84R9165 PMO-F
 
  By: Muñoz, Jr. H.B. No. 2618
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of third-party administrators,
  including pharmacy benefit managers; expanding the requirement of a
  certificate of authority to engage in an occupation; adding
  provisions subject to a criminal penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 4151.001, Insurance Code, is amended by
  amending Subdivisions (1), (2), and (4) and adding Subdivisions
  (3-a) and (5-a) to read as follows:
               (1)  "Administrator" means a person who, in connection
  with annuities or life benefits, health benefits, accident
  benefits, pharmacy benefits, or workers' compensation benefits,
  collects premiums or contributions from or adjusts or settles
  claims for residents of this state.  Except as provided by Section
  4151.0023, the [The] term includes a delegated entity under Chapter
  1272 and a workers' compensation health care network authorized
  under Chapter 1305 that administers a workers' compensation claim
  for an insurer, including an insurer that establishes or contracts
  with the network to provide health care services.  Except as
  provided by Section 4151.0023, the [The] term does not include a
  person described by Section 4151.002.
               (2)  "Insurer" means a person who engages in the
  business of life, health, accident, or workers' compensation
  insurance under the law of this state.  For purposes of this chapter
  only, the term also includes:
                     (A)  an "insurance carrier," as defined by Section
  401.011(27), Labor Code, other than a governmental entity or a
  workers' compensation self-insurance group subject to regulation
  under Chapter 407A, Labor Code; and
                     (B)  an entity for whom a pharmacy benefit manager
  acts as described by Section 4151.0023.
               (3-a)  "Pharmacy benefit management" means
  administration or management of prescription drug benefits
  provided by an insurer, including:
                     (A)  retail pharmacy network management;
                     (B)  pharmacy discount card management;
                     (C)  claims payment to a retail pharmacy for
  prescription medications dispensed to plan participants;
                     (D)  clinical formulary development and
  management services, including utilization management and quality
  assurance programs;
                     (E)  rebate contracting and administration;
                     (F)  auditing contracted pharmacies;
                     (G)  establishing pharmacy reimbursement pricing
  and methodologies; and
                     (H)  determining single- and multiple-source
  medications.
               (4)  "Plan" means a plan, fund, or program established,
  adopted, or maintained by a plan sponsor or insurer to the extent
  that the plan, fund, or program is established, adopted, or
  maintained to provide indemnification, [or] expense reimbursement,
  or payment for any type of life, health, or accident benefit.
               (5-a)  "Retail pharmacy" means a pharmacy licensed
  under Chapter 560, Occupations Code, that dispenses medications to
  the public, including an independent pharmacy, a chain pharmacy, a
  supermarket pharmacy, or a mass merchandiser pharmacy. The term
  does not include a pharmacy that dispenses prescription medications
  primarily through the mail, a nursing home pharmacy, a long-term
  care facility pharmacy, a hospital pharmacy, a clinic pharmacy, a
  charitable or nonprofit pharmacy, a government pharmacy, or a
  pharmacy benefit manager that is serving in its capacity as a
  pharmacy benefit manager.
         SECTION 2.  Section 4151.002, Insurance Code, is amended to
  read as follows:
         Sec. 4151.002.  EXEMPTIONS. Except as provided by Section
  4151.0023, a [A] person is not an administrator if the person is:
               (1)  an employer, other than a certified workers'
  compensation self-insurer, administering an employee benefit plan
  or the plan of an affiliated employer under common management and
  control;
               (2)  a union administering a benefit plan on behalf of
  its members;
               (3)  an insurer or a group hospital service corporation
  subject to Chapter 842 acting with respect to a policy lawfully
  issued and delivered by the insurer or corporation in and under the
  law of a state in which the insurer or corporation was authorized to
  engage in the business of insurance;
               (4)  a health maintenance organization that is
  authorized to operate in this state under Chapter 843 with respect
  to any activity that is specifically regulated under that chapter,
  Chapter 1271, 1272, or 1367, Subchapter A, Chapter 1452, or
  Subchapter B, Chapter 1507;
               (5)  an agent licensed under Subchapter B, Chapter
  4051, Subchapter B, Chapter 4053, or Subchapter B, Chapter 4054,
  who receives commissions as an agent and is acting:
                     (A)  under appointment on behalf of an insurer
  authorized to engage in the business of insurance in this state; and
                     (B)  in the customary scope and duties of the
  person's authority as an agent;
               (6)  a creditor acting on behalf of its debtor with
  respect to insurance that covers a debt between the creditor and its
  debtor, if the creditor performs only the functions of a group
  policyholder or a creditor;
               (7)  a trust established in conformity with 29 U.S.C.
