86R488 PMO-D
 
  By: Kolkhorst S.B. No. 2261
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the practices and operation of pharmacy benefit
  managers; providing administrative penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The heading to Subchapter H, Chapter 1369,
  Insurance Code, is amended to read as follows:
  SUBCHAPTER H. PRICING AND REIMBURSEMENT PRACTICES; APPEALS AND
  COMPLAINTS [MAXIMUM ALLOWABLE COST]
         SECTION 2.  Subchapter H, Chapter 1369, Insurance Code, is
  amended by adding Sections 1369.3581, 1369.3582, and 1369.3583 to
  read as follows:
         Sec. 1369.3581.  PROHIBITED REIMBURSEMENT PRACTICES;
  RETROACTIVE REDUCTION OR DENIAL OF CLAIM. A pharmacy benefit
  manager may not on an aggregated basis or otherwise reduce or deny a
  claim for pharmacy services after adjudication of the claim unless
  the pharmacy benefit manager produces to the pharmacist or pharmacy
  prima facie evidence of:
               (1)  fraud or intentional misrepresentation related to
  the claim; and
               (2)  actual financial harm to the relevant enrollee or
  health benefit plan issuer.
         Sec. 1369.3582.  PRICING APPEALS GENERALLY. (a) The
  commissioner by rule shall:
               (1)  prescribe a standard procedure by which a
  pharmacist or pharmacy may appeal to the pharmacy benefit manager
  any pricing decision made by a pharmacy benefit manager;
               (2)  require a pharmacy benefit manager to use only the
  prescribed procedure for a pharmacist's or pharmacy's appeal of the
  pharmacy benefit manager's pricing decision; and
               (3)  require a pharmacy benefit manager who denies an
  appeal to:
                     (A)  provide to the appealing pharmacist or
  pharmacy the National Drug Code number of the relevant drug sold at
  a price below the price subject to the appeal and the name of the
  national or regional pharmaceutical wholesalers operating in this
  state that currently stock the drug at the lower price; and
                     (B)  if the lower price described by Paragraph (A)
  is more than the appealing pharmacist's or pharmacy's pharmacy
  acquisition cost of the relevant drug bought from a pharmaceutical
  wholesaler from which the pharmacist or pharmacy regularly
  purchases the majority of the pharmacist's or pharmacy's drugs for
  resale:
                           (i)  adjust the Maximum Allowable Cost List
  price to an amount above the pharmacist's or pharmacy's pharmacy
  acquisition cost; and
                           (ii)  permit the pharmacist or pharmacy to
  reverse and rebill each claim affected by the pharmacist's or
  pharmacy's inability to purchase the drug at a cost that is equal to
  or less than the price subject to the appeal.
         (b)  In prescribing the procedure under this section, the
  commissioner shall consider:
               (1)  input from any interested party; 
               (2)  any appeal procedure that is widely used
  commercially in this state or by the department or the Centers for
  Medicare and Medicaid Services; and
               (3)  any national standard or draft standard relating
  to the appeal of a pharmacy benefit manager's pricing decision.
         (c)  The commissioner shall establish penalties for failure
  to use the procedure prescribed under this section in accordance
  with this subchapter. 
         (d)  A pharmacy benefit manager that violates this
  subchapter or a rule adopted under this subchapter commits an
  unfair practice in violation of Chapter 541 and is subject to
  sanctions under Chapter 82.
         Sec. 1369.3583.  COMPLAINT PROGRAM. (a) The department
  shall establish a program to facilitate resolution of complaints
  against a pharmacy benefit manger relating to the pharmacy benefit
  manager's reimbursement practices.
         (b)  A pharmacist or pharmacy may file a complaint with the
  department under the program established under Subsection (a) if
  the complaint includes credible evidence that a pharmacy benefit
  manager engaged in an intentional course of conduct exhibited
  through a pattern or practice that:
               (1)  violates this chapter; or
               (2)  constitutes improper, fraudulent, or dishonest
  contract performance with the pharmacist or pharmacy.
         (c)  The commissioner shall determine by rule the threshold
  for filing a complaint under Subsection (b).
         (d)  After receipt of a complaint satisfying the threshold
  established under Subsection (c), the commissioner shall provide
  notice to the pharmacy benefit manager that is the subject of the
  complaint and conduct a hearing to determine if the pharmacy
  benefit manager engaged in a course of conduct described by
  Subsection (b). The commissioner shall consider:
               (1)  the contract between the pharmacist or pharmacy
  and the pharmacy benefit manager;
               (2)  one or more independent nationwide drug pricing
  databases or reference materials, including National Average Drug
  Acquisition Cost reference data developed by the Centers for
  Medicare and Medicaid Services; and
               (3)  any other relevant information.
