EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXIS TING LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*sb0595*
SENATE BILL 595
J5 4lr1562
CF HB 879
By: Senator Hershey
Introduced and read first time: January 26, 2024
Assigned to: Finance
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: February 27, 2024
CHAPTER ______
AN ACT concerning 1
Health Benefit Plans – Calculation of Cost Sharing Contribution – 2
Requirements and Prohibitions 3
FOR the purpose of requiring administrators, carriers, and pharmacy benefits managers to 4
include certain cost sharing amounts paid by or on behalf of an enrollee or a 5
beneficiary when calculating the enrollee’s or beneficiary’s contribution to a cost 6
sharing requirement for certain health care services; requiring administrators, 7
carriers, and pharmacy benefits managers to include certain cost sharing amounts 8
for certain high deductible health plans after an enrollee or a beneficiary satisfies a 9
certain requirement; prohibiting administrators, carriers, and pharmacy benefits 10
managers from directly or indirectly setting, altering, implementing, or conditioning 11
the terms of certain coverage based on certain information; and generally relating to 12
the calculation of cost sharing requirements. 13
BY adding to 14
Article – Insurance 15
Section 15–118.1 and 15–1611.3 16
Annotated Code of Maryland 17
(2017 Replacement Volume and 2023 Supplement) 18
BY repealing and reenacting, with amendments, 19
Article – Insurance 20
Section 15–1601 21
Annotated Code of Maryland 22
(2017 Replacement Volume and 2023 Supplement) 23 2 SENATE BILL 595
Preamble 1
WHEREAS, Residents of Maryland frequently rely on State–regulated commercial 2
health insurance carriers to secure access to the prescription medicines needed to protect 3
their health; and 4
WHEREAS, Commercial health insurance designs increasingly require patients to 5
bear significant out–of–pocket costs for their prescription medicines; and 6
WHEREAS, High out–of–pocket costs on prescription medicines impact the ability 7
of patients to start new and necessary medicines and to stay adherent to their current 8
prescriptions; and 9
WHEREAS, High or unpredictable cost sharing requirements are a main driver of 10
elevated patient out–of–pocket costs and allow health insurance carriers to capture 11
discounts and price concessions that are intended to benefit patients at the pharmacy 12
counter; and 13
WHEREAS, Health insurance carriers unfairly increase cost sharing burdens on 14
patients by refusing to count third–party assistance toward patients’ cost sharing 15
contributions; and 16
WHEREAS, The burdens of high or unpredictable cost sharing requirements are 17
borne disproportionately by patients with chronic or debilitating conditions; and 18
WHEREAS, Restrictions are needed on the ability of health insurance carriers and 19
their intermediaries to use unfair cost sharing designs to retain rebates and price 20
concessions that instead should be directly passed on to patients as cost savings; and 21
WHEREAS, Patients need equitable and accessible health coverage that does not 22
impose unfair cost sharing burdens on them; now, therefore, 23
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 24
That the Laws of Maryland read as follows: 25
Article – Insurance 26
15–118.1. 27
(A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE MEANINGS 28
INDICATED. 29
(2) “ADMINISTRATOR ” HAS THE MEANING STAT ED IN § 8–301 OF THIS 30
ARTICLE. 31
SENATE BILL 595 3
(3) “CARRIER” MEANS AN ENTITY SUBJ ECT TO THE JURISDICT ION OF 1
