Texas 2009 - 81st Regular

Texas House Bill HB1696 Compare Versions

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1	1	81R7761 PB-F
2	2	By: Isett H.B. No. 1696
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of pharmacy benefit managers and to
8	8	payment of claims to pharmacies and pharmacists.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle D, Title 13, Insurance Code, is amended
11	11	by adding Chapter 4154 to read as follows:
12	12	CHAPTER 4154. PHARMACY BENEFIT MANAGERS
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 4154.001. DEFINITIONS. In this chapter:
15	15	(1) "Covered entity" means a nonprofit hospital or
16	16	medical services corporation, a health insurer, a health benefit
17	17	plan, a health maintenance organization, a health program
18	18	administered by a state agency in the capacity of provider of health
19	19	coverage, or an employer, labor union, or other group of persons
20	20	organized in this state that provides health coverage. The term
21	21	does not include:
22	22	(A) a self-funded health coverage plan that is
23	23	exempt from state regulation under the Employee Retirement Income
24	24	Security Act of 1974 (29 U.S.C. Section 1001 et seq.);
25	25	(B) a plan issued for health coverage for federal
26	26	employees; or
27	27	(C) a health benefit plan that provides coverage
28	28	only for accidental injury or a specified disease, a hospital
29	29	indemnity plan, a Medicare supplement plan, a disability income
30	30	plan, a long-term care plan, or any other limited benefit health
31	31	insurance policy or contract.
32	32	(2) "Covered individual" means a member, participant,
33	33	enrollee, contract holder, policyholder, or beneficiary of a
34	34	covered entity who is provided health coverage by the covered
35	35	entity. The term includes a dependent or other individual who
36	36	receives health coverage through a policy, contract, or plan for a
37	37	covered individual.
38	38	(3) "Pharmacy benefit management" means
39	39	administration or management of prescription drug benefits
40	40	provided by a covered entity under the terms and conditions of a
41	41	contract between a pharmacy benefit manager and the covered entity.
42	42	(4) "Pharmacy benefit manager" has the meaning
43	43	assigned by Section 4151.151. The term includes a person acting on
44	44	behalf of a pharmacy benefit manager in a contractual or employment
45	45	relationship in the performance of pharmacy benefit management
46	46	services for a covered entity. The term does not include:
47	47	(A) a health insurer that holds a certificate of
48	48	authority to engage in the business of insurance in this state if
49	49	the health insurer or any subsidiary provides pharmacy benefit
50	50	management services exclusively to its own insureds; or
51	51	(B) a public self-funded pool or a private single
52	52	employer self-funded plan that provides pharmacy benefits or
53	53	pharmacy benefit management services directly to its
54	54	beneficiaries.
55	55	Sec. 4154.002. RULES. The commissioner may adopt rules and
56	56	standards as necessary to implement this chapter.
57	57	[Sections 4154.003-4154.050 reserved for expansion]
58	58	SUBCHAPTER B. REGULATION OF PHARMACY BENEFIT MANAGERS
59	59	Sec. 4154.051. APPLICABILITY. This chapter applies to each
60	60	pharmacy benefit manager that provides claims processing services,
61	61	other prescription drug or device services, or both claims
62	62	processing services and other prescription drug or device services
63	63	to covered individuals who are residents of this state.
64	64	Sec. 4154.052. CERTIFICATE OF AUTHORITY AS ADMINISTRATOR
65	65	REQUIRED. (a) A person may not act as or represent that the person
66	66	is a pharmacy benefit manager in this state unless the person is
67	67	covered by and is engaging in business under a certificate of
68	68	authority as a third-party administrator issued under Chapter 4151.
69	69	(b) Chapter 4151 applies to a pharmacy benefit manager.
70	70	Sec. 4154.053. PERFORMANCE OF DUTIES; GOOD FAITH; CONFLICT
71	71	OF INTEREST. (a) In operating as a pharmacy benefit manager, a
72	72	pharmacy benefit manager shall exercise good faith and fair dealing
73	73	in the performance of contractual obligations toward a covered
74	74	entity.
