Bill Text: TX SB2261 | 2019-2020 | 86th Legislature | Introduced

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Bill Title: Relating to the practices and operation of pharmacy benefit managers; providing administrative penalties.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2019-03-21 - Referred to Business & Commerce [SB2261 Detail]

Download: Texas-2019-SB2261-Introduced.html

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86R488 PMO-D
By: Kolkhorst S.B. No. 2261

A BILL TO BE ENTITLED
AN ACT
relating to the practices and operation of pharmacy benefit
managers; providing administrative penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Subchapter H, Chapter 1369,
Insurance Code, is amended to read as follows:
SUBCHAPTER H. PRICING AND REIMBURSEMENT PRACTICES; APPEALS AND
COMPLAINTS [MAXIMUM ALLOWABLE COST]
SECTION 2. Subchapter H, Chapter 1369, Insurance Code, is
amended by adding Sections 1369.3581, 1369.3582, and 1369.3583 to
read as follows:
Sec. 1369.3581. PROHIBITED REIMBURSEMENT PRACTICES;
RETROACTIVE REDUCTION OR DENIAL OF CLAIM. A pharmacy benefit
manager may not on an aggregated basis or otherwise reduce or deny a
claim for pharmacy services after adjudication of the claim unless
the pharmacy benefit manager produces to the pharmacist or pharmacy
prima facie evidence of:
(1) fraud or intentional misrepresentation related to
the claim; and
(2) actual financial harm to the relevant enrollee or
health benefit plan issuer.
Sec. 1369.3582. PRICING APPEALS GENERALLY. (a) The
commissioner by rule shall:
(1) prescribe a standard procedure by which a
pharmacist or pharmacy may appeal to the pharmacy benefit manager
any pricing decision made by a pharmacy benefit manager;
(2) require a pharmacy benefit manager to use only the
prescribed procedure for a pharmacist's or pharmacy's appeal of the
pharmacy benefit manager's pricing decision; and
(3) require a pharmacy benefit manager who denies an
appeal to:
(A) provide to the appealing pharmacist or
pharmacy the National Drug Code number of the relevant drug sold at
a price below the price subject to the appeal and the name of the
national or regional pharmaceutical wholesalers operating in this
state that currently stock the drug at the lower price; and
(B) if the lower price described by Paragraph (A)
is more than the appealing pharmacist's or pharmacy's pharmacy
acquisition cost of the relevant drug bought from a pharmaceutical
wholesaler from which the pharmacist or pharmacy regularly
purchases the majority of the pharmacist's or pharmacy's drugs for
resale:
(i) adjust the Maximum Allowable Cost List
price to an amount above the pharmacist's or pharmacy's pharmacy
acquisition cost; and
(ii) permit the pharmacist or pharmacy to
reverse and rebill each claim affected by the pharmacist's or
pharmacy's inability to purchase the drug at a cost that is equal to
or less than the price subject to the appeal.
(b) In prescribing the procedure under this section, the
commissioner shall consider:
(1) input from any interested party;
(2) any appeal procedure that is widely used
commercially in this state or by the department or the Centers for
Medicare and Medicaid Services; and
(3) any national standard or draft standard relating
to the appeal of a pharmacy benefit manager's pricing decision.
(c) The commissioner shall establish penalties for failure
to use the procedure prescribed under this section in accordance
with this subchapter.
(d) A pharmacy benefit manager that violates this
subchapter or a rule adopted under this subchapter commits an
unfair practice in violation of Chapter 541 and is subject to
sanctions under Chapter 82.
Sec. 1369.3583. COMPLAINT PROGRAM. (a) The department
shall establish a program to facilitate resolution of complaints
against a pharmacy benefit manger relating to the pharmacy benefit
manager's reimbursement practices.
(b) A pharmacist or pharmacy may file a complaint with the
department under the program established under Subsection (a) if
the complaint includes credible evidence that a pharmacy benefit
manager engaged in an intentional course of conduct exhibited
through a pattern or practice that:
(1) violates this chapter; or
(2) constitutes improper, fraudulent, or dishonest
contract performance with the pharmacist or pharmacy.
(c) The commissioner shall determine by rule the threshold
for filing a complaint under Subsection (b).