THE COMMISSIONER THAT CON TRACTS, OR OFFERS TO CONTRAC T, TO PROVIDE, 2
DELIVER, ARRANGE FOR , PAY FOR, OR REIMBURSE ANY OF THE COSTS OF HEALTH 3
CARE SERVICES UNDER A HEALTH BENEFIT PLA N IN THE STATE. 4
(4) “COST SHARING ” MEANS ANY COPAYMENT , COINSURANCE , 5
DEDUCTIBLE, OR OTHER SIMILAR CHA RGE REQUIRED OF AN E NROLLEE FOR A 6
HEALTH CARE SERVICE COVERED BY A HEALTH BENEFIT PLAN , INCLUDING A 7
PRESCRIPTION DRUG , AND PAID BY OR ON BE HALF OF THE ENROLLEE . 8
(5) “ENROLLEE” MEANS AN INDIVIDUAL ENTITLED TO PAYMENT FOR 9
HEALTH CARE SERVICES FROM AN ADMINISTRATO R OR A CARRIER. 10
(6) “HEALTH BENEFIT PLAN” MEANS A POLICY , A CONTRACT , A 11
CERTIFICATION , OR AN AGREEMENT OFFE RED OR ISSUED BY AN ADMINISTRATOR 12
OR A CARRIER TO PROV IDE, DELIVER, ARRANGE FOR , PAY FOR, OR REIMBURSE ANY 13
OF THE COSTS OF HEAL TH CARE SERVICES . 14
(7) “HEALTH CARE SERVICE ” MEANS AN ITEM OR SERVICE PROVI DED 15
TO AN INDIVIDUAL FOR THE PURPOSE OF PREVE NTING, ALLEVIATING, CURING, OR 16
HEALING HUMAN ILLNES S, INJURY, OR PHYSICAL DISABILI TY. 17
(B) THE ANNUAL LIMITATION ON COST SHARING PROV IDED FOR UNDER 42 18
U.S.C. § 18022(C)(1) SHALL APPLY TO ALL HEALTH CARE SERVICES COVERED 19
UNDER A HEALTH BENEF IT PLAN OFFERED OR I SSUED BY AN ADMINIST RATOR OR A 20
CARRIER IN THE STATE. 21
(C) (1) FOR A PRESCRIPTION DR UG OR BIOLOGICAL PRO DUCT COVERED 22
BY A HEALTH BENEFIT PLAN, THIS SUBSECTION APPL IES ONLY WITH RESPEC T TO A 23
PRESCRIPTION DRUG OR BIOLOGICAL PRODUCT : 24
(I) THAT DOES NOT HAVE A N AB–RATED GENERIC EQUIVA LENT 25
OR AN INTERCHANGEABL E BIOLOGICAL PRODUCT PREFERRED UNDER THE 26
FORMULARY OF THE HEA LTH BENEFIT PLAN ; OR 27
(II) 1. THAT HAS AN AB–RATED GENERIC EQUIVA LENT OR 28
AN INTERCHANGEABLE B IOLOGICAL PRODUCT PR EFERRED UNDER THE 29
FORMULARY OF THE HEA LTH BENEFIT PLAN ; AND 30
2. TO WHICH THE ENROLLE E HAS OBTAINED ACCES S 31
THROUGH A PRIOR AUTH ORIZATION, STEP THERAPY PROTOCO L, OR EXCEPTION OR 32
APPEAL PROCESS OF TH E ADMINISTR ATOR OR CARRIER . 33
4 SENATE BILL 595
(2) SUBJECT TO PARAGRAPHS (2) AND (3) (3) AND (4) OF THIS 1
SUBSECTION, WHEN CALCULATING AN ENROLLEE’S CONTRIBUTION TO AN 2
APPLICABLE COST SHAR ING REQUIREMENT , AN ADMINISTRATOR OR A CARRIER 3
SHALL INCLUDE COST S HARING AMOUNTS PAID BY THE ENROLLEE OR O N BEHALF 4
OF THE ENROLLEE BY A NOTHER PERSON . 5
(2) (3) IF THE APPLICATION OF T HE REQUIREMENT UNDER 6
PARAGRAPH (1) (2) OF THIS SUBSECTION W OULD RESULT IN HEALT H SAVINGS 7
ACCOUNT INELIGIBILIT Y UNDER § 223 OF THE INTERNAL REVENUE CODE, THE 8
REQUIREMENT SHALL AP PLY TO HEALTH SAVING S ACCOUNT–QUALIFIED HIGH 9
DEDUCTIBLE HEA LTH PLANS WITH RESPE CT TO THE DEDUCTIBLE OF THE PLAN 10
AFTER THE ENROLLEE S ATISFIES THE MINIMUM DEDUCTIBLE UNDER § 223 OF THE 11
INTERNAL REVENUE CODE. 12
(3) (4) FOR ITEMS OR SERVICES THAT ARE PREVENTIVE CARE IN 13
ACCORDANCE WITH § 223(C)(2)(C) OF THE INTERNAL REVENUE CODE, THE 14
REQUIREMENTS OF THIS SUBSECTION SHALL APP LY REGARDLESS OF WHE THER THE 15
ENROLLEE SATISFIES T HE MINIMUM DEDUCTIBL E UNDER § 223 OF THE INTERNAL 16
REVENUE CODE. 17
(D) AN ADMINISTRATOR OR A CARRIER MAY NOT DIRE CTLY OR INDIRECTLY 18
SET, ALTER, IMPLEMENT, OR CONDITION THE TER MS OF HEALTH BENEFIT PLAN 19
COVERAGE, INCLUDING THE BENEFI T DESIGN, BASED IN WHOLE OR IN PART ON 20
INFORMATION ABOUT TH E AVAILABILITY OR AM OUNT OF FINANCIAL OR PRODUCT 21
ASSISTANCE AVAILABLE FOR A PRESCRIPTION D RUG OR BIOLOGICAL PRODUC T. 22
(E) THE COMMISSIONER MAY ADOP T REGULATIONS TO CAR RY OUT THIS 23
SECTION. 24
15–1601. 25
(a) In this subtitle the following words have the meanings indicated. 26
