Bill Text: MI SB0999 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Insurance; third party administrators; pharmacy benefit manager; regulate and require certification as a third party administrator. Amends sec. 2 of 1984 PA 218 (MCL 550.902).

Spectrum: Partisan Bill (Republican 3-0)

Status: (Introduced - Dead) 2014-06-12 - Referred To Committee On Insurance [SB0999 Detail]

Download: Michigan-2013-SB0999-Introduced.html

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SENATE BILL No. 999

 

 

June 12, 2014, Introduced by Senators CASPERSON, SCHUITMAKER and CASWELL and referred to the Committee on Insurance.

 

 

 

     A bill to amend 1984 PA 218, entitled

 

"Third party administrator act,"

 

by amending section 2 (MCL 550.902).

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2. As used in this act:

 

     (a) "Administrative services manager" or "manager" means an

 

individual responsible for conducting the daily operations of a

 

third party administrator.

 

     (b) "Benefit plan" or "plan" means a medical, surgical,

 

dental, vision, or health care benefit plan and may include

 

coverage under a policy or certificate issued by a carrier.

 

     (c) "Board" means the TPA advisory board created under section

 

19.

 

     (d) "Carrier" means any of the following:

 

     (i) An an insurer which is or health maintenance organization

 

regulated pursuant to under the insurance code of 1956, Act No. 218

 

of the Public Acts of 1956, being sections 1956 PA 218, MCL 500.100

 

to 500.8302, of the Michigan Compiled Laws.

 

     (ii) A medical care corporation regulated pursuant to Act No.

 

108 of the Public Acts of 1939, being sections 550.301 to 550.316

 

of the Michigan Compiled Laws.

 

     (iii) A hospital service corporation regulated pursuant to Act

 

No. 109 of the Public Acts of 1939, being sections 550.501 to

 

550.517 of the Michigan Compiled Laws.

 

     (iv) A health care corporation regulated pursuant to the

 

nonprofit health care corporation reform act, Act No. 350 of the

 

Public Acts of 1980, being sections 550.1101 to 550.1704 of the

 

Michigan Compiled Laws.

 

     (v) A health maintenance organization regulated under part 210

 

of the public health code, Act No. 368 of the Public Acts of 1978,

 

being sections 333.21001 to 333.21099 of the Michigan Compiled

 

Laws.

 

     (vi) A or a dental care corporation regulated pursuant to Act

 

No. 125 of the Public Acts of 1963, being sections under 1963 PA

 

125, MCL 550.351 to 550.373. of the Michigan Compiled Laws.

 

     (e) "Commissioner" means the commissioner of insurance of this

 

state.director.

 

     (f) "Department" means the department of insurance and

 

financial services.

 

     (g) "Director" means the director of the department.

 

     (h) (f) "ERISA" means the employee retirement income security

 

act of 1974, as amended, Public Law 93-406, 88 Stat. 829.29 USC

 

1001 to 1461.

 

     (i) "Maximum allowable cost price" or "MAC price" means a

 

maximum reimbursement amount for a multiple source drug that is

 

listed in the orange book and is nationally available.

 

     (j) "Multiple source drug" means a drug for which there are 3

 

or more drug products, each of which meets all of the following

 

requirements, as determined by the director:

 

     (i) Is listed as A- or B-rated in the orange book, has an "NR"

 

or "NA" rating by medi-span, or has a similar rating by a

 

nationally recognized reference.

 

     (ii) Is generally and readily available for purchase by

 

pharmacies in this state from national or regional wholesalers and

 

is not obsolete.

 

     (k) "Nationally available" means that the drug product is

 

available for purchase by pharmacies or chain-operated warehouses

 

in sufficient supply from national pharmaceutical wholesalers and

 

is not obsolete or temporarily unavailable.

 

     (l) "Obsolete" means that the drug product may be listed in the

 

national pricing compendia but is no longer actively marketed by

 

the manufacturer or labeler.

 

     (m) "Orange book" means the publication entitled "Approved

 

Drug Products with Therapeutic Equivalence Evaluations" that

 

identifies drug products approved on the basis of safety and

 

effectiveness by the United States food and drug administration

 

under the authority of the federal food, drug, and cosmetic act, 21

 

USC 301 to 399f.

 

     (n) (g) "Person" means an individual, sole proprietorship,

 

partnership, corporation, association, or any other legal entity.

 

     (o) (h) "Personal data" means any record or information

 

pertaining to the diagnosis, treatment, or health of an individual

 

covered by a plan.

 

     (p) "Pharmacy" means that term as defined in section 17707 of

 

the public health code, 1978 PA 368, MCL 333.17707.

 

     (q) "Pharmacy benefit manager" or "PBM" means a person that

 

contracts with a pharmacy on behalf of a benefit plan for the

 

pharmacy to provide pharmacy services to individuals covered by the

 

plan and that determines reimbursement to the pharmacy for the

 

pharmacy services provided to individuals covered by the plan. A

 

person that engages in, or subcontracts for, 3 or more of the

 

following activities is considered a PBM subject to this act:

 

     (i) Claims processing.

 

     (ii) Pharmacy network management.

 

     (iii) Pharmacy discount card management.

 

     (iv) Payment of claims to pharmacies for prescription drugs

 

dispensed to individuals covered by the plan.

 

     (v) Clinical formulary development and management services

 

including, but not limited to, utilization management and quality

 

assurance programs.

 

     (vi) Rebate contracting and administration.

 

     (vii) Conducting of audits of network pharmacies.

 

     (viii) Setting of pharmacy reimbursement pricing and

 

methodologies, including MAC price, and determining single source

 

drugs or multiple source drugs.

 

     (ix) Retention of any spread or differential between what is

 

received from plans as reimbursement for prescription drugs and

 

what is paid to pharmacies by the PBM for the drugs.

 

     (r) (i) "Processes claims" means the administrative services

 

performed in connection with a claim for benefits under a plan.

 

     (s) (j) "Service contract" means the written agreement for the

 

provision of administrative services between the TPA and a plan, a

 

sponsor of a plan, or a carrier.

 

     (t) "Temporarily unavailable" means that the drug product is

 

experiencing short-term supply interruptions for which only

 

inconsistent or intermittent supply is available in the current

 

marketplace.

 

     (u) (k) "Third party administrator" or "TPA" means a person

 

who processes claims pursuant to a service contract and who may

 

also provide 1 or more other administrative services pursuant to a

 

service contract, other than under a worker's compensation self-

 

insurance program pursuant to section 611 of the worker's

 

disability compensation act of 1969, Act No. 317 of the Public Acts

 

of 1969, being section 1969 PA 317, MCL 418.611. of the Michigan

 

Compiled Laws. Third party administrator includes a pharmacy

 

benefit manager. Third party administrator does not include a

 

carrier or employer sponsoring a plan.