SB 1828 — PHARMACY BENEFIT MANAGER LIC

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"Department" means the Department of Financial and Professional Regulation.

"Health benefit plan" means a policy, contract, certificate, or agreement offered or issued by a health carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services including prescription drug benefits.

"Maintenance drug" means a drug prescribed by a practitioner who is authorized to prescribe drugs and used to treat a medical condition for a period greater than 30 days.

"Multi-source drug" means a drug that is stocked and is available from 3 or more suppliers.

"Pharmacist" means any individual properly licensed as a pharmacist by the Board.

"Pharmacist services" includes drug therapy and other patient care services provided by a licensed pharmacist intended to achieve outcomes related to the cure or prevention of a disease, elimination or reduction of a patient’s symptoms, or arresting or slowing of a disease process as defined in rules adopted by the Board.

"Pharmacy" has the meaning given to that term in the Pharmacy Practice Act of 1987.

"Pharmacy benefits management" means (i) the procurement of prescription drugs at a negotiated rate for dispensation within this State to covered persons, (ii) the administration or management of prescription drug benefits provided by a covered entity for the benefit of covered persons, or (iii) any of the following services provided with regard to the administration of pharmacy benefits:

(1) Mail service pharmacy.

(2) Claims processing, retail network management, and payment of claims to pharmacies for prescription drugs dispensed to covered persons.

SB1828 - 3 - LRB094 11306 RAS 42120 b (3) Clinical formulary development and management services.

(4) Rebate contracting and administration.

(5) Certain patient compliance, therapeutic intervention, and generic substitution programs.

(6) Disease management programs involving prescription drug utilization.

"Pharmacy benefits manager" or "PBM" means a person, business, or other entity that performs pharmacy benefits management.

"Pharmacy benefits manager" or "PBM" includes a person or entity acting for a PBM in a contractual or employment relationship in the performance of pharmacy benefits management for a covered entity and includes mail service pharmacies.

"Practice of pharmacy" has the meaning given to the term in the Pharmacy Practice Act of 1987.

"Secretary" means the Secretary of Financial and Professional Regulation.

"Usual and customary price" means the price the pharmacist would have charged a cash paying patient, not a patient where reimbursement rates are set by a contract, for the same services on the same date inclusive of any discounts applicable.

Section 15.

Applicability and scope.

This Act shall apply to a PBM that provides claims processing services, other prescription drug or device services, or both, to covered persons who are residents of this State.

Section 20.

Certificate of authority to act as a PBM.

(a) No person or organization shall act or operate as a PBM in this State without a valid certificate of authority issued by the Department.

The failure of any person to hold a certificate while acting as a PBM shall subject that person to a fine of not less than $5,000 and not more than $10,000 for each violation.

SB1828 - 4 - LRB094 11306 RAS 42120 b (b) Each person seeking a certificate of authority to act as a PBM shall file with the Department an application for a certificate of authority upon a form to be furnished by the Department.

This application shall include or be accompanied by all of the following:

(1) All basic organizational documents of the PBM, such as the articles of incorporation, articles of association, bylaws, partnership agreement, trade name certificate, trust agreement, shareholder agreement, and other applicable documents and all amendments to these documents.

(2) The names, addresses, official positions, and professional qualifications of the individuals who are responsible for the conduct of the affairs of the PBM, including all members of the board of directors, board of trustees, executive committee, other governing board, or committee, the principal officers in the case of a corporation, the partners or members in the case of a partnership or association, and any other person who exercises control or influence over the affairs of the PBM.

(3) A certificate of compliance issued by the Board indicating that the PBM’s plan of operation is consistent with the Pharmacy Practice Act of 1987 and any rules adopted under that Act.

(4) Annual statements or reports for the 3 most recent years, or such other information as the Department may require in order to review the current financial condition of the applicant.

(5) If the applicant is not currently acting as a PBM, a statement of the amounts and sources of funds available for organization expenses and the proposed arrangements for reimbursement and compensation of incorporators or other principals.

(6) The name and address of the agent for service of process in the State.

(7) A detailed description of the claims processing SB1828 - 5 - LRB094 11306 RAS 42120 b services, pharmacy services, insurance services, other prescription drug or device services, audit procedures for network pharmacies, or other administrative services to be provided.

(8) All incentive arrangements or programs, such as rebates, discounts, disbursements, or any other similar financial program or arrangement relating to income or consideration received or negotiated, directly or indirectly, with any pharmaceutical company, that relates to prescription drug or device services, including, at a minimum, information on the formula or other method for calculation and amount of the incentive arrangements, rebates or other disbursements, the identity of the associated drug or device, and the dates and amounts of the disbursements.

(9) A filing fee of $5,000.

(10) Any other information the Secretary may require.

(c) The applicant shall make available for inspection by the Department copies of all contracts with insurers, pharmaceutical manufacturers, or other persons utilizing the services of the PBM for pharmacy benefit management services.

Certain contracts are subject to prior approval as provided in Section 45.

(d) The Department shall not issue a certificate of authority if it determines that the PBM or any principal of the PBM is not competent, trustworthy, financially responsible, or of good personal and business reputation or has had an insurance license or pharmacy license denied for cause by any state.

