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Public Act 102-0778


 

Public Act 0778 102ND GENERAL ASSEMBLY

  
  
  

 


 
Public Act 102-0778
 
HB4595 EnrolledLRB102 23475 BMS 32651 b

    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 Sections 424 and 513b1 as follows:
 
    (215 ILCS 5/424)  (from Ch. 73, par. 1031)
    Sec. 424. Unfair methods of competition and unfair or
deceptive acts or practices defined. The following are hereby
defined as unfair methods of competition and unfair and
deceptive acts or practices in the business of insurance:
        (1) The commission by any person of any one or more of
    the acts defined or prohibited by Sections 134, 143.24c,
    147, 148, 149, 151, 155.22, 155.22a, 155.42, 236, 237,
    364, and 469, and 513b1 of this Code.
        (2) Entering into any agreement to commit, or by any
    concerted action committing, any act of boycott, coercion
    or intimidation resulting in or tending to result in
    unreasonable restraint of, or monopoly in, the business of
    insurance.
        (3) Making or permitting, in the case of insurance of
    the types enumerated in Classes 1, 2, and 3 of Section 4,
    any unfair discrimination between individuals or risks of
    the same class or of essentially the same hazard and
    expense element because of the race, color, religion, or
    national origin of such insurance risks or applicants. The
    application of this Article to the types of insurance
    enumerated in Class 1 of Section 4 shall in no way limit,
    reduce, or impair the protections and remedies already
    provided for by Sections 236 and 364 of this Code or any
    other provision of this Code.
        (4) Engaging in any of the acts or practices defined
    in or prohibited by Sections 154.5 through 154.8 of this
    Code.
        (5) Making or charging any rate for insurance against
    losses arising from the use or ownership of a motor
    vehicle which requires a higher premium of any person by
    reason of his physical disability, race, color, religion,
    or national origin.
        (6) Failing to meet any requirement of the Unclaimed
    Life Insurance Benefits Act with such frequency as to
    constitute a general business practice.
(Source: P.A. 99-143, eff. 7-27-15; 99-893, eff. 1-1-17.)
 