75	75	(b) A pharmacy benefit manager shall notify a covered entity
76	76	in writing of any activity, policy, practice, ownership interest,
77	77	or affiliation of the pharmacy benefit manager that may present a
78	78	conflict of interest.
79	79	Sec. 4154.054. REQUIREMENTS REGARDING CONTACTING COVERED
80	80	INDIVIDUALS. Except as otherwise provided by the terms of the
81	81	contract with a covered entity, a pharmacy benefit manager may not
82	82	contact a covered individual without the express written permission
83	83	of the covered entity.
84	84	Sec. 4154.055. DISPENSING OF SUBSTITUTE PRESCRIPTION DRUG
85	85	FOR PRESCRIBED DRUG. (a) A pharmacy benefit manager may request
86	86	the substitution of a lower priced generic and therapeutically
87	87	equivalent drug for a higher priced prescribed drug only as
88	88	provided by this section. The pharmacy benefit manager must obtain
89	89	the approval of the prescribing practitioner before requesting any
90	90	substitution under this section.
91	91	(b) If the net cost to the covered individual or covered
92	92	entity of the substituted drug exceeds the cost of the prescribed
93	93	drug, the substitution may be made only for medical reasons that
94	94	benefit the covered individual.
95	95	(c) A pharmacy benefit manager may not substitute an
96	96	equivalent prescribed drug contrary to a prescription drug order
97	97	that prohibits a substitution.
98	98	Sec. 4154.056. DUTIES TO PHARMACY NETWORK PROVIDER. (a) A
99	99	pharmacy benefit manager may not require a pharmacy network
100	100	provider to comply with recordkeeping provisions more stringent
101	101	than those required by other state law or rule or by federal law or
102	102	regulation.
103	103	(b) If a pharmacy benefit manager receives notice from a
104	104	covered entity of termination of the covered entity's contract, the
105	105	pharmacy benefit manager shall notify, not later than the 10th
106	106	business day after the date of the notice, each pharmacy network
107	107	provider affected by the termination of the effective date of the
108	108	termination.
109	109	(c) Not later than the third business day after the date of a
110	110	price increase notification by a manufacturer or supplier, a
111	111	pharmacy benefit manager shall adjust its payment to the pharmacy
112	112	network provider in a manner consistent with the price increase.
113	113	SECTION 2. Section 843.002, Insurance Code, is amended by
114	114	adding Subdivision (9-a) to read as follows:
115	115	(9-a) "Extrapolation" means a mathematical process or
116	116	technique used by a health maintenance organization or pharmacy
117	117	benefit manager that administers pharmacy claims for a health
118	118	maintenance organization in the audit of a pharmacy or pharmacist
119	119	to estimate audit results or findings for a larger batch or group of
120	120	claims not reviewed by the health maintenance organization or
121	121	pharmacy benefit manager.
122	122	SECTION 3. Section 843.338, Insurance Code, is amended to
123	123	read as follows:
124	124	Sec. 843.338. DEADLINE FOR ACTION ON CLEAN CLAIMS. Except
125	125	as provided by Sections [Section] 843.3385 and 843.339, not later
126	126	than the 45th day after the date on which a health maintenance
127	127	organization receives a clean claim from a participating physician
128	128	or provider in a nonelectronic format or the 30th day after the date
129	129	the health maintenance organization receives a clean claim from a
130	130	participating physician or provider that is electronically
131	131	submitted, the health maintenance organization shall make a
132	132	determination of whether the claim is payable and:
133	133	(1) if the health maintenance organization determines
134	134	the entire claim is payable, pay the total amount of the claim in
135	135	accordance with the contract between the physician or provider and
136	136	the health maintenance organization;
137	137	(2) if the health maintenance organization determines
138	138	a portion of the claim is payable, pay the portion of the claim that
139	139	is not in dispute and notify the physician or provider in writing
140	140	why the remaining portion of the claim will not be paid; or
141	141	(3) if the health maintenance organization determines
142	142	that the claim is not payable, notify the physician or provider in
143	143	writing why the claim will not be paid.