(e) A PBM shall maintain a fidelity bond equal to at least 10% of the amount of the funds handled or managed annually by the PBM.

However, the Department may require an amount in excess of $500,000, but not more than 10% of the amount of the funds handled or managed annually by the PBM.

A copy shall be provided to the Department.

(f) Any person or entity that fits the definition of a SB1828 - 6 - LRB094 11306 RAS 42120 b "PBM" on the effective date of this amendatory Act of the 94th General Assembly shall have 90 days in which to obtain a certificate of authority from the Department in order to continue to validly operate in this State.

Section 25.

Certificate of compliance issued by Board.

(a) Each PBM seeking to become licensed in the State must submit its plan of operation for review in a format prescribed by the Board.

(b) The Board will review the submission in order to determine if it complies with the Pharmacy Practice Act of 1987.

The Board shall adopt rules, including, but not limited to, rules concerning the format required, the filing fee, the requirements for re-certification, and any other information the Board may require to complete its review.

The fees collected shall be used solely for the purpose of regulating PBMs.

(c) If the PBM’s filing meets with Board approval, it shall be issued a certificate of compliance.

Subsequent material changes in the plan of operation must be filed with the Board.

Section 30.

Disclosure of ownership or affiliation and certain agreements.

(a) Each PBM shall disclose to the Department any ownership interest or affiliation of any kind with (i) any insurance company responsible for providing benefits directly or through reinsurance to any plan for which the PBM provides services or (ii) any parent companies, subsidiaries, and other entities or businesses relative to the provision of pharmacy services, other prescription drug or device services, or a pharmaceutical manufacturer.

(b) The PBM must notify the Department in writing within 5 calendar days of any material change in its ownership.

(c) Every PBM shall disclose all of the following agreements:

(1) Any agreement with a pharmaceutical manufacturer SB1828 - 7 - LRB094 11306 RAS 42120 b to favor that manufacturer’s products over a competitor’s products or to place that manufacturer’s drug on the PBM’s preferred list or formulary or to switch the drug prescribed by the patient’s health care provider with a drug agreed to by the PBM and that manufacturer.

(2) Any agreement with a pharmaceutical manufacturer to share manufacturer rebates and discounts with the PBM or to pay money or other economic benefits to the PBM.

(3) Any agreement to bill, or practice of billing, the health plan for prescription drugs at a cost higher than the PBM pays the pharmacy.

(4) Any agreement to share revenue with a mail order or internet pharmacy company.

(5) Any agreement to sell prescription drug data, including data concerning the prescribing practices of the health care providers in the State.

Section 35.

Maintenance, access, and confidentiality of records;

financial examination.

(a) Every PBM shall maintain, for the duration of the written agreement and for 2 years thereafter, books and records of all transactions between the PBM, insurers, covered persons, pharmacists, and pharmacies.

(b) The Department shall have access to books and records maintained by the PBM for the purposes of examination, audit, and inspection.

All information contained in these books and records shall be confidential.

However, the Department may use the information in any proceeding instituted against the PBM or insurer.

(c) The Secretary shall conduct periodic financial examinations of every PBM in this State to ensure an appropriate level of regulatory oversight.

The PBM shall pay the cost of the examination which shall be deposited in a special fund to provide all expenses for the regulation, supervision, and examination of all entities subject to regulation under this Act.

SB1828 - 8 - LRB094 11306 RAS 42120 b Section 40.

Annual statement and filing fee required.

(a) Each authorized PBM shall file with the Department an annual statement on or before March 1 of every year.

The statement shall be in a form and contain those matters prescribed by the Department and shall be accompanied by the filing fee established by the Department.

It must include the total number of persons subject to management by the PBM during the year, the number of persons terminated during the year, the number of persons covered at the end of the year, and the dollar value of claims processed.

(b) The statement shall disclose all incentive arrangements or programs, such as rebates, discounts, disbursements, or any other similar financial program or arrangement relating to income or consideration received or negotiated, directly or indirectly, with any pharmaceutical company, that relates to prescription drug or device services, including, at a minimum, information on the formula or other method for calculation and amount of the incentive arrangements, rebates, or other disbursements, the identity of the associated drug or device, and the dates and amounts of the disbursements.

Section 45.

Contracts;

agreement approval;

prohibited provisions.

(a) No person may act on behalf of a PBM without a written agreement between the person and the PBM.

(b) A PBM shall not require a pharmacist or pharmacy to participate in one contract in order to participate in another contract.

The PBM shall not exclude an otherwise qualified pharmacist or pharmacy from participation in a particular network solely because that pharmacist or pharmacy declined to participate in another plan or network managed by the PBM.

(c) The PBM must file with the Department a copy of all contracts or agreements with pharmacies for approval not less than 30 days before the execution of the contract or agreement.

SB1828 - 9 - LRB094 11306 RAS 42120 b The Department shall consult with the Board on the criteria prior to promulgation.

The contract shall be deemed approved unless the Department disapproves it within 30 days after it is filed.

