Alaska 2025-2026 Regular Session

Alaska Senate Bill SB134 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
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2	2	SB0134A -1- SB 134
3	3	New Text Underlined [DELETED TEXT BRACKETED]
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5	5	34-LS0461\A
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9	9
10	10
11	11	SENATE BILL NO. 134
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13	13	IN THE LEGISLATURE OF THE STATE OF ALASKA
14	14
15	15	THIRTY-FOURTH LEGISLATURE - FIRST SESSION
16	16
17	17	BY SENATOR GIESSEL
18	18
19	19	Introduced: 3/18/25
20	20	Referred: Health and Social Services, Labor and Commerce
21	21
22	22
23	23	A BILL
24	24
25	25	FOR AN ACT ENTITLED
26	26
27	27	"An Act relating to pharmacy bene fits managers; relating to third-party 1
28	28	administrators; and providing for an effective date." 2
29	29	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 3
30	30	* Section 1. AS 21.06.120(a) is amended to read: 4
31	31	(a) The director may examine the affairs, transactions, accounts, records, and 5
32	32	assets of each authorized and formerly authorized insurer and each licensed and 6
33	33	formerly licensed managing general agent, reinsurance intermediary broker, 7
34	34	reinsurance intermediary manager, surplus lines broker, pharmacy benefits manager,
35	35	8
36	36	and surplus lines association as often as the director considers advisable. In scheduling 9
37	37	and determining the nature, scope, and frequency of examinations, the director may 10
38	38	consider any factor or material that the director determines is appropriate, including 11
39	39	the results of financial statement analysis and ratios, competency of management or 12
40	40	change of ownership, actuarial opinions, reports of independent certified public 13
41	41	accountants, number and nature of consumer complaints, results of prior examinations, 14 34-LS0461\A
42	42	SB 134 -2- SB0134A
43	43	New Text Underlined [DELETED TEXT BRACKETED]
44	44
45	45	frequency of prior violations of statute and regulation, and criteria set out in the most 1
46	46	recent edition of the Financial Condition Examiners Handbook and the Market 2
47	47	Regulation Handbook approved by the National Association of Insurance 3
48	48	Commissioners and in effect when the director conducts an examination. Examination 4
49	49	of an alien insurer may be limited to its insurance transactions and affairs in the United 5
50	50	States. Examination of a reciprocal insurer may also include examination of its 6
51	51	attorney-in-fact to the extent that the transactions of the attorney-in-fact relate to the 7
52	52	insurer. 8
53	53	* Sec. 2. AS 21.06.120(d) is amended to read: 9
54	54	(d) The director may examine insurers, third-party administrators, and 10
55	55	pharmacy benefits managers in participation with the National Association of 11
56	56	Insurance Commissioners. 12
57	57	* Sec. 3. AS 21.06.120 is amended by adding a new subsection to read: 13
58	58	(h) The director may examine a third-party administrator or pharmacy benefits 14
59	59	manager any time the director determines that an examination or investigation is 15
60	60	necessary. 16
61	61	* Sec. 4. AS 21.06.160(a) is amended to read: 17
62	62	(a) Each person examined, other than examinations under AS 21.06.130 and 18
63	63	examinations of managing general agents, [THIRD-PARTY ADMINISTRATORS,] 19
64	64	reinsurance intermediary managers, motor vehicle service contract providers, or 20
65	65	surplus lines brokers, shall pay a reasonable rate calculated on salary, benefit costs, 21
66	66	and estimated division overhead for time spent directly or indirectly related to the 22
67	67	examination. Each person examined, other than examinations under AS 21.06.130, 23
68	68	shall pay actual out-of-pocket business expenses, including travel expenses, incurred 24
69	69	by division staff examiners and shall pay the compensation of a contract examiner, to 25
70	70	be set at a reasonable customary rate, for conducting the examination upon 26
71	71	presentation of a detailed account of the charges and expenses by the director or under 27
72	72	an order of the director. The director may waive payment of all or part of the actual 28
73	73	out-of-pocket business expenses incurred by division staff examiners, or the 29
74	74	compensation of a contract examiner, if the director determines that payment of the 30
75	75	expenses or compensation creates a financial hardship for a managing general agent, 31 34-LS0461\A
76	76	SB0134A -3- SB 134
77	77	New Text Underlined [DELETED TEXT BRACKETED]
78	78
