By Van de Putte                                       H.B. No. 2529
         76R7198 DLF-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the administration of pharmacy benefits under certain
 1-3     health benefit plans.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 1(1), Article 21.07-6, Insurance Code, is
 1-6     amended to read as follows:
 1-7                 (1)  "Administrator" means a person who collects
 1-8     premiums or contributions from or who adjusts or settles claims in
 1-9     connection with life, health, and accident benefits, including
1-10     pharmacy benefits, or annuities for residents of this state but
1-11     does not include:
1-12                       (A)  an employer on behalf of its employees or
1-13     the employees of one or more subsidiaries or affiliated
1-14     corporations of the employer;
1-15                       (B)  a union on behalf of its members;
1-16                       (C)  an insurance company or a group hospital
1-17     service corporation subject to Chapter 20 of this code with respect
1-18     to a policy lawfully issued and delivered by it in and under the
1-19     law of a state in which the insurer was authorized to do an
1-20     insurance business;
1-21                       (D)  a health maintenance organization that is
1-22     authorized to operate in this state under the Texas Health
1-23     Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
1-24     Code), with respect to any activity that is specifically regulated
 2-1     under that Act;
 2-2                       (E)  an agent licensed under Article 21.07 or
 2-3     Chapter 213, Acts of the 54th Legislature, Regular Session, 1955
 2-4     (Article 21.07-1, Vernon's Texas Insurance Code), who is acting
 2-5     under appointment on behalf of an insurance company authorized to
 2-6     do business in this state and within the customary scope and duties
 2-7     of the insurance agent's authority as an agent and who receives
 2-8     commissions as an agent;
 2-9                       (F)  a creditor who is acting on behalf of its
2-10     debtors with respect to insurance that covers a debt between the
2-11     creditor and its debtor so long as only the functions of a group
2-12     policyholder or creditor are performed;
2-13                       (G)  a trust established in conformity with 29
2-14     U.S.C. Section 186 and the trustees and employees who are acting
2-15     under the trust;
2-16                       (H)  a trust that is exempt from taxation under
2-17     Section 501(a) of the Internal Revenue Code of 1986 and the
2-18     trustees and employees acting under the trust, or a custodian and
2-19     the custodian's agents and employees who are acting pursuant to a
2-20     custodian account that complies with Section 401(f), Internal
2-21     Revenue Code of 1986;
2-22                       (I)  a bank, credit union, savings and loan
2-23     association, or other financial institution that is subject to
2-24     supervision or examination under federal or state law by federal or
2-25     state regulatory authorities so long as that institution is
2-26     performing only those functions for which it holds a license under
2-27     federal or state law;
 3-1                       (J)  a company that advances and collects a
 3-2     premium or charge from its credit card holders on their
 3-3     authorization, if the company does not adjust or settle claims and
 3-4     acts only in the company's debtor-creditor relationship with its
 3-5     credit card holders;
 3-6                       (K)  a person who adjusts or settles claims in
 3-7     the normal course of his practice or employment as a licensed
 3-8     attorney and who does not collect any premium or charge in
 3-9     connection with life, health, or accident benefits, including
3-10     pharmacy benefits, or annuities;
3-11                       (L)  an adjuster licensed by the commissioner, if
3-12     the adjuster is engaged in the performance of his powers and duties
3-13     as an adjuster within the scope of his license;
3-14                       (M)  a person who provides technical, advisory,
3-15     utilization review, precertification, or consulting services to an
3-16     insurer, plan, or plan sponsor and who does not make any management
3-17     or discretionary decisions on behalf of an insurer, plan, or plan
3-18     sponsor;
3-19                       (N)  an attorney in fact for a Lloyd's operating
3-20     under Chapter 18 of this code or a reciprocal or interinsurance
3-21     exchange operating under Chapter 19 of this code if acting in the
3-22     capacity of attorney in fact under the applicable chapter;
3-23                       (O)  a municipality that is self-insured or a
3-24     joint fund, risk management pool, or a self-insurance pool composed
3-25     of political subdivisions of this state that participate in a fund
3-26     or pool through interlocal agreements and any nonprofit
3-27     administrative agency or governing body or any nonprofit entity
 4-1     that acts solely on behalf of a fund, pool, agency, or body or any
 4-2     other funds, pools, agencies, or bodies that are established
 4-3     pursuant to or for the purpose of implementing an interlocal
 4-4     governmental agreement;
 4-5                       (P)  a self-insured political subdivision;
 4-6                       (Q)  a plan under which insurance benefits are
