Bill Text: IL HB0465 | 2019-2020 | 101st General Assembly | Chaptered

---

Bill Title: Reinserts the provisions of House Amendment No. 1, but with the following changes: Further amends the Illinois Insurance Code. In a provision concerning contracts between health insurers and pharmacy benefit managers, provides that such contracts must require pharmacy benefit managers to: (1) update maximum allowable cost pricing information at least every 7 calendar days; (2) provide access to its maximum allowable cost list to each pharmacy or pharmacy services administrative organization, as defined, subject to the maximum allowable cost list; (4) provide a process by which a contracted pharmacy can appeal the provider's reimbursement for a drug subject to maximum allowable cost pricing; and other matters. Regarding a drug on the maximum allowable cost list, requires pharmacy benefits managers to ensure that: (i) if a drug is a generically equivalent drug, it is listed as therapeutically equivalent and pharmaceutically equivalent to certain rating standards; (ii) the drug is available for purchase by each pharmacy in the State from national or regional wholesalers operating in Illinois; and (ii) the drug is not obsolete (rather than requiring a drug to have at least 3 or more nationally available, therapeutically equivalent, multiple source generic drugs with a significant cost difference and be available for purchase without limitations by all pharmacies in the State from national or regional wholesalers). Permits the Director of Insurance to examine a pharmacy benefit manager's designee, representative, or other specified persons (rather than any individual) about the business of the pharmacy benefit manager. Contains provisions concerning the denial of a pharmacy benefits manager's registration application or the suspension or revocation of a pharmacy benefits manager's registration. Defines terms. Further amends the Managed Care Reform and Patient Rights Act. Makes changes to the definition of "emergency medical condition". Removes changes made to a provision concerning the denial of coverage and payment for emergency services provided without prior authorization or an approved plan. Further amends the Illinois Public Aid Code. Makes changes to certain reporting requirements imposed on the Director of Healthcare and Family Services. Requires a pharmacy benefit manager to make certain disclosures to the Department of Healthcare and Family Services upon request. Requires a pharmacy benefit manager to make certain written disclosures to a pharmacy provider or pharmacy services administrative organization. Defines "pharmacy services administrative organization." Requires the Department to adopt rules establishing reasonable dispensing fees for fee-for-service payments in accordance with guidance or guidelines from the federal Centers for Medicare and Medicaid Services.

Spectrum: Slight Partisan Bill (Democrat 34-17)

Status: (Passed) 2019-08-23 - Public Act . . . . . . . . . 101-0452 [HB0465 Detail]

Download: Illinois-2019-HB0465-Chaptered.html

---

Public Act 101-0452
HB0465 Enrolled LRB101 03398 JRG 48406 b
AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. The Freedom of Information Act is amended by
changing Sections 7 and 7.5 as follows:
(5 ILCS 140/7) (from Ch. 116, par. 207)
Sec. 7. Exemptions.
(1) When a request is made to inspect or copy a public
record that contains information that is exempt from disclosure
under this Section, but also contains information that is not
exempt from disclosure, the public body may elect to redact the
information that is exempt. The public body shall make the
remaining information available for inspection and copying.
Subject to this requirement, the following shall be exempt from
inspection and copying:
(a) Information specifically prohibited from
disclosure by federal or State law or rules and regulations
implementing federal or State law.
(b) Private information, unless disclosure is required
by another provision of this Act, a State or federal law or
a court order.
(b-5) Files, documents, and other data or databases
maintained by one or more law enforcement agencies and

specifically designed to provide information to one or more
law enforcement agencies regarding the physical or mental
status of one or more individual subjects.
(c) Personal information contained within public
records, the disclosure of which would constitute a clearly
unwarranted invasion of personal privacy, unless the
disclosure is consented to in writing by the individual
subjects of the information. "Unwarranted invasion of
personal privacy" means the disclosure of information that
is highly personal or objectionable to a reasonable person
and in which the subject's right to privacy outweighs any
legitimate public interest in obtaining the information.
The disclosure of information that bears on the public
duties of public employees and officials shall not be
considered an invasion of personal privacy.
(d) Records in the possession of any public body
created in the course of administrative enforcement
proceedings, and any law enforcement or correctional
agency for law enforcement purposes, but only to the extent
that disclosure would:
(i) interfere with pending or actually and
reasonably contemplated law enforcement proceedings
conducted by any law enforcement or correctional
agency that is the recipient of the request;
(ii) interfere with active administrative
enforcement proceedings conducted by the public body

that is the recipient of the request;
(iii) create a substantial likelihood that a
person will be deprived of a fair trial or an impartial
hearing;
(iv) unavoidably disclose the identity of a
confidential source, confidential information
furnished only by the confidential source, or persons
who file complaints with or provide information to
administrative, investigative, law enforcement, or
penal agencies; except that the identities of
witnesses to traffic accidents, traffic accident
reports, and rescue reports shall be provided by
agencies of local government, except when disclosure
would interfere with an active criminal investigation
conducted by the agency that is the recipient of the
request;
(v) disclose unique or specialized investigative
techniques other than those generally used and known or
disclose internal documents of correctional agencies
related to detection, observation or investigation of
incidents of crime or misconduct, and disclosure would
result in demonstrable harm to the agency or public
body that is the recipient of the request;
(vi) endanger the life or physical safety of law
enforcement personnel or any other person; or
(vii) obstruct an ongoing criminal investigation

by the agency that is the recipient of the request.
(d-5) A law enforcement record created for law
enforcement purposes and contained in a shared electronic
record management system if the law enforcement agency that
is the recipient of the request did not create the record,
did not participate in or have a role in any of the events
which are the subject of the record, and only has access to
the record through the shared electronic record management
system.
(e) Records that relate to or affect the security of
correctional institutions and detention facilities.
(e-5) Records requested by persons committed to the
Department of Corrections, Department of Human Services
Division of Mental Health, or a county jail if those
materials are available in the library of the correctional
institution or facility or jail where the inmate is
confined.
(e-6) Records requested by persons committed to the
Department of Corrections, Department of Human Services
Division of Mental Health, or a county jail if those
materials include records from staff members' personnel
files, staff rosters, or other staffing assignment
information.
(e-7) Records requested by persons committed to the
Department of Corrections or Department of Human Services
Division of Mental Health if those materials are available

through an administrative request to the Department of
Corrections or Department of Human Services Division of
Mental Health.
(e-8) Records requested by a person committed to the
Department of Corrections, Department of Human Services
Division of Mental Health, or a county jail, the disclosure
of which would result in the risk of harm to any person or
the risk of an escape from a jail or correctional
institution or facility.
(e-9) Records requested by a person in a county jail or
committed to the Department of Corrections or Department of
Human Services Division of Mental Health, containing
personal information pertaining to the person's victim or
the victim's family, including, but not limited to, a
victim's home address, home telephone number, work or
school address, work telephone number, social security
number, or any other identifying information, except as may
be relevant to a requester's current or potential case or
claim.
(e-10) Law enforcement records of other persons
requested by a person committed to the Department of
Corrections, Department of Human Services Division of
Mental Health, or a county jail, including, but not limited
to, arrest and booking records, mug shots, and crime scene
photographs, except as these records may be relevant to the
requester's current or potential case or claim.

