Bill Summary for S 257 (2021-2022)

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Summary date: 

Mar 15 2021

Bill Information:

View NCGA Bill Details2021
Senate Bill 257 (Public) Filed Thursday, March 11, 2021
Intro. by Perry, Britt, Johnson.

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Bill summary

Recodifies GS 58-56A-10 as GS 58-56A-30, which provides for civil penalties and procedure for violations of Article 56A, Pharmacy Benefits Management, of GS Chapter 58. Amends and adds to the Article as follows.

Adds the following defined terms: claim, claims processing service, maximum allowable cost list, out-of-pocket costs, pharmacy services administration organization (PSAO) pharmacist services, and pharmacy benefits manager affiliate. Amends existing defined terms as follows. More specifically defines pharmacy benefits manager, which is currently defined to mean an entity who contracts with a pharmacy on behalf of an insurer or third-party administrator to administer or manage prescription drug benefits, to specify three functions the entity can perform under the definition: (1) negotiating rebates with manufacturers for drugs paid for or procured as described in the Article; (2) processing claims for prescription drugs or medical supplies or providing retail network management for pharmacies or pharmacists; or (3) paying pharmacies or pharmacists for prescription drugs or medical supplies. Changes the statutory cross-reference used to define health benefit plan, and no longer explicitly excludes the State Health Plan for Teachers and State Employees from the term. Amends the term maximum allowable cost price to define the term to mean the maximum amount that a pharmacy benefits manager will reimburse a pharmacy for the cost of generic or multiple source prescription drugs, medical products, or devices (previously the max per unit reimbursement for multiple source prescription drugs, medical products, or devices). 

Prohibits persons or organizations from establishing or operating as a pharmacy benefits manager for health benefit plans in the State without being licensed. Charges the Commissioner of Insurance (Commissioner) with licensing responsibilities. Authorizes the Commissioner to set the initial application fee at $2,000 and the annual renewal fee at $1,500. Delineates required application content. Requires applicants or licensees to file notice of material changes to required information.

Bars pharmacy benefit managers from prohibiting a pharmacist or pharmacy from charging a minimal shipping and handling fee for a mailed or delivered prescription if three disclosures are made to the insured by the pharmacist or pharmacy before delivery, including that the fee cannot be reimbursed by the health benefit plan, insurer, or pharmacy benefits manager.

Requires any fee or adjustment charged for the receipt and processing of a claim or the adjudication of a claim be justified on the remittance advice or be set out in contract and agreed upon by the pharmacy or pharmacist for each adjustment or fee. Specifies that the Article does not abridge the right of a pharmacist to refuse to fill or refill a prescription if the pharmacist believes it would be harmful to the patient or is not in the patient's best interest, or if there is no question to the validity of the prescription. Prohibits a pharmacy benefits manager from restricting a licensed pharmacy or pharmacist from dispensing any prescription drug. Bars retaliation against pharmacists or pharmacies exercising rights granted by the Article. Establishes five grounds for retroactive denial or reduction of a claim for pharmacist services after adjudication of the claim, including that the original claim was submitted fraudulently or the adjustments were part of an attempt to limit overpayment recovery efforts by a pharmacy benefits manager. Provides that the statute does not limit overpayment recovery efforts.

Adds a new provision to require pharmacy benefits managers to ensure that dispensing fees are not included in the calculation of a prescription drug's maximum allowable cost price. Additionally requires pharmacy benefits managers to create an administrative appeals procedure for contracted pharmacies or pharmacists, or their designee, to appeal the provider's reimbursement for a prescription drug subject to maximum allowable cost pricing. Restricts appeals to when the reimbursement amount for the drug is less than the net amount that the network provider paid to the drug supplier. Sets forth six requirements of the appeals procedure, including setting up a dedicated number and email address or website to submit appeals, allowing for at least 10 calendar days after the fill date to file an appeal and requiring a decision to be made within 10 days after receipt, and, for denied appeals, to require notification to include the names of the national or regional pharmaceutical wholesalers operating in the State.

Enacts new provisions as follows. Prohibits pharmacy benefits managers from denying licensed pharmacists or pharmacies from participating in a network on the same terms and conditions of other network participants. Entitles pharmacists or pharmacies that are members of a pharmacy service administration organization, as defined, to receive a copy of the contract provisions application to the pharmacy. Provides for continued liability for payment due for services rendered following termination of a pharmacist or pharmacy from a pharmacy benefits manager network, excluding cases of fraud, waste and abuse. Clarifies that pharmacy benefits managers are subject to HIPPA.

Establishes the following enforcement provisions. Authorizes the Commissioner to examine any pharmacy benefits manager's affairs to determine compliance with the Article. Authorizes the Commissioner to retain attorneys, independent actuaries, independent CPAs, or other professional and specialists as examiners, at cost to the pharmacy benefits manager. Provides for confidentiality of examinations. Deems violations of the Article subject to the existing civil penalties under GS 58-56A-30, as recodified, as well as license denial or revocation after notice and hearing. Makes conforming changes to repeal the existing procedure for the Department of Insurance to report any Article violations to the Attorney General. 

Directs the Commissioner to adopt implementing rules. 

Makes clarifying changes. 

Amends GS 58-2-40 to require the Commissioner to report to the Attorney General any violations of pharmacy benefits managers.

Amends GS 58-56-2 to exclude a licensed pharmacy benefits manager from the definition of a third party administrator as the term applies to Article 56.

Effective October 1, 2021, and applies to any contracts entered into, renewed, or amended on or after that date.