 4-7     provided exclusively by a carrier licensed to do business in this
 4-8     state and the administrator of the plan is either:
 4-9                             (i)  a full-time employee of the plan's
4-10     organizing or sponsoring association, trust, or other entity; or
4-11                             (ii)  the trustee or trustees of the
4-12     organizing or sponsoring trust; or
4-13                       (R)  a parent of a wholly owned direct or
4-14     indirect subsidiary insurer licensed to do business in this state
4-15     or a wholly owned direct or indirect subsidiary insurer that is a
4-16     part of the parent's holding company system that, only on behalf of
4-17     itself or its affiliated insurers:
4-18                             (i)  collects premiums or contributions, if
4-19     the parent or subsidiary insurer prepares only billing statements,
4-20     places those statements in the United States mail, and causes all
4-21     collected premiums to be deposited directly in a depository account
4-22     of the particular affiliated insurer, and the services rendered by
4-23     the parent or subsidiary are performed under an agreement regulated
4-24     and approved under Article 21.49-1 of this code or a similar
4-25     statute of the domiciliary state if the parent or subsidiary is a
4-26     foreign insurer doing business in this state; or
4-27                             (ii)  furnishes proof-of-loss forms,
 5-1     reviews claims, determines the amount of the liability for those
 5-2     claims, and negotiates settlements, but pays claims only from the
 5-3     funds of the particular subsidiary by checks or drafts of that
 5-4     subsidiary and the services rendered by the parent or subsidiary
 5-5     are performed under an agreement regulated and approved under
 5-6     Article 21.49-1 of this code or a similar statute of the
 5-7     domiciliary state if the parent or subsidiary is a foreign insurer
 5-8     doing business in this state.
 5-9           SECTION 2.  Article 21.07-6, Insurance Code, is amended by
5-10     adding Section 19A to read as follows:
5-11           Sec. 19A.  IDENTIFICATION CARDS FOR CERTAIN PLANS.  (a)  An
5-12     administrator for a plan that provides pharmacy benefits shall
5-13     issue an  identification card to each individual covered by the
5-14     plan.
5-15           (b)  The commissioner by rule shall adopt a standard form for
5-16     the identification card. At minimum, the standard form
5-17     identification card must include:
5-18                 (1)  the name or logo of the insurer or plan;
5-19                 (2)  the bank identification number of the insurer or
5-20     plan;
5-21                 (3)  the group number applicable for the individual;
5-22                 (4)  the expiration date of the coverage evidenced by
5-23     the card; and
5-24                 (5)  a telephone number to be used to contact an
5-25     appropriate person to obtain information relating to the pharmacy
5-26     benefits provided under the coverage.
5-27           SECTION 3.  Section 24, Article 21.07-6, Insurance Code, is
 6-1     amended to read as follows:
 6-2           Sec. 24. APPLICATION TO CERTAIN INSURERS AND HEALTH
 6-3     MAINTENANCE ORGANIZATIONS; APPLICATION TO PHARMACY BENEFIT
 6-4     MANAGEMENT.  (a)  An insurer or health maintenance organization
 6-5     that is not  exempt under Section 1(1)(C) or (D) of this article is
 6-6     subject to all provisions of this article, except Sections 3, 4, 5,
 6-7     10, and 20(a)(1).
 6-8           (b)  An insurer or health maintenance organization, and any
 6-9     subsidiary, division, affiliate, or agent of the insurer or health
6-10     maintenance organization, that acts as an administrator with
6-11     respect to pharmacy benefits shall comply with this article. The
6-12     exemptions granted to an insurer or health maintenance organization
6-13     under Section 1(1)(C) or (D) of this article do not apply to the
6-14     extent the insurer or health maintenance organization, or any
6-15     subsidiary, division, affiliate, or agent of the insurer or health
6-16     maintenance organization, acts as an administrator with respect to
6-17     pharmacy benefits.
6-18           SECTION 4.  This Act takes effect September 1, 1999.
6-19           SECTION 5.  (a)  This Act applies only to a person acting as
6-20     an administrator, as that term is defined by Section 1(1), Article
6-21     21.07-6, Insurance Code, as amended by this Act, with respect to
6-22     pharmacy benefits on or after January 1, 2000. A person acting as
6-23     an administrator with respect to pharmacy  benefits before January
6-24     1, 2000, is governed by the law as it existed immediately before
6-25     the effective date of this Act and that law is continued in effect
6-26     for that purpose.
6-27           (b)  An administrator is not required to provide an
 7-1     identification card to an individual, as required by Section 19A,
 7-2     Article 21.07-6, Insurance Code, as added by this Act, before
 7-3     January 1, 2000.
 7-4           SECTION 6.  The importance of this legislation and the
 7-5     crowded condition of the calendars in both houses create an
 7-6     emergency and an imperative public necessity that the
 7-7     constitutional rule requiring bills to be read on three several
 7-8     days in each house be suspended, and this rule is hereby suspended.