(f) Preliminary drafts, notes, recommendations,
memoranda and other records in which opinions are
expressed, or policies or actions are formulated, except
that a specific record or relevant portion of a record
shall not be exempt when the record is publicly cited and
identified by the head of the public body. The exemption
provided in this paragraph (f) extends to all those records
of officers and agencies of the General Assembly that
pertain to the preparation of legislative documents.
(g) Trade secrets and commercial or financial
information obtained from a person or business where the
trade secrets or commercial or financial information are
furnished under a claim that they are proprietary,
privileged or confidential, and that disclosure of the
trade secrets or commercial or financial information would
cause competitive harm to the person or business, and only
insofar as the claim directly applies to the records
requested.
The information included under this exemption includes
all trade secrets and commercial or financial information
obtained by a public body, including a public pension fund,
from a private equity fund or a privately held company
within the investment portfolio of a private equity fund as
a result of either investing or evaluating a potential
investment of public funds in a private equity fund. The
exemption contained in this item does not apply to the

aggregate financial performance information of a private
equity fund, nor to the identity of the fund's managers or
general partners. The exemption contained in this item does
not apply to the identity of a privately held company
within the investment portfolio of a private equity fund,
unless the disclosure of the identity of a privately held
company may cause competitive harm.
Nothing contained in this paragraph (g) shall be
construed to prevent a person or business from consenting
to disclosure.
(h) Proposals and bids for any contract, grant, or
agreement, including information which if it were
disclosed would frustrate procurement or give an advantage
to any person proposing to enter into a contractor
agreement with the body, until an award or final selection
is made. Information prepared by or for the body in
preparation of a bid solicitation shall be exempt until an
award or final selection is made.
(i) Valuable formulae, computer geographic systems,
designs, drawings and research data obtained or produced by
any public body when disclosure could reasonably be
expected to produce private gain or public loss. The
exemption for "computer geographic systems" provided in
this paragraph (i) does not extend to requests made by news
media as defined in Section 2 of this Act when the
requested information is not otherwise exempt and the only

purpose of the request is to access and disseminate
information regarding the health, safety, welfare, or
legal rights of the general public.
(j) The following information pertaining to
educational matters:
(i) test questions, scoring keys and other
examination data used to administer an academic
examination;
(ii) information received by a primary or
secondary school, college, or university under its
procedures for the evaluation of faculty members by
their academic peers;
(iii) information concerning a school or
university's adjudication of student disciplinary
cases, but only to the extent that disclosure would
unavoidably reveal the identity of the student; and
(iv) course materials or research materials used
by faculty members.
(k) Architects' plans, engineers' technical
submissions, and other construction related technical
documents for projects not constructed or developed in
whole or in part with public funds and the same for
projects constructed or developed with public funds,
including but not limited to power generating and
distribution stations and other transmission and
distribution facilities, water treatment facilities,

airport facilities, sport stadiums, convention centers,
and all government owned, operated, or occupied buildings,
but only to the extent that disclosure would compromise
security.
(l) Minutes of meetings of public bodies closed to the
public as provided in the Open Meetings Act until the
public body makes the minutes available to the public under
Section 2.06 of the Open Meetings Act.
(m) Communications between a public body and an
attorney or auditor representing the public body that would
not be subject to discovery in litigation, and materials
prepared or compiled by or for a public body in
anticipation of a criminal, civil or administrative
proceeding upon the request of an attorney advising the
public body, and materials prepared or compiled with
respect to internal audits of public bodies.
(n) Records relating to a public body's adjudication of
employee grievances or disciplinary cases; however, this
exemption shall not extend to the final outcome of cases in
which discipline is imposed.
(o) Administrative or technical information associated
with automated data processing operations, including but
not limited to software, operating protocols, computer
program abstracts, file layouts, source listings, object
modules, load modules, user guides, documentation
pertaining to all logical and physical design of

computerized systems, employee manuals, and any other
information that, if disclosed, would jeopardize the
security of the system or its data or the security of
materials exempt under this Section.
(p) Records relating to collective negotiating matters
between public bodies and their employees or
representatives, except that any final contract or
agreement shall be subject to inspection and copying.
(q) Test questions, scoring keys, and other
examination data used to determine the qualifications of an
applicant for a license or employment.
(r) The records, documents, and information relating
to real estate purchase negotiations until those
negotiations have been completed or otherwise terminated.
With regard to a parcel involved in a pending or actually
and reasonably contemplated eminent domain proceeding
under the Eminent Domain Act, records, documents and
information relating to that parcel shall be exempt except
as may be allowed under discovery rules adopted by the
Illinois Supreme Court. The records, documents and
information relating to a real estate sale shall be exempt
until a sale is consummated.
(s) Any and all proprietary information and records
related to the operation of an intergovernmental risk
management association or self-insurance pool or jointly
self-administered health and accident cooperative or pool.

Insurance or self insurance (including any
intergovernmental risk management association or self
insurance pool) claims, loss or risk management
information, records, data, advice or communications.
(t) Information contained in or related to
examination, operating, or condition reports prepared by,
on behalf of, or for the use of a public body responsible
for the regulation or supervision of financial
institutions, or insurance companies, or pharmacy benefit
managers, unless disclosure is otherwise required by State
law.
(u) Information that would disclose or might lead to
the disclosure of secret or confidential information,
codes, algorithms, programs, or private keys intended to be
used to create electronic or digital signatures under the
Electronic Commerce Security Act.
(v) Vulnerability assessments, security measures, and
response policies or plans that are designed to identify,
prevent, or respond to potential attacks upon a community's
population or systems, facilities, or installations, the
destruction or contamination of which would constitute a
clear and present danger to the health or safety of the
community, but only to the extent that disclosure could
reasonably be expected to jeopardize the effectiveness of
the measures or the safety of the personnel who implement
them or the public. Information exempt under this item may

include such things as details pertaining to the
mobilization or deployment of personnel or equipment, to
the operation of communication systems or protocols, or to
tactical operations.
(w) (Blank).
(x) Maps and other records regarding the location or
security of generation, transmission, distribution,
storage, gathering, treatment, or switching facilities
owned by a utility, by a power generator, or by the
Illinois Power Agency.
(y) Information contained in or related to proposals,
bids, or negotiations related to electric power
procurement under Section 1-75 of the Illinois Power Agency
Act and Section 16-111.5 of the Public Utilities Act that
is determined to be confidential and proprietary by the
Illinois Power Agency or by the Illinois Commerce
Commission.
(z) Information about students exempted from
disclosure under Sections 10-20.38 or 34-18.29 of the
School Code, and information about undergraduate students
enrolled at an institution of higher education exempted
from disclosure under Section 25 of the Illinois Credit
Card Marketing Act of 2009.
(aa) Information the disclosure of which is exempted
under the Viatical Settlements Act of 2009.
(bb) Records and information provided to a mortality

review team and records maintained by a mortality review
team appointed under the Department of Juvenile Justice
Mortality Review Team Act.
(cc) Information regarding interments, entombments, or
inurnments of human remains that are submitted to the
Cemetery Oversight Database under the Cemetery Care Act or
the Cemetery Oversight Act, whichever is applicable.
(dd) Correspondence and records (i) that may not be
disclosed under Section 11-9 of the Illinois Public Aid
Code or (ii) that pertain to appeals under Section 11-8 of
the Illinois Public Aid Code.
(ee) The names, addresses, or other personal
information of persons who are minors and are also
participants and registrants in programs of park
districts, forest preserve districts, conservation
districts, recreation agencies, and special recreation
associations.
(ff) The names, addresses, or other personal
information of participants and registrants in programs of
park districts, forest preserve districts, conservation
districts, recreation agencies, and special recreation
associations where such programs are targeted primarily to
minors.
(gg) Confidential information described in Section
1-100 of the Illinois Independent Tax Tribunal Act of 2012.
(hh) The report submitted to the State Board of

