Bill Text: TX HB2618 | 2015-2016 | 84th Legislature | Introduced
Bill Title: Relating to the regulation of third-party administrators, including pharmacy benefit managers; expanding the requirement of a certificate of authority to engage in an occupation; adding provisions subject to a criminal penalty.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2015-04-15 - Left pending in committee [HB2618 Detail]
Download: Texas-2015-HB2618-Introduced.html
84R9165 PMO-F | ||
By: Muñoz, Jr. | H.B. No. 2618 |
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relating to the regulation of third-party administrators, | ||
including pharmacy benefit managers; expanding the requirement of a | ||
certificate of authority to engage in an occupation; adding | ||
provisions subject to a criminal penalty. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 4151.001, Insurance Code, is amended by | ||
amending Subdivisions (1), (2), and (4) and adding Subdivisions | ||
(3-a) and (5-a) to read as follows: | ||
(1) "Administrator" means a person who, in connection | ||
with annuities or life benefits, health benefits, accident | ||
benefits, pharmacy benefits, or workers' compensation benefits, | ||
collects premiums or contributions from or adjusts or settles | ||
claims for residents of this state. Except as provided by Section | ||
4151.0023, the [ |
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1272 and a workers' compensation health care network authorized | ||
under Chapter 1305 that administers a workers' compensation claim | ||
for an insurer, including an insurer that establishes or contracts | ||
with the network to provide health care services. Except as | ||
provided by Section 4151.0023, the [ |
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person described by Section 4151.002. | ||
(2) "Insurer" means a person who engages in the | ||
business of life, health, accident, or workers' compensation | ||
insurance under the law of this state. For purposes of this chapter | ||
only, the term also includes: | ||
(A) an "insurance carrier," as defined by Section | ||
401.011(27), Labor Code, other than a governmental entity or a | ||
workers' compensation self-insurance group subject to regulation | ||
under Chapter 407A, Labor Code; and | ||
(B) an entity for whom a pharmacy benefit manager | ||
acts as described by Section 4151.0023. | ||
(3-a) "Pharmacy benefit management" means | ||
administration or management of prescription drug benefits | ||
provided by an insurer, including: | ||
(A) retail pharmacy network management; | ||
(B) pharmacy discount card management; | ||
(C) claims payment to a retail pharmacy for | ||
prescription medications dispensed to plan participants; | ||
(D) clinical formulary development and | ||
management services, including utilization management and quality | ||
assurance programs; | ||
(E) rebate contracting and administration; | ||
(F) auditing contracted pharmacies; | ||
(G) establishing pharmacy reimbursement pricing | ||
and methodologies; and | ||
(H) determining single- and multiple-source | ||
medications. | ||
(4) "Plan" means a plan, fund, or program established, | ||
adopted, or maintained by a plan sponsor or insurer to the extent | ||
that the plan, fund, or program is established, adopted, or | ||
maintained to provide indemnification, [ |
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or payment for any type of life, health, or accident benefit. | ||
(5-a) "Retail pharmacy" means a pharmacy licensed | ||
under Chapter 560, Occupations Code, that dispenses medications to | ||
the public, including an independent pharmacy, a chain pharmacy, a | ||
supermarket pharmacy, or a mass merchandiser pharmacy. The term | ||
does not include a pharmacy that dispenses prescription medications | ||
primarily through the mail, a nursing home pharmacy, a long-term | ||
care facility pharmacy, a hospital pharmacy, a clinic pharmacy, a | ||
charitable or nonprofit pharmacy, a government pharmacy, or a | ||
pharmacy benefit manager that is serving in its capacity as a | ||
pharmacy benefit manager. | ||
SECTION 2. Section 4151.002, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 4151.002. EXEMPTIONS. Except as provided by Section | ||
4151.0023, a [ |
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(1) an employer, other than a certified workers' | ||
compensation self-insurer, administering an employee benefit plan | ||
or the plan of an affiliated employer under common management and | ||
control; | ||
(2) a union administering a benefit plan on behalf of | ||
its members; | ||
(3) an insurer or a group hospital service corporation | ||
subject to Chapter 842 acting with respect to a policy lawfully | ||
issued and delivered by the insurer or corporation in and under the | ||
law of a state in which the insurer or corporation was authorized to | ||
engage in the business of insurance; | ||
(4) a health maintenance organization that is | ||
authorized to operate in this state under Chapter 843 with respect | ||
