Bill Summary for S 632 (2019-2020)

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Summary date: 

Apr 3 2019

Bill Information:

View NCGA Bill Details2019-2020 Session
Senate Bill 632 (Public) Filed Wednesday, April 3, 2019
Intro. by Britt, Hise, Tillman.

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Bill summary

Identical to H 534, filed 4/2/19.

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

Adds claim, claims processing service, maximum allowable cost list, other prescription drug or device services, pharmacist 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 pharmacy benefits manager to include any entity who contracts with a pharmacist or a pharmacy (was only 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 six 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 relevant conviction or violation. Details further requirements for applicants which are a partnership or other unincorporated association, limited liability company, or corporation, and has five or more partners, members, or stockholders. Mandates that any applicant or licensed pharmacy benefits manager must file notice a notice describing any material modification to the information required of applications. Directs the Commissioner to adopt rules establishing the licensing and reporting requirements of pharmacy benefits managers consistent with the Article.

Adds to GS 58-56A-3 concerning consumer protections. Now establishes that pharmacies and pharmacists cannot be prohibited, restricted, or penalized by a pharmacy benefits manager for discussing any information regarding the amount of the insured's cost share for a prescription drug. Modifies and adds to the contractual prohibitions of a pharmacy benefits manager to now prohibit restricting or penalizing a pharmacy or pharmacist from: (1) offering and providing direct and limited delivery services to an insured as an ancillary service of the pharmacy; (2) disclosing to any insured any health care information that the pharmacy or pharmacist deems appropriate within the pharmacist's scope of practice; (3) discussing information regarding the total cost for pharmacist services for a prescription drug, or from selling a more affordable alternative to the insured if available; and (4) disclosing information to the Commissioner investigating or examining a complaint or conducting a compliance review, which is considered proprietary, confidential, and not considered a public record. Specifies that a pharmacy benefits manager cannot prohibit a pharmacy or pharmacist from sharing proprietary or confidential information. Now prohibits a pharmacy benefits manager from charging or attempting to collect from an insured a copayment that exceeds the lesser of the total submitted charged by the network pharmacy, the contracted copayment amount, or the amount an individual would pay for a prescription drug if that individual was not insured and was paying cash for the prescription drug (was limited to a copayment that exceeds the total submitted charged by the network pharmacy). Now requires the insurer to include any amounts paid by the insured or paid on behalf of the insured by another person in calculating an insured's overall contribution to any out-of-pocket maximum or any cost-sharing required under a health benefit plan, as allowable under federal and state law.  Eliminates provisions requiring any contract for the provision of a network to deliver health care services between a pharmacy benefits manager and insurer to be available for review by the Department of Insurance (Department). Eliminates the requirement for the Department to report any violations of the statute or GS 58-56A-4 to the Attorney General. 

Prohibits a pharmacy benefits manager from causing or knowingly permitting the use of any advertisement, promotion, solicitation, representation, proposal or offer that is untrue, deceptive, or misleading. Prohibits a pharmacy benefits manager from knowingly making any misrepresentation. Prohibits a pharmacy benefits manager from requiring an insured to use a pharmacy benefits manager or affiliate for filling a prescription or the provision of other pharmacy care services. Permits an insured to use any in-network pharmacy or pharmacist for a prescription drug covered by the health benefit plan, including any specialty drugs and maintenance drugs, so long as the prescription drug is not a limited distribution drug, is not commonly carried in retail pharmacies, and requires special handling. 

Amends GS 58-56A-4, regarding pharmacy and pharmacist protections, to now provide the following. Permits a pharmacy benefits manager to charge a reasonable fee or adjustment for the receipt and processing of a claim or otherwise hold a pharmacy responsible for a fee relating to the adjudication of a claim, only if the fee is reported on the remittance advice of the adjudicated claim or is set out in the contract between the pharmacy benefits manager and the pharmacy.  Requires there to be a justification for each adjustment or fee. Maintains the provision which excludes from the statute's provisions claims under an employee benefit plan under the Employee Retirement Income Security Act or Medicare Part D. Explicitly prohibits pharmacy benefit managers from directly or indirectly charging a fee or adjustment if the fee or adjustment is not apparent at the time of claim processing, is not reported on the remittance advice of an adjudicated claim, or is charged after the initial claim is adjudicated in the point of sale. Prohibits the prohibition or restriction of a pharmacy or pharmacist from dispensing any prescription drug allowed to be dispensed under a license to practice pharmacy. Prohibits consistent under reimbursement with the express intent or purpose to drive out competition of financial injuring competitors, as specified. Prohibits requiring the use of mail order for filling prescriptions, unless required by the health benefit plan. Prohibits prohibiting a pharmacist or pharmacy from charging a shipping and handling fee to an insured requesting a prescription to be mailed or delivered. Does not allow a pharmacy benefits manager to prohibit participation in a class action lawsuit or penalize or retaliate against a pharmacist or pharmacy for exercising rights provided under the Article. Clarifies that the statute does not affect the right of a pharmacist or pharmacy to refuse to fill or refill a prescription, as specified. Allows a pharmacy or pharmacist to decline to provide pharmacist services on behalf of a pharmacy benefits manager or third-party administrator.

