Bill Text: IL HB4079 | 2015-2016 | 99th General Assembly | Introduced

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Bill Title: Amends the Illinois Insurance Code. Provides a process to register with the Department of Insurance as a pharmacy benefits manager and what information must be included. Provides that the Director of Insurance may revoke, suspend, deny, or restrict a certificate of registration for violation of the Code or on other grounds as determined necessary or appropriate by the Director. Provides that the Department shall regulate the drug pricing process used by pharmacy benefits managers, and specifies the appeals process for such pricing. Provides that pharmacy benefits managers shall not mandate that a covered individual use a specific pharmacy or provide incentives to encourage the use of a specific pharmacy under specified circumstances. Provides criteria for entities to use in performing on-site audits of pharmacy records. Provides that health plans must permit their enrollees to receive benefits, which may include a 90-day supply of covered prescription drugs, at any of its network community pharmacies. Contains provisions concerning medication synchronization. Provides that dispensing fees shall be determined exclusively on the total number of prescriptions dispensed. Regulates how pharmacy benefits managers may utilize personally identifiable data. Provides that the Department can regulate other specified activities of pharmacy benefits managers. Makes other changes. Effective January 1, 2016.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2015-03-27 - Rule 19(a) / Re-referred to Rules Committee [HB4079 Detail]

Download: Illinois-2015-HB4079-Introduced.html

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99TH GENERAL ASSEMBLY State of Illinois 2015 and 2016 HB4079 Introduced , by Rep. Kelly M. Cassidy SYNOPSIS AS INTRODUCED:
See Index
Amends the Illinois Insurance Code. Provides a process to register with the Department of Insurance as a pharmacy benefits manager and what information must be included. Provides that the Director of Insurance an revoke, suspend, deny, or restrict a certificate of registration for violation of the Code or on other grounds as determined necessary or appropriate by the Director. Provides that the Department shall regulate the drug pricing process used by pharmacy benefits managers, and specifies the appeals process for such pricing. Provides that pharmacy benefits managers shall not mandate that a covered individual use a specific pharmacy or provide incentives to encourage the use of a specific pharmacy under specified circumstances. Provides criteria for entities to use in performing on-site audits of pharmacy records. Provides that health plans must permit their enrollees to receive benefits, which may include a 90-day supply of covered prescription drugs, at any of its network community pharmacies. Contains provisions concerning medication synchronization. Provides that dispensing fees shall be determined exclusively on the total number of prescriptions dispensed. Regulates how pharmacy benefits managers may utilize personally identifiable data. Provides that the Department can regulate other specified activities of pharmacy benefits managers. Makes other changes. Effective January 1, 2016.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning insurance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Insurance Code is amended by
changing Sections 512-3, 512-4, 512-5, 512-6, 512-7, 512-8,
512-9, and 512-10 and by adding Sections 512-11, 512-12,
512-13, 512-14, 512-15, 512-16, 512-17, and 512-18 as follows:
(215 ILCS 5/512-3) (from Ch. 73, par. 1065.59-3)
Sec. 512-3. Definitions. For the purposes of this Article,
unless the context otherwise requires, the terms defined in
this Article have the meanings ascribed to them herein:
"Compounding" has the meaning ascribed to it in the
Pharmacy Practice Act.
"Department" means the Department of Insurance.
"Director" means the Director of Insurance.
"Entity" means a managed care company, insurance company,
third-party payor, a PBM, third-party prescription program, or
any other organization that represents these companies,
groups, or organizations.
"Generic exclusivity period" means the period established
in Section 355(j)(5)(B)(iv) of Title 21 of the United States
Code.
"Health plan" has the meaning ascribed to it in 45 CFR

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160.103.
"Maximum allowable cost" or "MAC" means a maximum
reimbursement amount for a group of therapeutically and
pharmaceutically equivalent multiple source drugs that are
listed in the federal Food and Drug Administration's "Approved
Drug Products with Therapeutic Equivalence Evaluations" and
for which there are no fewer than 3 nationally available
equivalent drug products.
"Medical device" has the meaning ascribed to it in the
Pharmacy Practice Act.
"Medication synchronization" means the coordination of
medication refills for a patient taking 2 or more medications
for a chronic condition such that the patient's medications are
refilled on the same schedule for a given time period.
"Medication therapy management services" has the meaning
ascribed to it in the Pharmacy Practice Act.
"Multiple source drug" means a drug for which there are 3
or more drug products that are:
(1) rated by the federal Food and Drug Administration
as therapeutically equivalent under the federal Food and
Drug Administration's most recent publication of Approved
Drug Products with Therapeutic Equivalence Evaluations;
(2) determined by the federal Food and Drug
Administration to be pharmaceutically equivalent or
bioequivalent; and
(3) separately sold or marketed in the United States

