Sen. Dale A. Righter
Filed: 4/20/2005
 
 

 




 

 		












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AMENDMENT TO SENATE BILL 1828




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    AMENDMENT NO. ______. Amend Senate Bill 1828, AS AMENDED, 
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by replacing everything after the enacting clause with the 
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following:

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

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 PHARMACEUTICAL BENEFITS MANAGEMENT


THIRD PARTY PRESCRIPTION


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PROGRAMS


 



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



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

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

 



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



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

 


 






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

 



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



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

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

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

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providing for the administration of or reimbursement for
of

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

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

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

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

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

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

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

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

 



 


 






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



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

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

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

 



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



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    Sec. 512-5. Fiduciary and Bonding Requirements. 

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    (a) A PBM
third party prescription program administrator

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

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

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

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

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    (d) The requirements of this Section do not apply to any 
 


 






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pharmaceutical benefits management
third party prescription

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

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authorized
to do business in the State of Illinois.

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

 



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



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

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program,
including but not limited to drugs covered, 
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reimbursement rates, co-payments,
and dosage quantity, shall 
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be given to each enrolled pharmacy at least 30
days prior to 
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the time it becomes effective.

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

 



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



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    Sec. 512-7. Contractual provisions. 

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

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

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


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


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        (2) If compliance with the requirements of this 
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    subsection (b) would
impair any provision of a contract 
 


 






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    between a program and any other person,
and if the contract 
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    provision was in existence before January 1, 2006
1990,

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


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


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


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            (B) (blank).
the program administrator is a 
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        licensed health maintenance
organization that is owned 
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        or controlled by another entity that also owns
or 
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        controls a pharmacy, and the administrator enters into 
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        an agreement or
contract with that pharmacy in 
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        accordance with subsection (a).


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

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


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


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

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

 



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



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    Sec. 512-8. Cancellation procedures. 
 


 






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    (a) The pharmaceutical benefits manager
administrator of a 
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program
shall notify all pharmacies enrolled in the program of 
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any cancellation
of the coverage of benefits of any group 
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enrolled in the program at least
30 days prior to the effective 
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date of such cancellation.
  However, if the PBM
administrator of 
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a program is not notified at least 45
days prior to the 
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effective date of such cancellation, the PBM
administrator

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

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

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    (c) Any person who intentionally uses a program 
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identification card to
obtain services from a pharmacy after 
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having received notice of the cancellation
of his benefits 
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shall be guilty of a Class C misdemeanor.  Persons shall
be 
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liable to the PBM
program administrator for all monies paid by 
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the PBM
program
administrator for any services received 
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pursuant to such misuse
any improper use of
the identification 
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card.

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

 



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



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

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products rendered as a result of the misuse, fraudulent or 
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illegal use of
an identification card unless such 
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identification card had expired, been
noticeably altered, or 
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the pharmacy was notified of the cancellation of
such card.  In 
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lieu of notifying pharmacies which have a common ownership,
the 
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PBM
administrator may notify a party designated by the pharmacy 
 


 






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to receive
such notice, in which case, notification shall not 
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become effective until
5 calendar days after the designee 
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receives notification.

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

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

 



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



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    Sec. 512-10. Failure to Register. Any pharmaceutical 
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benefits management
third party prescription program
or PBM 
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that
administrator which operates without a certificate of 
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registration or
fails to register with the Director and pay the 
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fee prescribed by this Article
shall be construed to be an 
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unauthorized insurer as defined in Article VII
of this Code and 
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shall be subject to all penalties contained therein.

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

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

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

 
 


 






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    (215 ILCS 5/512-11  new)
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    Sec. 512-11. Failure to Comply.   In order to enforce the 
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provisions of this Article, the Director may issue a cease and 
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desist order or require a PBM to pay a civil penalty or both. 
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Subject to the provisions of the Illinois Administrative 
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Procedure Act, the Director may, pursuant to Section 403A of 
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the Illinois Insurance Code, impose upon a pharmaceutical 
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benefits management program an administrative fine of $5,000 
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for violations of this Article.
 
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    (215 ILCS 5/512-12  new)
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    Sec. 512-12. Rulemaking. The Director shall have the 
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authority to adopt any rules necessary for the implementation 
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and administration of this Article.

 
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    Section 99. Effective date. This Act takes effect upon 
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becoming law.".