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A BILL TO BE ENTITLED
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AN ACT
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relating to the regulation of pharmacy benefit managers and to |
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payment of claims to pharmacies and pharmacists. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle D, Title 13, Insurance Code, is amended |
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by adding Chapter 4154 to read as follows: |
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CHAPTER 4154. PHARMACY BENEFIT MANAGERS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 4154.001. DEFINITIONS. In this chapter: |
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(1) "Covered entity" means a nonprofit hospital or |
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medical services corporation, a health insurer, a health benefit |
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plan, a health maintenance organization, a health program |
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administered by a state agency in the capacity of provider of health |
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coverage, or an employer, labor union, or other group of persons |
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organized in this state that provides health coverage. The term |
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does not include: |
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(A) a self-funded health coverage plan that is |
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exempt from state regulation under the Employee Retirement Income |
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Security Act of 1974 (29 U.S.C. Section 1001 et seq.); |
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(B) a plan issued for health coverage for federal |
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employees; or |
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(C) a health benefit plan that provides coverage |
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only for accidental injury or a specified disease, a hospital |
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indemnity plan, a Medicare supplement plan, a disability income |
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plan, a long-term care plan, or any other limited benefit health |
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insurance policy or contract. |
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(2) "Covered individual" means a member, participant, |
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enrollee, contract holder, policyholder, or beneficiary of a |
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covered entity who is provided health coverage by the covered |
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entity. The term includes a dependent or other individual who |
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receives health coverage through a policy, contract, or plan for a |
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covered individual. |
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(3) "Pharmacy benefit management" means |
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administration or management of prescription drug benefits |
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provided by a covered entity under the terms and conditions of a |
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contract between a pharmacy benefit manager and the covered entity. |
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(4) "Pharmacy benefit manager" has the meaning |
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assigned by Section 4151.151. The term includes a person acting on |
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behalf of a pharmacy benefit manager in a contractual or employment |
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relationship in the performance of pharmacy benefit management |
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services for a covered entity. The term does not include: |
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(A) a health insurer that holds a certificate of |
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authority to engage in the business of insurance in this state if |
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the health insurer or any subsidiary provides pharmacy benefit |
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management services exclusively to its own insureds; or |
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(B) a public self-funded pool or a private single |
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employer self-funded plan that provides pharmacy benefits or |
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pharmacy benefit management services directly to its |
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beneficiaries. |
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Sec. 4154.002. RULES. The commissioner may adopt rules and |
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standards as necessary to implement this chapter. |
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[Sections 4154.003-4154.050 reserved for expansion] |
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SUBCHAPTER B. REGULATION OF PHARMACY BENEFIT MANAGERS |
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Sec. 4154.051. APPLICABILITY. This chapter applies to each |
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pharmacy benefit manager that provides claims processing services, |
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other prescription drug or device services, or both claims |
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processing services and other prescription drug or device services |
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to covered individuals who are residents of this state. |
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Sec. 4154.052. CERTIFICATE OF AUTHORITY AS ADMINISTRATOR |
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REQUIRED. (a) A person may not act as or represent that the person |
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is a pharmacy benefit manager in this state unless the person is |
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covered by and is engaging in business under a certificate of |
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authority as a third-party administrator issued under Chapter 4151. |
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(b) Chapter 4151 applies to a pharmacy benefit manager. |
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Sec. 4154.053. PERFORMANCE OF DUTIES; GOOD FAITH; CONFLICT |
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OF INTEREST. (a) In operating as a pharmacy benefit manager, a |
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pharmacy benefit manager shall exercise good faith and fair dealing |
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in the performance of contractual obligations toward a covered |
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entity. |
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(b) A pharmacy benefit manager shall notify a covered entity |
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in writing of any activity, policy, practice, ownership interest, |
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or affiliation of the pharmacy benefit manager that may present a |
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conflict of interest. |
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Sec. 4154.054. REQUIREMENTS REGARDING CONTACTING COVERED |
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INDIVIDUALS. Except as otherwise provided by the terms of the |
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contract with a covered entity, a pharmacy benefit manager may not |
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contact a covered individual without the express written permission |
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of the covered entity. |
