HBA-TYH H.B. 2529 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2529 By: Van de Putte Insurance 3/24/1999 Introduced 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. 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 requires the HMO or insurer which administers the pharmacy benefit internally to adhere to this article. 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 to each individual covered by the plan. Requires the commissioner of insurance by rule to adopt a standard form for the identification card. Provides that at minimum, the standard form identification card must include the enumerated information. SECTION 3. Amends Section 24, Article 21.07-6, Insurance Code, as follows: Sec. 24. New Title: APPLICATION TO CERTAIN INSURERS AND HEALTH MAINTENANCE ORGANIZATIONS; APPLICATION TO PHARMACY BENEFIT MANAGEMENT. (a) Created from existing text. (b) Requires 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. Provides that the exemptions granted to an insurer or health maintenance organization under Section 1(1)(C) or (D) of this article 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. SECTION 4. Effective date: September 1, 1999. SECTION 5. (a) Makes application of this Act prospective, as of January 1, 2000. (b) Provides that an administrator is not required to provide an identification card to an individual, as required by Section 19A, Article 21.07-6, Insurance Code, as added by this Act, before January 1, 2000. SECTION 6. Emergency clause.