    (215 ILCS 5/513b1)
    Sec. 513b1. Pharmacy benefit manager contracts.
    (a) As used in this Section:
    "340B drug discount program" means the program established
under Section 340B of the federal Public Health Service Act,
42 U.S.C. 256b.
    "340B entity" means a covered entity as defined in 42
U.S.C. 256b(a)(4) authorized to participate in the 340B drug
discount program.
    "340B pharmacy" means any pharmacy used to dispense 340B
drugs for a covered entity, whether entity-owned or external.
    "Biological product" has the meaning ascribed to that term
in Section 19.5 of the Pharmacy Practice Act.
    "Maximum allowable cost" means the maximum amount that a
pharmacy benefit manager will reimburse a pharmacy for the
cost of a drug.
    "Maximum allowable cost list" means a list of drugs for
which a maximum allowable cost has been established by a
pharmacy benefit manager.
    "Pharmacy benefit manager" means a person, business, or
entity, including a wholly or partially owned or controlled
subsidiary of a pharmacy benefit manager, that provides claims
processing services or other prescription drug or device
services, or both, for health benefit plans.
    "Retail price" means the price an individual without
prescription drug coverage would pay at a retail pharmacy, not
including a pharmacist dispensing fee.
    "Third-party payer" means any entity that pays for
prescription drugs on behalf of a patient other than a health
care provider or sponsor of a plan subject to regulation under
Medicare Part D, 42 U.S.C. 1395w101, et seq.
    (b) A contract between a health insurer and a pharmacy
benefit manager must require that the pharmacy benefit
manager:
        (1) Update maximum allowable cost pricing information
    at least every 7 calendar days.
        (2) Maintain a process that will, in a timely manner,
    eliminate drugs from maximum allowable cost lists or
    modify drug prices to remain consistent with changes in
    pricing data used in formulating maximum allowable cost
    prices and product availability.
        (3) Provide access to its maximum allowable cost list
    to each pharmacy or pharmacy services administrative
    organization subject to the maximum allowable cost list.
    Access may include a real-time pharmacy website portal to
    be able to view the maximum allowable cost list. As used in
    this Section, "pharmacy services administrative
    organization" means an entity operating within the State
    that contracts with independent pharmacies to conduct
    business on their behalf with third-party payers. A
    pharmacy services administrative organization may provide
    administrative services to pharmacies and negotiate and
    enter into contracts with third-party payers or pharmacy
    benefit managers on behalf of pharmacies.
        (4) Provide a process by which a contracted pharmacy
    can appeal the provider's reimbursement for a drug subject
    to maximum allowable cost pricing. The appeals process
    must, at a minimum, include the following:
            (A) A requirement that a contracted pharmacy has
        14 calendar days after the applicable fill date to
        appeal a maximum allowable cost if the reimbursement
        for the drug is less than the net amount that the
        network provider paid to the supplier of the drug.
            (B) A requirement that a pharmacy benefit manager
        must respond to a challenge within 14 calendar days of
        the contracted pharmacy making the claim for which the
        appeal has been submitted.
            (C) A telephone number and e-mail address or
        website to network providers, at which the provider
        can contact the pharmacy benefit manager to process
        and submit an appeal.
            (D) A requirement that, if an appeal is denied,
        the pharmacy benefit manager must provide the reason
        for the denial and the name and the national drug code
        number from national or regional wholesalers.
            (E) A requirement that, if an appeal is sustained,
        the pharmacy benefit manager must make an adjustment
        in the drug price effective the date the challenge is
        resolved and make the adjustment applicable to all
        similarly situated network pharmacy providers, as
        determined by the managed care organization or
        pharmacy benefit manager.
        (5) Allow a plan sponsor contracting with a pharmacy
    benefit manager an annual right to audit compliance with
    the terms of the contract by the pharmacy benefit manager,
    including, but not limited to, full disclosure of any and
    all rebate amounts secured, whether product specific or
    generalized rebates, that were provided to the pharmacy
    benefit manager by a pharmaceutical manufacturer.
        (6) Allow a plan sponsor contracting with a pharmacy
