Illinois General Assembly - Full Text of HB4079
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Full Text of HB4079  99th General Assembly




State of Illinois
2015 and 2016


Introduced , by Rep. Kelly M. Cassidy


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    Amends the Illinois Insurance Code. Provides a process to register with the Department of Insurance as a pharmacy benefits manager and what information must be included. Provides that the Director of Insurance an revoke, suspend, deny, or restrict a certificate of registration for violation of the Code or on other grounds as determined necessary or appropriate by the Director. Provides that the Department shall regulate the drug pricing process used by pharmacy benefits managers, and specifies the appeals process for such pricing. Provides that pharmacy benefits managers shall not mandate that a covered individual use a specific pharmacy or provide incentives to encourage the use of a specific pharmacy under specified circumstances. Provides criteria for entities to use in performing on-site audits of pharmacy records. Provides that health plans must permit their enrollees to receive benefits, which may include a 90-day supply of covered prescription drugs, at any of its network community pharmacies. Contains provisions concerning medication synchronization. Provides that dispensing fees shall be determined exclusively on the total number of prescriptions dispensed. Regulates how pharmacy benefits managers may utilize personally identifiable data. Provides that the Department can regulate other specified activities of pharmacy benefits managers. Makes other changes. Effective January 1, 2016.

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HB4079LRB099 10333 MLM 30560 b

1    AN ACT concerning insurance.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Insurance Code is amended by
5changing Sections 512-3, 512-4, 512-5, 512-6, 512-7, 512-8,
6512-9, and 512-10 and by adding Sections 512-11, 512-12,
7512-13, 512-14, 512-15, 512-16, 512-17, and 512-18 as follows:
8    (215 ILCS 5/512-3)  (from Ch. 73, par. 1065.59-3)
9    Sec. 512-3. Definitions. For the purposes of this Article,
10unless the context otherwise requires, the terms defined in
11this Article have the meanings ascribed to them herein:
12    "Compounding" has the meaning ascribed to it in the
13Pharmacy Practice Act.
14    "Department" means the Department of Insurance.
15    "Director" means the Director of Insurance.
16    "Entity" means a managed care company, insurance company,
17third-party payor, a PBM, third-party prescription program, or
18any other organization that represents these companies,
19groups, or organizations.
20    "Generic exclusivity period" means the period established
21in Section 355(j)(5)(B)(iv) of Title 21 of the United States
23    "Health plan" has the meaning ascribed to it in 45 CFR



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2    "Maximum allowable cost" or "MAC" means a maximum
3reimbursement amount for a group of therapeutically and
4pharmaceutically equivalent multiple source drugs that are
5listed in the federal Food and Drug Administration's "Approved
6Drug Products with Therapeutic Equivalence Evaluations" and
7for which there are no fewer than 3 nationally available
8equivalent drug products.
9    "Medical device" has the meaning ascribed to it in the
10Pharmacy Practice Act.
11    "Medication synchronization" means the coordination of
12medication refills for a patient taking 2 or more medications
13for a chronic condition such that the patient's medications are
14refilled on the same schedule for a given time period.
15    "Medication therapy management services" has the meaning
16ascribed to it in the Pharmacy Practice Act.
17    "Multiple source drug" means a drug for which there are 3
18or more drug products that are:
19        (1) rated by the federal Food and Drug Administration
20    as therapeutically equivalent under the federal Food and
21    Drug Administration's most recent publication of Approved
22    Drug Products with Therapeutic Equivalence Evaluations;
23        (2) determined by the federal Food and Drug
24    Administration to be pharmaceutically equivalent or
25    bioequivalent; and
26        (3) separately sold or marketed in the United States



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1    during the same calendar quarter.
2    "Nationally available" means that such products are
3available for purchase by pharmacies or chain-operated
4warehouses in sufficient supply from national pharmaceutical
5wholesalers and are not obsolete or temporarily unavailable.
6Products must be available for purchase from a wholesale drug
7distributor as defined and licensed according to the Wholesale
8Drug Distribution Licensing Act.
9    "Obsolete" means that such products may be listed in the
10national pricing compendia but are no longer actively marketed
11by the manufacturer or labeler.
12    "Patient counseling" has the meaning ascribed to it in the
13Pharmacy Practice Act.
14    "Pharmacist" has the meaning ascribed to it in the Pharmacy
15Practice Act.
16    "Pharmacist care" has the meaning ascribed to it in the
17Pharmacy Practice Act and is considered to be a component of
18pharmacist-provided care.
19    "Pharmacy" has the meaning ascribed to it in the Pharmacy
20Practice Act.
21    "Pharmacy benefits manager" or "PBM" means an entity that
22contracts with third-party pharmacies or pharmacists on behalf
23of a health plan for the third-party pharmacy and pharmacists
24to provide pharmacy services to such health plans.
25    "Practice of pharmacy" has the meaning ascribed to it in
26the Pharmacy Practice Act.



