HB0126GUS

HOUSE HEALTH, GOVERNMENT AND INDIAN AFFAIRS COMMITTEE SUBSTITUTE FOR HOUSE BILL 126

51st legislature - STATE OF NEW MEXICO - second session, 2014

AN ACT

RELATING TO HEALTH CARE; ENACTING THE PHARMACY BENEFITS MANAGER REGULATION ACT; PROVIDING PENALTIES; AMENDING AND ENACTING SECTIONS OF THE NEW MEXICO INSURANCE CODE; REQUIRING LICENSURE OF PHARMACY BENEFITS MANAGERS; ESTABLISHING GUIDELINES AND NOTICE PROVISIONS FOR MAXIMUM ALLOWABLE COST FOR DRUGS AND FOR CHALLENGING MAXIMUM ALLOWABLE COST PRICING.

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 8 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 federal 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 Prescription Drug, Improvement, and Modernization Act of 2003 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 benefit plan or health 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 pharmacies; 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, health insurers, unions, health maintenance organizations, medicare advantage plans or prescription drug plans 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. An application for licensure as a pharmacy benefits manager shall require only the following information:

(1) the identity of the pharmacy benefits manager;

(2) the name and business address of the contact person for the pharmacy benefits manager; and

(3) where applicable, the federal employer identification number for the pharmacy benefits manager.

C. 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 its application or other information submitted as a part of its application for a license 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.

D. 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.

E. The Pharmacy Benefits Manager Regulation Act does not apply to a person that is a licensed health care facility, pharmacy, licensed health care professional, health 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] MAXIMUM ALLOWABLE COST PRICING REQUIREMENTS.--

A. A pharmacy benefits manager using maximum allowable cost pricing shall:

(1) to place a drug on a maximum allowable cost list, ensure that the drug:

(a) is listed as "A" or "B" rated in the most recent version of the United States food and drug administration's approved drug products with therapeutic equivalence evaluations, also known as the "orange book";

(b) has an "NR" or "NA" rating or a similar rating by a nationally recognized reference; and

(c) is generally available for purchase by pharmacies in the state from national or regional wholesalers and is not obsolete;

(2) provide to a network pharmacy provider, at the time a contract is entered into or renewed with the network pharmacy provider, the sources used to determine the maximum allowable cost pricing for the maximum allowable cost list specific to that provider;

(3) review and update maximum allowable cost price information at least once every seven days to reflect any modification of maximum allowable cost pricing;

(4) in formulating the maximum allowable cost price for a drug, use only the price of the drug and use only the drugs listed as therapeutically equivalent in the most recent version of the United States food and drug administration's approved drug products with therapeutic equivalence evaluations, also known as the "orange book";

(5) establish a process for eliminating products from the maximum allowable cost list or modifying maximum allowable cost prices in a timely manner to remain consistent with pricing changes and product availability in the marketplace;

(6) provide a procedure under which a network pharmacy provider may challenge a listed maximum allowable cost price for a drug and respond to a challenge not later than the fifteenth day after the date the challenge is made. If the challenge is successful, a pharmacy benefits manager using maximum allowable cost pricing shall make an adjustment in the drug price effective one day after the challenge is resolved, and make the adjustment applicable to all similarly situated network pharmacy providers, as determined by the managed care organization or pharmacy benefits manager, as appropriate. If the challenge is denied, the pharmacy benefits manager using maximum allowable cost pricing shall provide the reason for the denial; and

(7) provide a process for each of its network pharmacy providers to readily access the maximum allowable cost list specific to that provider.

B. A maximum allowable cost list specific to a provider and maintained by a managed care organization or pharmacy benefits manager is confidential.

C. As used in this section, "maximum allowable cost" means the maximum amount that a pharmacy benefits manager will reimburse a pharmacy for the cost of a drug."