79	79	third-party administrator, reinsurance intermediary manager, motor vehicle service 1
80	80	contract provider, or surplus lines broker. The accounting may either be presented 2
81	81	periodically during the course of the examination or at the termination of the 3
82	82	examination. A person may not pay and an examiner may not accept additional 4
83	83	compensation for an examination. A person shall pay examination expenses to the 5
84	84	division under this subsection using an electronic payment method specified by the 6
85	85	director. 7
86	86	* Sec. 5. AS 21.27.010(a) is amended to read: 8
87	87	(a) Except as provided otherwise in this chapter, a person may not act as or 9
88	88	represent to be an insurance producer, managing general agent, reinsurance 10
89	89	intermediary broker, reinsurance intermediary manager, surplus lines broker, third-11
90	90	party administrator, pharmacy benefits manager, or independent adjuster in this 12
91	91	state or relative to a subject resident, located, or to be performed in this state unless 13
92	92	licensed under this chapter. A person may not act as or represent to be a managing 14
93	93	general agent, reinsurance intermediary broker, third-party administrator, 15
94	94	pharmacy benefits manager, or reinsurance intermediary manager representing an 16
95	95	insurer domiciled in this state regarding a risk located outside this state unless licensed 17
96	96	by this state. 18
97	97	* Sec. 6. AS 21.27.010(c) is amended to read: 19
98	98	(c) A third-party administrator is not required to be licensed as a managing 20
99	99	general agent if the third-party administrator 21
100	100	(1) is licensed [REGISTERED] under this chapter [AS 21.27.630 - 22
101	101	21.27.660]; or 23
102	102	(2) only investigates and adjusts claims and is licensed under this 24
103	103	chapter as an independent adjuster. 25
104	104	* Sec. 7. AS 21.27.010 is amended by adding a new subsection to read: 26
105	105	(l) In addition to the requirements under AS 21.27.010 - 21.27.460, a 27
106	106	(1) third-party administrator is subject to the licensing requirements 28
107	107	under AS 21.27.630 - 21.27.660; and 29
108	108	(2) pharmacy benefits manager is subject to the licensing requirements 30
109	109	under AS 21.27.901 - 21.27.955. 31 34-LS0461\A
110	110	SB 134 -4- SB0134A
111	111	New Text Underlined [DELETED TEXT BRACKETED]
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113	113	* Sec. 8. AS 21.27.060(d) is amended to read: 1
114	114	(d) This section does not apply to an applicant 2
115	115	(1) for a limited license under AS 21.27.150(a)(1), (4), (5), or (8); 3
116	116	[OR] 4
117	117	(2) who, at any time within the one-year period immediately preceding 5
118	118	the date the current pending application is received by the division, had been licensed 6
119	119	in good standing in this state under a license requiring substantially similar 7
120	120	qualifications as required by the license applied for; or 8
121	121	(3) who is a compliance officer for a third-party administrator or 9
122	122	pharmacy benefits manager. 10
123	123	* Sec. 9. AS 21.27.380(b) is amended to read: 11
124	124	(b) If a license is not renewed on or before the renewal date set by the director, 12
125	125	the license expires. A licensee may not act as or represent to be an insurance producer, 13
126	126	managing general agent, reinsurance intermediary broker, third-party administrator, 14
127	127	pharmacy benefits manager, reinsurance intermediary manager, surplus lines broker, 15
128	128	or independent adjuster during the time a license has expired. The director may 16
129	129	reinstate an expired license if the person continues to qualify for the license and pays 17
130	130	renewal license fees and a delayed renewal penalty. Reinstatement does not exempt a 18
131	131	person from a penalty provided by law for transacting business while unlicensed. A 19
132	132	license may not be renewed if it has expired for two years or longer. 20
133	133	* Sec. 10. AS 21.27.630(a) is amended to read: 21
134	134	(a) A person may not act as or represent to be a third-party administrator in 22
135	135	this state or relative to a subject resident, located, or to be performed in this state, 23
136	136	unless licensed [REGISTERED] under this chapter or in another jurisdiction under 24
137	137	AS 21.27.650. A person may not act as or represent to be a third-party administrator 25
138	138	representing an insurer domiciled in this state regarding a risk located outside this state 26
139	139	unless licensed [REGISTERED] by this state under the provisions of this chapter. 27
140	140	* Sec. 11. AS 21.27.630(b) is amended to read: 28
