By: Van de Putte S.B. No. 1582
 
 
A BILL TO BE ENTITLED
AN ACT
relating to payment of claims to pharmacies and pharmacists.
       BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
       SECTION 1.  Section 843.002, Insurance Code, is amended by
adding Subdivision (9-a) to read as follows:
             (9-a)  "Extrapolation" means a mathematical process of
constructing new data points outside a discrete set of known data
points used in the payment or audit of claims to providers who are
pharmacists or pharmacies. The term includes linear, conic,
polynomial, statistical, and electronic extrapolation, as well as
any other extrapolation techniques used to estimate payment of
claims or audit findings affecting providers who are pharmacists or
pharmacies.
       SECTION 2.  Section 843.338, Insurance Code, is amended to
read as follows:
       Sec. 843.338.  DEADLINE FOR ACTION ON CLEAN CLAIMS. Except
as provided by Sections [Section] 843.3385 and 843.339, not later
than the 45th day after the date on which a health maintenance
organization receives a clean claim from a participating physician
or provider in a nonelectronic format or the 30th day after the date
the health maintenance organization receives a clean claim from a
participating physician or provider that is electronically
submitted, the health maintenance organization shall make a
determination of whether the claim is payable and:
             (1)  if the health maintenance organization determines
the entire claim is payable, pay the total amount of the claim  in
accordance with the contract between the physician or provider and
the health maintenance organization;
             (2)  if the health maintenance organization determines
a portion of the claim is payable, pay the portion of the claim that
is not in dispute and notify the physician or provider in writing
why the remaining portion of the claim will not be paid; or
             (3)  if the health maintenance organization determines
that the claim is not payable, notify the physician or provider in
writing why the claim will not be paid.
       SECTION 3.  Section 843.339, Insurance Code, is amended to
read as follows:
       Sec. 843.339.  DEADLINE FOR ACTION ON [CERTAIN] PRESCRIPTION
CLAIMS; PAYMENT. (a)  Not later than the 21st day after the date a
health maintenance organization affirmatively adjudicates a
pharmacy claim that is electronically submitted, the health
maintenance organization shall pay the total amount of the claim. A
health maintenance organization shall pay a pharmacy claim that is
submitted in a nonelectronic format not later than the deadline
provided under Section 843.338.
       (b)  Except as provided by Subsection (c), a pharmacy benefit
manager that administers a pharmacy claim for a health maintenance
organization shall pay the provider through electronic funds
transfer not later than the 14th day after the date on which the
claim was affirmatively adjudicated.
       (c)  If the provider is unable to receive payment of a claim
described by Subsection (b) through electronic funds transfer, the
pharmacy benefit manager shall pay the claim not later than the 21st
day after the date on which the claim was affirmatively
adjudicated.
       SECTION 4.  Section 843.340, Insurance Code, is amended by
adding Subsections (f) and (g) to read as follows:
       (f)  A health maintenance organization may not use
extrapolation computations or practices to complete the audit of a
provider who is a pharmacist or pharmacy.  A health maintenance
organization may not require extrapolation audits as a condition of
participation in the health maintenance organization's contract,
network, or program for a provider who is a pharmacist or pharmacy.
       (g)  A pharmacy benefit manager who performs an on-site audit
under this chapter of a provider who is a pharmacist or pharmacy
shall provide the provider reasonable notice of the audit and
accommodate the provider's schedule to the greatest extent
possible. The notice required under this subsection must be in
writing and must be sent by certified mail not later than the 15th
day before the date on which the on-site audit is scheduled to
occur.
       SECTION 5.  Section 843.344, Insurance Code, is amended to
read as follows:
       Sec. 843.344.  APPLICABILITY OF SUBCHAPTER TO ENTITIES
CONTRACTING WITH HEALTH MAINTENANCE ORGANIZATION. This subchapter
applies to a person, including a pharmacy benefit manager, with
whom a health maintenance organization contracts to:
             (1)  process or pay claims;
             (2)  obtain the services of physicians and providers to
provide health care services to enrollees; or
             (3)  issue verifications or preauthorizations.
       SECTION 6.  Subchapter J, Chapter 843, Insurance Code, is
amended by adding Sections 843.354, 843.355, and 843.356 to read as
follows:
       Sec. 843.354.  DEPARTMENT ENFORCEMENT OF PHARMACY CLAIMS.
(a)  Notwithstanding any other provision of this subchapter, a
dispute regarding payment of a claim to a provider who is a
pharmacist or pharmacy shall be resolved as provided by this
section.
       (b)  A provider who is a pharmacist or pharmacy may submit a
complaint to the department alleging noncompliance with the
requirements of this subchapter by a health maintenance
organization or an entity that contracts with the health
maintenance organization as provided by Section 843.344. A
complaint must be submitted in writing or by submitting a completed
complaint form to the department by mail or through another
delivery method. The department shall maintain a complaint form on
the department's Internet website and at the department's offices
for use by a complainant.