(b) “Agent” means a pharmacy, a pharmacist, a mail order pharmacy, or a 27
nonresident pharmacy acting on behalf or at the direction of a pharmacy benefits manager. 28
(c) “Beneficiary” means an individual who receives prescription drug coverage or 29
benefits from a purchaser. 30
(d) (1) “Carrier” means the State Employee and Retiree Health and Welfare 31
Benefits Program, an insurer, a nonprofit health service plan, [or] a health maintenance 32
organization, OR ANY OTHER ENTITY SUBJECT TO THE JURIS DICTION OF THE 33
COMMISSIONER that: 34
(i) provides prescription drug coverage or benefits in the State; and 35 SENATE BILL 595 5
(ii) enters into an agreement with a pharmacy benefits manager for 1
the provision of pharmacy benefits management services. 2
(2) “Carrier” does not include a person that provides prescription drug 3
coverage or benefits through plans subject to ERISA and does not provide prescription drug 4
coverage or benefits through insurance, unless the person is a multiple employer welfare 5
arrangement as defined in § 514(b)(6)(a)(ii) of ERISA. 6
(e) “Compensation program” means a program, policy, or process through which 7
sources and pricing information are used by a pharmacy benefits manager to determine the 8
terms of payment as stated in a participating pharmacy contract. 9
(f) “Contracted pharmacy” means a pharmacy that participates in the network of 10
a pharmacy benefits manager through a contract with: 11
(1) the pharmacy benefits manager; or 12
(2) a pharmacy services administration organization or a group purchasing 13
organization. 14
(G) “COST SHARING ” MEANS ANY COPAYMENT , COINSURANCE , 15
DEDUCTIBLE, OR OTHER SIMILAR CHA RGE REQUIRED OF A BE NEFICIARY FOR A 16
HEALTH CARE SERVICE COVERED BY A HEALTH BENEFIT PLAN , INCLUDING A 17
PRESCRIPTION DRUG , AND PAID BY OR ON BE HALF OF THE BENEFICI ARY. 18
[(g)] (H) “ERISA” has the meaning stated in § 8–301 of this article. 19
[(h)] (I) “Formulary” means a list of prescription drugs used by a purchaser. 20
(J) “HEALTH BENEFIT PLAN ” MEANS A POLICY , A CONTRACT , A 21
CERTIFICATION , OR AN AGREEMENT OFFE RED OR ISSUED BY AN ADMINISTRATOR 22
OR A CARRIER TO PROVIDE , DELIVER, ARRANGE FOR , PAY FOR, OR REIMBURSE ANY 23
PORTION OF THE COST OF HEALTH CARE SERVI CES. 24
(K) “HEALTH CARE SERVICE ” MEANS AN ITEM OR SER VICE PROVIDED TO AN 25
INDIVIDUAL FOR THE P URPOSE OF PREVENTING , ALLEVIATING, CURING, OR 26
HEALING HUM AN ILLNESS, INJURY, OR PHYSICAL DISABILI TY. 27
[(i)] (L) (1) “Manufacturer payments” means any compensation or 28
remuneration a pharmacy benefits manager receives from or on behalf of a pharmaceutical 29
manufacturer. 30
(2) “Manufacturer payments” includes: 31
6 SENATE BILL 595
(i) payments received in accordance with agreements with 1
pharmaceutical manufacturers for formulary placement and, if applicable, drug utilization; 2
(ii) rebates, regardless of how categorized; 3
(iii) market share incentives; 4
(iv) commissions; 5
(v) fees under products and services agreements; 6
(vi) any fees received for the sale of utilization data to a 7
pharmaceutical manufacturer; and 8
(vii) administrative or management fees. 9
(3) “Manufacturer payments” does not include purchase discounts based on 10
invoiced purchase terms. 11
[(j)] (M) “Nonprofit health maintenance organization” has the meaning stated 12
in § 6–121(a) of this article. 13
[(k)] (N) “Nonresident pharmacy” has the meaning stated in § 12–403 of the 14
Health Occupations Article. 15
[(l)] (O) “Participating pharmacy contract” means a contract filed with the 16
