HBA-KMH C.S.S.B. 1237 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 1237 By: Nelson Insurance 5/7/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Pharmacy benefit managers are the third party intermediaries between the payee and the payor. They are traditionally persons who collect premiums or contributions, or who adjust or settle claims, in connection with life, health, and accident benefits or annuities for residents of this state. Currently pharmacy benefit managers are not considered to be third party administrators. Virtually all health maintenance organizations issue pharmacy benefit cards to their enrollees who are covered to receive prescription benefits. The information included on these cards is used by each pharmacy to determine the specific benefits of the health plan and to process the payment claim. Before filling a patient's prescription, the pharmacist must make computer contact with the health maintenance organization (HMO) to determine specific information regarding insurance coverage. The communication between the pharmacist and the HMO takes place through telephone switching services (similar to those used in ATM machines). The pharmacist needs specific information regarding the patient or the patient's insurance account in order to communicate with the HMO. If there is a problem with the initial claim inquiry, a pharmacist may spend an inordinate amount of time working out what should be routine claims with HMOs. Additionally, the pharmacist must pay the switching companies a fee every time a claim is sent regardless of whether the HMO accepts or processes the claim. C.S.S.B. 1237 includes pharmacy benefit managers in the third party administrators section of the Insurance Code and requires information that is necessary to assist in the processing of claims with HMOs to be placed on a pharmacy benefit card. This bill also sets the terms for the issuance of a pharmacy benefit card by health benefit plans and specifies the required contents of a pharmacy benefit card. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in SECTION 2 (Section 19A, Article 21.07-6, Insurance Code) and SECTION 3 (Section 4, Article 21.53L, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 1(1), Article 21.07-6, Insurance Code, to define an "administrator" as a person who collects premiums or contributions from or who adjusts or settles claims in connection with life, health, and accident benefits, including pharmacy benefits. Makes a conforming change. SECTION 2. Amends Article 21.07-6, Insurance Code, by adding Section 19A, as follows: Sec. 19A. IDENTIFICATION CARDS FOR CERTAIN PLANS. Requires an administrator for a plan that provides pharmacy benefits to issue an identification card (card) to each individual covered by the plan within 30 days of the date the administrator receives notice of the individual's eligibility for the benefits, except as provided by rules adopted by the commissioner. Requires the commissioner of insurance (commissioner) by rule to adopt standard information to be included in the card. Provides that at minimum, the standard form card must include the name or logo of the entity that is administering the pharmacy benefits; the International Identification Number that is assigned by the American National Standards Institute for the entity that is administering the pharmacy benefits; the group number applicable for the individual, the effective date of the coverage evidenced by the card; a telephone number to be used to contact an appropriate person to obtain information relating to the pharmacy benefits provided under the coverage; and copayment information for generic and brand-name prescription drugs. SECTION 3. Amends Subchapter E, Chapter 21, Insurance Code, by adding Article 21.53L, as follows: Article 21.53L. PHARMACY BENEFIT CARDS Sec. 1. DEFINITION. Defines "health benefit plan." Sec. 2. SCOPE OF ARTICLE. Sets forth the scope of this article, specifying its applicability or inapplicability to specified plans. Sec. 3. IDENTIFICATION CARD; PHARMACY BENEFITS. Requires a health benefit plan that provides pharmacy benefits for enrollees in the plan to include on the identification card of each enrollee the name or logo of the entity that is administering the pharmacy benefits, if different from the health benefit plan; the group number applicable to the individual; the effective date of the coverage evidenced by the card; a telephone number to be used to contact an appropriate person to obtain information relating to the pharmacy benefits provided under the coverage; and copayment information for generic and brandname prescription drugs. Provides that this section does not require such a health benefit plan to issue a card separate from any identification card issued to evidence coverage under the health benefit plan, if the card contains the information required by this section. Sec. 4. RULES. Requires the commissioner to adopt rules as necessary to implement this article. SECTION 4. Effective date: September 1, 1999. SECTION 5.(a) Makes application of this Act prospective to an administrator with respect to pharmacy benefits, as of January 1, 2000. (b) Provides that an administrator, as the term is defined by this Act, is not required to issue a new card to an individual, as required by this Act, if the card held by the individual on the effective date of this Act contains the elements described by this Act. Provides that a new card complying with this Act must be issued at the time the individual's coverage is modified. (c) Provides that a health benefit plan, as that term is defined by this Act, is not required to issue a new card to an enrollee, as required by this Act, if the card held by the enrollee on the effective date of this Act contains the elements described by this Act. Provides that a new card complying with this Act must be issued at the time the enrollee's coverage is modified. SECTION 6. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 1237 modifies the original in SECTION 2 (proposed Section 19A, Article 21.07-6, Insurance Code) to subject the section to rules adopted by the commissioner. The substitute requires an identification card to be issued to each individual covered by the plan, rather than each individual covered by the plan who is at least 17 years of age. This substitute also includes in the minimum required information for the identification card copayment information for generic and brand-name prescription drugs. C.S.S.B. 1237 modifies the original in SECTION 3 by adding proposed Section 4, Article 21.53L, Insurance Code to require the commissioner to adopt rules as necessary to implement this article. The substitute makes a conforming change in proposed Section 3.