SB 38: "An Act relating to insurance; removing references, definitions, and confidentiality of information provisions relating to managed care entities, substituting health care insurers in the former role of managed care entities, and amending the definitions of 'covered person,' 'managed care plan,' and 'utilization review,' as those terms relate to the administration of managed care insurance plans; authorizing persons to act as pharmacy benefits managers subject to oversight by the division of insurance; and amending the definition of 'health care insurer' as it relates to health care insurance."
00 SENATE BILL NO. 38 01 "An Act relating to insurance; removing references, definitions, and confidentiality of 02 information provisions relating to managed care entities, substituting health care 03 insurers in the former role of managed care entities, and amending the definitions of 04 'covered person,' 'managed care plan,' and 'utilization review,' as those terms relate to 05 the administration of managed care insurance plans; authorizing persons to act as 06 pharmacy benefits managers subject to oversight by the division of insurance; and 07 amending the definition of 'health care insurer' as it relates to health care insurance." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09 * Section 1. AS 21.07.010 is amended to read: 10 Sec. 21.07.010. Patient and health care provider protection. (a) A contract 11 between a participating health care provider and a health care insurer [MANAGED 12 CARE ENTITY] that offers a managed care plan must contain a provision that 13 (1) provides for a reasonable mechanism to identify all medical care
01 services to be provided by the health care insurer [MANAGED CARE ENTITY]; 02 (2) clearly states or references an attachment that states the health care 03 provider's rate of compensation; 04 (3) clearly states all ways in which the contract between the health care 05 provider and the health care insurer [MANAGED CARE ENTITY] may be 06 terminated; a provision that provides for discretionary termination by either party must 07 apply equitably to both parties; 08 (4) provides that, in the event of a dispute between the parties to the 09 contract, a fair, prompt, and mutual dispute resolution process must be used; at a 10 minimum, the process must provide 11 (A) for an initial meeting at which all parties are present or 12 represented by individuals with authority regarding the matters in dispute; the 13 meeting shall be held within 10 working days after the plan receives written 14 notice of the dispute or gives written notice to the provider, unless the parties 15 otherwise agree in writing to a different schedule; 16 (B) that if, within 30 days following the initial meeting, the 17 parties have not resolved the dispute, the dispute shall be submitted to 18 mediation directed by a mediator who is mutually agreeable to the parties and 19 who is not regularly under contract to or employed by either of the parties; 20 each party shall bear its proportionate share of the cost of mediation, including 21 the mediator fees; 22 (C) that if, after a period of 60 days following commencement 23 of mediation, the parties are unable to resolve the dispute, either party may 24 seek other relief allowed by law; 25 (D) that the parties shall agree to negotiate in good faith in the 26 initial meeting and in mediation; 27 (5) states that a health care provider may not be penalized or the health 28 care provider's contract terminated by the health care insurer [MANAGED CARE 29 ENTITY] because the health care provider acts as an advocate for a covered person in 30 seeking appropriate, medically necessary medical care services; 31 (6) protects the ability of a health care provider to communicate openly
01 with a covered person about all appropriate diagnostic testing and treatment options; 02 and 03 (7) defines words in a clear and concise manner. 04 (b) A contract between a participating health care provider and a health care 05 insurer [MANAGED CARE ENTITY] that offers a managed care plan may not 06 contain a provision that 07 (1) has as its predominant purpose the creation of direct financial 08 incentives to the health care provider for withholding covered medical care services 09 that are medically necessary; nothing in this paragraph shall be construed to prohibit a 10 contract between a participating health care provider and a health care insurer 11 [MANAGED CARE ENTITY] from containing incentives for efficient management 12 of the utilization and cost of covered medical care services; 13 (2) requires the provider to contract for all products that are currently 14 offered or that may be offered in the future by the health care insurer [MANAGED 15 CARE ENTITY]; or 16 (3) requires the health care provider to be compensated for medical 17 care services performed at the same rate as the health care provider has contracted 18 with another health care insurer [MANAGED CARE ENTITY]. 19 (c) A health care insurer [MANAGED CARE ENTITY] may not enter into a 20 contract with a health care provider that requires the provider to indemnify or hold 21 harmless the health care insurer [MANAGED CARE ENTITY] for the acts or 22 conduct of the health care insurer [MANAGED CARE ENTITY]. An 23 indemnification or hold harmless clause entered into in violation of this subsection is 24 void. 25 * Sec. 2. AS 21.07.020 is amended to read: 26 Sec. 21.07.020. Required contract provisions for managed care plans. A 27 managed care plan must contain 28 (1) a provision that preauthorization for a covered medical procedure 29 on the basis of medical necessity may not be retroactively denied unless the 30 preauthorization is based on materially incomplete or inaccurate information provided 31 by or on behalf of the provider;
