Senate Bill No. 118
(By Senators Tomblin (Mr. President) and Sprouse
By Request of the Executive)
____________
[Introduced February 15, 2001; referred to the Committee
on Health and Human Resources; and then to the Committee on
Finance.]
____________
A BILL to amend chapter thirty-three of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article twenty-five-f,
relating to prepaid pharmacy service organizations; providing
definitions; providing for procedures and requirements for a
certificate of authority from the insurance commissioner;
setting minimum capitalization; establishing the powers of the
entity; governance of the corporation; required reports;
contractual requirements; grievance procedures; establishing
prohibited practices; providing for examinations; quality
assurance requirements; examinations; establishing procedures
for revocation of a certificate of authority and
rehabilitation, liquidation or conservation; authorizing rules
by the insurance commissioner; providing for medical
confidentiality; and establishing regulatory guidelines, fees,
penalties and oversight by the insurance commissioner.
Be it enacted by the legislature of West Virginia:
That chapter thirty-three of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by adding
thereto a new article, designated article twenty-five-f, to read as
follows:
ARTICLE 25F. PREPAID PHARMACY SERVICE ORGANIZATION ACT.
§33-25F-1. Short title.
This article may be cited as the "Prepaid Pharmacy Service
Organization Act."
§33-25F-2. Definitions.
(a) "Capitation" means the fixed amount paid by a prepaid
limited pharmacy service organization to a pharmacy provider under
contract with the prepaid pharmacy service organization in exchange
for rendering pharmacy services.
(b) "Commissioner" means the commissioner of insurance.
(c) "Consumer" means any person who is not a provider of care
or an employee, officer, director or stockholder of any provider of
care.
(d) "Copayment" means a specific dollar amount, except as
otherwise provided for by statute, that the subscriber must pay
upon receipt of covered pharmacy services and which is set at an
amount consistent with allowing the subscriber access to covered
pharmacy services.
(e) "Employee" means a person in some official employment or
position working for a salary or wage continuously for no less than
one calendar quarter and who is in such a relation to another
person that the latter may control the work of the former and
direct the manner in which the work is done.
(f) "Employer" means any individual, corporation, partnership,
other private association, or state or local government that
employs the equivalent of at least two full-time employees during
any four consecutive calendar quarters.
(g) "Enrollee," "subscriber," or "member" means an individual
who has been voluntarily enrolled in a prepaid pharmacy service
organization, including individuals on whose behalf a contractual
arrangement has been entered into with a prepaid pharmacy service
organization to receive pharmacy services.
(h) "Evidence of coverage" means any certificate, agreement or
contract issued to an enrollee setting out the coverage and other
rights to which the enrollee is entitled.
(i) "Impaired" means a financial situation in which, based
upon the financial information which would be required by this
chapter for the preparation of the prepaid pharmacy service
organization's annual statement, the assets of the prepaid pharmacy
service organization are less than the sum of all of its
liabilities and required reserves including any minimum capital and
surplus required of the prepaid pharmacy service organization by
this chapter so as to maintain its authority to transact the kinds
of business or insurance it is authorized to transact.
(j) "Insolvent" or "insolvency" means a financial situation in
which, based upon the financial information which would be required
by this chapter for the preparation of the prepaid pharmacy service
organization's annual statement, the assets of the prepaid pharmacy
service organization are less than the sum of all of its
liabilities and required reserves.
(k) "Pharmacy or pharmacist" means any individual properly
licensed as a pharmacist in this state or an organization which
employs such individuals.
(l) "Pharmacy service" means the provision of or arranging for
the provision of pharmaceutical or related products. This does not
include any inpatient services.
(m) "Premium" means a prepaid per capita or prepaid aggregate
fixed sum unrelated to the actual or potential utilization of
services of any particular person which is charged by the prepaid
pharmacy service organization for pharmacy services provided to an
enrollee.
(n) "Prepaid pharmacy service organization" means a public or
private organization which provides, or otherwise makes available
to enrollees, pharmacy services and which:
(1) Receives premiums for the provision of pharmacy services
to enrollees on a prepaid per capita or prepaid aggregate fixed sum
basis, excluding copayments;
(2) Provides pharmacy services primarily:
(A) Directly through a panel of pharmacies or pharmacists who
are employees or partners of the organization;
(B) Through arrangements with pharmacies or pharmacists; or
(C) Some combination of paragraphs (A) and (B) of this
subdivision;
(3) Assures the availability, accessibility and quality,
including effective utilization, of the pharmacy service or
services that it provides or makes available through clearly
identifiable focal points of legal and administrative responsibility;
(4) Prepaid pharmacy service organization does not include an
entity otherwise authorized pursuant to the laws of this state to
indemnify for any pharmacy service, or a pharmacy provider or
entity when providing a pharmacy service pursuant to a contract
with a prepaid pharmacy service organization, a health maintenance
organization, a health insurer or a self-insurance plan.
(o) "Provider" means a pharmacy, pharmacist or other
individual or entity which may legally provide pharmacy services.
(p) "Qualified independent actuary" means an actuary who is a
member of the American academy of actuaries or the society of
actuaries and has experience in establishing rates for prepaid
pharmacy service or similar organizations and who has no financial
or employment interest in the prepaid pharmacy service
organization.
(q) "Quality assurance" means an ongoing program designed to
objectively and systematically monitor and evaluate the quality and
appropriateness of the enrollee's care, pursue opportunities to
improve the enrollee's care, and resolve identified problems at the
prevailing professional standard of care.
(r) "Service area" means the county or counties approved by
the commissioner within which the prepaid pharmacy service
organization may provide or arrange for pharmacy services to be
available to its subscribers.
(s) "Statutory surplus" means the minimum amount of
unencumbered surplus which a corporation must maintain pursuant to
the requirements of this article.
(t) "Surplus" means the amount by which a corporation's assets
exceed its liabilities and required reserves based upon the
financial information which would be required by this chapter for
the preparation of the corporation's annual statement except that
assets pledged to secure debts not reflected on the books of the
prepaid pharmacy service organization shall not be included in
surplus.
(u) "Surplus notes" means debt which has been subordinated to
all claims of subscribers and all creditors of the organization.
(v) "Uncovered expenses" means the cost of a pharmacy service
covered by a prepaid pharmacy service organization, for which a
subscriber would also be liable in the event of the insolvency of
the organization.
(w) "Utilization management" means a system for the evaluation
of the necessity, appropriateness, and efficiency of the use of
pharmacy services, procedures and facilities.
§33-25F-3. Application for certificate of authority.
(a) Notwithstanding any law of this state to the contrary, any
person may apply to the commissioner for and obtain a certificate
of authority to establish or operate a prepaid pharmacy service
organization in compliance with this article: Provided, That the
organization for which a certificate of authority to operate a
prepaid pharmacy service organization is sought shall also receive
a certificate of authority under the provisions of article one,
chapter thirty-one of this code. No person may sell prepaid
pharmacy service organization enrollee contracts, nor may any
prepaid pharmacy service organization commence services, prior to receipt of a certificate of authority from the commissioner. Any
person may, however, establish the feasibility of a prepaid
pharmacy service organization prior to receipt of a certificate of
authority through funding drives and by receiving loans and grants.
(b) Every prepaid pharmacy service organization in operation
as of the effective date of this article shall submit an
application for a certificate of authority under this section
within thirty days of the effective date of this article. Each
applicant may continue to operate until the commissioner acts upon
the application. In the event that an application is denied
pursuant to section five of this article, the applicant shall be
treated as a prepaid pharmacy service organization whose
certificate of authority has been revoked.
(c) The commissioner may require any organization providing or
arranging for pharmacy services on a prepaid per capita or prepaid
aggregate fixed sum basis to apply for a certificate of authority
under this article. Any organization directed to apply for a
certificate of authority is subject to the provisions of subsection
(b) of this section.
