SB1828 Engrossed

LRB094 11306 RAS 42120 b






1
    AN ACT concerning regulation.

 
2
    Be it enacted by the People of the State of Illinois,
 
3
represented in the General Assembly:


 
4
    Section 5. The Illinois Insurance Code is amended  by 
5
changing  the heading of Article  XXXI 1/2 and Sections 512-1, 
6
512-2, 512-3, 512-4, 512-5, 512-6, 512-7, 512-8, 512-9, and 
7
512-10 and  by adding Sections 512-11 and 512-12 as follows:
 
8
    (215 ILCS 5/Art. XXXI.5 heading)
9

ARTICLE XXXI 1/2. 

10
 PHARMACEUTICAL BENEFITS MANAGEMENT


THIRD PARTY PRESCRIPTION


11

PROGRAMS


 



12
    (215 ILCS 5/512-1)  (from Ch. 73, par. 1065.59-1)



13
    Sec. 512-1. Short Title. This Article shall be known and 
14
may be cited
as the "Pharmaceutical Benefits Management 
15
Programs Law
Third Party Prescription Program Act".

16
(Source: P.A. 82-1005.)

 



17
    (215 ILCS 5/512-2)  (from Ch. 73, par. 1065.59-2)



18
    Sec. 512-2. Purpose. It is hereby determined and declared 
19
that the
purpose of this Article is to regulate pharmaceutical 
20
benefits management programs
certain practices engaged in by 
21
third-party
prescription
program administrators.

22
(Source: P.A. 82-1005.)

 



23
    (215 ILCS 5/512-3)  (from Ch. 73, par. 1065.59-3)



24
    Sec. 512-3. Definitions. For the purposes of this Article, 
25
unless the
context otherwise requires, the terms defined in 
26
this Article have the meanings
ascribed
to them herein:

27
    "Director" means the Director of the Division of Insurance 
28
of the Department of Financial and Professional Regulation.
29
    "Division" means the Division of Insurance of the 
 


 






SB1828 Engrossed
- 2 -
LRB094 11306 RAS 42120 b




1
Department of Financial and Professional Regulation.

2
    (a) "Pharmaceutical benefits management
Third party 
3
prescription program" or "program" means any system of

4
providing for the administration of or reimbursement for
of

5
pharmaceutical services and prescription
drug products offered 
6
or operated in this State by a pharmaceutical benefits manager

7
under a contractual arrangement
or agreement between a provider 
8
of such services and another party who is
not the consumer of 
9
those services and products.  Such programs may include, but 
10
need not be limited to, employee benefit
plans whereby a 
11
consumer receives prescription drugs or other pharmaceutical

12
services and those services are paid for by
an agent of the 
13
employer or others.

14
    (b) "Pharmaceutical benefits manager
Third party program 
15
administrator" or "PBM
administrator" means any person,

16
partnership or corporation who issues or causes to be issued 
17
any payment
or reimbursement to a provider for services 
18
rendered pursuant to a pharmaceutical benefits management

19
third
party prescription program. "Pharmaceutical benefits 
20
manager" or "PBM" ,  but does not include the Director of Public

21
Aid or any agent authorized by
the Director to reimburse a 
22
provider of services rendered pursuant to a
program of which 
23
the Department of Public Aid is the third party.

24
(Source: P.A. 90-372, eff. 7-1-98.)

 



25
    (215 ILCS 5/512-4)  (from Ch. 73, par. 1065.59-4)



26
    Sec. 512-4. Registration. All pharmaceutical benefits 
27
management
third party prescription programs and
PBMs

28
administrators doing business in the State shall register with 
29
the Director
of Insurance.  The Director may
shall promulgate 
30
regulations establishing criteria
for registration in 
31
accordance with the terms of this Article. The Director
may by 
32
rule establish an annual registration fee for each 
33
pharmaceutical benefits management program
third party 
34
administrator.

35
(Source: P.A. 82-1005.)

 



 


 






SB1828 Engrossed
- 3 -
LRB094 11306 RAS 42120 b




1
    (215 ILCS 5/512-5)  (from Ch. 73, par. 1065.59-5)



2
    Sec. 512-5. Fiduciary and Bonding Requirements. 

3
    (a) A PBM
third party prescription program administrator

4
shall (1) establish and
maintain a fiduciary account, separate 
5
and apart from any and all other
accounts, for the receipt and 
6
disbursement of funds for reimbursement of
providers of 
7
services under the program, or (2) post,
or cause to be posted, 
8
a bond of indemnity in an amount equal to not less
than 10% of 
9
the total estimated annual reimbursements under the program.

