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|[ House Amendment 001 ]|
92_HB5930 LRB9214694JSpc 1 AN ACT to create the Pharmacy Benefit Management and 2 Regulation Act. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 1. Short title. This Act may be cited as the 6 Pharmacy Benefit Management Regulation Act. 7 Section 5. Purpose and intent. This Act establishes 8 standards and criteria for the regulation and licensing of 9 pharmacy benefit management companies. The purpose of this 10 Act is to promote, preserve, and protect the public health, 11 safety, and welfare by and through effective regulation and 12 licensing of pharmacy benefit management companies. 13 Section 10. Definitions. For purposes of this Act: 14 "Board of Pharmacy" or "Board" means the State Board of 15 Pharmacy. 16 "Cease and desist" is an order of the Board prohibiting a 17 pharmacy benefit manager or pharmacy benefit management 18 company or other person or entity from continuing a 19 particular course of conduct that violates this Act or its 20 rules. 21 "Director" means the Director of Insurance. 22 "Enrollee" means an individual who has been enrolled in a 23 pharmacy benefit management plan. 24 "Insolvent" or "insolvency" means a financial situation 25 in which, based upon the financial information required by 26 this Act for the preparation of the pharmacy benefit 27 management company's annual statement, the assets of the 28 pharmacy benefit management company are less than the sum of 29 all of its liabilities and required reserves. 30 "Pharmacists services" includes drug therapy and other -2- LRB9214694JSpc 1 patient care services provided by a licensed pharmacist 2 intended to achieve outcomes related to the cure or 3 prevention of a disease, elimination or reduction of a 4 patient's symptoms, or arresting or slowing of a disease 5 process as defined in the rules of the Board. 6 "Pharmacists" means any individual properly licensed as a 7 pharmacist by the Department of Professional Regulation. 8 "Pharmacy" means any appropriately licensed place within 9 this State where drugs are dispensed and pharmacist services 10 are provided. 11 "Pharmacy benefits management company" or "PBM" means a 12 business that administers the prescription drug and device 13 portion of health insurance plans on behalf of plan sponsors, 14 such as self-insured employers, insurance companies, unions, 15 and health maintenance organizations. 16 "Pharmacy benefit management plan" means an arrangement 17 for the delivery of prescription services in which a pharmacy 18 benefit management company undertakes to provide, arrange 19 for, pay for, or reimburse any of the costs of prescription 20 services for an enrollee on a prepaid or insured basis which 21 (i) contains one or more incentive arrangements intended to 22 influence the cost or level of prescription services between 23 the plan sponsor and one or more pharmacies with respect to 24 the delivery of prescription services and (ii) requires or 25 creates benefit payment differential incentives for enrollees 26 to use under contract with the pharmacy benefit management 27 company. A pharmacy benefit plan does not mean an employee 28 welfare benefit plan (as defined in Section 3(1) of the 29 Employee Retirement Income Security Act of 1974, 29 U.S.C. 30 1002(1)), which is self-insured or self-funded. 31 Section 15. Certificate of authority. 32 (a) No person or organization may establish or operate a 33 pharmacy benefit management company in this State to provide -3- LRB9214694JSpc 1 pharmacy benefit management plans without obtaining a 2 certificate of authority from the Board. All PBMs providing 3 pharmacy benefit management plans in this State shall obtain 4 a certificate of authority from the Board of pharmacy every 4 5 years. 6 An organization or person may apply to the Board to 7 obtain a certificate of authority to establish and operate a 8 PBM in compliance with this Act if the organization obtains 9 from the Director an annual license to do business in this 10 State. 11 (b) The Board may suspend or revoke any certificate of 12 authority issued to a pharmacy benefit management company 13 under this Act or deny an application for a certificate of 14 authority if it finds that: 15 (1) the pharmacy benefit management company is 16 operating significantly in contravention of its basic 17 organizational document; 18 (2) the pharmacy benefit management company does 19 not arrange for pharmacists services; 20 (3) the pharmacy benefit management company has 21 failed to meet the requirements for issuance of a 22 certificate of authority as set forth in this Act; 23 (4) the pharmacy benefit management company is 24 unable to fulfill its obligation to furnish pharmacists 25 services as required under its pharmacy benefit 26 management plan; 27 (5) the pharmacy benefit management company is no 28 longer financially responsible and may reasonably be 29 expected to be unable to meet its obligations to 30 enrollees or prospective enrollees; 31 (6) the pharmacy benefit management company, or any 32 person on its