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2021 Regular Session
SENATE BILL NO. 218
BY SENATOR FRED MILLS
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
PHARMACEUTICALS. Provides relative to the payment of pharmacy claims. (See Act)
1 AN ACT
2 To amend and reenact R.S. 22:1856(B), 1856.1(A), the introductory paragraph of 1856.1(B),
3 1856.1(B)(2)(a), (3)(a), and (4)(a), (D)(1)(b), (E)(5), and (G), 1860(C), the
4 introductory paragraph of 1860.2(A), 1860.3(C) and (D), and 1867(A), R.S.
5 37:1256(B), and the introductory paragraph of R.S. 40:2868(A) and 2870(A)(4) and
6 to enact R.S. 22:1856(C)(16) and (17) and (G), 1856.1(H), 1856.2, 1860.3(E) and
7 (F), 1863(10) and (11), and 1864(C) and R.S. 40:2864(D) and 2870(A)(21), (22), and
8 (23), relative to the payment of pharmacy claims; to provide for pharmacy audits; to
9 provide for reimbursements; to provide for definitions; to prohibit spread pricing; to
10 provide for pharmacy benefit manager permits; to provide for the duties of pharmacy
11 benefit managers; to provide for prohibited acts; to provide for an effective date; and
12 to provide for related matters.
13 Be it enacted by the Legislature of Louisiana:
14 Section 1. R.S. 22:1856(B), 1856.1(A), the introductory paragraph of 1856.1(B),
15 1856.1(B)(2)(a), (3)(a), and (4)(a), (D)(1)(b), (E)(5), and (G), 1860(C), the introductory
16 paragraph of 1860.2(A), and 1860.3(C) and (D), and 1867(A) are hereby amended and
17 reenacted and R.S. 22:1856(C)(16) and (17) and (G), 1856.1(H), 1856.2, 1860.3(E) and (F),
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1 1863(10) and (11), and 1864(C) are hereby enacted to read as follows:
2 §1856. Payment standard; limitations on claim filing and audits; remittance advice
3 * * *
4 B. Health insurance issuers that limit the period of time that a pharmacist or
5 pharmacy under contract for delivery of covered benefits has to submit claims for
6 payment under R.S. 22:1853 or 1854 shall have the same limited period of time
7 following payment of such claims to perform any review or audit for purposes of
8 reconsidering the validity of such claims.
9 A pharmacy record audit, reconsideration, or any other review of a
10 claim for delivery of covered benefits performed by a health insurance issuer
11 or their representative shall be done in accordance with R.S. 22:1856.1.
12 C. Each remittance advice generated by a health insurance issuer or its agent
13 to a pharmacist or his agent or pharmacy or its agent shall be sent on the date of
14 payment and shall include the following information, clearly identified and totaled
15 for each claim listed:
16 * * *
17 (16) On or after January 1, 2023, reimbursement paid to the health
18 insurance issuer.
19 (17) On or after January 1, 2023, reimbursement paid to the pharmacy.
20 * * *
21 G. The agent of a pharmacist or pharmacy, including but not limited to
22 a pharmacy services administrative organization, shall send the pharmacist or
23 pharmacy the complete remittance advice required by Subsection C of this
24 Section on the date of payment for each claim.
25 §1856.1. Pharmacy record audits; recoupment; appeals
26 A.(1) As used in this Section, "entity" means a managed care company,
27 insurance company, third-party payor, or the representative of the managed care
28 company including a pharmacy benefit manager, insurance company, or third-party
29 payor.
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1 (2) Except for an alleged fraud, willful misrepresentation, or abuse audit
2 performed in accordance with R.S. 22:1856.1(G)(2), any entity that limits the
3 period of time that a pharmacist or pharmacy under contract for delivery of
4 covered benefits has to submit claims for payment pursuant to R.S. 22:1853 or
5 1854 shall have the same limited period of time following payment of the claims,
6 up to a maximum time period of one year from the date the claim was
7 adjudicated, to perform an audit, reconsideration, or any other review of a
8 claim.