141	141	(b) A third-party administrator may not transact business for a kind or class of 29
142	142	authority for which the person is not licensed [REGISTERED]. 30
143	143	* Sec. 12. AS 21.27.630(c) is amended to read: 31 34-LS0461\A
144	144	SB0134A -5- SB 134
145	145	New Text Underlined [DELETED TEXT BRACKETED]
146	146
147	147	(c) Except as otherwise provided in this chapter, a third-party administrator 1
148	148	shall be licensed [REGISTERED] under this chapter [AS 21.27.630 - 21.27.660] 2
149	149	unless the third-party administrator only investigates and adjusts claims and is licensed 3
150	150	under this chapter as an independent adjuster. 4
151	151	* Sec. 13. AS 21.27.630(d) is amended to read: 5
152	152	(d) A third-party administrator may not use a fictitious name or alias unless 6
153	153	the licensee's legal name and fictitious name or alias are on the license 7
154	154	[REGISTRATION]. 8
155	155	* Sec. 14. AS 21.27.630(e) is amended to read: 9
156	156	(e) A person who is an employee of an admitted insurer, who acts within the 10
157	157	course and scope of that employment, and within the scope of the insurer's certificate 11
158	158	of authority is not required to be licensed [REGISTERED] under this chapter 12
159	159	[SECTION]. 13
160	160	* Sec. 15. AS 21.27.630(g) is amended to read: 14
161	161	(g) A credit union or a financial institution subject to supervision or 15
162	162	examination by federal or state banking authorities, or a mortgage lender, that 16
163	163	performs no functions other than advancing premiums to the insurer and collecting a 17
164	164	debt from the insured is not required to be licensed [REGISTERED] as a third-party 18
165	165	administrator. 19
166	166	* Sec. 16. AS 21.27.630(h) is amended to read: 20
167	167	(h) A credit card issuing company that performs no functions, including 21
168	168	adjustment or settlement of claims, other than advancing and collecting premiums 22
169	169	from its credit card holders who have authorized collection is not required to be 23
170	170	licensed [REGISTERED] as a third-party administrator. 24
171	171	* Sec. 17. AS 21.27.630(i) is amended to read: 25
172	172	(i) A person who only provides services to bona fide employee benefit plans 26
173	173	that are established by an employer or an employee organization, or both, for which 27
174	174	the insurance laws of this state are preempted under the Employee Retirement Income 28
175	175	Security Act of 1974, is not required to be additionally licensed [REGISTERED] as a 29
176	176	third-party administrator if the person certifies to the director on or before February 1 30
177	177	of each year its exempt status. 31 34-LS0461\A
178	178	SB 134 -6- SB0134A
179	179	New Text Underlined [DELETED TEXT BRACKETED]
180	180
181	181	* Sec. 18. AS 21.27.630(j) is amended to read: 1
182	182	(j) A third-party administrator 2
183	183	[(1) SHALL APPLY FOR REGISTRATION UNDER THE 3
184	184	PROCEDURES OF AS 21.27.040; 4
185	185	(2) SHALL RENEW ITS REGISTRATION UNDER THE 5
186	186	PROCEDURES OF AS 21.27.380; AND 6
187	187	(3)] is subject to hearings and orders on violations; denial, nonrenewal, 7
188	188	suspension, or revocation of license [REGISTRATION]; penalties; and surrender of 8
189	189	license [REGISTRATION] under the procedures set out in AS 21.27.405 - 21.27.460. 9
190	190	* Sec. 19. AS 21.27.630(k) is amended to read: 10
191	191	(k) An insurer that holds a certificate of authority issued by the director and is 11
192	192	in good standing under this title is not required to be licensed [REGISTERED] as a 12
193	193	third-party administrator in this state. 13
194	194	* Sec. 20. AS 21.27.630(l) is amended to read: 14
195	195	(l) A person that is not required to be licensed [REGISTERED] as a third-15
196	196	party administrator under (e) - (k) of this section must file an annual [A] certification 16
197	197	with the director that the person meets the requirements for exemption on or before 17
198	198	February 1 of each year. 18
199	199	* Sec. 21. AS 21.27.630(m) is amended to read: 19
200	200	(m) A person who is an employee of a third-party administrator and who acts 20
201	201	within the course and scope of that employment and within the scope of the written 21
202	202	contract required under AS 21.27.650(a)(4) is not required to be licensed 22
203	203	[REGISTERED] as a third-party administrator under this section unless that person 23
204	204	is the designated compliance officer under AS 21.27.640(b)(6). The third-party 24
205	205	administrator is responsible for the acts of its employees regulated under this title. 25
