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2011 SESSION

11101824D
SENATE BILL NO. 879
Offered January 12, 2011
Prefiled January 10, 2011
A BILL to amend and reenact § 38.2-3407.7 of the Code of Virginia, relating to health insurance; choice of pharmacy.
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Patron-- Reynolds
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Referred to Committee on Commerce and Labor
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Be it enacted by the General Assembly of Virginia:

1.  That § 38.2-3407.7 of the Code of Virginia is amended and reenacted as follows:

§ 38.2-3407.7. Pharmacies; freedom of choice.

A. As used in this section, unless the context requires a different meaning:

"Contract provider" means a pharmacy granted the right to provide prescription drugs and pharmacy services according to the terms of the insurer.

"Copayment" means a type of cost sharing whereby insured or covered persons pay a specified predetermined amount per unit of service with their insurer paying the remainder of the charge. The copayment is incurred at the time the service is used. The copayment may be a fixed or variable amount.

"Health benefit plan" means any accident and health insurance policy or certificate, health services plan contract, health maintenance organization subscriber contract, plan provided by a multiple employer welfare association or plan provided by another benefit arrangement. "Health benefit plan" does not mean accident only, credit, or disability insurance; coverage of Medicare services or federal employee health plans, pursuant to contracts with the United States government; Medicare supplement or long-term care insurance; Medicaid coverage; dental only or vision only insurance; specified disease insurance; hospital confinement indemnity coverage; limited benefit health coverage; coverage issued as a supplement to liability insurance; insurance arising out of a workers' compensation or similar law; automobile medical payment insurance; medical expense and loss of income benefits; or insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

"Insurer" means any entity that provides or offers a health benefit plan.

B. This section shall:

1. Apply to all:

a. Health benefit plans providing pharmaceutical services benefits, including prescription drugs, to any resident of the Commonwealth; and

b. Insurance companies and health maintenance organizations that provide or administer coverages and benefits for prescription drugs; and

2. Not apply to any:

a. Entity that (i) has its own facility; (ii) employs or contracts with physicians, pharmacists, nurses, and other health care personnel; and (iii) dispenses prescription drugs from its own pharmacy to its employees and to enrollees of its health benefit plan; however, this section shall apply to an entity otherwise excluded by this subdivision that contracts with an outside pharmacy or group of pharmacies to provide prescription drugs and services; or

b. Federal program, clinical trial program, or hospital or other licensed health care facility when dispensing prescription drugs to its patients.

C. Notwithstanding any provision of § 38.2-3407 to the contrary, no insurer proposing to issue preferred provider policies or contracts the terms of a health benefit plan shall prohibit not:

1. Prohibit or limit any person receiving pharmacy benefits furnished thereunder resident of the Commonwealth who is eligible for reimbursement for pharmacy services as a participant or beneficiary of a health benefit plan from selecting, without limitation, the pharmacy of his choice to furnish such benefits. This right of selection extends to and includes pharmacies that are nonpreferred providers and that have previously notified the insurer, by facsimile or otherwise, of their agreement to accept reimbursement for their services at rates applicable to pharmacies that are preferred providers, including any copayment consistently imposed by the insurer, as payment in full. Each insurer shall permit prompt electronic or telephonic transmittal of the reimbursement agreement by the pharmacy and ensure prompt verification to the pharmacy of the terms of reimbursement. In no event shall any person receiving a covered pharmacy benefit from a nonpreferred provider which has submitted a reimbursement agreement be responsible for amounts that may be charged by the nonpreferred provider in excess of the copayment and the insurer's reimbursement applicable to all of its preferred pharmacy providers. when the pharmacy has agreed to participate in the health benefit plan according to the terms offered by the insurer;

2. Deny a pharmacy the opportunity to participate as a contract provider under a health benefit plan if the pharmacy agrees to provide pharmacy services that meet the terms and requirements, including terms of reimbursement, of the insurer under a health benefit plan; however, if the pharmacy is offered the opportunity to participate as a contract provider, no provisions of this section shall apply if the pharmacy elects not to participate;

B. No such insurer shall impose upon any person receiving pharmaceutical benefits furnished under any such policy or contract:

13. Any Impose upon a beneficiary of pharmacy services under a health benefit plan any copayment, fee, or condition that is not equally imposed upon all individuals in the same benefit category, class, or copayment level, whether or not such benefits are furnished by pharmacists who are nonpreferred providers under the health benefit plan when receiving services from a contract provider;

24. Any Impose a monetary advantage or penalty under a health benefit plan that would affect or influence any such person's a beneficiary's choice of pharmacy. Monetary advantage or penalty includes higher copayment, a reduction in reimbursement for services, or promotion of one participating pharmacy over another by these methods; or

35. Any reduction in Reduce allowable reimbursement for pharmacy services related to utilization of pharmacists who are nonpreferred providers to a beneficiary under a health benefit plan because the beneficiary selects a pharmacy of his choice, so long as that pharmacy has enrolled with the health benefit plan under the terms offered to all pharmacies in the plan coverage area; or

6. Require a beneficiary, as a condition of payment or reimbursement, to purchase pharmacy services, including prescription drugs, exclusively through a mail-order pharmacy.

