KRS 205.647: State pharmacy benefit manager's report to Department for Medicaid

Services -- Requirements for Medicaid services contracts entered into or

renewed on or after March 27, 2020 -- Administrative regulations --

Reimbursement rates between pharmacy b enefit manager and contracted

pharmacy.

(1) As used in this section, "state pharmacy benefit manager" means a pharmacy

benefit manager, as defined in KRS 304.9 -020, contracted by the department,

pursuant to KRS 205.5512, to administer pharmacy benefits for all Medicaid

recipients enrolled in a managed care organization in the Commonwealth.

(2) The state pharmacy benefit manager shall, upon receipt of a request from the

Department for Medicaid Services, provide the following information to the

Department for Medicaid Services in a form and manner prescribed by the

Department for Medicaid Services:

(a) The total Medicaid dollars paid to the state pharmacy benefit manager by a

managed care organization and the total amount of Medicaid dollars paid to

the ph armacy benefit manager by a managed care organization which were

not subsequently paid to a pharmacy licensed in Kentucky;

(b) 1. The average reimbursement, by drug ingredient cost, dispensing fee, and

any other fee paid by the state pharmacy benefit manag er to licensed

pharmacies with which the state pharmacy benefit manager shares

common ownership, management, or control; or which are owned,

managed, or controlled by any of the state pharmacy benefit manager's

management companies, parent companies, subsi diary companies,

jointly held companies, or companies otherwise affiliated by a common

owner, manager, or holding company; or which share any common

members on the board of directors; or which share managers in

common.

2. For the purposes of this subsectio n, "average reimbursement" means a

statistical methodology selected by the Department for Medicaid

Services via any administrative regulations promulgated pursuant to this

section which shall include, at a minimum, the median and mean;

(c) The average reim bursement, by drug ingredient cost, dispensing fee, and any

other fee, paid by the state pharmacy benefit manager to pharmacies licensed

in Kentucky which operate more than ten (10) locations;

(d) The average reimbursement by drug ingredient cost, dispensi ng fee, and any

other fee, paid by the state pharmacy benefit manager to pharmacies licensed

in Kentucky which operate ten (10) or fewer locations; and

(e) All common ownership, management, common members of a board of

directors, shared managers, or control of the state pharmacy benefit manager,

or any of the state pharmacy benefit manager's management companies,

parent companies, subsidiary companies, jointl y held companies, or

companies otherwise affiliated by a common owner, manager, or holding

company with any managed care organization contracted to administer

Kentucky Medicaid benefits, any entity which contracts on behalf of a

pharmacy, or any pharmacy s ervices administration organization; or any

common ownership, management, common members of a board of directors,

shared managers, or control of a pharmacy services administration

organization that is contracted with the state pharmacy benefit manager, wit h

any drug wholesaler or distributor or any of the pharmacy services

administration organization's management companies, parent companies,

subsidiary companies, jointly held companies, or companies otherwise

affiliated by a common owner, common members of a board of directors,

manager, or holding company.

(3) All information provided by the state pharmacy benefit manager pursuant to

subsection (2) of this section shall reflect data for the most recent full calendar year

and shall be divided by month. This i nformation shall be managed by the

Department for Medicaid Services in accordance with applicable law and shall be

exempt from KRS 61.870 to 61.884 in accordance with KRS 61.878(1)(c).

(4) Any contract entered into or renewed for the delivery of Medicaid s ervices by a

managed care organization on or after March 27, 2020, shall comply with the

following requirements:

(a) The Department for Medicaid Services shall, in accordance with KRS

205.5514, set or create, and may change at any time for any reason,

reimbursement rates between the state pharmacy benefit manager and a

contracted pharmacy, or an entity which contracts on behalf of a pharmacy.

Reimbursement rates shall include dispensing fees which take into account

applicable guidance by the Center for Medicare and Medicaid Services;

(b) All laws and administrative regulations promulgated by the Department for

Medicaid Services, including but not limited to the regulation of maximum

allowable costs;

(c) The Department for Medicaid Services shall review and m ay approve or deny

any contract between the managed care organization and the state pharmacy

benefit manager;

(d) Any fee established, modified, or implemented directly or indirectly by a

managed care organization, the state pharmacy benefit manager, or an entity

which contracts on behalf of a pharmacy that is directly or indirectly charged

to, passed onto, or required to be paid by a pharmacy services administration

organization, pharmacy, or Medicaid recipient shall be submitted to the

Department for Medi caid Services for approval. This paragraph shall not

apply to any membership fee or service fee established, modified, or

implemented by a pharmacy services administration organization on a

pharmacy licensed in Kentucky that is not directly or indirectly r elated to

product reimbursement; and

(e) The provisions of KRS 205.5512 and 205.5514.

(5) The Department for Medicaid Services may promulgate administrative regulations

pursuant to KRS Chapter 13A as necessary to implement and administer its

responsibilities under this section. These administrative regulations may include but

are not limited to the assessment of fines, penalties, or sanctions for noncompliance.

(6) The Department for Medicaid Services may consider any information ascertained

pursuant to thi s section in the setting, creation, or approval of reimbursement rates

used by a pharmacy benefit manager or an entity which contracts on behalf of a

pharmacy.