Committee Substitute for SB0295PAS

SENATE PUBLIC AFFAIRS COMMITTEE SUBSTITUTE FOR

SENATE BILL 295

49th legislature - STATE OF NEW MEXICO - first session, 2009

AN ACT

RELATING TO PRESCRIPTION DRUGS; ENACTING THE PHARMACY BENEFITS MANAGER REGULATION ACT; PROVIDING PENALTIES; AMENDING AND ENACTING SECTIONS OF THE NEW MEXICO INSURANCE CODE; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] SHORT TITLE.--Sections 1 through 9 of this act may be cited as the "Pharmacy Benefits Manager Regulation Act"."

Section 2. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] DEFINITIONS.--As used in the Pharmacy Benefits Manager Regulation Act:

A. "covered entity" means a nonprofit hospital or medical service corporation, health insurer, health benefit plan or health maintenance organization, a health program administered by the state as a provider of health coverage; any type of group health care coverage, including any form of self-insurance offered, issued or renewed pursuant to the Health Care Purchasing Act; or an employer, labor union or other group of persons organized in the state that provides health coverage to covered individuals who are employed or reside in the state. "Covered entity" does not include a self-funded plan that is exempt from state regulation pursuant to the Employee Retirement Income Security Act of 1974; a plan issued for coverage for federal employees; or a health plan that provides coverage only for accidental injury, specified disease, hospital indemnity, medicare supplement, disability income, long-term care or other limited benefit health insurance policies and contracts;

B. "covered individual" means a member, participant, enrollee, contract holder, policy holder or beneficiary of a covered entity who is provided health coverage by the covered entity and includes a dependent or other person provided health coverage through a policy, contract or plan for a covered individual;

C. "medicare advantage plan" or "MA-PD" means a prescription drug program authorized pursuant to Part C of Title 18 of the federal Medicare Modernization Act that provides qualified prescription drug coverage;

D. "pharmacist" means an individual licensed as a pharmacist by the board of pharmacy;

E. "pharmacy" means a licensed place of business where drugs are compounded or dispensed and pharmacist services are provided;

F. "pharmacy benefits management" means the service provided to a health plan or insurer, directly or through another person, including the procurement of prescription drugs to be dispensed to patients, or the administration or management of prescription drug benefits, including:

(1) mail service pharmacy; and

(2) claims processing, retail network management or payment of claims to pharmacies for dispensing dangerous drugs, as those drugs are defined in the New Mexico Drug, Device and Cosmetic Act;

G. "pharmacy benefits manager" means a person or a wholly or partially owned or controlled subsidiary of a person that provides claims administration, benefit design and management, pharmacy network management, negotiation and administration of product discounts, rebates and other benefits accruing to the pharmacy benefits manager or other prescription drug or device services to third parties, but "pharmacy benefits manager" does not include licensed health care facilities, pharmacies, licensed health care professionals, insurers, unions, health maintenance organizations, a medicare advantage plan or a prescription drug plan when providing formulary services to their own patients, employees, members or beneficiaries;

H. "prescription drug plan" or "PDP" means prescription drug coverage that is offered pursuant to a policy, contract or plan that has been approved as specified in 42 CFR Part 423 and that is offered by a prescription drug plan sponsor that has a contract with the federal centers for medicare and medicaid services of the United States department of health and human services; and

I. "superintendent" means the superintendent of insurance."

Section 3. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] LICENSE.--

A. A person shall not operate as a pharmacy benefits manager unless licensed by the superintendent in accordance with the Pharmacy Benefits Manager Regulation Act and applicable federal and state laws.

B. The superintendent shall enforce the provisions of the Pharmacy Benefits Manager Regulation Act and may suspend or revoke a license issued to a pharmacy benefits manager or deny an application for a license or renewal of a license if:

(1) the pharmacy benefits manager is operating materially in contravention of:

(a) its application or other information submitted as a part of its application for a license or renewal of its license; or

(b) a condition imposed by the superintendent with respect to the issuance or renewal of its license;

(2) the pharmacy benefits manager has failed to continuously meet or substantially comply with the requirements for issuance of a license;

(3) the continued operation of the pharmacy benefits manager adversely affects the public health and safety;

(4) the pharmacy benefits manager has failed to substantially comply with applicable state or federal laws or rules; or

(5) the pharmacy benefits manager has transacted insurance in the state without authorization or has transacted insurance for a product that is not issued by an authorized insurer.