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1    "Prescription" has the meaning ascribed to it in the
2Pharmacy Practice Act.
3    "Standing Order" has the meaning ascribed to it in the
4Pharmacy Practice Act.
5    "Temporarily unavailable" means that such products are
6experiencing short-term supply interruptions for which only
7inconsistent or intermittent supply is available in the current
9    "Unique Identifier" has the meaning ascribed to it in the
10Pharmacy Practice Act.
11    (a) "Third party prescription program" or "program" means
12any system of providing for the reimbursement of pharmaceutical
13services and prescription drug products offered or operated in
14this State under a contractual arrangement or agreement between
15a provider of such services and another party who is not the
16consumer of those services and products. Such programs may
17include, but need not be limited to, employee benefit plans
18whereby a consumer receives prescription drugs or other
19pharmaceutical services and those services are paid for by an
20agent of the employer or others.
21    (b) "Third party program administrator" or "administrator"
22means any person, partnership or corporation who issues or
23causes to be issued any payment or reimbursement to a provider
24for services rendered pursuant to a third party prescription
25program, but does not include the Director of Healthcare and
26Family Services or any agent authorized by the Director to



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1reimburse a provider of services rendered pursuant to a program
2of which the Department of Healthcare and Family Services is
3the third party.
4(Source: P.A. 95-331, eff. 8-21-07.)
5    (215 ILCS 5/512-4)  (from Ch. 73, par. 1065.59-4)
6    Sec. 512-4. Registration.
7    (a) All PBMs that provide services to residents of this
8State shall apply for, obtain, and maintain a certificate of
9registration to operate as a PBM from the Department.
10    (b) The PBM certificate of registration shall be renewed
12    (c) The Director shall establish the fees and shall have
13the authority to assess fees to cover the annual expenses and
14costs of administering this Article.
15    (d) The application for a certificate of registration to
16operate in this State as a PBM shall be in a form prescribed by
17the Director and shall be verified by an officer or authorized
18representative of the PBM.
19    (e) The application shall include, but is not limited to,
20the following:
21        (1) All organizational documents, including, but not
22    limited to, articles of incorporation, bylaws, and other
23    similar documents and any amendments.
24        (2) The names, addresses, titles, and qualifications
25    of the members and officers of the board of directors,



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1    board of trustees, or other governing body or committee, or
2    the partners or owners in case of a partnership or other
3    entity or association.
4        (3) A detailed description of the claims processing
5    services, pharmacy services, insurance services, other
6    prescription drug or device services, or other
7    administrative services provided.
8        (4) The name and address of the agent for service of
9    process in the State.
10        (5) Financial statements for the current and the
11    preceding year, showing the assets, liabilities, direct or
12    indirect income, and any other sources of financial support
13    as deemed sufficient by the Director to show financial
14    stability and viability to meet its full obligations to
15    participants and participating pharmacies. The Director
16    may allow a recent financial statement prepared by an
17    independent certified public accountant to meet this
18    requirement.
19        (6) Such other information as the Director may require.
20    (f) The Director may revoke, suspend, deny, or restrict a
21certificate of registration of a PBM for violation of this
22Article or on other grounds or violations of State or federal
23laws, rules, or regulations as determined necessary or
24appropriate by the Director. In the event that a certificate is
25revoked, suspended, or denied, the Director may permit such
26further operation of the PBM for a limited time, not to exceed



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160 days, under conditions and restrictions as determined by the
2Director as necessary for the beneficial interests of the
3participants and pharmacy and pharmacist providers.
4    (g) The Director may renew the certificate of any PBM,
5subject to any restrictions considered necessary or
6appropriate by the Director.
7    (h) The Director shall provide written notice to the PBM of
8any revocation, denial, suspension, or restriction, including
9the specific reasons. The PBM shall have the same rights to
10notice, hearings, and other provisions as provided to insurers
11or third party administrators, respectively, under State law.
12    (i) The Director shall, upon request, provide the
13Department of Financial and Professional Regulation with
14copies of applications, correspondence, and any other
15documents provided by the PBM to the Director, and with
16notices, findings, determinations, and other documents
17provided by the Director to the PBM.
18All third party prescription programs and administrators doing
19business in the State shall register with the Director of
20Insurance. The Director shall promulgate regulations
21establishing criteria for registration in accordance with the
22terms of this Article. The Director may by rule establish an
23annual registration fee for each third party administrator.
24(Source: P.A. 82-1005.)
25    (215 ILCS 5/512-5)  (from Ch. 73, par. 1065.59-5)