behalf, has advertised or merchandised its 33 services in an untrue, misrepresentative, misleading, 34 deceptive, or unfair manner; -4- LRB9214694JSpc 1 (7) the continued operation of the pharmacy benefit 2 management company would be hazardous to its enrollees; 3 (8) the pharmacy benefit management company has 4 failed to file an annual statement with the Director in a 5 timely manner; or 6 (9) the pharmacy benefit management company has 7 otherwise failed to substantially comply with this Act. 8 (c) When the certificate of authority of a pharmacy 9 benefit management company is revoked, the organization shall 10 proceed, immediately following the effective date of the 11 order of revocation, to wind up its affairs and shall conduct 12 no further business except as may be essential to the orderly 13 conclusion of the affairs of the organization. The Board may 14 permit such further operation of the organization as the 15 Board may find to be in the best interest of enrollees to the 16 end that the enrollees will be afforded the greatest 17 practical opportunity to obtain pharmacists services. 18 Section 20. License. 19 (a) The Director shall not issue an annual license to do 20 business in this State to any PBM providing pharmacy benefit 21 management plans until he is satisfied that the pharmacy 22 benefit management company: 23 (1) has paid all fees, taxes, and charges required 24 by law; 25 (2) has made any deposit required by this Act; 26 (3) has the minimum capital and surplus 27 requirements specified by the Director; 28 (4) has filed a financial statement or statements 29 and any reports, certificates, or other documents the 30 Director considers necessary to secure a full and 31 accurate knowledge of its affairs and financial 32 condition; 33 (5) is solvent and its financial condition, method -5- LRB9214694JSpc 1 of operation, and manner of doing business are such as to 2 satisfy the Director that it can meet its obligations to 3 all enrollees; and 4 (6) has otherwise complied with all the 5 requirements of law. 6 (b) This license shall be in addition to the certificate 7 of authority required by the Board. A nonrefundable license 8 application fee of $500 shall accompany each application for 9 a license to transact the business in this State. The fee 10 shall be collected by the Director and paid directly into the 11 Pharmacy Benefit Company Regulation Fund to provide expenses 12 for the regulation, supervision, and examination of all 13 entities subject to regulation under this Act. 14 The license shall be signed by the Director or a duly 15 authorized agent of the Director and shall expire on the next 16 June 30 after the date on which it becomes effective. 17 (c) All PBMs providing pharmacy benefit management plans 18 shall obtain an annual renewal of its license from the 19 Director. The Director may refuse to renew the license of any 20 pharmacy benefit management company or may renew the license 21 subject to any restrictions considered appropriate by the 22 Director, if he or she finds an impairment of required 23 capital and surplus or if it finds that the pharmacy benefit 24 management company has not satisfied all the conditions set 25 forth in this Act. The Director shall not fail to renew the 26 license of any pharmacy benefit management company to 27 transact business in this State without giving the pharmacy 28 benefit management company 10 days' notice and giving it an 29 opportunity to be heard. The hearing may be informal, and the 30 Director and the pharmacy benefit management company may 31 waive the required notice. 32 Section 25. Annual statement. 33 (a) A PBM providing pharmacy management benefit plans in -6- LRB9214694JSpc 1 this State shall file a statement with the Director annually 2 by March 1. The statement shall be verified by at least 2 3 principal officers and shall cover the preceding calendar 4 year. A pharmacy benefit management company shall also send a 5 copy of the statement to the Board. 6 (b) The statement shall be on forms prescribed by the 7 Director and shall include: 8 (1) a financial statement of the organization, 9 including its balance sheet and income statement for the 10 preceding year; 11 (2) the number of persons enrolled during the year, 12 the number of enrollees as of the end of the year, and 13 the number of enrollments terminated during the year; and 14 (3) any other information relating to the 15 operations of the pharmacy benefit management company 16 required by the Director pursuant to this Act. 17 (c) If the pharmacy benefit management company is 18 audited annually by an independent certified public 19 accountant, a copy of the certified audit report shall be 20 filed annually with the Director by June 30. 21 (d) The Director may extend the time prescribed for any 22 pharmacy benefit management company for filing annual 23 statements or other reports or exhibits of any for good cause 24 shown. However, the Director shall not extend the time for 25 filing annual statements beyond 60 days after the time 26 prescribed by subsection (a) of this Section. A pharmacy 27 benefit management company that fails to file its annual 28 statement within the time prescribed by this Section may have 29 its licensed revoked by the Director or its certificate of 30 authority revoked or suspended by the Board until the annual 31 statement is filed. 