(4)__The provisions of section 3174-Z apply to coverage.

(5)__By October 1, 2001, the department shall take all reasonable and necessary steps to obtain federal approval to provide Medicaid coverage for persons above 150% of the nonfarm income official poverty line.

(6)__Beginning November 1, 2001, the department shall provide coverage up to the maximum income eligibility level possible, subject to the limitation of funds appropriated and allocated to provide services to persons above 150% of the nonfarm income official poverty line;

Sec. A-2. 22 MRSA §3174-G, sub-§1, ¶¶F and G are enacted to read:

F.__Persons over 19 to 64 years of age who are not otherwise covered under paragraphs A to E when the person's family income is below or equal to 200% of the nonfarm income official poverty line.__The following provisions apply to coverage under this paragraph for persons above 150% and below 200% of the nonfarm income official poverty line.

(1)__The department must use the same enrollment and eligibility procedures and the same benefit package and outreach as used under section 3174-T, except that the limitation imposed by section 3174-T, subsection 2, paragraph C, subparagraph (3) does not apply.

(2)__By October 1, 2001, the department shall take all reasonable and necessary steps to obtain federal approval to provide Medicaid coverage for persons eligible under this paragraph.

(3)__Beginning November 1, 2001, the department shall provide coverage up to the maximum income eligibility level possible, subject to the limitation of funds appropriated and allocated to provide services under this paragraph.

(4)__Coverage is not available under this paragraph for a person who, within the 3 months prior to application for coverage, was insured or otherwise provided coverage under an employer-based health plan for which the employer paid 50% or more of the cost, except that this subparagraph does not apply if:

(a)__The cost to the employee of coverage exceeds 10% of income;

(b)__The person lost coverage because of a change in employment, termination of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, COBRA, of the Employee Retirement Income Security Act of 1974, as amended, 29 United States Code, Sections 1161 to 1168 (Supp. 1997) or termination for a reason not in the control of the person; or

(c)__The department has determined that grounds exist for a good-cause exception; and

G.__Persons who are self-employed or sole proprietors and their immediate family members and who may purchase coverage under this subsection, subject to the following provisions.

(1)__The department shall charge premiums to cover the cost of benefits under this paragraph, plus a contribution to administrative costs, minus the value of any subsidy provided by the department.

(2)__Premiums charged under this paragraph may not exceed the maximum cost allowable under the Consolidated Omnibus Budget Reconciliation Act of 1985, COBRA, of the Employee Retirement Income Security Act of 1974, as amended, 29 United States Code, Sections 1161 to 1168 (Supp. 1997).

(3)__Premiums charged under this paragraph may be calculated on a sliding scale that varies with family income.

(4)__By October 1, 2001, the department shall take all reasonable and necessary steps to obtain federal approval to provide Medicaid coverage for persons who are self-employed or sole proprietors.

(5)__Beginning November 1, 2001, the department shall provide coverage up to the maximum income eligibility level possible, subject to the limitation of funds appropriated and allocated to provide services to persons who are self-employed or sole proprietors.

(6)__Coverage is not available under this paragraph for persons eligible for Medicaid under paragraphs A to F.

(7)__Coverage is not available under this paragraph for a person whose family income is equal to or above 200% of the nonfarm income official poverty line and who, within the 3 months prior to application for coverage, was insured or otherwise provided coverage under an employer-based health plan for which the employer paid 50% or more of the cost, except that this subparagraph does not apply if:

(a)__The cost to the employee of coverage exceeds 10% of income;

(b)__The person lost coverage because of a change in employment, termination of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, COBRA, of the Employee Retirement Income Security Act of 1974, as amended, 29 United States Code, Sections 1161 to 1168 (Supp. 1997) or termination for a reason not in the control of the person; or

(c)__The department has determined that grounds exist for a good-cause exception; and

Sec. A-3. 22 MRSA §3174-G, sub-§4 is enacted to read:

4.__Rulemaking.__The department shall adopt rules to implement this section.__Rules adopted pursuant to this subsection are routine technical rules as defined by Title 5, chapter 375, subchapter II-A.

Sec. A-4. 22 MRSA §3174-T, sub-§2, ¶A, as amended by PL 1999, c. 401, Pt. QQ, §1 and affected by §5, is further amended to read:

A. The maximum eligibility level, subject to adjustment by the commissioner under paragraph B, is 200% 300% of the nonfarm income official poverty line.

