LRB-1284/3
DAK:wlj:ch
2001 - 2002 LEGISLATURE
February 13, 2001 - Introduced by Representatives Wieckert, Friske, Gronemus,
Rhoades, Pettis, Krawczyk, Petrowski, Loeffelholz, D. Meyer, Leibham, J.
Fitzgerald, Townsend, Reynolds, Lippert, McCormick, Bies, Ainsworth,
Albers, Freese, Gunderson, Gundrum, Hoven, Hundertmark, Jeskewitz,
Johnsrud, Kaufert, Kestell, Kreibich, F. Lasee, M. Lehman, Musser, Nass,
Olsen, Ott, Owens, Seratti, Skindrud, Stone, Sykora, Travis, Underheim,
Urban, Vrakas, Wade
and Ward, cosponsored by Senators Rosenzweig,
Harsdorf, S. Fitzgerald, Darling, Schultz
and Roessler. Referred to
Committee on Health.
AB120,1,11 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.); and to create
320.435 (4) (bv), 20.435 (4) (j), 20.435 (4) (jb), 49.45 (48), 49.47 (4) (aq) and 49.688
4of the statutes; relating to: expanding medical assistance income eligibility
5requirements for elderly persons; requiring pharmacies and pharmacists, as a
6condition of medical assistance participation, to charge elderly, low-income
7persons for prescription drugs no more than specific amounts; specifying
8requirements for rebate agreements between the department of health and
9family services and drug manufacturers; limiting prior authorization
10requirements under medical assistance; requiring the exercise of rule-making
11authority; making appropriations; and providing penalties.
Analysis by the Legislative Reference Bureau
Under current state law, pharmacies and pharmacists that are certified
providers of medical assistance (MA) services are reimbursed, at a rate established
by the department of health and family services (DHFS), for providing certain
prescription drugs to MA recipients. Under the MA program, numerous prescription

drugs must be authorized by DHFS prior to being dispensed to MA recipients. 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.
Under current law, an individual who is 65 years of age or older, blind, or
permanently disabled, 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, blind, or permanently disabled 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 or the
combined benefit amount available under the federal supplemental security income
(SSI) program.
Beginning March 1, 2002, this bill increases to 100% of the federal poverty level
the maximum income level for eligibility for MA for individuals who are 65 years of
age or older, blind, or permanently disabled.
This bill provides that, beginning March 1, 2002, persons who have applied for
and have been found by DHFS to be eligible for prescription drug assistance and who
have paid an annual enrollment fee of $25 may use a card, issued by DHFS, to obtain
certain prescription drugs for outpatient care at a rate that is the average wholesale
price minus 5% or the maximum allowable cost, as determined by DHFS, whichever
is less, plus a pharmacy dispensing fee. After an eligible person has paid a deductible
by expending $840 in a 12-month period for prescription drugs at this reduced rate,
the person may obtain additional prescription drugs in that period by paying a
copayment of $10 for each generic drug and a copayment of $20 for each drug that
is not a generic drug. Persons who are eligible to obtain prescription drugs for these
reduced charges are state residents who are at least 65 years of age, are not MA
recipients, and have household incomes, as determined by DHFS, that do not exceed
185% of the federal poverty line for a family the size of the persons' eligible families.
As a condition of participation by a pharmacy or pharmacist in the MA program, the
pharmacy or pharmacist may not charge persons who are eligible for prescription
drug assistance more than these amounts; as a part of the costs chargeable for the
deductible, the pharmacy or pharmacist may include a dispensing fee but may not
charge a dispensing fee after the deductible is met. If a person who is eligible has
other available coverage for prescription drugs, the program does not apply to the
costs for prescription drugs available under that other coverage.
Under the bill, DHFS or an entity with which DHFS contracts may enter with
drug manufacturers into rebate agreements that are modeled on federal medicaid
rebate agreements, under which the manufacturer must make payments to the state
treasurer for deposit in the general fund for the manufacturer's drugs that are
prescribed and purchased under the program. The amount of the rebate payment
under the agreement is required to be determined by the method that is specified
under federal medicaid rebate agreements. The amounts of the rebate payments
must, in turn, together with general purpose revenues, be paid by DHFS to
pharmacies or pharmacists that have reduced charges for prescription drugs for the
eligible persons. Payment is at the average wholesale price minus 5% or the
maximum allowable cost, as determined by DHFS, whichever is less, minus any

