SENATE BILL 881
By Reeves
HOUSE BILL 1244
By Martin B
HB1244
002620
- 1 -
AN ACT to amend Tennessee Code Annotated, Title 56,
relative to pharmacy benefits managers.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 56-7-3110, is amended by adding
the following at the end of the section immediately preceding the period:
, subject to § 56-2-305(c)(7)
SECTION 2. Tennessee Code Annotated, Section 56-2-305(c), is amended by adding
the following new subdivision:
(7) Violations made by pharmacy benefits managers as defined in § 56-7-3102.
SECTION 3. Tennessee Code Annotated, Section 56-7-3102, is amended by adding
the following as new, appropriately designated subdivisions:
( ) "Clean claim":
(A) Means a claim received by a pharmacy benefits manager for
adjudication that:
(i) Requires no further information, adjustment, or alteration by
the provider of the services in order to be processed and paid by the
pharmacy benefits manager; and
(ii) Has no defect or impropriety, including a lack of any required
substantiating documentation or particular circumstance requiring special
treatment that prevents timely payment from being made on the claim
under § 56-7-3124;
- 2 - 002620
(B) Includes resubmitted paper claims with previously identified
deficiencies corrected; and
(C) Does not include:
(i) A duplicate claim; or
(ii) A claim submitted more than ninety (90) days after the date of
service;
( ) "Duplicate claim" means an original claim and its duplicate, when the
duplicate is filed within thirty (30) days of the original claim;
( ) "Pay" means that the pharmacy benefits manager must send the provider
cash or a cash equivalent in full satisfaction of the allowed portion of the claim, or give
the provider a credit against any outstanding balance owed by that provider to the
pharmacy benefits manager. A payment occurs on the date when the cash, cash
equivalent, or notice of credit is mailed or otherwise sent to the provider;
( ) "Submitted" means that the provider mails or otherwise sends a claim to the
pharmacy benefits manager. A submission occurs on the date the claim is mailed or
otherwise sent to the pharmacy benefits manager;
SECTION 4. Tennessee Code Annotated, Title 56, Chapter 7, Part 31, is amended by
adding the following as a new section:
56-7-3124. Prompt payment standards.
(a) Not later than thirty (30) calendar days after the date that a pharmacy
benefits manager receives a claim submitted on paper from a provider, a pharmacy
benefits manager shall:
(1) For a clean claim, pay the total covered amount of the claim;
- 3 - 002620
(2) Pay the portion of the claim that constitutes a clean claim and that is
not in dispute and notify the provider in writing why the remaining portion of the
claim will not be paid; or
(3) Notify the provider in writing of all reasons why the claim does not
constitute a clean claim and will not be paid and what substantiating
documentation and information is required to adjudicate the claim as a clean
claim.
(b) Not later than fourteen (14) calendar days after receiving a claim by
electronic submission, a pharmacy benefits manager shall:
(1) For a clean claim, pay the total covered amount of the claim;
(2) Pay the portion of the claim that constitutes a clean claim and that is
not in dispute and notify the provider why the remaining portion of the claim will
not be paid; or
(3) Notify the provider of the reason why the claim does not constitute a
clean claim and will not be paid and what substantiating documentation or
information is required to adjudicate the claim.
(c) A paper claim must not be denied upon resubmission for lack of
substantiating documentation or information that has been previously provided by the
healthcare provider.
(d) A pharmacy benefits manager shall timely provide contracted providers with
all necessary information to properly submit a claim.
(e) A pharmacy benefits manager that does not comply with subdivision (b)(1)
shall pay one percent (1%) interest per month, accruing from the day after the payment
was due, on that amount of the claim that remains unpaid.
(f) Regulatory oversight.
- 4 - 002620
(1) The commissioner shall ensure, as part of the department's ongoing
regulatory oversight of pharmacy benefits managers, that pharmacy benefits
managers properly process and pay claims in accordance with this section.
(2)
(A) If the commissioner finds a pharmacy benefits manager has
failed during any calendar year to properly process and pay ninety-five
percent (95%) of all clean claims received from all providers during that
year in accordance with this section, then the commissioner may levy an
aggregate penalty up to ten thousand dollars ($10,000), if reasonable
notice in writing is given of the intent to levy the penalty.
(B) If the commissioner finds a pharmacy benefits manager has
failed during any calendar year to properly process and pay eighty-five
percent (85%) of all clean claims received from all providers during that
year in accordance with this section, then the commissioner may levy an
aggregate penalty in an amount of not less than ten thousand dollars
($10,000) nor more than one hundred thousand dollars ($100,000), if
reasonable notice in writing is given of the intent to levy the penalty.
(C) If the commissioner finds a pharmacy benefits manager has
failed during any calendar year to properly process and pay sixty percent
(60%) of all clean claims received from all providers during that year in
accordance with this section, then the commissioner may levy an
aggregate penalty in an amount of not less than one hundred thousand
dollars ($100,000) nor more than two hundred thousand dollars
($200,000), if reasonable notice in writing is given of the intent to levy the
penalty.
- 5 - 002620
(D) In determining the amount of any penalty, the commissioner
shall take into account whether the failure to achieve the standards in this
section is due to circumstances beyond the pharmacy benefits manager's
control and whether the pharmacy benefits manager has been in the
business of processing claims for two (2) years or less.
(E) The pharmacy benefits manager may request an
administrative hearing contesting the assessment of any administrative
penalty imposed by the commissioner within thirty (30) days after receipt
of the notice of the assessment.
(3) The commissioner may issue an order directing a pharmacy benefits
manager or a representative of a pharmacy benefits manager to cease and
desist from engaging in any act or practice in violation of this section. Within
fifteen (15) days after service of the cease and desist order, the respondent may
request a hearing on the question of whether acts or practices in violation of this
section have occurred.
(4) All hearings under this part must be conducted pursuant to the
Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
(5) In the case of any violations of this section, if the commissioner elects
not to issue a cease and desist order, or in the event of noncompliance with a
cease and desist order issued by the commissioner, the commissioner may
institute a proceeding to obtain injunctive or other appropriate relief in the
chancery court of Davidson County.
(6) Examinations to determine compliance with this section may be
conducted by the commissioner's staff. The commissioner may, if necessary,
contract with qualified, impartial outside sources to assist in examinations to
- 6 - 002620
determine compliance with this section. The expenses of the examinations must
be assessed against pharmacy benefits managers in accordance with § 56-32-
115(e). For other pharmacy benefits managers, the commissioner shall bill the
expenses of the examinations to those entities in accordance with § 56-1-413.
(g) Rules.
The commissioner shall adopt rules in accordance with the Uniform
Administrative Procedures Act, compiled in title 4, chapter 5, to effectuate
compliance with this section.
SECTION 5. Tennessee Code Annotated, Section 56-7-3206(c)(3)(A), is amended by
adding the following new subdivision:
(vii) Apply the findings from the appeal as to the rate of the reimbursement and
actual cost for the particular drug or medical product or device to all remaining refills on
the issued prescription drug or medical product or device, if the reimbursement aligns
with the appeal.
SECTION 6. The headings in this act are for reference purposes only and do not
constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
requested to include the headings in any compilation or publication containing this act.
SECTION 7. This act takes effect upon becoming a law, the public welfare requiring it.