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S728 SCS SCM Statement 6/17/19 SENATE COMMERCE COMMITTEE   STATEMENT TO   SENATE COMMITTEE SUBSTITUTE FOR SENATE, No.

728  STATE OF NEW JERSEY 218th LEGISLATURE   ADOPTEDDATED: JUNE 17, 2019     Sponsored by:

Senator  JUNE LINDA17, R.2019         The Senate Commerce Committee reports favorably a Senate Committee Substitute for Senate Bill No.

GREENSTEIN728. District 14 (Mercer and Middlesex) Senator  VIN GOPAL District 11 (Monmouth)   Co-Sponsored by:

Senators      Andrzejczak,This Sacco,substitute Gill,bill Stackprohibits anda Weinbergpharmacy  benefits  manager  from  retroactively SYNOPSISreducing     payment Prohibitson pharmacya benefitsproperly managersfiled fromclaim makingfor certainpayment by a pharmacy.  These retroactive reductions in claimspayment paymentsare often, particularly in the case of Medicare Part D, referred to pharmacies;as direct and indirect remuneration (DIR) fees.  Since these fees are commonly “clawed back” retroactively, and in many cases months after the claim is made, this process makes it difficult for pharmacies to operate with predictable revenues.

requires     Specifically, the bill provides that, after the date of receipt of a clean claim for payment made by a pharmacy, a pharmacy benefits managersmanager may not retroactively reduce payment on the claim, either directly or indirectly, through aggregated effective rate, direct or indirect remuneration, quality assurance program, or otherwise, except if the claim is found not to disclosebe certaina productclean informationclaim during the course of a routine audit performed pursuant to pharmacies.an agreement between the pharmacy benefits manager and the pharmacy.  Under the bill, when a pharmacy adjudicates a claim at the point of sale, the reimbursement amount provided to the pharmacy by the pharmacy benefits manager constitutes a final reimbursement amount.  The bill is not to be construed to prohibit any retroactive increase in payment to a pharmacy pursuant to a written agreement contract between the pharmacy benefits manager, and the pharmacy services administration organization, or a pharmacy.

      CURRENTPursuant VERSIONto OFthe TEXTbill,     “clean Substituteclaim” asmeans adopteda byclaim thethat Senatehas Commerceno Committee.defect or impropriety, including a lack of any required substantiating documentation, or other circumstance requiring special treatment.

        This  bill  provides Anthat Acta concerning pharmacy benefits managersmanager andmay amendingnot andrecoup supplementingfunds P.L.2015,from c.179a  pharmacy     in Beconnection Itwith Enactedclaims byfor which the Senatepharmacy andhas Generalalready Assemblybeen ofpaid unless the Staterecoupment ofis: New Jersey:

       1.    (New section)  a.

 After the date of receipt of a clean claim for payment made by a pharmacy, a pharmacy benefits manager shall not retroactively reduce payment on the claim, either directly or indirectly, through aggregated effective rate, direct or indirect remuneration, quality assurance program, or otherwise, except if the claim is found not to be a clean claim during the course of a routine audit performed pursuant to an agreement between the pharmacy benefits manager and the pharmacy.  When a pharmacy adjudicates a claim at the point of sale, the reimbursement amount provided to the pharmacy by the pharmacy benefits manager shall constitute a final reimbursement amount.  Nothing in this section shall be construed to prohibit any retroactive increase in payment to a pharmacy pursuant to a written agreement contract between the pharmacy benefits manager, and the pharmacy services administration organization, or a pharmacy.

     b.    For the purpose of this section, “clean claim” means a claim that has no defect or impropriety, including a lack of any required substantiating documentation, or other circumstance requiring special treatment, including, but not limited to, those listed in subsection d.

of this section, that prevents timely payment from being made on the claim.

     c.     A pharmacy benefit manager shall not recoup funds from a pharmacy in connection with claims for which the pharmacy has already been paid unless the recoupment is:

     d.    The provisions of thisthe sectionbill shall not apply to an investigative audit of pharmacy records when:

          2.   The Sectionbill 2also requires, with respect to execution, renewals, and changes in terms of P.L.2015,a c.179contract (C.17B:27F-2)between isa amendedpharmacy benefits manager and a pharmacy, more information to readbe asdisclosed follows:to the pharmacy in the contract, and a reasonable process by which contracted pharmacies can access certain pricing information.

     2.   The Uponbill executionalso orrequires renewalall ofcontracts eachbetween contract,a orpharmacy atbenefits suchmanager and a timecontracted whenpharmacy thereto isinclude anycertain materialfactors changethat inare thesubject termto of the contract, a pharmacyprocess benefitsto managerappeal shall,disputes.  withWith respect to contractsappeals betweenthat aare pharmacydenied, benefitsthe managerbill andprovides athat the pharmacy servicesbenefits administrativemanager organization,is orrequired betweento aprovide pharmacycertain benefitsinformation managerrelating andto athe contracteddenial. pharmacy:

     a.    The (1) bill includeprovides inthat thea contractpharmacy thebenefits sourcesmanager utilizedmay tonot determineterminate multiplea sourcepharmacy genericlicensed drug pricing, brand drug pricing, and the wholesaler in the State of New Jersey wheresolely pharmacieson may acquire the product,basis including,that if applicable, the brandpharmacy effectiveoffers rate,and genericprovides effectivestore rate,direct dispensingdelivery feeand effectivemail rate,prescriptions maximumto allowablean costinsured oras anyan [successive]ancillary otherservice. pricing formula [, or of the pharmacy benefits manager] for pharmacy reimbursement;

     (2)  The updatebill thatprohibits pricinga informationpharmacy everybenefits sevenmanager calendaror days;third-party payer from requiring pharmacy accreditation standards or recertification requirements to participate in a network which are inconsistent with, more stringent than, or in addition to, the federal and State requirements for a pharmacy in this State.

