OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 336 Bill Analysis
134th General Assembly
Click here for H.B. 336’s Fiscal Note
Version: As Introduced
Primary Sponsors: Reps. Lipps and West
Effective Date:
Yosef Schiff and Erika Kramer, Attorneys
SUMMARY
Health plan issuers and affiliated pharmacies
 Prohibits a health plan issuer from taking certain actions that would favor the issuer’s
affiliated pharmacies or would result in a covered person being required to use an
affiliated pharmacy or restricted from using an unaffiliated but in-network pharmacy.
 Prohibits a health plan issuer from preventing a pharmacy from joining the issuer’s
network if the pharmacy agrees to reasonable terms of the issuer’s pharmacy provider
contract and is otherwise in compliance with the law.
 Prohibits a health plan issuer from requiring a pharmacy, as a condition for joining its
network, to meet accreditation standards or certification requirements that are
inconsistent with or in addition to those of the Board of Pharmacy.
Incentive payment and adjustment systems
 Enacts requirements that a health plan issuer must meet in order to use an incentive
payments and adjustment system, including the processes for determining payments
and adjustments, standards for incentive payments and adjustments, and standards
relating to a pharmacy’s evaluation.
Notice of lower-cost alternatives
 Requires each contract between a health plan issuer and a pharmacy to include a
system by which the pharmacy can inform a covered person when a drug is available at
a lower cost if purchased outside of the health benefit plan.
Time limits to obtain certain cancer drugs
 Requires a health plan issuer to ensure that a covered person can obtain a covered
orally administered prescription drug used to treat cancer within 72 hours following
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submission of a clean claim or prior authorization request to the issuer, including, if
necessary, by covering such a drug obtained out-of-network.
Medicaid managed care organizations
 Also applies the above requirements to Medicaid managed care organizations, and, as
applicable, their pharmacy benefit managers.
Civil action
 Permits any covered person, pharmacy, or dispensing physician affected by a violation
of any of the above provisions by a health plan issuer or a Medicaid managed care
organization, or any of their intermediaries, to bring a civil action against the issuer or
the intermediary for compensatory damages and injunctive or other equitable relief.
Pharmacy audits
 Prohibits an auditing entity from penalizing a pharmacy based solely on the fact that all
materials requested by the auditing entity are not available during an onsite audit.
 Requires that a pharmacy have the opportunity to provide supplemental materials to an
auditing entity after the completion of an onsite audit.
 Prohibits an auditing entity from rejecting a document solely because the document is
not an original and requires the entity to accept documents sent via electronic or
telephonic means.
 Limits an audit to the lesser of 250 prescriptions or the number of prescriptions
dispensed by a pharmacy in the 24-month period before the audit.
 Specifies that a pharmacy is not required to pay any disputed recoupments resulting
from an audit until after the audit’s final disposition, including any relevant appeals or
dispute processes.
 Prohibits an auditing entity from being compensated based on its level or amounts of
recoupments.
 Regarding the existing prohibition against an auditing entity seeking recoupment from a
pharmacy due to clerical errors absent financial harm, restricts an exception relating to
incorrect directions to materially incorrect directions.
 Defines “fraud” as “knowingly engaging in deception with the intent of personal
enrichment or gain” for the purposes of the fraud-based exemptions to the pharmacy
audit law provisions that (1) require auditing entities to provide pharmacies notice of
on-site audits, (2) prohibit auditing entities from seeking reimbursement based on
clerical errors, and (3) require auditing entities to provide a preliminary audit report and
an opportunity to provide additional information.
 Permits a pharmacy to seek injunctive relief against a payer or its contracted pharmacy
benefit manager for violations of its pharmacy audit provisions by an auditing entity.
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Mail-order drugs
 Prohibits a pharmacy from mailing a dangerous drug to a patient when an in-person
consultation is required, unless the patient waives the consultation and elects to receive
the dangerous drug via mail order.
