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.