(a) The TennCare bureau is authorized to develop prescription drug programs and to contract with one (1) or more pharmacy benefit managers (PBMs) or other appropriate third party contractors to administer all or a portion of such prescription drug programs for the TennCare program. It is the legislative intent that, insofar as practical, any such pharmacy programs shall be developed and implemented in a manner that seeks to minimize undue disruption in successful drug therapies for current TennCare enrollees.
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Terms Used In Tennessee Code 4-3-1013

  • Contract: A legal written agreement that becomes binding when signed.
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(b) Under such a contract, a PBM may be directed by the TennCare bureau to:

(1) Provide information to the state TennCare pharmacy advisory committee for making recommendations related to a state preferred drug list (PDL);
(2) Provide claims processing and administrative services for the TennCare program;
(3) Provide data on utilization patterns to the bureau of TennCare, the department of finance and administration, TennCare managed care organizations, the University of Tennessee Health Science Center, and other entities determined by the TennCare bureau;
(4) Conduct prospective and retrospective drug utilization review as directed by the bureau of TennCare;
(5) Establish procedures for determining potential liability of third party payers, including, but not limited to, Medicare and private insurance companies, for persons receiving pharmacy services through the state of Tennessee;
(6) Maintain a retail pharmacy network to provide prescription drugs through state programs;
(7) Set pharmacy reimbursement rates and dispensing fee schedules necessary to maintain an adequate retail pharmacy network and increase the cost-effectiveness of state pharmacy purchases;
(8) Negotiate supplemental rebates with pharmaceutical manufacturers for prescription drug expenditures;
(9) Propose other initiatives to the bureau of TennCare to maintain or improve patient care while reducing prescription drug costs; and
(10) Provide other services as directed by the bureau of TennCare.
(c) The state TennCare program shall be authorized to receive one hundred percent (100%) of all rebates and any other financial incentives directly or indirectly resulting from the state’s contract with any PBM.
(d) The PBM contract may include performance goals and financial incentives for success or failure in attaining those goals. It is the legislative intent that such goals and incentives shall include the reliable and timely performance of any system of prior authorization that may be implemented pursuant to pharmacy programs authorized by this section.
(e) To the extent permitted by federal law and the TennCare waiver, the bureau of TennCare may implement, either independently or in combination with a PDL, cost saving measures for pharmaceutical services including, but not limited to, tiered co-payments, reference pricing, prior authorization, step therapy requirements, exclusion from coverage of drugs or classes of drugs, mandating the use of generic drugs, and mandating the use of therapeutic equivalent drugs.
(f) The TennCare bureau shall be required to annually report to the health committee of the house of representatives, the health and welfare committee of the senate, and to the finance, ways and means committees of the senate and the house of representatives concerning pharmacy benefits under the medical assistance program provided pursuant to title 71, chapter 5, on or before January 15 of each calendar year, beginning on January 15, 2013. The report shall specifically report on the use and cost of opioids and other controlled substances in the program.
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