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1    Sec. 512-5. Fiduciary and Bonding Requirements. An entity
2A third party prescription program administrator shall (1)
3establish and maintain a fiduciary account, separate and apart
4from any and all other accounts, for the receipt and
5disbursement of funds for reimbursement of providers of
6services under the entity's program, or (2) post, or cause to
7be posted, a bond of indemnity in an amount equal to not less
8than 10% of the total estimated annual reimbursements under the
9entity's program.
10    The establishment of such fiduciary accounts and bonds
11shall be consistent with applicable State law. If a bond of
12indemnity is posted, it shall be held by the Director of
13Insurance for the benefit and indemnification of the providers
14of services under the entity third party prescription program.
15    An entity administrator who operates more than one third
16party prescription program may establish and maintain a
17separate fiduciary account or bond of indemnity for each such
18program, or may operate and maintain a consolidated fiduciary
19account or bond of indemnity for all such programs.
20    The requirements of this Section do not apply to any third
21party prescription program administered by or on behalf of any
22insurance company, Health Care Service Plan Corporation or
23Pharmaceutical Service Plan Corporation authorized to do
24business in the State of Illinois.
25(Source: P.A. 82-1005.)



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1    (215 ILCS 5/512-6)  (from Ch. 73, par. 1065.59-6)
2    Sec. 512-6. Notice. Notice of any change in the terms of a
3PBM third party prescription program, including but not limited
4to drugs covered, pharmacist-provided services, reimbursement
5rates, co-payments, and dosage quantity, shall be given to each
6enrolled pharmacy at least 30 days prior to the time it becomes
8(Source: P.A. 82-1005.)
9    (215 ILCS 5/512-7)  (from Ch. 73, par. 1065.59-7)
10    Sec. 512-7. Contractual provisions.
11    (a) Any agreement or contract entered into in this State
12between the PBM administrator of a program and a pharmacy or
13pharmacist shall include a statement of the method and amount
14of reimbursement to the pharmacy or pharmacist for services
15rendered to persons enrolled in the program, the frequency of
16payment by the PBM program administrator to the pharmacy or
17pharmacist for those services, and a method for the
18adjudication of complaints and the settlement of disputes
19between the contracting parties.
20    (b)(1) A program shall provide an annual period of at least
21    30 days during which any pharmacy licensed under the
22    Pharmacy Practice Act may elect to participate in the
23    program under the program terms for at least one year.
24        (2) If compliance with the requirements of this
25    subsection (b) would impair any provision of a contract



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1    between a program and any other person, and if the contract
2    provision was in existence before January 1, 1990, then
3    immediately after the expiration of those contract
4    provisions the program shall comply with the requirements
5    of this subsection (b).
6        (3) This subsection (b) does not apply if:
7            (A) the program administrator is a licensed health
8        maintenance organization that owns or controls a
9        pharmacy and that enters into an agreement or contract
10        with that pharmacy in accordance with subsection (a);
11        or
12            (B) the program administrator is a licensed health
13        maintenance organization that is owned or controlled
14        by another entity that also owns or controls a
15        pharmacy, and the administrator enters into an
16        agreement or contract with that pharmacy in accordance
17        with subsection (a).
18            (4) This subsection (b) shall be inoperative after
19        October 31, 1992.
20    (c) The PBM program administrator shall cause to be issued
21an identification card to each person enrolled in the program.
22The identification card shall include:
23        (1) the name of the individual enrolled in the program;
24    and
25        (2) an expiration date if required under the
26    contractual arrangement or agreement between a provider of



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1    pharmaceutical services and prescription drug products and
2    the PBM third party prescription program administrator.
3(Source: P.A. 95-689, eff. 10-29-07.)
4    (215 ILCS 5/512-8)  (from Ch. 73, par. 1065.59-8)
5    Sec. 512-8. Cancellation procedures.
6    (a) The PBM administrator of a program shall notify all
7pharmacies and pharmacists enrolled in the program of any
8cancellation of the coverage of benefits of any group enrolled
9in the program at least 30 days prior to the effective date of
10such cancellation. However, if the PBM administrator of a
11program is not notified at least 45 days prior to the effective
12date of such cancellation, the PBM administrator shall notify
13all pharmacies and pharmacists enrolled in the program of the
14cancellation as soon as practicable after having received
16    (b) When a program is terminated, all persons enrolled
17therein shall be so notified, and the employer or plan sponsor
18shall make every reasonable effort to gain possession of any
19plan identification cards in such persons' possession.
20    (c) Any person who intentionally uses a program
21identification card to obtain services from a pharmacy or
22pharmacist after having received notice of the cancellation of
23his benefits shall be guilty of a Class C misdemeanor. Persons
24shall be liable to the PBM program administrator for all monies
25paid by the PBM program administrator for any services received