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during the same calendar quarter.
"Nationally available" means that such products are
available for purchase by pharmacies or chain-operated
warehouses in sufficient supply from national pharmaceutical
wholesalers and are not obsolete or temporarily unavailable.
Products must be available for purchase from a wholesale drug
distributor as defined and licensed according to the Wholesale
Drug Distribution Licensing Act.
"Obsolete" means that such products may be listed in the
national pricing compendia but are no longer actively marketed
by the manufacturer or labeler.
"Patient counseling" has the meaning ascribed to it in the
Pharmacy Practice Act.
"Pharmacist" has the meaning ascribed to it in the Pharmacy
Practice Act.
"Pharmacist care" has the meaning ascribed to it in the
Pharmacy Practice Act and is considered to be a component of
pharmacist-provided care.
"Pharmacy" has the meaning ascribed to it in the Pharmacy
Practice Act.
"Pharmacy benefits manager" or "PBM" means an entity that
contracts with third-party pharmacies or pharmacists on behalf
of a health plan for the third-party pharmacy and pharmacists
to provide pharmacy services to such health plans.
"Practice of pharmacy" has the meaning ascribed to it in
the Pharmacy Practice Act.

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"Prescription" has the meaning ascribed to it in the
Pharmacy Practice Act.
"Standing Order" has the meaning ascribed to it in the
Pharmacy Practice Act.
"Temporarily unavailable" means that such products are
experiencing short-term supply interruptions for which only
inconsistent or intermittent supply is available in the current
marketplace.
"Unique Identifier" has the meaning ascribed to it in the
Pharmacy Practice Act.
(a) "Third party prescription program" or "program" means
any system of providing for the reimbursement of pharmaceutical
services and prescription drug products offered or operated in
this State under a contractual arrangement or agreement between
a provider of such services and another party who is not the
consumer of those services and products. Such programs may
include, but need not be limited to, employee benefit plans
whereby a consumer receives prescription drugs or other
pharmaceutical services and those services are paid for by an
agent of the employer or others.
(b) "Third party program administrator" or "administrator"
means any person, partnership or corporation who issues or
causes to be issued any payment or reimbursement to a provider
for services rendered pursuant to a third party prescription
program, but does not include the Director of Healthcare and
Family Services or any agent authorized by the Director to

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reimburse a provider of services rendered pursuant to a program
of which the Department of Healthcare and Family Services is
the third party.
(Source: P.A. 95-331, eff. 8-21-07.)
(215 ILCS 5/512-4) (from Ch. 73, par. 1065.59-4)
Sec. 512-4. Registration.
(a) All PBMs that provide services to residents of this
State shall apply for, obtain, and maintain a certificate of
registration to operate as a PBM from the Department.
(b) The PBM certificate of registration shall be renewed
annually.
(c) The Director shall establish the fees and shall have
the authority to assess fees to cover the annual expenses and
costs of administering this Article.
(d) The application for a certificate of registration to
operate in this State as a PBM shall be in a form prescribed by
the Director and shall be verified by an officer or authorized
representative of the PBM.
(e) The application shall include, but is not limited to,
the following:
(1) All organizational documents, including, but not
limited to, articles of incorporation, bylaws, and other
similar documents and any amendments.
(2) The names, addresses, titles, and qualifications
of the members and officers of the board of directors,

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board of trustees, or other governing body or committee, or
the partners or owners in case of a partnership or other
entity or association.
(3) A detailed description of the claims processing
services, pharmacy services, insurance services, other
prescription drug or device services, or other
administrative services provided.
(4) The name and address of the agent for service of
process in the State.
(5) Financial statements for the current and the
preceding year, showing the assets, liabilities, direct or
indirect income, and any other sources of financial support
as deemed sufficient by the Director to show financial
stability and viability to meet its full obligations to
participants and participating pharmacies. The Director
may allow a recent financial statement prepared by an
independent certified public accountant to meet this
requirement.
(6) Such other information as the Director may require.
(f) The Director may revoke, suspend, deny, or restrict a
certificate of registration of a PBM for violation of this
Article or on other grounds or violations of State or federal
laws, rules, or regulations as determined necessary or
appropriate by the Director. In the event that a certificate is
revoked, suspended, or denied, the Director may permit such
further operation of the PBM for a limited time, not to exceed