9 B. Notwithstanding any other provision of law to the contrary, when an a
10 review, reconsideration, or any other audit of the records of a pharmacy is
11 conducted by an entity, the audit shall be conducted in accordance with the following
12 criteria:
13 * * *
14 (2)(a) No entity shall conduct an audit at a particular pharmacy more than
15 one time or for more than one hundred prescriptions annually. However, the
16 provisions of this Paragraph shall not apply when an entity must return to a
17 pharmacy to complete an audit already in progress, or there is an identified history
18 of errors, an identified activity which a reasonable man would believe to be
19 inappropriate, or illegal activity that the entity has brought to the attention of the
20 pharmacy owner or corporate headquarters of the pharmacy.
21 * * *
22 (3)(a) The entity or any vendor or subcontractor of the entity which conducts
23 the initial audit shall give the pharmacy notice and a comprehensive list of claims
24 by prescription number to be audited at least two weeks before conducting the
25 initial audit for each audit cycle. The entity or vendor or subcontractor of the
26 entity shall not receive payment nor compensate the auditor based on the
27 amount directly or indirectly recovered.
28 * * *
29 (4)(a)(i) Any clerical or record-keeping error, such as a typographical error,
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1 scrivener's error, or computer error, regarding a required document or record shall
2 not necessarily constitute fraud.
3 (ii) A claim arising pursuant to the provisions of this Section may be subject
4 to recoupment.
5 * * *
6 D.(1) No pharmacy shall be subject to recoupment of any portion of the
7 reimbursement for the dispensed product of a prescription unless one or more of the
8 following has occurred at the point of adjudication:
9 * * *
10 (b) The pharmacy has engaged in dispensing in excess of the benefit design,
11 as established by the plan sponsor, or has not filled prescriptions in accordance
12 with the prescriber's order, unless the only commercially available package size
13 exceeds the maximum days' supply or the prescription is for unit-of-use items
14 up to the manufacturer's recommendations.
15 * * *
16 E. * * *
17 (5) Notwithstanding any other provision of law to the contrary, the agency
18 entity conducting the audit shall not use the accounting practice of extrapolation in
19 calculating recoupment or penalties for audits, unless otherwise agreed to by the
20 pharmacy or mandated by a government agency or in the case of fraud.
21 * * *
22 G. This Section shall not apply to:
23 (1) Any quality assurance review, as defined by the time period prior to the
24 reimbursement by the entity to the pharmacy dispensing of the prescription.
25 (2) An investigation that is initiated based on or that involves suspected or
26 alleged fraud, willful misrepresentation, or abuse. The entity conducting the audit
27 shall provide notice of any investigation initiated pursuant to this Subsection to
28 the division of insurance fraud of the Department of Insurance prior to auditing
29 the pharmacy.
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1 H. If, upon investigation, the commissioner of insurance finds a violation
2 of this Section has occurred, either on his own initiative or in response to a
3 complaint filed with the Department of Insurance, the commissioner shall
4 suspend or revoke the license of the entity or, in lieu thereof, impose a fine.
5 §1856.2. Pharmacy record auditors; testing
6 On or after January 1, 2022, no individual shall perform an audit on
7 behalf of an entity pursuant to R.S. 22:1856.1 or any other provision of this
8 Subpart unless the individual has passed an examination which tests the
9 knowledge of the individual concerning pharmacy record audits and the
10 insurance laws and regulations of this state. Examinations shall be developed
11 and conducted in accordance with the rules and regulations promulgated by the
12 commissioner of insurance.
13 * * *
14 §1860. Violations; cease and desist orders; penalties
15 * * *
16 C. An aggrieved party, which may include a pharmacy benefit manager,
17 affected by the commissioner's decision, act, or order may demand a hearing in
18 accordance with Chapter 12 of this Title, R.S. 22:2191 et seq.
19 * * *
20 §1860.2. Certain pharmacy claims fees prohibited
21 A. A health insurance issuer, or a pharmacy benefit manager, or pharmacy
22 services administrative organization shall not directly or indirectly charge or hold
23 a pharmacist or pharmacy responsible for any fee related to a claim that is any of the
24 following:
25 * * *
26 §1860.3. Reimbursements
27 * * *
28 C.(1) No pharmacy benefit manager, pharmacy services administration
29 organization, or any person acting for or on behalf of a pharmacy benefit
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1 manager or pharmacy services administration organization shall make or allow
2 any direct or indirect reduction of payment to a pharmacist or pharmacy for
3 a drug, device, or service under a reconciliation process to an effective rate of
4 reimbursement, including but not limited to generic effective rates, brand
5 effective rates, direct and indirect remuneration fees, or any other reduction or
6 aggregate reduction of payment.