(d) Each application for a certificate of authority shall be
sworn to by an officer or authorized representative of the
applicant before a notary public, shall be in a form prescribed by
the commissioner and shall set forth or be accompanied by any and
all information required by the commissioner, including:
(1) The basic organizational document;
(2) The bylaws or rules;
(3) A list of the names, addresses and official positions of each member of the governing body, which shall contain a full
disclosure in the application of any financial interest by the
officer or member of the governing body or any provider or any
organization or corporation owned or controlled by that person and
the prepaid pharmacy service organization and the extent and nature
of any contract or financial arrangements between that person and
the prepaid pharmacy service organization;
(4) A description of the prepaid pharmacy service organization
and the pharmacy service or services to be offered;
(5) A copy of each evidence of coverage form and of each
enrollee contract form;
(6) Financial statements which include the assets, liabilities
and sources of financial support of the applicant and any
corporation or organization owned or controlled by the applicant;
(7)(A) A description of the proposed method of marketing the
plan;
(B) A schedule of proposed charges; and
(C) A financial plan which includes a three-year projection of
the expenses and income and other sources of future capital;
(8) A power of attorney duly executed by the applicant, if not
domiciled in this state, appointing the commissioner and his or her
successors in office, and duly authorized deputies, as the true and
lawful attorney of the applicant in and for this state upon whom
all lawful process in any legal action or proceeding against the
prepaid pharmacy service organization on a cause of action arising
in this state may be served;
(9) A statement reasonably describing the service area or areas to be served and the type or types of enrollees to be served;
(10) A description of the complaint procedures to be utilized
as required under section fourteen of this article;
(11) A description of the mechanism by which enrollees will be
afforded an opportunity to participate in matters of policy and
operation under section eight of this article;
(12) A complete biographical statement on forms prescribed by
the commissioner and an independent investigation report on all of
the individuals referred to in subdivision (3) of this subsection
and all officers, directors and persons holding five percent or
more of the common stock of the organization;
(13) A comprehensive feasibility study, performed by a
qualified independent actuary in conjunction with a certified
public accountant which shall contain a certification by the
qualified actuary and an opinion by the certified public accountant
as to the feasibility of the proposed organization. The study
shall be for the greater of three years or until the prepaid
pharmacy service organization has been projected to be profitable
for twelve consecutive months. The study shall show that the
prepaid pharmacy service organization would not, at the end of any
month of the projection period, have less than the minimum capital
and surplus as required by section six of this article. The
qualified independent actuary shall certify that:
(A) The rates for pharmacy services offered are neither
inadequate nor excessive nor unfairly discriminatory;
(B) The rates are appropriate for the classes of risks for
which they have been computed;
(C) The rating methodology is appropriate: Provided, That the
certification shall include an adequate description of the rating
methodology showing that the methodology follows consistent and
equitable actuarial principles;
(D) The prepaid pharmacy service organization is actuarially
sound: Provided, That the certification shall consider the rates,
benefits, and expenses of, and any other funds available for the
payment of obligations of, the organization;
(E) The rates being charged or to be charged are actuarially
adequate to the end of the period for which rates have been
guaranteed; and
(F) Incurred but not reported claims, if any, and claims
reported but not fully paid have been adequately provided for;
(14) A description of the prepaid pharmacy service
organization's quality assurance program; and
(15) Such other information as the commissioner may require to
be provided.
(e) A prepaid pharmacy service organization shall, unless
otherwise provided for by rules promulgated by the commissioner,
file notice prior to any modification of the operations or
documents filed pursuant to this section or as the commissioner may
require by rule. If the commissioner does not disapprove of the
filing within ninety days of filing, it is considered approved and
may be implemented by the prepaid pharmacy service organization.
§33-25F-4. Conditions precedent to issuance or maintenance of a
certificate of authority; renewal of certificate of
authority; effect of bankruptcy proceedings.
(a) As a condition precedent to the issuance or maintenance of
a certificate of authority, a prepaid pharmacy service organization
shall file or have on file with the commissioner:
(1) An acknowledgment that a delinquency proceeding pursuant
to article ten of this chapter or supervision by the commissioner
pursuant to article thirty-four of this chapter is the sole and
exclusive method for the liquidation, rehabilitation,
reorganization or conservation of a prepaid pharmacy service
organization;
(2) A waiver of any right to file or be subject to a
bankruptcy proceeding;
(3) Within thirty days of any change in the membership of the
governing body of the organization or in the officers or persons
holding five percent or more of the common stock of the
organization, or as otherwise required by the commissioner:
(A) An amended list of the names, addresses and official
positions of each member of the governing body, and a full
disclosure of any financial interest by a member of the governing
body or any provider or any organization or corporation owned or
controlled by that person and the prepaid pharmacy service
organization and the extent and nature of any contract or financial
arrangements between that person and the prepaid pharmacy service
organization; and
(B) A complete biographical statement on forms prescribed by
the commissioner and an independent investigation report on each
person for whom a biographical statement and independent
investigation report have not previously been submitted.
(b) All certificates of authority issued to prepaid pharmacy
service organizations expire at midnight on the thirty-first day of
May of each year. The commissioner shall renew annually the
certificates of authority of all prepaid pharmacy service
organizations which continue to meet all requirements of this
section and subsection (b), section five of this article, make
application therefor upon a form prescribed by the commissioner and
pay the renewal fee prescribed: Provided, That a prepaid pharmacy
service organization does not qualify for renewal of its
certificate of authority if the organization has no subscribers in
this state within twelve months after issuance of the certificate
of authority: Provided, however, That an organization not
qualifying for renewal may apply for a new certificate of authority
under section three of this article.
(c) The commencement of a bankruptcy proceeding either by or
against a prepaid pharmacy service organization, by operation of
law:
(1) Terminates the prepaid pharmacy service organization's
certificate of authority; and
(2) Vests in the commissioner for the use and benefit of the
subscribers of the prepaid pharmacy service organization the title
to any deposits of the prepaid pharmacy service organization held
by the commissioner.
(d) If the bankruptcy proceeding is initiated by a party other
than the prepaid pharmacy service organization, the operation of
subsection (c) of this section is stayed for a period of sixty days
following the date of commencement of the proceeding.
§33-25F-5. Issuance of certificate of authority.
(a) Upon receipt of an application for a certificate of
authority, the commissioner shall determine whether the application
for a certificate of authority, with respect to pharmacy services
to be furnished has demonstrated:
(1) The willingness and potential ability of the organization
to assure that pharmacy services will be provided in such a manner
as to enhance and assure both the availability and accessibility of
adequate personnel and facilities;
(2) Arrangements for an ongoing evaluation of the quality of
health care provided by the organization and utilization review
which meet the minimum standards set forth in section nineteen of
this article;
(3) That the organization has a procedure to develop, compile,
evaluate and report statistics relating to the cost of its
operations, the pattern of utilization of its services, the
quality, availability and accessibility of its services, and other
matters as may be reasonably required by rule.