(d) After receipt of a complaint satisfying the threshold
established under Subsection (c), the commissioner shall provide
notice to the pharmacy benefit manager that is the subject of the
complaint and conduct a hearing to determine if the pharmacy
benefit manager engaged in a course of conduct described by
Subsection (b). The commissioner shall consider:
(1) the contract between the pharmacist or pharmacy
and the pharmacy benefit manager;
(2) one or more independent nationwide drug pricing
databases or reference materials, including National Average Drug
Acquisition Cost reference data developed by the Centers for
Medicare and Medicaid Services; and
(3) any other relevant information.
(e) The commissioner shall take appropriate disciplinary
action against the pharmacy benefit manager as provided by this
code if the commissioner finds that the pharmacy benefit manager
engaged in a course of conduct described by Subsection (b).
SECTION 3. The heading to Subchapter I, Chapter 1369,
Insurance Code, is amended to read as follows:
SUBCHAPTER I. PHARMACY BENEFIT CLAIM ADJUDICATION AND DISPUTE
RESOLUTION
SECTION 4. Subchapter I, Chapter 1369, Insurance Code, is
amended by adding Sections 1369.403, 1369.404, 1369.405, 1369.406,
1369.407, 1369.408, 1369.409, 1369.410, and 1369.411 to read as
follows:
Sec. 1369.403. REQUEST AND PRELIMINARY PROCEDURES FOR
MANDATORY MEDIATION. (a) A pharmacist or pharmacy may request
mandatory mediation under this subchapter.
(b) A request for mandatory mediation must be provided to
the department on a form prescribed by the commissioner and must
include:
(1) the name of the pharmacist or pharmacy requesting
mediation;
(2) a brief description of the claim to be mediated;
(3) contact information, including a telephone
number, for the requesting pharmacist or pharmacy and the
pharmacist's or pharmacy's counsel, if the pharmacist or pharmacy
retains counsel;
(4) the name of the pharmacy benefit manager and name
of the applicable health benefit plan issuer; and
(5) any other information the commissioner may require
by rule.
(c) On receipt of a request for mediation, the department
shall notify the pharmacy benefit manager and applicable health
benefit plan issuer of the request.
(d) In an effort to settle the claim before mediation, all
parties must participate in an informal settlement teleconference
not later than the 30th day after the date on which the pharmacist
or pharmacy submits a request for mediation under this section.
(e) A dispute to be mediated under this subchapter that does
not settle as a result of a teleconference conducted under
Subsection (d) must be conducted in the county in which the
pharmacist or pharmacy is located.
Sec. 1369.404. MEDIATOR QUALIFICATIONS. (a) Except as
provided by Subsection (b), to qualify for an appointment as a
mediator under this subchapter a person must have completed at
least 40 classroom hours of training in dispute resolution
techniques in a course conducted by an alternative dispute
resolution organization or other dispute resolution organization
approved by the chief administrative law judge.
(b) A person not qualified under Subsection (a) may be
appointed as a mediator on agreement of the parties.
(c) A person may not act as mediator for a claim
adjudication dispute if the person has been employed by, consulted
for, or otherwise had a business relationship with a pharmacist,
pharmacy, or pharmacy benefit manager during the three years
immediately preceding the request for mediation.
Sec. 1369.405. APPOINTMENT OF MEDIATOR; FEES. (a) A
mediation shall be conducted by one mediator.
(b) The chief administrative law judge shall appoint the
mediator through a random assignment from a list of qualified
mediators maintained by the State Office of Administrative
Hearings.
(c) Notwithstanding Subsection (b), a person other than a
mediator appointed by the chief administrative law judge may
conduct the mediation on agreement of all of the parties and notice
to the chief administrative law judge.
(d) The mediator's fees shall be split evenly and paid by
the pharmacist or pharmacy and the pharmacy benefit manager.
Sec. 1369.406. CONDUCT OF MEDIATION; CONFIDENTIALITY. (a)
A mediator may not impose the mediator's judgment on a party about
an issue that is a subject of the mediation.
(b) A mediation session is under the control of the
mediator.
(c) Except as provided by this subchapter, the mediator must
hold in strict confidence all information provided to the mediator
by a party and all communications of the mediator with a party.
(d) A party must have an opportunity during the mediation to
speak and state the party's position.
(e) Except on the agreement of the participating parties, a
mediation may not last more than four hours.
(f) Except at the request of a pharmacist or pharmacy, a
mediation shall be held not later than the 180th day after the date
of the request for mediation.
Sec. 1369.407. MATTERS CONSIDERED IN MEDIATION; AGREED
RESOLUTION. (a) In a mediation under this subchapter, the parties
shall evaluate the adjudicated claim amount and whether the amount
is in accordance with this chapter and the pharmacy benefit
contract between the pharmacist or pharmacy and the pharmacy
benefit manager.