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60 days, under conditions and restrictions as determined by the
Director as necessary for the beneficial interests of the
participants and pharmacy and pharmacist providers.
(g) The Director may renew the certificate of any PBM,
subject to any restrictions considered necessary or
appropriate by the Director.
(h) The Director shall provide written notice to the PBM of
any revocation, denial, suspension, or restriction, including
the specific reasons. The PBM shall have the same rights to
notice, hearings, and other provisions as provided to insurers
or third party administrators, respectively, under State law.
(i) The Director shall, upon request, provide the
Department of Financial and Professional Regulation with
copies of applications, correspondence, and any other
documents provided by the PBM to the Director, and with
notices, findings, determinations, and other documents
provided by the Director to the PBM.
All third party prescription programs and administrators doing
business in the State shall register with the Director of
Insurance. The Director shall promulgate regulations
establishing criteria for registration in accordance with the
terms of this Article. The Director may by rule establish an
annual registration fee for each third party administrator.
(Source: P.A. 82-1005.)
(215 ILCS 5/512-5) (from Ch. 73, par. 1065.59-5)

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Sec. 512-5. Fiduciary and Bonding Requirements. An entity
A third party prescription program administrator shall (1)
establish and maintain a fiduciary account, separate and apart
from any and all other accounts, for the receipt and
disbursement of funds for reimbursement of providers of
services under the entity's program, or (2) post, or cause to
be posted, a bond of indemnity in an amount equal to not less
than 10% of the total estimated annual reimbursements under the
entity's program.
The establishment of such fiduciary accounts and bonds
shall be consistent with applicable State law. If a bond of
indemnity is posted, it shall be held by the Director of
Insurance for the benefit and indemnification of the providers
of services under the entity third party prescription program.
An entity administrator who operates more than one third
party prescription program may establish and maintain a
separate fiduciary account or bond of indemnity for each such
program, or may operate and maintain a consolidated fiduciary
account or bond of indemnity for all such programs.
The requirements of this Section do not apply to any third
party prescription program administered by or on behalf of any
insurance company, Health Care Service Plan Corporation or
Pharmaceutical Service Plan Corporation authorized to do
business in the State of Illinois.
(Source: P.A. 82-1005.)

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(215 ILCS 5/512-6) (from Ch. 73, par. 1065.59-6)
Sec. 512-6. Notice. Notice of any change in the terms of a
PBM third party prescription program, including but not limited
to drugs covered, pharmacist-provided services, reimbursement
rates, co-payments, and dosage quantity, shall be given to each
enrolled pharmacy at least 30 days prior to the time it becomes
effective.
(Source: P.A. 82-1005.)
(215 ILCS 5/512-7) (from Ch. 73, par. 1065.59-7)
Sec. 512-7. Contractual provisions.
(a) Any agreement or contract entered into in this State
between the PBM administrator of a program and a pharmacy or
pharmacist shall include a statement of the method and amount
of reimbursement to the pharmacy or pharmacist for services
rendered to persons enrolled in the program, the frequency of
payment by the PBM program administrator to the pharmacy or
pharmacist for those services, and a method for the
adjudication of complaints and the settlement of disputes
between the contracting parties.
(b)(1) A program shall provide an annual period of at least
30 days during which any pharmacy licensed under the
Pharmacy Practice Act may elect to participate in the
program under the program terms for at least one year.
(2) If compliance with the requirements of this
subsection (b) would impair any provision of a contract

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between a program and any other person, and if the contract
provision was in existence before January 1, 1990, then
immediately after the expiration of those contract
provisions the program shall comply with the requirements
of this subsection (b).
(3) This subsection (b) does not apply if:
(A) the program administrator is a licensed health
maintenance organization that owns or controls a
pharmacy and that enters into an agreement or contract
with that pharmacy in accordance with subsection (a);
or
(B) the program administrator is a licensed health
maintenance organization that is owned or controlled
by another entity that also owns or controls a
pharmacy, and the administrator enters into an
agreement or contract with that pharmacy in accordance
with subsection (a).
(4) This subsection (b) shall be inoperative after
October 31, 1992.
(c) The PBM program administrator shall cause to be issued
an identification card to each person enrolled in the program.
The identification card shall include:
(1) the name of the individual enrolled in the program;
and
(2) an expiration date if required under the
contractual arrangement or agreement between a provider of