206	206	* Sec. 22. AS 21.27.640(a) is amended to read: 26
207	207	(a) The director may not issue or renew a license [REGISTRATION] except 27
208	208	in compliance with this chapter and may not issue a license [REGISTRATION] to a 28
209	209	person, or to be exercised by a person, found by the director to be untrustworthy, 29
210	210	incompetent, financially irresponsible, or who has not established to the satisfaction of 30
211	211	the director that the person is qualified under this chapter. 31 34-LS0461\A
212	212	SB0134A -7- SB 134
213	213	New Text Underlined [DELETED TEXT BRACKETED]
214	214
215	215	* Sec. 23. AS 21.27.640(b) is amended to read: 1
216	216	(b) To qualify for issuance or renewal of a license [REGISTRATION], an 2
217	217	applicant or licensee [REGISTRANT] shall comply with this title, regulations adopted 3
218	218	under AS 21.06.090, and 4
219	219	(1) be a trustworthy person; 5
220	220	(2) have active working experience in administrative functions that, in 6
221	221	the director's opinion, exhibits the ability to competently perform the administrative 7
222	222	functions of a third-party administrator; 8
223	223	(3) not have committed an act that is a cause for denial, nonrenewal, 9
224	224	suspension, or revocation of a registration or license in this state or another 10
225	225	jurisdiction; 11
226	226	(4) maintain a lawfully established place of business as described in 12
227	227	AS 21.27.330 in this state, unless licensed as a nonresident under AS 21.27.270; 13
228	228	(5) disclose to the director all owners, officers, directors, or partners, if 14
229	229	any; 15
230	230	(6) designate a compliance officer for the firm; 16
231	231	(7) provide in or with its application 17
232	232	(A) all basic organizational documents of the third-party 18
233	233	administrator, including articles of incorporation, articles of association, 19
234	234	partnership agreement, trade name certificate, trust agreement, shareholder 20
235	235	agreement, and other applicable documents and all endorsements to the 21
236	236	required documents; 22
237	237	(B) the bylaws, rules, regulations, or similar documents 23
238	238	regulating the internal affairs of the administrator; 24
239	239	(C) the names, mailing addresses, physical addresses, official 25
240	240	positions, and professional qualifications of persons who are responsible for 26
241	241	the conduct of affairs of the third-party administrator, including the members 27
242	242	of the board of directors, board of trustees, executive committee, or other 28
243	243	governing board or committee; the principal officers in the case of a 29
244	244	corporation, or the partners or members in the case of a partnership, limited 30
245	245	liability company, limited liability partnership, or association; shareholders 31 34-LS0461\A
246	246	SB 134 -8- SB0134A
247	247	New Text Underlined [DELETED TEXT BRACKETED]
248	248
249	249	holding directly or indirectly 10 percent or more of the voting securities of the 1
250	250	third-party administrator; and any other person who exercises control or 2
251	251	influence over the affairs of the third-party administrator; 3
252	252	(D) certified financial statements for the preceding two years, 4
253	253	or for each year and partial year that the applicant has been in business if less 5
254	254	than two years, prepared by an independent certified public accountant 6
255	255	establishing that the applicant is solvent, that the applicant's system of 7
256	256	accounting, internal control, and procedure is operating effectively to provide 8
257	257	reasonable assurance that money is promptly accounted for and paid to the 9
258	258	person entitled to the money, and any other information that the director may 10
259	259	require to review the current financial condition of the applicant; and 11
260	260	(E) a statement describing the business plan, including 12
261	261	information on staffing levels and activities proposed in this state and in other 13
262	262	jurisdictions and providing details establishing the third-party administrator's 14
263	263	capability for providing a sufficient number of experienced and qualified 15
264	264	personnel in the areas of claims handling, underwriting, and record keeping; 16
265	265	(8) provide to the director documents necessary to verify the 17
266	266	statements contained in or in connection with the application; and 18
267	267	(9) notify the director, in writing, not later than 30 days after 19
268	268	(A) a change in compliance officer, residence, place of 20
269	269	business, mailing address, or phone number; 21
270	270	(B) the final disposition of an administrative action taken 22