10
    (b) The establishment of such fiduciary accounts and bonds 
11
shall be consistent
with applicable State law.
If a bond of 
12
indemnity is posted, it shall be held by the Director of 
13
Insurance
for the benefit and indemnification of the providers 
14
of services under the
pharmaceutical benefits management
third 
15
party prescription program.

16
    (c) Any PBM
An administrator who operates more than one 
17
pharmaceutical benefits management
third party prescription

18
program
may establish and maintain a separate fiduciary account 
19
or bond of indemnity
for each such program, or may operate and 
20
maintain a consolidated fiduciary
account or bond of indemnity 
21
for all such programs.

22
    (d) The requirements of this Section do not apply to any 
23
pharmaceutical benefits management
third party prescription

24
program administered by or on behalf of any insurance company, 
25
Health Maintenance Organization, Limited Health Service 
26
Organization, or Voluntary Health Services Plan
Care
Service 
27
Plan Corporation or Pharmaceutical Service Plan Corporation

28
authorized
to do business in the State of Illinois.

29
(Source: P.A. 82-1005.)

 



30
    (215 ILCS 5/512-6)  (from Ch. 73, par. 1065.59-6)



31
    Sec. 512-6. Notice. Notice of any change in the terms of a 
32
pharmaceutical benefits management
third party prescription

33
program,
including but not limited to drugs covered, 
34
reimbursement rates, co-payments,
and dosage quantity, shall 
 


 






SB1828 Engrossed
- 4 -
LRB094 11306 RAS 42120 b




1
be given to each enrolled pharmacy at least 30
days prior to 
2
the time it becomes effective.

3
(Source: P.A. 82-1005.)

 



4
    (215 ILCS 5/512-7)  (from Ch. 73, par. 1065.59-7)



5
    Sec. 512-7. Contractual provisions. 

6
    (a) Any agreement or contract entered into in this State

7
between a PBM
the
administrator of a program and a pharmacy 
8
under a pharmaceutical benefits management program shall 
9
include a statement of the
method and amount of reimbursement 
10
to the pharmacy for services rendered to
persons enrolled in 
11
the program, the frequency of payment by the PBM
program

12
administrator to the pharmacy for those services, and a method 
13
for the
adjudication of complaints and the settlement of 
14
disputes between the
contracting parties.


15
    (b)(1) A program shall provide an annual period of at least 
16
    30 days
during which any pharmacy licensed under the 
17
    Pharmacy Practice Act of 1987
may elect to participate in 
18
    the program under the program terms for at
least one year.


19
        (2) If compliance with the requirements of this 
20
    subsection (b) would
impair any provision of a contract 
21
    between a program and any other person,
and if the contract 
22
    provision was in existence before January 1, 2006
1990,

23
    then immediately after the expiration of those contract 
24
    provisions the
program shall comply with the requirements 
25
    of this subsection (b).


26
        (3) This subsection (b) does not apply if:


27
            (A) the PBM
program administrator is a licensed 
28
        health maintenance
organization, limited health 
29
        service organization, or voluntary health services 
30
        plan that owns or controls a pharmacy and that enters 
31
        into an
agreement or contract with that pharmacy in 
32
        accordance with subsection (a); or


33
            (B) (blank).
the program administrator is a 
34
        licensed health maintenance
organization that is owned 
35
        or controlled by another entity that also owns
or 
 


 






SB1828 Engrossed
- 5 -
LRB094 11306 RAS 42120 b




1
        controls a pharmacy, and the administrator enters into 
2
        an agreement or
contract with that pharmacy in 
3
        accordance with subsection (a).


4
        (4) (Blank).
This subsection (b) shall be inoperative 
5
    after October 31,
1992.

6
    (c) The PBM
program administrator shall cause to be issued 
7
an identification
card to each person enrolled in the program.  
8
The identification card
shall comply with the Uniform 
9
Prescription Drug Information Card Act.
include:


10
        (1) the name of the individual enrolled in the program; 
11
    and


12
        (2) an expiration date if required under the 
13
    contractual arrangement or
agreement between a provider of 
14
    pharmaceutical services and prescription
drug products and 
15
    the third party prescription program administrator.

16
(Source: P.A. 86-473; 87-254.)

