SF 554 — A bill for an act relating to pharmacy benefits manager reverse auctions and group insurance, and annual reporting by pharmacy benefits managers.

Senate File 554 - IntroducedReprinted SENATE FILE 554 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SF 284) (As Amended and Passed by the Senate April 24, 2023) A BILL FOR An Act relating to pharmacy benefits manager reverse auctions and group insuranceinsurance, forand publicannual employees.reporting by pharmacy benefits managers.

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Prior to November 1, 2024,2023, the department shall procure, through solicitation of proposals from qualified professional services vendors, all of the following based on price, capabilities, and other factors deemed relevant by the department:

(3) Simultaneously evaluate in real-time diverse and complex multiple proposals from full-service pharmacy benefits LSBSF 1509SV554 (1)(2) 90 -2- ko/rnko/rn/mb 2/102/7 S.F.

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Subsequent contracts must be awarded no later than three months prior to termination or expiration of the current pharmacy benefits manager’s services contract for a covered group, such as the state employees benefits group, that includes only active employees and dependents, but does not include retiree participants in a Medicare part D LSBSF 1509SV554 (1)(2) 90 -4- ko/rnko/rn/mb 4/104/7 S.F.

The obligation of the winning pharmacy benefits manager to pay the per-prescription fee shall LSBSF 1509SV554 (1)(2) 90 -5- ko/rnko/rn/mb 5/105/7 S.F.

After(1) completionThree ofyears after the first service contract is awarded to a pharmacy benefits manager reversepursuant auction,to subsection 9, paragraph “a”, any self-funded private sector health plansplan with substantial participation by Iowa employees and the employees’ dependents shall have the option to participateconduct in a jointpharmacy purchasingbenefits poolmanager withreverse stateauction employees for subsequentthe pharmacyspecific benefitsself-funded managerprivate reversesector auctions.health plan utilizing the technology platform and technology operator services selected by the department under this section.

The department may charge the self-funded private sector health plan a fee, as established by the department by rule, sufficient to cover any incremental cost associated with the pharmacy benefits manager reverse auction.

(2) A pharmacy benefits manager selected by a self-funded private sector health plan as a result of a pharmacy benefits manager reverse auction conducted pursuant to subparagraph (1) shall be assessed a per-prescription fee, pursuant to subsection 11, in an amount determined by the department by rule.

Any self-funded public sector health plans or self-funded private sector health plans that opt to participateconduct with the state employees group benefits plan in a joint pharmacy benefits manager reverse auction purchasing pool shall retain full autonomy over determination of the individual health plan’s respective prescription drug formularies and pharmacy benefit designs, and shall not be required to adopt a common prescription drug formulary or common prescription pharmacy benefit design.

Any such entity or purchasing group shall agree, before participating in the pharmacy benefits manager reverse auction, to accept the prescription drug pricing plan that is selected through a pharmacy benefits manager reverse auction process.

Any pharmacy benefits manager providing services to the department,SF to554 a(2) self-funded public sector health plan, or to a self-funded private sector health plan as described in this section shall provide the department, each participating self-funded public sector health plan, and each participating self-funded private sector health plan access to complete pharmacy claims data necessary to conduct the pharmacy benefits manager reverse auction and to carry out applicable LSB 1509SV (1) 90 -6- ko/rnko/rn/mb 6/106/7 S.F.

554 department, to a self-funded public sector health plan, or to a self-funded private sector health plan as described in this section shall provide the department, each participating self-funded public sector health plan, and each participating self-funded private sector health plan access to complete pharmacy claims data necessary to conduct the pharmacy benefits manager reverse auction and to carry out applicable administrative and management duties.

EXPLANATIONSec. The inclusion of this explanation does not constitute agreement with the explanation’s substance by the members of the general assembly.

This2. bill relates to pharmacy benefits manager reverse auctions and group insurance for public employees.

