LRB-4294/1
DAK&ISR:wlj:km
1999 - 2000 LEGISLATURE
March 9, 2000 - Introduced by Representative Underheim, by request of Governor
Tommy G. Thompson. Referred to Committee on Health.
AB870,1,8 1An Act to amend 49.47 (4) (b) 2m. b., 49.47 (4) (b) 2r., 49.47 (4) (b) 2w., 49.47 (4)
2(b) 3., 49.47 (4) (c) 1., 49.47 (4) (c) 3. and 49.47 (4) (i) 2. (intro.); to create 49.45
3(2) (a) 25., 49.45 (8w), 49.47 (4) (aq) and 49.688 of the statutes; and to affect
41999 Wisconsin Act 9, section 9123 (9n); relating to: requiring pharmacies and
5pharmacists, as a condition of medical assistance participation, to charge
6elderly, low-income persons for prescription drugs at no more than the rate
7reimbursed under medical assistance, expanding medical assistance eligibility
8and making appropriations.
Analysis by the Legislative Reference Bureau
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.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB870, s. 1 1Section 1. 49.45 (2) (a) 25. of the statutes is created to read:
AB870,3,6
149.45 (2) (a) 25. Identify categories of pharmaceutical drugs that account for
2significant prescription order volume and expenditure by persons who are aged at
3least 65 years and periodically obtain recommendations from the School of Pharmacy
4at the University of Wisconsin-Madison or a similar medical education and research
5organization, as defined in s. 448.08 (1) (b), as to preferred drugs within the
6categories.
AB870, s. 2 7Section 2. 49.45 (8w) of the statutes is created to read:
AB870,3,138 49.45 (8w) Prescription drugs; prior authorization; reimbursement. (a)
9Provision of a prescription drug, as defined in s. 450.01 (20), that is not a preferred
10drug under sub. (2) (a) 25. and that is provided to an individual aged at least 65 years
11under s. 49.46 (2) (b) 6. h. is reimbursable under medical assistance only if the
12pharmacist or pharmacy that provides the drug receives prior authorization from the
13department for the provision.
AB870,3,1714 (b) Beginning January 1, 2001, the rate for reimbursement for drugs under s.
1549.46 (2) (b) 6. h. in selected categories, as determined by the department, is the
16average wholesale price minus 15% or the maximum allowable cost, as determined
17by the department, whichever is less.
AB870, s. 3 18Section 3. 49.47 (4) (aq) of the statutes is created to read:
AB870,3,2219 49.47 (4) (aq) 1. Subject to subd. 2., an individual who does not meet the
20limitation on income under par. (c) is eligible for medical assistance if the individual
21is 65 years of age or older and the individual's income does not exceed 100% of the
22federal poverty level.
AB870,4,223 2. If a federal waiver is necessary to provide medical assistance to individuals
24specified in subd. 1., the department shall request a waiver from the secretary of the

1federal department of health and human services before providing medical
2assistance under this paragraph.
AB870, s. 4 3Section 4. 49.47 (4) (b) 2m. b. of the statutes is amended to read:
AB870,4,64 49.47 (4) (b) 2m. b. For persons who are eligible under par. (a) 3. or 4. or (aq),
5motor vehicles are exempt from consideration as an asset to the same extent as
6provided under 42 USC 1381 to 1385.
AB870, s. 5 7Section 5. 49.47 (4) (b) 2r. of the statutes is amended to read:
AB870,4,118 49.47 (4) (b) 2r. For a person who is eligible under par. (a) 3. or 4. or (aq), the
9value of any burial space or agreement representing the purchase of a burial space
10held for the purpose of providing a place for the burial of the person or any member
11of his or her immediate family.
AB870, s. 6 12Section 6. 49.47 (4) (b) 2w. of the statutes is amended to read:
AB870,4,1513 49.47 (4) (b) 2w. For a person who is eligible under par. (a) 3. or 4. or (aq), life
14insurance with cash surrender values if the total face value of all life insurance
15policies is not more than $1,500.
AB870, s. 7 16Section 7. 49.47 (4) (b) 3. of the statutes is amended to read:
AB870,4,2117 49.47 (4) (b) 3. For a person who is eligible under par. (a) 3. or 4. or (aq), funds
18set aside to meet the burial and related expenses of the person and his or her spouse
19in an amount not to exceed $1,500 each, minus the sum of the cash value of any life
20insurance excluded under subd. 2w. and the amount in any irrevocable burial trust
21under s. 445.125 (1) (a).
AB870, s. 8 22Section 8. 49.47 (4) (c) 1. of the statutes is amended to read:
AB870,5,823 49.47 (4) (c) 1. Except as provided in par. pars. (am) and (aq) and as limited by
24subd. 3., eligibility exists if income does not exceed 133 1/3% of the maximum aid to
25families with dependent children payment under s. 49.19 (11) for the applicant's