 



17
    (215 ILCS 5/512-8)  (from Ch. 73, par. 1065.59-8)



18
    Sec. 512-8. Cancellation procedures. 
19
    (a) The pharmaceutical benefits manager
administrator of a 
20
program
shall notify all pharmacies enrolled in the program of 
21
any cancellation
of the coverage of benefits of any group 
22
enrolled in the program at least
30 days prior to the effective 
23
date of such cancellation.
  However, if the PBM
administrator of 
24
a program is not notified at least 45
days prior to the 
25
effective date of such cancellation, the PBM
administrator

26
shall notify all pharmacies enrolled in the program of the 
27
cancellation
as soon as practicable after having received 
28
notice.

29
    (b) When a program is terminated, all persons enrolled 
30
therein shall be
so notified, and the employer shall make every 
31
reasonable effort to gain
possession of any plan identification 
32
cards in such persons' possession.

33
    (c) Any person who intentionally uses a program 
34
identification card to
obtain services from a pharmacy after 
35
having received notice of the cancellation
of his benefits 
 


 






SB1828 Engrossed
- 6 -
LRB094 11306 RAS 42120 b




1
shall be guilty of a Class C misdemeanor.  Persons shall
be 
2
liable to the PBM
program administrator for all monies paid by 
3
the PBM
program
administrator for any services received 
4
pursuant to such misuse
any improper use of
the identification 
5
card.

6
(Source: P.A. 82-1005.)

 



7
    (215 ILCS 5/512-9)  (from Ch. 73, par. 1065.59-9)



8
    Sec. 512-9. Denial of Payment. 
9
    (a) No PBM
administrator shall deny payment
to any pharmacy 
10
for covered pharmaceutical services or prescription drug

11
products rendered as a result of the misuse, fraudulent or 
12
illegal use of
an identification card unless such 
13
identification card had expired, been
noticeably altered, or 
14
the pharmacy was notified of the cancellation of
such card.  In 
15
lieu of notifying pharmacies which have a common ownership,
the 
16
PBM
administrator may notify a party designated by the pharmacy 
17
to receive
such notice, in which case, notification shall not 
18
become effective until
5 calendar days after the designee 
19
receives notification.

20
    (b) No PBM
program administrator may withhold any payment 
21
to any pharmacy
for covered pharmaceutical services or 
22
prescription drug products beyond
the time period specified in 
23
the payment schedule provisions of the agreement,
except for 
24
individual claims for payment which have been returned to the 
25
pharmacy
as incomplete or illegible.  Such returned claims shall 
26
be paid if resubmitted
by the pharmacy to the PBM
program 
27
administrator with the appropriate corrections made.

28
(Source: P.A. 82-1005.)

 



29
    (215 ILCS 5/512-10)  (from Ch. 73, par. 1065.59-10)



30
    Sec. 512-10. Failure to Register. Any pharmaceutical 
31
benefits management
third party prescription program
or PBM 
32
that
administrator which operates without a certificate of 
33
registration or
fails to register with the Director and pay the 
34
fee prescribed by this Article
shall be construed to be an 
 


 






SB1828 Engrossed
- 7 -
LRB094 11306 RAS 42120 b




1
unauthorized insurer as defined in Article VII
of this Code and 
2
shall be subject to all penalties contained therein.

3
    The provisions of this
the Article shall apply to all new 
4
programs established
on or after January 1, 2006
1983. Programs 
5
existing on the effective date of this amendatory Act of the 
6
94th General Assembly
Existing programs shall comply with the 
7
provisions
of this Article as they existed before the effective 
8
date of this amendatory Act of the 94th General Assembly until

9
on the anniversary date of the programs that occurs on or
after 
10
January 1, 2006, at which time the programs shall comply with 
11
the provisions of this Article as they exist beginning on the 
12
effective date of this amendatory Act of the 94th General 
13
Assembly
1983.

14
(Source: P.A. 82-1005.)

 
15
    (215 ILCS 5/512-11  new)
16
    Sec. 512-11. Failure to Comply.   In order to enforce the 
17
provisions of this Article, the Director may issue a cease and 
18
desist order or require a PBM to pay a civil penalty or both. 
19
Subject to the provisions of the Illinois Administrative 
20
Procedure Act, the Director may, pursuant to Section 403A of 
21
the Illinois Insurance Code, impose upon a pharmaceutical 
22
benefits management program an administrative fine of $5,000 
23
for violations of this Article.
 
24
    (215 ILCS 5/512-12  new)
25
    Sec. 512-12. Rulemaking. The Director shall have the 
26
authority to adopt any rules necessary for the implementation 
27
and administration of this Article.
 
28
    Section 99. Effective date. This Act takes effect upon 
29
becoming law.