copayment made, plus a dispensing fee. If a manufacturer enters into a rebate
agreement, DHFS may not, after February 28, 2002, and before March 1, 2004,
expand the prior authorization requirements under the MA program or under the
prescription drug program created under the bill for prescription drugs
manufactured by that manufacturer beyond those prior authorization requirements
in effect under the MA program on March 1, 2002.
Under the bill, DHFS is authorized to enter into a contract with an entity to
perform DHFS' duties and exercise its powers, other than rule making, under the
prescription drug assistance program. DHFS must, under the bill, promulgate rules
that specify the criteria to be used to determine household income for persons eligible
for prescription drug assistance. Prescription drugs for which the reduced charges
must be made are those that are available as an MA benefit and that are
manufactured by a manufacturer that enters into a rebate agreement with DHFS.
DHFS must calculate and transmit to pharmacies and pharmacists that participate
in the MA program the prices at the discounted rate that must be charged to certain
eligible persons in meeting the deductible for prescription drugs and must
periodically update this information and transmit the updated information to
pharmacies and pharmacists. DHFS must monitor compliance by pharmacies and
pharmacists with the requirement to charge eligible persons for the specified
prescription drugs at the reduced amounts and annually report to the legislature
concerning the compliance. DHFS also must promulgate rules that establish
prohibitions against fraud that are substantially similar to MA fraud provisions; the
bill specifies penalties applicable to violations of these prohibitions. If federal law
is changed to provide coverage for outpatient prescription drugs as a benefit under
medicare or another program, DHFS must provide a report to the legislature that
analyzes the differences between the federal program and the program under the bill
and that provides recommendations concerning alignment, if any, of the differences.
The bill appropriates $2,000,000 in general purpose revenues in fiscal year 2001-02
to the joint committee on finance and authorizes DHFS to submit a proposal for
review and approval by the department of administration and by the joint committee
on finance, for expenditure of these moneys for administration of the program.
For further information see the state and local 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:
AB120, s. 1 1Section 1. 20.005 (3) (schedule) of the statutes: at the appropriate place, insert
2the following amounts for the purposes indicated: - See PDF for table PDF
AB120, s. 2 1Section 2. 20.435 (4) (bv) of the statutes is created to read:
AB120,4,42 20.435 (4) (bv) Prescription drug assistance for elderly; aids. The amounts in
3the schedule for payment to pharmacies and pharmacists under s. 49.688 (8) for
4prescription drug assistance for elderly persons.
AB120, s. 3 5Section 3. 20.435 (4) (j) of the statutes is created to read:
AB120,4,96 20.435 (4) (j) Prescription drug assistance for elderly; manufacturer rebates.
7All moneys received from rebate payments by manufacturers under s. 49.688 (7), to
8be used for payment to pharmacies and pharmacists under s. 49.688 (8) for
9prescription drug assistance for elderly persons.
AB120, s. 4 10Section 4. 20.435 (4) (jb) of the statutes is created to read:
AB120,4,1311 20.435 (4) (jb) Prescription drug assistance for elderly; enrollment fees. All
12moneys received from payment of enrollment fees under s. 49.688 (3), to be used for
13administration of the program under s. 49.688.
AB120, s. 5 14Section 5. 49.45 (48) of the statutes is created to read:
AB120,5,315 49.45 (48) Prior authorization for legend drugs. If, after February 28, 2002,
16and before March 1, 2004, a manufacturer has in force a rebate agreement under s.
1749.688 (7), the department may not during that period expand the prior