1family size or the combined benefit amount available under supplemental security
2income under 42 USC 1381 to 1383c and state supplemental aid under s. 49.77
3whichever is higher. In this subdivision "income" includes earned or unearned
4income that would be included in determining eligibility for the individual or family
5under s. 49.19 or 49.77, or for the aged, blind or disabled under 42 USC 1381 to 1385.
6"Income" does not include earned or unearned income which would be excluded in
7determining eligibility for the individual or family under s. 49.19 or 49.77, or for the
8aged, blind or disabled individual under 42 USC 1381 to 1385.
AB870, s. 9 9Section 9. 49.47 (4) (c) 3. of the statutes is amended to read:
AB870,5,1310 49.47 (4) (c) 3. Except as provided in par. pars. (am) and (aq), no person is
11eligible for medical assistance under this section if the person's income exceeds the
12maximum income levels that the U.S. department of health and human services sets
13for federal financial participation under 42 USC 1396b (f).
AB870, s. 10 14Section 10. 49.47 (4) (i) 2. (intro.) of the statutes is amended to read:
AB870,5,1715 49.47 (4) (i) 2. (intro.) Notwithstanding par. (b) 2r. and 3., a person who is
16described in par. (a) 3. or 4. or (aq) is not eligible for benefits under this section if any
17of the following criteria is met:
AB870, s. 11 18Section 11. 49.688 of the statutes is created to read:
AB870,5,20 1949.688 Prescription drug charges; low-income elderly persons. (1) In
20this section:
AB870,5,2121 (a) "Prescription drug" has the meaning given in s. 450.01 (20).
AB870,5,2222 (b) "Prescription order" has the meaning given in s. 450.01 (21).
AB870,6,4 23(2) Beginning January 1, 2001, as a condition of participation by a pharmacy
24or pharmacist in the program under ss. 49.45, 49.46 and 49.47, the pharmacy or
25pharmacist may not charge a person who presents a valid prescription order and a

1card indicating that he or she meets eligibility requirements under sub. (3) an
2amount for a prescription drug for outpatient care under the order that exceeds the
3medical assistance reimbursement rate for providing the corresponding legend drug
4under s. 49.46 (2) (b) 6. h.
AB870,6,10 5(3) A person who is at least 65 years of age, who is ineligible for medical
6assistance and whose income does not exceed 185% of the poverty line is eligible to
7purchase a prescription drug at the amount specified in sub. (2). The person may
8apply to the department, on a form provided by the department, for a determination
9of eligibility and issuance of a prescription drug card for purchase of prescription
10drugs under this section.
AB870,6,14 11(4) The department shall devise and distribute a form for application for the
12program under this section, shall determine eligibility of applicants and shall issue
13to eligible persons a prescription drug card for use in purchasing prescription drugs
14at the amount specified in sub. (2).
AB870,6,20 15(5) The department shall, for the purposes of sub. (2), calculate and transmit
16to pharmacies and pharmacists that are certified providers of medical assistance the
17medical assistance reimbursement rates for providing legend drugs under s. 49.46
18(2) (b) 6. h. and any additional discounts on the drugs. The department shall
19periodically update this information and transmit the updated rates to pharmacies
20and pharmacists.
AB870,6,23 21(6) The department shall provide information and education to pharmacies,
22pharmacists and persons aged at least 65 years concerning the program under this
23section and concerning the preferred drugs under s. 49.45 (2) (a) 25.
AB870, s. 12 24Section 12 . 1999 Wisconsin Act 9, section 9123 (9n), is amended to read:
AB870,7,9
1[1999 [Wisconsin Act 9] Section 9123 (9n) Limitation on reduction of
2reimbursement for pharmaceutical drugs.
During the 1999-2001 fiscal biennium,
3except for pharmaceutical drugs in selected categories, as determined by the
4department,
the department of health and family services may not discount the
5average wholesale price of pharmaceutical drugs provided under section 49.45 of the
6statutes to medical assistance recipients by more than 10% if the department
7reimburses for those pharmaceuticals under a formula that takes into account the
8average wholesale price, and the department may not reduce pharmacy dispensing
9fees.
AB870, s. 13 10Section 13. Appropriation changes; health and family services.
AB870,7,1711 (1) Prescription drug assistance for elderly; administration. In the schedule
12under section 20.005 (3) of the statutes for the appropriation to the department of
13health and family services under section 20.435 (4) (a) of the statutes, as affected by
14the acts of 1999, the dollar amount is increased by $1,000,000 for fiscal year 1999-00
15and the dollar amount is increased by $1,000,000 for fiscal year 2000-01 to increase
16funding for administration of the prescription drug assistance for elderly program
17under section 49.688 of the statutes, as created by this act.
AB870,7,2218 (2) Expanded medical assistance eligibility; benefit. In the schedule under
19section 20.005 (3) of the statutes for the appropriation to the department of health
20and family services under section 20.435 (4) (b) of the statutes, as affected by the acts
21of 1999, the dollar amount is increased by $1,2000,000 for fiscal year 2000-01 to
22increase funding for expanded eligibility for medical assistance program benefits.
AB870,8,323 (3) Expanded medical assistance eligibility; administration. In the schedule
24under section 20.005 (3) of the statutes for the appropriation to the department of
25health and family services under section 20.435 (4) (bm) of the statutes, as affected

1by the acts of 1999, the dollar amount is increased by $1,000,000 for fiscal year
22000-01 to increase funding for administration of expanded eligibility for medical
3assistance program benefits.
AB870, s. 14 4Section 14. Initial applicability.
AB870,8,75 (1) The treatment of section 49.47 (4) (aq), (b) 2m. b., 2r., 2w. and 3., (c) 1. and
63. and (i) (2) (intro.) of the statutes first applies to eligibility determinations made
7for medical assistance on January 1, 2001.
AB870, s. 15 8Section 15. Effective dates. This act takes effect on the day after publication,
9except as follows:
AB870,8,1110 (1) Medical assistance reimbursement for pharmaceutical drugs. The
11treatment of Section 12 of this act takes effect on January 1, 2001.
AB870,8,1212 (End)
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