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Sec. 4154.055. DISPENSING OF SUBSTITUTE PRESCRIPTION DRUG |
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FOR PRESCRIBED DRUG. (a) A pharmacy benefit manager may request |
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the substitution of a lower priced generic and therapeutically |
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equivalent drug for a higher priced prescribed drug only as |
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provided by this section. The pharmacy benefit manager must obtain |
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the approval of the prescribing practitioner before requesting any |
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substitution under this section. |
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(b) If the net cost to the covered individual or covered |
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entity of the substituted drug exceeds the cost of the prescribed |
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drug, the substitution may be made only for medical reasons that |
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benefit the covered individual. |
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(c) A pharmacy benefit manager may not substitute an |
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equivalent prescribed drug contrary to a prescription drug order |
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that prohibits a substitution. |
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Sec. 4154.056. DUTIES TO PHARMACY NETWORK PROVIDER. (a) A |
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pharmacy benefit manager may not require a pharmacy network |
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provider to comply with recordkeeping provisions more stringent |
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than those required by other state law or rule or by federal law or |
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regulation. |
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(b) If a pharmacy benefit manager receives notice from a |
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covered entity of termination of the covered entity's contract, the |
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pharmacy benefit manager shall notify, not later than the 10th |
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business day after the date of the notice, each pharmacy network |
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provider affected by the termination of the effective date of the |
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termination. |
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(c) Not later than the third business day after the date of a |
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price increase notification by a manufacturer or supplier, a |
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pharmacy benefit manager shall adjust its payment to the pharmacy |
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network provider in a manner consistent with the price increase. |
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SECTION 2. Section 843.002, Insurance Code, is amended by |
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adding Subdivision (9-a) to read as follows: |
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(9-a) "Extrapolation" means a mathematical process or |
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technique used by a health maintenance organization or pharmacy |
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benefit manager that administers pharmacy claims for a health |
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maintenance organization in the audit of a pharmacy or pharmacist |
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to estimate audit results or findings for a larger batch or group of |
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claims not reviewed by the health maintenance organization or |
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pharmacy benefit manager. |
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SECTION 3. Section 843.338, Insurance Code, is amended to |
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read as follows: |
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Sec. 843.338. DEADLINE FOR ACTION ON CLEAN CLAIMS. Except |
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as provided by Sections [Section] 843.3385 and 843.339, not later |
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than the 45th day after the date on which a health maintenance |
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organization receives a clean claim from a participating physician |
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or provider in a nonelectronic format or the 30th day after the date |
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the health maintenance organization receives a clean claim from a |
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participating physician or provider that is electronically |
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submitted, the health maintenance organization shall make a |
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determination of whether the claim is payable and: |
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(1) if the health maintenance organization determines |
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the entire claim is payable, pay the total amount of the claim in |
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accordance with the contract between the physician or provider and |
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the health maintenance organization; |
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(2) if the health maintenance organization determines |
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a portion of the claim is payable, pay the portion of the claim that |
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is not in dispute and notify the physician or provider in writing |
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why the remaining portion of the claim will not be paid; or |
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(3) if the health maintenance organization determines |
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that the claim is not payable, notify the physician or provider in |
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writing why the claim will not be paid. |
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SECTION 4. Section 843.339, Insurance Code, is amended to |
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read as follows: |
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Sec. 843.339. DEADLINE FOR ACTION ON [CERTAIN] PRESCRIPTION |
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CLAIMS; PAYMENT. (a) A [Not later than the 21st day after the date
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a] health maintenance organization, or a pharmacy benefit manager |
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that administers pharmacy claims for the health maintenance |
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organization, that affirmatively adjudicates a pharmacy claim that |
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is electronically submitted, [the health maintenance organization] |
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shall pay the total amount of the claim through electronic funds |
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transfer not later than the 14th day after the date on which the |
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claim was affirmatively adjudicated. |
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(b) A health maintenance organization, or a pharmacy |
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benefit manager that administers pharmacy claims for the health |
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maintenance organization, that affirmatively adjudicates a |
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pharmacy claim that is not electronically submitted, shall pay the |
