[Congressional Record Volume 151, Number 106 (Friday, July 29, 2005)]
[Senate]
[Pages S9507-S9509]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself and Mr. Inouye):
  S. 1585. A bill to amend title XIX of the Social Security Act to 
reduce the costs of prescription drugs for enrollees of medicaid 
managed care organizations by extending the discounts offered under 
fee-for-service medicaid to such organizations; to the Committee on 
Finance.
  Mr. BINGAMAN. Mr. President, I am introducing legislation today with 
Senator Inouye entitled the Medicaid Health Plan Rebate Act of 2005.
  I ask unanimous consent that a summary of the legislation developed 
by the Association for Community Affiliated Plans, a policy statement 
by the American Public Human Services Association on the issue, and a 
letter of support from the Medicaid Health Plans of America be printed 
in the Record.
  I further ask for unanimous consent that the text of the legislation 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  Association for Community Affiliated plans--Reducing Medicaid Costs 
  Without Cutting Benefits or Beneficiaries: Congress Should Equalize 
   Description Drug Costs for Beneficiaries in Medicaid Managed Care


                                Request

       As Congress and the States struggle to control the 
     skyrocketing costs of Medicaid, the Association for Community 
     Affiliated Plans (ACAP) supports a solution that will save 
     Federal, State governments and Medicaid Managed Care 
     Organizations (MCOs) up to $2 billion over ten years by 
     equalizing the treatment of prescription drug discounts 
     between Medicaid managed care and Medicaid fee- for-service. 
     In offering Medicaid managed care plans access to the 
     Medicaid drug rebate, Congress will provide relief for 
     federal and state budgets, thereby mitigating the need for 
     added cuts to Medicaid benefits or populations.


                               background

       Created by the Omnibus Budget Reconciliation Act (OBRA) of 
     1990, the Medicaid Drug Rebate Program requires a drug 
     manufacturer to have a rebate agreement with the Secretary of 
     the Department of Health and Human Services for States to 
     receive federal funding for outpatient drugs dispensed to 
     Medicaid patients. At the time the law was enacted, managed 
     care organizations were excluded from access to the drug 
     rebate program. In 1990, only 2.8 million people were 
     enrolled in Medicaid managed care and so the savings lost by 
     the carve-out were relatively small. Today, 12 million people 
     are enrolled in capitated managed care plans. This migration 
     of beneficiaries into managed care has, in turn, increased 
     States' Medicaid pharmacy costs because fewer beneficiaries 
     have access to the drug rebate.


                      challenge for medicaid plans

       Under the drug rebate, States receive between 18 and 20 
     percent discount on brand

[[Page S9508]]

     name drug prices and between 10 and 11 percent for generic 
     drug prices. At the time the rebate was enacted, many of the 
     plans in Medicaid were large commercial plans who believed 
     that they could get better discounts than the federal rebate. 
     Today, Medicaid-focused plans are the fastest growing sector 
     in Medicaid managed care. According to a study by the Lewin 
     Group, Medicaid-focused MCOs typically only receive about a 6 
     percent discount on brand name drugs and no discount on 
     generics. Because many MCOs (particularly smaller Medicaid-
     focused MCOs) do not have the capacity to negotiate deeper 
     discounts with drug companies, Medicaid is overpaying for 
     prescription drugs for enrollees in Medicaid health plans.


                    Opportunity or Medicaid Savings

       The Lewin Group estimates that this proposal could save up 
     to $2 billion over 10 years. This legislation has been 
     endorsed by organizations representing both state government 
     and the managed care industry, including the National 
     Association of State Medicaid Directors, and the Association 
     for Community Affiliated Plans.
       As Congress is forced to make tough choices to control the 
     costs of the Medicaid program, this proposal offers a ``no-
     harm'' option to control costs and ensure that there is not a 
     prima facie pharmacy cost disadvantage states using managed 
     care as a cost effective alternative to Medicaid fee-for-
     service.
                                  ____