1authorization requirements for prescription drugs manufactured by the
2manufacturer for which coverage is provided under s. 49.46 (2) (b) 6. h. beyond those
3prior authorization requirements that are in effect on March 1, 2002.
AB120, s. 6 4Section 6. 49.47 (4) (aq) of the statutes is created to read:
AB120,5,95 49.47 (4) (aq) 1. Subject to subd. 2., an individual who does not meet the
6limitation on income under par. (c) is eligible for medical assistance if the individual's
7income does not exceed 100% of the federal poverty level, and the individual is 65
8years of age or older or is blind or totally and permanently disabled, as defined under
9federal Title XVI.
AB120,5,1310 2. If a federal waiver is necessary to provide medical assistance to individuals
11specified in subd. 1., the department shall request a waiver from the secretary of the
12federal department of health and human services before providing medical
13assistance under this paragraph.
AB120, s. 7 14Section 7. 49.47 (4) (b) 2m. b. of the statutes is amended to read:
AB120,5,1715 49.47 (4) (b) 2m. b. For persons who are eligible under par. (a) 3. or 4. or (aq),
16motor vehicles are exempt from consideration as an asset to the same extent as
17provided under 42 USC 1381 to 1385.
AB120, s. 8 18Section 8. 49.47 (4) (b) 2r. of the statutes is amended to read:
AB120,5,2219 49.47 (4) (b) 2r. For a person who is eligible under par. (a) 3. or 4. or (aq), the
20value of any burial space or agreement representing the purchase of a burial space
21held for the purpose of providing a place for the burial of the person or any member
22of his or her immediate family.
AB120, s. 9 23Section 9. 49.47 (4) (b) 2w. of the statutes is amended to read:
AB120,6,3
149.47 (4) (b) 2w. For a person who is eligible under par. (a) 3. or 4. or (aq), life
2insurance with cash surrender values if the total face value of all life insurance
3policies is not more than $1,500.
AB120, s. 10 4Section 10. 49.47 (4) (b) 3. of the statutes is amended to read:
AB120,6,95 49.47 (4) (b) 3. For a person who is eligible under par. (a) 3. or 4. or (aq), funds
6set aside to meet the burial and related expenses of the person and his or her spouse
7in an amount not to exceed $1,500 each, minus the sum of the cash value of any life
8insurance excluded under subd. 2w. and the amount in any irrevocable burial trust
9under s. 445.125 (1) (a).
AB120, s. 11 10Section 11. 49.47 (4) (c) 1. of the statutes is amended to read:
AB120,6,2211 49.47 (4) (c) 1. Except as provided in par. pars. (am) and (aq) and as limited by
12subd. 3., eligibility exists if income does not exceed 133 1/3% 133.33% of the
13maximum aid to families with dependent children payment under s. 49.19 (11) for
14the applicant's family size or the combined benefit amount available under
15supplemental security income under 42 USC 1381 to 1383c and state supplemental
16aid under s. 49.77 whichever is higher. In this subdivision "income" includes earned
17or unearned income that would be included in determining eligibility for the
18individual or family under s. 49.19 or 49.77, or for the aged, blind or disabled under
1942 USC 1381 to 1385. "Income" does not include earned or unearned income which
20would be excluded in determining eligibility for the individual or family under s.
2149.19 or 49.77, or for the aged, blind or disabled individual under 42 USC 1381 to
221385.
AB120, s. 12 23Section 12. 49.47 (4) (c) 3. of the statutes is amended to read:
AB120,7,224 49.47 (4) (c) 3. Except as provided in par. pars. (am) and (aq), no person is
25eligible for medical assistance under this section if the person's income exceeds the

1maximum income levels that the U.S. department of health and human services sets
2for federal financial participation under 42 USC 1396b (f).
AB120, s. 13 3Section 13. 49.47 (4) (i) 2. (intro.) of the statutes is amended to read:
AB120,7,64 49.47 (4) (i) 2. (intro.) Notwithstanding par. (b) 2r. and 3., a person who is
5described in par. (a) 3. or 4. or (aq) is not eligible for benefits under this section if any
6of the following criteria is met:
AB120, s. 14 7Section 14. 49.688 of the statutes is created to read:
AB120,7,9 849.688 Prescription drug assistance for low-income elderly persons.
9(1)
In this section:
AB120,7,1010 (a) "Generic name" has the meaning given in s. 450.12 (1) (b).
AB120,7,1211 (b) "Poverty line" means the nonfarm federal poverty line for the continental
12United States, as defined by the federal department of labor under 42 USC 9902 (2).
AB120,7,1613 (c) "Prescription drug" means a prescription drug, as defined in s. 450.01 (20),
14that is included in the drugs specified under s. 49.46 (2) (b) 6. h. and that is
15manufactured by a manufacturer that enters into a rebate agreement in force under
16sub. (7).
AB120,7,1717 (d) "Prescription order" has the meaning given in s. 450.01 (21).
AB120,8,2 18(2) A person who is a resident, as defined in s. 27.01 (10) (a), of this state, who
19is at least 65 years of age, who is not a recipient of medical assistance, whose annual
20household income, as determined by the department, does not exceed 185% of the
21poverty line for a family the size of the person's eligible family, and who pays the
22program enrollment fee specified in sub. (3) (a) is eligible to purchase a prescription
23drug at the amounts specified in sub. (6) (b). The person may apply to the
24department, on a form provided by the department together with program

