SB1828 Engrossed LRB094 11306 RAS 42120 b

1     AN ACT concerning regulation.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Insurance Code is amended by
5 changing the heading of Article XXXI 1/2 and Sections 512-1,
6 512-2, 512-3, 512-4, 512-5, 512-6, 512-7, 512-8, 512-9, and
7 512-10 and by adding Sections 512-11 and 512-12 as follows:
 
8     (215 ILCS 5/Art. XXXI.5 heading)
9
ARTICLE XXXI 1/2.
10 PHARMACEUTICAL BENEFITS MANAGEMENT
THIRD PARTY PRESCRIPTION
11
PROGRAMS

 
12     (215 ILCS 5/512-1)  (from Ch. 73, par. 1065.59-1)
13     Sec. 512-1. Short Title. This Article shall be known and
14 may be cited as the "Pharmaceutical Benefits Management
15 Programs Law Third Party Prescription Program Act".
16 (Source: P.A. 82-1005.)
 
17     (215 ILCS 5/512-2)  (from Ch. 73, par. 1065.59-2)
18     Sec. 512-2. Purpose. It is hereby determined and declared
19 that the purpose of this Article is to regulate pharmaceutical
20 benefits management programs certain practices engaged in by
21 third-party prescription program administrators.
22 (Source: P.A. 82-1005.)
 
23     (215 ILCS 5/512-3)  (from Ch. 73, par. 1065.59-3)
24     Sec. 512-3. Definitions. For the purposes of this Article,
25 unless the context otherwise requires, the terms defined in
26 this Article have the meanings ascribed to them herein:
27     "Director" means the Director of the Division of Insurance
28 of the Department of Financial and Professional Regulation.
29     "Division" means the Division of Insurance of the

 

 

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1 Department of Financial and Professional Regulation.
2     (a) "Pharmaceutical benefits management Third party
3 prescription program" or "program" means any system of
4 providing for the administration of or reimbursement for of
5 pharmaceutical services and prescription drug products offered
6 or operated in this State by a pharmaceutical benefits manager
7 under a contractual arrangement or agreement between a provider
8 of such services and another party who is not the consumer of
9 those services and products. Such programs may include, but
10 need not be limited to, employee benefit plans whereby a
11 consumer receives prescription drugs or other pharmaceutical
12 services and those services are paid for by an agent of the
13 employer or others.
14     (b) "Pharmaceutical benefits manager Third party program
15 administrator" or "PBM administrator" means any person,
16 partnership or corporation who issues or causes to be issued
17 any payment or reimbursement to a provider for services
18 rendered pursuant to a pharmaceutical benefits management
19 third party prescription program. "Pharmaceutical benefits
20 manager" or "PBM" , but does not include the Director of Public
21 Aid or any agent authorized by the Director to reimburse a
22 provider of services rendered pursuant to a program of which
23 the Department of Public Aid is the third party.
24 (Source: P.A. 90-372, eff. 7-1-98.)
 
25     (215 ILCS 5/512-4)  (from Ch. 73, par. 1065.59-4)
26     Sec. 512-4. Registration. All pharmaceutical benefits
27 management third party prescription programs and PBMs
28 administrators doing business in the State shall register with
29 the Director of Insurance. The Director may shall promulgate
30 regulations establishing criteria for registration in
31 accordance with the terms of this Article. The Director may by
32 rule establish an annual registration fee for each
33 pharmaceutical benefits management program third party
34 administrator.
35 (Source: P.A. 82-1005.)
 