(b) The commissioner shall issue or deny a certificate of
authority to any person filing an application within one hundred
twenty days after receipt of the application. Issuance of a
certificate of authority shall be granted upon payment of the
application fee prescribed, if the commissioner is satisfied that
the following conditions are met:
(1) The prepaid pharmacy service organization's proposed plan
of operation meets the requirements of subsection (a) of this
section;
(2) The prepaid pharmacy service organization will effectively
provide or arrange for the provision of pharmacy services on a
prepaid basis except for copayments: Provided, That nothing in
this section relieves a prepaid pharmacy service organization from
the obligations to provide a pharmacy service because of the
nonpayment of copayments unless the enrollee fails to make payment
in at least three instances over any twelve-month period:
Provided, however, That nothing in this section permits a prepaid
pharmacy service organization to charge copayments to medicare
beneficiaries or medicaid recipients in excess of the copayments
permitted under those programs, nor is a prepaid pharmacy service
organization required to provide a pharmacy service to medicare
beneficiaries or medicaid recipients in excess of the benefits
compensated under those programs;
(3) The prepaid pharmacy service organization is financially
responsible and may reasonably be expected to meet its obligations
to enrollees and prospective enrollees. In making this
determination, the commissioner may consider:
(A) The financial soundness of the prepaid pharmacy service
organization's arrangements for pharmacy services and the proposed
schedule of charges used in connection with each pharmacy service
offered;
(B) Arrangements for maintenance of the minimum capital and
surplus required under section six of this article;
(C) Any arrangements which will guarantee the continuation of
benefits and payments to providers for services rendered both prior
to and after insolvency for the duration of the contract period for which payment has been made;
(4) The enrollees will be afforded an opportunity to
participate in matters of policy and operation pursuant to section
eight of this article;
(5) The prepaid pharmacy service organization has demonstrated
that it will assume full financial risk on a prospective basis for
the provision of pharmacy services: Provided, That notwithstanding
the requirement of this subdivision, a prepaid pharmacy service
organization may obtain reinsurance acceptable to the commissioner
from an accredited reinsurer or make other arrangements:
(A) For the cost of providing to any enrollee pharmacy
services, the aggregate value of which exceeds four thousand
dollars in any year;
(B) For the cost of providing pharmacy services to its
enrollees on a nonelective emergency basis; or
(C) For not more than ninety-five percent of the amount by
which the prepaid pharmacy service organization's costs for any of
its fiscal years exceed one hundred five percent of its income for
those fiscal years;
(6) The ownership, control and management of the prepaid
pharmacy service organization is competent and trustworthy and
possesses managerial experience that would make the proposed
organization operation beneficial to the subscribers. The
commissioner may, at his or her discretion, refuse to grant or
continue authority to transact the business of a prepaid pharmacy
service organization in this state at any time during which the
commissioner has probable cause to believe that the ownership, control or management of the organization includes any person whose
business operations are or have been marked by business practices
or conduct that is to the detriment of the public, stockholders,
investors or creditors; and
(c) A certificate of authority may be denied only after
compliance with the requirements of section twenty-three of this
article.
(d) No person who has not been issued a certificate of
authority may use the words "prepaid pharmacy service organization"
or the initials "PPSO" in its name, contracts, logo or literature:
Provided, That persons who are operating under a contract with,
operating in association with, enrolling enrollees for, or
otherwise authorized by a prepaid pharmacy service organization
licensed under this article to act on its behalf may use the terms
"prepaid pharmacy service organization" or "PPSO" for the limited
purpose of denoting or explaining their association or relationship
with the authorized prepaid pharmacy service organization. No
prepaid pharmacy service organization which has a minority of board
members who are consumers may use the words "consumer controlled"
in its name or in any way represent to the public that it is
controlled by consumers.
§33-25F-6. Minimum capital.
(a) Each prepaid pharmacy service organization shall have and
maintain fully paid-in capital stock, if a for-profit stock
corporation, or statutory surplus funds, if a nonprofit
corporation, totaling at least:
(1) The greater of one hundred thousand dollars or ten percent of its expenses for the previous twelve-month period as reported in
its most recent financial statement filed pursuant to subsection
(a), section twelve of this article up to a maximum total of the
required capital and surplus for an insurer under article three,
section five-b of this chapter; and
(b) For purposes of this section, "expenses" means those costs
set forth by the national association of insurance commissioners
(NAIC) in the statement of revenues, expenses and net worth
contained in the annual statement instruction - limited health
service organization and the official NAIC annual statement blanks
- limited health service organizations.
§33-25F-7. Powers of organization.
(a) Upon obtaining a certificate of authority as required
under this article, a prepaid pharmacy service organization may
enter into pharmacy service contracts in this state and engage in
any activities, consistent with the purposes and provisions of this
article, which are necessary to the performance of its obligations
under such contracts, subject to the limitations provided for in
this article: Provided, That nothing in this article authorizes
any prepaid pharmacy service organization to transact any insurance
other than that for which the organization is granted a certificate
of authority under this article.
(b) The commissioner may propose rules for legislative
approval in accordance with the provisions of article three,
chapter twenty-nine-a of this code, limiting or regulating the
powers of prepaid pharmacy service organizations which he or she
finds to be in the public interest. These rules may be proposed as emergency rules.
§33-25F-8. Governing body; enrollee participation.
(a) The governing body of any prepaid pharmacy service
organization may include enrollees, providers or other individuals.
(b) The governing body shall establish a mechanism to afford
the enrollees an opportunity to participate in matters of policy
and operation through the establishment of advisory panels, by the
use of advisory referenda on major policy decisions, or through the
use of other mechanisms as may be prescribed by the commissioner.
§33-25F-9. Fiduciary responsibilities of managers; fidelity bond.
A prepaid pharmacy service organization shall maintain a
blanket fidelity bond covering all directors, officers, managers
and employees of the organization who receive, collect, disburse or
invest funds in connection with the activities of the organization,
issued by an insurer licensed in this state or, if the fidelity
bond required by this subdivision is not available from an insurer
licensed in this state, a fidelity bond procured by an excess line
broker licensed in this state, in an amount at least equal to the
minimum amount of fidelity insurance as provided in the national
association of insurance commissioners handbook, as amended, or as
the commissioner may by rule, propose for legislative approval in
accordance with the provisions of article three, chapter
twenty-nine-a of this code, require.
§33-25F-10. Provider contracts.
(a) Whenever a contract exists between a prepaid pharmacy
service organization and a provider and the organization fails to
meet its obligations to pay fees for services already rendered to a subscriber, the prepaid pharmacy service organization is liable
for the fee or fees rather than the subscriber; and the contract
shall state that liability.
(b) No enrollee of a prepaid pharmacy service organization is
liable to any provider of a pharmacy service for any service
covered by the prepaid pharmacy service organization if at any time
during the provision of the service, the provider or its agents are
aware the individual to whom the service is provided is an enrollee
of a prepaid pharmacy service organization.
(c) If at any time during the provision of pharmacy services,
a provider or its agents are aware that the subscriber is a prepaid
pharmacy service organization enrollee for the service provided,
the provider of services or any agent or representative of the
provider may not collect or attempt to collect from a subscriber
any money for services covered by a prepaid pharmacy service
organization, and no provider or agent or representative of the
provider may maintain any action at law against a subscriber of a
prepaid pharmacy service organization to collect money owed to the
provider by a prepaid pharmacy service organization.
(d) Every contract between a prepaid pharmacy service
organization and a provider of a pharmacy service shall be in
writing and shall contain a provision that the subscriber is not
liable to the provider for any services covered by the subscriber's
contract with the prepaid pharmacy service organization.
(e) The provisions of this section do not apply to the amount
of any deductible or copayment not payable by the prepaid pharmacy
service organization pursuant to its contract with its subscriber.
(f) When a subscriber receives covered emergency health care
services from a noncontracting provider, the prepaid pharmacy
service organization is responsible for payment of the provider's
normal charges for the health care services, exclusive of any
applicable deductibles or copayments.
(g) For all provider contracts executed on or after the
effective date of this article and within one hundred eighty days
of that date for contracts in existence on that date:
(1) The contracts shall provide that the provider provide
sixty days advance written notice to the prepaid pharmacy service
organization and the commissioner before canceling the contract
with the prepaid pharmacy service organization for any reason; and
(2) The contract shall provide that nonpayment for goods or
services rendered by the provider to the prepaid pharmacy service
organization is not a valid reason for avoiding the sixty-day
advance notice of cancellation.
(h) Upon receipt by the prepaid pharmacy service organization
of a sixty-day cancellation notice, the prepaid pharmacy service
organization may, if requested by the provider, terminate the
contract in less than sixty days if the prepaid pharmacy service
organization is not financially impaired or insolvent.
§33-25F-11. Evidence of coverage; review of enrollee records;
charges for pharmacy services; cancellation of
contract by enrollee.
(a)(1) Every enrollee is entitled to evidence of coverage in
accordance with this section. The prepaid pharmacy service
organization or its designated representative shall issue the evidence of coverage.
(2) No evidence of coverage, or amendment thereto, shall be
issued or delivered to any person in this state until a copy of the
form of the evidence of coverage, or amendment thereto, has been
filed with and approved by the commissioner.