1enrollment fee payment, for a determination of eligibility and issuance of a
2prescription drug card for purchase of prescription drugs under this section.
AB120,8,3 3(3) (a) Program participants shall pay all of the following:
AB120,8,44 1. For each 12-month benefit period, a program enrollment fee of $25.
AB120,8,55 2. For each 12-month benefit period, a deductible for each person of $840.
AB120,8,66 3. After payment of the deductible under subd. 2., all of the following:
AB120,8,87 a. A copayment of $10 for each prescription drug that bears only a generic
8name.
AB120,8,109 b. A copayment of $20 for each prescription drug that does not bear only a
10generic name.
AB120,8,1411 (b) Notwithstanding s. 49.002, if a person who is eligible under this section has
12other available coverage for payment of a prescription drug, this section applies only
13to costs for prescription drugs for the person that are not covered under the person's
14other available coverage.
AB120,8,20 15(4) The department shall devise and distribute a form for application for the
16program under sub. (2), shall determine eligibility for each 12-month benefit period
17of applicants, and shall issue to eligible persons a prescription drug card for use in
18purchasing prescription drugs, as specified in sub. (5). The department shall
19promulgate rules that specify the criteria to be used to determine annual household
20income under sub. (2).
AB120,9,2 21(5) Beginning March 1, 2002, as a condition of participation by a pharmacy or
22pharmacist in the program under ss. 49.45, 49.46, or 49.47, the pharmacy or
23pharmacist may not charge a person who presents a valid prescription order and a
24card indicating that he or she meets eligibility requirements under sub. (2) an

1amount for a prescription drug under the order that exceeds the amounts specified
2in sub. (6) (b).
AB120,9,5 3(6) (a) The charge for a prescription drug shall be calculated at the average
4wholesale price minus 5% or the maximum allowable cost, as determined by the
5department, whichever is less.
AB120,9,76 (b) The amounts that a pharmacy or pharmacist may charge a person specified
7in sub. (2) in a calendar year period for a prescription drug are the following:
AB120,9,118 1. If applicable, a deductible, as specified in sub. (3) (a) 2., for a prescription
9drug that is charged at the rate specified in par. (a), plus a dispensing fee that is equal
10to the dispensing fee permitted to be charged for prescription drugs for which
11coverage is provided under s. 49.46 (2) (b) 6. h.
AB120,9,1312 2. After the deductible under subd. 1. is charged, the copayment, as applicable,
13that is specified in sub. (3) (a) 3. a. or b.
AB120,9,1714 (c) The department shall calculate and transmit to pharmacies and
15pharmacists that are certified providers of medical assistance amounts that may be
16used in calculating charges under par. (a). The department shall periodically update
17this information and transmit the updated amounts to pharmacies and pharmacists.
AB120,9,22 18(7) The department or an entity with which the department contracts may
19enter into a rebate agreement that is modeled on the rebate agreement specified
20under 42 USC 1396r-8 with a drug manufacturer that sells drugs for prescribed use
21in this state. The rebate agreement, if negotiated, shall include all of the following
22as requirements:
AB120,9,2423 (a) That the manufacturer shall make rebate payments for each prescription
24drug of the manufacturer that is prescribed for persons who are eligible under sub.