DETAILED ANALYSIS
Health plan issuers and affiliated pharmacies
The bill prohibits a health plan issuer that issues a health benefit plan covering
pharmacy services, including prescription drug coverage, from doing any of the following:
 Ordering or directing a covered person to fill a prescription at or obtain services from an
affiliated pharmacy (a pharmacy in which a health plan issuer, either directly or
indirectly through one or more intermediaries, has an investment or ownership interest
or with which it shares common ownership);
 Restricting a covered person’s ability to select a pharmacy if the selected pharmacy is in
the health plan issuer’s pharmacy provider network;
 Imposing a cost-sharing requirement on the covered person that differs depending on
which in-network pharmacy the covered person uses;
 Imposing any other condition on a covered person or pharmacy that restricts a covered
person’s ability to use an in-network pharmacy of the covered person’s choosing;
 Preventing a pharmacy from participating in the health plan issuer’s network if the
pharmacy does both of the following:
 Agrees to the reasonable and relevant terms and conditions of the health plan
issuer’s pharmacy provider contract;
 Provides pharmacy services in accordance with all applicable state and federal laws.
 Requiring a pharmacy, as a condition of participation in the health plan issuer’s network,
to meet accreditation standards or certification requirements that are inconsistent with
or in addition to those of the Board of Pharmacy;
 Transferring or sharing records relating to prescription information containing patient-
identifiable or prescriber-identifiable data to an affiliated pharmacy for any commercial
purpose. This provision is not to be construed to prohibit the exchange of prescription
information between a health plan issuer and an affiliated pharmacy for the limited
purposes of pharmacy reimbursement, formulary compliance, pharmacy care, or
utilization review.
 Knowingly making a misrepresentation to a covered person, pharmacist, pharmacy, or
dispensing physician (a physician who dispenses a prescription drug, drug containing
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certain controlled substances, drug intended for administration by injection other than
through a natural orifice, or drug that is a biological product).1
The above prohibitions do not apply to either of the following:
 A health benefit plan offered by a health insuring corporation under which a majority of
covered services are provided by physicians employed by the health plan issuer or by a
single contracted medical group;
 Pharmacy services provided to an individual receiving inpatient or emergency services at
a health care facility that provides medical services on an inpatient or resident basis.2
Incentive payment and adjustment systems
The bill enacts requirements regarding the use of incentive payment and adjustment
systems. “Incentive payments and adjustments” are price concessions, rebates, discounts, fees,
reconciliation adjustments, bonuses, performance payments, incentives, and any other
payment adjustment determined through the use of performance criteria, regardless of when
such adjustments are applied. An “incentive payment and adjustment system” is a system
established by a health plan issuer for determining the amount of payments to participating
pharmacies that uses incentive payments and adjustments to determine such payment
amounts.3
Under the bill, a health plan issuer, and any incentive payment and adjustment system
the issuer uses to determine pharmacy reimbursement payments for prescription drugs, must
meet all of the following requirements:
 The process for determining the incentive payments and adjustments, including
performance criteria, must be described in an express contract between the issuer and
the pharmacy entered into not less than six months before the start of the period in
which the pharmacy’s performance is to be measured;
 The incentive payments and adjustments must be based on the individual pharmacy’s
actual performance metrics under the performance criteria;
 The pharmacy’s evaluation must be based on actual data received from the pharmacy
and not extrapolated from a sample of data;
 The pharmacy’s evaluation must be based on objective performance standards, not on
its performance relative to other pharmacies;
1 R.C. 3902.72(A) and (B) and 3902.73(A) and R.C. 4729.01, not in the bill.
2 R.C. 3902.73(B).
3 R.C. 3902.74(A).
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 The pharmacy’s performance must be evaluated using only performance criteria over
which a pharmacy has meaningful control and that appropriately correspond to the
types of services offered by the pharmacy, including the dispensing of specialty drugs;
 The incentive payments and adjustments must not favor the health plan issuer’s
affiliated pharmacies or discriminate against nonaffiliated pharmacies;
 For each claim for which a pharmacy receives decreased reimbursement, the health
plan issuer must provide the pharmacy a written explanation detailing how the
pharmacy failed to meet the applicable performance criteria and describing the steps it
must take to improve its performance. The written explanation must be provided at the
time the incentive payments and adjustments are applied or as soon as practicable
thereafter.
