SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicaid Drug Review, Utilization, 
Good Governance Improvement Act'' or the ``Medicaid DRUG Improvement 
Act''.

SEC. 2. MEDICAID DRUG UTILIZATION REVIEW.

    (a) State Plan Requirement.--Section 1902(a) of the Social Security 
Act (42 U.S.C. 1396a(a)) is amended--
            (1) in paragraph (82), at the end, by striking ``and'';
            (2) in paragraph (83), at the end, by striking the period 
        and inserting ``; and''; and
            (3) by inserting after paragraph (83) the following new 
        paragraph:
            ``(84) provide that the State is in compliance with the 
        drug review and utilization requirements under subsection 
        (nn)(1).''.
    (b) Drug Review and Utilization Requirements.--Section 1902 of the 
Social Security Act (42 U.S.C. 1396a) is amended by adding at the end 
the following new subsection:
    ``(nn) Drug Review and Utilization Requirements.--
            ``(1) In general.--For purposes of subsection (a)(84), the 
        drug review and utilization requirements under this subsection 
        are, subject to paragraph (3) and beginning October 1, 2019, 
        the following:
                    ``(A) Claims review limitations.--
                            ``(i) In general.--The State has in place--
                                    ``(I) safety edits (as specified by 
                                the State) for subsequent fills for 
                                opioids and a claims review automated 
                                process (as designed and implemented by 
                                the State) that indicates when an 
                                individual enrolled under the State 
                                plan (or under a waiver of the State 
                                plan) is prescribed a subsequent fill 
                                of opioids in excess of any limitation 
                                that may be identified by the State;
                                    ``(II) safety edits (as specified 
                                by the State) on the maximum daily 
                                morphine equivalent that can be 
                                prescribed to an individual enrolled 
                                under the State plan (or under a waiver 
                                of the State plan) for treatment of 
                                chronic pain and a claims review 
                                automated process (as designed and 
                                implemented by the State) that 
                                indicates when an individual enrolled 
                                under the plan (or waiver) is 
                                prescribed the morphine equivalent for 
                                such treatment in excess of any 
                                limitation that may be identified by 
                                the State; and
                                    ``(III) a claims review automated 
                                process (as designed and implemented by 
                                the State) that monitors when an 
                                individual enrolled under the State 
                                plan (or under a waiver of the State 
                                plan) is concurrently prescribed 
                                opioids and--
                                            ``(aa) benzodiazepines; or
                                            ``(bb) antipsychotics.
                            ``(ii) Managed care entities.--The State 
                        requires each managed care entity (as defined 
                        in section 1932(a)(1)(B)) with respect to which 
                        the State has a contract under section 1903(m) 
                        or under section 1905(t)(3) to have in place, 
                        subject to paragraph (3), with respect to 
                        individuals who are eligible for medical 
                        assistance under the State plan (or under a 
                        waiver of the State plan) and who are enrolled 
                        with the entity, the limitations described in 
                        subclauses (I) and (II) of clause (i) and a 
                        claims review automated process described in 
                        subclause (III) of such clause.
                            ``(iii) Rules of construction.--Nothing in 
                        this subparagraph may be construed as 
                        prohibiting a State or managed care entity from 
                        designing and implementing a claims review 
                        automated process under this subparagraph that 
                        provides for prospective or retrospective 
                        reviews of claims. Nothing in this subparagraph 
                        shall be understood as prohibiting the exercise 
                        of clinical judgment from a provider enrolled 
                        as a participating provider in a State plan (or 
                        waiver of the State plan) or contracting with a 
                        managed care entity regarding the best items 
                        and services for an individual enrolled under 
                        such State plan (or waiver).
                    ``(B) Program to monitor antipsychotic medications 
                by children.--The State has in place a program (as 
                designed and implemented by the State), including such 
                a program that the State had in place before the date 
                of the enactment of this subsection, to monitor and 
                manage the appropriate use of antipsychotic medications 
                by children enrolled under the State plan (or under a 
                waiver of the State plan) and submits annually to the 
                Secretary such information as the Secretary may require 
                on activities carried out under such program for 
                individuals not more than the age of 18 years generally 
                and children in foster care specifically.
                    ``(C) Fraud and abuse identification.--The State 
                has in place a process (as designed and implemented by 
                the State), including such a process that the State had 
                in place before the date of the enactment of this 
                subsection, that identifies potential fraud or abuse of 
                controlled substances by individuals enrolled under the 
                State plan (or under a waiver of the State plan), 
                health care providers prescribing drugs to individuals 
                so enrolled, and pharmacies dispensing drugs to 
                individuals so enrolled.
                    ``(D) Reports.--The State shall include in the 
                annual report submitted to the Secretary under section 
                1927(g)(3)(D) information on the limitations, 
                requirement, program, and processes applied by the 
                State under subparagraphs (A) through (C) in accordance 
                with such manner and time as specified by the 
                Secretary.
            ``(2) Annual report by secretary.--For each fiscal year 
        beginning with fiscal year 2020, the Secretary shall submit to 
        Congress a report on the most recent information submitted by 
        States under paragraph (1)(D).
            ``(3) Exceptions.--
                    ``(A) Certain individuals exempted.--The drug 
                review and utilization requirements under this 
                subsection shall not apply with respect to an 
                individual who--
                            ``(i) is receiving--
                                    ``(I) hospice or palliative care; 
                                or
                                    ``(II) treatment for cancer;
                            ``(ii) is a resident of a long-term care 
                        facility, of a facility described in section 
                        1905(d), or of another facility for which 
                        frequently abused drugs are dispensed for 
                        residents through a contract with a single 
                        pharmacy; or
                            ``(iii) the State elects to treat as 
                        exempted from such requirements.
                    ``(B)  Exception relating to ensuring access.--In 
                order to ensure reasonable access to health care, the 
                Secretary may waive the drug review and utilization 
                requirements under this subsection, with respect to a 
                State, in the case of natural disasters and similar 
                situations, and in the case of the provision of 
                emergency services (as defined for purposes of section 
                1860D-4(c)(5)(D)(ii)(II)).''.
    (c) Managed Care Entities.--Section 1932 of the Social Security Act 
(42 U.S.C. 1396u-2) is amended by adding at the end the following new 
subsection:
    ``(i) Drug Utilization Review Activities and Requirements.--
Beginning not later than October 1, 2019, each contract under a State 
plan with a managed care entity (other than a primary care case 
manager) under section 1903(m) shall provide that the entity is in 
compliance with the applicable provisions of section 438.3(s)(2) of 
title 42 of the Code of Federal Regulations, section 483.3(s)(4)) of 
such title, and section 483.3(s)(5) of such title, as such provisions 
were in effect on March 31, 2018.''.