01 (2) a provision for emergency room services if any coverage is 02 provided for treatment of a medical emergency; 03 (3) a provision that covered medical care services be reasonably 04 available in the community in which a covered person resides or that, if referrals are 05 required by the plan, adequate referrals outside the community be available if the 06 medical care service is not available in the community; 07 (4) a provision that any utilization review decision 08 (A) must be made within 72 hours after receiving the request 09 for preapproval for nonemergency situations; for emergency situations, 10 utilization review decisions for care following emergency services must be 11 made as soon as is practicable but in any event not later than 24 hours after 12 receiving the request for preapproval or for coverage determination; and 13 (B) to deny, reduce, or terminate a health care benefit or to 14 deny payment for a medical care service because that service is not medically 15 necessary shall be made by an employee or agent of the health care insurer 16 [MANAGED CARE ENTITY] who is a licensed health care provider; 17 (5) a provision that provides for an internal appeal mechanism for a 18 covered person who disagrees with a utilization review decision made by a health 19 care insurer [MANAGED CARE ENTITY]; except as provided under (6) of this 20 section, this appeal mechanism must provide for a written decision 21 (A) from the health care insurer [MANAGED CARE 22 ENTITY] within 18 working days after the date written notice of an appeal is 23 received; and 24 (B) on the appeal by an employee or agent of the health care 25 insurer [MANAGED CARE ENTITY] who holds the same professional 26 license as the health care provider who is treating the covered person; 27 (6) a provision that provides for an internal appeal mechanism for a 28 covered person who disagrees with a utilization review decision made by a health 29 care insurer [MANAGED CARE ENTITY] in any case in which delay would, in the 30 written opinion of the treating provider, jeopardize the covered person's life or 31 materially jeopardize the covered person's health; the health care insurer
01 [MANAGED CARE ENTITY] shall 02 (A) decide an appeal described in this paragraph within 72 03 hours after receiving the appeal; and 04 (B) provide for a written decision on the appeal by an 05 employee or agent of the health care insurer [MANAGED CARE ENTITY] 06 who holds the same professional license as the health care provider who is 07 treating the covered person; 08 (7) a provision that discloses the existence of the right to an external 09 appeal of a utilization review decision made by a health care insurer [MANAGED 10 CARE ENTITY]; the external appeal shall be as conducted in accordance with 11 AS 21.07.050; 12 (8) a provision that discloses covered benefits, optional supplemental 13 benefits, and benefits relating to and restrictions on nonparticipating provider services; 14 (9) a provision that describes the preapproval requirements and 15 whether clinical trials or experimental or investigational treatment are covered; 16 (10) a provision describing a mechanism for assignment of benefits for 17 health care providers and payment of benefits; 18 (11) a provision describing availability of prescription medications or a 19 formulary guide, and whether medications not listed are excluded; if a formulary guide 20 is made available, the guide must be updated annually; and 21 (12) a provision describing available translation or interpreter services, 22 including audiotape or braille information. 23 * Sec. 3. AS 21.07.030(a) is amended to read: 24 (a) If a health care insurer [MANAGED CARE ENTITY] offers a managed 25 care plan that provides for coverage of medical care services only if the services are 26 furnished through a network of health care providers that have entered into a contract 27 with the health care insurer [MANAGED CARE ENTITY], the health care insurer 28 [MANAGED CARE ENTITY] shall also offer a non-network option to covered 29 persons at initial enrollment, as provided under (c) of this section. The non-network 30 option may require that a covered person pay a higher deductible, copayment, or 31 premium for the plan if the higher deductible, copayment, or premium results from