(3) An evidence of coverage shall contain a clear, concise and
complete statement of:
(A) The pharmacy services to which the enrollee is entitled;
(B) Any exclusions or limitations on the service, kind of
service, benefits, or kind of benefits, to be provided, including
any copayments;
(C) Where and in what manner information is available as to
how a service may be obtained;
(D) The total amount of payment and copayment, if any, for the
pharmacy services which the enrollee is obligated to pay with
respect to individual contracts, or an indication whether the plan
is contributory or noncontributory with respect to group
certificates;
(E) A description of the prepaid pharmacy service
organization's method for resolving enrollee grievances; and
(F) The following exact statement in bold print:
"Each subscriber or enrollee, by acceptance of the benefits
described in this evidence of coverage, consents to the examination
of his or her medical records for purposes of utilization review,
quality assurance and peer review by the prepaid pharmacy service
organization or its designee."
(4) Any subsequent approved change in an evidence of coverage shall be issued to each enrollee.
(5) A copy of the form of the evidence of coverage to be used
in this state, and any amendment thereto, is subject to the filing
and approval requirements of subdivision (2), subsection (a) of
this section, unless the commissioner promulgates a rule dispensing
with this requirement or unless it is subject to the jurisdiction
of the commissioner under the laws governing health insurance or
hospital, medical, dental or health service corporations, in which
event the filing and approval provisions of those laws apply. To
the extent, however, that those provisions do not apply the
requirements in subdivision (3), subsection (a) of this section,
are applicable.
(b)(1) Premiums for each pharmacy service offered may be
established in accordance with actuarial principles: Provided,
That premiums may not be excessive, inadequate, or unfairly
discriminatory. A certification by a qualified independent actuary
shall accompany a rate filing for each pharmacy service offered and
shall certify that:
(A) The rates are neither inadequate nor excessive nor
unfairly discriminatory;
(B) That the rates are appropriate for the classes of risks
for which they have been computed;
(C) Provide an adequate description of the rating methodology
showing that the methodology follows consistent and equitable
actuarial principles; and
(D) The rates being charged are actuarially adequate to the
end of the period for which rates have been guaranteed.
(c) Rates for particular pharmacy services are inadequate if
the premiums derived from the rating structure, plus investment
income, copayments, and revenues from coordination of benefits and
subrogation, fees-for-service and reinsurance recoveries are not
set at a level at least equal to the anticipated cost of benefits
for the pharmacy services during the period for which the rates are
to be effective and the other expenses which would be incurred if
other expenses were at the level for the current or nearest future
period during which the prepaid pharmacy service organization is
projected to make a profit. For this analysis, total investment
income added to premiums, copayments and revenues from coordination
of benefits and subrogation, fees-for-service and reinsurance
recoveries with respect to all pharmacy services offered may not
exceed three percent of the prepaid pharmacy service organization's
total projected revenues.
(d) The commissioner shall within a reasonable period approve
any form if the requirements of subsection (a) of this section are
met and any schedule of charges if the requirements of subsections
(b) and (c) of this section are met. It is unlawful to issue the
form or to use the schedule of charges until approved. If the
commissioner disapproves of the filing, he or she shall notify the
filer promptly. In the notice, the commissioner shall specify the
reasons for his or her disapproval and the findings of fact and
conclusions which support his or her reasons. A hearing will be
granted by the commissioner within forty-five days after a request
in writing, by the person filing, has been received by the
commission. If the commissioner does not disapprove any form or schedule of charges within sixty days of the filing of the forms or
charges, they are approved.
(e) The commissioner may require the submission of whatever
relevant information in addition to the schedule of charges which
he or she considers necessary in determining whether to approve or
disapprove a filing made pursuant to this section.
(f) An individual enrollee may cancel a contract with a
prepaid pharmacy service organization at any time for any reason:
Provided, That a prepaid pharmacy service organization may require
that the enrollee give thirty days advance notice: Provided,
however, That an individual enrollee whose premium rate was
determined pursuant to a group contract may cancel a contract with
a prepaid pharmacy service organization pursuant to the terms of
that contract.
§33-25F-12. Annual and quarterly reports.
Every prepaid pharmacy service organization shall comply with
and is subject to the provisions of section fourteen, article four
of this chapter relating to filing of financial statements with the
commissioner and the national association of insurance
commissioners. The annual financial statement required by that
section shall include, but not be limited to, the following:
(a) A statutory financial statement of the organization,
including its balance sheet and receipts and disbursements for the
preceding year certified by an independent certified public
accountant, reflecting at least:
(1) All prepayment and other payments received for pharmacy services rendered;
(2) Expenditures to all providers, by classes or groups of
providers, and insurance companies or nonprofit health service plan
corporations engaged to fulfill obligations arising out of the
pharmacy service contract;
(3) Expenditures for capital improvements, or additions
thereto, including, but not limited to, construction, renovation or
purchase of facilities and capital equipment; and
(4) The organization's fidelity bond;
(b) The number of new enrollees enrolled during the year, the
number of enrollees as of the end of the year and the number of
enrollees terminated during the year on a form prescribed by the
commissioner;
(c) A summary of information compiled pursuant to subdivision
(3), subsection (a), section five of this article in such form as
the commissioner requires;
(d) A report of the names and residence addresses of all
persons set forth in subdivision (3), subsection (d), section three
of this article who were associated with the prepaid pharmacy
service organization during the preceding year, and the amount of
wages, expense reimbursements, or other payments to those
individuals for services to the prepaid pharmacy service
organization, including a full disclosure of all financial
arrangements during the preceding year required to be disclosed
pursuant to subdivision (3), subsection (d), section three of this
article; and
(e) Other information relating to the performance of the prepaid pharmacy service organization as is reasonably necessary to
enable the commissioner to carry out his or her duties under this
article.
§33-25F-13. Annual report to enrollees.
Every prepaid pharmacy service organization or its
representative shall annually, before the first day of April, make
available to, via the internet or otherwise, each enrollee a
summary of: Its most recent annual financial statement, including
a balance sheet and statement of receipts and disbursements; a
description of the prepaid pharmacy service organization, the
pharmacy service offered, its facilities and personnel for each
pharmacy service offered, any material changes therein since the
last report, the current evidence of coverage for pharmacy
services, and a clear and understandable description of the prepaid
pharmacy service organization's method for resolving enrollee
complaints: Provided, That with respect to enrollees who have been
enrolled through contracts between a prepaid pharmacy service
organization and an employer, the prepaid pharmacy service
organization satisfies the requirement of this section by providing
the requisite summary to each enrolled employee: Provided,
however, That with respect to medicaid recipients enrolled under a
group contract between a prepaid pharmacy service organization and
the governmental agency responsible for administering the medicaid
program, the prepaid pharmacy service organization satisfies the
requirement of this section by providing the requisite summary to
each local office of the governmental agency responsible for administering the medicaid program for inspection by enrollees of
the prepaid pharmacy service organization.
§33-25F-14. Grievance procedure.
(a) A prepaid pharmacy service organization shall establish
and maintain a grievance procedure, which has been approved by the
commissioner, to provide adequate and reasonable procedures for the
expeditious resolution of written grievances initiated by enrollees
concerning any matter relating to any provisions of the
organization's pharmacy service contracts, including, but not
limited to, claims regarding the scope of coverage for health care
services; denials, cancellations or nonrenewals of enrollee
coverage; observance of an enrollee's rights as a patient; and the
quality of the services rendered.