144	144	SECTION 4. Section 843.339, Insurance Code, is amended to
145	145	read as follows:
146	146	Sec. 843.339. DEADLINE FOR ACTION ON [CERTAIN] PRESCRIPTION
147	147	CLAIMS; PAYMENT. (a) A [Not later than the 21st day after the date
148	148	a] health maintenance organization, or a pharmacy benefit manager
149	149	that administers pharmacy claims for the health maintenance
150	150	organization, that affirmatively adjudicates a pharmacy claim that
151	151	is electronically submitted, [the health maintenance organization]
152	152	shall pay the total amount of the claim through electronic funds
153	153	transfer not later than the 14th day after the date on which the
154	154	claim was affirmatively adjudicated.
155	155	(b) A health maintenance organization, or a pharmacy
156	156	benefit manager that administers pharmacy claims for the health
157	157	maintenance organization, that affirmatively adjudicates a
158	158	pharmacy claim that is not electronically submitted, shall pay the
159	159	total amount of the claim not later than the 21st day after the date
160	160	on which the claim was affirmatively adjudicated.
161	161	SECTION 5. Section 843.340, Insurance Code, is amended by
162	162	adding Subsections (f) and (g) to read as follows:
163	163	(f) A health maintenance organization or a pharmacy benefit
164	164	manager that administers pharmacy claims for the health maintenance
165	165	organization may not use extrapolation to complete the audit of a
166	166	provider who is a pharmacist or pharmacy. A health maintenance
167	167	organization or a pharmacy benefit manager that administers
168	168	pharmacy claims for the health maintenance organization may not
169	169	require extrapolation audits as a condition of participation in the
170	170	health maintenance organization's contract, network, or program
171	171	for a provider who is a pharmacist or pharmacy.
172	172	(g) A health maintenance organization or a pharmacy benefit
173	173	manager that administers pharmacy claims for the health maintenance
174	174	organization that performs an on-site audit under this chapter of a
175	175	provider who is a pharmacist or pharmacy shall provide the provider
176	176	reasonable notice of the audit and accommodate the provider's
177	177	schedule to the greatest extent possible. The notice required
178	178	under this subsection must be in writing and must be sent by
179	179	certified mail to the provider not later than the 15th day before
180	180	the date on which the on-site audit is scheduled to occur.
181	181	SECTION 6. Section 843.344, Insurance Code, is amended to
182	182	read as follows:
183	183	Sec. 843.344. APPLICABILITY OF SUBCHAPTER TO ENTITIES
184	184	CONTRACTING WITH HEALTH MAINTENANCE ORGANIZATION. This subchapter
185	185	applies to a person, including a pharmacy benefit manager, with
186	186	whom a health maintenance organization contracts to:
187	187	(1) process or pay claims;
188	188	(2) obtain the services of physicians and providers to
189	189	provide health care services to enrollees; or
190	190	(3) issue verifications or preauthorizations.
191	191	SECTION 7. Subchapter J, Chapter 843, Insurance Code, is
192	192	amended by adding Sections 843.354, 843.355, and 843.356 to read as
193	193	follows:
194	194	Sec. 843.354. DEPARTMENT ENFORCEMENT OF PHARMACY CLAIMS.
195	195	(a) Notwithstanding any other provision of this subchapter, a
196	196	dispute regarding payment of a claim to a provider who is a
197	197	pharmacist or pharmacy shall be resolved as provided by this
198	198	section.
199	199	(b) A provider who is a pharmacist or pharmacy may submit a
200	200	complaint to the department alleging noncompliance with the
201	201	requirements of this subchapter by a health maintenance
202	202	organization, a pharmacy benefit manager that administers pharmacy
203	203	claims for the health maintenance organization, or another entity
204	204	that contracts with the health maintenance organization as provided
205	205	by Section 843.344. A complaint must be submitted in writing or by
206	206	submitting a completed complaint form to the department by mail or
207	207	through another delivery method. The department shall maintain a
208	208	complaint form on the department's Internet website and at the
209	209	department's offices for use by a complainant.
