October 1, 2014, Introduced by Reps. Walsh, Knezek, Barnett, Rogers, Denby, Jacobsen, Brown and Schmidt and referred to the Committee on Insurance.
A bill to amend 1984 PA 233, entitled
"Prudent purchaser act,"
by amending the title and section 2 (MCL 550.52), section 2 as
amended by 2014 PA 74, and by adding section 3c.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to authorize certain organizations to enter into
prudent purchaser agreements with health care providers; to control
health care costs, assure appropriate utilization of health care
services, and maintain quality of health care; to provide for the
regulation of certain organizations, health care providers, health
care
facilities, and prudent purchaser arrangements; to establish a
joint
legislative committee to investigate the degree of
competition
in the health care coverage market in this state; and
to provide for the powers and duties of certain state officers and
agencies; and to prescribe penalties and provide remedies.
Sec. 2. As used in this act:
(a) "Board of pharmacy" means the Michigan board of pharmacy
created in section 17721 of the public health code, 1978 PA 368,
MCL 333.17721.
(b) "Coinsurance" means a type of cost sharing under which an
insured or covered member pays out of pocket a specified percentage
of cost for a service, and the organization covers the remainder of
the charge.
(c) (a)
"Commissioner" means the commissioner
of
insurance.director.
(d) "Copayment" means a type of cost sharing under which an
insured or covered member pays out of pocket a specified
predetermined amount for a service, and the organization covers the
remainder of the charge. A copayment is incurred at the time the
service is used and may be a fixed or variable amount.
(e) "Deductible" means a type of cost sharing under which an
insured or covered member pays out of pocket a specified amount
before an organization will pay or reimburse any cost for a
service.
(f) (b)
"Dental care corporation"
means a dental care
corporation incorporated under 1963 PA 125, MCL 550.351 to 550.373.
(c)
"Health care corporation" means a health care corporation
incorporated
under the nonprofit health care corporation reform
act,
1980 PA 350, MCL 550.1101 to 550.1704.
(g) "Department" means the department of insurance and
financial services.
(h) "Director" means the director of the department.
(i) (d)
"Health care provider"
means a health facility or a
person licensed, certified, or registered under part 62 or parts
161 to 182 of the public health code, 1978 PA 368, MCL 333.6230 to
333.6251 and 333.16101 to 333.18237, and chapter 2A of the mental
health
code, 1974 PA 258, MCL 330.1260 to 330.1287. Health care
provider
does not include a pharmacist or pharmacy engaged in the
retail
sale of drugs, until January 1, 1987.
(j) (e)
"Health facility" means:
(i) A Except
as otherwise provided in this subparagraph, a
facility or agency, or a licensed part of the facility or agency,
licensed or authorized under parts 201 to 217 of the public health
code,
1978 PA 368, MCL 333.20101 to 333.21799e. , or a licensed
part
of that facility or agency. Health
facility does not include
an ambulance operation, aircraft transport operation, nontransport
prehospital life support operation, or medical first response
service licensed or authorized under part 209 of the public health
code, 1978 PA 368, MCL 333.20901 to 333.20979.
(ii) A mental hospital, psychiatric hospital, psychiatric unit,
or other facility defined in 42 USC 1396d(d) operated by the
department of community health or certified or licensed under the
mental health code, 1974 PA 258, MCL 330.1001 to 330.2106.
(iii) A facility providing outpatient physical therapy services,
including
speech speech-language pathology services.
(iv) A kidney disease treatment center, including a
freestanding hemodialysis unit.
(v) An organized ambulatory health care facility.
(vi) A tertiary health care service facility.
(vii) A substance abuse treatment use disorder services program
licensed under part 62 of the public health code, 1978 PA 368, MCL
333.6230 to 333.6251, or chapter 2A of the mental health code, 1974
PA 258, MCL 330.1260 to 330.1287.
(viii) An outpatient psychiatric clinic.
(ix) A home health agency.
(k) (f)
"Health maintenance
organization" means that term as
defined in section 3501 of the insurance code of 1956, 1956 PA 218,
MCL 500.3501.
(g)
"Hospital service corporation" means a hospital service
corporation
incorporated under former 1939 PA 109.
(l) (h)
"Insurer" means an
insurer that term as defined in
section 106 of the insurance code of 1956, 1956 PA 218, MCL
500.106.
(i)
"Medical care corporation" means a medical care
corporation
incorporated under former 1939 PA 108.
(m) (j)
"Organization" means an
insurer, a dental care
corporation,
hospital service corporation, medical care
corporation,
health care corporation, a health
maintenance
organization, or a third party administrator.
(n) "Person" means an individual, sole proprietorship,
partnership, corporation, association, or any other legal entity.