7 (2) The provisions of Paragraph (1) of this Subsection shall only apply
8 to a local pharmacy as defined in R.S. 22:1863.
9 D. No new agreements or extensions of existing agreements for the
10 provision of pharmacy benefit manager services allowing for the
11 reimbursement of a pharmacy or pharmacist in an amount less than the amount
12 that the pharmacy benefit manager was paid by the health plan provider for the
13 same claim shall be entered into after January 1, 2022.
14 C.E. The commission of any act prohibited by this Section shall be
15 considered an unfair method of competition and unfair practice or act which shall
16 subject the violator to any and all actions, including investigative demands, private
17 actions, remedies, and penalties, provided for in the unfair trade practices
18 provisions of the Louisiana Insurance Code, R.S. 22:1961 et seq., or the Unfair
19 Trade Practices and Consumer Protection Law, R.S. 51:1401 et seq.
20 D.F. Any provision of a contract that is contrary to any provision of this
21 Section shall be null, void, and unenforceable in this state.
22 * * *
23 §1863. Definitions
24 As used in this Subpart, the following definitions apply:
25 * * *
26 (10) "Local pharmacy" means any pharmacy domiciled in at least one
27 Louisiana parish that has fewer than ten retail outlets under its corporate
28 umbrella.
29 (11) "Specialty Drug" means a prescription drug that is not readily
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1 available at a retail pharmacy, is prescribed for a person with a chronic,
2 complex, life-threatening, or rare medical condition, and requires either of the
3 following:
4 (a) Specialized product handling or administration by the dispensing
5 pharmacy.
6 (b) Specialized clinical care, including requirement dosing adjustments,
7 intensive clinical monitoring, or expanded services for patients. For the
8 purposes of this Paragraph, "expanded services" may include intensive patient
9 counseling, education, or ongoing clinical support beyond traditional dispensing
10 actives such as individualized disease and therapy management to support
11 improved health outcomes.
12 §1864. Requirements for use of the National Drug Code by a pharmacy benefit
13 manager
14 * * *
15 C. A pharmacy benefits manager under contract with a health insurance
16 issuer shall use a single maximum amount to be paid by the health insurance
17 issuer to a pharmacy for a generic drug or a brand name drug that has at least
18 one generic alternative available. A health insurance issuer or pharmacy
19 benefits manager under contract with a health insurance issuer shall use the
20 same maximum allowable cost list for each pharmacy.
21 * * *
22 §1867. Prohibition on spread pricing; notice exception
23 A. A On or before December 31, 2024, a pharmacy benefit manager or
24 pharmacy services administrative organization is prohibited from conducting or
25 participating in spread pricing in this state unless the pharmacy benefit manager
26 provides written notice as provided in Subsection B of this Section. Effective
27 January 1, 2022, no new agreement or extension of an existing agreement for
28 the provision of pharmacy benefit manager services shall allow for spread
29 pricing.
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1 * * *
2 Section 2. R.S. 37:1256(B) is hereby amended and reenacted to read as follows:
3 §1256. Louisiana Board of Pharmacy; authority to regulate pharmacy benefit
4 managers
5 * * *
6 B. A pharmacy benefit manager may be but is not required to be permitted
7 under shall obtain a permit pursuant to Part IV of this Chapter if it administers,
8 develops, maintains, performs, or provides one or more pharmacy services in this
9 state or that affects one or more beneficiaries of a pharmacy benefit management
10 plan administered by the pharmacy benefit manager, as set forth in R.S. 40:2868.
11 Section 3. The introductory paragraph of R.S. 40:2868(A) and 2870(A)(4) are
12 hereby amended and reenacted and R.S. 40:2864(D) and 2870(A)(21), (22), and (23) are
13 hereby enacted to read as follows:
14 §2864. Duties of pharmacy benefit managers
15 * * *
16 D. A pharmacy benefit manager shall notify a health insurance issuer
17 in writing of any activity, policy, or practice of the pharmacy benefit manager
18 that directly or indirectly presents a conflict of interest with the duties provided
19 for in this Chapter.