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total amount of the claim not later than the 21st day after the date |
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on which the claim was affirmatively adjudicated. |
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SECTION 5. Section 843.340, Insurance Code, is amended by |
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adding Subsections (f) and (g) to read as follows: |
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(f) A health maintenance organization or a pharmacy benefit |
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manager that administers pharmacy claims for the health maintenance |
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organization may not use extrapolation to complete the audit of a |
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provider who is a pharmacist or pharmacy. A health maintenance |
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organization or a pharmacy benefit manager that administers |
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pharmacy claims for the health maintenance organization may not |
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require extrapolation audits as a condition of participation in the |
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health maintenance organization's contract, network, or program |
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for a provider who is a pharmacist or pharmacy. |
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(g) A health maintenance organization or a pharmacy benefit |
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manager that administers pharmacy claims for the health maintenance |
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organization that performs an on-site audit under this chapter of a |
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provider who is a pharmacist or pharmacy shall provide the provider |
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reasonable notice of the audit and accommodate the provider's |
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schedule to the greatest extent possible. The notice required |
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under this subsection must be in writing and must be sent by |
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certified mail to the provider not later than the 15th day before |
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the date on which the on-site audit is scheduled to occur. |
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SECTION 6. Section 843.344, Insurance Code, is amended to |
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read as follows: |
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Sec. 843.344. APPLICABILITY OF SUBCHAPTER TO ENTITIES |
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CONTRACTING WITH HEALTH MAINTENANCE ORGANIZATION. This subchapter |
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applies to a person, including a pharmacy benefit manager, with |
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whom a health maintenance organization contracts to: |
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(1) process or pay claims; |
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(2) obtain the services of physicians and providers to |
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provide health care services to enrollees; or |
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(3) issue verifications or preauthorizations. |
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SECTION 7. Subchapter J, Chapter 843, Insurance Code, is |
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amended by adding Sections 843.354, 843.355, and 843.356 to read as |
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follows: |
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Sec. 843.354. DEPARTMENT ENFORCEMENT OF PHARMACY CLAIMS. |
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(a) Notwithstanding any other provision of this subchapter, a |
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dispute regarding payment of a claim to a provider who is a |
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pharmacist or pharmacy shall be resolved as provided by this |
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section. |
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(b) A provider who is a pharmacist or pharmacy may submit a |
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complaint to the department alleging noncompliance with the |
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requirements of this subchapter by a health maintenance |
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organization, a pharmacy benefit manager that administers pharmacy |
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claims for the health maintenance organization, or another entity |
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that contracts with the health maintenance organization as provided |
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by Section 843.344. A complaint must be submitted in writing or by |
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submitting a completed complaint form to the department by mail or |
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through another delivery method. The department shall maintain a |
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complaint form on the department's Internet website and at the |
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department's offices for use by a complainant. |
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(c) After investigation of the complaint by the department, |
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the commissioner shall determine the validity of the complaint and |
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shall enter a written order. In the order, the commissioner shall |
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provide the health maintenance organization and the complainant |
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with: |
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(1) a summary of the investigation conducted by the |
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department; |
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(2) written notice of the matters asserted, including |
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a statement: |
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(A) of the legal authority, jurisdiction, and |
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alleged conduct under which an enforcement action is imposed or |
|
denied, with a reference to the statutes and rules involved; and |
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(B) that, on request to the department, the |
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health maintenance organization and the complainant are entitled to |
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a hearing conducted by the State Office of Administrative Hearings |
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in the manner prescribed by Section 843.355 regarding the |
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determinations made in the order; and |
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(3) a determination of the denial of the allegations |
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or the imposition of penalties against the health maintenance |
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organization. |
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(d) An order issued under Subsection (c) is final in the |
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absence of a request by the complainant or health maintenance |
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organization for a hearing under Section 843.355. |
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(e) If the department investigation substantiates the |
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allegations of noncompliance made under Subsection (b), the |
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commissioner, after notice and an opportunity for a hearing as |
