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.