271	271	against the licensee [REGISTRANT] by a governmental agency of another 23
272	272	state, by a governmental agency of another jurisdiction, or by a financial 24
273	273	industry regulatory authority sanction or arbitration proceeding; in addition, a 25
274	274	licensee [REGISTRANT] shall submit to the director documents relating to the 26
275	275	final disposition on, including the final order and other relevant legal 27
276	276	documents in, the action; or 28
277	277	(C) a conviction of a misdemeanor or felony of the third-party 29
278	278	administrator, its officers, directors, partners, owners, or employees. 30
279	279	* Sec. 24. AS 21.27.640(d) is amended to read: 31 34-LS0461\A
280	280	SB0134A -9- SB 134
281	281	New Text Underlined [DELETED TEXT BRACKETED]
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283	283	(d) If the director finds that the applicant or licensee [REGISTRANT] is 1
284	284	qualified and that application, license [REGISTRATION], or renewal fees have been 2
285	285	paid, the director may issue or renew the license [REGISTRATION]. 3
286	286	* Sec. 25. AS 21.27.650(a) is amended to read: 4
287	287	(a) An insurer may not transact business with a third-party administrator 5
288	288	unless 6
289	289	(1) the insurer holds a certificate of authority in this state if required 7
290	290	under this title; 8
291	291	(2) the third-party administrator is licensed [REGISTERED] under 9
292	292	this chapter [OR THE THIRD-PARTY ADMINISTRATOR HAS FILED A 10
293	293	CERTIFICATION WITH THE DIRECTOR CERTIFYING THAT THE THIRD-11
294	294	PARTY ADMINISTRATOR IS OPERATING ONLY FOR A FOREIGN INSURER 12
295	295	OTHER THAN A SELF-FUNDED MULTIPLE EMPLOYER WELFARE 13
296	296	ARRANGEMENT REGULATED UNDER AS 21.85 AND IS REGISTERED AS A 14
297	297	THIRD-PARTY ADMINISTRATOR BY THE THIRD-PARTY 15
298	298	ADMINISTRATOR'S RESIDENT INSURANCE REGULATOR IN A STATE 16
299	299	THAT THE DIRECTOR HAS DETERMINED HAS ENACTED PROVISIONS 17
300	300	SUBSTANTIALLY SIMILAR TO THOSE CONTAINED IN AS 21.27.630 - 18
301	301	21.27.650 AND THAT IS ACCREDITED BY THE NATIONAL ASSOCIATION OF 19
302	302	INSURANCE COMMISSIONERS]; 20
303	303	(3) the third-party administrator provides the director on January 1, 21
304	304	April 1, July 1, and October 1 of each year 22
305	305	(A) a list of persons who supervise or have responsibility over 23
306	306	personnel performing administrative functions, including claims administration 24
307	307	and payment, marketing administrative functions, premium accounting, 25
308	308	premium billing, coverage verification, underwriting, or certificate issuance 26
309	309	upon a subject resident, located, or to be performed in this state; 27
310	310	(B) a list of current insurers under contract; and 28
311	311	(C) other information the director may require; 29
312	312	(4) a written contract is in effect between the parties that establishes 30
313	313	the responsibilities of each party, indicates both parties' share of responsibility for a 31 34-LS0461\A
314	314	SB 134 -10- SB0134A
315	315	New Text Underlined [DELETED TEXT BRACKETED]
316	316
317	317	particular function, and specifies the division of responsibilities; 1
318	318	(5) there is in effect a written contract between the insurer and third-2
319	319	party administrator that contains the following provisions: 3
320	320	(A) the insurer may terminate the contract for cause upon 4
321	321	written notice sent by certified mail to the third-party administrator and may 5
322	322	suspend the underwriting authority of the third-party administrator during a 6
323	323	dispute regarding the cause for termination; but the insurer must fulfill all 7
324	324	lawful obligations with respect to policies affected by the written agreement, 8
325	325	regardless of any dispute between the insurer and the third-party administrator; 9
326	326	(B) the third-party administrator shall render accounts to the 10
327	327	insurer detailing all transactions and remit all money due under the contract to 11
328	328	the insurer at least monthly; 12
329	329	(C) all money collected for the account of an insurer shall be 13
330	330	held by the third-party administrator as a fiduciary; 14
331	331	(D) all payments on behalf of the insurer shall be held by the 15
332	332	third-party administrator as a fiduciary; 16
333	333	(E) the third-party administrator may not retain more than three 17
334	334	months' estimated claims payments and allocated loss adjustment expenses; 18
335	335	(F) the third-party administrator shall maintain separate records 19
336	336	for each insurer in a form usable by the insurer; the insurer or its authorized 20