Education by the School Security and Standards Task Force
under item (8) of subsection (d) of Section 2-3.160 of the
School Code and any information contained in that report.
(ii) Records requested by persons committed to or
detained by the Department of Human Services under the
Sexually Violent Persons Commitment Act or committed to the
Department of Corrections under the Sexually Dangerous
Persons Act if those materials: (i) are available in the
library of the facility where the individual is confined;
(ii) include records from staff members' personnel files,
staff rosters, or other staffing assignment information;
or (iii) are available through an administrative request to
the Department of Human Services or the Department of
Corrections.
(jj) Confidential information described in Section
5-535 of the Civil Administrative Code of Illinois.
(1.5) Any information exempt from disclosure under the
Judicial Privacy Act shall be redacted from public records
prior to disclosure under this Act.
(2) A public record that is not in the possession of a
public body but is in the possession of a party with whom the
agency has contracted to perform a governmental function on
behalf of the public body, and that directly relates to the
governmental function and is not otherwise exempt under this
Act, shall be considered a public record of the public body,
for purposes of this Act.

(3) This Section does not authorize withholding of
information or limit the availability of records to the public,
except as stated in this Section or otherwise provided in this
Act.
(Source: P.A. 99-298, eff. 8-6-15; 99-346, eff. 1-1-16; 99-642,
eff. 7-28-16; 100-26, eff. 8-4-17; 100-201, eff. 8-18-17;
100-732, eff. 8-3-18.)
(5 ILCS 140/7.5)
Sec. 7.5. Statutory exemptions. To the extent provided for
by the statutes referenced below, the following shall be exempt
from inspection and copying:
(a) All information determined to be confidential
under Section 4002 of the Technology Advancement and
Development Act.
(b) Library circulation and order records identifying
library users with specific materials under the Library
Records Confidentiality Act.
(c) Applications, related documents, and medical
records received by the Experimental Organ Transplantation
Procedures Board and any and all documents or other records
prepared by the Experimental Organ Transplantation
Procedures Board or its staff relating to applications it
has received.
(d) Information and records held by the Department of
Public Health and its authorized representatives relating

to known or suspected cases of sexually transmissible
disease or any information the disclosure of which is
restricted under the Illinois Sexually Transmissible
Disease Control Act.
(e) Information the disclosure of which is exempted
under Section 30 of the Radon Industry Licensing Act.
(f) Firm performance evaluations under Section 55 of
the Architectural, Engineering, and Land Surveying
Qualifications Based Selection Act.
(g) Information the disclosure of which is restricted
and exempted under Section 50 of the Illinois Prepaid
Tuition Act.
(h) Information the disclosure of which is exempted
under the State Officials and Employees Ethics Act, and
records of any lawfully created State or local inspector
general's office that would be exempt if created or
obtained by an Executive Inspector General's office under
that Act.
(i) Information contained in a local emergency energy
plan submitted to a municipality in accordance with a local
emergency energy plan ordinance that is adopted under
Section 11-21.5-5 of the Illinois Municipal Code.
(j) Information and data concerning the distribution
of surcharge moneys collected and remitted by carriers
under the Emergency Telephone System Act.
(k) Law enforcement officer identification information

or driver identification information compiled by a law
enforcement agency or the Department of Transportation
under Section 11-212 of the Illinois Vehicle Code.
(l) Records and information provided to a residential
health care facility resident sexual assault and death
review team or the Executive Council under the Abuse
Prevention Review Team Act.
(m) Information provided to the predatory lending
database created pursuant to Article 3 of the Residential
Real Property Disclosure Act, except to the extent
authorized under that Article.
(n) Defense budgets and petitions for certification of
compensation and expenses for court appointed trial
counsel as provided under Sections 10 and 15 of the Capital
Crimes Litigation Act. This subsection (n) shall apply
until the conclusion of the trial of the case, even if the
prosecution chooses not to pursue the death penalty prior
to trial or sentencing.
(o) Information that is prohibited from being
disclosed under Section 4 of the Illinois Health and
Hazardous Substances Registry Act.
(p) Security portions of system safety program plans,
investigation reports, surveys, schedules, lists, data, or
information compiled, collected, or prepared by or for the
Regional Transportation Authority under Section 2.11 of
the Regional Transportation Authority Act or the St. Clair

County Transit District under the Bi-State Transit Safety
Act.
(q) Information prohibited from being disclosed by the
Personnel Record Records Review Act.
(r) Information prohibited from being disclosed by the
Illinois School Student Records Act.
(s) Information the disclosure of which is restricted
under Section 5-108 of the Public Utilities Act.
(t) All identified or deidentified health information
in the form of health data or medical records contained in,
stored in, submitted to, transferred by, or released from
the Illinois Health Information Exchange, and identified
or deidentified health information in the form of health
data and medical records of the Illinois Health Information
Exchange in the possession of the Illinois Health
Information Exchange Authority due to its administration
of the Illinois Health Information Exchange. The terms
"identified" and "deidentified" shall be given the same
meaning as in the Health Insurance Portability and
Accountability Act of 1996, Public Law 104-191, or any
subsequent amendments thereto, and any regulations
promulgated thereunder.
(u) Records and information provided to an independent
team of experts under the Developmental Disability and
Mental Health Safety Act (also known as Brian's Law).
(v) Names and information of people who have applied

for or received Firearm Owner's Identification Cards under
the Firearm Owners Identification Card Act or applied for
or received a concealed carry license under the Firearm
Concealed Carry Act, unless otherwise authorized by the
Firearm Concealed Carry Act; and databases under the
Firearm Concealed Carry Act, records of the Concealed Carry
Licensing Review Board under the Firearm Concealed Carry
Act, and law enforcement agency objections under the
Firearm Concealed Carry Act.
(w) Personally identifiable information which is
exempted from disclosure under subsection (g) of Section
19.1 of the Toll Highway Act.
(x) Information which is exempted from disclosure
under Section 5-1014.3 of the Counties Code or Section
8-11-21 of the Illinois Municipal Code.
(y) Confidential information under the Adult
Protective Services Act and its predecessor enabling
statute, the Elder Abuse and Neglect Act, including
information about the identity and administrative finding
against any caregiver of a verified and substantiated
decision of abuse, neglect, or financial exploitation of an
eligible adult maintained in the Registry established
under Section 7.5 of the Adult Protective Services Act.
(z) Records and information provided to a fatality
review team or the Illinois Fatality Review Team Advisory
Council under Section 15 of the Adult Protective Services