               American Public Human Services Association

            National Association of State Medicaid Directors


  Policy Statement: MCO Access to the Medicaid Pharmacy Rebate Program

     Background
       The Omnibus Budget Reconciliation Act of 1990 (OBRA `90) 
     established a Medicaid drug rebate program that requires 
     pharmaceutical manufacturers to provide a rebate to 
     participating state Medicaid agencies. In return, states must 
     cover all prescription drugs manufactured by a company that 
     participates in the rebate program. At the time of this 
     legislation, only a small percentage of Medicaid 
     beneficiaries were enrolled in capitated managed care plans 
     and were primarily served by plans that also had commercial 
     lines of business. These plans requested to be excluded from 
     the drug rebate program as it was assumed that they would be 
     able to secure a better rebate on their own. Though 
     regulations have not yet been promulgated, federal 
     interpretation to date has excluded Medicaid managed care 
     organizations from participating in the federal rebate 
     program.
       Today, the situation is quite different. 58% of all 
     Medicaid beneficiaries are enrolled in some type of managed 
     care delivery system, many in capitated health plans. Some 
     managed care plans, especially Medicaid-dominated plans that 
     make up a growing percentage of the Medicaid marketplace, are 
     looking at the feasibility of gaining access to the Medicaid 
     pharmacy rebate. However, a number of commercial plans remain 
     content to negotiate their own pharmacy rates and are not 
     interested in pursuing the Medicaid rebate.
     Policy Statement
       The National Association of State Medicaid Directors is 
     supportive of Medicaid managed care organizations (MCOs), in 
     their capacity as an agent of the state, being able to 
     participate fully in the federal Medicaid rebate program. To 
     do so, the MCO must adhere to all of the federal rebate rules 
     set forth in OBRA '90 and follow essentially the same 
     ingredient cost payment methodology used by the state. The 
     state will have the ability to make a downward adjustment in 
     the MCO's capitation rate based on the assumption that the 
     MCO will collect the full rebate instead of the state. 
     Finally, if a pharmacy benefit manager (PBM) is under 
     contract with an MCO to administer the Medicaid pharmacy 
     benefit for them, then the same principal shall apply, but in 
     no way should both the MCO and the PBM be allowed to claim 
     the rebate.
                                  ____



                             Medicaid Health Plans of America,

                                    Washington, DC, April 7, 2005.
     Margaret A. Murray,
     Executive Director, Association for Community Affiliated 
         Plans, Washington, DC.
       Dear Ms. Murray: The Medicaid Health Plans of America 
     (MHPOA) supports your proposed initiative to provide Medicaid 
     managed care organizations with access to the Medicaid drug 
     rebate found in Section 1927 of the Social Security Act. We 
     support this effort and urge Congress to enact this common 
     sense provision.
       Medicaid Health Plans of America, formed in 1993 and 
     incorporated in 1995, is a trade association representing 
     health plans and other entities participating in Medicaid 
     managed care throughout the country It's primary focus is to 
     provide research, advocacy, analysis, and organized forums 
     that support the development of effective policy solutions to 
     promote and enhance the delivery of quality healthcare. The 
     Association initially coalesced around the issue of national 
     healthcare reform, and as the policy debate changed from 
     national healthcare reform to national managed care reform, 
     the areas of focus shifted to the changes in Medicaid managed 
     care.
       Your proposal to allow Medicaid managed care organizations 
     access to the Medicaid drug rebate makes sense given the 
     migration of Medicaid beneficiaries from fee-for-service to 
     managed care since 1990. Increasingly, states have not been 
     able to take advantage of the drug rebate for those enrollees 
     in managed care, thus driving up federal and state Medicaid 
     costs. The savings estimated in the Lewin Group study are 
     significant and may help to mitigate the needs for other cuts 
     in the program. In addition, it demonstrates a proactive 
     effort to offer solutions to improving the Medicaid program. 
     We applaud this effort.
       MHPOA is proud to support this legislative proposal and 
     will endorse any legislation in Congress to enact this 
     proposal.
           Sincerely,
                                                   Thomas Johnson,
     Executive Director.
                                  ____


                                S. 1585

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicaid Health Plan Rebate 
     Act of 2005''.