337	337	representative shall have the right to audit and the right to copy all accounts 21
338	338	and records related to the insurer's business; the director, in addition to other 22
339	339	authority granted in this title, shall have access to all books, bank accounts, and 23
340	340	records of the third-party administrator in a form usable to the director; any 24
341	341	trade secrets contained in books and records reviewed by the director, 25
342	342	including the identity and addresses of policyholders and certificate holders, 26
343	343	shall be kept confidential, except that the director may use the information in a 27
344	344	proceeding instituted against the third-party administrator or the insurer; 28
345	345	(G) the contract may not be assigned in whole or in part by the 29
346	346	third-party administrator; 30
347	347	(H) if the contract permits the third-party administrator to do 31 34-LS0461\A
348	348	SB0134A -11- SB 134
349	349	New Text Underlined [DELETED TEXT BRACKETED]
350	350
351	351	underwriting, the contract must include the following: 1
352	352	(i) the third-party administrator's maximum annual 2
353	353	premium volume; 3
354	354	(ii) the rating system and basis of the rates to be 4
355	355	charged; 5
356	356	(iii) the types of risks that may be written; 6
357	357	(iv) maximum limits of liability; 7
358	358	(v) applicable exclusions; 8
359	359	(vi) territorial limitations; 9
360	360	(vii) policy cancellation provisions; 10
361	361	(viii) the maximum policy term; and 11
362	362	(ix) that the insurer shall have the right to cancel or not 12
363	363	renew a policy of insurance subject to applicable state law; 13
364	364	(I) if the contract permits the third-party administrator to 14
365	365	administer claims on behalf of the insurer, the contract must include the 15
366	366	following: 16
367	367	(i) written settlement authority must be provided by the 17
368	368	insurer and may be terminated for cause upon the insurer's written 18
369	369	notice sent by certified mail to the third-party administrator or upon the 19
370	370	termination of the contract, but the insurer may suspend the settlement 20
371	371	authority during a dispute regarding the cause of termination; 21
372	372	(ii) claims shall be reported to the insurer within 30 22
373	373	days; 23
374	374	(iii) a copy of the claim file shall be sent to the insurer 24
375	375	upon request or as soon as it becomes known that the claim has the 25
376	376	potential to exceed an amount determined by the director or exceeds the 26
377	377	limit set by the insurer, whichever is less, involves a coverage dispute, 27
378	378	may exceed the third-party administrator's claims settlement authority, 28
379	379	is open for more than six months, involves extra contractual 29
380	380	allegations, or is closed by payment in excess of an amount set by the 30
381	381	director or an amount set by the insurer, whichever is less; 31 34-LS0461\A
382	382	SB 134 -12- SB0134A
383	383	New Text Underlined [DELETED TEXT BRACKETED]
384	384
385	385	(iv) each party to the contract shall comply with unfair 1
386	386	claims settlement statutes and regulations; 2
387	387	(v) transmission of electronic data must occur at least 3
388	388	monthly if electronic claim files are in existence; and 4
389	389	(vi) claim files shall be the sole property of the insurer; 5
390	390	upon an order of liquidation of the insurer, the third-party administrator 6
391	391	shall have reasonable access to and the right to copy the files on a 7
392	392	timely basis; and 8
393	393	(J) the contract may not provide for commissions, fees, or 9
394	394	charges contingent upon savings obtained in the adjustment, settlement, and 10
395	395	payment of losses covered by the insurer's obligations; but a third-party 11
396	396	administrator may receive performance-based compensation for providing 12
397	397	hospital or other auditing services or may receive compensation based on 13
398	398	premiums or charges collected or the number of claims paid or processed. 14
399	399	* Sec. 26. AS 21.27.650(q) is amended to read: 15
400	400	(q) The director may, without advance notice or hearing, immediately suspend 16
401	401	by order the license [REGISTRATION] of a third-party administrator if the director 17
402	402	finds that one or more of the following circumstances exist: 18
403	403	(1) the third-party administrator is insolvent or impaired; 19
404	404	(2) a proceeding for bankruptcy, receivership, conservatorship, or 20
405	405	rehabilitation, or another delinquency proceeding regarding the third-party 21
