Sponsored by:
Assemblyman TROY SINGLETON
District 7 (Burlington)
SYNOPSIS
Regulates certain auditing and disclosure practices of pharmacy benefits management companies.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning pharmacy benefits management companies and supplementing Title 17B of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in this act:
"Carrier" means an insurance company, health service corporation, hospital service corporation, medical service corporation, or health maintenance organization authorized to issue health benefits plans in this State.
"Covered person" means a person on whose behalf a carrier or other entity, who is the sponsor of the health benefits plan, is obligated to pay benefits pursuant to a health benefits plan.
"Drug" means a drug or device as defined in R.S.24:1-1.
"Health benefits plan" means a benefits plan which pays hospital or medical expense benefits for covered services, or prescription drug benefits for covered services, and is delivered or issued for delivery in this State by or through a carrier or any other sponsor, including, but not limited to, a carrier, self-insured employer, or union. For the purposes of this act, health benefits plan shall not include the following plans, policies or contracts: accident only; credit disability; long-term care; Medicare supplement coverage; TRICARE supplement coverage; coverage for Medicare services pursuant to a contract with the United States government; coverage arising out of a worker's compensation or similar law; coverage under a policy of private passenger automobile insurance issued pursuant to P.L.1972, c.70 (C.39:6A-1 et seq.); or hospital confinement indemnity coverage.
"Maximum allowable cost" means the maximum amount that a pharmacy benefits management company shall reimburse a pharmacy for the cost of a drug.
"Obsolete" means a drug that may be listed in a national pricing compendia but cannot be dispensed based on the expiration date of the last lot manufactured.
"Pharmacy" means any place in the State where drugs are dispensed or pharmaceutical care is provided by a licensed pharmacist, but shall not include a medical office under the control of a licensed physician.
"Pharmacy benefits management company" means a corporation, business, or other entity, or unit within a corporation, business, or other entity, that administers prescription drug benefits on behalf of a purchaser.
"Pharmacy benefits management services" means the provision of any of the following services on behalf of a purchaser: the procurement of prescription drugs at a negotiated rate for dispensation within this State; the processing of prescription drug claims; or the administration of payments related to prescription drug claims.
"Prescription" means a prescription as defined in section 5 of P.L.1977, c.240 (C.24:6E-4).
"Prescription drug benefits" means the benefits provided for prescription drugs and pharmacy services for covered services under a health benefits plan contract.
"Purchaser" means any sponsor of a health benefits plan who enters into an agreement with a pharmacy benefits management company for the provision of pharmacy benefits management services to covered persons.
2. A pharmacy benefits management company, or an entity acting on its behalf, that conducts an on-site audit of a pharmacy shall comply with the following procedures:
a. A pharmacy shall be given notice 10 calendar days before an initial on-site audit is conducted.
b. An audit that involves clinical or professional judgment shall be conducted by or in consultation with a pharmacist licensed to practice in this State pursuant to the "New Jersey Pharmacy Practice Act," P.L.2003, c.280 (C.45:14-40 et seq.).
c. Each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies audited by the entity.
d. The period covered by the audit may not exceed 24 months from the date that the claim was submitted to or adjudicated by the pharmacy benefits management company, unless a longer period is required under State or federal law.
e. Extrapolation or other statistical expansion techniques shall not be used in calculating recoupment amounts.
3. A pharmacy benefits management company shall:
a. establish a written process for a pharmacy to appeal preliminary and final audit reports; and
b. provide a copy of the report of audit recoupment amounts to the pharmacy.
4. In each contract between a pharmacy benefits management company and a pharmacy, the pharmacy benefits management company shall identify the sources used to establish the maximum allowable cost price of any drug included on a maximum allowable cost list.
5. In order to place a prescription drug on a maximum allowable cost list, the pharmacy benefits management company shall ensure that the drug is:
a. 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, or has an "NR" or "NA" rating or similar rating by a nationally recognized reference;
b. generally available for purchase without limitations by pharmacies in the State from national or regional wholesalers; and
c. not obsolete.
6. The pharmacy benefits management company shall:
a. update the pricing information at least every seven days; and
b. maintain a procedure to eliminate products from the list of drugs subject to maximum allowable cost pricing in a timely manner in order to remain consistent with pricing changes in the marketplace.
7. All contracts between a pharmacy benefits management company and a pharmacy shall include a process to appeal maximum allowable cost pricing. The contract provision establishing the process shall include the following terms:
a. The right to appeal shall be limited to 21 days following the initial claim;
b. The appeal shall be investigated and resolved within 21 days of receipt of the appeal by the pharmacy benefits management company;
c. A telephone number at which a pharmacy may contact the pharmacy benefits management company and speak with an individual who is responsible for processing appeals; and
d. (1) If the maximum allowable cost is upheld on appeal, the pharmacy benefits management company shall provide the reason to the contracting pharmacy; or
(2) If the maximum allowable cost is not upheld on appeal, the pharmacy benefits management company shall adjust, for the appealing contracting pharmacy, the maximum allowable cost of the drug that is the subject of the appeal, within one business day of the date of the decision on the appeal.
8. The Commissioner of Banking and Insurance shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations, including any penalty provisions the commissioner deems to be necessary, to effectuate the purposes of this act.
9. This act shall take effect on the 90th day next following enactment and shall apply to all contracts or agreements for pharmacy benefits management services that are executed or renewed on or after the effective date.
STATEMENT
This bill requires pharmacy benefits management companies to adhere to certain auditing practices and to disclose certain information regarding maximum allowable cost lists.
The bill provides that a pharmacy benefits management company, which conducts an on-site audit of a pharmacy, shall comply with the following procedures:
a. A pharmacy shall be given notice 10 calendar days before an initial on-site audit is conducted.
b. An audit that involves clinical or professional judgment shall be conducted by or in consultation with a pharmacist licensed to practice in this State pursuant to the "New Jersey Pharmacy Practice Act."
c. Each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies audited by the entity.
d. The period covered by the audit may not exceed 24 months from the date that the claim was submitted to or adjudicated by the entity, unless a longer period is required under State or federal law.
e. Extrapolation or other statistical expansion techniques shall not be used in calculating recoupment amounts.
The bill also provides that a pharmacy benefits management company shall establish a process for a pharmacy to appeal audit reports and provide a copy of the report of the audit recoupment amounts to the pharmacy.
The bill requires pharmacy benefits management companies to disclose the sources used in calculating the maximum allowable cost price for all drugs on a maximum allowable cost list.
Finally, the bill requires all contracts between a pharmacy benefits management company and a pharmacy to include a process to appeal maximum allowable cost pricing. The contract provision establishing the process shall include the following terms:
a. The right to appeal shall be limited to 21 days following the initial claim;
b. The appeal shall be investigated and resolved within 21 days of receipt of the appeal by the pharmacy benefits management company;
c. A telephone number at which a pharmacy may contact the pharmacy benefits management company and speak with an individual who is responsible for processing appeals; and
d. (1) If the maximum allowable cost is upheld on appeal, the pharmacy benefits management company shall provide the reason to the contracting pharmacy; or
(2) If the maximum allowable cost is not upheld on appeal, the pharmacy benefits management company shall adjust, for the appealing contracting pharmacy, the maximum allowable cost of the drug that is the subject of the appeal, within one business day of the date of the decision on the appeal.