Bill Summary – FastDemocracy

H-0476.1
                                 HOUSE BILL 1253
     State of Washington         68th Legislature     2023 Regular Session
     By Representatives Stonier, Schmick, Kretz, Macri, and Pollet
     Read first time 01/12/23.     Referred to Committee on Health Care &
     Wellness.
      AN ACT Relating to pharmacy benefit managers; amending RCW
  48.200.020, 48.200.210, and 48.200.280; adding a new chapter to Title
  48   RCW;   recodifying  RCW   48.200.210,   48.200.220,  48.200.230,
  48.200.240, 48.200.250, 48.200.260, 48.200.270, 48.200.280, and
  48.200.290; and providing an effective date.
  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     Sec. 1.   RCW 48.200.020 and 2020 c 240 s 2 are each amended to
 read as follows:
     The definitions in this section apply throughout this chapter
 unless the context clearly requires otherwise.
     (1) "Affiliate" or "affiliated employer" means a person who
 directly or indirectly through one or more intermediaries, controls
 or is controlled by, or is under common control with, another
 specified person.
     (2) "Certification" has the same meaning as in RCW 48.43.005.
     (3) "Employee benefits programs" means programs under both the
 public employees' benefits board established in RCW 41.05.055 and the
 school employees' benefits board established in RCW 41.05.740.
     (4)(a) "Health care benefit manager" means a person or entity
 providing services to, or acting on behalf of, a health carrier or
 employee benefits programs, that directly or indirectly impacts the
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 determination or utilization of benefits for, or patient access to,
 health care services, drugs, and supplies including, but not limited
 to:
     (i) Prior authorization or preauthorization of benefits or care;
     (ii) Certification of benefits or care;
     (iii) Medical necessity determinations;
     (iv) Utilization review;
     (v) Benefit determinations;
     (vi) Claims processing and repricing for services and procedures;
     (vii) Outcome management;
     (viii) Provider credentialing and recredentialing;
     (ix) Payment or authorization of payment to providers and
 facilities for services or procedures;
     (x) Dispute resolution, grievances, or appeals relating to
 determinations or utilization of benefits;
     (xi) Provider network management; or
     (xii) Disease management.
     (b) "Health care benefit manager" includes, but is not limited
 to, health care benefit managers that specialize in specific types of
 health care benefit management such as ((pharmacy benefit managers,))
 radiology benefit managers, laboratory benefit managers, and mental
 health benefit managers.
     (c) "Health care benefit manager" does not include:
     (i) Health care service contractors as defined in RCW 48.44.010;
     (ii)   Health  maintenance   organizations  as   defined  in   RCW
 48.46.020;
     (iii) Issuers as defined in RCW 48.01.053;
     (iv) The public employees' benefits board established in RCW
 41.05.055;
     (v) The school employees' benefits board established in RCW
 41.05.740;
     (vi) Discount plans as defined in RCW 48.155.010;
     (vii) Direct patient-provider primary care practices as defined
 in RCW 48.150.010;
     (viii) An employer administering its employee benefit plan or the
 employee benefit plan of an affiliated employer under common
 management and control;
     (ix) A union administering a benefit plan on behalf of its
 members;
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     (x) An insurance producer selling insurance or engaged in related
 activities within the scope of the producer's license;
     (xi) A creditor acting on behalf of its debtors with respect to
 insurance, covering a debt between the creditor and its debtors;
     (xii) A behavioral health administrative services organization or
 other county-managed entity that has been approved by the state
 health care authority to perform delegated functions on behalf of a
 carrier;
     (xiii) A hospital licensed under chapter 70.41 RCW or ambulatory
 surgical facility licensed under chapter 70.230 RCW;
     (xiv) The Robert Bree collaborative under chapter 70.250 RCW;
     (xv) The health technology clinical committee established under
 RCW 70.14.090; ((or))
     (xvi) Pharmacy benefit managers; or
     (xvii) The prescription drug purchasing consortium established
 under RCW 70.14.060.
     (5) "Health care provider" or "provider" has the same meaning as
 in RCW 48.43.005.
     (6) "Health care service" has the same meaning as in RCW
 48.43.005.
     (7) "Health carrier" or "carrier" has the same meaning as in RCW
 48.43.005.
     (8) "Laboratory benefit manager" means a person or entity
 providing service to, or acting on behalf of, a health carrier,
 employee benefits programs, or another entity under contract with a
 carrier, that directly or indirectly impacts the determination or
 utilization of benefits for, or patient access to, health care
 services, drugs, and supplies relating to the use of clinical
 laboratory services and includes any requirement for a health care
 provider to submit a notification of an order for such services.
