Bill Summary for S 432 (2019-2020)

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Summary date: 

Aug 13 2019

Bill Information:

View NCGA Bill Details2019-2020 Session
Senate Bill 432 (Public) Filed Thursday, March 28, 2019
Intro. by Ballard.

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Bill summary

House committee substitute deletes the provisions of the 1st edition and now provides the following.

Part I.

Enacts new Part 4A to Article 6 of GS Chapter 131E, titled the Birth Center Licensure Act (Act).

Sets out the purpose of the Act and defines terms. Defines birth center as a facility licensed for the primary purpose of performing normal, uncomplicated deliveries that is not a hospital or ambulatory surgical facility, and where births are planned to occur away from the mother's usual residence following a low-risk pregnancy, as that term is defined. 

Requires DHHS to review and, as necessary, revise the Freestanding Birth Center Fee Schedule every three years to ensure that the fees are sufficient to cover the costs of services and that the cost for any State-mandated newborn screening is reimbursed at least at cost. 

Directs DHHS to inspect birth centers as it deems necessary to investigate unexpected occurrences involving death or serious physical injury and reportable adverse outcomes identified in the rules adopted by the Commission. Requires all licensed birth centers be subject to DHHS inspections at all times. Provides for access to licensed premises by authorized DHHS representatives. Effective December 1, 2019, makes it unlawful for any person to resist proper entry by authorized DHHS representatives upon premises other than a private dwelling. Prohibits those representatives from endangering the health or well-being of any patient being treated in the birth center by his or her entry onto the premises. Grants DHHS the authority to investigate birth centers in the same manner as it investigates hospitals under GS 131E-80(d). Permits public disclosure of information received by the Commission or DHHS through filed reports, license applications, or inspections required or authorized by new Part 4A except where disclosure would violate applicable laws concerning patient records and confidentiality. Prohibits disclosure from identifying the patient involved without permission of the patient or court order.

Creates the seven-member NC Birth Center Commission of DHHS. Specifies the powers and duties of the Commission, including adopting rules establishing standards for licensure, operation, and regulation of birth centers in the state. Details the Commission membership and provides for four-year terms, with members serving for no more than two consecutive terms. Provides parameters for vacancies, removal, and member expenses, as well as Commission quorum and the provision of clerical services. Requires initial appointments be made no later than 60 days after the effective date of the act. Provides for staggered terms. Specifies that partial terms of initial members for staggering member terms do not count as full terms for purposes of the term limitations.

Requires the Commission to adopt rules establishing seven licensure requirements, including: (1) a requirement that the birth center obtain and maintain accreditation with the Commission for the Accreditation of Birth Centers (CABC), and including several documentation and reporting requirements; (2) a requirement that the birth center establish procedures specifying the criteria by which each person's risk status will be evaluated at admission and during labor, pursuant to CABC standards; and (3) a requirement that the birth center develop and submit a plan for complying with the standards of CABC with respect to transfer of care procedures. Requires DHHS to enforce the provisions of new Part 4A and any rules adopted by the Commission.

Allows the Commission, its members, and staff to release confidential or nonpublic information to any health care licensure board or authorized DHHS personnel with enforcement or investigative responsibilities concerning licensure action.

Adds the following provisions to new Part 4A. Except as otherwise provided, the following provisions are effective one year after the rules promulgated by the Commission are adopted, and applicable to licenses granted on or after that date.

Prohibits the establishment or operation of a birth center in the state without first obtaining a license from the Department of Health and Human Services (DHHS) pursuant to new Part 4A. Requires DHHS to provide applications for licensure and details the information required to be included in applications. Directs DHHS to issue a license upon the recommendation of the NC Birth Center Commission (Commission) if it finds the applicant is in compliance with the provisions of Part 4A and any rules adopted by the Commission. Provides that the license is valid for one year and is required to designate the number of beds and the number of rooms on the licensed premises. Establishes a $400 nonrefundable annual license fee to be credited to DHHS as a departmental receipt and applied to offset costs for licensing and inspecting birth centers, as well as a nonrefundable $17.50 annual per-birthing room fee. Provides for license renewal by DHHS pursuant to rules adopted by the Commission. Establishes that a license is not transferable or assignable except with written approval of DHHS. Requires operators to post the license on the licensed premises in an area accessible to the public. Allows currently operating and accredited birthing centers to continue operations as the Commission is constituted and promulgates permanent rules. Requires those operating birth centers to submit completed applications and requisite fees to the Division of Health Service Regulation within 90 days of the effective date of the Commission's permanent rules regarding licensure applications. Requires the application and fee to be received or postmarked no later than 90 days after the rules are adopted. 