Sec. A-5. 22 MRSA §3174-T, sub-§2, ¶¶D and E, as reallocated by RR 1997, c. 2, §46, are amended to read:

D. Notwithstanding changes in the maximum eligibility level determined under paragraph B, the following requirements apply to enrollment and eligibility:

(1) Children must be enrolled for 6-month 12-month enrollment periods. Prior to the end of each 6-month 12-month enrollment period the department shall redetermine eligibility for continuing coverage; and

(2) Children of higher family income may not be covered unless children of lower family income are also covered. This subparagraph may not be applied to disqualify a child during the 6-month 12-month enrollment period. Children of higher income may be disqualified at the end of the 6-month 12-month enrollment period if the commissioner has lowered the maximum eligibility level under paragraph B.

E. Coverage under the Cub Care program may be purchased for children described in subparagraphs (1) and (2) for a period of up to 18 months as provided in this paragraph at a premium level that is revenue neutral and that covers the cost of the benefit and a contribution toward administrative costs no greater than the maximum level allowable under COBRA. The department shall adopt rules to implement this paragraph. The following children are eligible to enroll under this paragraph:

(1) A child who is enrolled under paragraph A or B and whose family income at the end of the child's 6- month 12-month enrollment term exceeds the maximum allowable income set in that paragraph; and

(2) A child who is enrolled in the Medicaid program and whose family income exceeds the limits of that program. The department shall terminate Medicaid coverage for a child who enrolls in the Cub Care program under this subparagraph.

Sec. A-6. 22 MRSA §§3174-Z and 3174-AA to 3174-CC are enacted to read:

§3174-Z.__Asset limits

In determining eligibility for medical assistance under the Medicaid program for all individuals and families subject to an asset test, the department shall exempt from consideration all assets exempt pursuant to program rule on January 1, 2001 and the assets listed in this section:

1.__Second vehicle.__A 2nd vehicle that is necessary for employment, to secure medical treatment or to provide transportation for essential daily activities or a vehicle that has been modified for operation by or the transportation of a person with a disability;

2.__Certain savings.__Any individual retirement account, self- employed plan, tax sheltered annuity or Keogh or comparable retirement account of an adult family member;

3.__Life insurance.__Any life insurance policy covering a family member;

4.__Educational savings accounts.__Any educational savings plan or account reserved exclusively for educational purposes, including postsecondary education, for a child or an adult; and

5.__Savings.__An amount up to $8,000 for an individual and up to $12,000 for a household of more than one person.

§3174-AA.__Electronic application

The department shall establish and implement an electronic application and enrollment procedure for the Medicaid program.__ The procedure must include a process for applicants or their representatives to apply for benefits electronically and to receive electronically a preliminary determination of eligibility.

§3174-BB.__Enrollment periods

The department shall establish enrollment periods for medical assistance as provided in this section.__Prior to the end of the enrollment period, the department shall determine continuing eligibility for the next enrollment period and notify the enrollee of the determination.

1.__Children.__In the Medicaid program and the Cub Care program under section 3174-T, the enrollment period for children under 19 years of age must be 12 months.

2.__Adults.__In the Medicaid program the enrollment period must be the longest period allowed by law, rule or regulation, but not exceed 12 months.

§3174-CC.__Outreach services

The department shall provide outreach services, including Medicaid managed care ombudsman services, for the Medicaid program and the Cub Care program, under section 3174-T.__Outreach services must provide information on program eligibility, enrollment and benefits to enrollees and potentially eligible families to the greatest extent possible.__The department shall contract for outreach services, which may be provided by independent entities, including participating insurance producers licensed to sell health insurance pursuant to Title 24-A, chapter 16.__Outreach services must include a toll-free telephone number operated by a nonprofit entity independent of the department and the health benefits advisor to provide information and assistance to the public.

Sec. A-7. Electronic benefit transfer. By October 1, 2001, the Department of Human Services shall implement an electronic benefit transfer system for the delivery of services under the Medicaid program, as authorized by the Maine Revised Statutes, Title 22, chapter 1, subchapter I-A. The department shall adopt rules to implement this section. Rules adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.

PART B

Sec. B-1. 22 MRSA §254, sub-§1, ¶A, as enacted by PL 1999, c. 401, Pt. KKK, §1 and affected by §10 and c. 531, Pt. F, §2, is amended to read:

A. The basic component of the program must provide drugs and medications for cardiac conditions and high blood pressure, diabetes, arthritis, anticoagulation, hyperlipidemia, osteoporosis, chronic obstructive pulmonary disease and asthma, incontinence, thyroid diseases, glaucoma, parkinson's disease, multiple sclerosis and, amyotrophic lateral sclerosis and cancer.