(d) The written agreement between the insurer and the PBM shall not provide that the pharmacist or pharmacy is responsible for the actions of the insurer or the PBM.

(e) All agreements shall provide that when the PBM receives payment for the services of the pharmacist or pharmacy that the PBM shall act as a fiduciary of the pharmacy or pharmacist who provided the services.

The PBM shall distribute said funds in accordance with the time frames set forth in this Act.

Section 50.

PBM prohibited practices.

(a) A PBM shall not intervene in the delivery or transmission of prescriptions from the prescriber to the pharmacist or pharmacy for the purpose of (i) influencing the prescriber’s choice of therapy, (ii) influencing the patient’s choice of pharmacist or pharmacy, or (iii) altering the prescription information, including but not limited to, switching the prescribed drug without the express authorization of the prescriber.

(b) No agreement shall mandate that a pharmacist or pharmacy change a covered person’s prescription, unless the prescribing physician and the covered person authorize the pharmacist to make the change.

(c) The insurer and the PBM may not discriminate with respect to participation in the network or reimbursement as to any pharmacist or pharmacy that is acting within the scope of his or her license or certification.

(d) The PBM may not transfer a health benefit plan to another payment network unless it receives written authorization from the insurer.

(e) No PBM may discriminate when contracting with pharmacies on the basis of co-payments or days of supply.

A contract shall apply the same coinsurance, co-payment, and SB1828 - 10 - LRB094 11306 RAS 42120 b deductible to covered drug prescriptions filled by any pharmacy, including a mail order pharmacy or pharmacist who participates in the network.

(f) No PBM may discriminate when advertising which pharmacies are participating pharmacies.

Any list of participating pharmacies shall be complete and all inclusive.

(g) No PBM may mandate basic record keeping by any pharmacist or pharmacy that is more stringent than required by State or federal laws or regulations.

Section 55.

Termination of agreements.

(a) A pharmacist or pharmacy may not be terminated from the network or penalized by a PBM solely because of filing a complaint, grievance, or appeal as permitted under this Act.

(b) A pharmacist or pharmacy may not be terminated from the network or penalized because it expresses disagreement with the PBM’s decision to deny or limit benefits to a covered person or because the pharmacist or pharmacy assists a covered person in seeking reconsideration of the PBM’s decision or because the pharmacist or pharmacy discusses alternative medications.

(c) Before terminating a pharmacy from the network, the PBM must give the pharmacy or pharmacist a written explanation of the reason for the termination at least 30 days prior to the termination date, unless the termination is based on (i) the loss of the pharmacy’s license to practice pharmacy or cancellation of professional liability insurance or (ii) a conviction of fraud.

(d) Termination of a contract between a PBM and a pharmacy or pharmacist, or termination of a pharmacy or pharmacist from a PBM’s provider network shall not release the PBM from the obligation to make any payment due to the pharmacy or pharmacist for pharmacist services rendered.

Section 60.

Medication reimbursement costs;

use of index required.

PBMs shall use a current and nationally recognized benchmark to base the reimbursement paid to network pharmacies SB1828 - 11 - LRB094 11306 RAS 42120 b for medications and products.

This reimbursement must be determined as follows:

(1) For brand or single source products, the Average Wholesale Price (AWP) as listed in First Data Bank (Hearst publications) or Facts & Comparisons (formerly Medispan) correct and current on the date of service provided shall be used as an index.

(2) For generic drug or multi-source products, Maximum Allowable Cost (MAC) shall be established by referencing First Data Bank (Hearst publications) or Facts & Comparisons (formerly Medispan) Baseline Price (BLP).

Only products that are compliant with pharmacy laws as equivalent and generically interchangeable with a federal FDA Orange Book rating of "A-B" will be reimbursed from a MAC price methodology.

If a multi-source product has no BLP price, then it shall be treated as a single source branded drug for the purpose of determining reimbursement.

Section 65.

Timely payments;

audits.

(a) If a PBM processes claims via electronic review, then it shall electronically transmit payment within 7 calendar days of said claims transmission to the pharmacist or pharmacy.

Specific time limits for the PBM to pay the pharmacist for all other services rendered must be set forth in the agreement.

(b) Within 24 hours of a price increase notification by a manufacturer or supplier, the PBM must adjust its payments to the pharmacist or pharmacy consistent with the price increase.

(c) Claims paid by the PBM shall not be retroactively denied or adjusted after 7 days from adjudication of such claims, except as provided in subsection (d) of this Section.

In no case shall acknowledgement of eligibility be retroactively reversed.

(d) The PBM may retroactively deny or adjust in the event of any of the following:

(1) The original claim was submitted fraudulently.

(2) The original claim payment was incorrect because SB1828 - 12 - LRB094 11306 RAS 42120 b the provider was already paid for services rendered.

(3) The services were not rendered by the pharmacist or pharmacy.

(e) The PBM may not require extrapolation audits as a condition of participating in the contract, network, or program.

(f) The PBM shall not recoup any moneys that it believes are due as a result of the audit by setoff until the pharmacist or pharmacy has the opportunity to review the PBM’s findings and concurs with the results.

If the parties cannot agree, then the audit shall be subject to review by the Board.

