SB2779 94TH GENERAL ASSEMBLY

LRB094 19050 RAS 54546 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB2779

Introduced 1/20/2006, by Sen. Dale A. Righter

SYNOPSIS AS INTRODUCED:

215 ILCS 5/Art. XXXI.5 heading
215 ILCS 5/512-1	from Ch. 73, par. 1065.59-1
215 ILCS 5/512-2	from Ch. 73, par. 1065.59-2
215 ILCS 5/512-3	from Ch. 73, par. 1065.59-3
215 ILCS 5/512-4	from Ch. 73, par. 1065.59-4
215 ILCS 5/512-5	from Ch. 73, par. 1065.59-5
215 ILCS 5/512-6	from Ch. 73, par. 1065.59-6
215 ILCS 5/512-7	from Ch. 73, par. 1065.59-7
215 ILCS 5/512-8	from Ch. 73, par. 1065.59-8
215 ILCS 5/512-9	from Ch. 73, par. 1065.59-9
215 ILCS 5/512-10	from Ch. 73, par. 1065.59-10
215 ILCS 5/512-11 new
215 ILCS 5/512-12 new

Amends the Third Party Prescription Programs Article of the Insurance Code to change the name of the Article to the Pharmaceutical Benefits Management Programs Law. Changes references from third party prescription programs to pharmaceutical benefits management programs and from third party program administrator to pharmaceutical benefits manager or PBM throughout the Article. Provides for the registration of all pharmaceutical benefits management programs and pharmaceutical benefits managers (PBMs) doing business in the State with the Director of the Division of Insurance of the Department of Financial and Professional Regulation. Makes changes concerning fiduciary and bonding, notice, and contractual requirements, cancellation procedures, denial of payment, and failure to register. Sets forth provisions concerning failure to comply. Grants rulemaking authority to the Director of the Division of Insurance. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning regulation.

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

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

(215 ILCS 5/Art. XXXI.5 heading)

ARTICLE XXXI 1/2.

PHARMACEUTICAL BENEFITS MANAGEMENT THIRD PARTY PRESCRIPTION

PROGRAMS

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

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

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

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

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

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

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

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

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

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

(a) "Pharmaceutical benefits management Third party prescription program" or "program" means any system of providing for the administration of or reimbursement for of pharmaceutical services and prescription drug products offered or operated in this State by a pharmaceutical benefits manager under a contractual arrangement or agreement between a provider of such services and another party who is not the consumer of those services and products. Such programs may include, but need not be limited to, employee benefit plans whereby a consumer receives prescription drugs or other pharmaceutical services and those services are paid for by an agent of the employer or others.

(b) "Pharmaceutical benefits manager Third party program administrator" or "PBM administrator" means any person, partnership or corporation who issues or causes to be issued any payment or reimbursement to a provider for services rendered pursuant to a pharmaceutical benefits management third party prescription program. "Pharmaceutical benefits manager" or "PBM" , but does not include the Director of Healthcare and Family Services Public Aid or any agent authorized by the Director to reimburse a provider of services rendered pursuant to a program of which the Department of Healthcare and Family Services Public Aid is the third party.

(Source: P.A. 90-372, eff. 7-1-98; revised 12-15-05.)

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

Sec. 512-4. Registration. All pharmaceutical benefits management third party prescription programs and PBMs administrators doing business in the State shall register with the Director of Insurance. The Director may shall promulgate regulations establishing criteria for registration in accordance with the terms of this Article. The Director may by rule establish an annual registration fee for each pharmaceutical benefits management program third party administrator.

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

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

Sec. 512-5. Fiduciary and Bonding Requirements.

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

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

(c) Any PBM An administrator who operates more than one pharmaceutical benefits management third party prescription program may establish and maintain a separate fiduciary account or bond of indemnity for each such program, or may operate and maintain a consolidated fiduciary account or bond of indemnity for all such programs.

(d) The requirements of this Section do not apply to any pharmaceutical benefits management third party prescription program administered by or on behalf of any insurance company, Health Maintenance Organization, Limited Health Service Organization, or Voluntary Health Services Plan Care Service Plan Corporation or Pharmaceutical Service Plan Corporation authorized to do business in the State of Illinois.

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

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

Sec. 512-6. Notice. Notice of any change in the terms of a pharmaceutical benefits management third party prescription program, including but not limited to drugs covered, reimbursement rates, co-payments, and dosage quantity, shall be given to each enrolled pharmacy at least 30 days prior to the time it becomes effective.

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

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

Sec. 512-7. Contractual provisions.

(a) Any agreement or contract entered into in this State between a PBM the administrator of a program and a pharmacy under a pharmaceutical benefits management program shall include a statement of the method and amount of reimbursement to the pharmacy for services rendered to persons enrolled in the program, the frequency of payment by the PBM program administrator to the pharmacy for those services, and a method for the adjudication of complaints and the settlement of disputes between the contracting parties.

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

(2) If compliance with the requirements of this subsection (b) would impair any provision of a contract between a program and any other person, and if the contract provision was in existence before January 1, 2006 1990, then immediately after the expiration of those contract provisions the program shall comply with the requirements of this subsection (b).

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

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

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

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

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

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

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

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

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

Sec. 512-8. Cancellation procedures.

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

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

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

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

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

Sec. 512-9. Denial of Payment.

(a) No PBM administrator shall deny payment to any pharmacy for covered pharmaceutical services or prescription drug products rendered as a result of the misuse, fraudulent or illegal use of an identification card unless such identification card had expired, been noticeably altered, or the pharmacy was notified of the cancellation of such card. In lieu of notifying pharmacies which have a common ownership, the PBM administrator may notify a party designated by the pharmacy to receive such notice, in which case, notification shall not become effective until 5 calendar days after the designee receives notification.

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

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

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

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

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

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

(215 ILCS 5/512-11 new)

Sec. 512-11. Failure to Comply. In order to enforce the provisions of this Article, the Director may issue a cease and desist order or require a PBM to pay a civil penalty or both. Subject to the provisions of the Illinois Administrative Procedure Act, the Director may, pursuant to Section 403A of the Illinois Insurance Code, impose upon a pharmaceutical benefits management program an administrative fine of $5,000 for violations of this Article.

(215 ILCS 5/512-12 new)

Sec. 512-12. Rulemaking. The Director shall have the authority to adopt any rules necessary for the implementation and administration of this Article.

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