210	210	(c) After investigation of the complaint by the department,
211	211	the commissioner shall determine the validity of the complaint and
212	212	shall enter a written order. In the order, the commissioner shall
213	213	provide the health maintenance organization and the complainant
214	214	with:
215	215	(1) a summary of the investigation conducted by the
216	216	department;
217	217	(2) written notice of the matters asserted, including
218	218	a statement:
219	219	(A) of the legal authority, jurisdiction, and
220	220	alleged conduct under which an enforcement action is imposed or
221	221	denied, with a reference to the statutes and rules involved; and
222	222	(B) that, on request to the department, the
223	223	health maintenance organization and the complainant are entitled to
224	224	a hearing conducted by the State Office of Administrative Hearings
225	225	in the manner prescribed by Section 843.355 regarding the
226	226	determinations made in the order; and
227	227	(3) a determination of the denial of the allegations
228	228	or the imposition of penalties against the health maintenance
229	229	organization.
230	230	(d) An order issued under Subsection (c) is final in the
231	231	absence of a request by the complainant or health maintenance
232	232	organization for a hearing under Section 843.355.
233	233	(e) If the department investigation substantiates the
234	234	allegations of noncompliance made under Subsection (b), the
235	235	commissioner, after notice and an opportunity for a hearing as
236	236	described by Subsection (c), shall require the health maintenance
237	237	organization to pay penalties as provided by Section 843.342.
238	238	Sec. 843.355. HEARING BY STATE OFFICE OF ADMINISTRATIVE
239	239	HEARINGS; FINAL ORDER. (a) The State Office of Administrative
240	240	Hearings shall conduct a hearing regarding a written order of the
241	241	commissioner under Section 843.354 on the request of the
242	242	department. A hearing under this section is subject to Chapter
243	243	2001, Government Code, and shall be conducted as a contested case
244	244	hearing.
245	245	(b) After receipt of a proposal for decision issued by the
246	246	State Office of Administrative Hearings after a hearing conducted
247	247	under Subsection (a), the commissioner shall issue a final order.
248	248	(c) If it appears to the department, the complainant, or the
249	249	health maintenance organization that a person or entity is engaging
250	250	in or is about to engage in a violation of a final order issued under
251	251	Subsection (b), the department, the complainant, or the health
252	252	maintenance organization may bring an action for judicial review in
253	253	district court in Travis County to enjoin or restrain the
254	254	continuation or commencement of the violation or to compel
255	255	compliance with the final order. The complainant or the health
256	256	maintenance organization may also bring an action for judicial
257	257	review of the final order.
258	258	Sec. 843.356. LEGISLATIVE DECLARATION. It is the intent of
259	259	the legislature that the requirements contained in this subchapter
260	260	regarding payment of claims to providers who are pharmacists or
261	261	pharmacies apply to all health maintenance organizations and
262	262	pharmacy benefit managers unless otherwise prohibited by federal
263	263	law.
264	264	SECTION 8. Section 1301.001, Insurance Code, is amended by
265	265	amending Subdivision (1) and adding Subdivision (1-a) to read as
266	266	follows:
267	267	(1) "Health care provider" means a practitioner,
268	268	institutional provider, or other person or organization that
269	269	furnishes health care services and that is licensed or otherwise
270	270	authorized to practice in this state. The term includes a
271	271	pharmacist and a pharmacy. The term does not include a physician.
272	272	(1-a) "Extrapolation" means a mathematical process or
273	273	technique used by an insurer or pharmacy benefit manager that
274	274	administers pharmacy claims for an insurer in the audit of a
275	275	pharmacy or pharmacist to estimate audit results or findings for a
276	276	larger batch or group of claims not reviewed by the insurer or
277	277	pharmacy benefit manager.
