limits on total out of pocket costs. The lowest price of four different calculations for each drug determines reimbursement. Below is a list of each calculation:

  1. Estimated Acquisition Cost -- Average Wholesale Price (this is the pharmaceutical industry's equivalent of a catalog price for all of its drugs) minus 17.4%.
  2. Federal Maximum Allowable Cost -- Federal law establishes maximum price.
  3. Utah Maximum Allowable Cost -- Utah has the option to set maximum prices for its drug reimbursements.
  4. Usual and Customary Charges -- This is the amount the provider typically charges private pay patients.
Funding History
Appropriation Overview

During the 2015 General Session, the Legislature appropriated for Fiscal Year 2016, $107,328,600 from all sources for Pharmacy. This is a 0 percent increase from Fiscal Year 2015 revised estimated amounts from all sources. The total includes $3,021,900 from the General/Education Funds, an increase of 0.2 percent from revised Fiscal Year 2015 estimates.

Staff Analysis

Drug Utilization Review Board - UCA 26-18-103 requires an annual report to legislative leadership on the activities and results from work by the board. The federal FY 2013 report is available at https://medicaid.utah.gov/Documents/pdfs/annual%20reports/dur%20annual%20reports/StateOfUtahDURAnnualReport2013.pdf. Below is some information from the report:

  1. "Utah Medicaid has a contract with the University of Utah's Drug Regimen Review Center (DRRC). The DRRC reviews Utah Medicaid clients who have high drug utilization and drug costs…For Federal fiscal year 2013, the DRRC program achieved over $935,000 in savings by assisting physicians to reduce the number of prescriptions that could cause potential adverse drug reactions, or eliminate unnecessary and/or duplicate prescriptions. Voluntary feedback indicates that more than 50% of prescribers learned valuable information regarding specific medications, and that over 25% made changes to their patients' drug regimens as a result of the review."
  2. "Utah Medicaid's [Preferred Drug List] program became operational in October 2007 without the requirement of Prior Authorization (PA) for non-preferred drugs. Although it was a voluntary program, it was still able to reduce Medicaid claim expenses by approximately $1.9 million in total funds its first State fiscal year. In 2008 prior authorization became a requirement, and in Federal fiscal year 2013 Utah Medicaid has enjoyed savings and cost avoidances of over $101 million (including rebate savings)."
  3. "One of the tools that Utah Medicaid uses to reduce fraud, waste and abuse is the lock-in program. For Federal fiscal year 2013, the program afforded almost $6,200,000 in savings/cost avoidance."

The following drugs traditionally have been dispensed in the largest volume within Medicaid: depression, schizophrenia, bipolar disorders, attention deficit-hyperactivity disorder, and pain management.

Obtaining prescription drugs in Medicaid is influenced by the following laws and cost saving efforts:

Federal Law:

  1. Medicaid must provide access to all prescribed drugs for drugs that provide rebates (few drugs are excluded).

State Law:

  1. Generic drugs, when available, must be used in most cases unless prior approval for a brand name drug is obtained or the brand name drug costs less.
  2. Preferred Drug List -- try preferred drugs first for certain drug classes unless prior approval is obtained. The Pharmacy and Therapeutics Committee, which is composed of pharmacists and physicians, recommended which drugs are preferred. The committee recommends which drugs are preferred based on equivalency in efficacy and safety. Utah participates in the Sovereign States Drug Consortium, which negotiates with drug manufacturers to obtain supplemental rebates in exchange for having their drugs be the preferred drug for certain medical conditions.
  3. Drug Utilization Review Board -- determines if drugs subject to misuse need a prior approval, reviews drugs for acceptable off-label uses, and in recommending prior authorization for some drugs can consider costs.