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described by Subsection (c), shall require the health maintenance |
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organization to pay penalties as provided by Section 843.342. |
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Sec. 843.355. HEARING BY STATE OFFICE OF ADMINISTRATIVE |
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HEARINGS; FINAL ORDER. (a) The State Office of Administrative |
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Hearings shall conduct a hearing regarding a written order of the |
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commissioner under Section 843.354 on the request of the |
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department. A hearing under this section is subject to Chapter |
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2001, Government Code, and shall be conducted as a contested case |
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hearing. |
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(b) After receipt of a proposal for decision issued by the |
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State Office of Administrative Hearings after a hearing conducted |
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under Subsection (a), the commissioner shall issue a final order. |
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(c) If it appears to the department, the complainant, or the |
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health maintenance organization that a person or entity is engaging |
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in or is about to engage in a violation of a final order issued under |
|
Subsection (b), the department, the complainant, or the health |
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maintenance organization may bring an action for judicial review in |
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district court in Travis County to enjoin or restrain the |
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continuation or commencement of the violation or to compel |
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compliance with the final order. The complainant or the health |
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maintenance organization may also bring an action for judicial |
|
review of the final order. |
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Sec. 843.356. LEGISLATIVE DECLARATION. It is the intent of |
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the legislature that the requirements contained in this subchapter |
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regarding payment of claims to providers who are pharmacists or |
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pharmacies apply to all health maintenance organizations and |
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pharmacy benefit managers unless otherwise prohibited by federal |
|
law. |
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SECTION 8. Section 1301.001, Insurance Code, is amended by |
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amending Subdivision (1) and adding Subdivision (1-a) to read as |
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follows: |
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(1) "Health care provider" means a practitioner, |
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institutional provider, or other person or organization that |
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furnishes health care services and that is licensed or otherwise |
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authorized to practice in this state. The term includes a |
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pharmacist and a pharmacy. The term does not include a physician. |
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(1-a) "Extrapolation" means a mathematical process or |
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technique used by an insurer or pharmacy benefit manager that |
|
administers pharmacy claims for an insurer in the audit of a |
|
pharmacy or pharmacist to estimate audit results or findings for a |
|
larger batch or group of claims not reviewed by the insurer or |
|
pharmacy benefit manager. |
|
SECTION 9. Section 1301.103, Insurance Code, is amended to |
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read as follows: |
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Sec. 1301.103. DEADLINE FOR ACTION ON CLEAN CLAIMS. Except |
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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. |
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SECTION 10. Section 1301.104, Insurance Code, is amended to |
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read as follows: |
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Sec. 1301.104. DEADLINE FOR ACTION ON CERTAIN PHARMACY |
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CLAIMS; PAYMENT. (a) An [Not later than the 21st day after the date
|
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an] insurer, or a pharmacy benefit manager that administers |
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pharmacy claims for the insurer under a preferred provider benefit |
|
plan, that affirmatively adjudicates a pharmacy claim that is |
|
electronically submitted, [the insurer] shall pay the total amount |
|
of the claim through electronic funds transfer not later than the |
|
14th day after the date on which the claim was affirmatively |
|
adjudicated. |
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(b) An insurer, or a pharmacy benefit manager that |
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administers pharmacy claims for the insurer under a preferred |
|
provider benefit plan, that affirmatively adjudicates a pharmacy |
|
claim that is not electronically submitted, shall pay the total |
|
amount of the claim not later than the 21st day after the date on |
|
which the claim was affirmatively adjudicated. |
|
SECTION 11. Section 1301.105, Insurance Code, is amended by |
|
adding Subsections (e) and (f) to read as follows: |
|
(e) An insurer or a pharmacy benefit manager that |
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administers pharmacy claims for the insurer may not use |
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extrapolation to complete the audit of a preferred provider that 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 that is a pharmacist or |
|
pharmacy. |
|
(f) An insurer or a pharmacy benefit manager that |
|
administers pharmacy claims for the insurer that performs an |
|
on-site audit of a preferred provider that 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 to the preferred provider |
|
not later than the 15th day before the date on which the on-site |
|
audit is scheduled to occur. |
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SECTION 12. Section 1301.109, Insurance Code, is amended to |
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read as follows: |
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Sec. 1301.109. APPLICABILITY TO ENTITIES CONTRACTING WITH |
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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 13. Subchapter C-1, Chapter 1301, Insurance Code, |
|
is amended by adding Sections 1301.139, 1301.140, and 1301.141 to |
|
read as follows: |
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Sec. 1301.139. DEPARTMENT ENFORCEMENT OF PHARMACY CLAIMS. |
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(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, a pharmacy |
|
benefit manager that administers pharmacy claims for the insurer, |
|
or another 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 14. 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 15. The change in law made by this Act applies only |
|
to a contract between a pharmacy benefit manager and an insurer or |
|
health maintenance organization entered into or renewed on or after |
|
January 1, 2010. A contract entered into or renewed before January |
|
1, 2010, is governed by the law as it existed immediately before the |
|
effective date of this Act, and that law is continued in effect for |
|
that purpose. |
|
SECTION 16. This Act takes effect September 1, 2009. |