Authorizes the denial, suspension, or revocation of a license for substantial failure to comply with the provisions of Part 4A or rules adopted by the Commission. Authorizes the DHHS Secretary or a designee to suspend the admission of any new patients to a birth center if the birth center conditions are detrimental to the health or safety of any patient. Establishes that the suspension is effective until the Secretary or a designee is satisfied that the conditions or circumstances merit its removal. Further, clarifies that this authority is in addition to the authority to suspend or revoke the license of the birth center. Provides for a birth center to contest any adverse action on its license pursuant to GS Chapter 150B (APA).

Prohibits a licensed birth center from representing or providing services outside of the scope of the license. Sets the following limitations on services at a licensed birth center: (1) surgical procedures must be limited to those normally accomplished during an uncomplicated birth, (2) no abortions can be performed, (3) no general or conduction anesthesia can be performed, and (4) no vaginal birth after cesarean or trial of labor after cesarean can be performed.

Adds a new statute to the Part to make it a Class 3 misdemeanor to operate a birth center without a license, punishable by a fine of up to $50 for the first offense and up to $500 for each subsequent offense. Specifies that each day of continuing violation after conviction is considered a separate offense. Effective one year after the rules promulgated by the Commission are adopted.

Directs DHHS to, by October 1, 2019, review, and as necessary, revise, its current Freestanding Birth Center Fee Schedule to ensure that the fees are sufficient to cover the costs of services and that the cost for any State-mandated newborn screening is reimbursed at least at cost. Additionally directs DHHS to develop a birth center licensure application consistent with the Part's requirements and make it available upon the adoption of the rules by the Commission.

Part II.

Makes the following changes to Article 56A, Pharmacy Management Benefits, of GS Chapter 58.

Adds claimclaims processing servicemaximum allowable cost listout-of-pocket-costspharmacy administration organizationpharmacist services, and pharmacy benefits manager affiliate to the defined terms set out in GS 58-56A-1. Amends the definition of health benefit plan to now refer to the definition set out for the term in GS 58-3-167, and makes conforming changes to the definition. Amends the definition of maximum allowable cost price 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 (was, the maximum per unit reimbursement amount for multiple source prescription drugs, medical products, or devices). Amends the definition of pharmacy benefits manager to include any entity who contracts with a pharmacy on behalf of an insurer or third-party administrator to administer or manage prescription drug benefits to perform three specified functions: (1) processing claims for prescription drugs or medical supplies or providing retail network management for pharmacies or pharmacists, (2) paying pharmacies or pharmacists for prescription drugs or medical supplies, or (3) negotiating rebates with manufacturers for drugs paid for or procured as described in the Article (previously, the definition did not specify functions performed by the manager). Makes conforming organizational changes.

Enacts GS 58-56A-2 to now require licensure by the Commissioner of Insurance (Commissioner) for a person or organization to establish or operate as a pharmacy benefits manager in the state for health benefit plans. Directs the Commissioner to prescribe the application for a license. Authorizes the Commissioner to charge an initial application fee of $2,000 and an annual renewal fee of $1,500. Sets forth five exclusive components the application must contain, including contact information of the pharmacy benefits manager, the manager's agent for service of process, each person with management control over the pharmacy benefits manager, and each person with a beneficial ownership interest in the pharmacy benefits manager. Further requires the application to include a signed statement indicating that no officer with management or control of the pharmacy benefits manager has been convicted of a felony or has violated any requirements of applicable state or federal law, or a signed statement describing any relevant conviction or violation. Mandates that any applicant or licensed pharmacy benefits manager must file a notice describing any material modification to the information required of applications. Authorizes the Commissioner to adopt rules establishing the licensing requirements of pharmacy benefits managers consistent with the statute.

Adds to GS 58-56A-3 concerning consumer protections. Restricts a pharmacy benefit manager from prohibiting a pharmacist or pharmacy from charging a minimal shipping and handling fee to the insured for a mailed or delivered prescription if the pharmacist or pharmacy discloses to the insured prior to delivery: the fee amount, that the fee cannot be reimbursed, and that the charge is agreed to by the health benefit plan or pharmacy benefits manager. Adds that when calculating the insured's overall contribution to any out-of-pocket maximum or any cost-sharing requirement under the health benefit plan, the insurer must include any amounts paid by the insured or paid on the insured's behalf to the extent allowed by state and federal law. Eliminates the requirement for the Department to report any violations of the statute or GS 58-56A-4 to the Attorney General. 