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1pursuant to any improper use of the identification card.
2(Source: P.A. 82-1005.)
3    (215 ILCS 5/512-9)  (from Ch. 73, par. 1065.59-9)
4    Sec. 512-9. Denial of Payment.
5    (a) No PBM administrator shall deny payment to any pharmacy
6or pharmacist for covered pharmaceutical services,
7pharmacist-provided services, or prescription drug products
8rendered as a result of the misuse, fraudulent or illegal use
9of an identification card unless such identification card had
10expired, been noticeably altered, or the pharmacy or pharmacist
11was notified of the cancellation of such card. In lieu of
12notifying pharmacies which have a common ownership, the PBM
13administrator may notify a party designated by the pharmacy or
14pharmacist to receive such notice, in which case, notification
15shall not become effective until 5 calendar days after the
16designee receives notification.
17    (b) No PBM program administrator may withhold any payment
18to any pharmacy or pharmacist for covered pharmaceutical
19services, pharmacist-provided services, or prescription drug
20products beyond the time period specified in the payment
21schedule provisions of the agreement, except for individual
22claims for payment which have been returned to the pharmacy as
23incomplete or illegible. Such returned claims shall be paid if
24resubmitted by the pharmacy to the PBM program administrator
25with the appropriate corrections made.



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1(Source: P.A. 82-1005.)
2    (215 ILCS 5/512-10)  (from Ch. 73, par. 1065.59-10)
3    Sec. 512-10. Failure to Register. Any entity third party
4prescription program or administrator which operates without a
5certificate of registration or fails to register with the
6Director and pay the fee prescribed by this Article shall be
7construed to be an unauthorized insurer as defined in Article
8VII of this Code and shall be subject to all penalties
9contained therein.
10    The provisions of the Article shall apply to all new
11programs established on or after January 1, 1983. Existing
12programs shall comply with the provisions of this Article on
13the anniversary date of the programs that occurs on or after
14January 1, 1983.
15(Source: P.A. 82-1005.)
16    (215 ILCS 5/512-11 new)
17    Sec. 512-11. Pricing.
18    (a) A MAC shall be:
19        (1) established for any drug with at least 3 or more
20    A-rated therapeutically equivalent multiple source drugs,
21    as defined by the federal Food and Drug Administration or
22    when only 2 products are available during a generic
23    exclusivity period; and
24        (2) determined using comparable drug prices obtained



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1    from multiple nationally recognized comprehensive data
2    sources, including wholesalers, drug file vendors, and
3    pharmaceutical manufacturers for drugs that are nationally
4    available and available for purchase locally by multiple
5    pharmacies in the State. A MAC shall be established for a
6    product using only equivalent drugs as determined by the
7    federal Food and Drug Administration.
8    (b) For those drugs in which a MAC applies, the PBM shall
9include in contracts with pharmacies information regarding
10which of the national compendia is used to obtain pricing data
11used in the calculation of MAC pricing and shall make MAC price
12adjustments at least twice a month and provide pharmacies with
13prompt notification of any changes or additions made to the MAC
14price list and MAC rates at that time, except when a price for
15a drug changes by more than 100%; in such cases, the MAC price
16adjustment for that drug shall be made within 3 business days
17of the change in price.
18    The PBM shall provide a process to allow providers to
19submit 200 claims per MAC appeal, in an Excel file, containing
20all National Drug Codes within the Generic Product Identifier,
21and shall allow pharmacy providers to comment on, contest, or
22appeal the MAC rates and MAC list. The right to contest shall
23be limited in duration and provide for retroactive payment in
24the event it is determined that MAC pricing has been applied
25incorrectly. All inquiries to the PBM concerning MAC lists, MAC
26rates, and pricing shall be acted upon and responded to within



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15 business days.
2    If the challenge is successful, the PBM shall make an
3adjustment in the drug price to the date of the original
4challenge and make the adjustment applicable to all similarly
5situated network pharmacy providers, as determined by the
6managed care organization or PBM, as appropriate.
7    If the challenge is successful, a network pharmacy retains
8the right to collect or not collect additional appropriate
9co-payments from a patient after adjustments in the drug price.
10    The PBM shall make all applicable MAC lists, including all
11changes in the price of drugs, available to network pharmacies
12upon request in a readily accessible and usable format that
13contains a complete list of the drug name, National Drug Code,
14package size, per unit price, strength of drug, Generic Price
15Identifier, and Generic Code Number. In the event there are
16multiple MAC lists under the same contract, the contract shall
17identify which MAC lists are appropriately applicable.
18    (c) A PBM shall also include in contracts with pharmacies a
19process for no less than once a week updates to pharmacy
20product pricing files used to calculate prescription prices
21that will be used to reimburse pharmacies.
22    (d) A PBM shall provide a contractual commitment to deliver
23a particular average reimbursement rate for generic drugs. The
24average reimbursement rate for generic drugs shall be
25calculated using the actual amount paid to the pharmacy,
26including patient co-pays and reimbursements from PBMs but