(o) "Pharmacy" means that term as defined in section 17707 of
the public health code, 1978 PA 368, MCL 333.17707, and includes a
person that holds a pharmacist or pharmacy license issued under
part 177 of the public health code, 1978 PA 368, MCL 333.17701 to
333.17780.
(p) "Pharmacy benefits or coverage" means the full or partial
payment or reimbursement by an organization of the cost of pharmacy
services provided to an insured or covered member.
(q) "Pharmacy services" means all services falling within the
scope of the practice of pharmacy.
(r) "Practice of pharmacy" means that term as defined in
section 17707 of the public health code, 1978 PA 368, MCL
333.17707.
(s) (k)
"Provider panel" means a
panel of health care
providers providing health care services under a prudent purchaser
agreement.
(t) (l) "Prudent
purchaser agreement" means an agreement
between an organization and a health care provider under section 3.
(u) (m)
"Third party
administrator" means an administrator
operating under a certificate of authority issued by the
commissioner
director pursuant to the third party administrator
act, 1984 PA 218, MCL 550.901 to 550.960.
Sec. 3c. (1) In addition to the requirements of section 3, an
organization that provides or administers pharmacy benefits or
coverage under a prudent purchaser agreement shall comply with this
section. If a requirement of section 3 conflicts with a requirement
of this section with regard to pharmacy benefits or coverage, this
section prevails.
(2) Upon the written request of a pharmacy located within the
geographic area served by an organization's provider panel that
provides pharmacy services to its insureds or covered members, the
organization shall enroll the requesting pharmacy as a member of
that provider panel in accordance with the same terms and
conditions, including terms of reimbursement, that are offered to
other pharmacies that are members of that provider panel.
(3) An organization that provides or administers pharmacy
benefits or coverage under a prudent purchaser agreement shall not
do any of the following:
(a) Prohibit an insured or covered member who is entitled to
receive pharmacy benefits or coverage from selecting a pharmacy of
his or her choice if the selected pharmacy has agreed to
participate according to the terms of the prudent purchaser
agreement between the organization and members of its provider
panel that provide pharmacy services to insureds or covered members
in the same geographic area.
(b) Limit the ability of an insured or covered member who is
entitled to receive pharmacy benefits or coverage to select a
pharmacy of his or her choice that has agreed to participate
according to the terms of the prudent purchaser agreement between
the organization and members of its provider panel that provide
pharmacy services to insureds or covered members in the same
geographic area.
(c) Require an insured or covered member, as a condition of
payment or reimbursement, to purchase pharmacy services through a
mail-order pharmacy.
(d) Create a monetary advantage or impose a penalty in
relation to a pharmacy's provision of pharmacy services that is
reasonably likely to affect an insured's or covered member's choice
of pharmacy. As used in this subdivision, "monetary advantage" and
"penalty" include the imposition or requirement of a higher
copayment, coinsurance, or deductible; a reduction in reimbursement
for services; or any other action that is intended or reasonably
likely to promote 1 pharmacy over another.
(e) Impose on an insured or covered member who is entitled to
receive pharmacy benefits or coverage any copayment, coinsurance,
or deductible, fee, or condition that is not equally imposed upon
all insureds or covered members in the same benefit category,
class, or level under the policy, certificate, or contract when
receiving pharmacy services from a participating member of a
provider panel.
(f) Reduce allowable reimbursement for pharmacy services to an
insured or covered member because the insured or covered member
selects a pharmacy of his or her choice, if the selected pharmacy
has enrolled or requested to enroll and participate as a member of
the organization's provider panel as provided in subsection (2).
(g) Deny a pharmacy the opportunity to participate as a member
of a provider panel under a prudent purchaser agreement if the
pharmacy makes a written request as provided in subsection (2) and
agrees to provide pharmacy services to the organization's insureds
or covered members in accordance with the same terms and
conditions, including terms of reimbursement, that are offered to
other pharmacies that are members of that provider panel.
(h) Require a pharmacy to participate as a member of a
provider panel under a prudent purchaser agreement as a condition
for inclusion of that pharmacy in another provider panel of that
organization.
(4) An organization shall provide notice of the creation of a
new provider panel that provides pharmacy services to its insureds
or covered members and of the opportunity to apply for membership
in an existing provider panel in the manner provided in section 3.
The organization shall do all of the following:
(a) Provide written notification to the director, the board of
pharmacy, and all pharmacies in the geographic area served by the
new provider panel that provides pharmacy services at least 30 days
before the effective date of the new provider panel or of the new
prudent purchaser agreement that provides for the establishment of
the provider panel. The written notification under this subdivision
must include contact information for the organization and
information concerning the new provider panel and the terms and
conditions that govern the participation of pharmacies as members
of the provider panel.