Sec. B-2. Medicaid buy-in for persons with disabilities. By January 1, 2002, the Department of Human Services shall amend the rules regarding eligibility for persons with disabilities to purchase coverage under the Medicaid program. The amended rules must maintain the income eligibility limit of 250% of the federal nonfarm income official poverty line for earned and unearned income combined and must remove any limitation on unearned income. The rules must grant eligibility to employed persons who have a medically improved disability. Rules adopted pursuant to this section are routine technical rules as defined by the Maine Revised Statutes, Title 5, chapter 375, subchapter II-A.

Sec. B-3. Support for primary and preventive health care services. The Department of Human Services, Bureau of Health shall undertake an initiative in primary and preventive health care to expand access for underserved populations, utilizing $2,000,000 appropriated in fiscal year 2001-02 and annually thereafter. The initiative must provide support for health care access in 2 ways:

1. Funding for Community Health Center Program. One million, seven hundred thousand dollars to support community, migrant and homeless health centers receiving funding from the Community Health Center Program operated by the federal Bureau of Primary Health Care. From this amount, funding must be provided as follows:

A. One hundred fifty thousand dollars per year must be provided as Medicaid seed for a contract with the Maine Ambulatory Care Coalition to provide financial and other support to health centers in assisting individuals in applying for Medicaid program and Cub Care program benefits. This funding is provided to meet the federal requirement to provide Medicaid outstationing services at health centers;

B. Three hundred seventy-five thousand dollars per year must be provided as the Medicaid seed to provide incentives under Medicaid to improve the quality of services and enhance the delivery of preventive services at health centers. The Department of Human Services, Bureau of Medical Services shall work collaboratively with the Maine Ambulatory Care Coalition in developing this program and provide $75,000 each year for the state seed for a contract with the Maine Ambulatory Care Coalition to assist health centers in designing and participating in the incentive program. This program will enhance the provision of preventive services and improve the quality of services at health centers provided through Medicaid; and

C. One million, one hundred seventy-five thousand dollars per year must be provided by August 1st of each year to health center grantees to support the infrastructure of these programs in providing primary care services to underserved populations. Fifty thousand dollars per year must be provided to each grantee with an additional $10,000 for the 2nd and each additional site operated by a grantee. The remainder must be allocated among health center grantees according to a formula that provides that a grantee will receive funding in proportion to its total number of encounters as reported to the federal Bureau of Primary Health Care for the previous calendar year as compared to the number of encounters provided by all health center grantees for that calendar year. For the purposes of this paragraph, "site" means a site or sites operated by the grantee within its scope of service that meet all health center requirements, including providing primary care services, regardless of patients' ability to pay, 5 days a week with extended hours. This program will support the primary care infrastructure providing services to underserved populations.

2. Program to support federally qualified look-alikes. Three hundred thousand dollars per year must be provided to support federally qualified look-alikes that meet standards that may be imposed by the Department of Human Services, including

reporting requirements. Each federally qualified look-alike must receive $50,000 or an amount equal to $300,000 divided by the total number of eligible entities, whichever is less.

Funding under this initiative may not supplant other sources of funding. The Department of Human Services may adopt rules to implement this initiative. Rules adopted pursuant to this section are routine technical rules as defined by the Maine Revised Statutes, Title 5, chapter 375, subchapter II-A.

Sec. B-4. Medicaid recovery. The Department of Human Services shall pursue the recovery of overcharges through the Medicaid program by manufacturers of prescription drugs that may have resulted from manipulation of the reporting of average wholesale prices of drugs by the manufacturers. To the extent allowable by the terms of any settlement agreement entered into by the department, all funds recovered by the department as a result of litigation against manufacturers of prescription drugs with regard to manipulation of prices must be deposited in the Maine Health Access Fund established pursuant to the Maine Revised Statutes, Title 22, section 258. By October 1, 2002, the department shall report to the Joint Standing Committee on Appropriations and Financial Affairs and the Joint Standing Committee on Health and Human Services regarding its efforts to recover Medicaid overcharges under this section.

Sec. B-5. Appropriation. The following funds are appropriated from the General Fund to carry out the purposes of this Act.

2001-02 2002-03

HUMAN SERVICES,

DEPARTMENT OF

Bureau of Health

Office of Health, Data

and Program Management

Office of Rural Health

and Primary Care

All Other $10,000 $10,000

Provides funding to match available federal funding to promote the delivery of health care in rural areas.

Sec. B-6. Allocation. The following funds are allocated from the Federal Expenditures Fund to carry out the purposes of this Act.

2001-02 2002-03

HUMAN SERVICES,

DEPARTMENT OF

Bureau of Health

All Other $150,000 $150,000

Provides funding from Maine Health Access Fund for school- based dental health screenings and dental sealants.