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pharmaceutical services and prescription drug products and
the PBM third party prescription program administrator.
(Source: P.A. 95-689, eff. 10-29-07.)
(215 ILCS 5/512-8) (from Ch. 73, par. 1065.59-8)
Sec. 512-8. Cancellation procedures.
(a) The PBM administrator of a program shall notify all
pharmacies and pharmacists enrolled in the program of any
cancellation of the coverage of benefits of any group enrolled
in the program at least 30 days prior to the effective date of
such cancellation. However, if the PBM administrator of a
program is not notified at least 45 days prior to the effective
date of such cancellation, the PBM administrator shall notify
all pharmacies and pharmacists enrolled in the program of the
cancellation as soon as practicable after having received
notice.
(b) When a program is terminated, all persons enrolled
therein shall be so notified, and the employer or plan sponsor
shall make every reasonable effort to gain possession of any
plan identification cards in such persons' possession.
(c) Any person who intentionally uses a program
identification card to obtain services from a pharmacy or
pharmacist after having received notice of the cancellation of
his benefits shall be guilty of a Class C misdemeanor. Persons
shall be liable to the PBM program administrator for all monies
paid by the PBM program administrator for any services received

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pursuant to any improper use of the identification card.
(Source: P.A. 82-1005.)
(215 ILCS 5/512-9) (from Ch. 73, par. 1065.59-9)
Sec. 512-9. Denial of Payment.
(a) No PBM administrator shall deny payment to any pharmacy
or pharmacist for covered pharmaceutical services,
pharmacist-provided services, or prescription drug products
rendered as a result of the misuse, fraudulent or illegal use
of an identification card unless such identification card had
expired, been noticeably altered, or the pharmacy or pharmacist
was notified of the cancellation of such card. In lieu of
notifying pharmacies which have a common ownership, the PBM
administrator may notify a party designated by the pharmacy or
pharmacist to receive such notice, in which case, notification
shall not become effective until 5 calendar days after the
designee receives notification.
(b) No PBM program administrator may withhold any payment
to any pharmacy or pharmacist for covered pharmaceutical
services, pharmacist-provided services, or prescription drug
products beyond the time period specified in the payment
schedule provisions of the agreement, except for individual
claims for payment which have been returned to the pharmacy as
incomplete or illegible. Such returned claims shall be paid if
resubmitted by the pharmacy to the PBM program administrator
with the appropriate corrections made.

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(Source: P.A. 82-1005.)
(215 ILCS 5/512-10) (from Ch. 73, par. 1065.59-10)
Sec. 512-10. Failure to Register. Any entity third party
prescription program or administrator which operates without a
certificate of registration or fails to register with the
Director and pay the fee prescribed by this Article shall be
construed to be an unauthorized insurer as defined in Article
VII of this Code and shall be subject to all penalties
contained therein.
The provisions of the Article shall apply to all new
programs established on or after January 1, 1983. Existing
programs shall comply with the provisions of this Article on
the anniversary date of the programs that occurs on or after
January 1, 1983.
(Source: P.A. 82-1005.)
(215 ILCS 5/512-11 new)
Sec. 512-11. Pricing.
(a) A MAC shall be:
(1) established for any drug with at least 3 or more
A-rated therapeutically equivalent multiple source drugs,
as defined by the federal Food and Drug Administration or
when only 2 products are available during a generic
exclusivity period; and
(2) determined using comparable drug prices obtained