     SEC. 2. EXTENSION OF PRESCRIPTION DRUG DISCOUNTS TO ENROLLEES 
                   OF MEDICAID MANAGED CARE ORGANIZATIONS.

       (a) In General.--Section 1927(j) of the Social Security Act 
     (42 U.S.C. 1396r-8(j)) is amended--
       (1) by striking paragraph (1);
       (2) by redesignating paragraphs (2) and (3) as paragraphs 
     (1) and (2), respectively, and realigning the left margins of 
     such paragraphs accordingly;
       (3) in paragraph (1) (as redesignated by paragraph (2) of 
     this section), by striking ``The State'' and inserting ``In 
     general.--The State''; and
       (4) in paragraph (2) (as so redesignated), by striking 
     ``Nothing'' and inserting ``Rule of construction.--Nothing''.
       (b) Effective Date.--The amendments made by this section 
     take effect on the date of enactment of this Act and apply to 
     rebate agreements entered into or renewed under section 1927 
     of the Social Security Act (42 U.S.C. 1396r-8) on or after 
     such date.

  Mr. REID. Mr. President, I rise to express my support for the 
Healthcare Equality and Accountability Act that Senator Akaka and I are 
introducing today. We are pleased that Congressman Honda, Chair of the 
Congressional Asian Pacific American Caucus, is introducing this 
legislation in the House of Representatives with the support of the 
Congressional Black Caucus, the Congressional Hispanic Caucus, and the 
Congressional Native American Caucus.
  My first elected position was on the board of trustees of the largest 
public hospital in Southern Nevada--a hospital known today as 
University Medical Center (UMC) of Southern Nevada.
  Since my time on the hospital board, Nevada has become not just one 
of the fastest growing states in the nation, but one of the most 
diverse. The Asian and Hispanic populations have grown by over 200 
percent, and the African-American population in Nevada has increased by 
91 percent. As a result, health care providers are struggling to meet 
the needs of Nevada's diverse population.
  In one example, a woman arrived at a Las Vegas emergency room 
hemorrhaging. Doctors determined that she needed a hysterectomy, but 
she did not speak English. Her young son had to interpret, but was 
embarrassed to explain the diagnosis, so instead he told his mother she 
had a tumor in her stomach.
  In areas with rapidly growing diverse populations, miscommunications 
like this one are all too common.
  In another incident, a woman at a lab in Las Vegas was diagnosed with 
breast cancer, but lab employees couldn't find anyone to explain her 
test results to her in Spanish.
  Unfortunately, a shortage of interpreters and translated material is 
just one problem that contributes to the high rate of health 
disparities among racial and ethnic groups.
  According to a recent report by the Centers for Disease Control, 
African-Americans are 30 percent more likely to die from heart disease 
and cancer than whites, and 40 percent more likely to die from stroke.
  Yet, despite a substantial need for health care, minority groups are 
less likely to have health insurance and are less likely to receive 
appropriate care.
  If we do nothing, the health care divide will only get worse. Since 
2000, millions more Americans are without health insurance and health 
care cost have skyrocketed. About 33 percent of Hispanics, 19 percent 
of African Americans and 19 percent of Asians are uninsured.
  In just one year--from 2002 to 2003--the number of Hispanics without 
health insurance increased by one million people.

[[Page S9509]]

  And for the first time in four decades, infant mortality rates in 
this nation have increased. The infant mortality rate for African 
Americans is more than twice as high than for whites; and is 70 percent 
higher for American Indian and Alaska Native infants.
  The legislation we are introducing today will help to: expand the 
health care safety net, diversify the health care work force, combat 
diseases that disproportionately affect racial and ethnic minorities, 
emphasize prevention and behavioral health, promote the collection and 
dissemination of data and enhance medical research, and provide 
interpreters and translation services in the delivery of health care.
  Everyone deserves equal treatment in health care. I hope that all of 
my colleagues will support the Healthcare Equality and Accountability 
Act so we may begin to close the health care divide.
                                 ______