Section 70.

Disclosures to covered persons;

authorization for substitutions.

(a) When the services of a PBM are utilized, the PBM must provide a written notice approved by the insurer to covered persons advising them of the identity of, and relationship between, the PBM, the insured, and the covered person.

(b) The notice must contain a statement advising the covered person that the PBM is regulated by the Department and has the right to file a complaint, appeal, or grievance with the Department concerning the PBM.

The notice shall include the toll-free telephone number, mailing address, and electronic mail address of the Department.

(c) The notice must be written in plain English, using terms that may be generally understood by the prudent layperson, and a copy must be provided to the Department and each pharmacist or pharmacy participating in the network.

(d) If a PBM requests a substitute prescription for a prescribed drug to a covered person, then the following provisions shall apply:

(1) The PBM may substitute a lower-priced generic and therapeutically equivalent drug for a higher-priced prescribed drug.

(2) With regard to substitutions in which the substitute drug costs more than the prescribed drug, the SB1828 - 13 - LRB094 11306 RAS 42120 b substitution must be made for medical reasons that benefit the covered individual.

If a substitution is being made under this subparagraph, the PBM shall obtain the approval of the prescribing health professional or that person’s authorized representative after disclosing to the covered individual the cost of both drugs and any benefit or payment directly or indirectly accruing to the PBM as a result of the substitution and any potential effects on a patient’s health and safety, including side effects.

(3) The PBM shall transfer, in full, to the covered entity any benefit or payment received in any form by the PBM as a result of a prescription drug substitution under paragraph (1) or (2) of this subsection (d).

Section 75.

Complaint process.

(a) The Department and the Board shall each adopt procedures for formal investigation of complaints concerning the failure of a pharmacy benefits manager to comply with this Act.

(b) The Department shall refer a complaint filed under this Act to the Board if the complaint involves a professional or patient health or safety issue.

(c) The Board shall refer a complaint filed under this Act to the Department if the complaint involves a business or financial issue.

Section 80.

Adjustment or settlement of claims;

compensation of PBM.

Compensation to a PBM for any claims that the PBM adjusts or settles on behalf of an insurer shall in no way be contingent on claims experience.

This Section does not prohibit the compensation of a PBM based on total number of claims paid or processed.

Section 85.

PBM responsibilities to the covered entity.

(a) A PBM shall provide to a covered entity all financial and utilization information requested by the covered entity SB1828 - 14 - LRB094 11306 RAS 42120 b relating to the provision of benefits to covered individuals through that covered entity and all financial and utilization information relating to services to that covered entity.

A PBM providing information under this Section may designate that material as confidential.

Information designated as confidential by a PBM and provided to a covered entity under this Section may not be disclosed by the covered entity to any person without the consent to the PBM, except that disclosure may be made when authorized by a court.

(b) A PBM shall disclose to the covered entity all financial terms and arrangements for remuneration of any kind that apply between the PBM and any prescription drug manufacturer or labeler, including, without limitation, rebates, formulary management and drug-switch or substitution programs, educational support, claims processing, and pharmacy network fees that are charged from retail pharmacies and data sales fees.

(c) A PBM shall disclose to the covered entity whether there is a difference between the price paid to retail pharmacy and the amount billed to the covered entity for the purchase.

(d) The covered entity may audit the PBM’s books and records related to the rebates or other information provided in subsections (a) through (c) of this Section.

(e) A PBM shall perform its duties exercising good faith and fair dealing toward the covered entity.

Section 90.

Pharmacy Benefits Management Fund.

The Pharmacy Benefits Management Fund is created as a special fund in the State Treasury.

All fees, fines, assessments, and penalties received under this Act shall be deposited into the Pharmacy Benefits Management Fund.

Section 95.

Assessment;

Secretary.

(a) The expense of administering this Act, including the costs incurred by the Secretary, shall be assessed annually by the Secretary against all PBMs operating in this State.

The SB1828 - 15 - LRB094 11306 RAS 42120 b assessment shall be in proportion to the business done in this State.

(b) The Secretary shall give each PBM notice of the assessment, which shall be paid to the Secretary on or before April 1 of each year.

(c) If an assessment is not paid by the prescribed date, the amount of any assessment, plus a penalty, the license of the defaulting PBM may be revoked or suspended by the Secretary until the assessment and any penalty has been paid.

Section 100.

Assessment;

Board.

(a) The expense of administering this Act, including the costs incurred by the Board, shall be assessed annually by the Board against all PBMs operating in this State.

The assessment shall be in proportion to the business done in this State.

(b) The Board shall give each PBM notice of the assessment, which shall be paid to the Board on or before April 1 of each year.

(c) If an assessment is not paid by the prescribed date, the amount of any assessment, plus a penalty, the license of the defaulting PBM may be revoked or suspended by the Board until the assessment and any penalty has been paid.

Section 105.

Rulemaking;

Secretary and Board.

The Secretary and the Board may adopt rules necessary to carry out the provisions of this Act.

These rules may include the definition of terms, the use of prescribed forms, reporting requirements, prohibited practices, and enforcement procedures.