     (9) "Mental health benefit manager" means a person or entity
 providing service to, or acting on behalf of, a health carrier,
 employee benefits programs, or another entity under contract with a
 carrier, that directly or indirectly impacts the determination of
 utilization of benefits for, or patient access to, health care
 services, drugs, and supplies relating to the use of mental health
 services and includes any requirement for a health care provider to
 submit a notification of an order for such services.
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     (10) "Network" means the group of participating providers,
 pharmacies, and suppliers providing health care services, drugs, or
 supplies to beneficiaries of a particular carrier or plan.
     (11) "Person" includes, as applicable, natural persons, licensed
 health care providers, carriers, corporations, companies, trusts,
 unincorporated associations, and partnerships.
     (12)(a) (("Pharmacy benefit manager" means a person that
 contracts with pharmacies on behalf of an insurer, a third-party
 payor, or the prescription drug purchasing consortium established
 under RCW 70.14.060 to:
     (i) Process claims for prescription drugs or medical supplies or
 provide retail network management for pharmacies or pharmacists;
     (ii) Pay pharmacies or pharmacists for prescription drugs or
 medical supplies;
     (iii) Negotiate rebates with manufacturers for drugs paid for or
 procured as described in this subsection;
     (iv) Manage pharmacy networks; or
     (v) Make credentialing determinations.
     (b) "Pharmacy benefit manager" does not include a health care
 service contractor as defined in RCW 48.44.010.
     (13)(a))) "Radiology benefit manager" means any person or entity
 providing service to, or acting on behalf of, a health carrier,
 employee benefits programs, or another entity under contract with a
 carrier, that directly or indirectly impacts the determination or
 utilization of benefits for, or patient access to, the services of a
 licensed radiologist or to advanced diagnostic imaging services
 including, but not limited to:
     (i) Processing claims for services and procedures performed by a
 licensed radiologist or advanced diagnostic imaging service provider;
 or
     (ii) Providing payment or payment authorization to radiology
 clinics, radiologists, or advanced diagnostic imaging service
 providers for services or procedures.
     (b) "Radiology benefit manager" does not include a health care
 service contractor as defined in RCW 48.44.010, a health maintenance
 organization as defined in RCW 48.46.020, or an issuer as defined in
 RCW 48.01.053.
     (((14))) (13) "Utilization review" has the same meaning as in RCW
 48.43.005.
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     Sec. 2. RCW 48.200.210 and 2020 c 240 s 10 are each amended to
 read as follows:
     The definitions in this section apply throughout this section and
 RCW 48.200.220 through 48.200.290 (as recodified by this act) unless
 the context clearly requires otherwise.
     (1) "Audit" means an on-site or remote review of the records of a
 pharmacy by or on behalf of an entity.
     (2) "Claim" means a request from a pharmacy or pharmacist to be
 reimbursed for the cost of filling or refilling a prescription for a
 drug or for providing a medical supply or service.
     (3) "Clerical error" means a minor error:
     (a) In the keeping, recording, or transcribing of records or
 documents or in the handling of electronic or hard copies of
 correspondence;
     (b) That does not result in financial harm to an entity; and
     (c) That does not involve dispensing an incorrect dose, amount,
 or type of medication, failing to dispense a medication, or
 dispensing a prescription drug to the wrong person.
     (4) "Entity" includes:
     (a) A pharmacy benefit manager;
     (b) An insurer;
     (c) A third-party payor;
     (d) A state agency; or
     (e) A person that represents or is employed by one of the
 entities described in this subsection.
     (5) "Fraud" means knowingly and willfully executing or attempting
 to execute a scheme, in connection with the delivery of or payment
 for health care benefits, items, or services, that uses false or
 misleading pretenses, representations, or promises to obtain any
 money or property owned by or under the custody or control of any
 person.
     (6) "Pharmacist" has the same meaning as in RCW 18.64.011.
     (7) "Pharmacy" has the same meaning as in RCW 18.64.011.
     (8) (("Third-party payor" means a person licensed under RCW
 48.39.005.)) "Affiliate" or "affiliated employer" means a person who,
 through one or more intermediaries, controls or is controlled by, or
 is under common control with, another specified person.
     (9) "Affiliated pharmacy" means a pharmacy that through one or
 more intermediaries is owned by, controlled by, or is under common
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 ownership or control of a pharmacy benefit manager, or where the
 pharmacy benefit manager has financial interest in the pharmacy.
     (10) "Certification" has the same meaning as in RCW 48.43.005.
     (11) "Covered person" means a person directly or indirectly
 covered by a pharmacy benefit plan or program.
     (12) "List" means the list of drugs for which predetermined
 reimbursement costs have been established, such as a maximum
 allowable cost, maximum allowable cost list, or any other benchmark
 prices utilized by the pharmacy benefit manager and must include the
 basis of the methodology and sources utilized to determine drug
 reimbursement amounts.
     (13) "Mail order pharmacy" means a pharmacy not open to the
 public which dispenses prescription drugs to patients through the
 mail or common carrier.