Sec. B-7. Allocation. The following funds are allocated from the Federal Expenditures Fund to carry out the purposes of this Act.

2001-02 2002-03

HUMAN SERVICES,

DEPARTMENT OF

Purchased Social Services

All Other $2,000,000 $2,000,000

Provides funding from the Maine Health Access Fund for grants to federally qualified health centers to provide direct primary and preventive care to rural and underserved areas of the state and to underserved populations.

PART C

Sec. C-1. 22 MRSA §258 is enacted to read:

§258.__Maine Health Access Fund

There is established the Maine Health Access Fund, referred to in this section as the "fund," as a dedicated fund to provide expanded access to health care.

1.__Transfers to fund.__Beginning November 1, 2001, the State Controller shall transfer to the fund money representing 25 mills per cigarette from the tax levied under Title 36, section 4365.__ The fund may also receive funds from other sources that are designated for the fund.__To the extent allowable by the terms of any settlement agreement entered into by the State, all funds recovered as a result of litigation with regard to health care must be deposited in the fund.__Interest earned on fund balances and investment income on balances in the fund accrue to the fund.

2.__Nonlapsing.__Any unexpended balances in the fund may not lapse but must be carried forward to be used pursuant to subsection 3.

3.__Payments from fund; contingency reserve.__Beginning January 1, 2002 and semiannually thereafter, the Treasurer of State shall report to the joint standing committee of the Legislature__having jurisdiction over health and human services matters and the joint standing committee of the Legislature having jurisdiction over appropriations and financial affairs the amount in the fund and the activity in the fund.__Ninety percent of the amount in the fund must be allocated by the Legislature for the purpose of access to health care.__Ten percent of the amount in the fund must be held in a contingency reserve in the fund for use if expenses for health programs supported by allocations from the fund exceed the allocations.__If funds held in the contingency reserve are required for program use to supplement allocations from the fund, the balance in the contingency reserve must be returned to 10% of the fund balance at the time that the next allocations from the fund are made.

4.__Restriction.__Allocations from the fund must be used to supplement and not supplant appropriations from the General Fund and in accordance with subsection 3.

5. Investment.__Notwithstanding the provisions of Title 5, section 135, the Treasurer of State shall invest and reinvest the funds in the contingency reserve under subsection 3 in accordance with the standards provided in Title 18-A, section 7-302.__The Treasurer of State shall develop and implement a prudent and profitable investment plan for balances held in the fund.__The plan must maximize return and minimize risk.

Sec. C-2. 36 MRSA §4365, as amended by PL 1999, c. 414, §37, is further amended by inserting at the end a new paragraph to read:

Beginning November 1, 2001, as a further public health

measure, the tax imposed under this section is 62 mills per cigarette.__The revenue generated by the tax increase imposed by this paragraph must be deposited in the Maine Health Access Fund established pursuant to Title 22, section 258.

PART D

Sec. D-1. Commission to Study the Group Purchasing of Prescription Drugs

1. Commission established. The Commission to Study the Group Purchasing of Prescription Drugs, referred to in this section as the "commission," is established.

A. The commission shall study the group purchasing of prescription drugs, with the goals of expanding access to prescription drugs, increasing efficiency in purchasing and decreasing the prices paid by consumers and 3rd-party payors. The commission shall consider the formation of a group that would include public and private health insurance and health benefit programs, with the limitation that no group would be required to participate unless the costs for the group and its members for prescription drugs are decreased as a result of group purchasing.

B. The commission shall make recommendations regarding group purchasing, with the goal of implementing a group purchasing initiative that includes the maximum number of consumers in the State no later than July 1, 2002.

2. Membership. The commission consists of 11 members.

A. The President of the Senate shall appoint:

(1) Three members of the Senate, at least one of whom must be from each of the 2 major political parties;

(2) One person representing the State Employee Health Commission and one person representing statewide organizations of consumers of health care services.

B. The Speaker of the House of Representatives shall appoint:

(1) Three members of the House, at least one of whom must represent the minority party; and

(2) One person representing the University of Maine System and one person representing the Maine Education Association.

C. The Commissioner of Human Services or a representative of the commissioner is a member of the commission.

When making the appointments, the President of the Senate and the Speaker of the House shall give preference to members from the Joint Standing Committee on Health and Human Services, the Joint Standing Committee on Banking and Insurance and the Joint Standing Committee on Appropriations and Financial Affairs.

3. Appointments; chairs; convening of commission. All appointments must be made no later than 30 days following the effective date of this section. The appointing authorities shall notify the Executive Director of the Legislative Council once all appointments have been made. The first named Senate member is the Senate chair and the first named House of Representatives member is the House chair. The first meeting must be called by the chairs no later than September 31, 2001.