1(2), to the state treasurer to be credited to the appropriation under s. 20.435 (4) (j),
2each calendar quarter or according to a schedule established by the department.
AB120,10,43 (b) That the amount of the rebate payment shall be determined by a method
4specified in 42 USC 1396r-8 (c).
AB120,10,19 5(8) From the appropriation accounts under s. 20.435 (4) (bv) and (j), beginning
6March 1, 2002, the department shall, under a schedule that is identical to that used
7by the department for payment of pharmacy provider claims under medical
8assistance, provide to pharmacies and pharmacists payments for prescription drugs
9sold by the pharmacies or pharmacists to persons eligible under sub. (2) who have
10paid the deductible specified under sub. (3) (a) 2. The payment for each prescription
11drug under this subsection shall be at the rate specified in sub. (6) (a), minus the
12amount of a copayment charged under sub. (6) (b) 2., plus a dispensing fee, as
13specified in sub. (6) (b) 1. The department shall devise and distribute a form for
14reports by pharmacies and pharmacists under this subsection and may limit
15payment under this subsection to those prescription drugs for which payment claims
16are submitted by pharmacies or pharmacists directly to the department. The
17department may apply to the program under this section the same utilization and
18cost control procedures that apply under rules promulgated by the department to
19medical assistance under subch. IV.
AB120,11,2 20(9) The department shall, under methods promulgated by the department by
21rule, monitor compliance by pharmacies and pharmacists that are certified providers
22of medical assistance with the requirements of sub. (5) and shall annually report to
23the legislature under s. 13.172 (2) concerning the compliance. The report shall
24include information on any pharmacies or pharmacists that discontinue

1participation as certified providers of medical assistance and the reasons given for
2the discontinuance.
AB120,11,4 3(10) (a) The department shall promulgate rules relating to prohibitions on
4fraud that are substantially similar to applicable provisions under s. 49.49 (1) (a).
AB120,11,85 (b) A person who is convicted of violating a rule promulgated by the department
6under par. (a) in connection with that person's furnishing of prescription drugs under
7this section may be fined not more than $25,000, or imprisoned for not more than 7
8years and 6 months, or both.
AB120,11,119 (c) A person other than a person specified in par. (b) who is convicted of violating
10a rule promulgated by the department under par. (a) may be fined not more than
11$10,000, or imprisoned for not more than one year, or both.
AB120,11,17 12(11) If federal law is amended to provide coverage for prescription drugs for
13outpatient care as a benefit under medicare or to provide similar coverage under
14another program, the department shall submit to appropriate standing committees
15of the legislature under s. 13.172 (3) a report that contains an analysis of the
16differences between such a federal program and the program under this section and
17that provides recommendations concerning alignment, if any, of the differences.
AB120,11,22 18(12) After February 28, 2002, and before March 1, 2004, the department may
19not subject a manufacturer that enters into a rebate agreement under sub. (7) to prior
20authorization requirements for a prescription drug under this section that are an
21expansion of prior authorization requirements in effect under the medical assistance
22program on March 1, 2002.
AB120,12,2 23(13) Except as provided in subs. (9) to (12), and except for the department's
24rule-making requirements and authority, the department may enter into a contract

1with an entity to perform the duties and exercise the powers of the department under
2this section.
AB120, s. 15 3Section 15. Nonstatutory provisions.
AB120,13,44 (1) Prescription drug assistance for elderly; administration. Before July 1,
52001, the department of health and family services may develop and submit to the
6department of administration a proposal for expenditure of the funds appropriated
7under section 20.865 (4) (a) of the statutes for administration of the prescription drug
8assistance for elderly program under section 49.688 of the statutes, as created by this
9act. The department of administration may approve, disapprove, or modify and
10approve any proposal it receives under this subsection. If the department of
11administration approves the proposal, the department shall submit the proposal,
12together with any modifications, to the cochairpersons of the joint committee on
13finance. If the cochairpersons of the committee do not notify the secretaries of
14administration and health and family services within 14 working days after
15receiving the proposal that the cochairpersons have scheduled a meeting for the
16purpose of reviewing the proposal, the secretary of administration may transfer from
17the appropriation under section 20.865 (4) of the statutes to the appropriation under
18section 20.435 (4) (a) of the statutes the amount specified in the proposal or any
19proposed modifications of the proposal for expenditure as specified in the proposal
20or any proposed modifications of the proposal and may approve any position
21authority specified in the proposal or any proposed modifications of the proposal. If,
22within 14 working days after receiving the proposal, the cochairpersons notify the
23secretaries of administration and health and family services that the cochairpersons
24have scheduled a meeting for the purpose of reviewing the proposal, the secretary of
25administration may not transfer any amount specified in the proposal or any

1proposed modifications of the proposal from the appropriation under section 20.865
2(4) of the statutes and may not approve any position authority specified in the
3proposal or any proposed modifications of the proposal, except as approved by the
4committee.
AB120, s. 16 5Section 16. Appropriation changes.
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