Establishes a Medicaid drug rebate remittance demonstration program to validate existing Medicaid drug rebate claims

BILL NUMBER:S5043A

Title of bill

An act to amend the public health law, in relation to establishing a medicaid drug rebate remittance demonstration program

Purpose or general idea of bill

This bill will establish a Medicaid drug rebate remittance demonstration program within the Department of Health for the purpose of working collaboratively with the pharmaceutical industry and third party vendors to validate drug rebate claims and rectify disputed claims.

Summary of specific provisions

This bill adds a new section 276-b to the Public Health Law.

Subdivision 1 establishes the Medicaid drug rebate remittance demonstration program to work collaboratively with third party vendors to validate existing Medicaid drug rebate claims to determine whether the data contains duplicate claims or claims on which rebates may already have been paid all or in part to Medicare Part D plans or some other third parties in order to rectify disputed claims.

Subdivision 2 sets forth the parameters of the demonstration program and the information required to be shared with drug manufacturers and third party vendors. It states that the Department of Health shall provide prescription drug utilization information to participating drug manufacturers who have entered into a rebate agreement with the Department and third party data vendors at no cost to the Department.

Subdivision 3 sets forth reporting requirements and recommendation options by the Department of Health. The Department shall report on the results of the program to the Governor, the Director of the Division of the Budget, the state Comptroller, and the Legislature on or before December 31, 2012.

Justification

In August 2004, the U.S. Department of Health & Human Services (HHS) Office of Inspector General released an audit of New York's Medicaid Drug Rebate Program billings, collections and dispute resolutions. HHS determined that "the processes and controls for rebate billings, collections, and dispute resolutions were not always coordinated effectively, did not maximize savings and did not produce accurate and complete records of rebate activities." Among its findings, HHS identified an estimated balance of $351 million in total outstanding rebates, including $32 million in unresolved disputes, as of June 30, 2002.

Medicaid programs in over 45 states boost their Medicaid drug rebate collections by disclosing prescription-level data to third party vendors with expertise in providing standardized databases to validate Medicaid rebate invoices and expedite the resolution of disputed claims, in an unbiased, objective manner. According to the Centers for Medicare and Medicaid Services (CMS), "data vendors can be invaluable for the purpose of validation drug rebate data, identifying potential errors and

achieving dispute resolution between States and pharmaceutical manufacturers." The California Department of Health Services noted that since providing claims detail data to a third party data vendor, "the percentage paid of the invoiced amount has increased" and "companies pay a larger amount within the initial payment timeframe."

This bill will require NYSDOH to share information and work cooperatively with third party data vendors in a demonstration program to determine the extent to which such collaboration will maximize Medicaid drug rebate revenues to the State.

Prior legislative history

Similar to S.5835/A.8869 of 2005. Vetoed.

Fiscal implications

No cost to the State. Potential increase in revenues based upon resolution of disputed rebate amounts.

Effective date

Immediately upon enactment.