Act.
(aa) Information which is exempted from disclosure
under Section 2.37 of the Wildlife Code.
(bb) Information which is or was prohibited from
disclosure by the Juvenile Court Act of 1987.
(cc) Recordings made under the Law Enforcement
Officer-Worn Body Camera Act, except to the extent
authorized under that Act.
(dd) Information that is prohibited from being
disclosed under Section 45 of the Condominium and Common
Interest Community Ombudsperson Act.
(ee) Information that is exempted from disclosure
under Section 30.1 of the Pharmacy Practice Act.
(ff) Information that is exempted from disclosure
under the Revised Uniform Unclaimed Property Act.
(gg) Information that is prohibited from being
disclosed under Section 7-603.5 of the Illinois Vehicle
Code.
(hh) Records that are exempt from disclosure under
Section 1A-16.7 of the Election Code.
(ii) Information which is exempted from disclosure
under Section 2505-800 of the Department of Revenue Law of
the Civil Administrative Code of Illinois.
(jj) Information and reports that are required to be
submitted to the Department of Labor by registering day and
temporary labor service agencies but are exempt from

disclosure under subsection (a-1) of Section 45 of the Day
and Temporary Labor Services Act.
(kk) Information prohibited from disclosure under the
Seizure and Forfeiture Reporting Act.
(ll) Information the disclosure of which is restricted
and exempted under Section 5-30.8 of the Illinois Public
Aid Code.
(mm) (ll) Records that are exempt from disclosure under
Section 4.2 of the Crime Victims Compensation Act.
(nn) (ll) Information that is exempt from disclosure
under Section 70 of the Higher Education Student Assistance
Act.
(oo) Information that is exempt from disclosure under
subsections (f) and (j) of Section 5-36 of the Illinois
Public Aid Code.
(Source: P.A. 99-78, eff. 7-20-15; 99-298, eff. 8-6-15; 99-352,
eff. 1-1-16; 99-642, eff. 7-28-16; 99-776, eff. 8-12-16;
99-863, eff. 8-19-16; 100-20, eff. 7-1-17; 100-22, eff. 1-1-18;
100-201, eff. 8-18-17; 100-373, eff. 1-1-18; 100-464, eff.
8-28-17; 100-465, eff. 8-31-17; 100-512, eff. 7-1-18; 100-517,
eff. 6-1-18; 100-646, eff. 7-27-18; 100-690, eff. 1-1-19;
100-863, eff. 8-14-18; 100-887, eff. 8-14-18; revised
10-12-18.)
Section 5. The State Employees Group Insurance Act of 1971
is amended by changing Section 6.11 as follows:

(5 ILCS 375/6.11)
(Text of Section after amendment by P.A. 100-1170)
Sec. 6.11. Required health benefits; Illinois Insurance
Code requirements. The program of health benefits shall provide
the post-mastectomy care benefits required to be covered by a
policy of accident and health insurance under Section 356t of
the Illinois Insurance Code. The program of health benefits
shall provide the coverage required under Sections 356g,
356g.5, 356g.5-1, 356m, 356u, 356w, 356x, 356z.2, 356z.4,
356z.6, 356z.8, 356z.9, 356z.10, 356z.11, 356z.12, 356z.13,
356z.14, 356z.15, 356z.17, 356z.22, 356z.25, 356z.26, 356z.29,
and 356z.32 of the Illinois Insurance Code. The program of
health benefits must comply with Sections 155.22a, 155.37,
355b, 356z.19, 370c, and 370c.1, and Article XXXIIB of the
Illinois Insurance Code. The Department of Insurance shall
enforce the requirements of this Section with respect to
Sections 370c and 370c.1 of the Illinois Insurance Code; all
other requirements of this Section shall be enforced by the
Department of Central Management Services.
Rulemaking authority to implement Public Act 95-1045, if
any, is conditioned on the rules being adopted in accordance
with all provisions of the Illinois Administrative Procedure
Act and all rules and procedures of the Joint Committee on
Administrative Rules; any purported rule not so adopted, for
whatever reason, is unauthorized.

(Source: P.A. 99-480, eff. 9-9-15; 100-24, eff. 7-18-17;
100-138, eff. 8-18-17; 100-863, eff. 8-14-18; 100-1024, eff.
1-1-19; 100-1057, eff. 1-1-19; 100-1102, eff. 1-1-19;
100-1170, eff. 6-1-19.)
Section 10. The Illinois Insurance Code is amended by
adding Article XXXIIB as follows:
(215 ILCS 5/Art. XXXIIB heading new)
ARTICLE XXXIIB. PHARMACY BENEFIT MANAGERS
(215 ILCS 5/513b1 new)
Sec. 513b1. Pharmacy benefit manager contracts.
(a) As used in this Section:
"Biological product" has the meaning ascribed to that term
in Section 19.5 of the Pharmacy Practice Act.
"Maximum allowable cost" means the maximum amount that a
pharmacy benefit manager will reimburse a pharmacy for the cost
of a drug.
"Maximum allowable cost list" means a list of drugs for
which a maximum allowable cost has been established by a
pharmacy benefit manager.
"Pharmacy benefit manager" means a person, business, or
entity, including a wholly or partially owned or controlled
subsidiary of a pharmacy benefit manager, that provides claims
processing services or other prescription drug or device

services, or both, for health benefit plans.
"Retail price" means the price an individual without
prescription drug coverage would pay at a retail pharmacy, not
including a pharmacist dispensing fee.
(b) A contract between a health insurer and a pharmacy
benefit manager must require that the pharmacy benefit manager:
(1) Update maximum allowable cost pricing information
at least every 7 calendar days.
(2) Maintain a process that will, in a timely manner,
eliminate drugs from maximum allowable cost lists or modify
drug prices to remain consistent with changes in pricing
data used in formulating maximum allowable cost prices and
product availability.
(3) Provide access to its maximum allowable cost list
to each pharmacy or pharmacy services administrative
organization subject to the maximum allowable cost list.
Access may include a real-time pharmacy website portal to
be able to view the maximum allowable cost list. As used in
this Section, "pharmacy services administrative
organization" means an entity operating within the State
that contracts with independent pharmacies to conduct
business on their behalf with third-party payers. A
pharmacy services administrative organization may provide
administrative services to pharmacies and negotiate and
enter into contracts with third-party payers or pharmacy
benefit managers on behalf of pharmacies.