         (e)  The commissioner shall take appropriate disciplinary
  action against the pharmacy benefit manager as provided by this
  code if the commissioner finds that the pharmacy benefit manager
  engaged in a course of conduct described by Subsection (b).
         SECTION 3.  The heading to Subchapter I, Chapter 1369,
  Insurance Code, is amended to read as follows:
  SUBCHAPTER I. PHARMACY BENEFIT CLAIM ADJUDICATION AND DISPUTE
  RESOLUTION
         SECTION 4.  Subchapter I, Chapter 1369, Insurance Code, is
  amended by adding Sections 1369.403, 1369.404, 1369.405, 1369.406,
  1369.407, 1369.408, 1369.409, 1369.410, and 1369.411 to read as
  follows:
         Sec. 1369.403.  REQUEST AND PRELIMINARY PROCEDURES FOR
  MANDATORY MEDIATION. (a) A pharmacist or pharmacy may request
  mandatory mediation under this subchapter.
         (b)  A request for mandatory mediation must be provided to
  the department on a form prescribed by the commissioner and must
  include:
               (1)  the name of the pharmacist or pharmacy requesting
  mediation;
               (2)  a brief description of the claim to be mediated;
               (3)  contact information, including a telephone
  number, for the requesting pharmacist or pharmacy and the
  pharmacist's or pharmacy's counsel, if the pharmacist or pharmacy
  retains counsel;
               (4)  the name of the pharmacy benefit manager and name
  of the applicable health benefit plan issuer; and
               (5)  any other information the commissioner may require
  by rule.
         (c)  On receipt of a request for mediation, the department
  shall notify the pharmacy benefit manager and applicable health
  benefit plan issuer of the request.
         (d)  In an effort to settle the claim before mediation, all
  parties must participate in an informal settlement teleconference
  not later than the 30th day after the date on which the pharmacist
  or pharmacy submits a request for mediation under this section.
         (e)  A dispute to be mediated under this subchapter that does
  not settle as a result of a teleconference conducted under
  Subsection (d) must be conducted in the county in which the
  pharmacist or pharmacy is located.
         Sec. 1369.404.  MEDIATOR QUALIFICATIONS. (a) Except as
  provided by Subsection (b), to qualify for an appointment as a
  mediator under this subchapter a person must have completed at
  least 40 classroom hours of training in dispute resolution
  techniques in a course conducted by an alternative dispute
  resolution organization or other dispute resolution organization
  approved by the chief administrative law judge.
         (b)  A person not qualified under Subsection (a) may be
  appointed as a mediator on agreement of the parties.
         (c)  A person may not act as mediator for a claim
  adjudication dispute if the person has been employed by, consulted
  for, or otherwise had a business relationship with a pharmacist,
  pharmacy, or pharmacy benefit manager during the three years
  immediately preceding the request for mediation.
         Sec. 1369.405.  APPOINTMENT OF MEDIATOR; FEES. (a) A
  mediation shall be conducted by one mediator.
         (b)  The chief administrative law judge shall appoint the
  mediator through a random assignment from a list of qualified
  mediators maintained by the State Office of Administrative
  Hearings.
         (c)  Notwithstanding Subsection (b), a person other than a
  mediator appointed by the chief administrative law judge may
  conduct the mediation on agreement of all of the parties and notice
  to the chief administrative law judge.
         (d)  The mediator's fees shall be split evenly and paid by
  the pharmacist or pharmacy and the pharmacy benefit manager.
         Sec. 1369.406.  CONDUCT OF MEDIATION; CONFIDENTIALITY. (a)
  A mediator may not impose the mediator's judgment on a party about
  an issue that is a subject of the mediation.
         (b)  A mediation session is under the control of the
  mediator.
         (c)  Except as provided by this subchapter, the mediator must
  hold in strict confidence all information provided to the mediator
  by a party and all communications of the mediator with a party.
         (d)  A party must have an opportunity during the mediation to
  speak and state the party's position.
         (e)  Except on the agreement of the participating parties, a
  mediation may not last more than four hours.
         (f)  Except at the request of a pharmacist or pharmacy, a
  mediation shall be held not later than the 180th day after the date
  of the request for mediation.
         Sec. 1369.407.  MATTERS CONSIDERED IN MEDIATION; AGREED
  RESOLUTION. (a) In a mediation under this subchapter, the parties
  shall evaluate the adjudicated claim amount and whether the amount
  is in accordance with this chapter and the pharmacy benefit
  contract between the pharmacist or pharmacy and the pharmacy
  benefit manager.