C. If the license of a pharmacy benefits manager is revoked, the manager shall proceed, immediately following the effective date of the order of revocation, to wind up its affairs and conduct no further business except as may be essential to the orderly conclusion of its affairs. The superintendent may permit further operation of the pharmacy benefits manager if the superintendent finds it to be in the best interest of patients to obtain pharmacist services.

D. The Pharmacy Benefits Manager Regulation Act does not apply to a person that is a licensed health care facility, pharmacy, licensed health care professional, insurer, union, health maintenance organization, medicare advantage plan or prescription drug plan when that person is providing formulary services to its own patients, employees, members or beneficiaries."

Section 4. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] PHARMACY BENEFITS MANAGER CONTRACTS.--

A. A pharmacy benefits manager shall not require that a pharmacy participate in one contract in order to participate in another contract.

B. Each pharmacy benefits manager shall provide to the pharmacies, at least thirty days prior to its execution, a contract written in plain English.

C. A contract between a pharmacy benefits manager and a pharmacy shall provide specific time limits for the pharmacy benefits manager to pay the pharmacy for services rendered.

D. A pharmacy shall not be held responsible for acts or omissions of a pharmacy benefits manager. A pharmacy benefits manager shall not be held responsible for the acts or omissions of a pharmacy."

Section 5. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] CONSUMER CONTACT LIMITED.--A pharmacy benefits manager, unless authorized by the terms of its contract with a covered entity, shall not contact a covered individual without express written permission of the covered entity."

Section 6. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] AUDIT--PHARMACY BENEFITS MANAGER.--

A. A pharmacy benefits manager, whether licensed pursuant to the Pharmacy Benefits Manager Regulation Act or exempt from licensure pursuant to that act, shall be subject to Section 61-11-18.2 NMSA 1978 to the same extent and in the same manner as a pharmacy.

B. The covered entity may have the pharmacy benefits manager's books and records audited to verify a pharmacy benefits manager's performance in accordance with the terms of the contract between the parties. If the parties have not expressly provided for audit rights and the pharmacy benefits manager has advised the covered entity that other reasonable options are available and, subject to negotiation, the covered entity may have such books and records audited as follows:

(1) audits may be conducted no more frequently than once in each twelve-month period upon not less than thirty business days' written notice to the pharmacy benefits manager;

(2) the covered entity and pharmacy benefits manager shall select a mutually agreed-upon independent firm to conduct such audit, and such independent firm shall sign a confidentiality agreement with the covered entity and the pharmacy benefits manager ensuring that all information obtained during the audit will be kept confidential and that the auditing firm shall not use, disclose or otherwise reveal any such information in any manner or form to any person except as otherwise permitted under the confidentiality agreement; the covered entity shall treat all information obtained as a result of the audit as confidential and shall not use or disclose such information except as may be otherwise permitted under the terms of the contract between the covered entity and the pharmacy benefits manager or if ordered by a court of competent jurisdiction for good cause shown; and

(3) the audit shall be conducted at the pharmacy benefits manager's office where such records are located, during normal business hours, without undue interference with the pharmacy benefits manager's business activities and in accordance with reasonable audit procedures."

Section 7. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] DRUG SUBSTITUTION.--

A. A resident pharmacy benefits manager who wishes to make a substitution for a prescription drug prescribed for a covered entity shall substitute a prescription drug in accordance with the Drug Product Selection Act.

B. A nonresident pharmacy benefits manager who wishes to make a substitution for a prescription drug prescribed for a covered entity shall substitute a prescription drug in accordance with the laws and regulations of the state where the pharmacy benefits manager is a resident."

Section 8. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] REMEDY.--A covered entity may bring a civil action to enforce the provisions of the Pharmacy Benefits Manager Regulation Act or to seek civil damages for the violation of its provisions, except where parties have agreed by contract to alternative dispute resolution."

