84R9165 PMO-F
	By: Muñoz, Jr.	H.B. No. 2618

	A BILL TO BE ENTITLED
	AN ACT
	relating to the regulation of third-party administrators,
	including pharmacy benefit managers; expanding the requirement of a
	certificate of authority to engage in an occupation; adding
	provisions subject to a criminal penalty.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 4151.001, Insurance Code, is amended by
	amending Subdivisions (1), (2), and (4) and adding Subdivisions
	(3-a) and (5-a) to read as follows:
	(1)  "Administrator" means a person who, in connection
	with annuities or life benefits, health benefits, accident
	benefits, pharmacy benefits, or workers' compensation benefits,
	collects premiums or contributions from or adjusts or settles
	claims for residents of this state.  Except as provided by Section
	4151.0023, the [The] term includes a delegated entity under Chapter
	1272 and a workers' compensation health care network authorized
	under Chapter 1305 that administers a workers' compensation claim
	for an insurer, including an insurer that establishes or contracts
	with the network to provide health care services.  Except as
	provided by Section 4151.0023, the [The] term does not include a
	person described by Section 4151.002.
	(2)  "Insurer" means a person who engages in the
	business of life, health, accident, or workers' compensation
	insurance under the law of this state.  For purposes of this chapter
	only, the term also includes:
	(A)  an "insurance carrier," as defined by Section
	401.011(27), Labor Code, other than a governmental entity or a
	workers' compensation self-insurance group subject to regulation
	under Chapter 407A, Labor Code; and
	(B)  an entity for whom a pharmacy benefit manager
	acts as described by Section 4151.0023.
	(3-a)  "Pharmacy benefit management" means
	administration or management of prescription drug benefits
	provided by an insurer, including:
	(A)  retail pharmacy network management;
	(B)  pharmacy discount card management;
	(C)  claims payment to a retail pharmacy for
	prescription medications dispensed to plan participants;
	(D)  clinical formulary development and
	management services, including utilization management and quality
	assurance programs;
	(E)  rebate contracting and administration;
	(F)  auditing contracted pharmacies;
	(G)  establishing pharmacy reimbursement pricing
	and methodologies; and
	(H)  determining single- and multiple-source
	medications.
	(4)  "Plan" means a plan, fund, or program established,
	adopted, or maintained by a plan sponsor or insurer to the extent
	that the plan, fund, or program is established, adopted, or
	maintained to provide indemnification, [or] expense reimbursement,
	or payment for any type of life, health, or accident benefit.
	(5-a)  "Retail pharmacy" means a pharmacy licensed
	under Chapter 560, Occupations Code, that dispenses medications to
	the public, including an independent pharmacy, a chain pharmacy, a
	supermarket pharmacy, or a mass merchandiser pharmacy. The term
	does not include a pharmacy that dispenses prescription medications
	primarily through the mail, a nursing home pharmacy, a long-term
	care facility pharmacy, a hospital pharmacy, a clinic pharmacy, a
	charitable or nonprofit pharmacy, a government pharmacy, or a
	pharmacy benefit manager that is serving in its capacity as a
	pharmacy benefit manager.
	SECTION 2.  Section 4151.002, Insurance Code, is amended to
	read as follows:
	Sec. 4151.002.  EXEMPTIONS. Except as provided by Section
	4151.0023, a [A] person is not an administrator if the person is:
	(1)  an employer, other than a certified workers'
	compensation self-insurer, administering an employee benefit plan
	or the plan of an affiliated employer under common management and
	control;
	(2)  a union administering a benefit plan on behalf of
	its members;
	(3)  an insurer or a group hospital service corporation
	subject to Chapter 842 acting with respect to a policy lawfully
	issued and delivered by the insurer or corporation in and under the
	law of a state in which the insurer or corporation was authorized to
	engage in the business of insurance;
	(4)  a health maintenance organization that is
	authorized to operate in this state under Chapter 843 with respect
	to any activity that is specifically regulated under that chapter,
	Chapter 1271, 1272, or 1367, Subchapter A, Chapter 1452, or
	Subchapter B, Chapter 1507;
	(5)  an agent licensed under Subchapter B, Chapter
	4051, Subchapter B, Chapter 4053, or Subchapter B, Chapter 4054,
	who receives commissions as an agent and is acting:
	(A)  under appointment on behalf of an insurer
	authorized to engage in the business of insurance in this state; and
	(B)  in the customary scope and duties of the
	person's authority as an agent;
	(6)  a creditor acting on behalf of its debtor with
	respect to insurance that covers a debt between the creditor and its
	debtor, if the creditor performs only the functions of a group
	policyholder or a creditor;
	(7)  a trust established in conformity with 29 U.S.C.