       (c)  After investigation of the complaint by the department,
the commissioner shall determine the validity of the complaint and
shall enter a written order. In the order, the commissioner shall
provide the health maintenance organization and the complainant
with:
             (1)  a summary of the investigation conducted by the
department;
             (2)  written notice of the matters asserted, including
a statement:
                   (A)  of the legal authority, jurisdiction, and
alleged conduct under which an enforcement action is imposed or
denied, with a reference to the statutes and rules involved; and
                   (B)  that, on request to the department, the
health maintenance organization and the complainant are entitled to
a hearing conducted by the State Office of Administrative Hearings
in the manner prescribed by Section 843.355 regarding the
determinations made in the order; and
             (3)  a determination of the denial of the allegations
or the imposition of penalties against the health maintenance
organization.
       (d)  An order issued under Subsection (c) is final in the
absence of a request by the complainant or health maintenance
organization for a hearing under Section 843.355.
       (e)  If the department investigation substantiates the
allegations of noncompliance made under Subsection (b), the
commissioner, after notice and an opportunity for a hearing as
described by Subsection (c), shall require the health maintenance
organization to pay penalties as provided by Section 843.342.
       Sec. 843.355.  HEARING BY STATE OFFICE OF ADMINISTRATIVE
HEARINGS; FINAL ORDER. (a)  The State Office of Administrative
Hearings shall conduct a hearing regarding a written order of the
commissioner under Section 843.354 on the request of the
department. A hearing under this section is subject to Chapter
2001, Government Code, and shall be conducted as a contested case
hearing.
       (b)  After receipt of a proposal for decision issued by the
State Office of Administrative Hearings after a hearing conducted
under Subsection (a), the commissioner shall issue a final order.
       (c)  If it appears to the department, the complainant, or the
health maintenance organization that a person or entity is engaging
in or is about to engage in a violation of a final order issued under
Subsection (b), the department, the complainant, or the health
maintenance organization may bring an action for judicial review in
district court in Travis County to enjoin or restrain the
continuation or commencement of the violation or to compel
compliance with the final order.  The complainant or the health
maintenance organization may also bring an action for judicial
review of the final order.
       Sec. 843.356.  LEGISLATIVE DECLARATION. It is the intent of
the legislature that the requirements contained in this subchapter
regarding payment of claims to providers who are pharmacists or
pharmacies apply to all health maintenance organizations and
pharmacy benefit managers unless otherwise prohibited by federal
law.
       SECTION 7.  Section 1301.001, Insurance Code, is amended by
amending Subdivision (1) and adding Subdivision (1-a) to read as
follows:
             (1)  "Health care provider" means a practitioner,
institutional provider, or other person or organization that
furnishes health care services and that is licensed or otherwise
authorized to practice in this state.  The term includes a
pharmacist and a pharmacy. The term does not include a physician.
             (1-a)  "Extrapolation" means a mathematical process of
constructing new data points outside a discrete set of known data
points used in the payment or audit of claims to providers who are
pharmacists or pharmacies. The term includes linear, conic,
polynomial, statistical, and electronic extrapolation, as well as
any other extrapolation techniques used to estimate payment of
claims or audit findings affecting providers who are pharmacists or
pharmacies.
       SECTION 8.  Section 1301.103, Insurance Code, is amended to
read as follows:
       Sec. 1301.103.  DEADLINE FOR ACTION ON CLEAN CLAIMS. Except
as provided by Sections 1301.104 and [Section] 1301.1054, not later
than the 45th day after the date an insurer receives a clean claim
from a preferred provider in a nonelectronic format or the 30th day
after the date an insurer receives a clean claim from a preferred
provider that is electronically submitted, the insurer shall make a
determination of whether the claim is payable and:
             (1)  if the insurer determines the entire claim is
payable, pay the total amount of the claim in accordance with the
contract between the preferred provider and the insurer;
             (2)  if the insurer determines a portion of the claim is
payable, pay the portion of the claim that is not in dispute and
notify the preferred provider in writing why the remaining portion
of the claim will not be paid; or
             (3)  if the insurer determines that the claim is not
payable, notify the preferred provider in writing why the claim
will not be paid.
       SECTION 9.  Section 1301.104, Insurance Code, is amended to
read as follows:
       Sec. 1301.104.  DEADLINE FOR ACTION ON [CERTAIN] PHARMACY
CLAIMS; PAYMENT. (a)  Not later than the 21st day after the date an
insurer affirmatively adjudicates a pharmacy claim that is
electronically submitted, the insurer shall pay the total amount of
the claim. An insurer shall pay a pharmacy claim that is submitted
in a nonelectronic format not later than the deadline provided
under Section 1301.103.
       (b)  Except as provided by Subsection (c), a pharmacy benefit
manager that administers a pharmacy claim for an insurer under a
preferred provider benefit plan shall pay the provider through
electronic funds transfer not later than the 14th day after the date
on which the claim was affirmatively adjudicated.