278	278	SECTION 9. Section 1301.103, Insurance Code, is amended to
279	279	read as follows:
280	280	Sec. 1301.103. DEADLINE FOR ACTION ON CLEAN CLAIMS. Except
281	281	as provided by Sections 1301.104 and [Section] 1301.1054, not later
282	282	than the 45th day after the date an insurer receives a clean claim
283	283	from a preferred provider in a nonelectronic format or the 30th day
284	284	after the date an insurer receives a clean claim from a preferred
285	285	provider that is electronically submitted, the insurer shall make a
286	286	determination of whether the claim is payable and:
287	287	(1) if the insurer determines the entire claim is
288	288	payable, pay the total amount of the claim in accordance with the
289	289	contract between the preferred provider and the insurer;
290	290	(2) if the insurer determines a portion of the claim is
291	291	payable, pay the portion of the claim that is not in dispute and
292	292	notify the preferred provider in writing why the remaining portion
293	293	of the claim will not be paid; or
294	294	(3) if the insurer determines that the claim is not
295	295	payable, notify the preferred provider in writing why the claim
296	296	will not be paid.
297	297	SECTION 10. Section 1301.104, Insurance Code, is amended to
298	298	read as follows:
299	299	Sec. 1301.104. DEADLINE FOR ACTION ON CERTAIN PHARMACY
300	300	CLAIMS; PAYMENT. (a) An [Not later than the 21st day after the date
301	301	an] insurer, or a pharmacy benefit manager that administers
302	302	pharmacy claims for the insurer under a preferred provider benefit
303	303	plan, that affirmatively adjudicates a pharmacy claim that is
304	304	electronically submitted, [the insurer] shall pay the total amount
305	305	of the claim through electronic funds transfer not later than the
306	306	14th day after the date on which the claim was affirmatively
307	307	adjudicated.
308	308	(b) An insurer, or a pharmacy benefit manager that
309	309	administers pharmacy claims for the insurer under a preferred
310	310	provider benefit plan, that affirmatively adjudicates a pharmacy
311	311	claim that is not electronically submitted, shall pay the total
312	312	amount of the claim not later than the 21st day after the date on
313	313	which the claim was affirmatively adjudicated.
314	314	SECTION 11. Section 1301.105, Insurance Code, is amended by
315	315	adding Subsections (e) and (f) to read as follows:
316	316	(e) An insurer or a pharmacy benefit manager that
317	317	administers pharmacy claims for the insurer may not use
318	318	extrapolation to complete the audit of a preferred provider that is
319	319	a pharmacist or pharmacy. An insurer may not require extrapolation
320	320	audits as a condition of participation in the insurer's contract,
321	321	network, or program for a preferred provider that is a pharmacist or
322	322	pharmacy.
323	323	(f) An insurer or a pharmacy benefit manager that
324	324	administers pharmacy claims for the insurer that performs an
325	325	on-site audit of a preferred provider that is a pharmacist or
326	326	pharmacy shall provide the provider reasonable notice of the audit
327	327	and accommodate the provider's schedule to the greatest extent
328	328	possible. The notice required under this subsection must be in
329	329	writing and must be sent by certified mail to the preferred provider
330	330	not later than the 15th day before the date on which the on-site
331	331	audit is scheduled to occur.
332	332	SECTION 12. Section 1301.109, Insurance Code, is amended to
333	333	read as follows:
334	334	Sec. 1301.109. APPLICABILITY TO ENTITIES CONTRACTING WITH
335	335	INSURER. This subchapter applies to a person, including a pharmacy
336	336	benefit manager, with whom an insurer contracts to:
337	337	(1) process or pay claims;
338	338	(2) obtain the services of physicians and health care
339	339	providers to provide health care services to insureds; or
340	340	(3) issue verifications or preauthorizations.
341	341	SECTION 13. Subchapter C-1, Chapter 1301, Insurance Code,
342	342	is amended by adding Sections 1301.139, 1301.140, and 1301.141 to
343	343	read as follows:
344	344	Sec. 1301.139. DEPARTMENT ENFORCEMENT OF PHARMACY CLAIMS.
345	345	(a) Notwithstanding any other provision of this subchapter, a
346	346	dispute regarding payment of a claim to a preferred provider who is
347	347	a pharmacist or pharmacy shall be resolved as provided by this
348	348	section.