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1excluding the dispensing fee. The average reimbursement rate
2for generic drugs shall not be calculated solely according to
3the amount allowed by the plan and shall include all generics
4dispensed, regardless of whether they are subject to MAC
5pricing. The PBM shall disclose to the network pharmacy the
6methodology used in determining the average reimbursement rate
7for generic drugs.
8    (e) A PBM may not charge a transaction fee for claims
9submissions provided in an electronic format by a health care
11    (f) The Director may require a pharmacy benefits manager to
12submit information to the Department related to the pharmacy
13benefits manager's pricing methodology for MAC prices.
14    (215 ILCS 5/512-12 new)
15    Sec. 512-12. PBM networks.
16    (a) A PBM shall not mandate that a covered individual use a
17specific community pharmacy, mail order pharmacy, specialty
18pharmacy, or other pharmacy or entity. Nor can the PBM provide
19incentives to beneficiaries or plan sponsors to encourage the
20use of a specific pharmacy if only applicable to a PBM
22    (b) A PBM may not require that a pharmacist or pharmacy
23participate in a network managed by the PBM as a condition for
24the pharmacy to participate in another network managed by the
25same PBM.



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1    (c) A PBM may not exclude an otherwise qualified pharmacist
2or pharmacy from participation in a particular network provided
3that the pharmacist or pharmacy accepts the terms, conditions,
4and reimbursement rates of the PBM, meets all applicable
5federal and State licensure and permit requirements, and has
6not been excluded from participation in any federal or State
8    (d) A PBM or entity shall not automatically enroll or
9disenroll a pharmacy in a contract or modify an existing
10agreement without written agreement of the pharmacist or
12    (e) If a PBM establishes a discount card network, the PBM
13shall not require participation in the discount card network by
14a pharmacy in exchange for participation in the broader retail
15network. The PBM shall allow a pharmacy to opt out of the
16discount card network and choose to only participate in the
17PBM's funded retail network.
18    (f) A PBM must have a contracted pharmacy network
19consisting of retail pharmacies sufficient to ensure that the
20following requirements are satisfied:
21        (1) At least 90% of health plan beneficiaries, on
22    average, in urban areas served by the PBM live within 2
23    miles of a network pharmacy that is a community pharmacy.
24        (2) At least 90% of health plan beneficiaries, on
25    average, in suburban areas served by the PBM live within 5
26    miles of a network pharmacy that is a community pharmacy.



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1        (3) At least 70% of health plan beneficiaries, on
2    average, in rural areas served by the PBM live within 15
3    miles of a network pharmacy that is a community pharmacy.
4    (215 ILCS 5/512-13 new)
5    Sec. 512-13. Audit of pharmacy records.
6    (a) Notwithstanding any other law, when an on-site audit of
7the records of a pharmacy is conducted by an entity, the audit
8shall be conducted in accordance with the following criteria:
9        (1) The entity conducting the initial on-site audit
10    shall give the pharmacy and the pharmacy's corporate office
11    written notice at least 30 days before conducting the
12    initial on-site audit for each audit cycle and shall
13    disclose the specific prescriptions to be included in the
14    audit.
15        (2) Unless otherwise consented to by the pharmacy, an
16    audit shall not be initiated or scheduled during the first
17    5 calendar days of any month or the day before or after a
18    federal holiday due to the high volume of prescriptions
19    filled during that time.
20        (3) The entity conducting the on-site audit shall not
21    interfere with the delivery of pharmacist services to a
22    patient and shall utilize every effort to minimize
23    inconvenience and disruption to pharmacy operations during
24    the audit process. The on-site audit shall not exceed 4
25    hours in duration and shall review no more than 100 unique