406	406	administrator has been commenced in any state or by a governmental agency of 22
407	407	another jurisdiction; 23
408	408	(3) the third-party administrator is in an unsound condition, or is in a 24
409	409	condition or using methods or practices that render its further transaction of insurance 25
410	410	injurious to policy holders or the public. 26
411	411	* Sec. 27. AS 21.27.901 is amended to read: 27
412	412	Sec. 21.27.901. Licensure [REGISTRATION] of pharmacy benefits 28
413	413	managers; scope of business practice. (a) A person may not conduct business in the 29
414	414	state as a pharmacy benefits manager unless the person is licensed [REGISTERED] 30
415	415	with the director. 31 34-LS0461\A
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419	419	(b) A pharmacy benefits manager licensed [REGISTERED] under this section 1
420	420	may 2
421	421	(1) contract with an insurer to administer or manage pharmacy benefits 3
422	422	provided by an insurer for a covered person, including claims processing services for 4
423	423	and audits of payments for prescription drugs and medical devices and supplies; and 5
424	424	(2) contract with network pharmacies. 6
425	425	(c) A pharmacy benefits manager 7
426	426	(1) shall apply for license [REGISTRATION] following the same 8
427	427	procedures for licensure set out in AS 21.27.040; 9
428	428	(2) is subject to hearings and orders on violations; denial, nonrenewal, 10
429	429	suspension, or revocation of license [REGISTRATION]; penalties; and surrender of 11
430	430	license [REGISTRATION] under the procedures set out in AS 21.27.405 - 21.27.460. 12
431	431	(d) Each day that a pharmacy benefits manager conducts business in the state 13
432	432	as a pharmacy benefits manager without being licensed [REGISTERED] is a separate 14
433	433	violation of this section, and each separate violation is subject to the maximum civil 15
434	434	penalty under AS 21.97.020. 16
435	435	* Sec. 28. AS 21.27 is amended by adding new sections to read: 17
436	436	Sec. 21.27.903. Pharmacy benefit manager qualifications. (a) An 18
437	437	application for a pharmacy benefits manager license must be in a form prescribed by 19
438	438	the director. 20
439	439	(b) The director may only issue or renew a license if the director is satisfied 21
440	440	that the applicant is a trustworthy person. The director may not issue a license to an 22
441	441	applicant who has committed an act that is a cause for denial, nonrenewal, suspension, 23
442	442	or revocation of a registration or license in this state or another jurisdiction. 24
443	443	(c) An application must disclose 25
444	444	(1) information concerning the identity, professional history, 26
445	445	professional experience, and background history of all owners, officers, directors, or 27
446	446	partners; 28
447	447	(2) any administrative action taken against the owners, officers, 29
448	448	directors, or partners by a governmental agency of this or another jurisdiction and any 30
449	449	sanction imposed by a financial industry regulatory authority or arbitration 31 34-LS0461\A
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453	453	proceeding; 1
454	454	(3) any criminal prosecution in this state or another state or jurisdiction 2
455	455	of an owner, officer, director, or partner; the application must include the criminal 3
456	456	complaint, calendaring order, and other relevant legal documents. 4
457	457	(d) An application must designate a compliance officer for the pharmacy 5
458	458	benefits manager and include the name, business address, telephone number, 6
459	459	electronic mailing address, professional experience, and information concerning the 7
460	460	background history of the officer. 8
461	461	(e) An application must include 9
462	462	(1) the required application fee; 10
463	463	(2) the organizational documents of the pharmacy benefits manager, 11
464	464	including articles of incorporation, articles of association, partnership agreement, trade 12
465	465	name certificate, trust agreement, shareholder agreement, and other applicable 13
466	466	documents, as well as the endorsements to the required documents; 14
467	467	(3) the name and address of the pharmacy benefits manager's agent for 15
468	468	service of process in the state; 16
469	469	(4) the bylaws, rules, regulations, or similar documents regulating the 17
470	470	internal affairs of the pharmacy benefits manager; 18
471	471	(5) the name, electronic mailing address, physical address, official 19
472	472	position, and professional qualifications of each person who is responsible for the 20
473	473	conduct of affairs of the pharmacy benefits manager, including the board of directors, 21