(b) A detailed description of the prepaid pharmacy service
organization's subscriber grievance procedure shall be included in
all group and individual contracts as well as any certificate or
member handbook provided to subscribers. This procedure shall be
administered at no cost to the subscriber. A prepaid pharmacy
service organization subscriber grievance procedure shall include
the following:
(1) Both informal and formal steps shall be available to
resolve the grievance. A grievance is not considered formal until
a written grievance is executed by the subscriber or completed on
forms prescribed and received by the prepaid pharmacy service
organization;
(2) Each prepaid pharmacy service organization shall designate
at least one grievance coordinator who is responsible for the implementation of the prepaid pharmacy service organization's
grievance procedure;
(3) Phone numbers shall be specified by the prepaid pharmacy
service organization for the subscriber to call to present an
informal grievance or to contact the grievance coordinator. Each
phone number shall be toll free within the subscriber's geographic
area and provide reasonable access to the prepaid pharmacy service
organization without undue delays. There shall be an adequate
number of phone lines to handle incoming grievances;
(4) An address shall be included for written grievances;
(5) Each level of the grievance procedure shall have some
person with problem solving authority to participate in each step
of the grievance procedure;
(6) The prepaid pharmacy service organization shall process
the formal written subscriber grievance through all phases of the
grievance procedure in a reasonable length of time not to exceed
forty-five days, unless the subscriber and prepaid pharmacy service
organization mutually agree to extend the time frame. If the
complaint involves the collection of information outside the
service area, the prepaid pharmacy service organization has thirty
additional days to process the subscriber complaint through all
phases of the grievance procedure. The time limitations prescribed
in this subdivision requiring completion of the grievance process
within sixty days are tolled after the prepaid pharmacy service
organization has notified the subscriber, in writing, that
additional information is required in order to properly complete
review of the grievance. Upon receipt by the prepaid pharmacy service organization of the additional information requested, the
time for completion of the grievance process set forth in this
subdivision resumes;
(7) The subscriber grievance procedure shall state that the
subscriber has the right to appeal to the commissioner within
thirty days of receipt by the subscriber of a written ruling by the
prepaid pharmacy service organization which denies, in whole or in
part, relief requested by the subscriber in a formal written
subscriber grievance. There shall be the additional requirement
that subscribers under a group contract between the prepaid
pharmacy service organization and a department or division of the
state shall first appeal to the state agency responsible for
administering the relevant program, and if either party is not
satisfied with the outcome of the appeal, the unsatisfied party may
appeal to the commissioner. The prepaid pharmacy service
organization shall provide the subscriber a written notice of the
right to appeal upon completion of the full grievance procedure and
supply the commissioner with a copy of the final decision letter.
A subscriber has thirty days after receipt of the written notice to
appeal to the commissioner if the prepaid pharmacy service
organization's ruling denies the relief requested by the
subscriber, in whole or in part;
(8) The prepaid pharmacy service organization shall have
provider involvement in reviewing grievances related to a
provider's services;
(9) The prepaid pharmacy service organization shall offer to
meet with the subscriber during the formal grievance process. The location of the meeting shall be at the administrative offices of
the prepaid pharmacy service organization within the service area
or at a location within the service area which is convenient to the
subscriber;
(10) The prepaid pharmacy service organization may not
establish time limits of less than one year from the date of
occurrence for the subscriber to file a formal grievance. The date
of occurrence is the date upon which a claim, service or other
matter sought by the subscriber was denied by the prepaid pharmacy
service organization or date of occurrence of the event which gave
rise to the grievance;
(11) Each prepaid pharmacy service organization shall maintain
an accurate record of each formal grievance. Each record shall
include the following:
(A) A complete description of the grievance, the subscriber's
name and address, the provider's name and address and the prepaid
pharmacy service organization's name and address;
(B) A complete description of the prepaid pharmacy service
organization's factual findings and conclusions after completion of
the full formal grievance procedure;
(C) A complete description of the prepaid pharmacy service
organization's conclusions pertaining to the grievance as well as
the prepaid pharmacy service organization's final disposition of
the grievance; and
(D) A statement as to which levels of the grievance procedure
the grievance has been processed and how many more levels of the
grievance procedure are remaining before the grievance has been processed through the prepaid pharmacy service organization's
entire grievance procedure;
(12) Copies of the grievances and the responses thereto shall
be available to the commissioner and the public for inspection for
three years.
(c) Any subscriber grievance in which time is of the essence
shall be handled on an expedited basis, so that a reasonable person
would believe that a prevailing subscriber would be able to realize
the full benefit of a decision in his or her favor.
(d) Each prepaid pharmacy service organization shall submit to
the commissioner an annual report in a form prescribed by the
commissioner which describes the grievance procedure and contains
a compilation and analysis of the grievances filed, their
disposition and their underlying causes.
(e) If a dispute arises during a weekend concerning whether a
subscriber is to be provided a prescribed drug, the prepaid
pharmacy services organization must provide a three-day supply of
the drug.
§33-25F-15. Prohibited practices.
(a) No prepaid pharmacy service organization, or
representative thereof, may cause or knowingly permit the use of
advertising which is untrue or misleading, solicitation which is
untrue or misleading, or any form of evidence of coverage which is
deceptive. No advertising may be used until it has been approved
by the commissioner. Advertising which has not been disapproved by
the commissioner within sixty days of filing is considered
approved. For purposes of this article:
(1) A statement or item of information is untrue if it does
not conform to fact in any respect which is or may be significant
to an enrollee of, or person considering enrollment in, a prepaid
pharmacy service organization;
(2) A statement or item of information is misleading, whether
or not it may be literally untrue, if, in the total context in
which the statement is made or the item of information is
communicated, the statement or item of information may be
reasonably understood by a reasonable person, not possessing
special knowledge regarding health care coverage, as indicating any
benefit or advantage or the absence of any exclusion, limitation,
or disadvantage of possible significance to an enrollee of, or
person considering enrollment in, a prepaid pharmacy service
organization, if the benefit or advantage or absence of limitation,
exclusion or disadvantage does not in fact exist;
(3) An evidence of coverage is deceptive if the evidence of
coverage taken as a whole, and with consideration given to
typography and format, as well as language, causes a reasonable
person, not possessing special knowledge regarding prepaid pharmacy
service organizations, and evidences of coverage therefor, to
expect benefits, services or other advantages which the evidence of
coverage does not provide or which the prepaid pharmacy service
organization issuing the evidence of coverage does not regularly
make available for enrollees covered under the evidence of
coverage; and
(4) The commissioner may further define practices which are
untrue, misleading or deceptive.
(b)(1) No prepaid pharmacy service organization may cancel or
fail to renew the coverage of an enrollee except for:
(A) Failure to pay the charge for health care coverage;
(B) Termination of the prepaid pharmacy service organization;
(C) Termination of the group plan;
(D) Enrollee moving out of the area served;
(E) Enrollee moving out of an eligible group; or
(F) Other reasons established in rules promulgated by the
commissioner.
(2) No prepaid pharmacy service organization may use any
technique of rating or grouping to cancel or fail to renew the
coverage of an enrollee. An enrollee shall be given thirty days'
notice of any cancellation or nonrenewal and the notice shall
include the reasons for the cancellation or nonrenewal: Provided,
That each enrollee moving out of an eligible group shall be granted
the opportunity to enroll in the prepaid pharmacy service
organization on an individual basis. A prepaid pharmacy service
organization may not disenroll an enrollee for nonpayment of
copayments unless the enrollee has failed to make payment in at
least three instances over any twelve-month period. Any enrollee
wrongfully disenrolled shall be reenrolled.
(c)(1) No prepaid pharmacy service organization may use in its
name, contracts, logo or literature any of the words "insurance,"
"casualty," "surety," "mutual" or any other words which are
descriptive of the insurance, casualty or surety business or
deceptively similar to the name or description of any insurance or
surety corporation doing business in this state: Provided, That when a prepaid pharmacy service organization has contracted with
another insurer for any coverage permitted by this article, it may
so state; and
(2) No person who has not been issued a certificate of
authority under this article may use the words "prepaid pharmacy
service organization" or the initials "PPSO" in its name,
contracts, logo or literature to imply, directly or indirectly,
that it is a prepaid pharmacy service organization or hold itself
out to be a prepaid pharmacy service organization.
(d) The providers of a prepaid pharmacy service organization
who provide pharmacy services and the prepaid pharmacy service
organization do not have recourse against enrollees for amounts
above those specified in the evidence of coverage as the periodic
prepayment or copayment for pharmacy services.
(e) No prepaid pharmacy service organization may discriminate
in enrollment policies or quality of services against any person on
the basis of race, sex, age, religion, place of residence, health
status or source of payment: Provided, That differences in rates
based on valid actuarial distinctions, including distinctions
relating to age and sex, are not considered discrimination in
enrollment policies.