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from multiple nationally recognized comprehensive data
sources, including wholesalers, drug file vendors, and
pharmaceutical manufacturers for drugs that are nationally
available and available for purchase locally by multiple
pharmacies in the State. A MAC shall be established for a
product using only equivalent drugs as determined by the
federal Food and Drug Administration.
(b) For those drugs in which a MAC applies, the PBM shall
include in contracts with pharmacies information regarding
which of the national compendia is used to obtain pricing data
used in the calculation of MAC pricing and shall make MAC price
adjustments at least twice a month and provide pharmacies with
prompt notification of any changes or additions made to the MAC
price list and MAC rates at that time, except when a price for
a drug changes by more than 100%; in such cases, the MAC price
adjustment for that drug shall be made within 3 business days
of the change in price.
The PBM shall provide a process to allow providers to
submit 200 claims per MAC appeal, in an Excel file, containing
all National Drug Codes within the Generic Product Identifier,
and shall allow pharmacy providers to comment on, contest, or
appeal the MAC rates and MAC list. The right to contest shall
be limited in duration and provide for retroactive payment in
the event it is determined that MAC pricing has been applied
incorrectly. All inquiries to the PBM concerning MAC lists, MAC
rates, and pricing shall be acted upon and responded to within

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5 business days.
If the challenge is successful, the PBM shall make an
adjustment in the drug price to the date of the original
challenge and make the adjustment applicable to all similarly
situated network pharmacy providers, as determined by the
managed care organization or PBM, as appropriate.
If the challenge is successful, a network pharmacy retains
the right to collect or not collect additional appropriate
co-payments from a patient after adjustments in the drug price.
The PBM shall make all applicable MAC lists, including all
changes in the price of drugs, available to network pharmacies
upon request in a readily accessible and usable format that
contains a complete list of the drug name, National Drug Code,
package size, per unit price, strength of drug, Generic Price
Identifier, and Generic Code Number. In the event there are
multiple MAC lists under the same contract, the contract shall
identify which MAC lists are appropriately applicable.
(c) A PBM shall also include in contracts with pharmacies a
process for no less than once a week updates to pharmacy
product pricing files used to calculate prescription prices
that will be used to reimburse pharmacies.
(d) A PBM shall provide a contractual commitment to deliver
a particular average reimbursement rate for generic drugs. The
average reimbursement rate for generic drugs shall be
calculated using the actual amount paid to the pharmacy,
including patient co-pays and reimbursements from PBMs but

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excluding the dispensing fee. The average reimbursement rate
for generic drugs shall not be calculated solely according to
the amount allowed by the plan and shall include all generics
dispensed, regardless of whether they are subject to MAC
pricing. The PBM shall disclose to the network pharmacy the
methodology used in determining the average reimbursement rate
for generic drugs.
(e) A PBM may not charge a transaction fee for claims
submissions provided in an electronic format by a health care
provider.
(f) The Director may require a pharmacy benefits manager to
submit information to the Department related to the pharmacy
benefits manager's pricing methodology for MAC prices.
(215 ILCS 5/512-12 new)
Sec. 512-12. PBM networks.
(a) A PBM shall not mandate that a covered individual use a
specific community pharmacy, mail order pharmacy, specialty
pharmacy, or other pharmacy or entity. Nor can the PBM provide
incentives to beneficiaries or plan sponsors to encourage the
use of a specific pharmacy if only applicable to a PBM
pharmacy.
(b) A PBM may not require that a pharmacist or pharmacy
participate in a network managed by the PBM as a condition for
the pharmacy to participate in another network managed by the
same PBM.

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(c) A PBM may not exclude an otherwise qualified pharmacist
or pharmacy from participation in a particular network provided
that the pharmacist or pharmacy accepts the terms, conditions,
and reimbursement rates of the PBM, meets all applicable
federal and State licensure and permit requirements, and has
not been excluded from participation in any federal or State
program.
(d) A PBM or entity shall not automatically enroll or
disenroll a pharmacy in a contract or modify an existing
agreement without written agreement of the pharmacist or
pharmacy.
(e) If a PBM establishes a discount card network, the PBM
shall not require participation in the discount card network by
a pharmacy in exchange for participation in the broader retail
network. The PBM shall allow a pharmacy to opt out of the
discount card network and choose to only participate in the
PBM's funded retail network.
(f) A PBM must have a contracted pharmacy network
consisting of retail pharmacies sufficient to ensure that the
following requirements are satisfied:
(1) At least 90% of health plan beneficiaries, on
average, in urban areas served by the PBM live within 2
miles of a network pharmacy that is a community pharmacy.
(2) At least 90% of health plan beneficiaries, on
average, in suburban areas served by the PBM live within 5
miles of a network pharmacy that is a community pharmacy.