 

 

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1     (215 ILCS 5/512-5)  (from Ch. 73, par. 1065.59-5)
2     Sec. 512-5. Fiduciary and Bonding Requirements.
3     (a) A PBM third party prescription program administrator
4 shall (1) establish and maintain a fiduciary account, separate
5 and apart from any and all other accounts, for the receipt and
6 disbursement of funds for reimbursement of providers of
7 services under the program, or (2) post, or cause to be posted,
8 a bond of indemnity in an amount equal to not less than 10% of
9 the total estimated annual reimbursements under the program.
10     (b) The establishment of such fiduciary accounts and bonds
11 shall be consistent with applicable State law. If a bond of
12 indemnity is posted, it shall be held by the Director of
13 Insurance for the benefit and indemnification of the providers
14 of services under the pharmaceutical benefits management third
15 party prescription program.
16     (c) Any PBM An administrator who operates more than one
17 pharmaceutical benefits management third party prescription
18 program may establish and maintain a separate fiduciary account
19 or bond of indemnity for each such program, or may operate and
20 maintain a consolidated fiduciary account or bond of indemnity
21 for all such programs.
22     (d) The requirements of this Section do not apply to any
23 pharmaceutical benefits management third party prescription
24 program administered by or on behalf of any insurance company,
25 Health Maintenance Organization, Limited Health Service
26 Organization, or Voluntary Health Services Plan Care Service
27 Plan Corporation or Pharmaceutical Service Plan Corporation
28 authorized to do business in the State of Illinois.
29 (Source: P.A. 82-1005.)
 
30     (215 ILCS 5/512-6)  (from Ch. 73, par. 1065.59-6)
31     Sec. 512-6. Notice. Notice of any change in the terms of a
32 pharmaceutical benefits management third party prescription
33 program, including but not limited to drugs covered,
34 reimbursement rates, co-payments, and dosage quantity, shall

 

 

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1 be given to each enrolled pharmacy at least 30 days prior to
2 the time it becomes effective.
3 (Source: P.A. 82-1005.)
 
4     (215 ILCS 5/512-7)  (from Ch. 73, par. 1065.59-7)
5     Sec. 512-7. Contractual provisions.
6     (a) Any agreement or contract entered into in this State
7 between a PBM the administrator of a program and a pharmacy
8 under a pharmaceutical benefits management program shall
9 include a statement of the method and amount of reimbursement
10 to the pharmacy for services rendered to persons enrolled in
11 the program, the frequency of payment by the PBM program
12 administrator to the pharmacy for those services, and a method
13 for the adjudication of complaints and the settlement of
14 disputes between the contracting parties.
15     (b)(1) A program shall provide an annual period of at least
16     30 days during which any pharmacy licensed under the
17     Pharmacy Practice Act of 1987 may elect to participate in
18     the program under the program terms for at least one year.
19         (2) If compliance with the requirements of this
20     subsection (b) would impair any provision of a contract
21     between a program and any other person, and if the contract
22     provision was in existence before January 1, 2006 1990,
23     then immediately after the expiration of those contract
24     provisions the program shall comply with the requirements
25     of this subsection (b).
26         (3) This subsection (b) does not apply if:
27             (A) the PBM program administrator is a licensed
28         health maintenance organization, limited health
29         service organization, or voluntary health services
30         plan that owns or controls a pharmacy and that enters
31         into an agreement or contract with that pharmacy in
32         accordance with subsection (a); or
33             (B) (blank). the program administrator is a
34         licensed health maintenance organization that is owned
35         or controlled by another entity that also owns or

 

 

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1         controls a pharmacy, and the administrator enters into
2         an agreement or contract with that pharmacy in
3         accordance with subsection (a).
4         (4) (Blank). This subsection (b) shall be inoperative
5     after October 31, 1992.
6     (c) The PBM program administrator shall cause to be issued
7 an identification card to each person enrolled in the program.
8 The identification card shall comply with the Uniform
9 Prescription Drug Information Card Act. include:
10         (1) the name of the individual enrolled in the program;
11     and
12         (2) an expiration date if required under the
13     contractual arrangement or agreement between a provider of
14     pharmaceutical services and prescription drug products and
15     the third party prescription program administrator.
16 (Source: P.A. 86-473; 87-254.)
 