to any activity that is specifically regulated under that chapter, | ||
Chapter 1271, 1272, or 1367, Subchapter A, Chapter 1452, or | ||
Subchapter B, Chapter 1507; | ||
(5) an agent licensed under Subchapter B, Chapter | ||
4051, Subchapter B, Chapter 4053, or Subchapter B, Chapter 4054, | ||
who receives commissions as an agent and is acting: | ||
(A) under appointment on behalf of an insurer | ||
authorized to engage in the business of insurance in this state; and | ||
(B) in the customary scope and duties of the | ||
person's authority as an agent; | ||
(6) a creditor acting on behalf of its debtor with | ||
respect to insurance that covers a debt between the creditor and its | ||
debtor, if the creditor performs only the functions of a group | ||
policyholder or a creditor; | ||
(7) a trust established in conformity with 29 U.S.C. | ||
Section 186 or a trustee or employee who is acting under the trust; | ||
(8) a trust that is exempt from taxation under Section | ||
501(a), Internal Revenue Code of 1986, or a trustee or employee | ||
acting under the trust; | ||
(9) a custodian or a custodian's agent or employee who | ||
is acting under a custodian account that complies with Section | ||
401(f), Internal Revenue Code of 1986; | ||
(10) a bank, credit union, savings and loan | ||
association, or other financial institution that is subject to | ||
supervision or examination under federal or state law by a federal | ||
or state regulatory authority, if the institution is performing | ||
only those functions for which the institution holds a license | ||
under federal or state law; | ||
(11) a company that advances and collects a premium or | ||
charge from its credit card holders on their authorization, if the | ||
company does not adjust or settle claims and acts only in the | ||
company's debtor-creditor relationship with its credit card | ||
holders; | ||
(12) a person who adjusts or settles claims in the | ||
normal course of the person's practice or employment as a licensed | ||
attorney and who does not collect any premium or charge in | ||
connection with annuities or with life, health, accident, pharmacy, | ||
or workers' compensation benefits; | ||
(13) an adjuster licensed under Subtitle C by the | ||
department who is engaged in the performance of the individual's | ||
powers and duties as an adjuster in the scope of the individual's | ||
license; | ||
(14) a person who provides technical, advisory, | ||
utilization review, precertification, or consulting services to an | ||
insurer, plan, or plan sponsor but does not make any management or | ||
discretionary decisions on behalf of the insurer, plan, or plan | ||
sponsor; | ||
(15) an attorney in fact for a Lloyd's plan operating | ||
under Chapter 941 or for a reciprocal or interinsurance exchange | ||
operating under Chapter 942 who is acting in the capacity of | ||
attorney in fact under the applicable chapter; | ||
(16) a joint fund, risk management pool, or | ||
self-insurance pool composed of political subdivisions of this | ||
state that participate in a fund or pool through interlocal | ||
agreements, any nonprofit administrative agency or governing body | ||
or other nonprofit entity that acts solely on behalf of a fund, | ||
pool, agency, or body, or any other fund, pool, agency, or body | ||
established under or for the purpose of implementing an interlocal | ||
governmental agreement; | ||
(17) a self-insured political subdivision; | ||
(18) a plan under which insurance benefits are | ||
provided exclusively by an insurer authorized to engage in the | ||
business of insurance in this state and the administrator of which | ||
is: | ||
(A) a full-time employee of the plan's organizing | ||
or sponsoring association, trust, or other entity; or | ||
(B) a trustee of the organizing or sponsoring | ||
trust; | ||
(19) a parent of a wholly owned direct or indirect | ||
subsidiary insurer authorized to engage in the business of | ||
insurance in this state or a wholly owned direct or indirect | ||
subsidiary insurer that is a part of the parent's holding company | ||
system that, under an agreement regulated and approved under | ||
Chapter 823 or a similar statute of the domiciliary state if the | ||
parent or subsidiary insurer is a foreign insurer engaged in | ||
business in this state, on behalf of only itself or an affiliated | ||
insurer: | ||
(A) collects premiums or contributions, if the | ||
parent or subsidiary insurer: | ||
(i) prepares only billing statements and | ||
places those statements in the United States mail; and | ||
(ii) causes all collected premiums to be | ||
deposited directly in a depository account of the particular | ||
affiliated insurer; or | ||
(B) furnishes proof-of-loss forms, reviews | ||
claims, determines the amount of the liability for those claims, | ||
and negotiates settlements, if the parent or subsidiary insurer | ||
pays claims only from the funds of the particular subsidiary by | ||
checks or drafts of that subsidiary; or | ||
(20) an affiliate, as described by Section [ |