20 * * *
21 §2868. Pharmacy benefit manager; regulation by the Louisiana Board of Pharmacy;
22 requirements for permitting
23 A. A pharmacy benefit manager may shall obtain and maintain a permit
24 from the Louisiana Board of Pharmacy if the pharmacy benefit manager
25 administers, develops, maintains, performs, or provides one or more of the following
26 pharmacy services in this state or that affects one or more beneficiaries of a
27 pharmacy benefit management plan administered by the pharmacy benefit manager:
28 * * *
29 §2870. Prohibited acts; unfair and deceptive trade practices
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1 A. A pharmacy benefit manager in Louisiana shall not:
2 * * *
3 (4) Conduct On or before December 31, 2024, conduct or participate in
4 spread pricing as defined in R.S. 22:1863(9) without providing the notice required
5 by R.S. 22:1867 or, effective January 1, 2022, enter into a new agreement or
6 extension of an existing agreement for the provision of pharmacy manager
7 benefit services allowing for spread pricing.
8 * * *
9 (21) Cause or knowingly permit the use of any advertisement, promotion,
10 solicitation, representation, proposal, or offer that is untrue, deceptive, or
11 misleading.
12 (22) Prohibit a pharmacy or pharmacist from offering and providing
13 delivery services to a covered individual as an ancillary service of the pharmacy.
14 (23) On or after January 1, 2025, reimburse a pharmacy or pharmacist
15 in this state an amount less than the amount that the pharmacy benefit manager
16 was paid by the health plan provider for the same claim or, effective January
17 1, 2022, enter into a new agreement or extension of an existing agreement for
18 the provision of pharmacy benefit manager services allowing for the
19 reimbursement of a pharmacy or pharmacist in an amount less than the amount
20 that the pharmacy benefit manager was paid by the health plan provider for the
21 same claim.
22 Section 4. Provisions of this Act shall not invalidate or impede the enforcement of
23 contacts existing at the time of the effective date of this Act. Effective January 1, 2022, no
24 new agreement or extension of an existing agreement for the provision of pharmacy benefit
25 manager services shall allow for spread pricing.
26 Section 5. The provisions of R.S. 22:1856.1, as enacted by this Act, shall become
27 effective on July 1, 2022.
28 Section 6. Except as provided in Section 5 of this Act, the provisions of this Act
29 shall become effective upon signature by the governor or, if not signed by the governor,
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1 upon expiration of the time for bills to become law without signature by the governor, as
2 provided by Article III, Section 18 of the Constitution of Louisiana. If vetoed by the
3 governor and subsequently approved by the legislature, this Act shall become effective on
4 the day following such approval.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Brandi Cannon.
DIGEST
SB 218 Reengrossed 2021 Regular Session Fred Mills
Present law provides for the payment for prescription drugs, other products and supplies, and
pharmacist services submitted by a pharmacist or pharmacy under a contract for the
provision of covered benefits with a health insurance issuer.
Present law provides for the remittance advice generated by a health insurance issuer to a
pharmacist or pharmacy to be sent on the date of payment and containing certain enumerated
information, clearly identified and totaled for each claim listed. Proposed law adds, effective
January 1, 2023, the requirement to include the amount of reimbursement paid to the health
insurance issuer and the reimbursement paid to the pharmacy.
Present law provides that health insurance issuers that limit the period of time that a
pharmacist or pharmacy has to submit claims for payment shall have the same limited period
of time following payment of the claims to reconsider the validity of the claims. Proposed
law provides that, except in cases of alleged fraud, willful misrepresentation, or abuse, the
time period shall not exceed one year from the date a claim was adjudicated to perform any
review, reconsideration, or any other audit of the claim.
Present law provides for the audit of pharmacy records and prohibits the conducting of an
audit at a particular pharmacy more than one time annually. Proposed law also prohibits an
audit for more than one hundred prescriptions annually.
Present law provides that the entity which conducts the initial audit shall give the pharmacy
notice at least two weeks before conducting the initial audit except in cases of alleged fraud
or willful misrepresentation when notice before the initial audit could impede the audit,
review, or investigation. Proposed law adds the requirement for the auditor to provide a
comprehensive list of claims by prescription number to be audited.
