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H.B. 126 Enrolled





Sponsor: Rebecca D. Lockhart

                  F. LaVar Christensen                   This act modifies the Medicaid Assistance Act. The act authorizes the department to
                  study a Medicaid drug program. The act establishes certain requirements for the
                  Medicaid drug program and requires legislative oversight before a Medicaid drug
                  program is implemented. The act clarifies that the department must implement the state
                  Medicaid program through the administrative rule process. The act requires the
                  department to submit a proposed administrative rule that would modify Medicaid
                  benefits, services, or reimbursement methodologies to either the Legislative Executive
                  Appropriations Committee or the Health and Human Services Appropriation
                  Subcommittee before adopting the rule.
                  This act affects sections of Utah Code Annotated 1953 as follows:
                      26-18-2.3, as enacted by Chapter 21, Laws of Utah 1988
                      26-18-3, as last amended by Chapter 316, Laws of Utah 2000
                      26-18-2.4, Utah Code Annotated 1953
                  Be it enacted by the Legislature of the state of Utah:
                      Section 1. Section 26-18-2.3 is amended to read:
                       26-18-2.3. Division responsibilities -- Emphasis -- Periodic assessment.
                      (1) In accordance with the requirements of Title XIX of the Social Security Act and
                  applicable federal regulations, the division is responsible for the effective and impartial
                  administration of this chapter in an efficient, economical manner. The division shall:
                      (a) establish, on a statewide basis, a program to safeguard against unnecessary or
                  inappropriate use of Medicaid services, excessive payments, and unnecessary or inappropriate
                  hospital admissions or lengths of stay[. The division shall];

                      (b) deny any provider claim for services that fail to meet criteria established by the
                  division concerning medical necessity or appropriateness[. The division shall]; and
                      (c) place its emphasis on high quality care to recipients in the most economical and
                  cost-effective manner possible, with regard to both publicly and privately provided services.
                      (2) The division shall implement and utilize cost-containment methods, where possible,
                  which may include, but are not limited to:
                      (a) prepayment and postpayment review systems to determine if utilization is reasonable
                  and necessary;
                      (b) preadmission certification of nonemergency admissions;
                      (c) mandatory outpatient, rather than inpatient, surgery in appropriate cases;
                      (d) second surgical opinions;
                      (e) procedures for encouraging the use of outpatient services;
                      (f) consistent with Sections 28-18-2.4 and 58-17a-605.1 , a Medicaid drug program;
                      [(f)] (g) coordination of benefits; and
                      [(g)] (h) review and exclusion of providers who are not cost effective or who have
                  abused the Medicaid program, in accordance with the procedures and provisions of federal law
                  and regulation.
                      (3) The director of the division shall periodically assess the cost effectiveness and health
                  implications of the existing Medicaid program, and consider alternative approaches to the
                  provision of covered health and medical services through the Medicaid program, in order to
                  reduce unnecessary or unreasonable utilization.
                      Section 2. Section 26-18-2.4 is enacted to read:
                      26-18-2.4. Medicaid drug program.
                      (1) A Medicaid drug program developed by the department under Subsection 26-18-2.3
                      (a) shall, notwithstanding Subsection 26-18-2.3 (1)(b), be based on clinical and
                  cost-related factors which include medical necessity as determined by a provider in accordance
                  with administrative rules established by the Drug Utilization Review Board; and