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823.003, of a self-insurer certified under Chapter 407, Labor Code, | ||
and who: | ||
(A) is performing the acts of an administrator on | ||
behalf of that certified self-insurer; and | ||
(B) directly or indirectly through one or more | ||
intermediaries, controls, is controlled by, or is under common | ||
control with that certified self-insurer, as the term "control" is | ||
described by Section 823.005. | ||
SECTION 3. Subchapter A, Chapter 4151, Insurance Code, is | ||
amended by adding Section 4151.0023 to read as follows: | ||
Sec. 4151.0023. CHAPTER APPLICABILITY TO PHARMACY BENEFIT | ||
MANAGERS; EXCEPTIONS. (a) Notwithstanding any other law, this | ||
chapter applies to a person, other than a pharmacist or pharmacy, | ||
who collects premium or contributions from or adjusts or settles | ||
claims for residents of this state with respect to pharmacy | ||
benefits provided by an entity that issues or provides a plan that | ||
provides benefits for medical or surgical expenses incurred as a | ||
result of a health condition, accident, or sickness, including an | ||
individual, group, blanket, or franchise insurance policy or | ||
insurance agreement, a group hospital service contract, or an | ||
individual or group evidence of coverage or similar coverage | ||
document that is offered by: | ||
(1) an insurance company; | ||
(2) a group hospital service corporation operating | ||
under Chapter 842; | ||
(3) a fraternal benefit society operating under | ||
Chapter 885; | ||
(4) a stipulated premium company operating under | ||
Chapter 884; | ||
(5) an exchange operating under Chapter 942; | ||
(6) a health maintenance organization operating under | ||
Chapter 843; | ||
(7) a multiple employer welfare arrangement that holds | ||
a certificate of authority under Chapter 846; or | ||
(8) an approved nonprofit health corporation that | ||
holds a certificate of authority under Chapter 844. | ||
(b) This chapter applies to a pharmacy benefit manager that | ||
provides pharmacy benefit management with respect to pharmacy | ||
benefits provided by the provider or issuer of a plan of group | ||
health coverage made available by a school district in accordance | ||
with Section 22.004, Education Code. | ||
(c) Notwithstanding Section 172.014, Local Government Code, | ||
or any other law, this chapter applies to a pharmacy benefit manager | ||
that provides pharmacy benefit management with respect to pharmacy | ||
benefits provided by a risk pool created under Chapter 172, Local | ||
Government Code, that provides health and accident coverage. | ||
(d) Notwithstanding any provision in Chapter 1551, 1575, | ||
1579, or 1601 or any other law, this chapter applies to a pharmacy | ||
benefit manager that provides pharmacy benefit management with | ||
respect to pharmacy benefits provided by the provider or issuer of: | ||
(1) a basic coverage plan under Chapter 1551; | ||
(2) a basic plan under Chapter 1575; | ||
(3) a primary care coverage plan under Chapter 1579; | ||
and | ||
(4) a plan that provides basic coverage under Chapter | ||
1601. | ||
(e) Notwithstanding Section 1501.251 or any other law, this | ||
chapter applies to a pharmacy benefit manager that provides | ||
pharmacy benefit management with respect to pharmacy benefits | ||
provided by the issuer of coverage under a small employer health | ||
benefit plan subject to Chapter 1501. | ||
(f) To the extent allowed by federal law, this chapter | ||
applies to a pharmacy benefit manager that provides pharmacy | ||
benefit management with respect to pharmacy benefits provided by | ||
the state Medicaid program, except that this chapter does not apply | ||
to a managed care organization subject to Section 533.005, | ||
Government Code. | ||
(g) This chapter does not apply to a pharmacy benefit | ||
manager with respect to pharmacy benefits provided by: | ||
(1) a plan that provides coverage: | ||
(A) for wages or payments in lieu of wages for a | ||
period during which an employee is absent from work because of | ||
sickness or injury; | ||
(B) as a supplement to a liability insurance | ||
policy; | ||
(C) for credit insurance; | ||
(D) only for dental or vision care; | ||
(E) only for hospital expenses; or | ||
(F) only for indemnity for hospital confinement; | ||
(2) a Medicare supplemental policy as defined by | ||
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss); | ||
(3) a workers' compensation insurance policy or any | ||
other plan or arrangement that provides workers' compensation | ||
benefits; | ||
(4) medical payment insurance coverage provided under | ||
a motor vehicle insurance policy; or | ||
(5) a long-term care policy, including a nursing home | ||
fixed indemnity policy, unless the commissioner determines that the | ||
policy provides benefit coverage so comprehensive that the policy | ||
is a health benefit plan as described by Subsections (a)-(f). | ||
(h) Notwithstanding any other law, a person described by | ||
Subsections (a)-(g) is an administrator subject to this chapter and | ||
must obtain a certificate of authority under Subchapter B. | ||
