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.