Proposed law provides that the auditor shall not receive payment nor be compensated based
on the amount directly or indirectly recovered.
Proposed law provides that the auditor shall provide notice of any investigation initiated
based upon fraud to the division of insurance fraud of the Department of Insurance prior to
auditing the pharmacy. Proposed law requires the commissioner of insurance to take
appropriate enforcement action.
Proposed law provides that, effective January 1, 2022, no individual shall perform an audit
unless the individual has passed an examination which tests the knowledge of the individual
concerning pharmacy record audits and the insurance laws and regulations of this state.
Proposed law provides that no pharmacy benefit manager (PBM) or pharmacy services
administration organization (PSAO) shall make or allow any direct or indirect reduction of
payment to a pharmacist or pharmacy for a drug, device, or service under a reconciliation
process to an effective rate of reimbursement. Proposed law applies only to local
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pharmacies.
Proposed law provides that, effective January 1, 2025, no PBM shall reimburse a pharmacy
or pharmacist in this state an amount less than the amount that the PBM was paid by the
health plan provider for the same claim.
Present law provides that, until December 31, 2024, a PBM is prohibited from conducting
or participating in spread pricing in this state unless written notice is provided to the
policyholders. Proposed law removes the written notice exception and prohibits spread
pricing after January 1, 2025.
Present law provides that a PBM has the duties of good faith, honesty, trust, confidence, and
candor and provides for the standard for the fulfillment of the PBM's duties. Proposed law
provides for a PBM to notify a health insurance issuer in writing of any activity, policy, or
practice of the PBM that directly or indirectly presents a conflict of interest.
Present law provides that a PBM may obtain and maintain a permit from the La. Board of
Pharmacy if the PBM provides certain pharmacy services. Proposed law requires a PBM to
obtain and maintain the permit.
Present law provides for certain prohibited acts or unfair and deceptive trade practices by
PBMs. Proposed law adds the actions of causing or knowingly permitting the use of any
advertisement, promotion, solicitation, representation, proposal, or offer that is untrue,
deceptive, or misleading, prohibiting a pharmacy from offering delivery services, and
reimbursing a pharmacy less than the amount paid by the health plan.
Proposed law shall not invalidate or impede the enforcement of contracts for the provision
of pharmacy benefit manager services existing at the time of the effective date of proposed
law. Proposed law provides that, effective January 1, 2022, no new agreement or extension
of an existing agreement for the provision of pharmacy benefit manager services shall allow
for spread pricing.
Proposed law provides for various effective dates.
(Amends R.S. 22:1856(B), 1856.1(A), 1856.1(B)(intro para), (B)(2)(a), (3)(a), and (4)(a),
(D)(1)(b), (E)(5), and (G), 1860(C), 1860.2(A)(intro para), 1860.3(C) and (D), and 1867(A),
R.S. 37:1256(B), and R.S. 40:2868(A)(intro para) and 2870(A)(4); adds R.S. 22:1856(C)(16)
and (17), and (G), 1856.1(H), 1856.2, 1860.3(E) and (F), 1863(10) and (11), and 1864(C)
and R.S. 40:2864(D) and 2870(A)(21), (22), and (23))
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Health and Welfare to
the original bill
1. Adds reimbursement amounts to the required content of a remittance advice.
2. Clarifies the permitted enforcement actions of the commissioner of
insurance.
3. Restores present law relative to the review and audit of pharmacy claims.
4. Requires an individual to pass a test prior to conducting an audit.
5. Deletes proposed law relative to the fiduciary duty of a PBM.
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6. Deletes the proposed repeal of the pharmacy benefit manager monitoring
advisory council.
7. Provides for various effective dates.
8. Makes technical changes.
Senate Floor Amendments to engrossed bill
1. Provides for effective dates.
2. Deletes provision relative to enforcement by the commissioner of insurance.
3. Deletes definition of entity.
4. Specifies that the remittance advice is to be sent on the date of payment for
each claim.
5. Specifies that the prohibition on direct or indirect reduction of payment to an
effective rate of reimbursement applies only to local pharmacies.
6. Adds definitions for local pharmacy and specialty drug.
7. Makes technical changes.
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