Department-initiated Effort:

  1. Contract with a drug regimen review center - review some Medicaid cases monthly for potential adverse drug reactions and/or duplicate prescriptions.
  2. Hemophilia disease management program -- products supplied to patients through a sole source contract. This program is possible because of special federal authority granted via a 1915(b) Freedom of Choice waiver.
  3. Abuse potential/drug over utilization -- clients considered for the Restriction Program when they take several drugs with high potential for addiction and/or are receiving similar prescriptions from two or more providers for potentially addictive drugs. The Restriction Program limits clients to a single pharmacy from which they can receive their prescriptions.

The Medicaid Program requires tamper-resistant pads for written prescriptions. Such pads have three characteristics:

  1. One or more industry-recognized features designed to prevent unauthorized copying of a completed or blank prescription form.
  2. One or more industry-recognized features designed to prevent the erasure or modification of information written on the prescription by the prescriber.
  3. One or more industry-recognized features designed to prevent the use of counterfeit prescription forms.

If a pharmacy fills a prescription that does not comply with the requirements above, then Medicaid will recover the funds paid by Medicaid. Prescribers have to ensure that pads used to write Medicaid prescriptions meet the "tamper-resistant" requirements. If not, the patient will likely be required to get another prescription written on an approved prescription form.

Intent Language

SB0002: Item 75

The Legislature intends that with the funding appropriated for the building block titled, "Intermediate Care Facilities - Intellectually Disabled," the Department of Health shall: 1) Direct funds to increase the salaries of direct care workers; 2) Increase only those rates which include a direct care service component, including respite; 3) Monitor providers to ensure that all funds appropriated are applied to direct care worker wages and that none of the funding goes to administrative functions or provider profits; In conjunction with Intermediate Care Facilities - Intellectually Disabled providers, report to the Office of the Legislature Fiscal Analyst no later than September 1, 2015 regarding: 1) the implementation and status of increasing salaries for direct care workers, 2) a detailed explanation with supporting documentation of how Intermediate Care Facilities - Intellectually Disabled providers are reimbursed, including all accounting codes used and the previous and current rates for each accounting code, and 3) a conceptual explanation of how Intermediate Care Facilities - Intellectually Disabled providers realize profit within the closed market of providing Intermediate Care Facilities - Intellectually Disabled services.

SB0002: Item 75

The Legislature intends that, if funds are available, Medicaid fee-for-service payments for anesthesia services be increased from the current amount of $18.27 to $23.73 for Fiscal Year 2016.

SB0002: Item 75

The Legislature intends that 5% of all funds provided in the Medicaid program for managed care dental plans be used for contracted plan administration and that any funds provided for the Affordable are Act premium tax not be included in that 5% administrative funds amount.

SB0003: Item 123

Under Section 63J-1-603 of the Utah Code the Legislature intends that up to $3,216,000 of the appropriations provided for the Medicaid Optional Services line item not lapse at the close of Fiscal Year 2016. The use of any nonlapsing funds is limited to a pilot program for assistance for children with disabilities and complex medical conditions to be used in similar amounts over three years with the goal of serving a similar number of clients over three years.

SB0007S01: Item 6

The Legislature intends that the Department of Health report on the following performance measures for the Medicaid Optional Services line item: (1) annual state general funds saved through preferred drug list (Target = $8.5 million general fund or more), (2) count of new choices waiver clients coming out of nursing homes into community based care (Target = 390 or more), and (3) emergency dental program savings (Target = $250,000 General Fund savings or more) by January 1, 2016 to the Social Services Appropriations Subcommittee.

SB0007S01: Item 18

The Legislature intends that the Department of Health report on the following performance measures for the Medicaid Optional Services line item: (1) annual state general funds saved through preferred drug list (Target = $8.5 million general fund or more), (2) count of new choices waiver clients coming out of nursing homes into community based care (Target = 390 or more), and (3) emergency dental program savings (Target = $250,000 General Fund savings or more) by January 1, 2016 to the Social Services Appropriations Subcommittee.

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COBI contains unaudited data as presented to the Legislature by state agencies at the time of publication. For audited financial data see the State of Utah's Comprehensive Annual Financial Reports.