     (14) "Multiple source drug" means any covered outpatient
 prescription drug for which there is at least one other drug product
 that is rated as therapeutically equivalent under the food and drug
 administration's most recent publication of "Approved Drug Products
 with   Therapeutic  Equivalence   Evaluations;"  is   pharmaceutically
 equivalent or bioequivalent, as determined by the food and drug
 administration; and is sold or marketed in the state.
     (15) "Network pharmacy" means a pharmacy that contracts with a
 pharmacy benefit manager to dispense prescription drugs to covered
 persons.
     (16) "Person" includes, as applicable, natural persons, licensed
 health care providers, carriers, corporations, companies, trusts,
 unincorporated associations, and partnerships.
     (17) "Pharmacy benefit manager" means a person that administers
 or manages a pharmacy benefits plan or program under a contractual
 obligation.
     (18) "Pharmacy benefits plan or program" means a plan or program
 that pays for, reimburses, covers the cost of, or otherwise provides
 for pharmacist services to individuals who reside in or are employed
 in this state.
     (19) "Pharmacy network" means the pharmacies located in the state
 and contracted by the pharmacy benefit manager to dispense
 prescription drugs to covered persons.
     (20) "Provider administered drug" means any prescription drug
 that requires administration by a provider as defined in RCW
 48.43.005.
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      (21) "Specialty drug" means a drug that:
      (a) Is subject to restricted distribution by the United States
  food and drug administration; or
      (b) Requires special handling, provider coordination, or patient
  education that cannot be provided by a retail pharmacy.
      (22) "Therapeutically equivalent" has the same meaning as in RCW
  69.41.110.
     NEW SECTION. Sec. 3. (1) To conduct business in this state, a
 pharmacy benefit manager shall register with the commissioner and
 annually renew the registration.
     (2) To apply for registration under this section, a pharmacy
 benefit manager shall:
     (a) Submit an application on forms and in a manner prescribed by
 the commissioner and verified by the applicant by affidavit or
 declaration under chapter 5.50 RCW. Applications shall contain at
 least the following information:
     (i) The identity of the pharmacy benefit manager and persons with
 any ownership or controlling interest in the applicant, including
 relevant business licenses and tax identification numbers, and the
 identity of any person that the pharmacy benefit manager has a
 controlling interest in;
     (ii) The business name, address, phone number, and contact person
 for the pharmacy benefit manager;
     (iii) An attestation that they have the capacity to comply with,
 and have designated a person responsible for, compliance with state
 and federal laws; and
     (iv) Any other information as the commissioner may reasonably
 require; and
     (b) Pay an initial registration fee and annual renewal
 registration fee as established in rule by the commissioner. The fees
 for each registration must be set by the commissioner in an amount
 that ensures the registration, renewal, rule-making, oversight, and
 enforcement activities related to the requirements established under
 this act are self-supporting.
     (3) All receipts from fees collected by the commissioner under
 this section shall be deposited into the insurance commissioner's
 regulatory account created in RCW 48.02.190.
     (4) The commissioner may deny a registration or renewal of a
 registration of a pharmacy benefit manager if:
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     (a) There is evidence of a previous or current violation of this
 chapter;
     (b) The pharmacy benefit manager has not paid the required fees;
 or
     (c) The pharmacy benefit manager does not have the capacity to
 comply with, or has not designated a person responsible for
 compliance with, applicable state and federal laws.
     (5) Any material change in the information provided to obtain or
 renew a registration shall be filed with the commissioner within 30
 days of the change.
     (6) Every registered pharmacy benefit manager shall retain a
 record of all transactions completed for a period of not less than
 seven years from the date of their creation. All such records as to
 any particular transaction must be kept available and open to
 inspection by the commissioner upon request during the seven years
 after the date of completion of such transaction.
     NEW SECTION.   Sec. 4.   (1) A pharmacy benefit manager may not
 administer a pharmacy benefits plan or program without a written
 agreement describing the rights and responsibilities of the parties
 to the contract conforming to the provisions of this chapter and any
 rules adopted by the commissioner to implement or enforce this
 chapter including rules governing contract content.
     (2) A pharmacy benefit manager shall file with the commissioner,
 in the form and manner prescribed by the commissioner, every pharmacy
 benefits plan or program contract and every contract amendment
 between the pharmacy benefit manager and an entity, provider,
 pharmacy, pharmacy services administration organization, or other
 health care benefit manager, entered into directly or indirectly in
 support of a pharmacy benefits plan or program management contract
 with a health carrier or employee benefits program within 30 days
 following the effective date of the contract or contract amendment.
     (3) Contracts filed under this section are confidential and not
 subject to public inspection under RCW 48.02.120(2), or public
 disclosure under chapter 42.56 RCW, if filed in accord