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                      (b) may include therapeutic categories of drugs that may be exempted from the drug
                      (2) (a) (i) The department shall study the Medicaid drug program for fiscal year 2003-04,
                  but may not implement the program unless the department reports its findings and
                  recommendations, including any proposed rules to the Legislative Executive Appropriations
                  Committee and Legislative Management Committee at their August 2003 meeting, or if a
                  meeting is not held in August, at the September 2003 meeting, for their review and
                      (ii) The Legislative Executive Appropriations Committee and Legislative Management
                  Committee shall review the Medicaid drug program proposed by the department and may:
                      (A) recommend that the department implement the drug program;
                      (B) recommend that the department modify the drug program;
                      (C) recommend that the department terminate the drug program; or
                      (D) recommend to the governor that he call a special session of the Legislature to review
                  and approve the drug program.
                      (b) The department may use the Medicaid drug program developed and approved under
                  Subsection (2)(a) in subsequent fiscal years.
                      (3) The department shall report its findings and recommendations regarding the
                  Medicaid drug program to the Legislative Health and Human Services Interim Committee by
                  August 30, 2003, and to the Legislative Health and Human Services Appropriations
                  Subcommittee during the 2004 General Session.
                      Section 3. Section 26-18-3 is amended to read:
                       26-18-3. Administration of Medicaid program by department -- Disciplinary
                  measures and sanctions -- Funds collected.
                      (1) The department shall be the single state agency responsible for the administration of
                  the Medicaid program in connection with the United States Department of Health and Human
                  Services pursuant to Title XIX of the Social Security Act.
                      (2) (a) The department shall [develop implementing policy] implement the Medicaid

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                  program through administrative rules in conformity with this chapter, Title 63, Chapter 46a, Utah
                  Administrative Rulemaking Act, the requirements of Title XIX, and applicable federal
                      (b) (i) The rules adopted under Subsection (2)(a) shall include, in addition to other rules
                  necessary to implement the program, the standards used by the department for determining
                  eligibility for Medicaid services, the services and benefits to be covered by the Medicaid
                  program, and reimbursement methodologies for providers under the Medicaid program.
                      (ii) If the department implements a change in the Medicaid State Plan, initiates a new
                  Medicaid waiver, submits an amendment to an existing Medicaid waiver, or initiates a rate
                  change requiring public notice under state or federal law, the department shall, prior to adopting
                  the change, report to either the Legislative Executive Appropriations Committee or the
                  Legislative Health and Human Services Appropriations Subcommittee and include in the report:
                      (A) the proposed change in services or reimbursement;
                      (B) the effect of an increase or decrease in services or benefits on individuals and
                      (C) the degree to which any proposed cut may result in cost-shifting to more expensive
                  services in health or human service programs; and
                      (D) the effect of any proposed increase of benefits or reimbursement on current and
                  future appropriations from the Legislature to the department.
                      (iii) Any rules adopted by the department under this Subsection (2) are subject to review
                  and reauthorization by the Legislature in accordance with Section 63-46a-11.5 .
                      (3) The department may, in its discretion, contract with the Department of Human
                  Services or other qualified agencies for services in connection with the administration of the
                  Medicaid program, including but not limited to the determination of the eligibility of individuals
                  for the program, recovery of overpayments, and enforcement of fraud and abuse laws, consistent
                  with Section 26-20-13 , to the extent permitted by law and quality control services.
                      (4) The department shall provide, by rule, disciplinary measures and sanctions for
                  Medicaid providers who fail to comply with the rules and procedures of the program, provided

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                  that sanctions imposed administratively may not extend beyond:
                      (a) termination from the program;
                      (b) recovery of claim reimbursements incorrectly paid; and
                      (c) those specified in Section 1919 of Title XIX of the federal Social Security Act.
                      (5) Funds collected as a result of a sanction imposed under Section 1919 of Title XIX of
                  the federal Social Security Act shall be deposited in the General Fund as nonlapsing dedicated
                  credits to be used by the division in accordance with the requirements of that section.
                      (6) (a) In determining whether an applicant or recipient is eligible for a service or benefit
                  under this part or Chapter 40, Utah Children's Health Insurance [Program] Act, the department
                  shall, if Subsection (6)(b) is satisfied, exclude from consideration one passenger vehicle
                  designated by the applicant or recipient.
                      (b) Before Subsection (6)(a) may be applied:
                      (i) the federal government must:
                      (A) determine that Subsection (6)(a) may be implemented within the state's existing
                  public assistance-related waivers as of January 1, 1999;
                      (B) extend a waiver to the state permitting the implementation of Subsection (6)(a); or
                      (C) determine that the state's waivers that permit dual eligibility determinations for cash
                  assistance and Medicaid are no longer valid; and
                      (ii) the department must determine that Subsection (6)(a) can be implemented within
                  existing funding.

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