(b) The parties shall consider one or more independent
nationwide drug pricing databases or reference materials,
including National Average Drug Acquisition Cost reference data
developed by the Centers for Medicare and Medicaid Services.
(c) Nothing in this subchapter prohibits mediation of more
than one adjudicated claim between the parties at a mediation.
(d) The goal of the mediation is to reach an agreement among
the pharmacist or pharmacy, the pharmacy benefit manager, and the
health benefit plan issuer as to the amount paid to the pharmacist
or pharmacy.
Sec. 1369.408. NO AGREED RESOLUTION. (a) The mediator of
an unsuccessful mediation under this subchapter shall report the
outcome of the mediation to the department and the chief
administrative law judge.
(b) The chief administrative law judge shall enter an order
of referral of a matter reported under Subsection (a) to a special
judge under Chapter 151, Civil Practice and Remedies Code, that:
(1) names the special judge on whom the parties agreed
or appoints the special judge if the parties did not agree on a
judge;
(2) states the issues to be referred and the time and
place on which the parties agree for the trial;
(3) requires each party to pay the party's
proportionate share of the special judge's fee; and
(4) certifies that the parties have waived the right
to trial by jury.
(c) A trial by the special judge selected or appointed as
described by Subsection (b) must proceed under Chapter 151, Civil
Practice and Remedies Code, except that the special judge's verdict
is not relevant or material to any other adjudicated claim and has
no precedential value.
(d) Notwithstanding any other provision of this section,
Section 151.012, Civil Practice and Remedies Code, does not apply
to a mediation under this subchapter.
Sec. 1369.409. REPORT OF MEDIATOR. The mediator shall
report to the commissioner:
(1) the names of the parties to the mediation; and
(2) whether the parties reached an agreement or the
mediator made a referral under Section 1369.408.
Sec. 1369.410. BAD FAITH. (a) The following conduct
constitutes bad faith mediation for purposes of this subchapter:
(1) failing to participate in the mediation;
(2) failing to provide information the mediator
believes is necessary to facilitate an agreement; or
(3) failing to designate a representative
participating in the mediation with full authority to enter into
any mediated agreement.
(b) Failure to reach an agreement is not conclusive proof of
bad faith mediation.
Sec. 1369.411. PENALTIES. (a) Bad faith mediation by a
pharmacy benefit manager is grounds for imposition of an
administrative penalty under Chapter 4151.
(b) Except for good cause shown, on a report of a mediator
and appropriate proof of bad faith mediation, the commissioner
shall impose an administrative penalty.
SECTION 5. Chapter 1369, Insurance Code, is amended by
adding Subchapter K to read as follows:
SUBCHAPTER K. PHARMACY BENEFIT MANAGERS
Sec. 1369.501. DEFINITIONS. In this subchapter:
(1) "Enrollee" means an individual who is covered
under a health benefit plan, including a covered dependent.
(2) "Health benefit plan" means an individual, group,
blanket, or franchise insurance policy or insurance agreement, a
group hospital service contract, or an individual or group
subscriber contract or evidence of coverage or similar coverage
document issued by a health maintenance organization, that provides
health insurance or health benefits.
(3) "Health benefit plan issuer" means an entity
authorized under this code or another insurance law of this state
that provides health insurance or health benefits through a health
benefit plan in this state.
(4) "Pharmacist service" means the provision of a
product or good, patient care, or other clinical, professional, or
administrative services in the practice of pharmacy.
(5) "Pharmacy benefit manager" has the meaning
assigned by Section 4151.151.
(6) "Pharmacy benefit network" means a system for the
delivery of pharmacy benefits and pharmacist services established
by contract between a pharmacy benefit manager and a pharmacist or
pharmacy.
(7) "Rebate" means a discount or other concession,
including an incentive, related to dispensing a prescription drug
that is paid by a manufacturer or third party, directly or
indirectly, to a pharmacy benefit manager.
Sec. 1369.502. CONTRACT REQUIREMENTS; CONTRACT ACCESS. (a)
A pharmacy benefit manager may not sell, lease, or otherwise
transfer information regarding the payment or reimbursement terms
of a pharmacy benefit network contract without the express
authority of and prior adequate notification to the pharmacists or
pharmacies in the pharmacy benefit network. The prior adequate
notification must be provided in the written format specified by
the pharmacy benefit network contract.