4. Duties. The commission shall consider the purposes outlined in subsection 1 and shall review initiatives for the group purchasing of prescription drugs. The commission shall consider for potential inclusion in the group purchasing program persons provided health benefits or prescription drug coverage through governmental programs, county and municipal health benefits coverage, the University of Maine System, the technical colleges and private colleges located in the State, the Maine Education Association, the State Employee Health Program and any other groups that may benefit from inclusion in a group purchasing program.

5. Staff assistance. Upon approval of the Legislative Council, the Office of Policy and Legal Analysis shall provide necessary staffing services to the commission.

6. Compensation. Members of the commission are entitled to receive the legislative per diem as defined in the Maine Revised Statutes, Title 3, section 2 and reimbursement for travel and other necessary expenses for attendance at authorized meetings of the commission.

7. Report. The commission shall submit a report and any necessary implementing legislation to the Second Regular Session of the 120th Legislature no later than November 15, 2001. If the commission requires an extension of time to make its report, it may apply to the Legislative Council, which may grant the extension.

8. Commission budget. The chairs of the commission, with

assistance from the commission staff, shall administer the commission budget. Within 10 days after its first meeting, the commission shall present a work plan and proposed budget to the Legislative Council for its approval. The commission may not incur expenses that would result in the commission's exceeding its approved budget. Upon request from the commission, the Executive Director of the Legislative Council or the executive director's designee shall provide the commission chairs and staff with a status report on the commission budget, expenditures incurred and paid and available funds.

SUMMARY

This bill contains a number of provisions to expand access to health care and increase the cigarette tax. This bill also does the following:

1. It increases income eligibility for the Medicaid program for parents and caretaker relatives of children receiving Medicaid coverage from 150% to 200% of the nonfarm income official poverty line;

2. It provides eligibility for Medicaid coverage to noncategorically eligible adults with an income up to 200% of the federal nonfarm official poverty line and to self-employed persons and sole proprietors and members of their immediate families on a buy-in basis;

3. It increases the income eligibility for children in the Cub Care program from 200% to 300% of the federal nonfarm official poverty line;

4. It provides for an enrollment period in the Cub Care program of 12 months;

5. It provides asset exemptions in the Medicaid program for adults for certain 2nd vehicles, certain savings accounts, life insurance, educational savings and savings for a single person or married person living alone of $8,000 and for married persons living together of $12,000. The bill requires the Department of Human Services to implement an electronic benefit transfer system for the delivery of services under the Medicaid program by October 1, 2001;

6. It requires the Department of Human Services to implement an electronic application system that will receive applications electronically and provide electronically a preliminary determination of eligibility;

7. It provides for 12-month enrollment periods in the Medicaid program for children and for adults to the extent possible under federal law or pursuant to a waiver;

8. It requires outreach services, including Medicaid managed care ombudsman services, under the Medicaid and Cub Care programs and provides for the Department of Human Services to contract with independent entities, including participating insurance producers for outreach services and an independent nonprofit entity to provide the toll-free telephone number services;

9. It expands the basic component of the elderly low-cost drug program to cover cancer drugs. This means that prescription drugs for cancer will be provided to the consumer with a maximum co-pay of 20%;

10. It requires the Department of Human Services to amend the rules allowing persons with disabilities to purchase coverage in the Medicaid program. The rules must maintain income eligibility limits while removing separate limits of earned and unearned income and provide eligibility for employed persons who have a medically improved disability;

11. It allocates funds from the Maine Health Access Fund for dental health screenings and dental sealants of $150,000 in each year;

12. It directs the Department of Human Services, Bureau of Health to undertake an initiative to expand access to primary and preventive health care. It appropriates $2,000,000 in each year for the support of the community health centers and the federally qualified health center look-alikes. Because some of this funding will be used for Medicaid match to federal funds, the bill also allocates matching federal funding;

13. It appropriates $10,000 in each year to be used as the match for federal funds available for the Department of Human Services, Bureau of Health, Office of Health, Data and Program Management and funding for the Office for Rural Health and Primary Care;

14. It requires the Department of Human Services to pursue the recovery of overcharges by prescription drug manufacturers through the Medicaid program;

15. It establishes the Maine Health Access Fund to receive funds from the tobacco tax increase and to allocate those funds to health care expansion initiatives;

16. It increases the tobacco tax by 25 mills per cigarette, which equals 50¢ for each package of cigarettes beginning November 1, 2001 and dedicates the tax increase to the Maine Health Access Fund; and

17. It establishes the Commission to Study the Group Purchasing of Prescription Drugs.