       (c)  If the provider is unable to receive payment of a claim
described by Subsection (b) through electronic funds transfer, the
pharmacy benefit manager shall pay the claim not later than the 21st
day after the date on which the claim was affirmatively
adjudicated.
       SECTION 10.  Section 1301.105, Insurance Code, is amended by
adding Subsections (e) and (f) to read as follows:
       (e)  An insurer may not use extrapolation computations or
practices to complete the audit of a preferred provider who is a
pharmacist or pharmacy.  An insurer may not require extrapolation
audits as a condition of participation in the insurer's contract,
network, or program for a preferred provider who is a pharmacist or
pharmacy.
       (f)  A pharmacy benefit manager who performs an on-site audit
of a preferred provider who is a pharmacist or pharmacy shall
provide the provider reasonable notice of the audit and accommodate
the provider's schedule to the greatest extent possible. The
notice required under this subsection must be in writing and must be
sent by certified mail not later than the 15th day before the date
on which the on-site audit is scheduled to occur.
       SECTION 11.  Section 1301.109, Insurance Code, is amended to
read as follows:
       Sec. 1301.109.  APPLICABILITY TO ENTITIES CONTRACTING WITH
INSURER. This subchapter applies to a person, including a pharmacy
benefit manager, with whom an insurer contracts to:
             (1)  process or pay claims;
             (2)  obtain the services of physicians and health care
providers to provide health care services to insureds; or
             (3)  issue verifications or preauthorizations.
       SECTION 12.  Subchapter C-1, Chapter 1301, Insurance Code,
is amended by adding Sections 1301.139, 1301.140, and 1301.141 to
read as follows:
       Sec. 1301.139.  DEPARTMENT ENFORCEMENT OF PHARMACY CLAIMS.
(a)  Notwithstanding any other provision of this subchapter, a
dispute regarding payment of a claim to a preferred provider who is
a pharmacist or pharmacy shall be resolved as provided by this
section.
       (b)  A preferred provider who is a pharmacist or pharmacy may
submit a complaint to the department alleging noncompliance with
the requirements of this subchapter by an insurer or an entity that
contracts with the insurer as provided by Section 1301.109. A
complaint must be submitted in writing or by submitting a completed
complaint form to the department by mail or through another
delivery method. The department shall maintain a complaint form on
the department's Internet website and at the department's offices
for use by a complainant.
       (c)  After investigation of the complaint by the department,
the commissioner shall determine the validity of the complaint and
shall enter a written order. In the order, the commissioner shall
provide the insurer and the complainant with:
             (1)  a summary of the investigation conducted by the
department;
             (2)  written notice of the matters asserted, including
a statement:
                   (A)  of the legal authority, jurisdiction, and
alleged conduct under which an enforcement action is imposed or
denied, with a reference to the statutes and rules involved; and
                   (B)  that, on request to the department, the
insurer and the complainant are entitled to a hearing conducted by
the State Office of Administrative Hearings in the manner
prescribed by Section 1301.140 regarding the determinations made in
the order; and
             (3)  a determination of the denial of the allegations
or the imposition of penalties against the insurer.
       (d)  An order issued under Subsection (c) is final in the
absence of a request by the complainant or insurer for a hearing
under Section 1301.140.
       (e)  If the department investigation substantiates the
allegations of noncompliance made under Subsection (b), the
commissioner, after notice and an opportunity for a hearing as
described by Subsection (c), shall require the insurer to pay
penalties as provided by Section 1301.137.
       Sec. 1301.140.  HEARING BY STATE OFFICE OF ADMINISTRATIVE
HEARINGS; FINAL ORDER.  (a)  The State Office of Administrative
Hearings shall conduct a hearing regarding a written order of the
commissioner under Section 1301.139 on the request of the
department. A hearing under this section is subject to Chapter
2001, Government Code, and shall be conducted as a contested case
hearing.
       (b)  After receipt of a proposal for decision issued by the
State Office of Administrative Hearings after a hearing conducted
under Subsection (a), the commissioner shall issue a final order.
       (c)  If it appears to the department, the complainant, or the
insurer that a person or entity is engaging in or is about to engage
in a violation of a final order issued under Subsection (b), the
department, the complainant, or the insurer may bring an action for
judicial review in district court in Travis County to enjoin or
restrain the continuation or commencement of the violation or to
compel compliance with the final order.  The complainant or the
insurer may also bring an action for judicial review of the final
order.
       Sec. 1301.141.  LEGISLATIVE DECLARATION. It is the intent
of the legislature that the requirements contained in this
subchapter regarding payment of claims to preferred providers who
are pharmacists or pharmacies apply to all insurers and pharmacy
benefit managers unless otherwise prohibited by federal law.
       SECTION 13.  The change in law made by this Act applies only
to a claim submitted by a provider to a health maintenance
organization or an insurer on or after the effective date of this
Act. A claim submitted before the effective date of this Act is
governed by the law as it existed immediately before that date, and
that law is continued in effect for that purpose.
       SECTION 14.  This Act takes effect September 1, 2007.