01 increased costs caused by the use of a non-network provider. The health care insurer 02 [MANAGED CARE ENTITY] shall provide an actuarial demonstration of the 03 increased costs to the director at the director's request. If the increased costs are not 04 justified, the director shall require the health care insurer [MANAGED CARE 05 ENTITY] to recalculate the appropriate costs allowed and resubmit the appropriate 06 deductible, copayment, or premium to the director. This subsection does not apply to a 07 covered person who is offered non-network coverage through another managed care 08 plan or through another health care insurer [MANAGED CARE ENTITY]. 09 * Sec. 4. AS 21.07.030(b) is amended to read: 10 (b) The amount of any additional premium charged by the health care 11 insurer [MANAGED CARE ENTITY] for the additional cost of the creation and 12 maintenance of the option described in (a) of this section and the amount of any 13 additional cost sharing imposed under this option shall be paid by the covered person 14 unless it is paid by an employer or other person through agreement with the health 15 care insurer [MANAGED CARE ENTITY]. 16 * Sec. 5. AS 21.07.030(c) is amended to read: 17 (c) A covered person may make a change to the medical care coverage option 18 provided under this section only during a time period determined by the health care 19 insurer [MANAGED CARE ENTITY]. The time period described in this subsection 20 must occur at least annually and last for at least 15 working days. 21 * Sec. 6. AS 21.07.030(d) is amended to read: 22 (d) If a health care insurer [MANAGED CARE ENTITY] that offers a 23 managed care plan requires or provides for a designation by a covered person of a 24 participating primary care provider, the health care insurer [MANAGED CARE 25 ENTITY] shall permit the covered person to designate any participating primary care 26 provider that is available to accept the covered person. 27 * Sec. 7. AS 21.07.030(e) is amended to read: 28 (e) Except as provided in this subsection, a health care insurer [MANAGED 29 CARE ENTITY] that offers a managed care plan shall permit a covered person to 30 receive medically necessary or appropriate specialty care, subject to appropriate 31 referral procedures, from any qualified participating health care provider that is
01 available to accept the individual for medical care. This subsection does not apply to 02 specialty care if the health care insurer [MANAGED CARE ENTITY] clearly 03 informs covered persons of the limitations on choice of participating health care 04 providers with respect to medical care. In this subsection, 05 (1) "appropriate referral procedures" means procedures for referring 06 patients to other health care providers as set out in the applicable member contract and 07 as described under (a) of this section; 08 (2) "specialty care" means care provided by a health care provider with 09 training and experience in treating a particular injury, illness, or condition. 10 * Sec. 8. AS 21.07.030(f) is amended to read: 11 (f) If a contract between a health care provider and a health care insurer 12 [MANAGED CARE ENTITY] is terminated, a covered person may continue to be 13 treated by that health care provider as provided in this subsection. If a covered person 14 is pregnant or being actively treated by a provider on the date of the termination of the 15 contract between that provider and the health care insurer [MANAGED CARE 16 ENTITY], the covered person may continue to receive medical care services from that 17 provider as provided in this subsection, and the contract between the health care 18 insurer [MANAGED CARE ENTITY] and the provider shall remain in force with 19 respect to the continuing treatment. The covered person shall be treated for the 20 purposes of benefit determination or claim payment as if the provider were still under 21 contract with the health care insurer [MANAGED CARE ENTITY]. However, 22 treatment is required to continue only while the managed care plan remains in effect 23 and 24 (1) for the period that is the longest of the following: 25 (A) the end of the current plan year; 26 (B) up to 90 days after the termination date, if the event 27 triggering the right to continuing treatment is part of an ongoing course of 28 treatment; 29 (C) through completion of postpartum care, if the covered 30 person is pregnant on the date of termination; or 31 (2) until the end of the medically necessary treatment for the condition,
01 disease, illness, or injury if the person has a terminal condition, disease, illness, or 02 injury; in this paragraph, "terminal" means a life expectancy of less than one year. 03 * Sec. 9. AS 21.07.050(a) is amended to read: 04 (a) A health care insurer [MANAGED CARE ENTITY] offering a managed 05 care plan shall provide for an external appeal process that meets the requirements of 06 this section in the case of an externally appealable decision for which a timely appeal 07 is made in writing either by the health care insurer [MANAGED CARE ENTITY] or 08 by the covered person. 09 * Sec. 10. AS 21.07.050(b) is amended to read: 10 (b) A health care insurer [MANAGED CARE ENTITY] may condition the 11 use of an external appeal process in the case of an externally appealable decision upon 12 a final decision in an internal appeal under AS 21.07.020, but only if the decision is 13 made in a timely basis consistent with the deadlines provided under this chapter. 