(b) A pharmacy benefit manager may not provide a person
access to pharmacy services or contractual discounts under a
pharmacy benefit network contract unless the contract
specifically:
(1) allows the pharmacy benefit manager to provide to
the person access to the pharmacy benefit manager's rights and
responsibilities under the pharmacy benefit network contract; and
(2) makes the person's access contingent on the person
complying with all applicable terms, limitations, and conditions of
the pharmacy benefit network contract.
(c) A pharmacy benefit network contract must require that,
on the request of a pharmacist or pharmacy, the pharmacy benefit
manager will timely provide information necessary for the
pharmacist or pharmacy to determine whether a person is authorized
to access the pharmacist's or pharmacy's services and contractual
discounts.
(d) A pharmacy benefit network contract must specify or
reference a separate fee schedule. The fee schedule may be
provided by any reasonable method, including electronically. The
fee schedule may describe:
(1) specific services or procedures that the
pharmacist or pharmacy may deliver and the amount of the
corresponding payment;
(2) a methodology for calculating the amount of the
payment based on a published fee schedule; or
(3) any other reasonable manner that provides an
ascertainable amount for payment for services.
(e) For the purposes of this section, a pharmacy benefit
manager shall permit a pharmacist or pharmacy participating in a
pharmacy benefit network reasonable access, including electronic
access, during business hours to review the pharmacy benefit
network contract. The information obtained during the review may
be used or disclosed only for the purposes of complying with the
terms of the contract, this subchapter, or other state or federal
law.
Sec. 1369.503. FIDUCIARY DUTIES. (a) A pharmacy benefit
manager of a health benefit plan issuer is a fiduciary of the health
benefit plan issuer.
(b) The pharmacy benefit manager shall:
(1) act in accordance with the standards of conduct
applicable to a fiduciary in an enterprise of like character and
with like aims;
(2) perform its duties with care, skill, prudence, and
diligence; and
(3) comply with the fiduciary requirements of this
section.
(c) The pharmacy benefit manager shall notify the health
benefit plan issuer in writing of any activity, policy, or practice
of the pharmacy benefit manager that directly or indirectly
presents a conflict of interest between the pharmacy benefit
manager and the health benefit plan issuer.
(d) The pharmacy benefit manager shall provide to a health
benefit plan issuer all financial and utilization information
requested by the health benefit plan issuer relating to the
provision of benefits to the relevant enrollees and any financial
and utilization information relating to the pharmacy benefit
manager's services to the health benefit plan issuer.
(e) If a pharmacy benefit manager substitutes a more
expensive drug for a prescribed drug, the pharmacy benefit manager
shall disclose to the health benefit plan issuer the cost of the
prescribed drug and the substitute drug and the amount of any rebate
the pharmacy benefit manager may receive, directly or indirectly,
as a result of the substitution.
(f) A pharmacy benefit manager shall transfer to the health
benefit plan issuer the entire amount of any rebate that the
pharmacy benefit manager receives, directly or indirectly, for any
reason, including as the result of:
(1) a substitution described by Subsection (e);
(2) a substitution by the pharmacy benefit manager of
a lower-priced generic and therapeutically equivalent drug for a
higher-priced prescribed drug; or
(3) volume of sales of a drug or a class or brand of
drug.
(g) A pharmacy benefit manager shall disclose to a health
benefit plan issuer all financial terms and arrangements for
remuneration of any kind, including rebates, that the pharmacy
benefit manager has with each drug manufacturer or relabeler, as
defined by 21 C.F.R. Section 207.1, including formulary management
and drug-switch programs, educational support, claims processing
and pharmacy network fees that are charged from pharmacists and
pharmacies, and data sales fees.
Sec. 1369.504. PHARMACY BENEFIT NETWORK STANDARDS. (a) The
commissioner shall by rule adopt pharmacy benefit network adequacy
standards that:
(1) are adapted to local markets in which a pharmacy
benefit manager operates;
(2) ensure availability of, and accessibility to, a
full range of contracted pharmacists and pharmacies to provide
pharmacy services to enrollees; and
(3) on good cause shown, may allow departure from
local market network adequacy standards if the commissioner posts
on the department's Internet website the name of the pharmacy
benefit manager, the health benefit plan issuer, and the affected
local market.
(b) The commissioner may not consider mail-order pharmacies
in the determination of the pharmacy benefit network adequacy
standards adopted by rule under Subsection (a).