         (b)  The parties shall consider one or more independent
  nationwide drug pricing databases or reference materials,
  including National Average Drug Acquisition Cost reference data
  developed by the Centers for Medicare and Medicaid Services.
         (c)  Nothing in this subchapter prohibits mediation of more
  than one adjudicated claim between the parties at a mediation.
         (d)  The goal of the mediation is to reach an agreement among
  the pharmacist or pharmacy, the pharmacy benefit manager, and the
  health benefit plan issuer as to the amount paid to the pharmacist
  or pharmacy.
         Sec. 1369.408.  NO AGREED RESOLUTION. (a) The mediator of
  an unsuccessful mediation under this subchapter shall report the
  outcome of the mediation to the department and the chief
  administrative law judge.
         (b)  The chief administrative law judge shall enter an order
  of referral of a matter reported under Subsection (a) to a special
  judge under Chapter 151, Civil Practice and Remedies Code, that:
               (1)  names the special judge on whom the parties agreed
  or appoints the special judge if the parties did not agree on a
  judge;
               (2)  states the issues to be referred and  the time and
  place on which the parties agree for the trial;
               (3)  requires each party to pay the party's
  proportionate share of the special judge's fee; and
               (4)  certifies that the parties have waived the right
  to trial by jury.
         (c)  A trial by the special judge selected or appointed as
  described by Subsection (b) must proceed under Chapter 151, Civil
  Practice and Remedies Code, except that the special judge's verdict
  is not relevant or material to any other adjudicated claim and has
  no precedential value.
         (d)  Notwithstanding any other provision of this section,
  Section 151.012, Civil Practice and Remedies Code, does not apply
  to a mediation under this subchapter.
         Sec. 1369.409.  REPORT OF MEDIATOR. The mediator shall
  report to the commissioner:
               (1)  the names of the parties to the mediation; and
               (2)  whether the parties reached an agreement or the
  mediator made a referral under Section 1369.408.
         Sec. 1369.410.  BAD FAITH. (a) The following conduct
  constitutes bad faith mediation for purposes of this subchapter:
               (1)  failing to participate in the mediation;
               (2)  failing to provide information the mediator
  believes is necessary to facilitate an agreement; or
               (3)  failing to designate a representative
  participating in the mediation with full authority to enter into
  any mediated agreement.
         (b)  Failure to reach an agreement is not conclusive proof of
  bad faith mediation.
         Sec. 1369.411.  PENALTIES. (a) Bad faith mediation by a
  pharmacy benefit manager is grounds for imposition of an
  administrative penalty under Chapter 4151.
         (b)  Except for good cause shown, on a report of a mediator
  and appropriate proof of bad faith mediation, the commissioner
  shall impose an administrative penalty.
         SECTION 5.  Chapter 1369, Insurance Code, is amended by
  adding Subchapter K to read as follows:
  SUBCHAPTER K. PHARMACY BENEFIT MANAGERS
         Sec. 1369.501.  DEFINITIONS. In this subchapter:
               (1)  "Enrollee" means an individual who is covered
  under a health benefit plan, including a covered dependent.
               (2)  "Health benefit plan" means an individual, group,
  blanket, or franchise insurance policy or insurance agreement, a
  group hospital service contract, or an individual or group
  subscriber contract or evidence of coverage or similar coverage
  document issued by a health maintenance organization, that provides
  health insurance or health benefits.
               (3)  "Health benefit plan issuer" means an entity
  authorized under this code or another insurance law of this state
  that provides health insurance or health benefits through a health
  benefit plan in this state.
               (4)  "Pharmacist service" means the provision of a
  product or good, patient care, or other clinical, professional, or
  administrative services in the practice of pharmacy.
               (5)  "Pharmacy benefit manager" has the meaning
  assigned by Section 4151.151.
               (6)  "Pharmacy benefit network" means a system for the
  delivery of pharmacy benefits and pharmacist services established
  by contract between a pharmacy benefit manager and a pharmacist or
  pharmacy.
               (7)  "Rebate" means a discount or other concession,
  including an incentive, related to dispensing a prescription drug
  that is paid by a manufacturer or third party, directly or
  indirectly, to a pharmacy benefit manager.
         Sec. 1369.502.  CONTRACT REQUIREMENTS; CONTRACT ACCESS. (a)
  A pharmacy benefit manager may not sell, lease, or otherwise
  transfer information regarding the payment or reimbursement terms
  of a pharmacy benefit network contract without the express
  authority of and prior adequate notification to the pharmacists or
  pharmacies in the pharmacy benefit network. The prior adequate
  notification must be provided in the written format specified by
  the pharmacy benefit network contract.
