Under current state law, pharmacies and pharmacists that are certified
providers of medical assistance services are reimbursed for the provision of certain
prescription drugs to medical assistance (MA) recipients at a rate established by the
department of health and family services (DHFS). Under current federal law,
persons entitled to coverage under Part B of Medicare do not receive coverage for
prescription drugs for outpatient care as a benefit. Also under current law, as
enacted in 1999 Wisconsin Act 9 (the biennial budget act), DHFS may not discount
the average wholesale price of pharmaceutical drugs provided to MA recipients if
DHFS reimburses for those drugs under a formula that takes into account the
average wholesale price, nor may DHFS reduce pharmacy dispensing fees.

---

Under current law, an individual who is 65 years of age or older is eligible to
receive MA if he or she meets certain income and asset requirements. Currently, to
satisfy the income requirements for MA eligibility, an individual who is 65 years of
age or older must have an income that does not exceed 133.33% of the maximum
payment amount under the former aid to families with dependent children (AFDC)
program.

Beginning January 1, 2001, this bill increases the maximum income level for
individuals 65 years of age or older to 100% of the federal poverty level.

The bill requires that DHFS identify categories of pharmaceutical drugs that
account for significant volume and expenditure by elderly persons and periodically
obtain from the School of Pharmacy at the University of Wisconsin-Madison or a
similar organization recommendations as to preferred drugs within these categories.
Drugs that are provided to an elderly MA recipient that are not these preferred drugs
are not reimbursable under MA unless the provider has received prior authorization
from DHFS to provide the drug. In addition, the bill specifies that the rate for MA
drug reimbursement in selected categories, as determined by DHFS, is the average
wholesale price minus 15% or the maximum allowable cost, as determined by DHFS,
whichever is less. The bill makes an exception, effective January 1, 2001, for these
selected categories to the current prohibition on reducing MA reimbursement for
pharmaceutical drugs.

The bill specifies that, beginning January 1, 2001, as a condition of
participation by a pharmacy or pharmacist in the MA program, the pharmacy or
pharmacist may not charge an amount for a prescription drug for outpatient care
that exceeds the MA reimbursement rate to persons who are aged at least 65 years,
who are ineligible for MA and whose incomes do not exceed 185% of the federal
poverty line. Persons must provide a card, issued by DHFS after a determination of
eligibility, to qualify for these reduced charges. DHFS must calculate and transmit
to pharmacies and pharmacists that participate in the MA program the MA
reimbursement rates for providing prescription drugs and must periodically update
this information and transmit the updated information to pharmacies and
pharmacists. DHFS must provide information and education to pharmacies,
pharmacists and persons aged at least 65 years concerning the program of reduced
prescription drug charges for elderly persons and concerning preferred
pharmaceutical drugs within categories of drugs that account for significant volume
and expenditure by elderly persons.