14 * Sec. 11. AS 21.07.050(c) is amended to read: 15 (c) Except as provided in this subsection, the external appeal process shall be 16 conducted under a contract between the health care insurer [MANAGED CARE 17 ENTITY] and one or more external appeal agencies that have qualified under 18 AS 21.07.060. The health care insurer [MANAGED CARE ENTITY] shall provide 19 (1) that the selection process among external appeal agencies 20 qualifying under AS 21.07.060 does not create any incentives for external appeal 21 agencies to make a decision in a biased manner; 22 (2) for auditing a sample of decisions by external appeal agencies to 23 ensure that decisions are not made in a biased manner; and 24 (3) that all costs of the process, except those incurred by the covered 25 person or treating professional in support of the appeal, shall be paid by the health 26 care insurer [MANAGED CARE ENTITY] and not by the covered person. 27 * Sec. 12. AS 21.07.050(d) is amended to read: 28 (d) An external appeal process must include at least the following: 29 (1) a fair, de novo determination based on coverage provided by the 30 plan and by applying terms as defined by the plan; however, nothing in this paragraph 31 may be construed as providing for coverage of items and services for which benefits
01 are excluded under the plan or coverage; 02 (2) an external appeal agency shall determine whether the health care 03 insurer's [MANAGED CARE ENTITY'S] decision is (A) in accordance with the 04 medical needs of the patient involved, as determined by the health care insurer 05 [MANAGED CARE ENTITY], taking into account, as of the time of the health care 06 insurer's [MANAGED CARE ENTITY'S] decision, the patient's medical needs and 07 any relevant and reliable evidence the agency obtains under (3) of this subsection, and 08 (B) in accordance with the scope of the covered benefits under the plan; if the agency 09 determines the decision complies with this paragraph, the agency shall affirm the 10 decision, and, to the extent that the agency determines the decision is not in 11 accordance with this paragraph, the agency shall reverse or modify the decision; 12 (3) the external appeal agency shall include among the evidence taken 13 into consideration 14 (A) the decision made by the health care insurer 15 [MANAGED CARE ENTITY] upon internal appeal under AS 21.07.020 and 16 any guidelines or standards used by the health care insurer [MANAGED 17 CARE ENTITY] in reaching a decision; 18 (B) any personal health and medical information supplied with 19 respect to the individual whose denial of claim for benefits has been appealed; 20 (C) the opinion of the individual's treating physician or health 21 care provider; and 22 (D) the managed care plan; 23 (4) the external appeal agency may also take into consideration the 24 following evidence: 25 (A) the results of studies that meet professionally recognized 26 standards of validity and replicability or that have been published in peer- 27 reviewed journals; 28 (B) the results of professional consensus conferences 29 conducted or financed in whole or in part by one or more government 30 agencies; 31 (C) practice and treatment guidelines prepared or financed in
01 whole or in part by government agencies; 02 (D) government-issued coverage and treatment policies; 03 (E) generally accepted principles of professional medical 04 practice; 05 (F) to the extent that the agency determines them [IT] to be 06 free of any conflict of interest, the opinions of individuals who are qualified as 07 experts in one or more fields of health care that are directly related to the 08 matters under appeal; 09 (G) to the extent that the agency determines them [IT] to be 10 free of any conflict of interest, the results of peer reviews conducted by the 11 health care insurer [MANAGED CARE ENTITY] involved; 12 (H) the community standard of care; and 13 (I) anomalous utilization patterns; 14 (5) an external appeal agency shall determine 15 (A) whether a denial of a claim for benefits is an externally 16 appealable decision; 17 (B) whether an externally appealable decision involves an 18 expedited appeal; and 19 (C) for purposes of initiating an external review, whether the 20 internal appeal process has been completed; 21 (6) a party to an externally appealable decision may submit evidence 22 related to the issues in dispute; 23 (7) the health care insurer [MANAGED CARE ENTITY] involved 24 shall provide the external appeal agency with access to information and to provisions 25 of the plan or health insurance coverage relating to the matter of the externally 26 appealable decision, as determined by the external appeal agency; and 27 (8) a determination by the external appeal agency on the decision must 28 (A) be made orally or in writing and, if it is made orally, shall 29 be supplied to the parties in writing as soon as possible; 30 (B) be made in accordance with the medical exigencies of the 31 case involved, but in no event later than 21 working days after the appeal is
