SRC-JEC, EPT S.B. 1173 78(R)BILL ANALYSIS Senate Research CenterS.B. 1173 By: Janek State Affairs 6/27/2003 Enrolled DIGEST AND PURPOSE One of the cost drivers in health insurance is the frequency of prescriptions and the increased cost of prescription medication. S.B. 1173 amends the Insurance Code to address prescription drug benefits under the group health benefit program for certain governmental employees. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 1551.205, Insurance Code, as effective June 1, 2003, to prohibit the board of trustees of the Employees Retirement System of Texas (ERS) from contracting for or providing a coverage plan that may provide coverage for prescription drugs to assist in stopping smoking at a lower benefit level than is provided for other prescription drugs. SECTION 2. Amends Subchapter E, Chapter 1551, Insurance Code, as effective June 1, 2003, by adding Sections 1551.218 and 1551.219, as follows: Sec. 1551.218. PRIOR AUTHORIZATION FOR CERTAIN DRUGS. (a) Defines "drug formulary." (b) Requires a health benefit plan provided under this chapter that uses a drug formulary in providing a prescription drug benefit to require prior authorization for coverage of the following categories of prescribed drugs if the specific drug prescribed is not included in the formulary: (1) a gastrointestinal drug; (2) a cholesterol-lowering drug; (3) an anti-inflammatory drug; (4) an antihistamine drug; and (5) an antidepressant drug. (c) Requires the board of trustees of ERS every six months to submit to the comptroller and to the Legislative Budget Board a report regarding any cost savings achieved in the group benefits program through implementation of the prior authorization requirement of this section. Requires a report to cover the previous sixmonth period. Sec. 1551.219. MAIL ORDER REQUIREMENT FOR PRESCRIPTION DRUG COVERAGE PROHIBITED. Prohibits the board of trustees of ERS or a health benefit plan under this chapter that provides benefits for prescription drugs from requiring a participant in the group benefits program to purchase a prescription drug through a mail order program. Requires the board or health benefit plan to require that a participant who chooses to obtain a prescription drug through a retail pharmacy or other method other than by mail order pay a deductible, copayment, coinsurance, or other cost-sharing obligation to cover the additional cost of obtaining a prescription drug through that method rather than by mail order. SECTION 3. Amends Subchapter D, Chapter 1575, Insurance Code, as effective June 1, 2003, by adding Section 1575.161, as follows: Sec. 1575.161. PRIOR AUTHORIZATION FOR CERTAIN DRUGS. (a) Defines "drug formulary." (b) Requires a health benefit plan provided under this chapter that uses a drug formulary in providing a prescription drug benefit to require prior authorization for coverage of the following categories of prescribed drugs if the specific drug prescribed is not included in the formulary: (1) a gastrointestinal drug; (2) a cholesterol-lowering drug; (3) an anti-inflammatory drug; (4) an antihistamine; and (5) an antidepressant drug. (c) Requires the board of trustees every six months to submit to the comptroller and to the Legislative Budget Board a report regarding any cost savings achieved in the program through implementation of the prior authorization requirement of this section. Requires a report to cover the previous six-month period. SECTION 4. Amends Subchapter E, Chapter 3, Insurance Code, by adding Article 3.50-7A, as follows: Art. 3.50-7A. PRIOR AUTHORIZATION FOR CERTAIN DRUGS PROVIDED UNDER TEXAS SCHOOL EMPLOYEES UNIFORM GROUP COVERAGE PROGRAM. (a) Defines "drug formulary." (b) Requires a health coverage plan provided under the uniform group coverage program established under Article 3.50-7 of this code that uses a drug formulary in providing a prescription drug benefit to require prior authorization for coverage of the following categories of prescribed drugs if the specific drug prescribed is not included in the formulary: (1) a gastrointestinal drug; (2) a cholesterol-lowering drug; (3) an anti-inflammatory drug; (4) an antihistamine drug; and (5) an antidepressant drug. (c) Requires the Teacher Retirement System of Texas every six months to submit to the comptroller and to the Legislative Budget Board a report regarding any cost savings achieved in the uniform group coverage program through implementation of the prior authorization requirement of this article. Requires a report to cover the previous sixmonth period. SECTION 5. Provides that the initial reports required by Subsection (c), Section 1551.218 and Subsection (c), Section 1575.161, Insurance Code, and Subsection (c), Article 3.50-7A, Insurance Code, as added by this Act, are due September 1, 2005. SECTION 6. Makes application of Section 1551.205(3), Insurance Code, as added by this Act, to coverage under Chapter 815, Government Code, prospective to September 1, 2004. SECTION 7. Effective date: Provides that this Act takes effect September 1, 2003, and applies to health benefit plans provided under Chapters 1551 and 1575, Insurance Code, as effective June 1, 2003, and health coverage plans subject to Article 3.50-7A, Insurance Code, as added by this Act, beginning with the 2004-2005 plan year.