HBA-TYH C.S.H.B. 2529 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2529
By: Van de Putte
Insurance
4/16/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Pharmacy benefit managers are the third party intermediates between the
payee and the payor.  They are traditionally persons who collect premiums
or contributions, or who adjust or settle claims, in connection with life,
health, and accident benefits or annuities for residents of this state.
Currently pharmacy benefit managers are not considered to be third party
administrators.   

Virtually all health maintenance organizations issue pharmacy benefit cards
to their enrollees who are covered to receive prescription benefits.  The
information included on these cards is used by each pharmacy to determine
the specific benefits of the health plan and to process the payment claim.
Before filling a patient's prescription, the pharmacist must make computer
contact with the health maintenance organization (HMO) to determine
specific information regarding insurance coverage. The communication
between the pharmacist and the HMO takes place through telephone switching
services (similar to those used in the ATM machines).  The pharmacist needs
specific information regarding the patient or the patient's insurance
account in order to communicate with the HMO.  If there is a problem with
the initial claim inquiry, a pharmacist may spend five minutes to three
days working out what should be routine claims with HMOs.  Additionally,
the pharmacist must pay the switching companies a fee every time a claim is
sent regardless of whether the HMO accepts or processes the claim. 

C.S.H.B. 2529 includes pharmacy benefit managers in the third party
administrators section of the Insurance Code and requires information that
is necessary to assist in the processing of claims with HMOs to be placed
on a pharmacy benefit card.  This bill also sets the terms for the issuance
of a pharmacy benefit card by health benefit plans and specifies the
required contents of a pharmacy benefit card. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commissioner of insurance in
SECTION 2 (Section 19A, Article 21.07-6, Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 1(1), Article 21.07-6, Insurance Code, to define
an "administrator" as a person who collects premiums or contributions from
or who adjusts or settles claims in connection with life, health, and
accident benefits, including pharmacy benefits.  Makes a conforming change. 

SECTION 2.  Amends Article 21.07-6, Insurance Code, by adding Section 19A,
as follows: 

Sec. 19A.  IDENTIFICATION CARDS FOR CERTAIN PLANS.  Requires an
administrator for a plan that provides pharmacy benefits to issue an
identification card (card) to each individual covered by the plan who is at
least 17 years of age within 30 days of the date the administrator receives
notice of the individual's eligibility for the benefits.  Requires the
commissioner of insurance by rule to adopt standard information to be
included in the card. Provides that at minimum, the standard form card must
include specific information identifying the entity offering the health
benefit plan, the enrollee, the length of coverage,  and a phone number for
further reference. 

SECTION 3.  Amends Subchapter E, Chapter 21, Insurance Code, by adding
Article 21.53L, as follows: 

Art. 21.53L.  PHARMACY BENEFIT CARDS

Sec. 1.  DEFINITION.  Defines "health benefit plan."

Sec. 2.  SCOPE OF ARTICLE.  Sets forth the scope of this article,
specifying the plans that are applicable and the plans that are not
applicable. 

Sec. 3.  IDENTIFICATION CARD; PHARMACY BENEFITS.  Requires a health benefit
plan that provides pharmacy benefits for enrollees to include on the card
of each enrollee specific information identifying the entity offering the
health benefit plan, the enrollee, the length of coverage, and a phone
number for further reference.  Provides that this section does not require
such a health benefit plan to issue a card separate from any identification
card issued to evidence coverage under the health benefit plan, if the card
contains the information required by this section. 

SECTION 4.  Effective date: September 1, 1999.

SECTION 5.(a)  Makes application of this Act prospective for an
administrator, as of January 1, 2000. 

(b)  Provides that an administrator, as the term is defined by this Act, is
not required to issue a new card to an individual, as required by this Act,
if the card held by the individual on the effective date of this Act
contains the elements described by this Act.  Provides that a new card
complying with this Act, must be issued at the time the individual's
coverage is modified. 

(c)  Provides that a health benefit plan, as that term is defined by this
Act, is not required to issue a new card to an enrollee, as required by
this Act, if the card held by the enrollee on the effective date of this
Act contains the elements described by this Act.  Provides that a new card
complying with this Act, must be issued at the time the enrollee's coverage
is modified. 

SECTION 6.  Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute modifies the original bill in SECTION 2 by deleting
references made to "the insurer or plan" and replacing it with "the entity
that is administering the pharmacy benefits." 

The substitute modifies the original bill in SECTION 2 (proposed Section
19A(a)) by specifying that the identification card is issued to each
individual who is covered by the plan and who is at least 17 year of age.   

The substitute modifies the original bill in SECTION 2 (proposed Section
19A(b)) by requiring the commissioner, by rule, to adopt standard
information to be included on the card, rather than a standard form for the
card.  The substitute modifies the original bill in SECTION 2 (proposed
Section 19A(b)(2)) by deleting the requirement for the card to include the
bank identification number of the insurer or plan, and replacing it with
the requirement for the card to include the International Identification
Number that is assigned by the American National Standards Institute for
the entity that is administering the pharmacy benefits, in addition to
other enumerated information proposed by the original bill.   

The substitute modifies the original bill in SECTION 2 by adding Subsection
(c) to the proposed Section 19A, setting a 30 day time limit for an
administrator to issue a card to an eligible individual  after the
administrator receives notice of the individual's eligibility. 

The substitute modifies the original bill in SECTION 3 by deleting the
original text, which proposed to amend Section 24, Article 21.07-6,
Insurance Code, by giving it a new title, "APPLICATION TO CERTAIN INSURERS
AND HEALTH MAINTENANCE ORGANIZATIONS; APPLICATION TO PHARMACY BENEFIT
MANAGEMENT," and requiring an insurer or health maintenance organization,
and any subsidiary, division, affiliate, or agent of the insurer or health
maintenance organization, that acts as an administrator with respect to
pharmacy benefits to comply with this article.  The original text also
provides that the exemptions granted to an insurer or health maintenance
organization under Section 1 (Definitions) of this article (Third Party
Administrators) do not apply to the extent the insurer or health
maintenance organization, or any subsidiary, division, affiliate, or agent
of the insurer or health maintenance organization, acts as an administrator
with respect to pharmacy benefits. 

The substitute modifies the original bill by adding a new SECTION 3,
amending Subchapter E, Chapter 21, Insurance Code by adding Article 21.53L
(Pharmacy Benefit Cards), which sets terms for the issuance of a pharmacy
benefit card by health benefit plans and specifies the required contents of
a pharmacy benefit card. 

The substitute modifies the original bill in Subsection (b) of SECTION 5 by
providing that an administrator, as the term is defined by this Act, is not
required to issue a new card to an individual, as required by this Act, if
the card held by the individual on the effective date of this Act contains
the elements described by this Act, and providing that a new card complying
with this Act, must be issued at the time the individual's coverage is
modified.  The original bill provides that an administrator is not required
to provide an identification card to an individual, as required by this
Act, before January 1, 2000.  The substitute does not provide for such a
deadline. 

The substitute modifies the original bill in SECTION 5 by adding a new
Subsection (c), as follows: 

(c)  Provides that a health benefit plan, as that term is defined by this
Act, is not required to issue a new card to an enrollee, as required  by
the enrollee on the effective date of this Act contains the elements
described this Act.  Provides that a new card complying with this Act, must
be issued at the time the enrollee's coverage is modified.