349	349	(b) A preferred provider who is a pharmacist or pharmacy may
350	350	submit a complaint to the department alleging noncompliance with
351	351	the requirements of this subchapter by an insurer, a pharmacy
352	352	benefit manager that administers pharmacy claims for the insurer,
353	353	or another entity that contracts with the insurer as provided by
354	354	Section 1301.109. A complaint must be submitted in writing or by
355	355	submitting a completed complaint form to the department by mail or
356	356	through another delivery method. The department shall maintain a
357	357	complaint form on the department's Internet website and at the
358	358	department's offices for use by a complainant.
359	359	(c) After investigation of the complaint by the department,
360	360	the commissioner shall determine the validity of the complaint and
361	361	shall enter a written order. In the order, the commissioner shall
362	362	provide the insurer and the complainant with:
363	363	(1) a summary of the investigation conducted by the
364	364	department;
365	365	(2) written notice of the matters asserted, including
366	366	a statement:
367	367	(A) of the legal authority, jurisdiction, and
368	368	alleged conduct under which an enforcement action is imposed or
369	369	denied, with a reference to the statutes and rules involved; and
370	370	(B) that, on request to the department, the
371	371	insurer and the complainant are entitled to a hearing conducted by
372	372	the State Office of Administrative Hearings in the manner
373	373	prescribed by Section 1301.140 regarding the determinations made in
374	374	the order; and
375	375	(3) a determination of the denial of the allegations
376	376	or the imposition of penalties against the insurer.
377	377	(d) An order issued under Subsection (c) is final in the
378	378	absence of a request by the complainant or insurer for a hearing
379	379	under Section 1301.140.
380	380	(e) If the department investigation substantiates the
381	381	allegations of noncompliance made under Subsection (b), the
382	382	commissioner, after notice and an opportunity for a hearing as
383	383	described by Subsection (c), shall require the insurer to pay
384	384	penalties as provided by Section 1301.137.
385	385	Sec. 1301.140. HEARING BY STATE OFFICE OF ADMINISTRATIVE
386	386	HEARINGS; FINAL ORDER. (a) The State Office of Administrative
387	387	Hearings shall conduct a hearing regarding a written order of the
388	388	commissioner under Section 1301.139 on the request of the
389	389	department. A hearing under this section is subject to Chapter
390	390	2001, Government Code, and shall be conducted as a contested case
391	391	hearing.
392	392	(b) After receipt of a proposal for decision issued by the
393	393	State Office of Administrative Hearings after a hearing conducted
394	394	under Subsection (a), the commissioner shall issue a final order.
395	395	(c) If it appears to the department, the complainant, or the
396	396	insurer that a person or entity is engaging in or is about to engage
397	397	in a violation of a final order issued under Subsection (b), the
398	398	department, the complainant, or the insurer may bring an action for
399	399	judicial review in district court in Travis County to enjoin or
400	400	restrain the continuation or commencement of the violation or to
401	401	compel compliance with the final order. The complainant or the
402	402	insurer may also bring an action for judicial review of the final
403	403	order.
404	404	Sec. 1301.141. LEGISLATIVE DECLARATION. It is the intent
405	405	of the legislature that the requirements contained in this
406	406	subchapter regarding payment of claims to preferred providers who
407	407	are pharmacists or pharmacies apply to all insurers and pharmacy
408	408	benefit managers unless otherwise prohibited by federal law.
409	409	SECTION 14. The change in law made by this Act applies only
410	410	to a claim submitted by a provider to a health maintenance
411	411	organization or an insurer on or after the effective date of this
412	412	Act. A claim submitted before the effective date of this Act is
413	413	governed by the law as it existed immediately before that date, and
414	414	that law is continued in effect for that purpose.
415	415	SECTION 15. The change in law made by this Act applies only
416	416	to a contract between a pharmacy benefit manager and an insurer or
417	417	health maintenance organization entered into or renewed on or after
418	418	January 1, 2010. A contract entered into or renewed before January
419	419	1, 2010, is governed by the law as it existed immediately before the
420	420	effective date of this Act, and that law is continued in effect for
421	421	that purpose.
422	422	SECTION 16. This Act takes effect September 1, 2009.