    benefit manager to request that the pharmacy benefit
    manager disclose the actual amounts paid by the pharmacy
    benefit manager to the pharmacy.
        (7) Provide notice to the party contracting with the
    pharmacy benefit manager of any consideration that the
    pharmacy benefit manager receives from the manufacturer
    for dispense as written prescriptions once a generic or
    biologically similar product becomes available.
    (c) In order to place a particular prescription drug on a
maximum allowable cost list, the pharmacy benefit manager
must, at a minimum, ensure that:
        (1) if the drug is a generically equivalent drug, it
    is listed as therapeutically equivalent and
    pharmaceutically equivalent "A" or "B" rated in the United
    States Food and Drug Administration's most recent version
    of the "Orange Book" or have an NR or NA rating by
    Medi-Span, Gold Standard, or a similar rating by a
    nationally recognized reference;
        (2) the drug is available for purchase by each
    pharmacy in the State from national or regional
    wholesalers operating in Illinois; and
        (3) the drug is not obsolete.
    (d) A pharmacy benefit manager is prohibited from limiting
a pharmacist's ability to disclose whether the cost-sharing
obligation exceeds the retail price for a covered prescription
drug, and the availability of a more affordable alternative
drug, if one is available in accordance with Section 42 of the
Pharmacy Practice Act.
    (e) A health insurer or pharmacy benefit manager shall not
require an insured to make a payment for a prescription drug at
the point of sale in an amount that exceeds the lesser of:
        (1) the applicable cost-sharing amount; or
        (2) the retail price of the drug in the absence of
    prescription drug coverage.
    (f) Unless required by law, a contract between a pharmacy
benefit manager or third-party payer and a 340B entity or 340B
pharmacy shall not contain any provision that:
        (1) distinguishes between drugs purchased through the
    340B drug discount program and other drugs when
    determining reimbursement or reimbursement methodologies,
    or contains otherwise less favorable payment terms or
    reimbursement methodologies for 340B entities or 340B
    pharmacies when compared to similarly situated non-340B
    entities;
        (2) imposes any fee, chargeback, or rate adjustment
    that is not similarly imposed on similarly situated
    pharmacies that are not 340B entities or 340B pharmacies;
        (3) imposes any fee, chargeback, or rate adjustment
    that exceeds the fee, chargeback, or rate adjustment that
    is not similarly imposed on similarly situated pharmacies
    that are not 340B entities or 340B pharmacies;
        (4) prevents or interferes with an individual's choice
    to receive a covered prescription drug from a 340B entity
    or 340B pharmacy through any legally permissible means,
    except that nothing in this paragraph shall prohibit the
    establishment of differing copayments or other
    cost-sharing amounts within the benefit plan for covered
    persons who acquire covered prescription drugs from a
    nonpreferred or nonparticipating provider;
        (5) excludes a 340B entity or 340B pharmacy from a
    pharmacy network on any basis that includes consideration
    of whether the 340B entity or 340B pharmacy participates
    in the 340B drug discount program;
        (6) prevents a 340B entity or 340B pharmacy from using
    a drug purchased under the 340B drug discount program; or
        (7) any other provision that discriminates against a
    340B entity or 340B pharmacy by treating the 340B entity
    or 340B pharmacy differently than non-340B entities or
    non-340B pharmacies for any reason relating to the
    entity's participation in the 340B drug discount program.
    As used in this subsection, "pharmacy benefit manager" and
"third-party payer" do not include pharmacy benefit managers
and third-party payers acting on behalf of a Medicaid program.
    (g) A violation of this Section by a pharmacy benefit
manager constitutes an unfair or deceptive act or practice in
the business of insurance under Section 424.
    (h) A provision that violates subsection (f) in a contract
between a pharmacy benefit manager or a third-party payer and
a 340B entity that is entered into, amended, or renewed after
July 1, 2022 shall be void and unenforceable.
    (i) (f) This Section applies to contracts entered into or
renewed on or after July 1, 2022 2020.
    (j) (g) This Section applies to any group or individual
policy of accident and health insurance or managed care plan
that provides coverage for prescription drugs and that is
amended, delivered, issued, or renewed on or after July 1,
2020.
(Source: P.A. 101-452, eff. 1-1-20.)
 