	Section 186 or a trustee or employee who is acting under the trust;
	(8)  a trust that is exempt from taxation under Section
	501(a), Internal Revenue Code of 1986, or a trustee or employee
	acting under the trust;
	(9)  a custodian or a custodian's agent or employee who
	is acting under a custodian account that complies with Section
	401(f), Internal Revenue Code of 1986;
	(10)  a bank, credit union, savings and loan
	association, or other financial institution that is subject to
	supervision or examination under federal or state law by a federal
	or state regulatory authority, if the institution is performing
	only those functions for which the institution holds a license
	under federal or state law;
	(11)  a company that advances and collects a premium or
	charge from its credit card holders on their authorization, if the
	company does not adjust or settle claims and acts only in the
	company's debtor-creditor relationship with its credit card
	holders;
	(12)  a person who adjusts or settles claims in the
	normal course of the person's practice or employment as a licensed
	attorney and who does not collect any premium or charge in
	connection with annuities or with life, health, accident, pharmacy,
	or workers' compensation benefits;
	(13)  an adjuster licensed under Subtitle C by the
	department who is engaged in the performance of the individual's
	powers and duties as an adjuster in the scope of the individual's
	license;
	(14)  a person who provides technical, advisory,
	utilization review, precertification, or consulting services to an
	insurer, plan, or plan sponsor but does not make any management or
	discretionary decisions on behalf of the insurer, plan, or plan
	sponsor;
	(15)  an attorney in fact for a Lloyd's plan operating
	under Chapter 941 or for a reciprocal or interinsurance exchange
	operating under Chapter 942 who is acting in the capacity of
	attorney in fact under the applicable chapter;
	(16)  a joint fund, risk management pool, or
	self-insurance pool composed of political subdivisions of this
	state that participate in a fund or pool through interlocal
	agreements, any nonprofit administrative agency or governing body
	or other nonprofit entity that acts solely on behalf of a fund,
	pool, agency, or body, or any other fund, pool, agency, or body
	established under or for the purpose of implementing an interlocal
	governmental agreement;
	(17)  a self-insured political subdivision;
	(18)  a plan under which insurance benefits are
	provided exclusively by an insurer authorized to engage in the
	business of insurance in this state and the administrator of which
	is:
	(A)  a full-time employee of the plan's organizing
	or sponsoring association, trust, or other entity; or
	(B)  a trustee of the organizing or sponsoring
	trust;
	(19)  a parent of a wholly owned direct or indirect
	subsidiary insurer authorized to engage in the business of
	insurance in this state or a wholly owned direct or indirect
	subsidiary insurer that is a part of the parent's holding company
	system that, under an agreement regulated and approved under
	Chapter 823 or a similar statute of the domiciliary state if the
	parent or subsidiary insurer is a foreign insurer engaged in
	business in this state, on behalf of only itself or an affiliated
	insurer:
	(A)  collects premiums or contributions, if the
	parent or subsidiary insurer:
	(i)  prepares only billing statements and
	places those statements in the United States mail; and
	(ii)  causes all collected premiums to be
	deposited directly in a depository account of the particular
	affiliated insurer; or
	(B)  furnishes proof-of-loss forms, reviews
	claims, determines the amount of the liability for those claims,
	and negotiates settlements, if the parent or subsidiary insurer
	pays claims only from the funds of the particular subsidiary by
	checks or drafts of that subsidiary; or
	(20)  an affiliate, as described by Section [Chapter]
	823.003, of a self-insurer certified under Chapter 407, Labor Code,
	and who:
	(A)  is performing the acts of an administrator on
	behalf of that certified self-insurer; and
	(B)  directly or indirectly through one or more
	intermediaries, controls, is controlled by, or is under common
	control with that certified self-insurer, as the term "control" is
	described by Section 823.005.