32 Section 30. Financial examination. 33 (a) Instead of or in addition to making his or her own -7- LRB9214694JSpc 1 financial examination of a pharmacy benefit management 2 company, the Director may accept the report of a financial 3 examination of other person responsible for the pharmacy 4 benefit management companies under the laws of another state 5 certified by the insurance supervisory official, similar 6 regulatory agency, or the state health supervisory official 7 of another state. 8 (b) The Director shall coordinate financial examinations 9 of a PBM that provides pharmacy management benefit plans in 10 this State to ensure an appropriate level of regulatory 11 oversight and to avoid any undue duplication of effort or 12 regulation. The pharmacy benefit management company being 13 examined shall pay the cost of the examination. The cost of 14 the examination shall be deposited into the Pharmacy Benefit 15 Company Regulation Fund, a special fund created in the State 16 treasury. Moneys in the Fund shall be used to pay the 17 expenses of administering this Act. 18 Section 35. Assessment. 19 (a) The expense of administering this Act, including the 20 cost incurred by the Director and the Board, shall be 21 assessed annually by the Board against all pharmacy benefit 22 management companies operating in this State. Before 23 determining the assessment, the Board shall request from the 24 Director an estimate of all expenses for the regulation, 25 supervision, and examination of all entities subject to 26 regulation under this Act. The assessment shall be in 27 proportion to the business done in this State. 28 (b) All fees assessed under this Act and paid to the 29 Board shall be deposited into the Pharmacy Benefit Company 30 Regulation Fund. 31 (c) The Board shall assess each pharmacy benefit 32 management company annually for its just share of expenses. 33 The assessment shall be in proportion to the business done in -8- LRB9214694JSpc 1 this State. The Board shall provide the Director an amount 2 from the Pharmacy Benefit Company Regulation Fund to cover 3 all expenses incurred by the Director for the regulation 4 under this Act. 5 (d) The Board shall give each pharmacy benefit 6 management company notice of the assessment, which shall be 7 paid to the Board on or before March 1 of each year. A 8 pharmacy benefit management company that fails to pay the 9 assessment on or before the date prescribed shall be subject 10 to a penalty imposed by the Board. The penalty shall be 10% 11 of the assessment and interest for the period between the due 12 date and the date of full payment. If a payment is made in an 13 amount later found to be in error, the Board shall (i) if an 14 additional amount is due, notify the company of the 15 additional amount and the company shall pay the additional 16 amount within 14 days after the date of the notice or (ii) if 17 an overpayment is made, order a refund. 18 If an assessment made under this Act is not paid to the 19 Board by the prescribed date, the amount of the assessment, 20 penalty, and interest may be recovered from the defaulting 21 company in an action brought at the request of the Board by 22 the Attorney General made in the name and for the use of the 23 State in the appropriate circuit court after 10 days' notice 24 to the company. The certificate of authority of any 25 defaulting company to transact business in this State may be 26 revoked or suspended by the Board until it has paid the 27 assessment. 28 Section 40. PBM contracts. A PBM that contracts with a 29 pharmacy or pharmacist to provide pharmacists services 30 through a pharmacy management plan for enrollees in this 31 State shall file the contract with the Board 30 days before 32 the execution of the contract. The contract shall be deemed 33 approved unless the Board disapproves the contract within 30 -9- LRB9214694JSpc 1 days after filing with the Board. Disapproval shall be in 2 writing and set forth the reasons for disapproval. A copy the 3 disapproval shall be delivered to the PBM. The Board, 4 consistent with its responsibility for protecting the public 5 interest, shall develop formal criteria for the approval and 6 disapproval of PBM contracts. 7 Section 45. Enforcement. 