    Section 10. The Illinois Public Aid Code is amended by
changing Sections 5-5.12 and 5-36 as follows:
 
    (305 ILCS 5/5-5.12)  (from Ch. 23, par. 5-5.12)
    Sec. 5-5.12. Pharmacy payments.
    (a) Every request submitted by a pharmacy for
reimbursement under this Article for prescription drugs
provided to a recipient of aid under this Article shall
include the name of the prescriber or an acceptable
identification number as established by the Department.
    (b) Pharmacies providing prescription drugs under this
Article shall be reimbursed at a rate which shall include a
professional dispensing fee as determined by the Illinois
Department, plus the current acquisition cost of the
prescription drug dispensed. The Illinois Department shall
update its information on the acquisition costs of all
prescription drugs no less frequently than every 30 days.
However, the Illinois Department may set the rate of
reimbursement for the acquisition cost, by rule, at a
percentage of the current average wholesale acquisition cost.
    (c) (Blank).
    (d) The Department shall review utilization of narcotic
medications in the medical assistance program and impose
utilization controls that protect against abuse.
    (e) When making determinations as to which drugs shall be
on a prior approval list, the Department shall include as part
of the analysis for this determination, the degree to which a
drug may affect individuals in different ways based on factors
including the gender of the person taking the medication.
    (f) The Department shall cooperate with the Department of
Public Health and the Department of Human Services Division of
Mental Health in identifying psychotropic medications that,
when given in a particular form, manner, duration, or
frequency (including "as needed") in a dosage, or in
conjunction with other psychotropic medications to a nursing
home resident or to a resident of a facility licensed under the
ID/DD Community Care Act or the MC/DD Act, may constitute a
chemical restraint or an "unnecessary drug" as defined by the
Nursing Home Care Act or Titles XVIII and XIX of the Social
Security Act and the implementing rules and regulations. The
Department shall require prior approval for any such
medication prescribed for a nursing home resident or to a
resident of a facility licensed under the ID/DD Community Care
Act or the MC/DD Act, that appears to be a chemical restraint
or an unnecessary drug. The Department shall consult with the
Department of Human Services Division of Mental Health in
developing a protocol and criteria for deciding whether to
grant such prior approval.
    (g) The Department may by rule provide for reimbursement
of the dispensing of a 90-day supply of a generic or brand
name, non-narcotic maintenance medication in circumstances
where it is cost effective.
    (g-5) On and after July 1, 2012, the Department may
require the dispensing of drugs to nursing home residents be
in a 7-day supply or other amount less than a 31-day supply.
The Department shall pay only one dispensing fee per 31-day
supply.
    (h) Effective July 1, 2011, the Department shall
discontinue coverage of select over-the-counter drugs,
including analgesics and cough and cold and allergy
medications.
    (h-5) On and after July 1, 2012, the Department shall
impose utilization controls, including, but not limited to,
prior approval on specialty drugs, oncolytic drugs, drugs for
the treatment of HIV or AIDS, immunosuppressant drugs, and
biological products in order to maximize savings on these
drugs. The Department may adjust payment methodologies for
non-pharmacy billed drugs in order to incentivize the
selection of lower-cost drugs. For drugs for the treatment of
AIDS, the Department shall take into consideration the
potential for non-adherence by certain populations, and shall
develop protocols with organizations or providers primarily
serving those with HIV/AIDS, as long as such measures intend
to maintain cost neutrality with other utilization management
controls such as prior approval. For hemophilia, the
Department shall develop a program of utilization review and
control which may include, in the discretion of the
Department, prior approvals. The Department may impose special
standards on providers that dispense blood factors which shall
include, in the discretion of the Department, staff training
and education; patient outreach and education; case
management; in-home patient assessments; assay management;
maintenance of stock; emergency dispensing timeframes; data
collection and reporting; dispensing of supplies related to
blood factor infusions; cold chain management and packaging
practices; care coordination; product recalls; and emergency
clinical consultation. The Department may require patients to
receive a comprehensive examination annually at an appropriate
provider in order to be eligible to continue to receive blood
factor.
    (i) On and after July 1, 2012, the Department shall reduce
any rate of reimbursement for services or other payments or
alter any methodologies authorized by this Code to reduce any
rate of reimbursement for services or other payments in
accordance with Section 5-5e.
    (j) On and after July 1, 2012, the Department shall impose
limitations on prescription drugs such that the Department
shall not provide reimbursement for more than 4 prescriptions,
including 3 brand name prescriptions, for distinct drugs in a
30-day period, unless prior approval is received for all
prescriptions in excess of the 4-prescription limit. Drugs in
the following therapeutic classes shall not be subject to
prior approval as a result of the 4-prescription limit:
immunosuppressant drugs, oncolytic drugs, anti-retroviral
drugs, and, on or after July 1, 2014, antipsychotic drugs. On
or after July 1, 2014, the Department may exempt children with
complex medical needs enrolled in a care coordination entity
contracted with the Department to solely coordinate care for
such children, if the Department determines that the entity
has a comprehensive drug reconciliation program.
    (k) No medication therapy management program implemented
by the Department shall be contrary to the provisions of the
Pharmacy Practice Act.
    (l) Any provider enrolled with the Department that bills
the Department for outpatient drugs and is eligible to enroll
in the federal Drug Pricing Program under Section 340B of the
federal Public Health Service Act shall enroll in that
program. No entity participating in the federal Drug Pricing
Program under Section 340B of the federal Public Health
Service Act may exclude fee-for-service Medicaid from their
participation in that program, however, although the
Department may exclude entities defined in Section
1905(l)(2)(B) of the Social Security Act are excluded from
this requirement. This subsection does not apply to outpatient
drugs billed to Medicaid managed care organizations.
(Source: P.A. 102-558, eff. 8-20-21.)
 