01 filed, or, in the case of an expedited appeal, 72 hours after the time of 02 requesting an external appeal of the health care insurer's [MANAGED 03 CARE ENTITY'S] decision; 04 (C) state, in layperson's language, the basis for the 05 determination, including, if relevant, any basis in the terms or conditions of the 06 plan or coverage; and 07 (D) inform the covered person of the individual's rights, 08 including any time limits, to seek further review by the courts of the external 09 appeal determination. 10 * Sec. 13. AS 21.07.050(e) is amended to read: 11 (e) If the external appeal agency reverses or modifies the denial of a claim for 12 benefits, the health care insurer [MANAGED CARE ENTITY] shall 13 (1) upon receipt of the determination, authorize benefits in accordance 14 with that determination; 15 (2) take action as may be necessary to provide benefits, including 16 items or services, in a timely manner consistent with the determination; and 17 (3) submit information to the external appeal agency documenting 18 compliance with the agency's determination. 19 * Sec. 14. AS 21.07.060(b) is amended to read: 20 (b) An external appeal agency is qualified to consider appeals of managed care 21 plan health care decisions if the agency meets the following requirements: 22 (1) the agency meets the independence requirements of this section; 23 (2) the agency conducts external appeal activities through a panel of 24 two clinical peers, unless otherwise agreed to by both parties; and 25 (3) the agency has sufficient medical, legal, and other expertise and 26 sufficient staffing to conduct external appeal activities for the health care insurer 27 [MANAGED CARE ENTITY] on a timely basis consistent with this chapter. 28 * Sec. 15. AS 21.07.070 is amended to read: 29 Sec. 21.07.070. Limitation on liability of reviewers. An external appeal 30 agency qualifying under AS 21.07.060 and having a contract with a health care 31 insurer [MANAGED CARE ENTITY], and a person who is employed by the agency
01 or who furnishes professional services to the agency, may not be held by reason of the 02 performance of any duty, function, or activity required or authorized under this 03 chapter to have violated any criminal law [,] or to be civilly liable if due care was 04 exercised in the performance of the duty, function, or activity and there was no actual 05 malice or gross misconduct in the performance of the duty, function, or activity. 06 * Sec. 16. AS 21.07.080 is amended to read: 07 Sec. 21.07.080. Religious nonmedical providers. This chapter may not be 08 construed to 09 (1) restrict or limit the right of a health care insurer [MANAGED 10 CARE ENTITY] to include services provided by a religious nonmedical provider as 11 medical care services covered by the managed care plan; 12 (2) require a health care insurer [MANAGED CARE ENTITY], 13 when determining coverage for services provided by a religious nonmedical provider, 14 to 15 (A) apply medically based eligibility standards; 16 (B) use health care providers to determine access by a covered 17 person; 18 (C) use health care providers in making a decision on an 19 internal or external appeal; or 20 (D) require a covered person to be examined by a health care 21 provider as a condition of coverage; or 22 (3) require a managed care plan to exclude coverage for services 23 provided by a religious nonmedical provider because the religious nonmedical 24 provider is not providing medical or other data required from a health care provider if 25 the medical or other data is inconsistent with the religious nonmedical treatment or 26 nursing care being provided. 27 * Sec. 17. AS 21.07 is amended by adding new sections to read: 28 Article 2. Pharmacy Benefits Management. 29 Sec. 21.07.100. Agreements; prohibited provisions; approval. (a) A 30 pharmacy benefits manager may only act under the terms of a written agreement 31 between the pharmacy benefits manager and a health care insurer, a pharmacist, a
01 pharmacy, or a covered person that is approved by the director. The director shall 02 establish, by regulation, the permitted and prohibited terms of an agreement consistent 03 with AS 21.07.100 - 21.07.160 and the process by which the agreement may be 04 submitted for review and approval. 05 (b) Pharmacy benefits that may be managed by a pharmacy benefits manager 06 include 07 (1) mail service pharmacy programs; 08 (2) claims processing services; 09 (3) retail network management and payment of claims to pharmacies 10 for prescription drugs dispensed to covered persons; 11 (4) clinical formulary development and management services; 12 (5) rebate contracting and administration services; 13 (6) patient compliance, therapeutic intervention, and generic 14 substitution programs; and 15 (7) disease management programs involving prescription drug use. 16 (c) An agreement between a health care insurer and a pharmacy benefits 17 manager may not 18 (1) provide that a pharmacist or pharmacy is responsible for the actions 19 of the health care insurer or the pharmacy benefits manager; 20 (2) require a pharmacist or pharmacy to participate in one contract in 21 order to participate in another contract; 22 (3) exclude an otherwise qualified pharmacist or pharmacy from 23 participation in a particular network solely because the pharmacist or pharmacy 24 declined to participate in another plan or network managed by the pharmacy benefits 25 manager; or 26 (4) require a pharmacist or pharmacy to change a covered person's 27 prescription unless the prescribing physician and the covered person authorize the 28 pharmacist or pharmacy to make the change. 29 (d) An agreement must apply the same coinsurance, copayment, and 30 deductible terms to all covered drug prescriptions filled by a pharmacy, including a 31 mail order pharmacist or pharmacy that participates in a network.