(4) Provide a process by which a contracted pharmacy
can appeal the provider's reimbursement for a drug subject
to maximum allowable cost pricing. The appeals process
must, at a minimum, include the following:
(A) A requirement that a contracted pharmacy has 14
calendar days after the applicable fill date to appeal
a maximum allowable cost if the reimbursement for the
drug is less than the net amount that the network
provider paid to the supplier of the drug.
(B) A requirement that a pharmacy benefit manager
must respond to a challenge within 14 calendar days of
the contracted pharmacy making the claim for which the
appeal has been submitted.
(C) A telephone number and e-mail address or
website to network providers, at which the provider can
contact the pharmacy benefit manager to process and
submit an appeal.
(D) A requirement that, if an appeal is denied, the
pharmacy benefit manager must provide the reason for
the denial and the name and the national drug code
number from national or regional wholesalers.
(E) A requirement that, if an appeal is sustained,
the pharmacy benefit manager must make an adjustment in
the drug price effective the date the challenge is
resolved and make the adjustment applicable to all
similarly situated network pharmacy providers, as

determined by the managed care organization or
pharmacy benefit manager.
(5) Allow a plan sponsor contracting with a pharmacy
benefit manager an annual right to audit compliance with
the terms of the contract by the pharmacy benefit manager,
including, but not limited to, full disclosure of any and
all rebate amounts secured, whether product specific or
generalized rebates, that were provided to the pharmacy
benefit manager by a pharmaceutical manufacturer.
(6) Allow a plan sponsor contracting with a pharmacy
benefit manager to request that the pharmacy benefit
manager disclose the actual amounts paid by the pharmacy
benefit manager to the pharmacy.
(7) Provide notice to the party contracting with the
pharmacy benefit manager of any consideration that the
pharmacy benefit manager receives from the manufacturer
for dispense as written prescriptions once a generic or
biologically similar product becomes available.
(c) In order to place a particular prescription drug on a
maximum allowable cost list, the pharmacy benefit manager must,
at a minimum, ensure that:
(1) if the drug is a generically equivalent drug, it is
listed as therapeutically equivalent and pharmaceutically
equivalent "A" or "B" rated in the United States Food and
Drug Administration's most recent version of the "Orange
Book" or have an NR or NA rating by Medi-Span, Gold

Standard, or a similar rating by a nationally recognized
reference;
(2) the drug is available for purchase by each pharmacy
in the State from national or regional wholesalers
operating in Illinois; and
(3) the drug is not obsolete.
(d) A pharmacy benefit manager is prohibited from limiting
a pharmacist's ability to disclose whether the cost-sharing
obligation exceeds the retail price for a covered prescription
drug, and the availability of a more affordable alternative
drug, if one is available in accordance with Section 42 of the
Pharmacy Practice Act.
(e) A health insurer or pharmacy benefit manager shall not
require an insured to make a payment for a prescription drug at
the point of sale in an amount that exceeds the lesser of:
(1) the applicable cost-sharing amount; or
(2) the retail price of the drug in the absence of
prescription drug coverage.
(f) This Section applies to contracts entered into or
renewed on or after July 1, 2020.
(g) This Section applies to any group or individual policy
of accident and health insurance or managed care plan that
provides coverage for prescription drugs and that is amended,
delivered, issued, or renewed on or after July 1, 2020.
(215 ILCS 5/513b2 new)

Sec. 513b2. Licensure requirements.
(a) Beginning on July 1, 2020, to conduct business in this
State, a pharmacy benefit manager must register with the
Director. To initially register or renew a registration, a
pharmacy benefit manager shall submit:
(1) A nonrefundable fee not to exceed $500.
(2) A copy of the registrant's corporate charter,
articles of incorporation, or other charter document.
(3) A completed registration form adopted by the
Director containing:
(A) The name and address of the registrant.
(B) The name, address, and official position of
each officer and director of the registrant.
(b) The registrant shall report any change in information
required under this Section to the Director in writing within
60 days after the change occurs.
(c) Upon receipt of a completed registration form, the
required documents, and the registration fee, the Director
shall issue a registration certificate. The certificate may be
in paper or electronic form, and shall clearly indicate the
expiration date of the registration. Registration certificates
are nontransferable.
(d) A registration certificate is valid for 2 years after
its date of issue. The Director shall adopt by rule an initial
registration fee not to exceed $500 and a registration renewal
fee not to exceed $500, both of which shall be nonrefundable.

Total fees may not exceed the cost of administering this
Section.
(e) The Department shall adopt any rules necessary to
implement this Section.
(215 ILCS 5/513b3 new)
Sec. 513b3. Examination.
(a) The Director, or his or her designee, may examine a
registered pharmacy benefit manager.
(b) Any pharmacy benefit manager being examined shall
provide to the Director, or his or her designee, convenient and
free access to all books, records, documents, and other papers
relating to such pharmacy benefit manager's business affairs at
all reasonable hours at its offices.
(c) The Director, or his or her designee, may administer
oaths and thereafter examine the pharmacy benefit manager's
designee, representative, or any officer or senior manager as
listed on the license or registration certificate about the
business of the pharmacy benefit manager.
(d) The examiners designated by the Director under this
Section may make reports to the Director. Any report alleging
substantive violations of this Article, any applicable
provisions of this Code, or any applicable Part of Title 50 of
the Illinois Administrative Code shall be in writing and be
based upon facts obtained by the examiners. The report shall be
verified by the examiners.

(e) If a report is made, the Director shall either deliver
a duplicate report to the pharmacy benefit manager being
examined or send such duplicate by certified or registered mail
to the pharmacy benefit manager's address specified in the
records of the Department. The Director shall afford the
pharmacy benefit manager an opportunity to request a hearing to
object to the report. The pharmacy benefit manager may request
a hearing within 30 days after receipt of the duplicate report
by giving the Director written notice of such request together
with written objections to the report. Any hearing shall be
conducted in accordance with Sections 402 and 403 of this Code.
The right to a hearing is waived if the delivery of the report
is refused or the report is otherwise undeliverable or the
pharmacy benefit manager does not timely request a hearing.
After the hearing or upon expiration of the time period during
which a pharmacy benefit manager may request a hearing, if the
examination reveals that the pharmacy benefit manager is
operating in violation of any applicable provision of this
Code, any applicable Part of Title 50 of the Illinois
Administrative Code, a provision of this Article, or prior
order, the Director, in the written order, may require the
pharmacy benefit manager to take any action the Director
considers necessary or appropriate in accordance with the
report or examination hearing. If the Director issues an order,
it shall be issued within 90 days after the report is filed, or
if there is a hearing, within 90 days after the conclusion of

the hearing. The order is subject to review under the
Administrative Review Law.
(215 ILCS 5/513b4 new)
Sec. 513b4. Denial, revocation, or suspension of
registration; administrative fines.
(a) Denial of an application or suspension or revocation of
a registration in accordance with this Section shall be by
written order sent to the applicant or registrant by certified
or registered mail at the address specified in the records of
the Department. The written order shall state the grounds,
charges, or conduct on which denial, suspension, or revocation
is based. The applicant or registrant may in writing request a
hearing within 30 days from the date of mailing. Upon receipt
of a written request, the Director shall issue an order
setting: (i) a specific time for the hearing, which may not be
less than 20 nor more than 30 days after receipt of the
request; and (ii) a specific place for the hearing, which may
be in either the city of Springfield or in the county in
Illinois where the applicant's or registrant's principal place
of business is located. If no written request is received by
the Director, such order shall be final upon the expiration of
said 30 days.
(b) If the Director finds that one or more grounds exist
for the revocation or suspension of a registration issued under
this Article, the Director may, in lieu of or in addition to

