1-1     By:  Farabee, Maxey, Edwards (Senate Sponsor - Madla) H.B. No. 2495
 1-2           (In the Senate - Received from the House May 11, 1999;
 1-3     May 12, 1999, read first time and referred to Committee on Economic
 1-4     Development; May 14, 1999, reported favorably by the following
 1-5     vote:  Yeas 5, Nays 0; May 14, 1999, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to the use of a prescription drug formulary by a group
 1-9     health benefit plan.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1.  Subchapter E, Chapter 21, Insurance Code, is
1-12     amended by adding Article 21.52J to read as follows:
1-13           Art. 21.52J.  USE OF PRESCRIPTION DRUG FORMULARY BY GROUP
1-14     HEALTH BENEFIT PLAN
1-15           Sec. 1.  DEFINITIONS.  In this article:
1-16                 (1)  "Drug formulary" means a list of drugs for which a
1-17     health benefit plan provides coverage, approves payment, or
1-18     encourages or offers incentives for physicians to prescribe.
1-19                 (2)  "Enrollee" means an individual who is covered
1-20     under a group health benefit plan, including a covered dependent.
1-21                 (3)  "Group health benefit plan" means a plan described
1-22     by Section 2 of this article.
1-23                 (4)  "Physician" means a person licensed as a physician
1-24     by the Texas State Board of Medical Examiners.
1-25                 (5)  "Prescription drug" has the meaning assigned by
1-26     Section 5, Texas Pharmacy Act (Article 4542a-1, Vernon's Texas
1-27     Civil Statutes).
1-28           Sec. 2.  SCOPE OF ARTICLE.  (a)  This article applies only to
1-29     a group health benefit plan that provides benefits for medical or
1-30     surgical expenses incurred as a result of a health condition,
1-31     accident, or sickness, including a group, blanket, or franchise
1-32     insurance policy or insurance agreement, a group hospital service
1-33     contract, or a group contract or similar coverage document that is
1-34     offered by:
1-35                 (1)  an insurance company;
1-36                 (2)  a group hospital service corporation operating
1-37     under Chapter 20 of this code;
1-38                 (3)  a fraternal benefit society operating under
1-39     Chapter 10 of this code;
1-40                 (4)  a stipulated premium insurance company operating
1-41     under Chapter 22 of this code;
1-42                 (5)  a reciprocal exchange operating under Chapter 19
1-43     of this code;
1-44                 (6)  a health maintenance organization operating under
1-45     the Texas Health Maintenance Organization Act (Chapter 20A,
1-46     Vernon's Texas Insurance Code);
1-47                 (7)  a multiple employer welfare arrangement that holds
1-48     a certificate of authority under Article 3.95-2 of this code; or
1-49                 (8)  an approved nonprofit health corporation  that
1-50     holds a certificate of authority issued by the commissioner under
1-51     Article 21.52F of this code.
1-52           (b)  This article does not apply to:
1-53                 (1)  a plan that provides coverage:
1-54                       (A)  only for a specified disease or other single
1-55     benefit;
1-56                       (B)  only for accidental death or dismemberment;
1-57                       (C)  for wages or payments in lieu of wages for a
1-58     period during which an employee is absent from work because of
1-59     sickness or injury;
1-60                       (D)  as a supplement to liability insurance;
1-61                       (E)  for credit insurance;
1-62                       (F)  only for dental or vision care;
1-63                       (G)  only for hospital expenses; or
1-64                       (H)  only for indemnity for hospital confinement;
 2-1                 (2)  a small employer health benefit plan written under
 2-2     Chapter 26 of this code;
 2-3                 (3)  a Medicare supplemental policy as defined by
 2-4     Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
 2-5     as amended;
 2-6                 (4)  workers' compensation insurance coverage;
 2-7                 (5)  medical payment insurance coverage issued as part
 2-8     of a motor vehicle insurance policy; or
 2-9                 (6)  a long-term care policy, including a nursing home
2-10     fixed indemnity policy, unless the commissioner determines that the
2-11     policy provides benefit coverage so comprehensive that the policy
2-12     is a health benefit plan as described by Subsection (a) of this
2-13     section.
2-14           Sec. 3.  DISCLOSURE OF DRUG FORMULARY REQUIRED.  A group
2-15     health benefit plan that covers prescription drugs and that uses
2-16     one or more drug formularies to specify which prescription drugs
2-17     the plan will cover shall:
2-18                 (1)  provide to each enrollee in plain language in the
2-19     coverage documentation provided to the enrollee:
2-20                       (A)  notice that the plan uses one or more drug
2-21     formularies;
2-22                       (B)  an explanation of what a drug formulary is;
2-23                       (C)  a statement regarding the method the plan
2-24     uses to determine which prescription drugs are included in or
2-25     excluded from a drug formulary;
2-26                       (D)  a statement of how often the plan reviews
2-27     the contents of each drug formulary; and
2-28                       (E)  notice that the enrollee may contact the
2-29     plan to find out if a specific drug is on a particular drug
2-30     formulary;
2-31                 (2)  disclose to any individual on request, not later
2-32     than the third business day after the date of the request, whether
2-33     a specific drug is on a particular drug formulary; and
2-34                 (3)  notify an enrollee or any other individual who
2-35     requests information about a drug formulary under this section that
2-36     the presence of a drug on a drug formulary does not guarantee that
2-37     an enrollee's health care provider will prescribe that drug for a
2-38     particular medical condition or mental illness.
2-39           Sec. 4.  CHANGES TO PRESCRIPTION DRUG FORMULARY; CONTINUATION
2-40     OF BENEFITS REQUIRED.  (a)  A group health benefit plan that offers
2-41     prescription drug benefits shall make a prescription drug that was
2-42     approved or covered for a medical condition or mental illness
2-43     available to each enrollee at the contracted benefit level until
2-44     the enrollee's plan renewal date, regardless of whether the
2-45     prescribed drug has been removed from the health benefit plan's
2-46     drug formulary.
2-47           (b)  This section does not preclude a physician or other
2-48     health professional authorized to prescribe a drug from prescribing
2-49     another drug covered by the group health benefit plan that is
2-50     medically appropriate for the enrollee.
2-51           Sec. 5.  NONFORMULARY PRESCRIPTION DRUGS; ADVERSE
2-52     DETERMINATION.  If a group health benefit plan, through any of its
2-53     employees or agents, refuses to provide benefits to an enrollee for
2-54     a drug that is not included in a drug formulary and that the
2-55     enrollee's physician has determined is medically necessary, the
2-56     refusal constitutes an adverse determination for purposes of
2-57     Section 2, Article 21.58A, of this code.  An enrollee may appeal
2-58     the adverse determination under Sections 6 and 6A, Article 21.58A,
2-59     of this code.
2-60           Sec. 6.  RULES.  The commissioner may adopt rules to
2-61     implement this article.
2-62           SECTION 2.  This Act takes effect September 1, 1999, and
2-63     applies only to a group health benefit plan that is delivered,
2-64     issued for delivery, or renewed on or after January 1, 2000.  A
2-65     group health benefit plan delivered, issued for delivery, or
2-66     renewed before January 1, 2000, is governed by the law as it
2-67     existed immediately before the effective date of this Act, and that
2-68     law is continued in effect for that purpose.
2-69           SECTION 3.  The importance of this legislation and the
 3-1     crowded condition of the calendars in both houses create an
 3-2     emergency and an imperative public necessity that the
 3-3     constitutional rule requiring bills to be read on three several
 3-4     days in each house be suspended, and this rule is hereby suspended.
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