    (305 ILCS 5/5-36)
    Sec. 5-36. Pharmacy benefits.
    (a)(1) The Department may enter into a contract with a
third party on a fee-for-service reimbursement model for the
purpose of administering pharmacy benefits as provided in this
Section for members not enrolled in a Medicaid managed care
organization; however, these services shall be approved by the
Department. The Department shall ensure coordination of care
between the third-party administrator and managed care
organizations as a consideration in any contracts established
in accordance with this Section. Any managed care techniques,
principles, or administration of benefits utilized in
accordance with this subsection shall comply with State law.
    (2) The following shall apply to contracts between
entities contracting relating to the Department's third-party
administrators and pharmacies:
        (A) the Department shall approve any contract between
    a third-party administrator and a pharmacy;
        (B) the Department's third-party administrator shall
    not change the terms of a contract between a third-party
    administrator and a pharmacy without written approval by
    the Department; and
        (C) the Department's third-party administrator shall
    not create, modify, implement, or indirectly establish any
    fee on a pharmacy, pharmacist, or a recipient of medical
    assistance without written approval by the Department.
    (b) The provisions of this Section shall not apply to
outpatient pharmacy services provided by a health care
facility registered as a covered entity pursuant to 42 U.S.C.
256b or any pharmacy owned by or contracted with the covered
entity. A Medicaid managed care organization shall, either
directly or through a pharmacy benefit manager, administer and
reimburse outpatient pharmacy claims submitted by a health
care facility registered as a covered entity pursuant to 42
U.S.C. 256b, its owned pharmacies, and contracted pharmacies
in accordance with the contractual agreements the Medicaid
managed care organization or its pharmacy benefit manager has
with such facilities and pharmacies and in accordance with
subsection (h-5).
    (b-5) Any pharmacy benefit manager that contracts with a
Medicaid managed care organization to administer and reimburse
pharmacy claims as provided in this Section must be registered
with the Director of Insurance in accordance with Section
513b2 of the Illinois Insurance Code.
    (c) On at least an annual basis, the Director of the
Department of Healthcare and Family Services shall submit a
report beginning no later than one year after January 1, 2020
(the effective date of Public Act 101-452) that provides an
update on any contract, contract issues, formulary, dispensing
fees, and maximum allowable cost concerns regarding a
third-party administrator and managed care. The requirement
for reporting to the General Assembly shall be satisfied by
filing copies of the report with the Speaker, the Minority
Leader, and the Clerk of the House of Representatives and with
the President, the Minority Leader, and the Secretary of the
Senate. The Department shall take care that no proprietary
information is included in the report required under this
Section.
    (d) A pharmacy benefit manager shall notify the Department
in writing of any activity, policy, or practice of the
pharmacy benefit manager that directly or indirectly presents
a conflict of interest that interferes with the discharge of
the pharmacy benefit manager's duty to a managed care
organization to exercise its contractual duties. "Conflict of
interest" shall be defined by rule by the Department.
    (e) A pharmacy benefit manager shall, upon request,
disclose to the Department the following information:
        (1) whether the pharmacy benefit manager has a
    contract, agreement, or other arrangement with a
    pharmaceutical manufacturer to exclusively dispense or
    provide a drug to a managed care organization's enrollees,
    and the aggregate amounts of consideration of economic
    benefits collected or received pursuant to that
    arrangement;
        (2) the percentage of claims payments made by the
    pharmacy benefit manager to pharmacies owned, managed, or
    controlled by the pharmacy benefit manager or any of the
    pharmacy benefit manager's management companies, parent
    companies, subsidiary companies, or jointly held
    companies;
        (3) the aggregate amount of the fees or assessments
    imposed on, or collected from, pharmacy providers; and
        (4) the average annualized percentage of revenue
    collected by the pharmacy benefit manager as a result of
    each contract it has executed with a managed care
    organization contracted by the Department to provide
    medical assistance benefits which is not paid by the
    pharmacy benefit manager to pharmacy providers and
    pharmaceutical manufacturers or labelers or in order to
    perform administrative functions pursuant to its contracts
    with managed care organizations.
    (f) The information disclosed under subsection (e) shall
include all retail, mail order, specialty, and compounded
prescription products. All information made available to the
Department under subsection (e) is confidential and not
subject to disclosure under the Freedom of Information Act.
All information made available to the Department under
subsection (e) shall not be reported or distributed in any way
that compromises its competitive, proprietary, or financial
value. The information shall only be used by the Department to