 Any potential decrease in reimbursement to a pharmacy is, at a minimum, matched by
an equal potential increase in reimbursement.4
Notice of lower-cost alternatives
Under the bill, each contract between a health plan issuer and a pharmacy must include
a system by which the pharmacy can inform a covered person when a drug is available at a
lower cost if purchased outside of the health benefit plan.5
Time limits to obtain certain cancer drugs
The bill implements requirements regarding how quickly a covered person must receive
covered orally administered prescription drugs used to treat cancer following the submission of
a clean claim or prior authorization request.
A “clean claim” is a claim that can be processed without obtaining additional
information from the prescribing provider or a third party, is not for a recipient who receives
financial assistance for the drug, and is not for a prescribed drug that is associated with a
national drug shortage that has been reported to the U.S. Food and Drug Administration.6
“Prior authorization” is any practice implemented by a health plan issuer in which
coverage of a prescription drug is dependent upon a covered person or a physician obtaining
approval from the health plan issuer prior to the drug being covered. “Prior authorization”
includes prospective or utilization review procedures conducted prior to providing a drug.7
Under the bill, a health plan issuer must ensure that a covered person can obtain a
covered orally administered prescription drug used to treat cancer within 72 hours following
submission of a clean claim or prior authorization request to the issuer, notwithstanding the
4 R.C. 3902.74(B).
5 R.C. 3902.75.
6 R.C. 3902.76.
7 R.C. 3902.72(D).
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continuing-law requirement that an issuer respond to a prior authorization request within ten
calendar days for nonurgent care services. If the issuer is unable to do so by requiring the
covered person to use an in-network pharmacy or dispensing physician, the issuer must cover
the drug if purchased from an out-of-network pharmacy or dispensing physician to the same
extent as it would if the drug were dispensed in-network.8
The health plan issuer must, within 24 hours of submission of a clean claim or prior
authorization request for the drug, confirm receipt of the claim and notify the prescribing
provider in writing of both of the following:
 Whether the drug is covered;
 If the drug is covered, any delay in authorization or coverage that would likely result in
the covered person not being able to receive the drug within 72 hours following the
initial submission of the claim.9
Lastly, if it is likely that the drug will not be available to a covered person within
72 hours of the initial submission, the bill requires the issuer to notify the covered person that
the covered person can use another pharmacy or dispensing physician to obtain the drug,
including an out-of-network pharmacy or dispensing physician. The notification must be written
in a clear, concise, and intelligible manner.10
Medicaid managed care organizations
The bill applies all of the above requirements to Medicaid managed care organizations,
and, as applicable, to their pharmacy benefit managers. In doing so, some terminology is
modified to match the Medicaid law, such as using “enrollee” instead of “covered person.”11
Civil action
The bill permits any covered person, pharmacy, or dispensing physician affected by a
violation of any of the above provisions by a health plan issuer or a Medicaid managed care
organization, or any of their intermediaries, including a Medicaid managed care organization’s
pharmacy benefit manager, to bring a civil action against the issuer or the intermediary for
compensatory damages and injunctive or other equitable relief.12
Pharmacy audits
Continuing law places certain requirements on auditing entities, which are persons or
government entities that perform pharmacy audits. A pharmacy audit is a review of pharmacy
8 R.C. 3902.76(B) and R.C. 1739.05, 1751.72, 3923.041, and 5160.34, not in the bill.
9 R.C. 3902.76(C).
10 R.C. 3902.76(D).
11 R.C. 5167.124 to 5167.127.
12 R.C. 3902.77 and 5167.128.
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records, one purpose of which is to identify discrepancies in claims for payment for the
provision of drugs or services.13 The bill adds requirements regarding documentation and audit
limits and amends a continuing requirement regarding the recoupments an auditing entity or
payer may seek from a pharmacy in the case of an error.
Documentation and audit limits
The bill prohibits an auditing entity from penalizing a pharmacy based solely on the fact
that all materials requested by the auditing entity are not available during an onsite audit. It
also requires that a pharmacy have the opportunity to provide supplemental materials to an
auditing entity after the completion of an onsite audit. These materials are subject to the same
documentation standards as materials reviewed during the onsite