  Section 186 or a trustee or employee who is acting under the trust;
               (8)  a trust that is exempt from taxation under Section
  501(a), Internal Revenue Code of 1986, or a trustee or employee
  acting under the trust;
               (9)  a custodian or a custodian's agent or employee who
  is acting under a custodian account that complies with Section
  401(f), Internal Revenue Code of 1986;
               (10)  a bank, credit union, savings and loan
  association, or other financial institution that is subject to
  supervision or examination under federal or state law by a federal
  or state regulatory authority, if the institution is performing
  only those functions for which the institution holds a license
  under federal or state law;
               (11)  a company that advances and collects a premium or
  charge from its credit card holders on their authorization, if the
  company does not adjust or settle claims and acts only in the
  company's debtor-creditor relationship with its credit card
  holders;
               (12)  a person who adjusts or settles claims in the
  normal course of the person's practice or employment as a licensed
  attorney and who does not collect any premium or charge in
  connection with annuities or with life, health, accident, pharmacy,
  or workers' compensation benefits;
               (13)  an adjuster licensed under Subtitle C by the
  department who is engaged in the performance of the individual's
  powers and duties as an adjuster in the scope of the individual's
  license;
               (14)  a person who provides technical, advisory,
  utilization review, precertification, or consulting services to an
  insurer, plan, or plan sponsor but does not make any management or
  discretionary decisions on behalf of the insurer, plan, or plan
  sponsor;
               (15)  an attorney in fact for a Lloyd's plan operating
  under Chapter 941 or for a reciprocal or interinsurance exchange
  operating under Chapter 942 who is acting in the capacity of
  attorney in fact under the applicable chapter;
               (16)  a joint fund, risk management pool, or
  self-insurance pool composed of political subdivisions of this
  state that participate in a fund or pool through interlocal
  agreements, any nonprofit administrative agency or governing body
  or other nonprofit entity that acts solely on behalf of a fund,
  pool, agency, or body, or any other fund, pool, agency, or body
  established under or for the purpose of implementing an interlocal
  governmental agreement;
               (17)  a self-insured political subdivision;
               (18)  a plan under which insurance benefits are
  provided exclusively by an insurer authorized to engage in the
  business of insurance in this state and the administrator of which
  is:
                     (A)  a full-time employee of the plan's organizing
  or sponsoring association, trust, or other entity; or
                     (B)  a trustee of the organizing or sponsoring
  trust;
               (19)  a parent of a wholly owned direct or indirect
  subsidiary insurer authorized to engage in the business of
  insurance in this state or a wholly owned direct or indirect
  subsidiary insurer that is a part of the parent's holding company
  system that, under an agreement regulated and approved under
  Chapter 823 or a similar statute of the domiciliary state if the
  parent or subsidiary insurer is a foreign insurer engaged in
  business in this state, on behalf of only itself or an affiliated
  insurer:
                     (A)  collects premiums or contributions, if the
  parent or subsidiary insurer:
                           (i)  prepares only billing statements and
  places those statements in the United States mail; and
                           (ii)  causes all collected premiums to be
  deposited directly in a depository account of the particular
  affiliated insurer; or
                     (B)  furnishes proof-of-loss forms, reviews
  claims, determines the amount of the liability for those claims,
  and negotiates settlements, if the parent or subsidiary insurer
  pays claims only from the funds of the particular subsidiary by
  checks or drafts of that subsidiary; or
               (20)  an affiliate, as described by Section [Chapter]
  823.003, of a self-insurer certified under Chapter 407, Labor Code,
  and who:
                     (A)  is performing the acts of an administrator on
  behalf of that certified self-insurer; and
                     (B)  directly or indirectly through one or more
  intermediaries, controls, is controlled by, or is under common
  control with that certified self-insurer, as the term "control" is
  described by Section 823.005.