(f)(1) No agent of a prepaid pharmacy service organization or
person selling enrollments in a prepaid pharmacy service
organization may sell an enrollment in a prepaid pharmacy service
organization unless the agent or person first discloses in writing
to the prospective purchaser the following information using the
following exact terms in bold print:
(A) "Services offered," including any exclusions or
limitations;
(B) "Full cost," including copayments;
(C) "Facilities available and hours of services";
(D) "Disenrollment rate"; and
(2) In any home solicitation, any three-day cooling-off period
applicable to consumer transactions generally applies in the same
manner as consumer transactions.
(3) The form disclosure statement may not be used in sales
until it has been approved by the commissioner. Any person who
fails to disclose the requisite information prior to the sale of an
enrollment may be held liable in an amount equivalent to one year's
subscription rate to the prepaid pharmacy service organization,
plus costs and a reasonable attorney's fee.
(g) No contract with an enrollee may prohibit an enrollee from
canceling his or her enrollment at any time for any reason except
that the contract may require thirty days' notice to the prepaid
pharmacy service organization.
(h) No contract with an enrollee may contain any provision
purporting to make any portion of the articles of incorporation,
charter, bylaws or other organizational document of the prepaid
pharmacy service organization a part of the contract unless the
provision is set forth in full in the contract.
(i) Any person who in connection with an enrollment violates
any subsection of this section may be held liable for an amount
equivalent to one year's subscription rate, plus costs and a
reasonable attorney's fee.
§33-25F-16. Agent licensing and appointment required; regulation
of marketing.
(a) Prepaid pharmacy service organizations are subject to the
provisions of article twelve of this chapter; provided, that state
agencies may contract directly with prepaid pharmacy service
organizations.
(b) With respect to individual or group contracts covering
fewer than twenty-five subscribers, after a subscriber signs a
prepaid pharmacy service organization enrollment application and
before the prepaid pharmacy service organization may process the
application changing or initiating the subscriber coverage, each
prepaid pharmacy service organization shall verify in writing, in
a form prescribed by the commissioner, the intent and desire of the
individual subscriber to join the prepaid pharmacy service
organization. The verification shall be conducted by someone
outside the prepaid pharmacy service organization's marketing
department and shall show that:
(1) The subscriber intends and desires to join the prepaid
pharmacy service organization;
(2) If the subscriber is a medicare or medicaid recipient, the
subscriber understands that by joining the prepaid pharmacy service
organization he or she will be limited to the benefits provided by
the prepaid pharmacy service organization, and medicare or medicaid
will pay the prepaid pharmacy service organization for the
subscriber coverage;
(3) The subscriber understands the applicable restrictions of
prepaid pharmacy service organizations, especially that he or she must use the prepaid pharmacy service organization providers and
secure approval from the prepaid pharmacy service organization to
use pharmacy providers outside the plan; and
(4) If the subscriber is a member of a prepaid pharmacy
service organization, the subscriber understands that he or she is
transferring to another prepaid pharmacy service organization.
(c) The prepaid pharmacy service organization may not pay a
commission, fee, money or any other form of scheduled compensation
to any health insurance agent until the subscriber's application
has been processed and the prepaid pharmacy service organization
has confirmed the subscriber's enrollment by written notice in the
form prescribed by the commissioner. The confirmation notice shall
be accompanied by the evidence of coverage required by section
eleven of this article and shall confirm:
(1) The subscriber's transfer from his or her existing
coverage, such as from medicare, medicaid, another prepaid pharmacy
service organization, etc., to the new prepaid pharmacy service
organization; and
(2) The date enrollment begins and when benefits will be
available.
(d) The enrollment process is considered complete seven days
after the prepaid pharmacy service organization mails the
confirmation notice and evidence of coverage to the subscriber.
Each prepaid pharmacy service organization is directly responsible
for enrollment abuses.
(e) The commissioner may propose rules for legislative
approval in accordance with the provisions of article three, chapter twenty-nine-a of this code, to regulate marketing of
prepaid pharmacy service organizations by persons compensated
directly or indirectly by the prepaid pharmacy service
organization. The rules may prohibit door-to-door solicitations,
may prohibit commission sales, and may provide for other
proscriptions required to effectuate the purposes of this article.
§33-25F-17. Powers of insurers, hospital service corporations,
medical service corporations, dental service
corporations, health service corporations and
health maintenance organizations.
(a) An insurance company licensed in this state, a hospital,
medical, dental or health service corporation authorized to do
business in this state or a health maintenance organization holding
a certificate of authority under article twenty-five-a of this
chapter, after applying for and receiving a certificate of
authority as a prepaid pharmacy service organization, may through
a subsidiary or affiliate organize and operate a prepaid pharmacy
service organization under the provisions of this article.
Notwithstanding any other law to the contrary, any two or more
insurance companies, hospital, medical, dental or health service
corporations, health maintenance organizations or subsidiaries or
affiliates thereof, may jointly organize and operate a prepaid
pharmacy service organization. The business of insurance is
considered to include the providing of health care by a prepaid
pharmacy service organization owned or operated by an insurer or a
subsidiary of the insurer.
(b) Notwithstanding any provision of insurance, hospital, medical, dental or health service corporation or health maintenance
organization laws, an insurer, a hospital, medical, dental or
health service corporation or a health maintenance organization may
contract with a prepaid pharmacy service organization to provide
insurance or similar protection against the cost of care provided
through prepaid pharmacy service organizations and to provide
coverage in the event of the failure of the prepaid pharmacy
service organization to meet its obligations. The enrollees of a
prepaid pharmacy service organization constitute a permissible
group under those laws. Under the contracts, the insurer or
hospital, medical, dental or health service corporation or health
maintenance organization may make benefit payments to prepaid
pharmacy service organizations for pharmacy services rendered by
providers.
(c) Notwithstanding any provision of insurance, hospital,
medical, dental or health service corporation or health maintenance
organization laws, an insurer, a hospital, medical, dental or
health service corporation or a health maintenance organization may
not exclude in any contract or policy issued to a group, any
coverage which would duplicate the coverage of a prepaid pharmacy
service organization, whether for services, supplies or
reimbursement, to the extent that the coverage or service is
provided in accordance with this chapter pursuant to a contract or
policy issued to the same group or to a part of that group by a
prepaid pharmacy service organization. The coverage under such
other contract shall be considered primary and the coverage of the
prepaid pharmacy service organization secondary.
§33-25F-18. Examinations.
(a) The commissioner may make an examination of the affairs of
any prepaid pharmacy service organization and providers with whom
the organization has contracts, agreements or other arrangements as
often as he or she considers it necessary for the protection of the
interests of the people of this state but not less frequently than
once every three years.
(b) The commissioner may contract with the department of
health and human resources, any entity which has been accredited by
a nationally recognized accrediting organization and has been
approved by the commissioner to make examinations concerning the
quality of pharmacy services of any prepaid pharmacy service
organization and providers with whom the organization has
contracts, agreements or other arrangements, or any entity
contracted with by the department of health and human resources, as
often as it considers necessary for the protection of the interests
of the people of this state, but not less frequently than once
every three years: Provided, That in making the examination, the
department of health and human resources or the accredited entity
shall utilize the services of persons or organizations with
demonstrable expertise in assessing quality of health care.
(c) Every prepaid pharmacy service organization and affiliated
provider shall submit its books and records to the examinations and
in every way facilitate them. For the purpose of examinations, the
commissioner and the department of health and human resources have
all powers necessary to conduct the examinations, including, but
not limited to, the power to issue subpoenas, the power to administer oaths to and examine the officers and agents of the
prepaid pharmacy service organization and the principals of the
providers concerning their business.
(d) The prepaid pharmacy service organization is subject to
the provisions of section nine, article two of this chapter in
regard to the expense and conduct of examinations.
(e) In lieu of the examination, the commissioner may accept
the report of an examination made by another state.
(f) The expenses of an examination assessing quality of health
care under subsection (b) of this section and section nineteen of
this article shall be reimbursed pursuant to subdivision (5),
subsection (i), section nine, article two of this chapter.
§33-25F-19. Quality assurance.
(a) Each prepaid pharmacy service organization shall have in
writing a quality assurance program approved by the commissioner
which describes the program's objectives, organization and problem
solving activities.