Adds to GS 58-56A-5, concerning the maximum allowable cost price of prescription drugs. Similarly, prohibits a pharmacy benefits manager from engaging in a pattern or practice of reimbursing independent pharmacies or pharmacists less than the amount of the National Drug Average Acquisition Cost. 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 the 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-15. Sets forth limitations for retroactive denial or reduction of claims for pharmacist services after adjudication regarding fraudulent claims, claims already paid, services not rendered, and adjustments agreed upon. Clarifies that the statute does not limit overpayment recovery efforts by a pharmacy benefits manager. 

Enacts GS 58-56A-20 to authorize pharmacy benefits manager networks to require different pharmacy accreditation standards or certification requirements for participating in the network, provided they are applied without regard to independent status or pharmacy benefits manager affiliation. Provides pharmacy locations with access to more than one network, as specified. 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. Strictly prohibits benefit differentials. Prohibits conditioning participation on more stringent or additional requirements beyond federal and state licensure requirements. Requires pharmacy performance measure or pay-for-performance networks to use the electronic quality improvement platform for plans and pharmacies (EQuIPP) or another such unbiased, nationally-recognized entity. Details restrictions and limitations concerning pharmacy performance measures. Requires a pharmacist or pharmacy that belongs to a pharmacy service administration organization to receive a copy of the contract between the administration and the pharmacy benefits manager, upon request. 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. 

Enacts GS 58-65A-25 to require disclosure to a health benefit plan or contracted providers under the plan of any difference between the amount paid to a pharmacy and the amount charged to the health benefit plan if the pharmacy benefits manager has a pharmacy benefits manager affiliate, as defined. Prohibits the transfer of personally identifiable data, as specified, from pharmacy benefits managers and affiliates for commercial purposes; however, permits the exchange of prescription information for the limited purposes of reimbursement, formulary compliance, pharmacy care, or utilization review.  

Enacts GS 58-65A-30 to condition initial licensure or maintenance of licensure under the Article upon making available to the Department any network contract. Establishes an annual reporting requirement for all pharmacy benefit managers to report to the Commissioner specified information regarding rebates. 

Enacts GS 58-65A-35 to provide for the enforcement of the Article by the Commissioner by means of examination or audit, as described. Authorizes the Commissioner to contract with consultants and other professional as necessary and appropriate to conduct examinations or audits. Requires pharmacy benefit managers to pay the costs incurred in an examination or audit, and requires the Commissioner to institute a civil action to recover the expenses of examination in instances of refusal or failure to pay. Deems information or data acquired during examination or audit proprietary, confidential and not public record. Directs the Commissioner to adopt rules regarding the regulation of pharmacy benefits managers consistent with the Article. Subjects violations of the Article to penalties prescribed under GS 58-56A-10, as recodified and amended. Further, subjects a pharmacy benefits manager to lincense revocation or denial as a result of violations. Requires the Commissioner to report to the Attorney General any violations of the Article in accordance with GS 58-2-40(5) (as deleted from GS 58-56A-3; expanded to include violations of the Article rather than specified provisions).

Recodifies GS 58-56A-10 as GS 58-56A-40. Adds to the existing provisions. Provides for a monetary penalty for a violation of any provision of the Article other than GS 58-56A-5 (Maximum allowable cost price), to be determined by the Commissioner upon consideration of the degree and extend of harm caused, the amount of money that inured to the benefit of the violator as a result of the violation, whether the violation was committed willfully, and the prior record of the violator in complying or failing to comply with laws, rules, or orders applicable to the violator. Require remittance of the clear proceeds of this newly prescribed penalty to the Civil Penalty and Forfeiture Fund pursuant to GS 115C-457.2. Clarifies that payment of this penalty is in addition to payment of any other penalty for a violation of the state's criminal laws. 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 January 1, 2020.