such suspension or revocation, impose a fine upon the pharmacy
benefit manager as provided under subsection (c).
(c) With respect to any knowing and willful violation of a
lawful order of the Director, any applicable portion of this
Code, Part of Title 50 of the Illinois Administrative Code, or
provision of this Article, the Director may impose a fine upon
the pharmacy benefit manager in an amount not to exceed $50,000
for each violation.
(215 ILCS 5/513b5 new)
Sec. 513b5. Failure to register. Any pharmacy benefit
manager that operates without a registration or fails to
register with the Director and pay the fee prescribed by this
Article is an unauthorized insurer as defined in Article VII of
this Code and shall be subject to all penalties provided for
therein.
(215 ILCS 5/513b6 new)
Sec. 513b6. Insurance Producer Administration Fund. All
fees and fines paid to and collected by the Director under this
Article shall be paid promptly after receipt thereof, together
with a detailed statement of such fees, into the Insurance
Producer Administration Fund. The moneys deposited into the
Insurance Producer Administration Fund may be transferred to
the Professions Indirect Cost Fund, as authorized under Section
2105-300 of the Department of Professional Regulation Law of

the Civil Administrative Code of Illinois.
Section 15. The Health Maintenance Organization Act is
amended by changing Section 5-3 as follows:
(215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
Sec. 5-3. Insurance Code provisions.
(a) Health Maintenance Organizations shall be subject to
the provisions of Sections 133, 134, 136, 137, 139, 140, 141.1,
141.2, 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154,
154.5, 154.6, 154.7, 154.8, 155.04, 155.22a, 355.2, 355.3,
355b, 356g.5-1, 356m, 356v, 356w, 356x, 356y, 356z.2, 356z.4,
356z.5, 356z.6, 356z.8, 356z.9, 356z.10, 356z.11, 356z.12,
356z.13, 356z.14, 356z.15, 356z.17, 356z.18, 356z.19, 356z.21,
356z.22, 356z.25, 356z.26, 356z.29, 356z.30, 356z.32, 364,
364.01, 367.2, 367.2-5, 367i, 368a, 368b, 368c, 368d, 368e,
370c, 370c.1, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412,
444, and 444.1, paragraph (c) of subsection (2) of Section 367,
and Articles IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV,
and XXVI, and XXXIIB of the Illinois Insurance Code.
(b) For purposes of the Illinois Insurance Code, except for
Sections 444 and 444.1 and Articles XIII and XIII 1/2, Health
Maintenance Organizations in the following categories are
deemed to be "domestic companies":
(1) a corporation authorized under the Dental Service
Plan Act or the Voluntary Health Services Plans Act;

(2) a corporation organized under the laws of this
State; or
(3) a corporation organized under the laws of another
state, 30% or more of the enrollees of which are residents
of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a "domestic company" under Article VIII
1/2 of the Illinois Insurance Code.
(c) In considering the merger, consolidation, or other
acquisition of control of a Health Maintenance Organization
pursuant to Article VIII 1/2 of the Illinois Insurance Code,
(1) the Director shall give primary consideration to
the continuation of benefits to enrollees and the financial
conditions of the acquired Health Maintenance Organization
after the merger, consolidation, or other acquisition of
control takes effect;
(2)(i) the criteria specified in subsection (1)(b) of
Section 131.8 of the Illinois Insurance Code shall not
apply and (ii) the Director, in making his determination
with respect to the merger, consolidation, or other
acquisition of control, need not take into account the
effect on competition of the merger, consolidation, or
other acquisition of control;
(3) the Director shall have the power to require the
following information:
(A) certification by an independent actuary of the

adequacy of the reserves of the Health Maintenance
Organization sought to be acquired;
(B) pro forma financial statements reflecting the
combined balance sheets of the acquiring company and
the Health Maintenance Organization sought to be
acquired as of the end of the preceding year and as of
a date 90 days prior to the acquisition, as well as pro
forma financial statements reflecting projected
combined operation for a period of 2 years;
(C) a pro forma business plan detailing an
acquiring party's plans with respect to the operation
of the Health Maintenance Organization sought to be
acquired for a period of not less than 3 years; and
(D) such other information as the Director shall
require.
(d) The provisions of Article VIII 1/2 of the Illinois
Insurance Code and this Section 5-3 shall apply to the sale by
any health maintenance organization of greater than 10% of its
enrollee population (including without limitation the health
maintenance organization's right, title, and interest in and to
its health care certificates).
(e) In considering any management contract or service
agreement subject to Section 141.1 of the Illinois Insurance
Code, the Director (i) shall, in addition to the criteria
specified in Section 141.2 of the Illinois Insurance Code, take
into account the effect of the management contract or service

agreement on the continuation of benefits to enrollees and the
financial condition of the health maintenance organization to
be managed or serviced, and (ii) need not take into account the
effect of the management contract or service agreement on
competition.
(f) Except for small employer groups as defined in the
Small Employer Rating, Renewability and Portability Health
Insurance Act and except for medicare supplement policies as
defined in Section 363 of the Illinois Insurance Code, a Health
Maintenance Organization may by contract agree with a group or
other enrollment unit to effect refunds or charge additional
premiums under the following terms and conditions:
(i) the amount of, and other terms and conditions with
respect to, the refund or additional premium are set forth
in the group or enrollment unit contract agreed in advance
of the period for which a refund is to be paid or
additional premium is to be charged (which period shall not
be less than one year); and
(ii) the amount of the refund or additional premium
shall not exceed 20% of the Health Maintenance
Organization's profitable or unprofitable experience with
respect to the group or other enrollment unit for the
period (and, for purposes of a refund or additional
premium, the profitable or unprofitable experience shall
be calculated taking into account a pro rata share of the
Health Maintenance Organization's administrative and

marketing expenses, but shall not include any refund to be
made or additional premium to be paid pursuant to this
subsection (f)). The Health Maintenance Organization and
the group or enrollment unit may agree that the profitable
or unprofitable experience may be calculated taking into
account the refund period and the immediately preceding 2
plan years.
The Health Maintenance Organization shall include a
statement in the evidence of coverage issued to each enrollee
describing the possibility of a refund or additional premium,
and upon request of any group or enrollment unit, provide to
the group or enrollment unit a description of the method used
to calculate (1) the Health Maintenance Organization's
profitable experience with respect to the group or enrollment
unit and the resulting refund to the group or enrollment unit
or (2) the Health Maintenance Organization's unprofitable
experience with respect to the group or enrollment unit and the
resulting additional premium to be paid by the group or
enrollment unit.
In no event shall the Illinois Health Maintenance
Organization Guaranty Association be liable to pay any
contractual obligation of an insolvent organization to pay any
refund authorized under this Section.
(g) Rulemaking authority to implement Public Act 95-1045,
if any, is conditioned on the rules being adopted in accordance
with all provisions of the Illinois Administrative Procedure