(b) The scope of the quality assurance program shall include,
at a minimum:
(1) Organizational arrangements and responsibilities for
quality management and improvement processes;
(2) A documented utilization management program;
(3) A written policy that addresses enrollees' rights and
responsibilities; and
(4) Any other criteria considered necessary by the
commissioner.
§33-25F-20. Suspension or revocation of certificate of authority.
(a) The commissioner may suspend or revoke any certificate of
authority issued to a prepaid pharmacy service organization under
this article if he or she finds that any of the following
conditions exist:
(1) The prepaid pharmacy service organization is operating
significantly in contravention of its basic organizational
document, in any material breach of contract with an enrollee, or
in a manner contrary to that described in and reasonably inferred
from any other information submitted under section three of this
article unless amendments to the submissions have been filed with
an approval of the commissioner;
(2) The prepaid pharmacy service organization issues an
evidence of coverage or uses a schedule of premiums pharmacy
services which do not comply with the requirements of section
eleven of this article;
(3) The prepaid pharmacy service organization does not provide
or arrange for those pharmacy services which it has contracted to
provide to enrollees;
(4) The department of health and human resources or other
accredited entity certifies to the commissioner that:
(A) The prepaid pharmacy service organization is unable to
fulfill its obligations to furnish pharmacy services as required
under its contract with enrollees; or
(B) The prepaid pharmacy service organization does not meet
the requirements of subsection (a), section five of this article;
(5) The prepaid pharmacy service organization is no longer
financially responsible and may reasonably be expected to be unable to meet its obligations to enrollees or prospective enrollees or is
otherwise determined by the commissioner to be in a hazardous
financial condition;
(6) The prepaid pharmacy service organization has failed to
implement a mechanism affording the enrollees an opportunity to
participate in matters of policy and operation under section eight
of this article;
(7) The prepaid pharmacy service organization has failed to
implement the grievance procedure required by section fourteen of
this article in a manner to reasonably resolve valid grievances;
(8) The prepaid pharmacy service organization, or any person
on its behalf, has advertised or merchandised its services in an
untrue, misrepresentative, misleading, deceptive or unfair manner;
(9) The continued operation of the prepaid pharmacy service
organization would be hazardous to its enrollees;
(10) The prepaid pharmacy service organization has otherwise
failed to substantially comply with this article;
(11) The prepaid pharmacy service organization has violated a
lawful order of the commissioner; or
(12) The prepaid pharmacy service organization has failed to
implement or maintain a quality assurance program considered
satisfactory by the commissioner which meets the minimum standards
set forth in section nineteen of this article.
(b) A certificate of authority may be suspended or revoked
only after compliance with the requirements of section twenty-three
of this article.
(c) When the certificate of authority of a prepaid pharmacy service organization is suspended, the prepaid pharmacy service
organization may not, during the period of the suspension, enroll
any additional enrollees except newborn children or other newly
acquired dependents of existing enrollees, and may not engage in
any advertising or solicitation.
(d) When the certificate of authority of a prepaid pharmacy
service organization is revoked, the organization shall proceed,
immediately following the effective date of the order of
revocation, to terminate its affairs, and may conduct no further
business except as may be essential to the orderly conclusion of
the affairs of the organization. It may engage in no further
advertising or solicitation. The commissioner may, by written
order, permit further operation of the organization as he or she
may find to be in the best interests of enrollees, to the end that
enrollees will be afforded the greatest practical opportunity to
obtain continuing pharmacy service coverage.
§33-25F-21. Rehabilitation, liquidation or conservation of
prepaid pharmacy service organization.
Any rehabilitation, liquidation or conservation of a prepaid
pharmacy service organization is considered to be the
rehabilitation, liquidation or conservation of an insurance
company, is the exclusive remedy for rehabilitation, liquidation
and conservation of a prepaid pharmacy service organization as
provided by this article and shall be conducted under the
supervision of the commissioner pursuant to the law governing the
rehabilitation, liquidation or conservation of insurance companies.
The commissioner may apply for an order directing him or her to rehabilitate, liquidate or conserve a prepaid pharmacy service
organization upon any one or more grounds set out in the
rehabilitation statutes or when, in his or her opinion, the
continued operation of the prepaid pharmacy service organization
would be hazardous either to the enrollees or to the people of this
state.
§33-25F-22. Rules.
The commissioner may propose rules for legislative approval
in accordance with the provisions of article three, chapter
twenty-nine-a of this code:
(1) To effectuate the purposes of this article and to prevent
circumvention and evasion thereof; and
(2) To define the commissioner's authority to consider the
operating results of a prepaid pharmacy service organization's
affiliates and subsidiaries in the rate making and solvency
determination of that prepaid pharmacy service organization.
§33-25F-23. Administrative procedures.
(a) When the commissioner has cause to believe that grounds
for the denial of an application for a certificate of authority
exist, or that grounds for the suspension or revocation of a
certificate of authority exist, he or she shall notify the prepaid
pharmacy service organization in writing specifically stating the
grounds for denial, suspension or revocation and fixing a time of
at least twenty days thereafter for a hearing on the matter.
(b) After the hearing, or upon the failure of the prepaid
pharmacy service organization to appear at the hearing, the
commissioner shall take action as is considered advisable on written findings which shall be mailed to the prepaid pharmacy
service organization. The action of the commissioner is subject to
review. The court may modify, affirm or reverse the order of the
commissioner, in whole or in part.
(c) Proceedings under this article are governed by the
provisions of section thirteen, article two of this chapter.
§33-25F-24. Fees.
Every prepaid pharmacy service organization subject to this
article shall pay to the commissioner the following fees:
(1) For filing an application for a certificate of authority
or amendment thereto, two hundred dollars;
(2) For each renewal of a certificate of authority, the annual
fee as provided in section thirteen, article three of this chapter;
(3) For each form filing and for each rate filing, the fee as
provided in section thirty-four, article six of this chapter; and
(4) For filing each annual report, twenty-five dollars.
Fees charged under this section are for the purposes set forth
in section thirteen, article three of this chapter.
§33-25F-25. Penalties and enforcement.
(a) The commissioner may, in lieu of suspension or revocation
of a certificate of authority under section twenty of this article,
levy an administrative penalty in an amount not less than one
hundred dollars nor more than five thousand dollars, if reasonable
notice in writing is given of the intent to levy the penalty and
the prepaid pharmacy service organization has a reasonable time
within which to remedy the defect in its operations which gave rise
to the penalty citation. The commissioner may augment this penalty by an amount equal to the sum that he or she calculates to be the
damages suffered by enrollees or other members of the public.
(b) Any person who violates any provision of this article is
guilty of a misdemeanor and, upon conviction thereof, shall be
fined not less than one thousand dollars nor more than ten thousand
dollars, or confined in the regional or county jail not more than
one year, or both fined and confined.
(c)(1) If the commissioner, for any reason, has cause to
believe that any violation of this article or rules promulgated
pursuant thereto has occurred or is threatened, prior to the levy
of a penalty or suspension or revocation of a certificate of
authority, the commissioner may give notice to the prepaid pharmacy
service organization and to the representatives, or other persons
who appear to be involved in the suspected violation, to arrange a
conference with the alleged violators or their authorized
representatives for the purpose of attempting to ascertain the
facts relating to the suspected violation and, in the event it
appears that any violation has occurred or is threatened, to arrive
at an adequate and effective means of correcting or preventing the
violation.
(2) Proceedings under this subsection are not governed by any
formal procedural requirements, and may be conducted in a manner as
the commissioner considers appropriate under the circumstances.
Enrollees shall be afforded notice by publication of proceedings
under this subsection and shall be afforded the opportunity to
intervene.
(d)(1) The commissioner may issue an order directing a prepaid pharmacy service organization or a representative of a prepaid
pharmacy service organization to cease and desist from engaging in
any act or practice in violation of the provisions of this article
or rules promulgated pursuant to this article.
(2) Within ten days after service of the order of cease and
desist, the respondent may request a hearing on the question of
whether acts or practices in violation of this article have
occurred. The hearings shall be conducted pursuant to section
thirteen, article two of this chapter.