The rules shall be subject to review in accordance with general rules of administrative rulemaking and review of regulations.

Section 110.

Rulemaking;

Department.

The Department shall define the enforcement process that shall be implemented under this Act, including grounds for license revocation, fines, suspension, and reinstatement and shall adopt rules concerning SB1828 - 16 - LRB094 11306 RAS 42120 b unfair trade practices, protections for privacy and confidentiality of covered persons, and the prohibition of discrimination and false and misleading advertising.

Section 115.

Severability.

The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 900.

The State Finance Act is amended by changing Section 8g and by adding Section 5.640 as follows:

(30 ILCS 105/5.640 new) Sec.

5.640.

The Pharmacy Benefits Management Fund.

(30 ILCS 105/8g) Sec.

8g.

Fund transfers.

(a) In addition to any other transfers that may be provided for by law, as soon as may be practical after the effective date of this amendatory Act of the 91st General Assembly, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $10,000,000 from the General Revenue Fund to the Motor Vehicle License Plate Fund created by Senate Bill 1028 of the 91st General Assembly.

(b) In addition to any other transfers that may be provided for by law, as soon as may be practical after the effective date of this amendatory Act of the 91st General Assembly, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $25,000,000 from the General Revenue Fund to the Fund for Illinois’ Future created by Senate Bill 1066 of the 91st General Assembly.

(c) In addition to any other transfers that may be provided for by law, on August 30 of each fiscal year’s license period, the Illinois Liquor Control Commission shall direct and the State Comptroller and State Treasurer shall transfer from the General Revenue Fund to the Youth Alcoholism and Substance Abuse Prevention Fund an amount equal to the number of retail liquor licenses issued for that fiscal year multiplied by $50.

SB1828 - 17 - LRB094 11306 RAS 42120 b (d) The payments to programs required under subsection (d) of Section 28.1 of the Horse Racing Act of 1975 shall be made, pursuant to appropriation, from the special funds referred to in the statutes cited in that subsection, rather than directly from the General Revenue Fund.

Beginning January 1, 2000, on the first day of each month, or as soon as may be practical thereafter, the State Comptroller shall direct and the State Treasurer shall transfer from the General Revenue Fund to each of the special funds from which payments are to be made under Section 28.1(d) of the Horse Racing Act of 1975 an amount equal to 1/12 of the annual amount required for those payments from that special fund, which annual amount shall not exceed the annual amount for those payments from that special fund for the calendar year 1998.

The special funds to which transfers shall be made under this subsection (d) include, but are not necessarily limited to, the Agricultural Premium Fund;

the Metropolitan Exposition Auditorium and Office Building Fund;

the Fair and Exposition Fund;

the Standardbred Breeders Fund;

the Thoroughbred Breeders Fund;

and the Illinois Veterans’ Rehabilitation Fund.

(e) In addition to any other transfers that may be provided for by law, as soon as may be practical after the effective date of this amendatory Act of the 91st General Assembly, but in no event later than June 30, 2000, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $15,000,000 from the General Revenue Fund to the Fund for Illinois’ Future.

(f) In addition to any other transfers that may be provided for by law, as soon as may be practical after the effective date of this amendatory Act of the 91st General Assembly, but in no event later than June 30, 2000, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $70,000,000 from the General Revenue Fund to the Long-Term Care Provider Fund.

(f-1) In fiscal year 2002, in addition to any other transfers that may be provided for by law, at the direction of SB1828 - 18 - LRB094 11306 RAS 42120 b and upon notification from the Governor, the State Comptroller shall direct and the State Treasurer shall transfer amounts not exceeding a total of $160,000,000 from the General Revenue Fund to the Long-Term Care Provider Fund.

(g) In addition to any other transfers that may be provided for by law, on July 1, 2001, or as soon thereafter as may be practical, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $1,200,000 from the General Revenue Fund to the Violence Prevention Fund.

(h) In each of fiscal years 2002 through 2004, but not thereafter, in addition to any other transfers that may be provided for by law, the State Comptroller shall direct and the State Treasurer shall transfer $5,000,000 from the General Revenue Fund to the Tourism Promotion Fund.

(i) On or after July 1, 2001 and until May 1, 2002, in addition to any other transfers that may be provided for by law, at the direction of and upon notification from the Governor, the State Comptroller shall direct and the State Treasurer shall transfer amounts not exceeding a total of $80,000,000 from the General Revenue Fund to the Tobacco Settlement Recovery Fund.

Any amounts so transferred shall be re-transferred by the State Comptroller and the State Treasurer from the Tobacco Settlement Recovery Fund to the General Revenue Fund at the direction of and upon notification from the Governor, but in any event on or before June 30, 2002.

(i-1) On or after July 1, 2002 and until May 1, 2003, in addition to any other transfers that may be provided for by law, at the direction of and upon notification from the Governor, the State Comptroller shall direct and the State Treasurer shall transfer amounts not exceeding a total of $80,000,000 from the General Revenue Fund to the Tobacco Settlement Recovery Fund.

Any amounts so transferred shall be re-transferred by the State Comptroller and the State Treasurer from the Tobacco Settlement Recovery Fund to the General Revenue Fund at the direction of and upon notification from the Governor, but in any event on or before June 30, 2003.