Act and all rules and procedures of the Joint Committee on
Administrative Rules; any purported rule not so adopted, for
whatever reason, is unauthorized.
(Source: P.A. 99-761, eff. 1-1-18; 100-24, eff. 7-18-17;
100-138, eff. 8-18-17; 100-863, eff. 8-14-18; 100-1026, eff.
8-22-18; 100-1057, eff. 1-1-19; 100-1102, eff. 1-1-19; revised
10-4-18.)
Section 20. The Managed Care Reform and Patient Rights Act
is amended by changing Sections 10 and 30 as follows:
(215 ILCS 134/10)
Sec. 10. Definitions.
"Adverse determination" means a determination by a health
care plan under Section 45 or by a utilization review program
under Section 85 that a health care service is not medically
necessary.
"Clinical peer" means a health care professional who is in
the same profession and the same or similar specialty as the
health care provider who typically manages the medical
condition, procedures, or treatment under review.
"Department" means the Department of Insurance.
"Emergency medical condition" means a medical condition
manifesting itself by acute symptoms of sufficient severity,
regardless of the final diagnosis given, (including, but not
limited to, severe pain) such that a prudent layperson, who

possesses an average knowledge of health and medicine, could
reasonably expect the absence of immediate medical attention to
result in:
(1) placing the health of the individual (or, with
respect to a pregnant woman, the health of the woman or her
unborn child) in serious jeopardy;
(2) serious impairment to bodily functions; or
(3) serious dysfunction of any bodily organ or part; .
(4) inadequately controlled pain; or
(5) with respect to a pregnant woman who is having
contractions:
(A) inadequate time to complete a safe transfer to
another hospital before delivery; or
(B) a transfer to another hospital may pose a
threat to the health or safety of the woman or unborn
child.
"Emergency medical screening examination" means a medical
screening examination and evaluation by a physician licensed to
practice medicine in all its branches, or to the extent
permitted by applicable laws, by other appropriately licensed
personnel under the supervision of or in collaboration with a
physician licensed to practice medicine in all its branches to
determine whether the need for emergency services exists.
"Emergency services" means, with respect to an enrollee of
a health care plan, transportation services, including but not
limited to ambulance services, and covered inpatient and

outpatient hospital services furnished by a provider qualified
to furnish those services that are needed to evaluate or
stabilize an emergency medical condition. "Emergency services"
does not refer to post-stabilization medical services.
"Enrollee" means any person and his or her dependents
enrolled in or covered by a health care plan.
"Health care plan" means a plan, including, but not limited
to, a health maintenance organization, a managed care community
network as defined in the Illinois Public Aid Code, or an
accountable care entity as defined in the Illinois Public Aid
Code that receives capitated payments to cover medical services
from the Department of Healthcare and Family Services, that
establishes, operates, or maintains a network of health care
providers that has entered into an agreement with the plan to
provide health care services to enrollees to whom the plan has
the ultimate obligation to arrange for the provision of or
payment for services through organizational arrangements for
ongoing quality assurance, utilization review programs, or
dispute resolution. Nothing in this definition shall be
construed to mean that an independent practice association or a
physician hospital organization that subcontracts with a
health care plan is, for purposes of that subcontract, a health
care plan.
For purposes of this definition, "health care plan" shall
not include the following:
(1) indemnity health insurance policies including

those using a contracted provider network;
(2) health care plans that offer only dental or only
vision coverage;
(3) preferred provider administrators, as defined in
Section 370g(g) of the Illinois Insurance Code;
(4) employee or employer self-insured health benefit
plans under the federal Employee Retirement Income
Security Act of 1974;
(5) health care provided pursuant to the Workers'
Compensation Act or the Workers' Occupational Diseases
Act; and
(6) not-for-profit voluntary health services plans
with health maintenance organization authority in
existence as of January 1, 1999 that are affiliated with a
union and that only extend coverage to union members and
their dependents.
"Health care professional" means a physician, a registered
professional nurse, or other individual appropriately licensed
or registered to provide health care services.
"Health care provider" means any physician, hospital
facility, facility licensed under the Nursing Home Care Act,
long-term care facility as defined in Section 1-113 of the
Nursing Home Care Act, or other person that is licensed or
otherwise authorized to deliver health care services. Nothing
in this Act shall be construed to define Independent Practice
Associations or Physician-Hospital Organizations as health

care providers.
"Health care services" means any services included in the
furnishing to any individual of medical care, or the
hospitalization incident to the furnishing of such care, as
well as the furnishing to any person of any and all other
services for the purpose of preventing, alleviating, curing, or
healing human illness or injury including home health and
pharmaceutical services and products.
"Medical director" means a physician licensed in any state
to practice medicine in all its branches appointed by a health
care plan.
"Person" means a corporation, association, partnership,
limited liability company, sole proprietorship, or any other
legal entity.
"Physician" means a person licensed under the Medical
Practice Act of 1987.
"Post-stabilization medical services" means health care
services provided to an enrollee that are furnished in a
licensed hospital by a provider that is qualified to furnish
such services, and determined to be medically necessary and
directly related to the emergency medical condition following
stabilization.
"Stabilization" means, with respect to an emergency
medical condition, to provide such medical treatment of the
condition as may be necessary to assure, within reasonable
medical probability, that no material deterioration of the

condition is likely to result.
"Utilization review" means the evaluation of the medical
necessity, appropriateness, and efficiency of the use of health
care services, procedures, and facilities.
"Utilization review program" means a program established
by a person to perform utilization review.
(Source: P.A. 98-651, eff. 6-16-14; 98-841, eff. 8-1-14; 99-78,
eff. 7-20-15.)
(215 ILCS 134/30)
Sec. 30. Prohibitions.
(a) No health care plan or its subcontractors may prohibit
or discourage health care providers by contract or policy from
discussing any health care services and health care providers,
utilization review and quality assurance policies, terms and
conditions of plans and plan policy with enrollees, prospective
enrollees, providers, or the public.
(b) No health care plan by contract, written policy, or
procedure may permit or allow an individual or entity to
dispense a different drug in place of the drug or brand of drug
ordered or prescribed without the express permission of the
person ordering or prescribing the drug, except as provided
under Section 3.14 of the Illinois Food, Drug and Cosmetic Act.
(c) No health care plan or its subcontractors may by
contract, written policy, procedure, or otherwise mandate or
require an enrollee to substitute his or her participating

primary care physician under the plan during inpatient
hospitalization, such as with a hospitalist physician licensed
to practice medicine in all its branches, without the agreement
of that enrollee's participating primary care physician.
"Participating primary care physician" for health care plans
and subcontractors that do not require coordination of care by
a primary care physician means the participating physician
treating the patient. All health care plans shall inform
enrollees of any policies, recommendations, or guidelines
concerning the substitution of the enrollee's primary care
physician when hospitalization is necessary in the manner set
forth in subsections (d) and (e) of Section 15.
(d) A health care plan shall apply any third-party
payments, financial assistance, discount, product vouchers, or
any other reduction in out-of-pocket expenses made by or on
behalf of such insured for prescription drugs toward a covered
individual's deductible, copay, or cost-sharing
responsibility, or out-of-pocket maximum associated with the
individual's health insurance.
(e) (d) Any violation of this Section shall be subject to
the penalties under this Act.
(Source: P.A. 94-866, eff. 6-16-06.)
Section 25. The Pharmacy Practice Act is amended by adding
Section 42 as follows:

(225 ILCS 85/42 new)
Sec. 42. Information disclosure. A pharmacist or her or his
authorized employee must inform customers of a less expensive,
generically equivalent drug product for her or his prescription
and whether the cost-sharing obligation to the customer exceeds
the retail price of the prescription in the absence of
prescription drug coverage.
Section 30. The Illinois Public Aid Code is amended by
adding Section 5-36 as follows:
(305 ILCS 5/5-36 new)
Sec. 5-36. Pharmacy benefits.
(a)(1) The Department may enter into a contract with a
third party on a fee-for-service reimbursement model for the
purpose of administering pharmacy benefits as provided in this
Section for members not enrolled in a Medicaid managed care
organization; however, these services shall be approved by the
Department. The Department shall ensure coordination of care
between the third-party administrator and managed care
organizations as a consideration in any contracts established
in accordance with this Section. Any managed care techniques,
principles, or administration of benefits utilized in
accordance with this subsection shall comply with State law.
(2) The following shall apply to contracts between entities
contracting relating to the Department's third-party

administrators and pharmacies:
(A) the Department shall approve any contract between a
third-party administrator and a pharmacy;
(B) the Department's third-party administrator shall
not change the terms of a contract between a third-party
administrator and a pharmacy without written approval by
the Department; and
(C) the Department's third-party administrator shall
not create, modify, implement, or indirectly establish any
fee on a pharmacy, pharmacist, or a recipient of medical
assistance without written approval by the Department.
(b) The provisions of this Section shall not apply to
outpatient pharmacy services provided by a health care facility
registered as a covered entity pursuant to 42 U.S.C. 256b or
any pharmacy owned by or contracted with the covered entity. A
Medicaid managed care organization shall, either directly or
through a pharmacy benefit manager, administer and reimburse
outpatient pharmacy claims submitted by a health care facility
registered as a covered entity pursuant to 42 U.S.C. 256b, its
owned pharmacies, and contracted pharmacies in accordance with
the contractual agreements the Medicaid managed care
organization or its pharmacy benefit manager has with such
facilities and pharmacies. Any pharmacy benefit manager that
contracts with a Medicaid managed care organization to
administer and reimburse pharmacy claims as provided in this
Section must be registered with the Director of Insurance in

accordance with Section 513b2 of the Illinois Insurance Code.
(c) On at least an annual basis, the Director of the
Department of Healthcare and Family Services shall submit a
report beginning no later than one year after the effective
date of this amendatory Act of the 101st General Assembly that
provides an update on any contract, contract issues, formulary,
dispensing fees, and maximum allowable cost concerns regarding
a third-party administrator and managed care. The requirement
for reporting to the General Assembly shall be satisfied by
filing copies of the report with the Speaker, the Minority
Leader, and the Clerk of the House of Representatives and with
the President, the Minority leader, and the Secretary of the
Senate. The Department shall take care that no proprietary
information is included in the report required under this
Section.
(d) A pharmacy benefit manager shall notify the Department
in writing of any activity, policy, or practice of the pharmacy
benefit manager that directly or indirectly presents a conflict
of interest that interferes with the discharge of the pharmacy
benefit manager's duty to a managed care organization to
exercise its contractual duties. "Conflict of interest" shall
be defined by rule by the Department.
(e) A pharmacy benefit manager shall, upon request,
disclose to the Department the following information:
(1) whether the pharmacy benefit manager has a
contract, agreement, or other arrangement with a

pharmaceutical manufacturer to exclusively dispense or
provide a drug to a managed care organization's enrollees,
and the aggregate amounts of consideration of economic
benefits collected or received pursuant to that
arrangement;
(2) the percentage of claims payments made by the
pharmacy benefit manager to pharmacies owned, managed, or
controlled by the pharmacy benefit manager or any of the
pharmacy benefit manager's management companies, parent
companies, subsidiary companies, or jointly held
companies;
(3) the aggregate amount of the fees or assessments
imposed on, or collected from, pharmacy providers; and
(4) the average annualized percentage of revenue
collected by the pharmacy benefit manager as a result of
each contract it has executed with a managed care
organization contracted by the Department to provide
medical assistance benefits which is not paid by the
pharmacy benefit manager to pharmacy providers and
pharmaceutical manufacturers or labelers or in order to
perform administrative functions pursuant to its contracts
with managed care organizations.
(f) The information disclosed under subsection (e) shall
include all retail, mail order, specialty, and compounded
prescription products. All information made available to the
Department under subsection (e) is confidential and not subject

to disclosure under the Freedom of Information Act. All
information made available to the Department under subsection
(e) shall not be reported or distributed in any way that
compromises its competitive, proprietary, or financial value.
The information shall only be used by the Department to assess
the contract, agreement, or other arrangements made between a
pharmacy benefit manager and a pharmacy provider,
pharmaceutical manufacturer or labeler, managed care
organization, or other entity, as applicable.
(g) A pharmacy benefit manager shall disclose directly in
writing to a pharmacy provider or pharmacy services
administrative organization contracting with the pharmacy
benefit manager of any material change to a contract provision
that affects the terms of the reimbursement, the process for
verifying benefits and eligibility, dispute resolution,
procedures for verifying drugs included on the formulary, and
contract termination at least 30 days prior to the date of the
change to the provision. The terms of this subsection shall be
deemed met if the pharmacy benefit manager posts the
information on a website, viewable by the public. A pharmacy
service administration organization shall notify all contract
pharmacies of any material change, as described in this
subsection, within 2 days of notification. As used in this
Section, "pharmacy services administrative organization" means
an entity operating within the State that contracts with
independent pharmacies to conduct business on their behalf with

third-party payers. A pharmacy services administrative
organization may provide administrative services to pharmacies
and negotiate and enter into contracts with third-party payers
or pharmacy benefit managers on behalf of pharmacies.
(h) A pharmacy benefit manager shall not include the
following in a contract with a pharmacy provider:
(1) a provision prohibiting the provider from
informing a patient of a less costly alternative to a
prescribed medication; or
(2) a provision that prohibits the provider from
dispensing a particular amount of a prescribed medication,
if the pharmacy benefit manager allows that amount to be
dispensed through a pharmacy owned or controlled by the
pharmacy benefit manager, unless the prescription drug is
subject to restricted distribution by the United States
Food and Drug Administration or requires special handling,
provider coordination, or patient education that cannot be
provided by a retail pharmacy.
(i) Nothing in this Section shall be construed to prohibit
a pharmacy benefit manager from requiring the same
reimbursement and terms and conditions for a pharmacy provider
as for a pharmacy owned, controlled, or otherwise associated
with the pharmacy benefit manager.
(j) A pharmacy benefit manager shall establish and
implement a process for the resolution of disputes arising out
of this Section, which shall be approved by the Department.

(k) The Department shall adopt rules establishing
reasonable dispensing fees for fee-for-service payments in
accordance with guidance or guidelines from the federal Centers
for Medicare and Medicaid Services.