LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: SB 218 SLS 21RS 39
Bill Text Version: REENGROSSED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: May 13, 2021 11:56 AM Author: MILLS, FRED
Dept./Agy.: Insurance, Office of Group Benefits, Medicaid
Subject: Pharmacy Benefit Managers (PBMs) Analyst: Patrice Thomas
PHARMACEUTICALS RE INCREASE SG EX See Note Page 1 of 1
Provides relative to the payment of pharmacy claims. (gov sig)
Proposed law provides health insurance issuers have a maximum of one year (excludes fraud) from the date a claim was adjudicated to
perform any review, reconsideration, or any other audit of the claim. Proposed law provides restrictions on auditing of a pharmacy as
follows: once a year or for more than one hundred prescriptions annually; a comprehensive list of claims by prescription number to be
audited; removes the notice exception for cases of alleged fraud or willful misrepresentation; the auditor shall not receive payment nor be
compensated based on the amount directly or indirectly recovered; and auditor shall provide notice of any investigation to the
Commissioner of Insurance who may suspend or revoke a license for violations. Proposed law provides that no PBM or PSAO shall
reimburse a pharmacy or pharmacist in this state an amount less than the amount that the PBM or PSAO bills to the health plan provider
for the same claim. Proposed law prohibits spread pricing. Proposed law requires that a PBM may obtain and maintain a permit from the
LA Board of Pharmacy. Proposed law adds the action of causing or knowingly permitting the use of any advertisement, promotion,
solicitation, representation, proposal, or offer that is untrue, deceptive, or misleading as a prohibited act or unfair and deceptive trade
practice by PBMs. Proposed law is effective 1/01/22 for audits; 1/01/23 for reimbursements; and 1/01/25 for spread pricing.
EXPENDITURES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. INCREASE INCREASE INCREASE INCREASE INCREASE
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total
REVENUES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. INCREASE INCREASE INCREASE INCREASE INCREASE
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total
EXPENDITURE EXPLANATION
Proposed law may result in increased SGR expenditures by an indeterminable amount in the Office of Group Benefits as a result of
increased pharmacy claims. The proposed law prohibits pharmacy benefit manager (PBMs) or pharmacy services administration
organization (PSAOs) to reduce payment to a pharmacist or pharmacy for a drug, device, or service under a reconciliation process.
Presently, OGB contracts with a pharmacy benefit manager (MedImpact). OGB reports that prohibition from reducing payment under
proposed law may place limits on the amount PBMs can recoup from pharmacies for overpayments when performing the reconciliation
process in relation to the adjudication of rates paid versus contractual pricing guarantees, including those for generic prescription drugs. A
reduction in pharmacy recoupments may result in increased pharmacy claim expenditures under this measure. For illustrative purposes, in
the calendar year 2020, OGB recouped approximately $474,000 through pharmacy desk audits, onsite audits, and pre-pay audits.
The proposed law requires an entity conducting an audit on pharmacies and pharmacists to provide notice of any investigation to the
Louisiana Department of Insurance (LDI), Insurance Fraud Division. If a violation has occurred, LDI shall suspend or revoke the entity’s
license. Also, beginning January 1, 2022, the proposed law provides that individuals performing audits has passed an examination
developed by LDI. LDI reports that it is capable of addressing violations as well as developing an audit examination under the proposed
law with existing budgetary and personnel resources.
REVENUE EXPLANATION
The proposed law will increase SGR in the LA Board of Pharmacy (LBP) as a result of permitting pharmacy benefit managers (PBMs).
Under present law, its was permissive for PBMs to acquire a permit from LBP. The proposed law requires PBMs to obtain and maintain a
permit from the pharmacy board. The PBM permit fee is $500 annually. The number of PBMs that will acquire permits is unknown,
therefore anticipated permit revenue is indeterminable. However, to the extent that PBMs enter and exit the Louisiana market, actual
collections from permit fees may fluctuate from year-to-year.
The Office of Group Benefits (OGB) does not anticipate that additional costs associated with proposed law will require premium increases,
and therefore will not affect SGR premium collections. Furthermore, the OGB reports that projected pharmacy claim expenditures under
the proposed law would be covered by its fund balance of approximately $349.1 M as of March 2021. However, while proposed law may
not necessitate premium increases, to the extent numerous pieces of legislation are enacted that increase the overall costs of the OGB
program, the OGB may be required to increase premiums to fund ongoing program costs and maintain an actuarially sound fund balance
of $250 M.
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Alan M. Boxberger
13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Staff Director


Statutes affected:
SB218 Original: 22:1856(B), 22:1(B), 22:1(B)(2), 22:3(C), 22:1863(2), 22:1867(A), 37:1256(B), 40:2868(A), 40:2870(A)(4), 22:1(D)(1), 22:1867(B)
SB218 Engrossed: 22:1856(B), 22:1(A), 22:1(B), 22:1(B)(2), 22:2(A), 22:3(C), 22:1863(2), 37:1256(B), 40:2868(A), 40:2870(A)(4)
SB218 Reengrossed: 22:1856(B), 22:1(A), 22:1(B), 22:1(B)(2), 22:1860(C), 22:2(A), 22:3(C), 22:1867(A), 37:1256(B), 40:2868(A), 40:2870(A)(4)