SB1828 - 19 - LRB094 11306 RAS 42120 b (j) On or after July 1, 2001 and no later than June 30, 2002, in addition to any other transfers that may be provided for by law, at the direction of and upon notification from the Governor, the State Comptroller shall direct and the State Treasurer shall transfer amounts not to exceed the following sums into the Statistical Services Revolving Fund:

From the General Revenue Fund ................

$8,450,000 From the Public Utility Fund ................

1,700,000 From the Transportation Regulatory Fund ......

2,650,000 From the Title III Social Security and Employment Fund ............................

3,700,000 From the Professions Indirect Cost Fund ......

4,050,000 From the Underground Storage Tank Fund ......

550,000 From the Agricultural Premium Fund ..........

750,000 From the State Pensions Fund ................

200,000 From the Road Fund ..........................

2,000,000 From the Health Facilities Planning Fund ..............................

1,000,000 From the Savings and Residential Finance Regulatory Fund ............................

130,800 From the Appraisal Administration Fund ......

28,600 From the Pawnbroker Regulation Fund ..........

3,600 From the Auction Regulation Administration Fund ........................

35,800 From the Bank and Trust Company Fund..........

634,800 From the Real Estate License Administration Fund ........................

313,600 (k) In addition to any other transfers that may be provided for by law, as soon as may be practical after the effective date of this amendatory Act of the 92nd General Assembly, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $2,000,000 from the General Revenue Fund to the Teachers Health Insurance Security Fund.

(k-1) In addition to any other transfers that may be provided for by law, on July 1, 2002, or as soon as may be practical thereafter, the State Comptroller shall direct and SB1828 - 20 - LRB094 11306 RAS 42120 b the State Treasurer shall transfer the sum of $2,000,000 from the General Revenue Fund to the Teachers Health Insurance Security Fund.

(k-2) In addition to any other transfers that may be provided for by law, on July 1, 2003, or as soon as may be practical thereafter, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $2,000,000 from the General Revenue Fund to the Teachers Health Insurance Security Fund.

(k-3) On or after July 1, 2002 and no later than June 30, 2003, in addition to any other transfers that may be provided for by law, at the direction of and upon notification from the Governor, the State Comptroller shall direct and the State Treasurer shall transfer amounts not to exceed the following sums into the Statistical Services Revolving Fund:

Appraisal Administration Fund ................

$150,000 General Revenue Fund ........................

10,440,000 Savings and Residential Finance Regulatory Fund..........................

200,000 State Pensions Fund ..........................

100,000 Bank and Trust Company Fund ..................

100,000 Professions Indirect Cost Fund ..............

3,400,000 Public Utility Fund ..........................

2,081,200 Real Estate License Administration Fund ......

150,000 Title III Social Security and Employment Fund..........................

1,000,000 Transportation Regulatory Fund ..............

3,052,100 Underground Storage Tank Fund ................

50,000 (l) In addition to any other transfers that may be provided for by law, on July 1, 2002, or as soon as may be practical thereafter, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $3,000,000 from the General Revenue Fund to the Presidential Library and Museum Operating Fund.

(m) In addition to any other transfers that may be provided for by law, on July 1, 2002 and on the effective date of this SB1828 - 21 - LRB094 11306 RAS 42120 b amendatory Act of the 93rd General Assembly, or as soon thereafter as may be practical, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $1,200,000 from the General Revenue Fund to the Violence Prevention Fund.

(n) In addition to any other transfers that may be provided for by law, on July 1, 2003, or as soon thereafter as may be practical, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $6,800,000 from the General Revenue Fund to the DHS Recoveries Trust Fund.

(o) On or after July 1, 2003, and no later than June 30, 2004, in addition to any other transfers that may be provided for by law, at the direction of and upon notification from the Governor, the State Comptroller shall direct and the State Treasurer shall transfer amounts not to exceed the following sums into the Vehicle Inspection Fund:

From the Underground Storage Tank Fund ......

$35,000,000.

(p) On or after July 1, 2003 and until May 1, 2004, in addition to any other transfers that may be provided for by law, at the direction of and upon notification from the Governor, the State Comptroller shall direct and the State Treasurer shall transfer amounts not exceeding a total of $80,000,000 from the General Revenue Fund to the Tobacco Settlement Recovery Fund.

Any amounts so transferred shall be re-transferred from the Tobacco Settlement Recovery Fund to the General Revenue Fund at the direction of and upon notification from the Governor, but in any event on or before June 30, 2004.

(q) In addition to any other transfers that may be provided for by law, on July 1, 2003, or as soon as may be practical thereafter, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $5,000,000 from the General Revenue Fund to the Illinois Military Family Relief Fund.

(r) In addition to any other transfers that may be provided for by law, on July 1, 2003, or as soon as may be practical thereafter, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $1,922,000 from the General SB1828 - 22 - LRB094 11306 RAS 42120 b Revenue Fund to the Presidential Library and Museum Operating Fund.

(s) In addition to any other transfers that may be provided for by law, on or after July 1, 2003, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $4,800,000 from the Statewide Economic Development Fund to the General Revenue Fund.

