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First Substitute H.B. 126

Representative Rebecca D. Lockhart proposes the following substitute bill:




Sponsor: Rebecca D. Lockhart

             5      This act modifies the Medicaid Assistance Act. The act authorizes the department to
             6      study a Medicaid drug program. The act establishes certain requirements for the
             7      Medicaid drug program and requires legislative oversight before a Medicaid drug
             8      program is implemented. The act clarifies that the department must implement the state
             9      Medicaid program through the administrative rule process. The act requires the
             10      department to submit a proposed administrative rule that would modify Medicaid
             11      benefits, services, or reimbursement methodologies to either the Legislative Executive
             12      Appropriations Committee or the Health and Human Services Appropriation
             13      Subcommittee before adopting the rule.
             14      This act affects sections of Utah Code Annotated 1953 as follows:
             15      AMENDS:
             16          26-18-2.3, as enacted by Chapter 21, Laws of Utah 1988
             17          26-18-3, as last amended by Chapter 316, Laws of Utah 2000
             18      ENACTS:
             19          26-18-2.4, Utah Code Annotated 1953
             20      Be it enacted by the Legislature of the state of Utah:
             21          Section 1. Section 26-18-2.3 is amended to read:
             22           26-18-2.3. Division responsibilities -- Emphasis -- Periodic assessment.
             23          (1) In accordance with the requirements of Title XIX of the Social Security Act and
             24      applicable federal regulations, the division is responsible for the effective and impartial
             25      administration of this chapter in an efficient, economical manner. The division shall:

             26          (a) establish, on a statewide basis, a program to safeguard against unnecessary or
             27      inappropriate use of Medicaid services, excessive payments, and unnecessary or inappropriate
             28      hospital admissions or lengths of stay[. The division shall];
             29          (b) deny any provider claim for services that fail to meet criteria established by the
             30      division concerning medical necessity or appropriateness[. The division shall]; and
             31          (c) place its emphasis on high quality care to recipients in the most economical and
             32      cost-effective manner possible, with regard to both publicly and privately provided services.
             33          (2) The division shall implement and utilize cost-containment methods, where
             34      possible, which may include, but are not limited to:
             35          (a) prepayment and postpayment review systems to determine if utilization is
             36      reasonable and necessary;
             37          (b) preadmission certification of nonemergency admissions;
             38          (c) mandatory outpatient, rather than inpatient, surgery in appropriate cases;
             39          (d) second surgical opinions;
             40          (e) procedures for encouraging the use of outpatient services;
             41          (f) consistent with Sections 28-18-2.4 and 58-17a-605.1 , a Medicaid drug program;
             42          [(f)] (g) coordination of benefits; and
             43          [(g)] (h) review and exclusion of providers who are not cost effective or who have
             44      abused the Medicaid program, in accordance with the procedures and provisions of federal law
             45      and regulation.
             46          (3) The director of the division shall periodically assess the cost effectiveness and
             47      health implications of the existing Medicaid program, and consider alternative approaches to
             48      the provision of covered health and medical services through the Medicaid program, in order to
             49      reduce unnecessary or unreasonable utilization.
             50          Section 2. Section 26-18-2.4 is enacted to read:
             51          26-18-2.4. Medicaid Drug Program.
             52          (1) A Medicaid drug program developed by the department under Subsection 26-18-2.3
             53      (2)(f):
             54          (a) shall notwithstanding Subsection 26-18-2.3 (1)(b), be based on clinical and
             55      cost-related factors which include medical necessity as determined by a provider in accordance
             56      with administrative rules established by the Drug Utilization Review Board; and

