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. 3-7 * * * * *