Amends GS 58-56A-4, regarding pharmacy and pharmacist protections, to now provide the following. Requires there to be a justification for each adjustment or fee for processing a claim or otherwise related to adjudication of a claim, specifically justification on the remittance advice or as set out in contract and agreed upon by the pharmacy or pharmacist for each adjustment or fee. Maintains the provision that excludes from the statute's provisions claims under an employee benefit plan under the Employee Retirement Income Security Act or Medicare Part D. Provides that Article 56A does not abridge the right of a pharmacist to refuse service if the pharmacist believes it would be harmful to the patient, not in the patient's best interest, or if there is a question to the prescription's validity. Specifies that the provisions do not limit overpayment recovery efforts by a pharmacy benefits manager. Provides that a pharmacy or pharmacist cannot be prohibited or restricted by a pharmacy benefits manager from dispensing any prescription drug consistent with pharmacy licensure laws, including specialty drugs dispensed by a credentialed and accredited pharmacy. Prohibits a pharmacy benefits manager from penalizing or retaliating against a pharmacist or pharmacy for exercising rights provided by Article 56A, unless conduct amounts to a breach of contract. Establishes that a claim for pharmacist services cannot be retroactively denied or reduced after adjudication of the claim unless one of five circumstances apply, including that the original claim was submitted fraudulently. 

Adds to GS 58-56A-5, concerning the maximum allowable cost price of prescription drugs. Requires pharmacy benefits managers to ensure that dispensing fees are not included in the calculation of maximum allowable cost price. Requires pharmacy benefits managers to establish an administrative appeals procedure for reimbursement if less than the net amount that the network paid to the suppliers of the drug. Sets forth parameters for the appeal procedure. 

Enacts GS 58-56A-20 to authorize pharmacy benefits managers to maintain more than one network for different pharmacy services. Allows each individual network to have terms and conditions and require different pharmacy accreditation standards or certification requirements for participating in the network, so long as the standards and requirements are applied without regard to a pharmacy's or pharmacist's status as an independent pharmacy or pharmacy benefits manager affiliate. Prohibits denying the right to any properly licensed pharmacist or pharmacy from participating in the network on the same terms and conditions of other participants in the network. Requires pharmacy performance measure or pay-for-performance networks to use a nationally recognized entity aiding in improving pharmacy performance measures. Details restrictions and limitations concerning pharmacy performance measures. Provides that a pharmacist or pharmacy that is a member of a pharmacy service administration organization that enters into a contract with a health benefit plan issuer or a pharmacy benefits manager on the pharmacy's behalf is entitled to receive a copy of the contract provisions applicable to the pharmacy from that organization. Establishes that termination of a pharmacy or pharmacist from a network does not release the pharmacy benefits manager from the obligation to make any payment due to the pharmacy or pharmacist for pharmacist services properly rendered according to the contract; excludes cases of fraud, waste, and abuse. 

Enacts GS 58-65A-25 to prohibit a pharmacy benefits manager from, in any way prohibited by HIPAA, transferring or sharing records related to prescription information containing patient-identifiable and prescriber-identifiable data to a pharmacy benefits manager affiliate.

Enacts GS 58-65A-35 to provide for the enforcement of the Article by the Commissioner by means of examination, as described. Authorizes the Commissioner to retain professionals and specialists as examiners, with the cost of their retention placed upon the pharmacy benefits manager. Deems information or data acquired pending, during, and after the examination of any pharmacy benefits manager nonpublic, proprietary, and confidential. Authorizes the Commissioner to promulgate reasonable and necessary rules after proper notice and hearing. Makes violations of Article 56A subject to penalties under GS 58-56A-40, as codified and amended, as well as subjects a pharmacy benefits manager to revocation of or refusal to renew a license to operate, after proper notice and hearing. Requires the Commissioner to report any violations of the Article to the Attorney General.

Recodifies GS 58-56A-10 as GS 58-56A-40, regarding civil penalties for violations of Article 56A. Makes clarifying, conforming, and technical changes. 

Amends 58-2-40(5) to require the Commissioner to report in detail to the Attorney General any violations of laws relative to pharmacy benefits managers. 

Applies to any contracts entered into on or after March 1, 2020.

Makes conforming changes to the act's titles.