“PharmacySection benefits510C.2, managersubsection reverse2, auction”paragraph (reversea, auction)unnumbered isparagraph defined1, inCode the2023, billis asamended an automated, transparent, and competitive bidding process conducted online that starts with an opening round of bids and allows qualified pharmacy benefits manager (PBM) bidders to counter-offerread a lower price for as manyfollows: rounds of bidding as determined by the department of administrative services (DAS) for a multiple health plan prescription drug purchasing group.

“Price”A ispharmacy definedbenefits asmanager theshall projectedprovide costthe ofinformation apursuant PBM’s bid to providesubsection prescription1 drugto benefitsthe tocommissioner allowin directa comparisonformat ofapproved by the comparablycommissioner calculatedthat costsdoes ofnot competingdirectly PBMs’or proposalsindirectly overpublicly thedisclose durationany of the PBM’sfollowing: services contract.

ConsistentSF with554 Code(2) section 8A.311, and notwithstanding any other law to the contrary, the department shall enter into a contract for the services of a PBM for the administration LSB 1509SV (1) 90 -7- ko/rnko/rn/mb 7/107/7 S.F.

554 of benefits of self-funded public sector health plans.

“Self-funded public sector health plans” is defined as any group benefit plan under Code chapter 509A.

Prior to November 1, 2024, DAS shall procure, through solicitation of proposals from qualified professional services vendors, a technology platform with capabilities to conducting a PBM reverse auction, and related services from the operator of the technology platform.

The requirements for the technology platform and for the related services are detailed in the bill.

DAS is prohibited from awarding a contract for either the technology platform or the technology operator services to a vendor that is a PBM or a vendor that is managed by, or a subsidiary or affiliate of, a PBM.

The vendor awarded the contract by DAS shall not outsource any part of the PBM reverse auction or of the automated, real-time, electronic, line-by-line, claim-by-claim review of invoiced PBM prescription drug claims.

With technical assistance and support provided by the technology platform operator, DAS shall specify the terms of the participant bidding agreement.

The technology platform used to conduct the reverse auction shall be repurposed over the duration of the PBM’s services contract as an automated pharmacy claims adjudication engine to perform real-time, electronic, line-by-line, claim-by-claim review of 100 percent of invoiced PBM drug claims, and to identify all deviations from the specific terms of the PBM’s services contract.

DAS is required to reconcile the electronically adjudicated pharmacy claims with PBM invoices on a monthly or quarterly basis to ensure that state payments shall not exceed the terms specified in any PBM’s services contract.

If, following state payment to the PBM on the basis of the reconciliation, the PBM asserts that DAS has paid less than the amount owed, the PBM may seek resolution through a mutually acceptable dispute resolution process as agreed to in the terms of the services contract between the parties.

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554 The first PBM reverse auction shall be completed and the PBM services contract shall be awarded to the winning PBM with an effective date beginning July 1, 2024.

Subsequent services contracts must be awarded no later than three months prior to termination or expiration of the current PBM’s services contract for a covered group, such as the state employees benefits group, that includes only active employees and dependents, but does not include retiree participants in a Medicare part D employer group waiver program (Medicare employer group) pursuant to the federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Medicare Act).

If an eligible covered group that includes retiree participants in a Medicare employer group pursuant to the Medicare Act opts to use the processes and procedures under the bill, the relevant PBM reverse auction shall be completed and the PBM services contract shall be awarded to the winning PBM no later than six months prior to termination or expiration of the current PBM’s services contract covering the Medicare employer group.

DAS may perform a market check for providing PBM services during the term of the current PBM’s services contract.

“Market check” is defined in the bill.

DAS shall implement a no-pay option that obligates the winning PBM, rather than the state, to pay the cost of the technology platform and related technology platform operator services by assessing the PBM a per-prescription fee as detailed in the bill.

The bill shall apply to group benefit plans under Code chapter 509A.

The bill shall not apply to nonprofit, nongovernmental health maintenance organizations with respect to managed care plans that provide a majority of covered health care services through a single contracted medical group.

After the first PBM reverse auction, self-funded private sector health plans with substantial participation by Iowa employees and their dependents shall have the option to participate in a joint purchasing pool with state employees for LSB 1509SV (1) 90 -9- ko/rn 9/10 S.F.