         (b)  A pharmacy benefit manager may not provide a person
  access to pharmacy services or contractual discounts under a
  pharmacy benefit network contract unless the contract
  specifically:
               (1)  allows the pharmacy benefit manager to provide to
  the person access to the pharmacy benefit manager's rights and
  responsibilities under the pharmacy benefit network contract; and
               (2)  makes the person's access contingent on the person
  complying with all applicable terms, limitations, and conditions of
  the pharmacy benefit network contract.
         (c)  A pharmacy benefit network contract must require that,
  on the request of a pharmacist or pharmacy, the pharmacy benefit
  manager will timely provide information necessary for the
  pharmacist or pharmacy to determine whether a person is authorized
  to access the pharmacist's or pharmacy's services and contractual
  discounts.
         (d)  A pharmacy benefit network contract must specify or
  reference a separate fee schedule. The fee schedule may be
  provided by any reasonable method, including electronically. The
  fee schedule may describe:
               (1)  specific services or procedures that the
  pharmacist or pharmacy may deliver and the amount of the
  corresponding payment;
               (2)  a methodology for calculating the amount of the
  payment based on a published fee schedule; or
               (3)  any other reasonable manner that provides an
  ascertainable amount for payment for services.
         (e)  For the purposes of this section, a pharmacy benefit
  manager shall permit a pharmacist or pharmacy participating in a
  pharmacy benefit network reasonable access, including electronic
  access, during business hours to review the pharmacy benefit
  network contract. The information obtained during the review may
  be used or disclosed only for the purposes of complying with the
  terms of the contract, this subchapter, or other state or federal
  law.
         Sec. 1369.503.  FIDUCIARY DUTIES. (a) A pharmacy benefit
  manager of a health benefit plan issuer is a fiduciary of the health
  benefit plan issuer.
         (b)  The pharmacy benefit manager shall:
               (1)  act in accordance with the standards of conduct
  applicable to a fiduciary in an enterprise of like character and
  with like aims;
               (2)  perform its duties with care, skill, prudence, and
  diligence; and
               (3)  comply with the fiduciary requirements of this
  section.
         (c)  The pharmacy benefit manager shall notify the health
  benefit plan issuer in writing of any activity, policy, or practice
  of the pharmacy benefit manager that directly or indirectly
  presents a conflict of interest between the pharmacy benefit
  manager and the health benefit plan issuer.
         (d)  The pharmacy benefit manager shall provide to a health
  benefit plan issuer all financial and utilization information
  requested by the health benefit plan issuer relating to the
  provision of benefits to the relevant enrollees and any financial
  and utilization information relating to the pharmacy benefit
  manager's services to the health benefit plan issuer.
         (e)  If a pharmacy benefit manager substitutes a more
  expensive drug for a prescribed drug, the pharmacy benefit manager
  shall disclose to the health benefit plan issuer the cost of the
  prescribed drug and the substitute drug and the amount of any rebate
  the pharmacy benefit manager may receive, directly or indirectly,
  as a result of the substitution.
         (f)  A pharmacy benefit manager shall transfer to the health
  benefit plan issuer the entire amount of any rebate that the
  pharmacy benefit manager receives, directly or indirectly, for any
  reason, including as the result of:
               (1)  a substitution described by Subsection (e);
               (2)  a substitution by the pharmacy benefit manager of
  a lower-priced generic and therapeutically equivalent drug for a
  higher-priced prescribed drug; or
               (3)  volume of sales of a drug or a class or brand of
  drug.
         (g)  A pharmacy benefit manager shall disclose to a health
  benefit plan issuer all financial terms and arrangements for
  remuneration of any kind, including rebates, that the pharmacy
  benefit manager has with each drug manufacturer or relabeler, as
  defined by 21 C.F.R. Section 207.1, including formulary management
  and drug-switch programs, educational support, claims processing
  and pharmacy network fees that are charged from pharmacists and
  pharmacies, and data sales fees.
         Sec. 1369.504.  PHARMACY BENEFIT NETWORK STANDARDS. (a) The
  commissioner shall by rule adopt pharmacy benefit network adequacy
  standards that:
               (1)  are adapted to local markets in which a pharmacy
  benefit manager operates;
               (2)  ensure availability of, and accessibility to, a
  full range of contracted pharmacists and pharmacies to provide
  pharmacy services to enrollees; and
               (3)  on good cause shown, may allow departure from
  local market network adequacy standards if the commissioner posts
  on the department's Internet website the name of the pharmacy
  benefit manager, the health benefit plan issuer, and the affected
  local market.
         (b)  The commissioner may not consider mail-order pharmacies
  in the determination of the pharmacy benefit network adequacy
  standards adopted by rule under Subsection (a).