474	474	board of trustees, executive committee, or other governing board or committee; the 22
475	475	principal officers in the case of a corporation, or the partners or members in the case of 23
476	476	a partnership, limited liability company, limited liability partnership, or association; 24
477	477	shareholders holding directly or indirectly 10 percent or more of the voting securities 25
478	478	of the pharmacy benefits manager; and any other person who exercises control or 26
479	479	influence over the affairs of the pharmacy benefits manager; 27
480	480	(6) certified financial statements for the preceding two years, or for 28
481	481	each year and partial year that the applicant has been in business if less than two years, 29
482	482	prepared by an independent certified public accountant establishing that the applicant 30
483	483	is solvent, that the applicant's system of accounting, internal control, and procedure is 31 34-LS0461\A
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487	487	operating effectively to provide reasonable assurance that money is promptly 1
488	488	accounted for and paid to the person entitled to the money, and any other information 2
489	489	that the director may require to review the current financial condition of the applicant. 3
490	490	Sec. 21.27.904. Pharmacy benefit manager required notifications. (a) A 4
491	491	licensed pharmacy benefit manager shall notify the director in writing, not later than 5
492	492	30 days after 6
493	493	(1) a change in the information contained within the licensee's license, 7
494	494	place of business, electronic mailing address, physical mailing address, or telephone 8
495	495	number; 9
496	496	(2) a change in compliance officer, residence, place of business, 10
497	497	mailing address, or phone number; 11
498	498	(3) the final disposition of an administrative action taken against the 12
499	499	licensee by a governmental agency of another state, by a governmental agency of 13
500	500	another jurisdiction, or by a financial industry regulatory authority sanction or 14
501	501	arbitration proceeding; in addition, a licensee shall submit to the director documents 15
502	502	relating to the final disposition on, including the final order and other relevant legal 16
503	503	documents in, the action; or 17
504	504	(4) a conviction of a misdemeanor or felony of the pharmacy benefits 18
505	505	manager, its officers, designated compliance officer, directors, partners, or owners. 19
506	506	(b) Failure to provide the information required under this section within 30 20
507	507	days is cause for denial, revocation, or suspension of license. 21
508	508	* Sec. 29. AS 21.27.905 is amended to read: 22
509	509	Sec. 21.27.905. Renewal of license [REGISTRATION]. (a) A pharmacy 23
510	510	benefits manager shall biennially renew a license [REGISTRATION] with the director 24
511	511	following the procedures for license renewal in AS 21.27.380. 25
512	512	(b) To renew a license [REGISTRATION] under this section, a pharmacy 26
513	513	benefits manager shall pay a renewal fee established by the director. The director shall 27
514	514	set the amount of the renewal fee to allow the renewal and oversight activities of the 28
515	515	division to be self-supporting. 29
516	516	* Sec. 30. AS 21.27.905 is amended by adding a new subsection to read: 30
517	517	(c) The fees required under (b) of this section must include fees to cover the 31 34-LS0461\A
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521	521	cost of 1
522	522	(1) salaries and benefits paid to the personnel of the division engaged 2
523	523	in the enforcement of this chapter; 3
524	524	(2) reasonable technology costs related to the enforcement process, 4
525	525	including the actual cost of software and hardware used in the enforcement process 5
526	526	and the cost of training personnel in the proper use of the software or hardware; and 6
527	527	(3) reasonable education and training costs incurred by the division to 7
528	528	maintain the proficiency and competence of the enforcing personnel. 8
529	529	* Sec. 31. AS 21.27.975(15) is amended to read: 9
530	530	(15) "pharmacy benefits manager" means a person that contracts with a 10
531	531	pharmacy on behalf of an insurer to process claims or pay pharmacies for prescription 11
532	532	drugs or medical devices and supplies or provide network management for pharmacies 12
533	533	regardless of ownership of the pharmacy benefits manager; 13
534	534	* Sec. 32. AS 21.27.630(f) is repealed. 14
535	535	* Sec. 33. This Act takes effect January 1, 2026. 15