Section 9. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] PHARMACY BENEFITS MANAGER FUND--CREATED.--The "pharmacy benefits manager fund" is created in the state treasury. Fees and penalties assessed pursuant to the Pharmacy Benefits Manager Regulation Act shall be deposited in the fund. Money in the fund is appropriated to the insurance division of the commission to administer the Pharmacy Benefits Manager Regulation Act. Money in the fund shall not revert to the general fund or any other fund. Money in the fund may be expended pursuant to vouchers signed by the superintendent on warrants signed by the secretary of finance and administration."

Section 10. Section 59A-6-1 NMSA 1978 (being Laws 1984, Chapter 127, Section 101, as amended) is amended to read:

"59A-6-1. FEE SCHEDULE.--The superintendent shall collect the following fees:

A. insurer's certificate of authority -

(1) filing application for certificate of authority, and issuance of certificate of authority, if issued, including filing of all charter documents, financial statements, service of process, power of attorney, examination reports and other documents included with and part of the application. . . . . . . . . . . . . . . . . . . . . .$1,000.00

(2) annual continuation of certificate of authority, per kind of insurance, each year

continued. . . . . . . . . . . . . . . . . . . . . . . . 200.00

(3) reinstatement of certificate of authority (Section 59A-5-23 NMSA 1978). . . . . . . . . . . . . . .150.00

(4) amendment to certificate of

authority. . . . . . . . . . . . . . . . . . . . . . . . 200.00

B. charter documents - filing amendment to any charter document (as defined in Section 59A-5-3

NMSA 1978). . . . . . . . . . . . . . . . . . . . . . . . 10.00

C. annual statement of insurer,

filing. . . . . . . . . . . . . . . . . . . . . . . . . .200.00

D. service of process, acceptance by superintendent and issuance of certificate of service, where issued. . . 10.00

E. agents' licenses and appointments -

(1) filing application for original agent license and issuance of license, if issued. . . . . . . . 30.00

(2) appointment of agent -

(a) filing appointment, per kind of insurance, each insurer. . . . . . . . . . . . . . . . . .20.00

(b) continuation of appointment, each insurer, each year continued. . . . . . . . . . . . . . . 20.00

(3) variable annuity agent's license -

(a) filing application for license and issuance of license, if issued. . . . . . . . . . . . . . 30.00

(b) continuation of appointment each

year. . . . . . . . . . . . . . . . . . . . . . . . . . . 20.00

(4) temporary license as to life and health insurance or both. . . . . . . . . . . . . . . . . . . . .30.00

(a) as to property insurance. . . .30.00

(b) as to casualty/surety

insurance. . . . . . . . . . . . . . . . . . . . . . . . .30.00

F. solicitor license -

(1) filing application for original license and issuance of license, if issued. . . . . . . . . . . . 30.00

(2) continuation of appointment, per kind of insurance, each year. . . . . . . . . . . . . . . . . . . 20.00

G. broker license -

(1) filing application for license and issuance of original license, if issued. . . . . . . . . .30.00

(2) annual continuation of

license. . . . . . . . . . . . . . . . . . . . . . . . . .30.00

H. insurance vending machine license -

(1) filing application for original license and issuance of license, if issued, each machine. . . . . 25.00

(2) annual continuation of license, each

machine. . . . . . . . . . . . . . . . . . . . . . . . . .25.00

I. examination for license, application for examination conducted directly by superintendent, each grouping of kinds of insurance to be covered by the examination as provided by the superintendent's rules, and payable as to each instance of examination. . . . . . . . . . . . . . . . . .50.00

J. surplus line insurer - filing application for qualification as eligible surplus [lines] line

insurer. . . . . . . . . . . . . . . . . . . . . . . . 1,000.00

K. surplus line broker license -

(1) filing application for original license and issuance of license, if issued. . . . . . . . . . . .100.00

(2) annual continuation of

license. . . . . . . . . . . . . . . . . . . . . . . . . 100.00

L. adjuster license -

(1) filing application for original license and issuance of license, if issued. . . . . . . . . . . . 30.00