	SECTION 3.  Subchapter A, Chapter 4151, Insurance Code, is
	amended by adding Section 4151.0023 to read as follows:
	Sec. 4151.0023.  CHAPTER APPLICABILITY TO PHARMACY BENEFIT
	MANAGERS; EXCEPTIONS. (a)  Notwithstanding any other law, this
	chapter applies to a person, other than a pharmacist or pharmacy,
	who collects premium or contributions from or adjusts or settles
	claims for residents of this state with respect to pharmacy
	benefits provided by an entity that issues or provides a plan that
	provides benefits for medical or surgical expenses incurred as a
	result of a health condition, accident, or sickness, including an
	individual, group, blanket, or franchise insurance policy or
	insurance agreement, a group hospital service contract, or an
	individual or group evidence of coverage or similar coverage
	document that is offered by:
	(1)  an insurance company;
	(2)  a group hospital service corporation operating
	under Chapter 842;
	(3)  a fraternal benefit society operating under
	Chapter 885;
	(4)  a stipulated premium company operating under
	Chapter 884;
	(5)  an exchange operating under Chapter 942;
	(6)  a health maintenance organization operating under
	Chapter 843;
	(7)  a multiple employer welfare arrangement that holds
	a certificate of authority under Chapter 846; or
	(8)  an approved nonprofit health corporation that
	holds a certificate of authority under Chapter 844.
	(b)  This chapter applies to a pharmacy benefit manager that
	provides pharmacy benefit management with respect to pharmacy
	benefits provided by the provider or issuer of a plan of group
	health coverage made available by a school district in accordance
	with Section 22.004, Education Code.
	(c)  Notwithstanding Section 172.014, Local Government Code,
	or any other law, this chapter applies to a pharmacy benefit manager
	that provides pharmacy benefit management with respect to pharmacy
	benefits provided by a risk pool created under Chapter 172, Local
	Government Code, that provides health and accident coverage.
	(d)  Notwithstanding any provision in Chapter 1551, 1575,
	1579, or 1601 or any other law, this chapter applies to a pharmacy
	benefit manager that provides pharmacy benefit management with
	respect to pharmacy benefits provided by the provider or issuer of:
	(1)  a basic coverage plan under Chapter 1551;
	(2)  a basic plan under Chapter 1575;
	(3)  a primary care coverage plan under Chapter 1579;
	and
	(4)  a plan that provides basic coverage under Chapter
	1601.
	(e)  Notwithstanding Section 1501.251 or any other law, this
	chapter applies to a pharmacy benefit manager that provides
	pharmacy benefit management with respect to pharmacy benefits
	provided by the issuer of coverage under a small employer health
	benefit plan subject to Chapter 1501.
	(f)  To the extent allowed by federal law, this chapter
	applies to a pharmacy benefit manager that provides pharmacy
	benefit management with respect to pharmacy benefits provided by
	the state Medicaid program, except that this chapter does not apply
	to a managed care organization subject to Section 533.005,
	Government Code.
	(g)  This chapter does not apply to a pharmacy benefit
	manager with respect to pharmacy benefits provided by:
	(1)  a plan that provides coverage:
	(A)  for wages or payments in lieu of wages for a
	period during which an employee is absent from work because of
	sickness or injury;
	(B)  as a supplement to a liability insurance
	policy;
	(C)  for credit insurance;
	(D)  only for dental or vision care;
	(E)  only for hospital expenses; or
	(F)  only for indemnity for hospital confinement;
	(2)  a Medicare supplemental policy as defined by
	Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
	(3)  a workers' compensation insurance policy or any
	other plan or arrangement that provides workers' compensation
	benefits;
	(4)  medical payment insurance coverage provided under
	a motor vehicle insurance policy; or
	(5)  a long-term care policy, including a nursing home
	fixed indemnity policy, unless the commissioner determines that the
	policy provides benefit coverage so comprehensive that the policy
	is a health benefit plan as described by Subsections (a)-(f).
	(h)  Notwithstanding any other law, a person described by
	Subsections (a)-(g) is an administrator subject to this chapter and
	must obtain a certificate of authority under Subchapter B.
	SECTION 4.  The heading to Subchapter D, Chapter 4151,
	Insurance Code, is amended to read as follows:
	SUBCHAPTER D. PHARMACY BENEFITS [BENEFIT PLANS]
	SECTION 5.  Subchapter D, Chapter 4151, Insurance Code, is
	amended by amending Section 4151.151 and adding Sections 4151.154,
	4151.155, 4151.156, 4151.157, 4151.158, and 4151.159 to read as
	follows:
	Sec. 4151.151.  DEFINITION. In this subchapter, "pharmacy
	benefit manager" means a person, other than a pharmacy or
	pharmacist, who acts as an administrator who provides pharmacy
	benefit management in connection with pharmacy benefits.
