{"data":{"id":"us-ky/krs-205.647","jurisdiction":"us-ky","citation":"KRS 205.647","heading":"State pharmacy benefit manager's report to Department for Medicaid","body":"Services -- Requirements for Medicaid services contracts entered into or\nrenewed on or after March 27, 2020 -- Administrative regulations --\nReimbursement rates between pharmacy b enefit manager and contracted\npharmacy.\n(1) As used in this section, \"state pharmacy benefit manager\" means a pharmacy\nbenefit manager, as defined in KRS 304.9 -020, contracted by the department,\npursuant to KRS 205.5512, to administer pharmacy benefits  for all Medicaid\nrecipients enrolled in a managed care organization in the Commonwealth.\n(2) The state pharmacy benefit manager shall, upon receipt of a request from the\nDepartment for Medicaid Services, provide the following information to the\nDepartment for Medicaid Services in a form and manner prescribed by the\nDepartment for Medicaid Services:\n(a) The total Medicaid dollars paid to the state pharmacy benefit manager by a\nmanaged care organization and the total amount of Medicaid dollars paid to\nthe ph armacy benefit manager by a managed care organization which were\nnot subsequently paid to a pharmacy licensed in Kentucky;\n(b) 1. The average reimbursement, by drug ingredient cost, dispensing fee, and\nany other fee paid by the state pharmacy benefit manag er to licensed\npharmacies with which the state pharmacy benefit manager shares\ncommon ownership, management, or control; or which are owned,\nmanaged, or controlled by any of the state pharmacy benefit manager's\nmanagement companies, parent companies, subsi diary companies,\njointly held companies, or companies otherwise affiliated by a common\nowner, manager, or holding company; or which share any common\nmembers on the board of directors; or which share managers in\ncommon.\n2. For the purposes of this subsectio n, \"average reimbursement\" means a\nstatistical methodology selected by the Department for Medicaid\nServices via any administrative regulations promulgated pursuant to this\nsection which shall include, at a minimum, the median and mean;\n(c) The average reim bursement, by drug ingredient cost, dispensing fee, and any\nother fee, paid by the state pharmacy benefit manager to pharmacies licensed\nin Kentucky which operate more than ten (10) locations;\n(d) The average reimbursement by drug ingredient cost, dispensi ng fee, and any\nother fee, paid by the state pharmacy benefit manager to pharmacies licensed\nin Kentucky which operate ten (10) or fewer locations; and\n(e) All common ownership, management, common members of a board of\ndirectors, shared managers, or control of the state pharmacy benefit manager,\nor any of the state pharmacy benefit manager's management companies,\nparent companies, subsidiary companies, jointl y held companies, or\ncompanies otherwise affiliated by a common owner, manager, or holding\ncompany with any managed care organization contracted to administer\nKentucky Medicaid benefits, any entity which contracts on behalf of a\npharmacy, or any pharmacy s ervices administration organization; or any\ncommon ownership, management, common members of a board of directors,\nshared managers, or control of a pharmacy services administration\norganization that is contracted with the state pharmacy benefit manager, wit h\nany drug wholesaler or distributor or any of the pharmacy services\nadministration organization's management companies, parent companies,\nsubsidiary companies, jointly held companies, or companies otherwise\naffiliated by a common owner, common members of a board of directors,\nmanager, or holding company.\n(3) All information provided by the state pharmacy benefit manager pursuant to\nsubsection (2) of this section shall reflect data for the most recent full calendar year\nand shall be divided by month. This i nformation shall be managed by the\nDepartment for Medicaid Services in accordance with applicable law and shall be\nexempt from KRS 61.870 to 61.884 in accordance with KRS 61.878(1)(c).\n(4) Any contract entered into or renewed for the delivery of Medicaid s ervices by a\nmanaged care organization on or after March 27, 2020, shall comply with the\nfollowing requirements:\n(a) The Department for Medicaid Services shall, in accordance with KRS\n205.5514, set or create, and may change at any time for any reason,\nreimbursement rates between the state pharmacy benefit manager and a\ncontracted pharmacy, or an entity which contracts on behalf of a pharmacy.\nReimbursement rates shall include dispensing fees which take into account\napplicable guidance by the Center for Medicare and Medicaid Services;\n(b) All laws and administrative regulations promulgated by the Department for\nMedicaid Services, including but not limited to the regulation of maximum\nallowable costs;\n(c) The Department for Medicaid Services shall review and m ay approve or deny\nany contract between the managed care organization and the state pharmacy\nbenefit manager;\n(d) Any fee established, modified, or implemented directly or indirectly by a\nmanaged care organization, the state pharmacy benefit manager, or an  entity\nwhich contracts on behalf of a pharmacy that is directly or indirectly charged\nto, passed onto, or required to be paid by a pharmacy services administration\norganization, pharmacy, or Medicaid recipient shall be submitted to the\nDepartment for Medi caid Services for approval. This paragraph shall not\napply to any membership fee or service fee established, modified, or\nimplemented by a pharmacy services administration organization on a\npharmacy licensed in Kentucky that is not directly or indirectly r elated to\nproduct reimbursement; and\n(e) The provisions of KRS 205.5512 and 205.5514.\n(5) The Department for Medicaid Services may promulgate administrative regulations\npursuant to KRS Chapter 13A as necessary to implement and administer its\nresponsibilities under this section. These administrative regulations may include but\nare not limited to the assessment of fines, penalties, or sanctions for noncompliance.\n(6) The Department for Medicaid Services may consider any information ascertained\npursuant to thi s section in the setting, creation, or approval of reimbursement rates\nused by a pharmacy benefit manager or an entity which contracts on behalf of a\npharmacy.","path":["KRS Chapter 205"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=49891","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:52:04Z","sha256":"3dd51bc5ebc7874a929bed2ad108ed17c929cd10af2d90fb14cae84a6f31bf57","source_id":"us-ky","stale":false,"prev":"us-ky/krs-205.646","next":"us-ky/krs-205.648"},"notice":"GroundRules: Original legal text. Not legal advice."}