Commissioner in accordance with § 15–1628(b) of this subtitle. 17
[(m)] (P) “Pharmacist” has the meaning stated in § 12–101 of the Health 18
Occupations Article. 19
[(n)] (Q) “Pharmacy” has the meaning stated in § 12 –101 of the Health 20
Occupations Article. 21
[(o)] (R) “Pharmacy and therapeutics committee” means a committee 22
established by a pharmacy benefits manager to: 23
(1) objectively appraise and evaluate prescription drugs; and 24
(2) make recommendations to a purchaser regarding the selection of drugs 25
for the purchaser’s formulary. 26
[(p)] (S) (1) “Pharmacy benefits management services” means: 27
(i) the [procurement of prescription drugs at a negotiated rate for 28
dispensation within the State to beneficiaries] NEGOTIATION OF THE P RICE OF 29 SENATE BILL 595 7
PRESCRIPTION DRUGS , INCLUDING THE NEGOTI ATING AND CONTRACTIN G FOR 1
DIRECT AND INDIRECT REBATES, DISCOUNTS, OR OTHER PRICE CONCE SSIONS; 2
(ii) the administration or management of prescription drug coverage 3
provided by a purchaser for beneficiaries; [and] 4
(iii) any of the following services provided with regard to the 5
administration of prescription drug coverage: 6
1. mail service pharmacy; 7
2. claims processing, retail network management, and 8
payment of claims to pharmacies for prescription drugs dispensed to beneficiaries; 9
3. clinical formulary development and management services; 10
4. rebate contracting and administration; 11
5. patient compliance, therapeutic intervention, and generic 12
substitution programs; [or] 13
6. disease management programs; 14
7. DRUG UTILIZATION REV IEW; OR 15
8. ADJUDICATION OF APPE ALS OR GRIEVANCES 16
RELATED TO A PRESCRI PTION DRUG BENEFIT ; 17
(IV) THE PERFORMANCE OF A DMINISTRATIVE , MANAGERIAL , 18
CLINICAL, PRICING, FINANCIAL, REIMBURSEMENT , DATA ADMINISTRATION OR 19
REPORTING, OR BILLING SERVICES ; OR 20
(V) OTHER SERVICES DEFIN ED BY THE COMMISSIONER IN 21
REGULATION . 22
(2) “Pharmacy benefits management services” does not include any service 23
provided by a nonprofit health maintenance organization that operates as a group model, 24
provided that the service: 25
(i) is provided solely to a member of the nonprofit health 26
maintenance organization; and 27
(ii) is furnished through the internal pharmacy operations of the 28
nonprofit health maintenance organization. 29
[(q)] (T) “Pharmacy benefits manager” means: 30 8 SENATE BILL 595
(1) a person that [performs], IN ACCORDANCE WITH A WRITTEN 1
AGREEMENT WITH A PUR CHASER, EITHER DIRECTL Y OR INDIRECTLY , PROVIDES 2
ONE OR MORE pharmacy benefits management services; OR 3
(2) AN AGENT OR OTHER PR OXY OR REPRESENTATIV E, CONTRACTOR , 4
INTERMEDIARY , AFFILIATE, SUBSIDIARY, OR RELATED ENTITY OF A PERSON THAT 5
FACILITATES, PROVIDES, DIRECTS, OR OVERSEE S THE PROVISION OF P HARMACY 6
BENEFITS MANAGEMENT SERVICES. 7
[(r)] (U) “Proprietary information” means: 8
(1) a trade secret; 9
(2) confidential commercial information; or 10
(3) confidential financial information. 11
[(s)] (V) “Purchaser” means a person that offers a plan or program in the State, 12
including the State Employee and Retiree Health and Welfare Benefits Program, that: 13
(1) provides prescription drug coverage or benefits in the State; and 14
(2) enters into an agreement with a pharmacy benefits manager for the 15
provision of pharmacy benefits management services. 16
[(t)] (W) “Rebate sharing contract” means a contract between a pharmacy 17
benefits manager and a purchaser under which the pharmacy benefits manager agrees to 18