SECTION 4. The heading to Subchapter D, Chapter 4151, | ||
Insurance Code, is amended to read as follows: | ||
SUBCHAPTER D. PHARMACY BENEFITS [ |
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SECTION 5. Subchapter D, Chapter 4151, Insurance Code, is | ||
amended by amending Section 4151.151 and adding Sections 4151.154, | ||
4151.155, 4151.156, 4151.157, 4151.158, and 4151.159 to read as | ||
follows: | ||
Sec. 4151.151. DEFINITION. In this subchapter, "pharmacy | ||
benefit manager" means a person, other than a pharmacy or | ||
pharmacist, who acts as an administrator who provides pharmacy | ||
benefit management in connection with pharmacy benefits. | ||
Sec. 4151.154. AMENDMENT OF CONTRACT TERM. A pharmacy | ||
benefit manager may not change a term of a contract with a retail | ||
pharmacy, including automatically enrolling or disenrolling the | ||
pharmacy from a pharmacy benefit network, without prior written | ||
agreement of the retail pharmacy. | ||
Sec. 4151.155. CERTAIN TRANSACTION FEES PROHIBITED. A | ||
pharmacy benefit manager may not charge a transaction fee for a | ||
claim submitted electronically to the pharmacy benefit manager by a | ||
retail pharmacy. | ||
Sec. 4151.156. PHARMACY NETWORK REQUIREMENTS AND | ||
PROHIBITIONS. (a) A pharmacy benefit manager may not require that | ||
a retail pharmacy be a member of a network managed by the pharmacy | ||
benefit manager as a condition for the retail pharmacy to | ||
participate in another network managed by the pharmacy benefit | ||
manager. | ||
(b) A pharmacy benefit manager may not exclude a retail | ||
pharmacy from participation in a network if the 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 excluded from participation as a | ||
provider in any federal or state program. | ||
(c) A pharmacy benefit manager shall establish a pharmacy | ||
network that includes sufficient retail pharmacies to ensure that: | ||
(1) in urban areas, not less than 90 percent of plan | ||
participants, on average, live not more than two miles from a | ||
network retail pharmacy; | ||
(2) in suburban areas, not less than 90 percent of plan | ||
participants, on average, live not more than five miles from a | ||
network retail pharmacy; and | ||
(3) in rural areas, not less than 70 percent of plan | ||
participants, on average, live not more than 15 miles from a network | ||
retail pharmacy. | ||
Sec. 4151.157. RELATIONSHIP WITH PLAN PARTICIPANTS. A | ||
pharmacy benefit manager may not: | ||
(1) require that a plan participant use a retail | ||
pharmacy, mail order pharmacy, specialty pharmacy, or other entity | ||
providing pharmacy services: | ||
(A) in which the pharmacy benefit manager has an | ||
ownership interest; or | ||
(B) that has an ownership interest in the | ||
pharmacy benefit manager; or | ||
(2) provide an incentive to a plan participant to | ||
encourage the plan participant to use a retail pharmacy, mail order | ||
pharmacy, specialty pharmacy, or other entity providing pharmacy | ||
services: | ||
(A) in which the pharmacy benefit manager has an | ||
ownership interest; or | ||
(B) that has an ownership interest in the | ||
pharmacy benefit manager. | ||
Sec. 4151.158. SALE, RENTAL, OR LEASING OF CLAIMS DATA. (a) | ||
Not later than the 30th day before the date a pharmacy benefit | ||
manager intends to sell, rent, or lease an insurer's claims data, | ||
the pharmacy benefit manager shall disclose in writing to the | ||
insurer that the pharmacy benefit manager intends to sell, rent, or | ||
lease the claims data. The written disclosure must identify the | ||
potential purchaser and the expected use of the data. | ||
(b) A pharmacy benefit manager may not sell, rent, or lease | ||
claims data without the written approval of the insurer. | ||
(c) A pharmacy benefit manager must allow each plan | ||
participant to refuse the sale, rent, or lease of that plan | ||
participant's claims data. | ||
Sec. 4151.159. TRANSMISSION OF CLAIMS DATA AND CERTAIN | ||
OTHER INFORMATION PROHIBITED. A pharmacy benefit manager may not | ||
transmit a plan participant's personally identifiable utilization | ||
or claims data to a pharmacy owned by the pharmacy benefit manager | ||
unless before each transmission the plan participant consents in | ||
writing to the transmission. | ||
SECTION 6. The change in law made by this Act applies only | ||
to a contract between a pharmacy benefit manager and a retail | ||
pharmacy entered into or renewed on or after January 1, 2016. A | ||
contract entered into or renewed before January 1, 2016, 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 7. Unless required to register as an administrator | ||
under Chapter 4151, Insurance Code, before the effective date of | ||
this Act, an entity acting as, or holding itself out as, a pharmacy | ||
benefit manager for purposes of that chapter as amended by this Act | ||
is not required to hold a certificate of authority under that | ||
chapter before January 1, 2016. | ||
SECTION 8. This Act takes effect September 1, 2015. |