17     (215 ILCS 5/512-8)  (from Ch. 73, par. 1065.59-8)
18     Sec. 512-8. Cancellation procedures.
19     (a) The pharmaceutical benefits manager administrator of a
20 program shall notify all pharmacies enrolled in the program of
21 any cancellation of the coverage of benefits of any group
22 enrolled in the program at least 30 days prior to the effective
23 date of such cancellation. However, if the PBM administrator of
24 a program is not notified at least 45 days prior to the
25 effective date of such cancellation, the PBM administrator
26 shall notify all pharmacies enrolled in the program of the
27 cancellation as soon as practicable after having received
28 notice.
29     (b) When a program is terminated, all persons enrolled
30 therein shall be so notified, and the employer shall make every
31 reasonable effort to gain possession of any plan identification
32 cards in such persons' possession.
33     (c) Any person who intentionally uses a program
34 identification card to obtain services from a pharmacy after
35 having received notice of the cancellation of his benefits

 

 

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1 shall be guilty of a Class C misdemeanor. Persons shall be
2 liable to the PBM program administrator for all monies paid by
3 the PBM program administrator for any services received
4 pursuant to such misuse any improper use of the identification
5 card.
6 (Source: P.A. 82-1005.)
 
7     (215 ILCS 5/512-9)  (from Ch. 73, par. 1065.59-9)
8     Sec. 512-9. Denial of Payment.
9     (a) No PBM administrator shall deny payment to any pharmacy
10 for covered pharmaceutical services or prescription drug
11 products rendered as a result of the misuse, fraudulent or
12 illegal use of an identification card unless such
13 identification card had expired, been noticeably altered, or
14 the pharmacy was notified of the cancellation of such card. In
15 lieu of notifying pharmacies which have a common ownership, the
16 PBM administrator may notify a party designated by the pharmacy
17 to receive such notice, in which case, notification shall not
18 become effective until 5 calendar days after the designee
19 receives notification.
20     (b) No PBM program administrator may withhold any payment
21 to any pharmacy for covered pharmaceutical services or
22 prescription drug products beyond the time period specified in
23 the payment schedule provisions of the agreement, except for
24 individual claims for payment which have been returned to the
25 pharmacy as incomplete or illegible. Such returned claims shall
26 be paid if resubmitted by the pharmacy to the PBM program
27 administrator with the appropriate corrections made.
28 (Source: P.A. 82-1005.)
 
29     (215 ILCS 5/512-10)  (from Ch. 73, par. 1065.59-10)
30     Sec. 512-10. Failure to Register. Any pharmaceutical
31 benefits management third party prescription program or PBM
32 that administrator which operates without a certificate of
33 registration or fails to register with the Director and pay the
34 fee prescribed by this Article shall be construed to be an

 

 

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1 unauthorized insurer as defined in Article VII of this Code and
2 shall be subject to all penalties contained therein.
3     The provisions of this the Article shall apply to all new
4 programs established on or after January 1, 2006 1983. Programs
5 existing on the effective date of this amendatory Act of the
6 94th General Assembly Existing programs shall comply with the
7 provisions of this Article as they existed before the effective
8 date of this amendatory Act of the 94th General Assembly until
9 on the anniversary date of the programs that occurs on or after
10 January 1, 2006, at which time the programs shall comply with
11 the provisions of this Article as they exist beginning on the
12 effective date of this amendatory Act of the 94th General
13 Assembly 1983.
14 (Source: P.A. 82-1005.)
 
15     (215 ILCS 5/512-11 new)
16     Sec. 512-11. Failure to Comply. In order to enforce the
17 provisions of this Article, the Director may issue a cease and
18 desist order or require a PBM to pay a civil penalty or both.
19 Subject to the provisions of the Illinois Administrative
20 Procedure Act, the Director may, pursuant to Section 403A of
21 the Illinois Insurance Code, impose upon a pharmaceutical
22 benefits management program an administrative fine of $5,000
23 for violations of this Article.
 
24     (215 ILCS 5/512-12 new)
25     Sec. 512-12. Rulemaking. The Director shall have the
26 authority to adopt any rules necessary for the implementation
27 and administration of this Article.
 
28     Section 99. Effective date. This Act takes effect upon
29 becoming law.