Health Care Benefit Managers.
Definition.
A health care benefit manager (HCBM) is a person or entity providing service to, or acting on behalf of, a health carrier, a public employee benefit program, or a school employee benefit program, that directly or indirectly impacts the determination or utilization of benefits for, or patient access to, health care services, drugs, and supplies. Tasks that may be performed by an HCBM include prior authorization and provider credentialing or recredentialing.
Several types of entities are excluded from the definition of HCBM, including hospitals or ambulatory surgical facilities.
Registration.
All health care benefit managers (HCBMs), including radiology benefit managers (RBMs) and pharmacy benefit managers (PBMs) are required to register with the Insurance Commissioner (Commissioner). When registering, an HCBM must provide the following to the Commissioner:
Enforcement.
The Commissioner may take action against an HCBM or contracting health carrier for enumerated reasons including violations of any insurance law or any rule, subpoena, or order of the Commissioner. The Commissioner must provide notice of an inquiry or complaint against an HCBM concurrently to the HCBM and any carrier to which the inquiry or complaint pertains. The types of actions the Office of the Insurance Commissioner (OIC) may take against an HCBM include issuing a cease and desist order against the HCBM and contracting health carrier.
Pharmacy Benefit Managers.
Definition.
A PBM is a type of HCBM that performs a variety of pharmacy-related tasks on behalf of a health carrier, including negotiating rebates with manufacturers, and managing pharmacy networks.
Pharmacy Reimbursement.
A PBM may not place a drug on its list of drugs for which predetermined reimbursement costs have been established unless there are at least two therapeutically equivalent multiple source drugs, or at least one generic drug available from only one manufacturer, generally available for purchase by network pharmacies in Washington. The PBM must make available the sources to determine the predetermined reimbursement costs for the multisource generic drugs of the PBM. Dispensing fees may not be included in the calculation of the predetermined reimbursement costs for multisource generic drugs.
Appeals Process.
A PBM must establish a process through which a network pharmacy may appeal reimbursements for drugs subject to predetermined reimbursement costs for multisource generic drugs. A PBM must uphold an appeal if a pharmacy with fewer than 15 retail outlets in Washington can demonstrate that it is unable to purchase a therapeutically equivalent interchangeable product from a supplier doing business in Washington at the PBM's price. If an appeal is upheld for a pharmacy of any size, the PBM must make a reasonable adjustment. A pharmacy with fewer than 15 retail outlets in Washington may request a review of the PBM's decision by the OIC.
Prohibited Conduct.
A PBM may not:
Pharmacy Audit Standards.
An entity that audits pharmacy claims is subject to certain minimum standards. For example, the entity may not recoup costs related to clerical errors. A clerical error is a minor error in the keeping, recording, or transcribing of records or documents, or in the handling of electronic or hard copies of correspondence, that:
Health Care Benefit Managers.
Definition.
An entity, including a hospital, that performs provider credentialing or recredentialing is excluded from the definition of health care benefit manager (HCBM) only if it performs no other functions of an HCBM. It is clarified that a union is also exempt from the definition of an HCBM when it acts jointly with an employer to administer a health plan.
Registration.
When registering with the Office of the Insurance Commissioner (OIC), an HCBM must provide its certificate of registration with the Secretary of State.
Enforcement.
The requirement that notice of an inquiry or complaint must be sent concurrently to the HCBM and the health carrier is eliminated. The OIC must respond to and investigate complaints related to the conduct of an HCBM directly, without requiring the complaint to be pursued exclusively through a contracting health carrier.
It is clarified that the OIC may take action on violations of laws relating to HCBMs and that cease and desist orders may be issued against an HCBM, a health carrier, or both (instead of against an HCBM and a health carrier).
Service of Process.
A registered HCBM must appoint the Insurance Commissioner (Commissioner) as its attorney to receive service, and upon whom service must be served, all legal process issued against it in Washington upon causes of action arising within Washington. Service upon the Commissioner as attorney constitutes service upon the HCBM. All service of process to the HCBM must be through the Commissioner, except for actions upon contractor bonds, which may be served upon the Department of Labor and Industries. The appointment of the Commissioner is irrevocable, binds any successor of interest or to the assets or liabilities of the HCBM, and remains in effect as long as any contract made by the HCBM is in force. The service must be accomplished and processed in the same manner as for other insurance-related service.
The HCBM must designate the name, email address, and address of the person to whom the Commissioner must forward legal process. The HCBM must keep this information current and may change the person by filing a new designation.
Public and School Employee Health Plans.
State laws relating to HCBMs apply to health plans offered to state employees and school employees.
Pharmacy Benefit Managers.
Definition.
The definition of "pharmacy benefit manager (PBM)" is aligned with the definition of HCBM by changing the entities with which the PBM contracts from "insurers or third-party payors" to health carriers, employee benefits programs, and Medicaid managed care organizations. The Prescription Drug Consortium is removed as a contracting entity. The types of tasks a pharmacy benefit manager (PBM) performs include negotiating discounts or other price concessions from manufacturers and establishing pharmacy networks.
Pharmacy Reimbursement.
