1-1     By:  Madla                                            S.B. No. 1030
 1-2           (In the Senate - Filed March 9, 1999; March 10, 1999, read
 1-3     first time and referred to Committee on Economic Development;
 1-4     April 28, 1999, reported adversely, with favorable Committee
 1-5     Substitute by the following vote:  Yeas 7, Nays 0; April 28, 1999,
 1-6     sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 1030                   By:  Madla
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to the use of a prescription drug formulary by a group
1-11     health benefit plan.
1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13           SECTION 1.  Subchapter E, Chapter 21, Insurance Code, is
1-14     amended by adding Article 21.52J to read as follows:
1-15           Art. 21.52J.  USE OF PRESCRIPTION DRUG FORMULARY BY GROUP
1-16     HEALTH BENEFIT PLAN
1-17           Sec. 1.  DEFINITIONS.  In this article:
1-18                 (1)  "Drug formulary" means a list of drugs for which a
1-19     health benefit plan provides coverage, approves payment, or
1-20     encourages or offers incentives for physicians to prescribe.
1-21                 (2)  "Enrollee" means an individual who is covered
1-22     under a group health benefit plan, including a covered dependent.
1-23                 (3)  "Group health benefit plan" means a plan described
1-24     by Section 2 of this article.
1-25                 (4)  "Physician" means a person licensed as a physician
1-26     by the Texas State Board of Medical Examiners.
1-27                 (5)  "Prescription drug" has the meaning assigned by
1-28     Section 5, Texas Pharmacy Act (Article 4542a-1, Vernon's Texas
1-29     Civil Statutes).
1-30           Sec. 2.  SCOPE OF ARTICLE.  (a)  This article applies only to
1-31     a group health benefit plan that provides benefits for medical or
1-32     surgical expenses incurred as a result of a health condition,
1-33     accident, or sickness, including a group, blanket, or franchise
1-34     insurance policy or insurance agreement, a group hospital service
1-35     contract, or a group contract or similar coverage document that is
1-36     offered by:
1-37                 (1)  an insurance company;
1-38                 (2)  a group hospital service corporation operating
1-39     under Chapter 20 of this code;
1-40                 (3)  a fraternal benefit society operating under
1-41     Chapter 10 of this code;
1-42                 (4)  a stipulated premium insurance company operating
1-43     under Chapter 22 of this code;
1-44                 (5)  a reciprocal exchange operating under Chapter 19
1-45     of this code;
1-46                 (6)  a health maintenance organization operating under
1-47     the Texas Health Maintenance Organization Act (Chapter 20A,
1-48     Vernon's Texas Insurance Code);
1-49                 (7)  a multiple employer welfare arrangement that holds
1-50     a certificate of authority under Article 3.95-2 of this code; or
1-51                 (8)  an approved nonprofit health corporation  that
1-52     holds a certificate of authority issued by the commissioner under
1-53     Article 21.52F of this code.
1-54           (b)  This article does not apply to:
1-55                 (1)  a plan that provides coverage:
1-56                       (A)  only for a specified disease or other single
1-57     benefit;
1-58                       (B)  only for accidental death or dismemberment;
1-59                       (C)  for wages or payments in lieu of wages for a
1-60     period during which an employee is absent from work because of
1-61     sickness or injury;
1-62                       (D)  as a supplement to liability insurance;
1-63                       (E)  for credit insurance;
1-64                       (F)  only for dental or vision care;
 2-1                       (G)  only for hospital expenses; or
 2-2                       (H)  only for indemnity for hospital confinement;
 2-3                 (2)  a small employer health benefit plan written under
 2-4     Chapter 26 of this code;
 2-5                 (3)  a Medicare supplemental policy as defined by
 2-6     Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
 2-7     as amended;
 2-8                 (4)  workers' compensation insurance coverage;
 2-9                 (5)  medical payment insurance coverage issued as part
2-10     of a motor vehicle insurance policy; or
2-11                 (6)  a long-term care policy, including a nursing home
2-12     fixed indemnity policy, unless the commissioner determines that the
2-13     policy provides benefit coverage so comprehensive that the policy
2-14     is a health benefit plan as described by Subsection (a) of this
2-15     section.
2-16           Sec. 3.  DISCLOSURE OF DRUG FORMULARY REQUIRED.  A group
2-17     health benefit plan that covers prescription drugs and that uses
2-18     one or more drug formularies to specify which prescription drugs
2-19     the plan will cover shall:
2-20                 (1)  provide to each enrollee in plain language in the
2-21     coverage documentation provided to the enrollee:
2-22                       (A)  notice that the plan uses one or more drug
2-23     formularies;
2-24                       (B)  an explanation of what a drug formulary is;
2-25                       (C)  a statement regarding the method the plan
2-26     uses to determine which prescription drugs are included in or
2-27     excluded from a drug formulary;
2-28                       (D)  a statement of how often the plan reviews
2-29     the contents of each drug formulary; and
2-30                       (E)  notice that the enrollee may contact the
2-31     plan to find out if a specific drug is on a particular drug
2-32     formulary;
2-33                 (2)  disclose to any individual on request, not later
2-34     than the third business day after the date of the request, whether
2-35     a specific drug is on a particular drug formulary; and
2-36                 (3)  notify an enrollee or any other individual who
2-37     requests information about a drug formulary under this section that
2-38     the presence of a drug on a drug formulary does not guarantee that
2-39     an enrollee's health care provider will prescribe that drug for a
2-40     particular medical condition or mental illness.
2-41           Sec. 4.  CHANGES TO PRESCRIPTION DRUG FORMULARY; CONTINUATION
2-42     OF BENEFITS REQUIRED.  (a)  A group health benefit plan that offers
2-43     prescription drug benefits shall make a prescription drug that was
2-44     approved or covered for a medical condition or mental illness
2-45     available to each enrollee at the contracted benefit level until
2-46     the enrollee's plan renewal date, regardless of whether the
2-47     prescribed drug has been removed from the health benefit plan's
2-48     drug formulary.
2-49           (b)  This section does not preclude a physician or other
2-50     health professional authorized to prescribe a drug from prescribing
2-51     another drug covered by the group health benefit plan that is
2-52     medically appropriate for the enrollee.
2-53           Sec. 5.  NONFORMULARY PRESCRIPTION DRUGS; ADVERSE
2-54     DETERMINATION.  If a group health benefit plan, through any of its
2-55     employees or agents, refuses to provide benefits to an enrollee for
2-56     a drug that is not included in a drug formulary and that the
2-57     enrollee's physician has determined is medically necessary, the
2-58     refusal constitutes an adverse determination for purposes of
2-59     Section 2, Article 21.58A of this code.  An enrollee may appeal the
2-60     adverse determination under Sections 6 and 6A, Article 21.58A of
2-61     this code.
2-62           Sec. 6.  RULES.  The commissioner may adopt rules to
2-63     implement this article.
2-64           SECTION 2.  This Act takes effect September 1, 1999, and
2-65     applies only to a group health benefit plan that is delivered,
2-66     issued for delivery, or renewed on or after January 1, 2000.  A
2-67     group health benefit plan delivered, issued for delivery, or
2-68     renewed before January 1, 2000, is governed by the law as it
2-69     existed immediately before the effective date of this Act, and that
 3-1     law is continued in effect for that purpose.
 3-2           SECTION 3.  The importance of this legislation and the
 3-3     crowded condition of the calendars in both houses create an
 3-4     emergency and an imperative public necessity that the
 3-5     constitutional rule requiring bills to be read on three several
 3-6     days in each house be suspended, and this rule is hereby suspended.
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