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1    prescription numbers during an initial audit.
2        (4) No entity shall conduct an on-site audit at a
3    particular pharmacy more than one time annually. However,
4    this paragraph (4) shall not apply when an entity must
5    return to a pharmacy to complete an audit already in
6    progress.
7        (5) The period covered by an audit shall not exceed 2
8    years from the date the initial prescription claim was
9    submitted to or adjudicated by an entity.
10        (6) Each pharmacy shall be audited under the same
11    standards and parameters as other similarly situated
12    pharmacies audited by the entity. Any documentation and
13    records required by an auditor during an audit shall be of
14    the same type as the documentation and records required for
15    other similarly situated pharmacies.
16        (7) Any audit that involves clinical or professional
17    judgment shall be conducted by or in consultation with a
18    pharmacist.
19        (8) Each audit shall be conducted by a field agent who
20    possesses the requisite expertise in pharmacy practice.
21        (9) Any unintentional clerical or record-keeping
22    error, such as a typographical error, scrivener's error, or
23    computer error, regarding a required document or record
24    shall not necessarily constitute fraud. These claims may be
25    subject to recoupment, but shall not subject a pharmacy to
26    criminal penalties without proof of intent to commit fraud.



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1    In the case of errors which have no financial harm to the
2    patient or plan, the entity must not assess any
3    chargebacks.
4        (10) All audits shall be conducted in accordance with
5    generally accepted accounting principles, standards, and
6    procedures; and auditing principles, standards, and
7    procedures; and using standards and parameters established
8    by rule that are identical for all audits conducted.
9        (11) Prescriptions are considered valid prescriptions
10    if they are compliant with the Pharmacy Practice Act and
11    Illinois Controlled Substances Act and have been
12    positively adjudicated upon claim submission by the
13    entity. Plan restrictions should be addressed during the
14    claims adjudication process either through the rejection
15    of the claim or a rejection of the claim with direction to
16    obtain a prior authorization and may not be the basis for a
17    retrospective recoupment of a paid claim.
18        (12) A finding of an overpayment or underpayment must
19    be based on the actual overpayment or underpayment and may
20    not be a projection based on the number of patients served
21    having a similar diagnosis or on the number of similar
22    orders or refills for similar drugs.
23        (13) With the exception of overpayments, if a PBM
24    approves a claim through adjudication, the PBM may not
25    retroactively deny or modify reimbursement based on
26    information accompanying the original claim or information



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1    available to the PBM at the time of adjudication, unless
2    the claim was fraudulent, the pharmacy or pharmacist had
3    been reimbursed for the claim previously, or the services
4    reimbursed were not rendered by the pharmacy or pharmacist.
5        (14) A PBM may not require more information to be
6    written on a prescription than is required by State or
7    federal law. Nor may a PBM require more stringent records
8    to validate a prescription order than is required by State
9    or federal law.
10        (15) Electronic records, including electronic
11    beneficiary signature logs, electronic tracking of
12    prescriptions, electronic prescriber prescription
13    transmissions and imagery of hard copy prescriptions,
14    electronically scanned store, patient records maintained
15    at or accessible to the offices of an audited pharmacy's
16    central operations, and any other reasonably clear and
17    accurate electronic documentation shall be acceptable for
18    auditing under the same terms and conditions and for the
19    same purposes as their paper analogs.
20        If paper logs are used, auditors must look at least 14
21    days past the dispense date to check for patient pickup.
22        Point of sale electronic register data shall qualify as
23    proof of delivery to the patient.
24        (16) A pharmacy may use the records of a hospital,
25    physician, or other authorized practitioner of the healing
26    arts for drugs or medicinal supplies written or transmitted



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1    by any means of communication for purposes of validating
2    the pharmacy record with respect to orders or refills of a
3    legend drug or other controlled substance.
4        (17) Validation of appropriate day's supply and drug
5    dosing must be based on manufacturer guidelines and
6    definitions or, in the case of topical products or titrated
7    products, the professional judgment of the pharmacist
8    based upon communication with the patient or prescriber.
9        (18) A pharmacy's usual and customary price for
10    compounded medications is considered the reimbursable cost
11    unless an alternate price is published in the provider
12    contract and signed by both parties.
13        (19) A PBM may not require a pharmacy to agree to
14    recoupments deducted against future remittances and shall
15    invoice the pharmacy for payment if the pharmacy elects.
16    Recoupment may be deducted against future remittances
17    without mutual consent when the pharmacy is considered
18    delinquent in payment of the invoice per the contractual
19    arrangement.
20        (20) Interest shall not accrue during the audit period.
21        (21) Notwithstanding any other provision in this
22    subsection (a), the entity conducting the audit shall not
23    use the accounting practice of extrapolation in
24    calculating recoupments or penalties for audits. A finding
25    of overpayment or underpayment must be based on the actual
26    overpayment or underpayment and not on a projection based