(t) In addition to any other transfers that may be provided for by law, on or after July 1, 2003, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $50,000,000 from the General Revenue Fund to the Budget Stabilization Fund.

(u) On or after July 1, 2004 and until May 1, 2005, in addition to any other transfers that may be provided for by law, at the direction of and upon notification from the Governor, the State Comptroller shall direct and the State Treasurer shall transfer amounts not exceeding a total of $80,000,000 from the General Revenue Fund to the Tobacco Settlement Recovery Fund.

Any amounts so transferred shall be retransferred by the State Comptroller and the State Treasurer from the Tobacco Settlement Recovery Fund to the General Revenue Fund at the direction of and upon notification from the Governor, but in any event on or before June 30, 2005.

(v) In addition to any other transfers that may be provided for by law, on July 1, 2004, or as soon thereafter as may be practical, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $1,200,000 from the General Revenue Fund to the Violence Prevention Fund.

(w) In addition to any other transfers that may be provided for by law, on July 1, 2004, or as soon thereafter as may be practical, the State Comptroller shall direct and the State Treasurer shall transfer the sum of $6,445,000 from the General Revenue Fund to the Presidential Library and Museum Operating Fund.

(x) In addition to any other transfers that may be provided for by law, on January 15, 2005, or as soon thereafter as may SB1828 - 23 - LRB094 11306 RAS 42120 b be practical, the State Comptroller shall direct and the State Treasurer shall transfer to the General Revenue Fund the following sums:

From the State Crime Laboratory Fund, $200,000;

From the State Police Wireless Service Emergency Fund, $200,000;

From the State Offender DNA Identification System Fund, $800,000;

and From the State Police Whistleblower Reward and Protection Fund, $500,000.

(y) No transfers shall be made to the General Revenue Fund from the Pharmacy Benefits Management Fund.

92-11,90-372, eff.

6-11-01;7-1-98.) (215 ILCS 5/512-4) (from Ch.

92-505,73, eff.par.

12-20-01;1065.59-4) Sec.

92-600,512-4. eff.

6-28-02;Registration.

93-32,All eff.pharmaceutical benefits management third party prescription programs and PBMs administrators doing business in the State shall register with the Director of Insurance.

6-20-03;The Director may shall promulgate regulations establishing criteria for registration in accordance with the terms of this Article.

93-648,The eff.Director may by rule establish an annual registration fee for each pharmaceutical benefits management program third party administrator.

1-8-04;(Source:

93-839,P.A. eff.

7-30-04;82-1005.) SB1828 Engrossed - 3 - LRB094 11306 RAS 42120 b (215 ILCS 5/512-5) (from Ch.

93-1067,73, eff.par.

1-15-05.)1065.59-5) SectionSec. 999.

512-5.

Fiduciary and Bonding Requirements.

(a) A PBM third party prescription program administrator shall (1) establish and maintain a fiduciary account, separate and apart from any and all other accounts, for the receipt and disbursement of funds for reimbursement of providers of services under the program, or (2) post, or cause to be posted, a bond of indemnity in an amount equal to not less than 10% of the total estimated annual reimbursements under the program.

(b) The establishment of such fiduciary accounts and bonds shall be consistent with applicable State law.

If a bond of indemnity is posted, it shall be held by the Director of Insurance for the benefit and indemnification of the providers of services under the pharmaceutical benefits management third party prescription program.

(c) Any PBM An administrator who operates more than one pharmaceutical benefits management third party prescription program may establish and maintain a separate fiduciary account or bond of indemnity for each such program, or may operate and maintain a consolidated fiduciary account or bond of indemnity for all such programs.

(d) The requirements of this Section do not apply to any pharmaceutical benefits management third party prescription program administered by or on behalf of any insurance company, Health Maintenance Organization, Limited Health Service Organization, or Voluntary Health Services Plan Care Service Plan Corporation or Pharmaceutical Service Plan Corporation authorized to do business in the State of Illinois.

(Source:

P.A.

82-1005.) (215 ILCS 5/512-6) (from Ch.

73, par.

1065.59-6) Sec.

512-6.

Notice.

Notice of any change in the terms of a pharmaceutical benefits management third party prescription program, including but not limited to drugs covered, reimbursement rates, co-payments, and dosage quantity, shall SB1828 Engrossed - 4 - LRB094 11306 RAS 42120 b be given to each enrolled pharmacy at least 30 days prior to the time it becomes effective.

(Source:

P.A.

82-1005.) (215 ILCS 5/512-7) (from Ch.

73, par.

1065.59-7) Sec.

512-7.

Contractual provisions.

(a) Any agreement or contract entered into in this State between a PBM the administrator of a program and a pharmacy under a pharmaceutical benefits management program shall include a statement of the method and amount of reimbursement to the pharmacy for services rendered to persons enrolled in the program, the frequency of payment by the PBM program administrator to the pharmacy for those services, and a method for the adjudication of complaints and the settlement of disputes between the contracting parties.