Pharmacy reimbursement requirements are made generally applicable to drugs for which reimbursement costs have been established, instead of generic drugs.
Appeals.
In addition to a pharmacy, a pharmacy's representative may file an appeal to the PBM.
Prohibited Conduct.
A PBM may not:
Retaliatory actions against a pharmacy or pharmacist include cancellation of, restriction of, or refusal to renew or offer a contract to a pharmacy solely because the pharmacy or pharmacist has:
A pharmacist or pharmacy must make reasonable efforts to limit the disclosure of confidential and proprietary information.
Mail Order Pharmacies.
A PBM must:
If a covered person is using a mail order pharmacy, the PBM must ensure that patients have easy and timely access to prescription counseling by a pharmacist. The PBM must also allow for dispensing at local network pharmacies if:
Self-Funded Plans.
The act neither expands nor restricts the entities subject to laws regulating HCBMs, including PBMs. These laws continue to be inapplicable to a person or entity providing services to, or acting on behalf of, a union or employer administering a self-funded group health plan governed by the federal Employee Retirement Income Security Act of 1974 (ERISA).
Self-funded group plans regulated by the ERISA may elect to participate in state laws relating to PBMs. To elect to participate in this manner, the self-funded plan or its administrator must provide periodic notice to the OIC in a manner and by a date prescribed by the OIC. The notice must attest to the plan's participation and agreement to be bound by the state laws relating to PBMs. A self-funded plan that elects to participate, and any PBM it contracts with, are bound by the state laws in which it elected to participate. The OIC does not have enforcement authority over a PBM's conduct pursuant to a contract with a self-funded group plan.
Before a pharmacy or pharmacist files an appeal involving reimbursement, a PBM must provide, upon request, a current and accurate list of bank identification numbers, processor control numbers, and pharmacy group identifiers for health plans and self-funded group plans that have opted into PBM regulations and that have a contract or a contract terminated within the past 12 months with the PBM.
Pharmacy Audit Standards.
The type of clerical error for which an auditing entity may not recoup costs does not include errors involving the failure to dispense a medication.
The amended bill:
(In support) Pharmacists serve an essential role in patient care. Access to care is important because it maximizes health care and improves outcomes. Pharmacy benefit managers (PBMs) set the prices patients pay, but do so in an opaque manner. These practices are running pharmacies out of business and creating pharmacy deserts, even in densely populated areas. Community pharmacies are under threat, which harms patient access. Thriving businesses are closing. The practices of PBMs reduce access and increase price. This is a matter of industry versus patients. There needs to be regulation, transparency, and better policies related to PBMs.
Prohibiting PBMs from forcing patients to use mail-order pharmacies is important. In-person counseling is essential. Pushing consumers to mail-order pharmacies restricts access to pharmacists and can cause delivery issues and confidentiality breaches. This makes medication adherence more difficult to achieve. Reimbursement practices adversely affect staffing, which is an unsafe and unsustainable practice.
This bill will increase transparency and the fair treatment of patients. It will help both pharmacies and patients. The appeals process in this bill is essential to establish a fair process. The revisions affecting health are benefit managers (HCBMs) are important. They clarify who is an HCBM and who is not. This bill will lead to continuity of care for people with chronic conditions. Unions and self-insured health plans are excluded from this bill unless they opt in.
(Opposed) Pharmacies and health carriers need to work together. The transparency aspects of this bill are not objectionable, but the other provisions of this bill will reduce benefits and increase costs to consumers. Requiring all network pharmacies to have the same cost sharing and fees is concerning. Premiums will be negatively impacted. Patient safety will be compromised.
There should be an exemption to the mail-order provisions of the bill for specialty drugs. Requiring affirmative authorization may lead to delays in care. Specialty drugs are costly and can require special handling. The mail-order provisions in this bill open the door to duplicate dispensing. Taking mail-order pharmacies away will increase costs.
This bill imposes mandates on self-insured plans and violates federal law. A similar law in Oklahoma was stricken down on this basis. Union health plans are in crisis. This bill removes important cost control tools that help unions keep costs down.
The PBMs play a critical role. They negotiate with drug manufacturers, manage networks, and ensure access at good prices. This is a regulated industry already.
This is a complicated bill that needs more deliberation; it needs a study. The effective date of this bill should be extended until 2028 to accommodate health carrier contracting practices.
(Other) State programs already implement many of the provisions in this bill. The provisions add transparency and help the state to manage the pharmacy spend.
The mail-order provisions of this bill are a concern. There should be a delineation between traditional pharmacies and mail-order pharmacies. The products in specialty pharmacies are different and require lots of clinical support. The focus is not only on dispensing, but what happens after.
(In support) Jane Beyer, Office of the Insurance Commissioner; Patricia Bermúdez, AIDS Healthcare Foundation; Jenny Arnold, Washington State Pharmacy Association; Ryan Oftebro, Kelley-Ross Pharmacy; Jim Freeburg, Patient Coalition of Washington; Jeff Harrell, Cascadia Pharmacy Group; and Robert Queen, Rosauers Supermarkets.