Sec. 1369.505. ANY WILLING PROVIDER. (a) A pharmacy
benefit manager may not exclude a pharmacist or pharmacy from
participation in a pharmacy benefit network if the pharmacist or
pharmacy:
(1) accepts the terms, conditions, and reimbursement
rates of the pharmacy benefit manager;
(2) meets all applicable federal and state licensure
and permit requirements; and
(3) has not been terminated for cause as a provider in
any federal or state program.
(b) Except as required by the commissioner in coordination
with the Texas State Board of Pharmacy, a pharmacy benefit manager
may not require, as a condition of participating in a pharmacy
benefit network, that a pharmacist or pharmacy obtain:
(1) accreditation, credentialing, or certification
inconsistent with, more stringent than, or in addition to the
requirements imposed by the Texas State Board of Pharmacy or state
or federal law; or
(2) a performance or surety bond or other financial
guarantee in excess of the requirements imposed by the Texas State
Board of Pharmacy or state or federal law.
Sec. 1369.506. PROTECTED COMMUNICATION AND OTHER PRACTICES
BY PHARMACISTS AND PHARMACIES. (a) In a participation contract
between a pharmacy benefit manager and a pharmacist or pharmacy
providing prescription drug coverage for a health benefit plan, a
pharmacist or pharmacy may not be prohibited or restricted from or
penalized in any way for disclosing to an enrollee any health care
information that the pharmacist or pharmacy considers appropriate
regarding:
(1) the nature of treatment, risks, or alternative
therapies;
(2) the availability of alternate therapies,
consultations, or tests;
(3) the decision of utilization reviewers or similar
persons to authorize or deny services;
(4) the process used to authorize or deny health care
services or benefits; or
(5) financial incentives and structures used by the
relevant health benefit plan.
(b) A pharmacist or pharmacy may provide to an enrollee
information regarding the enrollee's total cost for a pharmacist
service for a prescription drug.
(c) A pharmacy benefit manager may not prohibit a pharmacist
or pharmacy from:
(1) discussing information regarding the total cost
for a pharmacist service for a prescription drug; or
(2) selling a more affordable alternative to the
enrollee if a more affordable alternative is available.
(d) A pharmacy benefit manager contract with a
participating pharmacist or pharmacy may not prohibit, restrict, or
limit disclosure of information to the commissioner, law
enforcement, or state or federal governmental officials
investigating or examining a complaint or conducting a review of a
pharmacy benefit manager's compliance with the requirements of this
subchapter.
Sec. 1369.507. RECOUPMENT LIMITATION. (a) A reimbursement
made to a pharmacist or pharmacy by a pharmacy benefit manager may
not be denied or reduced after adjudication of the claim, unless:
(1) the original claim was submitted fraudulently;
(2) the original claim payment was incorrect because
the pharmacist or pharmacy had already been paid for the pharmacist
service; or
(3) the pharmacist service was not properly rendered
by the pharmacist or pharmacy.
(b) A pharmacy benefit manager entitled to a recoupment on
the basis of a discrepancy found during an audit related to a drug
that was properly dispensed may only recover fees paid by the
pharmacy benefit manager to the pharmacist or pharmacy associated
with the audited claim and may not recoup the cost of the drug or
other ingredient or any other amount related to the claim.
SECTION 6. The heading to Subchapter D, Chapter 4151,
Insurance Code, is amended to read as follows:
SUBCHAPTER D. PHARMACY BENEFITS [BENEFIT PLANS]
SECTION 7. Subchapter D, Chapter 4151, Insurance Code, is
amended by adding Section 4151.155 to read as follows:
Sec. 4151.155. BOARD OF PHARMACY REQUESTS. The
commissioner shall provide to the Texas State Board of Pharmacy, on
the board's request, a copy of any document related to an action
taken under Subchapter G against a pharmacy benefit manager,
including:
(1) a document or information or data submitted by a
pharmacy benefit manager to the commissioner;
(2) correspondence between the pharmacy benefit
manager and the commissioner; and
(3) a written notice, finding, or determination, or
other document sent by the commissioner to the pharmacy benefit
manager.
SECTION 8. Section 1369.357, Insurance Code, is repealed.
SECTION 9. Chapter 1369, Insurance Code, as amended by this
Act, applies only to a contract between a pharmacy benefit manager
and a pharmacist or pharmacy entered into or renewed on or after
January 1, 2020. A contract entered into or renewed before January
1, 2020, is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 10. This Act takes effect September 1, 2019.