Companies managing drug benefits would follow minimum pharmacy payment rules

Companies managing prescription benefits would follow minimum pharmacy payment rules and charge plans the same drug price they pay pharmacies. These payment and rebate rules would exclude self-funded health plans governed by ERISA, the federal retirement benefits law. Payments would use the national average pharmacy purchase cost, or wholesale purchase cost when that average is unavailable, plus the greater of $10.50 or the dispensing fee under the cited Kansas rule. Companies could not pay outside pharmacies less than their own or affiliated pharmacies for the same drug or service. Fees charged at the pharmacy counter or afterward, and revenue taken from pharmacies or patients for managing benefits, would be prohibited. Processing plan-approved deductibles and copayments would remain allowed. Manufacturer rebates not used by the insurer to reduce patients’ prescription cost shares would go to the health plan. Insurers would not be required to use rebates to reduce those cost shares. Minimum payments would use the drug-cost benchmark when the drug is given or dispensed. The proposal would take effect after publication in the statute book if enacted.

Pharmacy auditors would register with the Kansas insurance commissioner and give pharmacies notice and a chance to challenge audit findings. The rules would cover companies reviewing pharmacy records. Audits involving clinical judgment would require a pharmacist and cover at most 250 prescriptions and 24 months of claims, unless law requires a longer period. Audit protections would not apply when evidence indicates fraud, waste, abuse, criminal wrongdoing, or other intentional misconduct. Paperwork errors would justify taking back payments only if they caused an overpayment. Auditors would generally wait until the appeal deadline or the appeal process ends, whichever is later, before collecting disputed amounts. For discrepancies above $25,000, some future payments could be withheld during an appeal. Pharmacies would receive at least 14 calendar days’ notice unless both sides agree otherwise, and at least 30 calendar days to answer a preliminary report. Auditor registrations would expire each March 31.

Companies managing drug benefits and covered health plans would report rebates and payments to the Kansas insurance commissioner. Companies would report rebates, pharmacy payments, and differences between payments to pharmacies and charges to plans. Covered plans would report discounts received and how much they used to reduce premiums. Most reports would stay confidential. Quarterly reports on certain pharmacy payments compared with national average drug costs would be public. The commissioner could examine companies when reasonably needed to check compliance and charge them for the examination. Most reports would be annual, with more frequent company reports allowed at the commissioner’s request. Public pharmacy-payment reports would be quarterly and stay online for at least 24 months.

The Kansas insurance commissioner could impose fines and license penalties on companies that violate the prescription benefit rules. These rules would cover companies managing prescription benefits for Kansas residents. License penalties could include suspension, revocation, or limits on the license. After a hearing finds a violation, fines could reach $1,000 per violation, or $5,000 when the company knew or reasonably should have known it was violating the rules. Operating without a required license would carry a fine of up to $100,000 for the period of violation. Failure to provide requested examination information or timely reports could support license penalties. The commissioner could allow a corrective plan instead of denying renewal for an incomplete renewal filing. For people or pharmacies losing money through a violation, the commissioner could order repayment under Section 5. That section would exclude ERISA self-funded plans. The commissioner would review completed license renewal applications and relevant reports within 90 days.