SEC. 3. IDENTIFYING AND ADDRESSING INAPPROPRIATE PRESCRIBING AND 
              BILLING PRACTICES UNDER MEDICAID.

    (a) In General.--Section 1927(g) of the Social Security Act (42 
U.S.C. 1396r-8(g)) is amended--
            (1) in paragraph (1)(A)--
                    (A) by striking ``of section 1903(i)(10)(B)'' and 
                inserting ``of section 1902(a)(54)'';
                    (B) by striking ``, by not later than January 1, 
                1993,'';
                    (C) by inserting after ``gross overuse,'' the 
                following: ``excessive utilization,''; and
                    (D) by striking ``or inappropriate or medically 
                unnecessary care'' and inserting ``inappropriate or 
                medically unnecessary care, or prescribing or billing 
                practices that indicate abuse or excessive 
                utilization''; and
            (2) in paragraph (2)(B)--
                    (A) by inserting after ``gross overuse,'' the 
                following: ``excessive utilization,'';
                    (B) by striking ``or inappropriate or medically 
                unnecessary care'' and inserting ``inappropriate or 
                medically unnecessary care, or prescribing or billing 
                practices that indicate abuse or excessive 
                utilization''; and
                    (C) by adding at the end the following new 
                sentence: ``In the case that the program identifies a 
                pattern described in the previous sentence, the State 
                shall take such remedial actions as determined 
                necessary to address such pattern.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect with respect to retrospective drug use reviews conducted on 
or after October 1, 2020.
            Amend the title so as to read: ``A bill to amend title XIX 
        of the Social Security Act to require under Medicaid that State 
        Medicaid plans have in place certain drug utilization review 
        activities, and to require States to identify and address 
        inappropriate prescribing and billing practices under 
        Medicaid.''.
Medicaid Drug Review, Utilization, Good Governance Improvement Act or the Medicaid DRUG Improvement Act This bill requires state Medicaid programs to establish drug-review and utilization requirements for enrollees, particularly with respect to opioid prescriptions. Drug use review programs must also identify prescribing or billing practices by providers that indicate abuse or excessive utilization.
Medicaid Drug Review, Utilization, Good Governance Improvement Act