C. For purposes of this section, a prohibited condition or penalty shall include, without limitation: (i) denying immediate access to electronic claims filing to a pharmacy that is a nonpreferred provider and that has complied with subsection D or (ii) requiring a person receiving pharmacy benefits to make payment at point of service, except to the extent such conditions and penalties are similarly imposed on preferred providers.

D. Any A pharmacy that wishes to be covered by this section shall, if requested to do so in writing by an insurer, within 30 days of the pharmacy's receipt of the request, execute and deliver to the insurer the direct service agreement or preferred provider agreement that the insurer requires all of its preferred providers of pharmacy benefits to execute. Any pharmacy that fails to timely execute and deliver such agreement shall not be covered by this section with respect to that insurer unless and until the pharmacy executes and delivers the agreement , by or through a pharmacist acting on its behalf as its employee, agent, or owner, may not waive, discount, rebate, or distort a copayment of any insurer, policy, or plan or a beneficiary's coinsurance portion of a prescription drug coverage or reimbursement. If a pharmacy, by or through a pharmacist's acting on its behalf as its employee, agent, or owner, provides a pharmacy service to an enrollee of a health benefit plan that meets the terms and requirements of the insurer under a health benefit plan, the pharmacy shall provide its pharmacy services to all enrollees of that health benefit plan on the same terms and requirements of the insurer. A violation of this subsection shall subject the pharmacist to license revocation or suspension by the Board of Pharmacy pursuant to § 54.1-3316.

E. The Commission shall have no jurisdiction to adjudicate controversies arising out of this section At least 60 days before the effective date of any health benefit plan providing reimbursement to residents of the Commonwealth for prescription drugs, which plan restricts pharmacy participation, the entity providing the health benefit plan shall notify, in writing, all pharmacies within the geographical coverage area of the health benefit plan and offer the pharmacies the opportunity to participate in the health benefit plan. All pharmacies in the geographical coverage area of the plan shall be eligible to participate under identical reimbursement terms for providing pharmacy services, including prescription drugs. The entity providing the health benefit plan shall, through reasonable means, on a timely basis, and on regular intervals in order to effectuate the purposes of this section, inform the beneficiaries of the plan of the names and locations of pharmacies that are participating in the plan as providers of pharmacy services and prescription drugs. Additionally, participating pharmacies shall be entitled to announce their participation to their customers through a means acceptable to the pharmacy and the entity providing the health benefit plans. The pharmacy notification provisions of this section shall not apply when an individual or group is enrolled, but when the plan enters a particular county of the Commonwealth.

F. If rebates or marketing incentives are allowed to pharmacies or other dispensing entities providing services or benefits under a health benefit plan, these rebates or marketing incentives shall be offered on an equal basis to all pharmacies and other dispensing entities providing services or benefits under a health benefit plan when pharmacy services, including prescription drugs, are purchased in the same volume and under the same terms of payment. Nothing in this section shall limit the authority of an insurer proposing to issue preferred provider policies or contracts to select a single mail order pharmacy provider as the exclusive provider of pharmacy services that are delivered to the covered person's address by mail, common carrier, or delivery service. The provisions of this section shall not apply to such contracts. As used in this subsection, "mail order pharmacy provider" means a pharmacy permitted to conduct business in the Commonwealth whose primary business is to dispense a prescription drug or device under a prescriptive drug order and to deliver the drug or device to a patient primarily by mail, common carrier, or delivery service prevent a pharmaceutical manufacturer or wholesale distributor of pharmaceutical products from providing special prices, marketing incentives, rebates, or discounts to different purchasers not prohibited by federal and state antitrust laws.

G. Any entity or insurer providing a health benefit plan that fails to comply with the requirements of this section shall be subject to one or more of the following: (i) punishment as provided in § 38.2-218; (ii) suspension or revocation of any license issued by the Commonwealth; or (iii) any order that may be issued by the Commission pursuant to § 38.2-219.

H. A violation of this section creates a civil cause of action for damages or injunctive relief in favor of any person or pharmacy aggrieved by the violation.

I. The Commissioner shall not approve any health benefit plan providing pharmaceutical services that does not conform to this section.

J. Any provision in a health benefit plan that is executed, delivered, renewed, or otherwise contracted for in the Commonwealth that is contrary to any provision of this section shall, to the extent of the conflict, be void.

K. It shall be a violation of this section for any insurer or any person to provide any health benefit plan providing for pharmaceutical services to residents of the Commonwealth that does not conform to the provisions of this section.