(2) annual continuation of

license. . . . . . . . . . . . . . . . . . . . . . . . . .30.00

M. rating organization or rating advisory organization license -

(1) filing application for license and issuance of license, if issued. . . . . . . . . . . . . .100.00

(2) annual continuation of

license. . . . . . . . . . . . . . . . . . . . . . . . . 100.00

N. nonprofit health care plans -

(1) filing application for preliminary permit and issuance of permit, if issued. . . . . . . . . . . . 100.00

(2) certificate of authority, application, issuance, continuation, reinstatement, charter documents - same as for insurers

(3) annual statement, filing. . . . . . 200.00

(4) agents and solicitors -

(a) filing application for original license and issuance of license, if issued. . . . . . . . 30.00

(b) examination for license conducted directly by superintendent, each instance of

examination. . . . . . . . . . . . . . . . . . . . . . . .50.00

appointment. . . . . . . . . . . . . . . . . . . . . . . .20.00

O. prepaid dental plans -

(1) certificate of authority, application, issuance, continuation, reinstatement, charter documents - same as for insurers

(2) annual report, filing. . . . . . . .200.00

(3) agents and solicitors -

(a) filing application for original license and issuance of license, if issued. . . . . . . . 30.00

(b) examination for license conducted directly by superintendent, each instance of

examination. . . . . . . . . . . . . . . . . . . . . . . .50.00

year. . . . . . . . . . . . . . . . . . . . . . . . . . . 20.00

P. prearranged funeral insurance - application for certificate of authority, issuance, continuation, reinstatement, charter documents, filing annual statement, licensing of sales representatives - same as for insurers

Q. premium finance companies -

(1) filing application for original license and issuance of license, if issued. . . . . . . . . . . .100.00

(2) annual renewal of license. . . . . .100.00

R. motor clubs -

(1) certificate of authority -

(a) filing application for original certificate of authority and issuance of certificate of authority, if issued. . . . . . . . . . . . . . . . . . .200.00

(b) annual continuation of certificate of authority. . . . . . . . . . . . . . . . . . . . . . .100.00

(2) sales representatives -

(a) filing application for registration or license and issuance of registration or license, if issued, each representative. . . . . . . . . . . . . . . . . . . .20.00

(b) annual continuation of registration or license, each representative. . . . . . . . . . . . . .20.00

S. bail bondsmen -

(1) filing application for original license as bail bondsman or solicitor, and issuance of license, if

issued. . . . . . . . . . . . . . . . . . . . . . . . . . 30.00

(2) examination for license conducted directly by superintendent, each instance of

examination. . . . . . . . . . . . . . . . . . . . . . . .50.00

(3) continuation of appointment, each

year. . . . . . . . . . . . . . . . . . . . . . . . . . . 20.00

T. securities salesperson license -

(1) filing application for license and issuance of license, if issued. . . . . . . . . . . . . . 25.00

(2) renewal of license, each year. . . . 25.00

U. for each signature and seal of the superintendent affixed to any instrument. . . . . . . . . 10.00

V. required filing of forms or rates - by all lines of business other than property or casualty -

(1) rates. . . . . . . . . . . . . . . . 50.00

(2) major form - each new policy and each package submission, which can include multiple policy forms, application forms, rider forms, endorsement forms or amendment forms. . . . . . . . . . . . . . . . . . . . . . . . . . .30.00

(3) incidental forms and rates - forms filed for informational purposes; riders, applications, endorsements and amendments filed individually; rate service organization reference filings; rates filed for informational purposes.15.00

W. health maintenance organizations -

(1) filing an application for a certificate of authority. . . . . . . . . . . . . . . . . . . . . . . 1,000.00

(2) annual continuation of certificate of authority, each year continued. . . . . . . . . . . . . .200.00

(3) filing each annual report . . . . . 200.00

(4) filing an amendment to organizational documents requiring approval. . . . . . . . . . . . . . .200.00

(5) filing informational

amendments. . . . . . . . . . . . . . . . . . . . . . . . 50.00

(6) agents and solicitors -

(a) filing application for original license and issuance of license, if issued. . . . . . . . 30.00