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1    on the number of patients served having a similar diagnosis
2    or on the number of similar orders or refills for similar
3    drugs.
4        (22) A finding of an overpayment shall not include the
5    dispensing fee amount.
6        (23) The preliminary audit report shall be delivered to
7    the pharmacy and pharmacy corporate office within 30 days,
8    with reasonable extensions allowed, after conclusion of
9    the audit and shall contain claim level information for any
10    discrepancy found and total dollar amount of claims subject
11    to recovery.
12        (24) A pharmacy shall be allowed at least 30 days
13    following receipt of the preliminary audit report in which
14    to produce documentation to address any discrepancy found
15    during an audit or to file an appeal.
16        (25) A final audit report containing claim level
17    information for any discrepancy found and total dollar
18    amount of claims subject to recovery shall be delivered to
19    the pharmacy and pharmacy corporate office within 45 days
20    after the audited pharmacy's receipt of the preliminary
21    audit report if the audited pharmacy does not file an
22    appeal or offers no documentation to address a discrepancy
23    found during an audit, or within 60 days after the auditing
24    entity receives the audited pharmacy's appeal or
25    documentation to address a discrepancy. The final audit
26    results shall be reflected in the remittance advice at the



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1    claim level.
2        (26) The entity shall establish an appeals process that
3    meets the following requirements:
4            (A) The National Council for Prescription Drug
5        Programs or any other recognized national industry
6        standard shall be used to evaluate claims submission
7        and product size disputes.
8            (B) Each entity conducting an audit shall
9        establish a written appeals process under which a
10        pharmacy may appeal an unfavorable preliminary audit
11        report to the entity.
12            (C) If, following the appeal, the entity finds that
13        an unfavorable audit report or any portion thereof is
14        unsubstantiated, the entity shall dismiss the audit
15        report or said portion without the necessity of any
16        further action.
17        (27) A PBM may not recover payment of claims from the
18    pharmacy which is identified through the audit process to
19    be the responsibility of another payer. The PBM must
20    reconcile directly with the other payer for any monies owed
21    without requiring the pharmacy to reverse and rebill the
22    original claim in the retail setting.
23        (28) Each entity conducting an audit shall provide a
24    copy of the final audit report, after completion of any
25    review process, to the plan sponsor.
26        (29) The full amount of any recoupment on an audit



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1    shall be refunded to the plan sponsor.
2        (30) Neither the agency conducting the audit nor its
3    agents shall receive payment based on a percentage of the
4    amount recovered. This Section does not prevent the entity
5    conducting the audit from charging or assessing the
6    responsible party, directly or indirectly, based on
7    amounts recouped if both of the following conditions are
8    met:
9            (A) the plan sponsor and the entity conducting the
10        audit have a contract that explicitly states the
11        percentage charge or assessment to the plan sponsor;
12        and
13            (B) a commission to an agent or employee of the
14        entity conducting the audit is not based, directly or
15        indirectly, on amounts recouped.
16        (31) The entity conducting the audit shall not base
17    compensation of any employees of the entity involved with
18    the audit process on a percentage of the amount recovered
19    or audit findings.
20    (b) Recoupments of any disputed funds shall occur after
21final internal disposition of the audit, including the appeals
22process as set forth in subsection (c) of this Section.
23    (c) Notwithstanding any other law, each entity conducting
24an audit shall establish an appeals process under which a
25pharmacy may appeal a preliminary audit report to the entity.
26    (d) This Section does not apply to any audit, review, or



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1investigation that involves allegations of fraud, willful
2misrepresentation, or abuse.
3    (215 ILCS 5/512-14 new)
4    Sec. 512-14. 90-day supplies at community pharmacies. A
5health plan must permit its enrollees to receive benefits,
6which may include a 90-day supply of covered prescription
7drugs, at any of its network community pharmacies. A health
8insurance policy or government program providing benefits for
9prescriptions may not impose on a covered individual utilizing
10a community pharmacy a copayment, deductible, fee, limitation
11on benefits, or other condition or requirement not otherwise
12imposed on the covered individual when using a mail order
14    Nothing in this Section shall prohibit a pharmacist who is
15exercising his or her professional judgment from dispensing
16additional quantities of medication up to the total number of
17dosage units authorized by the prescriber on the original
18prescription and any refills.
19    (215 ILCS 5/512-15 new)
20    Sec. 512-15. Medication synchronization. All entities
21providing prescription drug coverage shall permit and apply a
22prorated daily cost-sharing rate to prescriptions that are
23dispensed by a pharmacy for less than a 30-day supply if the
24prescriber or pharmacist indicates the fill or refill could be