assess the contract, agreement, or other arrangements made
between a pharmacy benefit manager and a pharmacy provider,
pharmaceutical manufacturer or labeler, managed care
organization, or other entity, as applicable.
    (g) A pharmacy benefit manager shall disclose directly in
writing to a pharmacy provider or pharmacy services
administrative organization contracting with the pharmacy
benefit manager of any material change to a contract provision
that affects the terms of the reimbursement, the process for
verifying benefits and eligibility, dispute resolution,
procedures for verifying drugs included on the formulary, and
contract termination at least 30 days prior to the date of the
change to the provision. The terms of this subsection shall be
deemed met if the pharmacy benefit manager posts the
information on a website, viewable by the public. A pharmacy
service administration organization shall notify all contract
pharmacies of any material change, as described in this
subsection, within 2 days of notification. As used in this
Section, "pharmacy services administrative organization" means
an entity operating within the State that contracts with
independent pharmacies to conduct business on their behalf
with third-party payers. A pharmacy services administrative
organization may provide administrative services to pharmacies
and negotiate and enter into contracts with third-party payers
or pharmacy benefit managers on behalf of pharmacies.
    (h) A pharmacy benefit manager shall not include the
following in a contract with a pharmacy provider:
        (1) a provision prohibiting the provider from
    informing a patient of a less costly alternative to a
    prescribed medication; or
        (2) a provision that prohibits the provider from
    dispensing a particular amount of a prescribed medication,
    if the pharmacy benefit manager allows that amount to be
    dispensed through a pharmacy owned or controlled by the
    pharmacy benefit manager, unless the prescription drug is
    subject to restricted distribution by the United States
    Food and Drug Administration or requires special handling,
    provider coordination, or patient education that cannot be
    provided by a retail pharmacy.
    (h-5) Unless required by law, a Medicaid managed care
organization or pharmacy benefit manager administering or
managing benefits on behalf of a Medicaid managed care
organization shall not refuse to contract with a 340B entity
or 340B pharmacy for refusing to accept less favorable payment
terms or reimbursement methodologies when compared to
similarly situated non-340B entities and shall not include in
a contract with a 340B entity or 340B pharmacy a provision
that:
        (1) imposes any fee, chargeback, or rate adjustment
    that is not similarly imposed on similarly situated
    pharmacies that are not 340B entities or 340B pharmacies;
        (2) imposes any fee, chargeback, or rate adjustment
    that exceeds the fee, chargeback, or rate adjustment that
    is not similarly imposed on similarly situated pharmacies
    that are not 340B entities or 340B pharmacies;
        (3) prevents or interferes with an individual's choice
    to receive a prescription drug from a 340B entity or 340B
    pharmacy through any legally permissible means;
        (4) excludes a 340B entity or 340B pharmacy from a
    pharmacy network on the basis of whether the 340B entity
    or 340B pharmacy participates in the 340B drug discount
    program;
        (5) prevents a 340B entity or 340B pharmacy from using
    a drug purchased under the 340B drug discount program so
    long as the drug recipient is a patient of the 340B entity;
    nothing in this Section exempts a 340B pharmacy from
    following the Department's preferred drug list or from any
    prior approval requirements of the Department or the
    Medicaid managed care organization that are imposed on the
    drug for all pharmacies; or
        (6) any other provision that discriminates against a
    340B entity or 340B pharmacy by treating a 340B entity or
    340B pharmacy differently than non-340B entities or
    non-340B pharmacies for any reason relating to the
    entity's participation in the 340B drug discount program.
    A provision that violates this subsection in any contract
between a Medicaid managed care organization or its pharmacy
benefit manager and a 340B entity entered into, amended, or
renewed after July 1, 2022 shall be void and unenforceable.
    In this subsection (h-5):
    "340B entity" means a covered entity as defined in 42
U.S.C. 256b(a)(4) authorized to participate in the 340B drug
discount program.
    "340B pharmacy" means any pharmacy used to dispense 340B
drugs for a covered entity, whether entity-owned or external.
    (i) Nothing in this Section shall be construed to prohibit
a pharmacy benefit manager from requiring the same
reimbursement and terms and conditions for a pharmacy provider
as for a pharmacy owned, controlled, or otherwise associated
with the pharmacy benefit manager.
    (j) A pharmacy benefit manager shall establish and
implement a process for the resolution of disputes arising out
of this Section, which shall be approved by the Department.
    (k) The Department shall adopt rules establishing
reasonable dispensing fees for fee-for-service payments in
accordance with guidance or guidelines from the federal
Centers for Medicare and Medicaid Services.
(Source: P.A. 101-452, eff. 1-1-20; 102-558, eff. 8-20-21.)
 
    Section 99. Effective date. This Act takes effect July 1,
2022.

Effective Date: 7/1/2022