(b) Offer to all pharmacies located in the geographic area
served by the provider panel that provides pharmacy services, the
opportunity to participate as members of that provider panel in
accordance with the same terms and conditions, including terms of
reimbursement, that are offered to other pharmacies that are
members of that provider panel.
(c) To effectuate the purposes of this section, through
reasonable means, on a timely basis, and at regular intervals,
inform the insureds or covered members of the names and locations
of all pharmacies in the geographic area that are eligible to
participate as members of its provider panel that provides pharmacy
services in that geographic area in accordance with the same terms
and conditions, including terms of reimbursement, that are offered
to other pharmacies that are members of that provider panel.
(5) A pharmacy, at any time, may submit a written request to
an organization to become a member of the organization's provider
panel that provides pharmacy services to its insureds or covered
members in accordance with the same terms and conditions, including
terms of reimbursement, that are offered to other pharmacies that
are members of that provider panel.
(6) A pharmacy that participates as a member of a provider
panel that provides pharmacy services may announce its
participation to its customers through a means acceptable to the
pharmacy and the organization.
(7) Upon receipt of the notification required under subsection
(4)(a), the director shall promptly publish the notification and
its content on the department's internet website for dissemination
of information to the public.
(8) A pharmacy that is a member of an organization's provider
panel shall not impose or require a copayment, coinsurance,
deductible, fee, or condition that is not equally imposed upon or
required of all insureds or covered members in the same benefit
category, class, or level under the health insurance policy or plan
when providing pharmacy services to insureds or covered members. A
violation of this subsection is considered an unethical business
practice as described in section 16221(d) of the public health
code, 1978 PA 368, MCL 333.16221, and the department and the
disciplinary subcommittee may proceed as provided in that section
and section 16226 of the public health code, 1978 PA 368, MCL
333.16226.
(9) If an organization allows rebates or marketing incentives
to pharmacies that provide pharmacy services as members of its
provider panel, the organization shall offer the rebates or
marketing incentives on an equal basis to all member pharmacies
when the pharmacy services, including prescription drugs, are
purchased in the same volume and under the same terms of payment.
This subsection does not prevent a pharmaceutical manufacturer or
wholesale distributor of pharmaceutical products from providing
special prices, marketing incentives, rebates, or discounts to
different purchasers that are not otherwise prohibited by federal
or state antitrust laws.
(10) This section does not prohibit an organization from
designating an exclusive mail-order pharmacy for 1 or more of its
provider panels to provide pharmacy services to insureds or covered
members who elect to use a mail-order pharmacy as a source for
obtaining pharmacy services.
(11) This section does not prohibit an employer from
establishing an exclusive group of 1 or more pharmacies, owned and
operated by the employer, that employ licensed pharmacists for the
purpose of dispensing prescription drugs to the employer's
employees and the insureds or covered members of a plan established
by the employer for the benefit of its employees and their
dependents. This subsection does not apply to a pharmacy that
contracts with 1 or more outside pharmacies to provide pharmacy
services to the employer's employees and the insureds or covered
members of the plan.
(12) The attorney general, or a prosecuting attorney with the
permission of or at the request of the attorney general, may bring
an action for appropriate declaratory relief, injunctive relief, or
civil penalties in the name of this state for a violation of this
section. In an action brought under this subsection, the court may
assess for the benefit of this state a civil penalty of not more
than $50,000.00 for each violation of this section.
(13) A person threatened with injury or injured directly or
indirectly by a violation of this section may bring an action for
appropriate declaratory relief, injunctive relief, or actual
damages sustained due to the violation, plus judgment interest,
taxable costs, and reasonable attorney fees incurred in pursuit of
the remedies described in this subsection. If the court or jury
finds that the violation was flagrant, or committed for the purpose
of eliminating or restraining competition, the court may increase
the award of damages to an amount that does not exceed 3 times the
actual damages sustained due to the violation.
(14) A violation of subsection (3)(d), (g), or (h) is a felony
punishable by imprisonment for not more than 4 years or a fine of
not more than $50,000.00, or both.
(15) A violation of this section by an organization that is
subject to the insurance code of 1956, 1956 PA 218, MCL 500.100 to
500.8302, is considered a violation of that act, and the director
may proceed as provided in section 150 of the insurance code of
1956, 1956 PA 218, MCL 500.150.
(16) The penalties prescribed and remedies provided under this
section are cumulative and not exclusive. The attorney general, the
department, and other persons are not limited to the penalties and
remedies in this section. The use of 1 penalty or remedy by a
person is not a bar to the use of other penalties or remedies by
that person or to the use of a penalty or remedy by another person.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. ____ or House Bill No. 5877 (request no.
05934'14 a) of the 97th Legislature is enacted into law.