(e) In the case of any violation of the provisions of this
article or rules promulgated pursuant to this article, if the
commissioner elects not to issue a cease and desist order, or in
the event of noncompliance with a cease and desist order issued
pursuant to subsection (d) of this section, the commissioner may
institute a proceeding to obtain injunctive relief, or seek other
appropriate relief, in the circuit court of Kanawha County or the
county of the principal place of business of the prepaid pharmacy
service organization.
(f) Any enrollee of or resident of this state may bring an
action against the prepaid pharmacy service organization to enforce
any provision, standard or rule enforceable by the commissioner:
Provided, That this subsection does not authorize a civil action
against the commissioner, his or her employees or any other agency
or instrumentality of this state. In the case of any successful
action to enforce this article, or accompanying standards or rules,
the individual shall be awarded the costs of the action together
with a reasonable attorney's fee as determined by the court.
§33-25F-26. Statutory construction and relationship to other laws.
(a) Except as otherwise provided in this article, provisions
of the insurance laws, provisions of hospital, medical, dental or
health service corporation laws and provisions of health
maintenance organization laws are not applicable to any prepaid
pharmacy service organization granted a certificate of authority
under this article. The provisions of this article do not apply to
an insurer, hospital, medical, dental or health service corporation
or health maintenance organization licensed and regulated pursuant
to the insurance laws, hospital, medical, dental or health service
corporation laws or health maintenance organization laws of this
state except with respect to its prepaid pharmacy service
corporation activities authorized and regulated pursuant to this
article. The provisions of this article do not apply to an entity
properly licensed by a reciprocal state to provide a pharmacy care
service to employer groups, where residents of West Virginia are
members of an employer group, and the employer group contract is
entered into in the reciprocal state. For purposes of this
subsection, a "reciprocal state" means a state which physically
borders West Virginia and which has subscriber or enrollee hold
harmless requirements substantially similar to those set out in
section ten of this article.
(b) Factually accurate advertising or solicitation regarding
the range of services provided, the premiums and copayments
charged, the sites of services and hours of operation, and any
other quantifiable, nonprofessional aspects of its operation by a
prepaid pharmacy service organization granted a certificate of authority, or its representative do not violate any provision of
law relating to solicitation or advertising by health professions:
Provided, That nothing contained in this subsection authorizes any
solicitation or advertising which identifies or refers to any
individual provider or makes any qualitative judgment concerning
any provider.
(c) Any prepaid pharmacy service organization authorized under
this article is not considered to be practicing medicine and is
exempt from the provision of chapter thirty of this code, relating
to the practice of medicine.
(d) The provisions of section nine, article two, examinations;
section thirteen, article two, hearings; sections fifteen and
twenty, article four, general provisions; section twenty, article
five, borrowing by insurers; section seventeen, article six,
noncomplying forms; article seven, assets and liabilities; article
eight, investments; article nine, administration of deposits;
article ten, rehabilitation and liquidation; article twelve,
agents, brokers, solicitors and excess line; section sixteen,
article fifteen, coverage of children; section eighteen, article
fifteen, equal treatment of state agency; section nineteen,
article fifteen, coordination of benefits with medicaid; article
fifteen-b, uniform health care administration act; section three,
article sixteen, required policy provisions; section eleven,
article sixteen, coverage of children; section thirteen, article
sixteen, equal treatment of state agency; section fourteen, article
sixteen, coordination of benefits with medicaid; article sixteen-a,
group health insurance conversion; article twenty-seven, insurance holding company systems; article thirty-three, annual audited
financial report; article thirty-four, administrative supervision;
article thirty-four-a, standards and commissioner's authority for
companies deemed to be in hazardous financial condition; article
thirty-five, criminal sanctions for failure to report impairment;
article thirty-seven, managing general agents; article thirty-nine,
disclosure of material transactions; and article forty-one,
privileges and immunity, all of this chapter are applicable to any
prepaid pharmacy service organization granted a certificate of
authority under this article. In circumstances where the code
provisions made applicable to prepaid pharmacy service
organizations by this section refer to the "insurer," the
"corporation" or words of similar import, the language includes
prepaid pharmacy service organizations.
(e) A prepaid pharmacy service organization granted a
certificate of authority under this article is exempt from paying
municipal business and occupation taxes on gross income it receives
from its enrollees, or from their employers or others on their
behalf, for health care items or services provided directly or
indirectly by the prepaid pharmacy service organization.
§33-25F-27. Filings and reports as public documents.
All applications, filings and reports required under this
article are public documents: Provided, That where the provisions
of other articles in this chapter are applicable to prepaid
pharmacy service organizations, all applications, filings and
reports required under those articles shall be afforded the level
of confidentiality as provided in those articles.
§33-25F-28. Confidentiality of medical information.
(a) Any data or information pertaining to the diagnosis,
treatment or health of any enrollee or applicant obtained from that
person or from any provider by any prepaid pharmacy service
organization shall be held in confidence and may not be disclosed
to any person except:
(1) To the extent that it may be necessary to facilitate an
assessment of the quality of care delivered pursuant to section
eighteen, of this article or to review the grievance procedure
pursuant to section fourteen of this article;
(2) Upon the express written consent of the enrollee or his or
her legally authorized representative;
(3) Pursuant to statute or court order for the production of
evidence or the discovery thereof;
(4) In the event of claim or litigation between that person
and the prepaid pharmacy service organization where the data or
information is pertinent;
(5) To a department or division of the state pursuant to the
terms of a group contract for the provision of health care services
between the prepaid pharmacy service organization and the
department or division of the state; or
(6) For a medicaid recipient enrolled under a group contract
between a prepaid pharmacy service organization and the
governmental agency responsible for administering the medicaid
program, in accordance with confidentiality rules applicable to the
medicaid program.
(b) A prepaid pharmacy service organization is entitled to claim any statutory privileges against the disclosure which the
provider who furnished the information to the prepaid pharmacy
service organization is entitled to claim.
(c) Any information provided to the division of insurance that
is part of the division investigation or examination is
confidential and exempt from disclosure under subsection (a) of
this section or otherwise until the investigation is completed or
ceases to be active. For purposes of this subsection, an
investigation is considered "active" while the investigation is
being conducted by the division with a reasonable, good faith
belief that it may lead to the filing of administrative, civil or
criminal proceedings. An investigation does not cease to be active
if the division is proceeding with reasonable dispatch and there is
a good faith belief that action may be initiated by the division or
other administrative or law-enforcement agency. After an
investigation or examination is completed or ceases to be active,
portions of the records relating to the investigation or
examination remain confidential and are exempt from disclosure
under subsection (a) of this section or otherwise if the disclosure
would:
(1) Jeopardize the integrity of another active investigation;
(2) Impair the safety and financial soundness of the licensee
or affiliated party;
(3) Reveal personal financial information;
(4) Reveal the identity of a confidential source;
(5) Defame or cause unwarranted damage to the good name or
reputation of an individual or jeopardize the safety of an individual; or
(6) Reveal investigative techniques or procedures.
§33-25F-29. Authority to contract with prepaid pharmacy service
organizations under medicaid.
Departments and agencies of the state including, but not
limited to, the public employees insurance agency, and the
department of health and human resources are authorized to enter
into contracts with prepaid pharmacy service organizations
certified and permitted to market under the laws of this state, and
to furnish to recipients of medical assistance under Title XIX of
the Social Security Act, 42 U.S.C. §1396, et seq., pharmacy
services offered to such recipients under the medical assistance
plan of West Virginia.
§33-25F-30. Authority of commissioner to propose rules regarding
affiliate and subsidiary operating results.
The commissioner may after notice and hearing propose rules
for legislative approval in accordance with the provisions of
article three, chapter twenty-nine-a of this code to define the
commissioner's authority to consider the operating results of an
insurer's affiliates and subsidiaries in the rate making and
solvency determination of that insurer.
§33-25F-31. Expiration and repeal of the article.
If there are no prepaid pharmacy service organizations
operating with a valid certificate of authority on or before the
thirty-first day of December, two thousand three, this article
shall expire on that date and be considered repealed.
NOTE: The purpose of this bill is to permit the operation of
prepaid pharmacy service organizations in this State and to provide
for their regulation.
This article is new; therefore, strike-throughs and
underscoring have been omitted.