	Sec. 4151.154.  AMENDMENT OF CONTRACT TERM. A pharmacy
	benefit manager may not change a term of a contract with a retail
	pharmacy, including automatically enrolling or disenrolling the
	pharmacy from a pharmacy benefit network, without prior written
	agreement of the retail pharmacy.
	Sec. 4151.155.  CERTAIN TRANSACTION FEES PROHIBITED. A
	pharmacy benefit manager may not charge a transaction fee for a
	claim submitted electronically to the pharmacy benefit manager by a
	retail pharmacy.
	Sec. 4151.156.  PHARMACY NETWORK REQUIREMENTS AND
	PROHIBITIONS. (a) A pharmacy benefit manager may not require that
	a retail pharmacy be a member of a network managed by the pharmacy
	benefit manager as a condition for the retail pharmacy to
	participate in another network managed by the pharmacy benefit
	manager.
	(b)  A pharmacy benefit manager may not exclude a retail
	pharmacy from participation in a network if the pharmacy:
	(1)  accepts the terms, conditions, and reimbursement
	rates of the pharmacy benefit manager;
	(2)  meets all applicable federal and state licensure
	and permit requirements; and
	(3)  has not been excluded from participation as a
	provider in any federal or state program.
	(c)  A pharmacy benefit manager shall establish a pharmacy
	network that includes sufficient retail pharmacies to ensure that:
	(1)  in urban areas, not less than 90 percent of plan
	participants, on average, live not more than two miles from a
	network retail pharmacy;
	(2)  in suburban areas, not less than 90 percent of plan
	participants, on average, live not more than five miles from a
	network retail pharmacy; and
	(3)  in rural areas, not less than 70 percent of plan
	participants, on average, live not more than 15 miles from a network
	retail pharmacy.
	Sec. 4151.157.  RELATIONSHIP WITH PLAN PARTICIPANTS.  A
	pharmacy benefit manager may not:
	(1)  require that a plan participant use a retail
	pharmacy, mail order pharmacy, specialty pharmacy, or other entity
	providing pharmacy services:
	(A)  in which the pharmacy benefit manager has an
	ownership interest; or
	(B)  that has an ownership interest in the
	pharmacy benefit manager; or
	(2)  provide an incentive to a plan participant to
	encourage the plan participant to use a retail pharmacy, mail order
	pharmacy, specialty pharmacy, or other entity providing pharmacy
	services:
	(A)  in which the pharmacy benefit manager has an
	ownership interest; or
	(B)  that has an ownership interest in the
	pharmacy benefit manager.
	Sec. 4151.158.  SALE, RENTAL, OR LEASING OF CLAIMS DATA. (a)
	Not later than the 30th day before the date a pharmacy benefit
	manager intends to sell, rent, or lease an insurer's claims data,
	the pharmacy benefit manager shall disclose in writing to the
	insurer that the pharmacy benefit manager intends to sell, rent, or
	lease the claims data. The written disclosure must identify the
	potential purchaser and the expected use of the data.
	(b)  A pharmacy benefit manager may not sell, rent, or lease
	claims data without the written approval of the insurer.
	(c)  A pharmacy benefit manager must allow each plan
	participant to refuse the sale, rent, or lease of that plan
	participant's claims data.
	Sec. 4151.159.  TRANSMISSION OF CLAIMS DATA AND CERTAIN
	OTHER INFORMATION PROHIBITED. A pharmacy benefit manager may not
	transmit a plan participant's personally identifiable utilization
	or claims data to a pharmacy owned by the pharmacy benefit manager
	unless before each transmission the plan participant consents in
	writing to the transmission.
	SECTION 6.  The change in law made by this Act applies only
	to a contract between a pharmacy benefit manager and a retail
	pharmacy entered into or renewed on or after January 1, 2016. A
	contract entered into or renewed before January 1, 2016, is
	governed by the law as it existed immediately before the effective
	date of this Act, and that law is continued in effect for that
	purpose.
	SECTION 7.  Unless required to register as an administrator
	under Chapter 4151, Insurance Code, before the effective date of
	this Act, an entity acting as, or holding itself out as, a pharmacy
	benefit manager for purposes of that chapter as amended by this Act
	is not required to hold a certificate of authority under that
	chapter before January 1, 2016.
	SECTION 8.  This Act takes effect September 1, 2015.