01 (e) If an agreement provides that the pharmacy benefits manager receives 02 payment for the services of a pharmacist or pharmacy, the pharmacy benefits manager 03 acts as a fiduciary of the pharmacist or pharmacy that provided the services. 04 (f) A pharmacy benefits manager shall file with the division a copy of each 05 agreement under which it operates for approval by the division not less than 30 days 06 before the execution of the agreement. The agreement shall be considered approved 07 unless the division disapproves it within 30 days after it is filed. 08 Sec. 21.07.105. Prohibited practices. (a) A pharmacy benefits manager may 09 not 10 (1) intervene in the delivery or transmission of prescriptions from the 11 prescriber to the pharmacist or pharmacy for the purpose of influencing the 12 prescriber's choice of therapy, influencing the patient's choice of pharmacist or 13 pharmacy, or altering the prescription information; 14 (2) switch a prescribed drug without the express authorization of the 15 prescriber; 16 (3) transfer a health benefit plan to another payment network unless 17 the pharmacy benefits manager receives written authorization from the insurer; 18 (4) unfairly discriminate when advertising which pharmacists or 19 pharmacies are participating pharmacists or pharmacies; 20 (5) require record keeping by a pharmacist or pharmacy that is more 21 stringent than required by state or federal laws or regulations; or 22 (6) unfairly discriminate when contracting with pharmacists or 23 pharmacies based on copayments or days of supply. 24 (b) A health care insurer and a pharmacy benefits manager may not unfairly 25 discriminate against a pharmacist or pharmacy that is acting within the scope of a 26 license or certification with respect to participation in a network or reimbursement 27 plan. 28 Sec. 21.07.110. Agreement termination. (a) An agreement between a 29 pharmacy benefits manager and a pharmacist or pharmacy may not be terminated, and 30 a pharmacy benefits manager may not penalize a pharmacist or pharmacy, because a 31 pharmacist or pharmacy
01 (1) has filed a complaint, grievance, or appeal; 02 (2) expresses disagreement with a pharmacy benefits manager's 03 decision to deny or limit benefits to a covered person; 04 (3) assists a covered person to seek reconsideration of the pharmacy 05 benefits manager's decision; or 06 (4) discusses alternative medications with a covered person. 07 (b) Before terminating an agreement with a pharmacist or pharmacy that 08 results in the exclusion of a pharmacist or pharmacy from a network, the pharmacy 09 benefits manager shall give the pharmacist or pharmacy a written explanation of the 10 reason for the termination at least 30 days before the termination date. However, the 11 agreement may be terminated immediately if the termination is based on 12 (1) the loss of the pharmacist's or pharmacy's license; or 13 (2) a licensee's conviction of fraud. 14 (c) Termination of an agreement between a pharmacy benefits manager and a 15 pharmacist or pharmacy does not release a pharmacy benefits manager from the 16 obligation to make a payment due to the pharmacist or pharmacy for services 17 rendered. 18 Sec. 21.07.115. Medication reimbursement costs. (a) A pharmacy benefits 19 manager shall use a current and nationally recognized benchmark as a basis to 20 establish the reimbursement paid to network pharmacists or pharmacies for 21 medications and products. The reimbursement must be determined as follows: 22 (1) for a brand name or single source product, the index is the First 23 DataBank or the Facts and Comparisons average wholesale price effective on the date 24 of service; 25 (2) for a generic drug or multisource product, the maximum allowable 26 cost is established by reference to the First DataBank or Facts and Comparisons 27 baseline price. 28 (b) Only products that comply with pharmacy laws as equivalent and 29 generically interchangeable with a federal Food and Drug Administration Orange 30 Book rating of "A-B" may be reimbursed using a maximum allowable cost price 31 method.
01 (c) If a multisource product does not have a baseline price, the multisource 02 product shall be treated as a single-source branded drug for the purpose of determining 03 reimbursement. 04 Sec. 21.07.120. Payments; audits. (a) If a pharmacy benefits manager or 05 health care insurer processes a claim electronically, the pharmacy benefits manager or 06 health care insurer shall electronically transmit payments to the pharmacist or 07 pharmacy not later than seven calendar days after the claim is transmitted to the 08 pharmacist or pharmacy. 09 (b) If a pharmacy benefits manager or health care insurer processes claims 10 nonelectronically, the time limits for payment to a pharmacist or pharmacy must be set 11 out in the agreement between the pharmacy benefits manager or health care insurer 12 and the pharmacist or pharmacy. 13 (c) A pharmacy benefits manager or health care insurer shall adjust the price 14 charged to a pharmacist or pharmacy within 24 hours after a price increase notification 15 received from a manufacturer or supplier. 16 (d) Except as provided in (f) of this section, claims paid by a pharmacy 17 benefits manager or a health care insurer may not be retroactively denied or adjusted 18 after seven days after adjudication of the claims. 19 (e) A pharmacy benefits manager or a health care insurer may not 20 retroactively reverse a determination of eligibility. 21 (f) A pharmacy benefits manager or health care insurer may retroactively deny 22 or adjust a claim if 23 (1) the original claim was submitted fraudulently; 24 (2) the original claim payment was incorrect because the pharmacist or 25 pharmacy was already paid for services rendered; or 26 (3) the services were not rendered by the pharmacist or pharmacy. 27 (g) A pharmacy benefits manager or a health care insurer may not require an 28 extrapolation audit as a condition of participating in a contract, network, or program. 29 (h) A pharmacy benefits manager or a health care insurer may not recoup 30 money the pharmacy benefits manager believes to be owed as a result of an audit by 31 setoff until the pharmacist or pharmacy has the opportunity to review the pharmacy