(b)(1) A program shall provide an annual period of at least 30 days during which any pharmacy licensed under the Pharmacy Practice Act of 1987 may elect to participate in the program under the program terms for at least one year.

(2) If compliance with the requirements of this subsection (b) would impair any provision of a contract between a program and any other person, and if the contract provision was in existence before January 1, 2006 1990, then immediately after the expiration of those contract provisions the program shall comply with the requirements of this subsection (b).

(3) This subsection (b) does not apply if:

(A) the PBM program administrator is a licensed health maintenance organization, limited health service organization, or voluntary health services plan that owns or controls a pharmacy and that enters into an agreement or contract with that pharmacy in accordance with subsection (a);

or (B) (blank).

the program administrator is a licensed health maintenance organization that is owned or controlled by another entity that also owns or SB1828 Engrossed - 5 - LRB094 11306 RAS 42120 b controls a pharmacy, and the administrator enters into an agreement or contract with that pharmacy in accordance with subsection (a).

(4) (Blank).

This subsection (b) shall be inoperative after October 31, 1992.

(c) The PBM program administrator shall cause to be issued an identification card to each person enrolled in the program.

The identification card shall comply with the Uniform Prescription Drug Information Card Act.

include:

(1) the name of the individual enrolled in the program;

and (2) an expiration date if required under the contractual arrangement or agreement between a provider of pharmaceutical services and prescription drug products and the third party prescription program administrator.

(Source:

P.A.

86-473;

87-254.) (215 ILCS 5/512-8) (from Ch.

73, par.

1065.59-8) Sec.

512-8.

Cancellation procedures.

(a) The pharmaceutical benefits manager administrator of a program shall notify all pharmacies enrolled in the program of any cancellation of the coverage of benefits of any group enrolled in the program at least 30 days prior to the effective date of such cancellation.

However, if the PBM administrator of a program is not notified at least 45 days prior to the effective date of such cancellation, the PBM administrator shall notify all pharmacies enrolled in the program of the cancellation as soon as practicable after having received notice.

(b) When a program is terminated, all persons enrolled therein shall be so notified, and the employer shall make every reasonable effort to gain possession of any plan identification cards in such persons’ possession.

(c) Any person who intentionally uses a program identification card to obtain services from a pharmacy after having received notice of the cancellation of his benefits SB1828 Engrossed - 6 - LRB094 11306 RAS 42120 b shall be guilty of a Class C misdemeanor.

Persons shall be liable to the PBM program administrator for all monies paid by the PBM program administrator for any services received pursuant to such misuse any improper use of the identification card.

(Source:

P.A.

82-1005.) (215 ILCS 5/512-9) (from Ch.

73, par.

1065.59-9) Sec.

512-9.

Denial of Payment.

(a) No PBM administrator shall deny payment to any pharmacy for covered pharmaceutical services or prescription drug products rendered as a result of the misuse, fraudulent or illegal use of an identification card unless such identification card had expired, been noticeably altered, or the pharmacy was notified of the cancellation of such card.

In lieu of notifying pharmacies which have a common ownership, the PBM administrator may notify a party designated by the pharmacy to receive such notice, in which case, notification shall not become effective until 5 calendar days after the designee receives notification.

(b) No PBM program administrator may withhold any payment to any pharmacy for covered pharmaceutical services or prescription drug products beyond the time period specified in the payment schedule provisions of the agreement, except for individual claims for payment which have been returned to the pharmacy as incomplete or illegible.

Such returned claims shall be paid if resubmitted by the pharmacy to the PBM program administrator with the appropriate corrections made.

(Source:

P.A.

82-1005.) (215 ILCS 5/512-10) (from Ch.

73, par.

1065.59-10) Sec.

512-10.

Failure to Register.

Any pharmaceutical benefits management third party prescription program or PBM that administrator which operates without a certificate of registration or fails to register with the Director and pay the fee prescribed by this Article shall be construed to be an SB1828 Engrossed - 7 - LRB094 11306 RAS 42120 b unauthorized insurer as defined in Article VII of this Code and shall be subject to all penalties contained therein.

The provisions of this the Article shall apply to all new programs established on or after January 1, 2006 1983.

Programs existing on the effective date of this amendatory Act of the 94th General Assembly Existing programs shall comply with the provisions of this Article as they existed before the effective date of this amendatory Act of the 94th General Assembly until on the anniversary date of the programs that occurs on or after January 1, 2006, at which time the programs shall comply with the provisions of this Article as they exist beginning on the effective date of this amendatory Act of the 94th General Assembly 1983.

(Source:

P.A.

82-1005.) (215 ILCS 5/512-11 new) Sec.

512-11.

Failure to Comply.

In order to enforce the provisions of this Article, the Director may issue a cease and desist order or require a PBM to pay a civil penalty or both.

Subject to the provisions of the Illinois Administrative Procedure Act, the Director may, pursuant to Section 403A of the Illinois Insurance Code, impose upon a pharmaceutical benefits management program an administrative fine of $5,000 for violations of this Article.

(215 ILCS 5/512-12 new) Sec.

512-12.

Rulemaking.

The Director shall have the authority to adopt any rules necessary for the implementation and administration of this Article.

Section 99.