A3648

An Act concerning value-based payment for prescription drugs in Medicaid program.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. The Department of Human Services, subject to federal approval and the availability of federal financial participation under Title XIX of the Social Security Act (42 U.S.C.s.1396 et seq.), shall establish a three-year demonstration project to employ value-based payment systems for a limited number of prescription drugs covered under the program. Under the demonstration project, the department shall enter into purchasing or rebate agreements with the manufacturers of at least three different prescription drugs, which will provide that the total reimbursement paid by the State for such drugs will be based in some part on observed outcomes of the drug’s use in patients.

b. The drugs selected for the demonstration program shall:

(1) have specific therapeutic purposes with outcomes that are readily measurable with existing data systems; and

(2) be among the highest-cost drugs in the New Jersey Medicaid program in aggregate spending.

c. Under the demonstration program, the department and the manufacturer of each drug selected for the program shall agree to (1) the best terms to accommodate the chosen value-based purchasing or rebate agreement, based on other value-based agreements with manufacturers that take into consideration observed outcomes of the drug’s use in patients; and (2) other relevant factors in the design of the demonstration program.

d. The department shall require that Medicaid managed care organizations participate in the demonstration program, and shall specify the obligations of the managed care organizations under the demonstration program in the contract between the department and the managed care organizations.

2. After the expiration of the three-year demonstration project established pursuant to section 1 of this act, the Commissioner of Human Services shall report to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), on the results of the demonstration project, along with the commissioner’s recommendations on the advisability of re-establishing the demonstration project, including whether a new demonstration project should expand upon the scope of the demonstration project established pursuant to section 1 of this act and any other recommended modifications as the commissioner deems appropriate. The report shall include specific performance test results, which shall be aggregated and de-identified as necessary to protect patients’ identities and health information protected by State and federal law.

3. The Commissioner of Human Services shall apply for such State plan amendments or waivers as may be necessary to implement the provisions of this act and to secure federal financial participation for State Medicaid expenditures under the federal Medicaid program.

4. This act shall take effect on the first day of the seventh month next following the date of enactment and shall expire three years after the date that the Department of Human Services commences implementation of the demonstration project, but the Commissioner of Human Services may take such anticipatory administrative action in advance thereof as shall be necessary for the implementation of this act.

STATEMENT

This bill establishes a three-year Medicaid demonstration project to pay for certain drugs according to a value-based payment system.

Under the bill, the Department of Human Services will establish a three-year demonstration project to employ value-based payment systems for a limited number of prescription drugs covered under the program. The department will enter into purchasing or rebate agreements with the manufacturers of at least three different prescription drugs, which will provide that the total reimbursement paid by the State for such drugs will be based in some part on observed outcomes of the drug’s use in patients.

The drugs selected for the demonstration project will have specific therapeutic purposes with outcomes that are readily measurable with existing data systems, and will be among the highest-cost drugs in the New Jersey Medicaid program in aggregate spending. The department and the manufacturer of each drug selected for the project must agree to the best terms to accommodate the chosen value-based purchasing or rebate agreement based on other value-based agreements with manufacturers that take into consideration observed outcomes of the drug’s use in patients.

The department will require that Medicaid managed care organizations participate in the demonstration project, and will specify the obligations of the managed care organizations under the demonstration program in the contract between the department and the managed care organizations.

After the expiration of the three-year demonstration project, the Commissioner of Human Services will report to the Governor and Legislature on the results of the demonstration project, along with the commissioner’s recommendations on the advisability of re-establishing, expanding, or otherwise modifying the project. The report shall include specific performance test results, which have been aggregated and de-identified as necessary to protect patients’ identities and health information protected by State and federal law.