Insurance Department releases proposed PBM rule; public hearing is July 11

The Arkansas Insurance Department released a proposed rule regulating pharmacy benefits managers Monday (June 4) and a public hearing is scheduled for July 11.

The proposed rule would administer a law passed during a special session this year creating the legal framework for licensing and regulating PBMs, which provide claims processes and other services and act as middlemen between pharmacists and health insurers. They can negotiate lower rates with pharmacists because they are national companies and because three of them control the market. The rule’s effective date is Jan. 1, 2019.

The public meeting will be at 10:30 a.m. July 11 at the Arkansas Insurance Department’s first floor hearing room.

Under the rule, PBMs would be required to file with the Insurance Department. The filing fee would be $1,000. The commissioner would review the PBMs’ reimbursement program to determine that rates for pharmacists are fair and reasonable and that pharmacists’ participation is not adversely impacted. An adverse impact would be a 10% reduction in participation due to a reduction in compensation. A pharmacist declining to provide a covered drug would be considered a negative impact.

The commissioner would not review complaints on a case-by-case basis.

Insurers would be required to develop a system with their PBMs to track the number of times pharmacists decline to sell covered prescription drugs because of inadequate reimbursements, and also the number of pharmacists who terminate their participation in a network. If a network adequacy violation exists because of compensation reductions, the insurer would be required to take corrective actions.

PBMs would be required to develop record-keeping systems tracking the number of challenges or appeals they receive, the outcomes of those challenges or appeals, the amount of reimbursement readjustments and the time taken for those to occur. These would be reported on a quarterly basis.

PBMs’ payments are based on a “maximum allowable cost” model created through a contract involving all participants. Violations pertaining to MACs would be a prohibited practice under the Insurance Department’s Trade Practices Act. The department would coordinate with the attorney general when a pattern of violations is detected.

The rule is the result of the Arkansas Pharmacy Benefits Manager Licensure Act passed during a special session in March. The act required PBMs to obtain a license from the insurance commissioner, Allen Kerr. The final rule must be filed by Sept. 1 or as soon as practicable afterwards with the Legislative Council, a group of legislators that meets between sessions.

PBMs became an issue worthy of a special session on Jan. 1, when Arkansas Blue Cross and Blue Shield began contracting with CVS Caremark as its PBM. CVS Caremark was already serving as the PBM for Ambetter, another health insurer. The state’s pharmacists claimed they were losing money on many CVS transactions. They said CVS Caremark had been illegally keeping too much of the insurers’ payments that belong to them.

CVS Caremark said it reimburses pharmacists at competitive rates and provides a cost-effective benefit for its clients.