         SECTION 3.  Subchapter A, Chapter 4151, Insurance Code, is
  amended by adding Section 4151.0023 to read as follows:
         Sec. 4151.0023.  CHAPTER APPLICABILITY TO PHARMACY BENEFIT
  MANAGERS; EXCEPTIONS. (a)  Notwithstanding any other law, this
  chapter applies to a person, other than a pharmacist or pharmacy,
  who collects premium or contributions from or adjusts or settles
  claims for residents of this state with respect to pharmacy
  benefits provided by an entity that issues or provides a plan that
  provides benefits for medical or surgical expenses incurred as a
  result of a health condition, accident, or sickness, including an
  individual, group, blanket, or franchise insurance policy or
  insurance agreement, a group hospital service contract, or an
  individual or group evidence of coverage or similar coverage
  document that is offered by:
               (1)  an insurance company;
               (2)  a group hospital service corporation operating
  under Chapter 842;
               (3)  a fraternal benefit society operating under
  Chapter 885;
               (4)  a stipulated premium company operating under
  Chapter 884;
               (5)  an exchange operating under Chapter 942;
               (6)  a health maintenance organization operating under
  Chapter 843;
               (7)  a multiple employer welfare arrangement that holds
  a certificate of authority under Chapter 846; or
               (8)  an approved nonprofit health corporation that
  holds a certificate of authority under Chapter 844.
         (b)  This chapter applies to a pharmacy benefit manager that
  provides pharmacy benefit management with respect to pharmacy
  benefits provided by the provider or issuer of a plan of group
  health coverage made available by a school district in accordance
  with Section 22.004, Education Code.
         (c)  Notwithstanding Section 172.014, Local Government Code,
  or any other law, this chapter applies to a pharmacy benefit manager
  that provides pharmacy benefit management with respect to pharmacy
  benefits provided by a risk pool created under Chapter 172, Local
  Government Code, that provides health and accident coverage.
         (d)  Notwithstanding any provision in Chapter 1551, 1575,
  1579, or 1601 or any other law, this chapter applies to a pharmacy
  benefit manager that provides pharmacy benefit management with
  respect to pharmacy benefits provided by the provider or issuer of:
               (1)  a basic coverage plan under Chapter 1551;
               (2)  a basic plan under Chapter 1575;
               (3)  a primary care coverage plan under Chapter 1579;
  and
               (4)  a plan that provides basic coverage under Chapter
  1601.
         (e)  Notwithstanding Section 1501.251 or any other law, this
  chapter applies to a pharmacy benefit manager that provides
  pharmacy benefit management with respect to pharmacy benefits
  provided by the issuer of coverage under a small employer health
  benefit plan subject to Chapter 1501.
         (f)  To the extent allowed by federal law, this chapter
  applies to a pharmacy benefit manager that provides pharmacy
  benefit management with respect to pharmacy benefits provided by
  the state Medicaid program, except that this chapter does not apply
  to a managed care organization subject to Section 533.005,
  Government Code.
         (g)  This chapter does not apply to a pharmacy benefit
  manager with respect to pharmacy benefits provided by:
               (1)  a plan that provides coverage:
                     (A)  for wages or payments in lieu of wages for a
  period during which an employee is absent from work because of
  sickness or injury;
                     (B)  as a supplement to a liability insurance
  policy;
                     (C)  for credit insurance;
                     (D)  only for dental or vision care;
                     (E)  only for hospital expenses; or
                     (F)  only for indemnity for hospital confinement;
               (2)  a Medicare supplemental policy as defined by
  Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
               (3)  a workers' compensation insurance policy or any
  other plan or arrangement that provides workers' compensation
  benefits;
               (4)  medical payment insurance coverage provided under
  a motor vehicle insurance policy; or
               (5)  a long-term care policy, including a nursing home
  fixed indemnity policy, unless the commissioner determines that the
  policy provides benefit coverage so comprehensive that the policy
  is a health benefit plan as described by Subsections (a)-(f).
         (h)  Notwithstanding any other law, a person described by
  Subsections (a)-(g) is an administrator subject to this chapter and
  must obtain a certificate of authority under Subchapter B.
         SECTION 4.  The heading to Subchapter D, Chapter 4151,
  Insurance Code, is amended to read as follows:
  SUBCHAPTER D. PHARMACY BENEFITS [BENEFIT PLANS]
         SECTION 5.  Subchapter D, Chapter 4151, Insurance Code, is
  amended by amending Section 4151.151 and adding Sections 4151.154,
  4151.155, 4151.156, 4151.157, 4151.158, and 4151.159 to read as
  follows:
         Sec. 4151.151.  DEFINITION. In this subchapter, "pharmacy
  benefit manager" means a person, other than a pharmacy or
  pharmacist, who acts as an administrator who provides pharmacy
  benefit management in connection with pharmacy benefits.
