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HB 4276

Human services: medical services; Medicaid managed care contract with pharmacy benefit manager; regulate, and require reporting. Amends 1939 PA 280 (MCL 400.1 - 400.119b) by adding secs. 105i & 105j.

2023-2024 Regular Session Introduced by Abraham Aiyash and 37 co-sponsors

HB 4276 requires PBMs in Michigan Medicaid to adopt pass-through pricing, protect small pharmacies' dispensing fees, and report annual data to DHHS.

assigned PA 279'23
#health:pharmaceuticals #humanservices:medicalservices #stateagencies(existing):healthandhumanservices
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Bill Summary · HB 4276

Summary — HB 4276 (adds MCL 400.105i & 400.105j; enacted PA 279 of 2023, eff. Feb 13, 2024)

Purpose
- To regulate pharmacy benefit manager (PBM) practices in Medicaid managed care contracting and to require annual PBM reporting to the Department of Health and Human Services (DHHS). The statute conditions DHHS contracts with Medicaid managed care organizations (MCOs) that rely on PBMs on PBM compliance with specified reimbursement, transparency, fee, and reporting requirements.

Key provisions

  1. Conditions on DHHS contracts with MCOs that rely on PBMs (MCL 400.105i)
  2. Reimbursement method for small Michigan pharmacies (those with ≤ 7 retail outlets): PBMs must use the lesser of
    • National Average Drug Acquisition Cost (NADAC) + a professional dispensing fee at least equal to the state “professional dispensing fee” (see MCL 333.1620), or
    • Wholesale Acquisition Cost (WAC) + that professional dispensing fee, or
    • The pharmacy’s usual & customary (cash) charge.
    • The PBM or any pharmacy services administrative organization (PSAO) may not retain any portion of that professional dispensing fee.
    • DHHS must identify which pharmacies are subject to this rule and give the list to Michigan Medicaid MCOs.
  3. Claims adjudication protection: PBMs must reimburse a legally valid claim at a rate no less than the rate in effect when the original claim was adjudicated at point of sale (prevents retroactive reductions).
  4. Pricing transparency: PBMs must agree to move to a transparent pass‑through pricing model and disclose administrative fees as a percentage of professional dispensing costs to DHHS.

  5. Fee limits and contract protections: PBMs must agree not to create new pharmacy administration fees and not to increase existing fees by more than the rate of inflation (except where required by federal law), and must not terminate an existing contract with a qualifying small Michigan pharmacy solely because of the additional professional dispensing fee required under the statute.

  6. Annual PBM reporting to DHHS (MCL 400.105j)

  7. By January 15 each year (first required Jan 15, 2024), each PBM that receives reimbursement for medical services (directly or through a Medicaid-contracted health plan) must submit aggregated information for the previous fiscal year to DHHS, including:

    • Total prescriptions dispensed.
    • Aggregate WAC for each drug on its formulary.
    • Aggregate rebates, discounts, and price concessions received for each formulary drug (including utilization discounts).
    • Aggregate administrative fees received from all pharmaceutical manufacturers.
    • Aggregate amounts (WAC + rebates/concessions) retained by the PBM and not passed through to DHHS or the Medicaid plan.
    • Aggregate reimbursements PBM pays to contracting pharmacies.
    • Any other information DHHS deems necessary.

  8. DHHS must forward the aggregated information to legislative appropriations subcommittees, fiscal agencies, policy offices, and the State Budget Office by March 1 each year.

  9. Confidentiality: Non‑aggregated information submitted under this section is confidential, not a public record, and may not be disclosed by DHHS.

Who is affected
- PBMs and pharmacy services administrative organizations (PSAOs) that serve Medicaid MCOs.
- Medicaid managed care organizations (MCOs) that rely on PBMs (because DHHS may not contract with MCOs whose PBMs fail to meet the requirements).
- Michigan retail pharmacies, particularly independent/smaller chains (≤ 7 outlets), which receive specified reimbursement protections and contractual safeguards.
- DHHS (administration, enforcement, and reporting responsibilities).
- Indirectly, Medicaid beneficiaries (through potential effects on pharmacy access and pharmacy reimbursement practices).

Procedural / timeline notes
- Enacted as Public Act 279 of 2023; effective date: February 13, 2024.
- Annual PBM reporting deadlines: submit to DHHS by January 15 each year; DHHS forwards aggregated data to legislative budget and policy offices by March 1 each year.
- Confidentiality protections limit public disclosure of non‑aggregated PBM data.

Potential impacts (practical considerations)
- Intended to bolster reimbursement and contractual protections for small, in‑state pharmacies and to increase PBM pricing/rebate transparency in the Medicaid managed care context.
- May alter MCO contract negotiations and PBM pricing models (movement toward pass‑through pricing).
- Creates administrative/reporting responsibilities for PBMs and DHHS; confidentiality may limit public scrutiny of non‑aggregated data while providing legislators and budget staff with aggregated information for oversight.

Compiled from official sources — confirm details with the bill’s official record.

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