8 (a) The Board shall develop formal investigation and 9 compliance procedures with respect to complaints by plan 10 sponsors, pharmacists, and enrollees concerning the failure 11 of a pharmacy benefit management company or the pharmacy 12 benefit manager to comply with the provisions of this Act. If 13 the Board has reason to believe that there is a violation of 14 this Act, it shall issue and serve upon the pharmacy benefit 15 management company or the pharmacy benefit manager concerned 16 a statement of the charges and a notice of a hearing to be 17 held at a time and place fixed in the notice, which shall not 18 be less than 30 days after notice is served. The notice shall 19 require the pharmacy benefit management company or the 20 pharmacy benefit manager to show cause why an order should 21 not be issued directing the alleged offender to cease and 22 desist from the violation. At the hearing, the pharmacy 23 benefit management company or the pharmacy benefit manager 24 shall have an opportunity to be heard and to show cause why 25 an order should not be issued requiring the pharmacy benefit 26 management company or the pharmacy benefit manager to cease 27 and desist from the violation. 28 (b) The Board may make an examination concerning the 29 quality of services of any pharmacy benefit management 30 company and providers with whom the pharmacy benefit 31 management company has contracts, agreements, or other 32 arrangements pursuant to its pharmacy benefit management plan 33 as often as the Board deems necessary for the protection of -10- LRB9214694JSpc 1 the interests of the people of this State. The pharmacy 2 benefit management company being examined shall pay the cost 3 of the examination. 4 Section 50. Prohibited practices. 5 (a) A pharmacy benefit management company or its 6 representative may not cause or knowingly permit the use of 7 (i) advertising that is untrue or misleading, (ii) 8 solicitation that is untrue or misleading, or (iii) any form 9 of evidence of coverage that is deceptive. 10 (b) A pharmacy benefit management company, unless 11 licensed as an insurer, may not use in its name, contracts, 12 or literature (i) any of the words "insurance", "casualty", 13 "surety", or "mutual" or (ii) any other words descriptive of 14 the insurance, casualty, or surety business or deceptively 15 similar to the name or description of any insurance or 16 fidelity and surety insurer doing business in this State. 17 (c) A pharmacy benefit management company may not 18 discriminate on the basis of race, creed, color, sex, or 19 religion in the selection of pharmacies for participation in 20 the organization. 21 (d) A pharmacy benefit management company may not 22 unreasonably discriminate against pharmacists when 23 contracting for pharmacist services. 24 Section 55. Disclosures. All of the following shall be 25 provided to the pharmacy benefit company's enrollees of a 26 pharmacy benefit management plan at the time of enrollment or 27 at the time the contract is issued and shall be made 28 available upon request or at least annually: 29 (1) A list of the names and locations of all 30 affiliated providers. 31 (2) A description of the service area or areas 32 within which the pharmacy benefit company provides -11- LRB9214694JSpc 1 prescription services. 2 (3) A description of the method of resolving 3 complaints of covered persons, including a description of 4 any arbitration procedure if complaints may be resolved 5 through a specified arbitration agreement. 6 (4) Notice that the pharmacy benefit management 7 company is subject to regulation in this State by both 8 the State Board of Pharmacy and the Director of 9 Insurance. 10 (5) A prominent notice included within the evidence 11 of coverage, providing substantially the following: "If 12 you have any questions regarding an appeal or grievance 13 concerning the pharmacist services that you have been 14 provided, which have not been satisfactorily addressed by 15 your plan, you may contact the State Pharmacy Board.". 16 The notice shall also provide the toll-free telephone 17 number, mailing address, and electronic mail address of 18 the State Board of Pharmacy. 19 Section 60. Privacy. An enrollee in a pharmacy benefit 20 management plan has the right to privacy and confidentiality 21 in pharmacist services. This right may be expressly waived in 22 writing by the enrollee or the enrollee's guardian. 23 Section 65. Insolvency. 24 (a) If a pharmacy benefit management company becomes 25 insolvent or ceases to be a company in this State in any 26 assessable or license year, the company shall remain liable 27 for the payment of the assessment for the period in which it 28 operated as a pharmacy benefit management company in this 29 State. 30 (b) In the event of an insolvency of a pharmacy benefit 31 management company, the Director may, after notice and 32 hearing, levy an assessment on pharmacy benefit management -12- LRB9214694JSpc 1 companies licensed to do business in this State. The 2 assessments shall be paid quarterly to the Director, and upon 3 receipt by the Director shall be paid over into an escrow 4 account in the Pharmacy Benefit Company Regulation Fund. This 5 escrow account shall be solely for the benefit of enrollees 6 of an insolvent pharmacy benefit management company. 7 Section 95. Severability. The provisions of this Act 8 are severable under Section 1.31 of the Statute on Statutes. 9 Section 97. The State Finance Act is amended by adding 10 Section 5.570 as follows: 11 (30 ILCS 105/5.570 new) 12 Sec. 5.570. The Pharmacy Benefit Company Regulation 13 Fund.
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