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(3) At least 70% of health plan beneficiaries, on
average, in rural areas served by the PBM live within 15
miles of a network pharmacy that is a community pharmacy.
(215 ILCS 5/512-13 new)
Sec. 512-13. Audit of pharmacy records.
(a) Notwithstanding any other law, when an on-site audit of
the records of a pharmacy is conducted by an entity, the audit
shall be conducted in accordance with the following criteria:
(1) The entity conducting the initial on-site audit
shall give the pharmacy and the pharmacy's corporate office
written notice at least 30 days before conducting the
initial on-site audit for each audit cycle and shall
disclose the specific prescriptions to be included in the
audit.
(2) Unless otherwise consented to by the pharmacy, an
audit shall not be initiated or scheduled during the first
5 calendar days of any month or the day before or after a
federal holiday due to the high volume of prescriptions
filled during that time.
(3) The entity conducting the on-site audit shall not
interfere with the delivery of pharmacist services to a
patient and shall utilize every effort to minimize
inconvenience and disruption to pharmacy operations during
the audit process. The on-site audit shall not exceed 4
hours in duration and shall review no more than 100 unique

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prescription numbers during an initial audit.
(4) No entity shall conduct an on-site audit at a
particular pharmacy more than one time annually. However,
this paragraph (4) shall not apply when an entity must
return to a pharmacy to complete an audit already in
progress.
(5) The period covered by an audit shall not exceed 2
years from the date the initial prescription claim was
submitted to or adjudicated by an entity.
(6) Each pharmacy shall be audited under the same
standards and parameters as other similarly situated
pharmacies audited by the entity. Any documentation and
records required by an auditor during an audit shall be of
the same type as the documentation and records required for
other similarly situated pharmacies.
(7) Any audit that involves clinical or professional
judgment shall be conducted by or in consultation with a
pharmacist.
(8) Each audit shall be conducted by a field agent who
possesses the requisite expertise in pharmacy practice.
(9) Any unintentional clerical or record-keeping
error, such as a typographical error, scrivener's error, or
computer error, regarding a required document or record
shall not necessarily constitute fraud. These claims may be
subject to recoupment, but shall not subject a pharmacy to
criminal penalties without proof of intent to commit fraud.

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In the case of errors which have no financial harm to the
patient or plan, the entity must not assess any
chargebacks.
(10) All audits shall be conducted in accordance with
generally accepted accounting principles, standards, and
procedures; and auditing principles, standards, and
procedures; and using standards and parameters established
by rule that are identical for all audits conducted.
(11) Prescriptions are considered valid prescriptions
if they are compliant with the Pharmacy Practice Act and
Illinois Controlled Substances Act and have been
positively adjudicated upon claim submission by the
entity. Plan restrictions should be addressed during the
claims adjudication process either through the rejection
of the claim or a rejection of the claim with direction to
obtain a prior authorization and may not be the basis for a
retrospective recoupment of a paid claim.
(12) A finding of an overpayment or underpayment must
be based on the actual overpayment or underpayment and may
not be a projection based on the number of patients served
having a similar diagnosis or on the number of similar
orders or refills for similar drugs.
(13) With the exception of overpayments, if a PBM
approves a claim through adjudication, the PBM may not
retroactively deny or modify reimbursement based on
information accompanying the original claim or information

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available to the PBM at the time of adjudication, unless
the claim was fraudulent, the pharmacy or pharmacist had
been reimbursed for the claim previously, or the services
reimbursed were not rendered by the pharmacy or pharmacist.
(14) A PBM may not require more information to be
written on a prescription than is required by State or
federal law. Nor may a PBM require more stringent records
to validate a prescription order than is required by State
or federal law.
(15) Electronic records, including electronic
beneficiary signature logs, electronic tracking of
prescriptions, electronic prescriber prescription
transmissions and imagery of hard copy prescriptions,
electronically scanned store, patient records maintained
at or accessible to the offices of an audited pharmacy's
central operations, and any other reasonably clear and
accurate electronic documentation shall be acceptable for
auditing under the same terms and conditions and for the
same purposes as their paper analogs.
If paper logs are used, auditors must look at least 14
days past the dispense date to check for patient pickup.
Point of sale electronic register data shall qualify as
proof of delivery to the patient.
(16) A pharmacy may use the records of a hospital,
physician, or other authorized practitioner of the healing
arts for drugs or medicinal supplies written or transmitted