         Sec. 1369.505.  ANY WILLING PROVIDER. (a) A pharmacy
  benefit manager may not exclude a pharmacist or pharmacy from
  participation in a pharmacy benefit network if the pharmacist or
  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 terminated for cause as a provider in
  any federal or state program.
         (b)  Except as required by the commissioner in coordination
  with the Texas State Board of Pharmacy, a pharmacy benefit manager
  may not require, as a condition of participating in a pharmacy
  benefit network, that a pharmacist or pharmacy obtain:
               (1)  accreditation, credentialing, or certification
  inconsistent with, more stringent than, or in addition to the
  requirements imposed by the Texas State Board of Pharmacy or state
  or federal law; or
               (2)  a performance or surety bond or other financial
  guarantee in excess of the requirements imposed by the Texas State
  Board of Pharmacy or state or federal law.
         Sec. 1369.506.  PROTECTED COMMUNICATION AND OTHER PRACTICES
  BY PHARMACISTS AND PHARMACIES. (a) In a participation contract
  between a pharmacy benefit manager and a pharmacist or pharmacy
  providing prescription drug coverage for a health benefit plan, a
  pharmacist or pharmacy may not be prohibited or restricted from or
  penalized in any way for disclosing to an enrollee any health care
  information that the pharmacist or pharmacy considers appropriate
  regarding:
               (1)  the nature of treatment, risks, or alternative
  therapies;
               (2)  the availability of alternate therapies,
  consultations, or tests;
               (3)  the decision of utilization reviewers or similar
  persons to authorize or deny services;
               (4)  the process used to authorize or deny health care
  services or benefits; or
               (5)  financial incentives and structures used by the
  relevant health benefit plan.
         (b)  A pharmacist or pharmacy may provide to an enrollee
  information regarding the enrollee's total cost for a pharmacist
  service for a prescription drug.
         (c)  A pharmacy benefit manager may not prohibit a pharmacist
  or pharmacy from:
               (1)  discussing information regarding the total cost
  for a pharmacist service for a prescription drug; or
               (2)  selling a more affordable alternative to the
  enrollee if a more affordable alternative is available.
         (d)  A pharmacy benefit manager contract with a
  participating pharmacist or pharmacy may not prohibit, restrict, or
  limit disclosure of information to the commissioner, law
  enforcement, or state or federal governmental officials
  investigating or examining a complaint or conducting a review of a
  pharmacy benefit manager's compliance with the requirements of this
  subchapter.
         Sec. 1369.507.  RECOUPMENT LIMITATION. (a)  A reimbursement
  made to a pharmacist or pharmacy by a pharmacy benefit manager may
  not be denied or reduced after adjudication of the claim, unless:
               (1)  the original claim was submitted fraudulently;
               (2)  the original claim payment was incorrect because
  the pharmacist or pharmacy had already been paid for the pharmacist
  service; or
               (3)  the pharmacist service was not properly rendered
  by the pharmacist or pharmacy.
         (b)  A pharmacy benefit manager entitled to a recoupment on
  the basis of a discrepancy found during an audit related to a drug
  that was properly dispensed may only recover fees paid by the
  pharmacy benefit manager to the pharmacist or pharmacy associated
  with the audited claim and may not recoup the cost of the drug or
  other ingredient or any other amount related to the claim.
         SECTION 6.  The heading to Subchapter D, Chapter 4151,
  Insurance Code, is amended to read as follows:
  SUBCHAPTER D. PHARMACY BENEFITS [BENEFIT PLANS]
         SECTION 7.  Subchapter D, Chapter 4151, Insurance Code, is
  amended by adding Section 4151.155 to read as follows:
         Sec. 4151.155.  BOARD OF PHARMACY REQUESTS. The
  commissioner shall provide to the Texas State Board of Pharmacy, on
  the board's request, a copy of any document related to an action
  taken under Subchapter G against a pharmacy benefit manager,
  including:
               (1)  a document or information or data submitted by a
  pharmacy benefit manager to the commissioner;
               (2)  correspondence between the pharmacy benefit
  manager and the commissioner; and
               (3)  a written notice, finding, or determination, or
  other document sent by the commissioner to the pharmacy benefit
  manager.
         SECTION 8.  Section 1369.357, Insurance Code, is repealed.
         SECTION 9.  Chapter 1369, Insurance Code, as amended by this
  Act, applies only to a contract between a pharmacy benefit manager
  and a pharmacist or pharmacy entered into or renewed on or after
  January 1, 2020. A contract entered into or renewed before January
  1, 2020, 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 10.  This Act takes effect September 1, 2019.