SECTION 5. 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 6. 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 7. 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 for items specific to the covered entity only 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, 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 sixty business days' written notice to the pharmacy benefits manager or thirty days from receipt of a detailed scope of work document, complete claims sample and a signed confidentiality agreement, if applicable;

(2) the covered entity and pharmacy benefits manager shall select a mutually agreed-upon independent firm to conduct such audit, and the 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 generally accepted accounting principles and audit standards."

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. 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. . . . . . . . . . . . .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) annual continuation of appointment, each insurer. . . . . . . . . . . . . . . . . . . . . . . 20.00

(3) variable annuity agent's license -

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

(b) annual continuation of

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

(4) temporary license -

(a) as to life and health insurance or

both. . . . . . . . . . . . . . . . . . . . . . . . . . . 30.00

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

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

(d) as to vehicle insurance. . . . 30.00

F. agency license and affiliations -

(1) filing application for original agency business entity license and issuance of license, if

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

(2) filing of individual affiliation, per kind of insurance . . . . . . . . . . . . . . . . . . . . . . .20.00

(3) annual continuation of individual affiliation. . . . . . . . . . . . . . . . . . . . . . . .20.00

G. solicitor license -

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

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

H. broker license -

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

(2) annual continuation of

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

I. 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

J. 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

K. surplus lines insurer - filing application for qualification as eligible surplus lines

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

L. surplus lines broker license -

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

(2) annual continuation of

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

M. surplus lines broker license and affiliations -

(1) filing application for original surplus lines brokerage business entity license and issuance of license, if issued. . . . . . . . . . . . . . . . . . . .100.00

(2) filing of individual affiliation per kind of insurance. . . . . . . . . . . . . . . . . . . . . . . 20.00

(3) annual continuation of individual affiliation . . . . . . . . . . . . . . . . . . . . . . . 20.00

N. adjuster license -

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

(2) annual continuation of

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

O. insurance consultant license -

(1) filing application for original license and issuance of license, if issued . . . . . . . . . . . .50.00

(2) application examination. . . . . . . 10.00

(3) biennial continuation of license . 100.00

P. viatical settlements license -

(1) providers -

(a) filing application for original license and issuance of license, if issued . . . . . . 1,000.00

(b) annual continuation of

license . . . . . . . . . . . . . . . . . . . . . . . . .200.00

(2) brokers -

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

(b) annual continuation of

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

(3) brokerages -

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

(b) annual continuation of

license. . . . . . . . . . . . . . . . . . . . . . . . . .20.00

(d) annual continuation of individual affiliation . . . . . . . . . . . . . . . . . . . . . . . 20.00

Q. 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

R. 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

S. 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

license . . . . . . . . . . . . . . . . . . . . . . . . . 20.00

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

U. premium finance companies -

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

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

V. 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

W. 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) annual continuation of

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

X. securities salesperson license -

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

(2) annual renewal of license. . . . . . 25.00

Y. 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

Z. health maintenance organizations -

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

(2) annual continuation of certificate of authority. . . . . . . . . . . . . . . . . . . . . . . . 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

AA. 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

BB. 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) annual continuation or renewal of

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

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

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

CC. miscellaneous fees -

(1) duplicate license . . . . . . . . . .30.00

(2) name change . . . . . . . . . . . . .30.00

(3) for each signature and seal of superintendent affixed to any instrument . . . . . . . . .10.00

DD. 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

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

An insurer shall be subject to additional fees or charges, termed retaliatory or reciprocal requirements, whenever form or rate-filing fees in excess of those imposed by state law are charged to insurers in New Mexico doing business in another state or whenever a condition precedent to the right to issue policies in another state is imposed by the laws of that state over and above the conditions imposed upon insurers by the laws of New Mexico; in those cases, the same form or rate-filing fees may be imposed upon an insurer from another state transacting or applying to transact business in New Mexico so long as the higher fees remain in force in the other state. If an insurer does not comply with the additional retaliatory or reciprocal requirement charges imposed under this subsection, the superintendent may refuse to grant or may withdraw approval of the tendered form or rate filing.

All fees are earned when paid and are not refundable."

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