(b) examination for license, each instance of examination. . . . . . . . . . . . . . . . . .50.00

appointment . . . . . . . . . . . . . . . . . . . . . . . 20.00

X. purchasing groups and foreign risk retention groups -

(1) original registration. . . . . . . .500.00

(2) annual continuation of

registration. . . . . . . . . . . . . . . . . . . . . . .200.00

(3) agent or broker fees same as for authorized insurers

Y. third party administrators -

(1) filing application for original individual insurance administrator license. . . . . . . . . . . . . .30.00

(2) filing application for original officer, manager or partner insurance administrator

license. . . . . . . . . . . . . . . . . . . . . . . . . .30.00

(3) continuation or renewal of annual

license. . . . . . . . . . . . . . . . . . . . . . . . . .30.00

(4) examination for license conducted directly by the superintendent, each examination. . . . . . . . . .75.00

(5) each request for a duplicate license or for each name change. . . . . . . . . . . . . . . . . . . 30.00

(6) filing of annual report. . . . . . . 50.00

Z. pharmacy benefits managers -

(1) filing an application for a

license . . . . . . . . . . . . . . . . . . . . . . . .1,000.00

(2) annual continuation of license, each year continued. . . . . . . . . . . . . . . . . . . . . . . . 500.00

(3) filing each annual report. . . . .. 200.00

(4) filing an amendment to organizational documents requiring approval. . . . . . . . . . . . . .. 200.00

(5) filing informational amendments. .. 100.00

(6) agents -

(a) filing application for original license and issuance of license, if issued. . . . . . .. 100.00

(b) annual continuation of

appointment. . . . . . . . . . . . . . . . . . . . . . .100.00."Section 11. Section 59A-6-5 NMSA 1978 (being Laws 1984, Chapter 127, Section 105, as amended) is amended to read:

"59A-6-5. DISTRIBUTION OF DIVISION COLLECTIONS.--

A. All money received by the division for fees, licenses, penalties and taxes, except as provided in Subsection Z of Section 59A-6-1 NMSA 1978, shall be paid daily by the superintendent to the state treasurer and credited to the "insurance department suspense fund" except as provided by:

(1) the Law Enforcement Protection Fund Act;

(2) Section 59A-6-1.1 NMSA 1978; and

(3) the Voter Action Act.

B. The superintendent may authorize refund of money erroneously paid as fees, licenses, penalties or taxes from the insurance department suspense fund under request for refund made within three years after the erroneous payment. In the case of premium taxes erroneously paid or overpaid in accordance with law, refund may also be requested as a credit against premium taxes due in any annual or quarterly premium tax return filed within three years of the erroneous or excess payment.

C. The "insurance operations fund" is created in the state treasury. The fund shall consist of the distributions made to it pursuant to Subsection D of this section. The legislature shall annually appropriate from the fund to the division those amounts necessary for the division to carry out its responsibilities pursuant to the Insurance Code and other laws. Any balance in the fund at the end of a fiscal year greater than one-half of that fiscal year's appropriation shall revert to the general fund.

D. At the end of every month, after applicable refunds are made pursuant to Subsection B of this section, the treasurer shall make the following transfers from the balance remaining in the insurance department suspense fund:

(1) to the "fire protection fund", that part of the balance derived from property and vehicle insurance business;

(2) to the insurance operations fund, that part of the balance derived from the fees imposed pursuant to Subsections A and E of Section 59A-6-1 NMSA 1978 other than fees derived from property and vehicle insurance business; and

(3) to the general fund, the balance remaining in the insurance department suspense fund derived from all other kinds of insurance business.

E. Fees imposed pursuant to Subsection Z of Section 59A-6-1 NMSA 1978 shall be distributed as follows:

(1) fifty percent to the pharmacy benefits manager fund for expenditure by the insurance division of the public regulation commission for administration of the Pharmacy Benefits Manager Regulation Act; and

(2) fifty percent to the human services department for development and maintenance of the preferred-drug list as required by Section 27-2-12.13 NMSA 1978."

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