01 benefits manager's or the health care insurer's findings and concurs with the results. If 02 the parties disagree, the results of the audit are subject to review by the director. 03 Sec. 21.07.125. Disclosures to covered persons. (a) If a health care insurer 04 uses the services of a pharmacy benefits manager, the pharmacy benefits manager 05 shall provide a written notice to a covered person that is approved by the health care 06 insurer. The notice must advise the covered person of the identity of, and relationship 07 among, the pharmacy benefits manager, the health care insurer, and the covered 08 person. 09 (b) The notice required in (a) of this section must contain 10 (1) a statement advising the covered person that the pharmacy benefits 11 manager is regulated by the insurance laws that are enforced by the director; 12 (2) a statement that the covered person has the right to file a complaint, 13 appeal, or grievance with the division concerning the pharmacy benefits manager or 14 health care insurer; and 15 (3) the telephone number, mailing address, and electronic mail address 16 of the director. 17 (c) The notice required in (a) of this section must be written in plain English, 18 using terms that are generally understood by a layperson, and a copy must be provided 19 to the division and to each pharmacist or pharmacy participating in a network. 20 Sec. 21.07.130. Authorized substitutions. (a) If a pharmacy benefits manager 21 requests a substitute prescription for a drug prescribed to a covered person and obtains 22 the approval of the prescribing health professional or the prescribing health 23 professional's authorized representative for a prescription drug substitution, the 24 pharmacy benefits manager may substitute a lower-priced generic and therapeutically 25 equivalent drug for a higher-priced prescribed drug. 26 (b) If the substitute drug costs more than the prescribed drug, the substitution 27 must be made for medical reasons that benefit the covered person. 28 (c) A pharmacy benefits manager shall disclose to the covered person the cost 29 of the original drug and the cost of the substitute drug, any benefit or payment 30 accruing to the pharmacy benefits manager as a result of the substitution, any potential 31 effects on a patient's health that may occur as a result of the substitution, the safety of
01 the substitution, and the side effects of the original drug compared to the side effects 02 of the substitute drug. 03 (d) The pharmacy benefits manager shall compensate the health care insurer 04 for any benefit or payment received by the pharmacy benefits manager as a result of a 05 prescription drug substitution under this section. 06 Sec. 21.07.135. Complaint process. (a) The director shall adopt regulations 07 establishing procedures for the investigation of complaints concerning the activity of a 08 pharmacy benefits manager. 09 (b) The division shall refer to the Board of Pharmacy a complaint involving an 10 issue that is under the jurisdiction of the Board of Pharmacy under AS 08.80.030. 11 Sec. 21.07.140. Compensation for claim adjustment. (a) Compensation to a 12 pharmacy benefits manager for claims adjusted or settled on behalf of a health care 13 insurer may not be based on claims experience. 14 (b) This section does not prohibit the compensation of a pharmacy benefits 15 manager based on the total number of claims paid or processed. 16 Sec. 21.07.145. Duty to the covered entity and health care insurer. (a) A 17 pharmacy benefits manager shall provide to a health care insurer the financial and use 18 information requested by the health care insurer relating to providing pharmacy 19 benefits to a covered person for the health care insurer. 20 (b) A pharmacy benefits manager providing information under this section 21 may designate the information provided under (a) of this section as confidential. 22 Information designated as confidential by a pharmacy benefits manager and provided 23 to a health care insurer under this section may not be disclosed by the covered entity to 24 a person without the consent of the pharmacy benefits manager, except that disclosure 25 may be made when authorized or required by a court. 26 (c) A pharmacy benefits manager shall disclose to the health care insurer all 27 financial terms and arrangements for remuneration that apply between the pharmacy 28 benefits manager and a prescription drug manufacturer or labeler, including rebates, 29 formulary management and drug-switching or drug-substitution programs, educational 30 support, claims processing and pharmacy network fees charged by retail pharmacies, 31 and data sales fees.