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by any means of communication for purposes of validating
the pharmacy record with respect to orders or refills of a
legend drug or other controlled substance.
(17) Validation of appropriate day's supply and drug
dosing must be based on manufacturer guidelines and
definitions or, in the case of topical products or titrated
products, the professional judgment of the pharmacist
based upon communication with the patient or prescriber.
(18) A pharmacy's usual and customary price for
compounded medications is considered the reimbursable cost
unless an alternate price is published in the provider
contract and signed by both parties.
(19) A PBM may not require a pharmacy to agree to
recoupments deducted against future remittances and shall
invoice the pharmacy for payment if the pharmacy elects.
Recoupment may be deducted against future remittances
without mutual consent when the pharmacy is considered
delinquent in payment of the invoice per the contractual
arrangement.
(20) Interest shall not accrue during the audit period.
(21) Notwithstanding any other provision in this
subsection (a), the entity conducting the audit shall not
use the accounting practice of extrapolation in
calculating recoupments or penalties for audits. A finding
of overpayment or underpayment must be based on the actual
overpayment or underpayment and not on a projection based

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on the number of patients served having a similar diagnosis
or on the number of similar orders or refills for similar
drugs.
(22) A finding of an overpayment shall not include the
dispensing fee amount.
(23) The preliminary audit report shall be delivered to
the pharmacy and pharmacy corporate office within 30 days,
with reasonable extensions allowed, after conclusion of
the audit and shall contain claim level information for any
discrepancy found and total dollar amount of claims subject
to recovery.
(24) A pharmacy shall be allowed at least 30 days
following receipt of the preliminary audit report in which
to produce documentation to address any discrepancy found
during an audit or to file an appeal.
(25) A final audit report containing claim level
information for any discrepancy found and total dollar
amount of claims subject to recovery shall be delivered to
the pharmacy and pharmacy corporate office within 45 days
after the audited pharmacy's receipt of the preliminary
audit report if the audited pharmacy does not file an
appeal or offers no documentation to address a discrepancy
found during an audit, or within 60 days after the auditing
entity receives the audited pharmacy's appeal or
documentation to address a discrepancy. The final audit
results shall be reflected in the remittance advice at the

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claim level.
(26) The entity shall establish an appeals process that
meets the following requirements:
(A) The National Council for Prescription Drug
Programs or any other recognized national industry
standard shall be used to evaluate claims submission
and product size disputes.
(B) Each entity conducting an audit shall
establish a written appeals process under which a
pharmacy may appeal an unfavorable preliminary audit
report to the entity.
(C) If, following the appeal, the entity finds that
an unfavorable audit report or any portion thereof is
unsubstantiated, the entity shall dismiss the audit
report or said portion without the necessity of any
further action.
(27) A PBM may not recover payment of claims from the
pharmacy which is identified through the audit process to
be the responsibility of another payer. The PBM must
reconcile directly with the other payer for any monies owed
without requiring the pharmacy to reverse and rebill the
original claim in the retail setting.
(28) Each entity conducting an audit shall provide a
copy of the final audit report, after completion of any
review process, to the plan sponsor.
(29) The full amount of any recoupment on an audit

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shall be refunded to the plan sponsor.
(30) Neither the agency conducting the audit nor its
agents shall receive payment based on a percentage of the
amount recovered. This Section does not prevent the entity
conducting the audit from charging or assessing the
responsible party, directly or indirectly, based on
amounts recouped if both of the following conditions are
met:
(A) the plan sponsor and the entity conducting the
audit have a contract that explicitly states the
percentage charge or assessment to the plan sponsor;
and
(B) a commission to an agent or employee of the
entity conducting the audit is not based, directly or
indirectly, on amounts recouped.
(31) The entity conducting the audit shall not base
compensation of any employees of the entity involved with
the audit process on a percentage of the amount recovered
or audit findings.
(b) Recoupments of any disputed funds shall occur after
final internal disposition of the audit, including the appeals
process as set forth in subsection (c) of this Section.
(c) Notwithstanding any other law, each entity conducting
an audit shall establish an appeals process under which a
pharmacy may appeal a preliminary audit report to the entity.
(d) This Section does not apply to any audit, review, or