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1in the best interest of the patient or is for the purpose of
2synchronizing the patient's chronic medications.
3    No entity providing prescription drug coverage shall deny
4coverage for the dispensing of any drug prescribed for the
5treatment of a chronic illness that is made in accordance with
6a plan among the insured, the prescriber, and a pharmacist to
7synchronize the refilling of multiple prescriptions for the
9    No entity providing prescription drug coverage shall use
10payment structures incorporating prorated dispensing fees
11determined by calculation of the days' supply of medication
12dispensed. Dispensing fees shall be determined exclusively on
13the total number of prescriptions dispensed.
14    The provisions of this Section shall not apply to a
15supplemental insurance policy, including a life care contract,
16accident-only policy, specified-disease policy, hospital
17policy providing a fixed daily benefit only, Medicare
18supplement policy, long-term care policy, or short-term major
19medical policy of 6 months or less in duration or any other
20supplemental policy.
21    (215 ILCS 5/512-16 new)
22    Sec. 512-16. Treatment of data. A PBM must adhere to the
23following criteria when handling personally identifiable
24utilization and claims data or other sensitive patient data:
25        (1) A PBM shall notify the health plan sponsor if it



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1    intends to sell utilization or claims data that the PBM
2    possesses.
3        (2) A PBM shall notify the health plan sponsor 30 days
4    before selling, leasing, or renting claims data, along with
5    the name of the potential purchaser of the data and the
6    expected use.
7        (3) A PBM may not sell, lease, or rent utilization or
8    claims data without written approval from the health plan
9    sponsor. The PBM must also allow each individual covered
10    the option to opt out.
11        (4) A PBM may not use a pharmacy's usual and customary
12    claims information for purposes other than determining
13    reimbursement and may not sell, lease, or rent a pharmacy's
14    usual and customary information without the pharmacy's
15    express written consent.
16        (5) A PBM may not contact covered individuals without
17    express written permission of the health plan sponsor and
18    the covered individual.
19        (6) A PBM may not transmit any personally identifiable
20    utilization or claims data to a pharmacy owned by a PBM if
21    the patient has not voluntarily elected in writing to fill
22    that particular prescription at the PBM-owned pharmacy.
23    (215 ILCS 5/512-17 new)
24    Sec. 512-17. Regulated activities. The Department may
25adopt rules to regulate the following activities of PBMs:



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1        (1) claims processing;
2        (2) pharmacy network management;
3        (3) pharmacy discount card, employer sponsored plan,
4    managed care Medicaid, and workers compensation
5    management;
6        (4) payment of claims to pharmacies for prescription
7    drugs, medical devices, and durable medical equipment
8    dispensed to covered individuals;
9        (5) payment of claims to pharmacists for
10    pharmacist-provided services to covered individuals,
11    including, but not limited to, medication therapy
12    management services;
13        (6) clinical formulary development and management
14    services, including, but not limited to, utilization
15    management and quality assurance programs;
16        (7) rebate contracting and administration;
17        (8) conducting audits of contracted pharmacies;
18        (9) setting pharmacy reimbursement pricing and
19    methodologies, including MAC, and determining single
20    source and multiple source drugs; and
21        (10) retention of any differential between what is
22    received from health plans as reimbursement for
23    prescription drugs or services and what is paid to
24    pharmacies or pharmacists by the PBM for such drugs.
25    (215 ILCS 5/512-18 new)



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1    Sec. 512-18. Enforcement.
2    (a) Enforcement of this Act shall be the responsibility of
3the Department and the Director.
4    (b) The Director shall have the authority to adopt any
5rules necessary for the implementation and administration of
6this Article.
7    (c) The Director shall take action or impose penalties to
8bring non-complying entities into full compliance with this
10    Section 99. Effective date. This Act takes effect January
111, 2016.



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2 Statutes amended in order of appearance
3    215 ILCS 5/512-3from Ch. 73, par. 1065.59-3
4    215 ILCS 5/512-4from Ch. 73, par. 1065.59-4
5    215 ILCS 5/512-5from Ch. 73, par. 1065.59-5
6    215 ILCS 5/512-6from Ch. 73, par. 1065.59-6
7    215 ILCS 5/512-7from Ch. 73, par. 1065.59-7
8    215 ILCS 5/512-8from Ch. 73, par. 1065.59-8
9    215 ILCS 5/512-9from Ch. 73, par. 1065.59-9
10    215 ILCS 5/512-10from Ch. 73, par. 1065.59-10
11    215 ILCS 5/512-11 new
12    215 ILCS 5/512-12 new
13    215 ILCS 5/512-13 new
14    215 ILCS 5/512-14 new
15    215 ILCS 5/512-15 new
16    215 ILCS 5/512-16 new
17    215 ILCS 5/512-17 new
18    215 ILCS 5/512-18 new