         Sec. 4151.154.  AMENDMENT OF CONTRACT TERM. A pharmacy
  benefit manager may not change a term of a contract with a retail
  pharmacy, including automatically enrolling or disenrolling the
  pharmacy from a pharmacy benefit network, without prior written
  agreement of the retail pharmacy.
         Sec. 4151.155.  CERTAIN TRANSACTION FEES PROHIBITED. A
  pharmacy benefit manager may not charge a transaction fee for a
  claim submitted electronically to the pharmacy benefit manager by a
  retail pharmacy.
         Sec. 4151.156.  PHARMACY NETWORK REQUIREMENTS AND
  PROHIBITIONS. (a) A pharmacy benefit manager may not require that
  a retail pharmacy be a member of a network managed by the pharmacy
  benefit manager as a condition for the retail pharmacy to
  participate in another network managed by the pharmacy benefit
  manager.
         (b)  A pharmacy benefit manager may not exclude a retail
  pharmacy from participation in a network if the pharmacy:
               (1)  accepts the terms, conditions, and reimbursement
  rates of the pharmacy benefit manager;
               (2)  meets all applicable federal and state licensure
  and permit requirements; and
               (3)  has not been excluded from participation as a
  provider in any federal or state program.
         (c)  A pharmacy benefit manager shall establish a pharmacy
  network that includes sufficient retail pharmacies to ensure that:
               (1)  in urban areas, not less than 90 percent of plan
  participants, on average, live not more than two miles from a
  network retail pharmacy;
               (2)  in suburban areas, not less than 90 percent of plan
  participants, on average, live not more than five miles from a
  network retail pharmacy; and
               (3)  in rural areas, not less than 70 percent of plan
  participants, on average, live not more than 15 miles from a network
  retail pharmacy.
         Sec. 4151.157.  RELATIONSHIP WITH PLAN PARTICIPANTS.  A
  pharmacy benefit manager may not:
               (1)  require that a plan participant use a retail
  pharmacy, mail order pharmacy, specialty pharmacy, or other entity
  providing pharmacy services:
                     (A)  in which the pharmacy benefit manager has an
  ownership interest; or
                     (B)  that has an ownership interest in the
  pharmacy benefit manager; or
               (2)  provide an incentive to a plan participant to
  encourage the plan participant to use a retail pharmacy, mail order
  pharmacy, specialty pharmacy, or other entity providing pharmacy
  services:
                     (A)  in which the pharmacy benefit manager has an
  ownership interest; or
                     (B)  that has an ownership interest in the
  pharmacy benefit manager.
         Sec. 4151.158.  SALE, RENTAL, OR LEASING OF CLAIMS DATA. (a)  
  Not later than the 30th day before the date a pharmacy benefit
  manager intends to sell, rent, or lease an insurer's claims data,
  the pharmacy benefit manager shall disclose in writing to the
  insurer that the pharmacy benefit manager intends to sell, rent, or
  lease the claims data. The written disclosure must identify the
  potential purchaser and the expected use of the data.
         (b)  A pharmacy benefit manager may not sell, rent, or lease
  claims data without the written approval of the insurer.
         (c)  A pharmacy benefit manager must allow each plan
  participant to refuse the sale, rent, or lease of that plan
  participant's claims data.
         Sec. 4151.159.  TRANSMISSION OF CLAIMS DATA AND CERTAIN
  OTHER INFORMATION PROHIBITED. A pharmacy benefit manager may not
  transmit a plan participant's personally identifiable utilization
  or claims data to a pharmacy owned by the pharmacy benefit manager
  unless before each transmission the plan participant consents in
  writing to the transmission.
         SECTION 6.  The change in law made by this Act applies only
  to a contract between a pharmacy benefit manager and a retail
  pharmacy entered into or renewed on or after January 1, 2016. A
  contract entered into or renewed before January 1, 2016, 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 7.  Unless required to register as an administrator
  under Chapter 4151, Insurance Code, before the effective date of
  this Act, an entity acting as, or holding itself out as, a pharmacy
  benefit manager for purposes of that chapter as amended by this Act
  is not required to hold a certificate of authority under that
  chapter before January 1, 2016.
         SECTION 8.  This Act takes effect September 1, 2015.