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investigation that involves allegations of fraud, willful
misrepresentation, or abuse.
(215 ILCS 5/512-14 new)
Sec. 512-14. 90-day supplies at community pharmacies. A
health plan must permit its enrollees to receive benefits,
which may include a 90-day supply of covered prescription
drugs, at any of its network community pharmacies. A health
insurance policy or government program providing benefits for
prescriptions may not impose on a covered individual utilizing
a community pharmacy a copayment, deductible, fee, limitation
on benefits, or other condition or requirement not otherwise
imposed on the covered individual when using a mail order
pharmacy.
Nothing in this Section shall prohibit a pharmacist who is
exercising his or her professional judgment from dispensing
additional quantities of medication up to the total number of
dosage units authorized by the prescriber on the original
prescription and any refills.
(215 ILCS 5/512-15 new)
Sec. 512-15. Medication synchronization. All entities
providing prescription drug coverage shall permit and apply a
prorated daily cost-sharing rate to prescriptions that are
dispensed by a pharmacy for less than a 30-day supply if the
prescriber or pharmacist indicates the fill or refill could be

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in the best interest of the patient or is for the purpose of
synchronizing the patient's chronic medications.
No entity providing prescription drug coverage shall deny
coverage for the dispensing of any drug prescribed for the
treatment of a chronic illness that is made in accordance with
a plan among the insured, the prescriber, and a pharmacist to
synchronize the refilling of multiple prescriptions for the
insured.
No entity providing prescription drug coverage shall use
payment structures incorporating prorated dispensing fees
determined by calculation of the days' supply of medication
dispensed. Dispensing fees shall be determined exclusively on
the total number of prescriptions dispensed.
The provisions of this Section shall not apply to a
supplemental insurance policy, including a life care contract,
accident-only policy, specified-disease policy, hospital
policy providing a fixed daily benefit only, Medicare
supplement policy, long-term care policy, or short-term major
medical policy of 6 months or less in duration or any other
supplemental policy.
(215 ILCS 5/512-16 new)
Sec. 512-16. Treatment of data. A PBM must adhere to the
following criteria when handling personally identifiable
utilization and claims data or other sensitive patient data:
(1) A PBM shall notify the health plan sponsor if it

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intends to sell utilization or claims data that the PBM
possesses.
(2) A PBM shall notify the health plan sponsor 30 days
before selling, leasing, or renting claims data, along with
the name of the potential purchaser of the data and the
expected use.
(3) A PBM may not sell, lease, or rent utilization or
claims data without written approval from the health plan
sponsor. The PBM must also allow each individual covered
the option to opt out.
(4) A PBM may not use a pharmacy's usual and customary
claims information for purposes other than determining
reimbursement and may not sell, lease, or rent a pharmacy's
usual and customary information without the pharmacy's
express written consent.
(5) A PBM may not contact covered individuals without
express written permission of the health plan sponsor and
the covered individual.
(6) A PBM may not transmit any personally identifiable
utilization or claims data to a pharmacy owned by a PBM if
the patient has not voluntarily elected in writing to fill
that particular prescription at the PBM-owned pharmacy.
(215 ILCS 5/512-17 new)
Sec. 512-17. Regulated activities. The Department may
adopt rules to regulate the following activities of PBMs:

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(1) claims processing;
(2) pharmacy network management;
(3) pharmacy discount card, employer sponsored plan,
managed care Medicaid, and workers compensation
management;
(4) payment of claims to pharmacies for prescription
drugs, medical devices, and durable medical equipment
dispensed to covered individuals;
(5) payment of claims to pharmacists for
pharmacist-provided services to covered individuals,
including, but not limited to, medication therapy
management services;
(6) clinical formulary development and management
services, including, but not limited to, utilization
management and quality assurance programs;
(7) rebate contracting and administration;
(8) conducting audits of contracted pharmacies;
(9) setting pharmacy reimbursement pricing and
methodologies, including MAC, and determining single
source and multiple source drugs; and
(10) retention of any differential between what is
received from health plans as reimbursement for
prescription drugs or services and what is paid to
pharmacies or pharmacists by the PBM for such drugs.
(215 ILCS 5/512-18 new)

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Sec. 512-18. Enforcement.
(a) Enforcement of this Act shall be the responsibility of
the Department and the Director.
(b) The Director shall have the authority to adopt any
rules necessary for the implementation and administration of
this Article.
(c) The Director shall take action or impose penalties to
bring non-complying entities into full compliance with this
Article.
Section 99. Effective date. This Act takes effect January
1, 2016.
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INDEX
Statutes amended in order of appearance