and      (3)  The establishbill aprovides reasonablethat processthe byCommissioner whichof contractedBanking pharmaciesand haveInsurance may review and approve the compensation program of a methodpharmacy tobenefits accessmanager relevantwith maximuma allowablehealth costbenefits pricingplan liststo [andensure anythat successivethe pricingreimbursement formulasfor inpharmacist services paid to a timelypharmacist manner]or ,pharmacy brandis effectivefair rate,and genericreasonable effectiveto rate,provide oran anyadequate otherpharmacy pricingbenefits formulasmanager network for pharmacya reimbursement;health benefits plan.

and          The b.   bill Maintainapplies aP.L.2015, procedurec.179 to(C.17B:27F-1 eliminateet drugsseq.), from the listlaw ofregulating drugspharmacy subjectbenefits tomanagers, multiple source generic drug pricing and brand drug pricing, or modify maximum allowable cost rates, brand effective rate, generic effective rate, dispensing fee effective rate or any other applicable pricing formula in a timely fashion and make that procedure easily accessible to theall pharmacy servicesbenefits administrativemanagers organizationsoperating orin the pharmaciesState thatand they are contractually obligated with to provideplans thatoffered informationthrough according to the requirementsState ofHealth thisBenefits section.Program.

(cf:     Finally, the bill provides that a pharmacy benefits manager that violates any provision of that law shall be subject to:

P.L.2015, c.179, s.2)        3.   (1)   Sectiona 4warning ofnotice; P.L.2015, c.179 (C.17B:27F-4) is amended to read as follows:

     4.   (2)   Allan contractsopportunity between a pharmacy benefits manager and a [contracted] pharmacy services administrative organization, or its contracted  pharmacies, and all contracts directly between a pharmacy benefits manager and a pharmacy shall include a process to appeal,cure investigate,the andviolation resolvewithin disputes14 regardingdays brandfollowing and multiple source generic drug pricing, including, if applicable, brand effective rate, generic effective rate, dispensing fee effective rate, and any other pricing formula for pharmacy reimbursement.  The contract provision establishing the processissuance shallof include the following:notice;

     a.    (3)   Thea righthearing tobefore appealthe shallcommissioner bewithin limited70 to 14 calendar days following the initialissuance claim;of the notice;

     b.    The appeal shall be investigated and resolved     by(4)   if the pharmacyviolation benefitshas managernot throughbeen ancured, internala processpenalty withinof 14not calendarless daysthan of$5,000 receiptor ofmore thethan appeal$10,000 byfor theeach pharmacyviolation. benefits manager;

     c.    This ASenate telephoneCommittee numberSubstitute at which a pharmacy services administrative organization, or a pharmacy may contact the pharmacy benefits manager and speak with an individual who is involvedidentical into theAssembly appealsBill process;No.3717 (2R).

and      d.   This (1) bill Ifwas pre-filed for introduction in the appeal2018-2019 issession denied,pending technical review.  As reported, the pharmacybill benefitsincludes managerthe shall:changes required by technical review, which has been performed.

     (a)   provide the reason for the denial [and] to the pharmacy services administrative organization and its contracted pharmacies, and the pharmacy services administrative organization shall inform its contracted pharmacies of the availability, location and pricing of the appealed drug in the State;

     (b)   provide the reason for the denial directly to a pharmacy, if it contracts directly with a pharmacy benefits manager;

     (c)   identify the national drug code of a drug product that is available for purchase by [contracted pharmacies] the specific contracted pharmacy appealing the claim in this State from wholesalers registered pursuant to P.L.1961, c.52 (C.24:6B-1 et seq.) at a price which is available to the specific contracted pharmacy appealing the claim and which is equal to or less than the maximum allowable cost or the brand effective rate, generic effective rate or other pricing for the appealed drug as determined by the pharmacy benefits manager;

and      (d)   provide the name of wholesalers registered under P.L.1961, c.52 (C.24:6B-1 et seq.) from which the appealing pharmacy can obtain the brand or multiple source generic drug at or below the brand effective rate, generic effective rate, dispensing fee effective rate, maximum allowable cost or any other pricing formula for pharmacy reimbursement;

     (2)   If the appeal is approved, the pharmacy benefits manager shall make the price correction, permit the reporting pharmacy to reverse and rebill the appealed claim, and make the price correction effective for all similarly situated pharmacies from the date of the approved appeal.

     e.     A pharmacy benefits manager shall not terminate a pharmacy licensed in the State of New Jersey solely on the basis that the pharmacy offers and provides store direct delivery and mail prescriptions to an insured as an ancillary service.

(cf:

P.L.2015, c.179, s.4)        4.    (New section)  A pharmacy benefits manager or third-party payer shall not require pharmacy accreditation standards or recertification requirements to participate in a network which are inconsistent with, more stringent than, or in addition to, the federal and State requirements for a pharmacy in this State.

     5.    (New section)  The Commissioner of Banking and Insurance may review and approve the compensation program of a pharmacy benefits manager with a health benefits plan to ensure that the reimbursement for pharmacist services paid to a pharmacist or pharmacy is fair and reasonable to provide an adequate pharmacy benefits manager network for a health benefits plan.

       6.    (New section)  P.L.2015, c.179 (C.17B:27F-1 et seq.) shall apply to all pharmacy benefits managers operating in the State of New Jersey.

       7.    (New section)  A pharmacy benefits manager that violates any provision of P.L.2015, c.179 (C.17B:27F-1 et seq.) shall be subject to:

     a.     a warning notice;

     b.    an opportunity to cure the violation within 14 days following the issuance of the notice;