share manufacturer payments with the purchaser. 19
[(u)] (X) (1) “Therapeutic interchange” means any change from one 20
prescription drug to another. 21
(2) “Therapeutic interchange” does not include: 22
(i) a change initiated pursuant to a drug utilization review; 23
(ii) a change initiated for patient safety reasons; 24
(iii) a change required due to market unavailability of the currently 25
prescribed drug; 26
(iv) a change from a brand name drug to a generic drug in accordance 27
with § 12–504 of the Health Occupations Article; or 28
SENATE BILL 595 9
(v) a change required for coverage reasons because the originally 1
prescribed drug is not covered by the beneficiary’s formulary or plan. 2
[(v)] (Y) “Therapeutic interchange solicitation” means any communication by a 3
pharmacy benefits manager for the purpose of requesting a therapeutic interchange. 4
[(w)] (Z) “Trade secret” has the meaning stated in § 11–1201 of the Commercial 5
Law Article. 6
15–1611.3. 7
(A) THIS SECTION APPLIES ONLY TO A PHARMACY B ENEFITS MANAGER 8
THAT PROVIDES PHARMA CY BENEFITS MANAGEME NT SERVICES ON BEHALF OF A 9
CARRIER. 10
(B) (1) FOR A PRESCRIPTION DR UG OR BIOLOGICAL PRO DUCT COVERED 11
BY A HEALTH BENEFIT PLAN, THIS SUBSECTION APPL IES ONLY WITH RESPEC T TO A 12
PRESCRIPTION DRUG OR BIOLOGICAL PRODUCT : 13
(I) THAT DOES NOT HAVE A N AB–RATED GENERIC EQUIVALENT 14
OR AN INTERCHANGEABL E BIOLOGICAL PRODUCT PREFERRED UNDER THE 15
FORMULARY OF THE HEA LTH BENEFIT PLAN ; OR 16
(II) 1. THAT HAS AN AB–RATED GENERIC EQUIVA LENT OR 17
AN INTERCHANGEABLE B IOLOGICAL PRODUCT PR EFERRED UNDER THE 18
FORMULARY OF THE HEA LTH BENEFIT PLAN ; AND 19
2. TO WHICH THE BENEFIC IARY HAS OBTAINED AC CESS 20
THROUGH A PRIOR AUTH ORIZATION, STEP THERAPY PROTOCO L, OR EXCEPTION OR 21
APPEAL PROCESS OF TH E CARRIER. 22
(2) SUBJECT TO PARAGRAPHS (2) AND (3) (3) AND (4) OF THIS 23
SUBSECTION, WHEN CALCULATING A B ENEFICIARY’S CONTRIBUTION TO AN 24
APPLICABLE COST SHAR ING REQUIREMENT , A PHARMACY BENEFITS MANAGER 25
SHALL INCLUDE COST S HARING AMOUNTS PAID BY THE BENEFICIARY O N BEHALF OF 26
THE BENEFICIARY BY A NOTHER PERSON . 27
(2) (3) IF THE APPLICATION OF THE REQUIREMENT UNDE R 28
PARAGRAPH (1) (2) OF THIS SUBSECTION W OULD RESULT IN HEALT H SAVINGS 29
ACCOUNT INELIGIBILIT Y UNDER § 223 OF THE INTERNAL REVENUE CODE, THE 30
REQUIREMENT SHALL AP PLY TO HEALTH SAVING S ACCOUNT–QUALIFIED HIGH 31
DEDUCTIBLE HEALTH PLANS WITH RE SPECT TO THE DEDUCTI BLE OF THE PLAN 32
AFTER THE BENEFICIAR Y SATISFIES THE MINI MUM DEDUCTIBLE UNDER § 223 OF 33
THE INTERNAL REVENUE CODE. 34 10 SENATE BILL 595
(3) (4) FOR ITEMS OR SERVICES THAT ARE PREVENTIVE CARE IN 1
ACCORDANCE WITH § 223(C)(2)(C) OF THE INTERNAL REVENUE CODE, THE 2
REQUIREMENTS OF THIS SUBSECTION SHALL APP LY REGARDLESS OF WHE THER THE 3
BENEFICIARY SATISFIE S THE MINIMUM DEDUCT IBLE UNDER § 223 OF THE 4
INTERNAL REVENUE CODE. 5
(C) A PHARMACY BENEFITS MA NAGER MAY NOT DIRECT LY OR INDIRECTLY 6
SET, ALTER, IMPLEMENT, OR CONDITION THE TER MS OF HEALTH BENEFIT PLAN 7
COVERAGE, INCLUDING THE BENEFI T DESIGN, BASED IN WHOLE OR IN PART ON 8
INFORMATION ABOUT TH E AVAILABILITY OR AM OUNT OF FINANCIAL OR PRODUCT 9
ASSISTANCE AVAILABLE FOR A PRESCRIPTION D RUG OR BIOLOGICAL PRODUCT. 10
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall apply to all 11
policies, contracts, and health plans issued, delivered, or renewed in the State on or after 12
January 1, 2025. 13
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall tak e effect 14
January 1, 2025. 15
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.