             57          (b) may include therapeutic categories of drugs that may be exempted from the drug
             58      program.
             59          (2) (a) (i) The department shall study the Medicaid drug program for fiscal year
             60      2003-04, but may not implement the program unless the department reports its findings and
             61      recommendations, including any proposed rules to the Legislative Executive Appropriations
             62      Committee and Legislative Management Committee at their August 2003 meeting, or if a
             63      meeting is not held in August, at the September 2003 meeting, for their review and
             64      recommendations.
             65          (ii) The Legislative Executive Appropriations Committee and Management Committee
             66      shall review the Medicaid drug program proposed by the department and may:
             67          (A) recommend that the department implement the drug program;
             68          (B) recommend that the department modify the drug program;
             69          (C) recommend that the department terminate the drug program; or
             70          (D) recommend to the governor that he call a special session of the Legislature to
             71      review and approve the drug program.
             72          (b) The department may use the Medicaid drug program developed and approved under
             73      Subsection (2)(a) in subsequent fiscal years.
             74          (3) The department shall report its findings and recommendations regarding the
             75      Medicaid drug program to the Legislative Health and Human Services Interim Committee by
             76      August 30, 2003, and to the Legislative Health and Human Services Appropriations
             77      Subcommittee during the 2004 General Session.
             78          Section 3. Section 26-18-3 is amended to read:
             79           26-18-3. Administration of Medicaid program by department -- Disciplinary
             80      measures and sanctions -- Funds collected.
             81          (1) The department shall be the single state agency responsible for the administration
             82      of the Medicaid program in connection with the United States Department of Health and
             83      Human Services pursuant to Title XIX of the Social Security Act.
             84          (2) (a) The department shall [develop implementing policy] implement the Medicaid
             85      program through administrative rules in conformity with this chapter, Title 63, Chapter 46a,
             86      Utah Administrative Rulemaking Act, the requirements of Title XIX, and applicable federal
             87      regulations.

             88          (b) (i) The rules adopted under Subsection (2)(a) shall include in addition to other rules
             89      necessary to implement the program, the standards used by the department for determining
             90      eligibility for Medicaid services, the services and benefits to be covered by the Medicaid
             91      program, and reimbursement methodologies for providers under the Medicaid program.
             92          (ii) If the department implements a change in the Medicaid State Plan, initiates a new
             93      Medicaid waiver, submits an amendment to an existing Medicaid waiver, or initiates a rate
             94      change requiring public notice under state or federal law, the department shall, prior to
             95      adopting the change, report to either the Legislative Executive Appropriations Committee or
             96      the Legislative Health and Human Services Appropriations Subcommittee and include in the
             97      report:
             98          (A) the proposed change in services or reimbursement;
             99          (B) the effect of an increase or decrease in services or benefits on individuals and
             100      families;
             101          (C) the degree to which any proposed cut may result in cost-shifting to more expensive
             102      services in health or human service programs; and
             103          (D) the effect of any proposed increase of benefits or reimbursement on current and
             104      future appropriations from the Legislature to the department.
             105          (iii) Any rules adopted by the department under this Subsection (2) are subject to
             106      review and reauthorization by the Legislature in accordance with Section 63-46a-11.5 .
             107          (3) The department may, in its discretion, contract with the Department of Human
             108      Services or other qualified agencies for services in connection with the administration of the
             109      Medicaid program, including but not limited to the determination of the eligibility of
             110      individuals for the program, recovery of overpayments, and enforcement of fraud and abuse
             111      laws, consistent with Section 26-20-13 , to the extent permitted by law and quality control
             112      services.
             113          (4) The department shall provide, by rule, disciplinary measures and sanctions for
             114      Medicaid providers who fail to comply with the rules and procedures of the program, provided
             115      that sanctions imposed administratively may not extend beyond:
             116          (a) termination from the program;
             117          (b) recovery of claim reimbursements incorrectly paid; and
             118          (c) those specified in Section 1919 of Title XIX of the federal Social Security Act.

             119          (5) Funds collected as a result of a sanction imposed under Section 1919 of Title XIX
             120      of the federal Social Security Act shall be deposited in the General Fund as nonlapsing
             121      dedicated credits to be used by the division in accordance with the requirements of that section.
             122          (6) (a) In determining whether an applicant or recipient is eligible for a service or
             123      benefit under this part or Chapter 40, Utah Children's Health Insurance [Program] Act, the
             124      department shall, if Subsection (6)(b) is satisfied, exclude from consideration one passenger
             125      vehicle designated by the applicant or recipient.
             126          (b) Before Subsection (6)(a) may be applied:
             127          (i) the federal government must:
             128          (A) determine that Subsection (6)(a) may be implemented within the state's existing
             129      public assistance-related waivers as of January 1, 1999;
             130          (B) extend a waiver to the state permitting the implementation of Subsection (6)(a); or
             131          (C) determine that the state's waivers that permit dual eligibility determinations for
             132      cash assistance and Medicaid are no longer valid; and
             133          (ii) the department must determine that Subsection (6)(a) can be implemented within
             134      existing funding.

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