01 (d) A pharmacy benefits manager shall disclose to the health care insurer 02 whether there is a difference between the price paid to a retail pharmacy and the 03 amount billed to the health care insurer. 04 (e) A health care insurer may audit the pharmacy benefits manager's records 05 related to the rebates or other information provided in this section. 06 Sec. 21.07.150. Pharmacy benefits manager registration. A pharmacy 07 benefits manager shall be registered as a third-party administrator under AS 21.27.630 08 - 21.27.660. 09 Sec. 21.07.155. Fees; penalty. (a) The division may, by regulation, 10 (1) assess reasonable fees from a pharmacy benefits manager for the 11 costs of administration of AS 21.07.100 - 21.07.160; and 12 (2) establish reasonable penalties, including suspending the registration 13 of a pharmacy benefits manager that fails to pay the appropriate fees. 14 (b) If the director determines, after a hearing under AS 21.06.170 - 21.06.230, 15 that a person has acted as a pharmacy benefits manager without registering authority 16 to act as a pharmacy benefits manager under AS 21.07.150, the person is subject to a 17 civil penalty of not less than $5,000 and not more than $10,000 for each violation. 18 Sec. 21.07.160. Applicability to the state and a bargaining unit. 19 AS 21.07.100 - 21.07.160 apply to a pharmacy benefits manager providing services to 20 (1) the state when it provides group insurance by means of self 21 insurance under AS 39.30.091; and 22 (2) a bargaining unit that is exempted under AS 39.30.090(a)(2) and an 23 implementing regulation or regulations and that provides health care benefits for 24 eligible state employees and their dependents. 25 * Sec. 18. AS 21.07.250(11) is amended to read: 26 (11) "managed care plan" or "plan" means an individual or group 27 health insurance policy that complies with AS 21.07.020 [PLAN OPERATED BY A 28 MANAGED CARE ENTITY]; 29 * Sec. 19. AS 21.07.250(14) is amended to read: 30 (14) "participating health care provider" means a health care provider 31 who has entered into an agreement with a health care insurer [MANAGED CARE
01 ENTITY] to provide services or supplies to a patient covered by a managed care plan; 02 * Sec. 20. AS 21.07.250(18) is amended to read: 03 (18) "utilization review" means a system of monitoring the use of , or 04 evaluating the clinical necessity, appropriateness, efficacy, or efficiency of, 05 medical care services, procedures, settings or supplies including ambulatory 06 review, prospective review, second opinion, certification, concurrent review, case 07 management, discharge planning, or retrospective review [REVIEWING THE 08 MEDICAL NECESSITY, APPROPRIATENESS, OR QUALITY OF MEDICAL 09 CARE SERVICES AND SUPPLIES PROVIDED UNDER A MANAGED CARE 10 PLAN USING SPECIFIED GUIDELINES, INCLUDING PREADMISSION 11 CERTIFICATION, THE APPLICATION OF PRACTICE GUIDELINES, 12 CONTINUED STAY REVIEW, DISCHARGE PLANNING, 13 PREAUTHORIZATION OF AMBULATORY PROCEDURES, AND 14 RETROSPECTIVE REVIEW]; 15 * Sec. 21. AS 21.07.250 is amended by adding new paragraphs to read: 16 (20) "Board of Pharmacy" or "board" means the Board of Pharmacy 17 established under AS 08.80.010; 18 (21) "covered person" means a member, policy holder, subscriber, 19 enrollee, beneficiary, or dependent participating in a health care plan; 20 (22) "health care insurer" has the meaning given in AS 21.54.500; 21 (23) "pharmacist" has the meaning given in AS 08.80.480; 22 (24) "pharmacy" has the meaning given in AS 08.80.480. 23 * Sec. 22. AS 21.54.500(17) is amended to read: 24 (17) "health care insurer" means a person that contracts or offers to 25 contract to provide, deliver, arrange for, pay for, or reimburse the costs of 26 medical care [TRANSACTING THE BUSINESS OF HEALTH CARE 27 INSURANCE], including an insurance company licensed under AS 21.09, a hospital 28 or medical service corporation licensed under AS 21.87, a fraternal benefit society 29 licensed under AS 21.84, a health maintenance organization licensed under AS 21.86, 30 a self-funded multiple employer welfare arrangement under AS 21.85, or a person 31 subject to this title who provides coverage for the cost of medical care [, A
01 CHURCH PLAN, AND A GOVERNMENTAL PLAN, EXCEPT FOR A 02 NONFEDERAL GOVERNMENTAL PLAN THAT ELECTS TO BE EXCLUDED 03 UNDER 42 U.S.C. 300gg-21(b)(2) (HEALTH CARE PORTABILITY AND 04 ACCOUNTABILITY ACT OF 1996)]; 05 * Sec. 23. AS 21.90.900 is amended by adding a new paragraph to read: 06 (46) "pharmacy benefits manager" means a person that, acting under 07 the terms of an agreement, procures prescription drugs at a negotiated rate and 08 dispenses the prescription drugs to a covered person or administers prescription drug 09 benefits provided by a covered entity for the benefit of a covered person, including 10 claims processing services and prescription drug and medical device services. 11 * Sec. 24. AS 21.07.040, 21.07.250(8), 21.07.250(9), and 21.07.250(10) are repealed.