WSR 99-03-006
PROPOSED RULES
INSURANCE COMMISSIONER'S OFFICE
[Insurance Commissioner Matter No. R 98-6--Filed January 7, 1999, 2:56 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 98-07-063.
Title of Rule: Pharmacy benefit standards.
Purpose: The proposed rules would seek to increase uniformity in the terminology used in the advertising of pharmacy benefits. This will increase the understanding of the consumer who read, hear, or view the advertisement.
Other Identifying Information: Insurance Commissioner Matter No. R 98-6.
Statutory Authority for Adoption: RCW 48.02.060, 48.30.010, 48.44.050, 48.46.200.
Statute Being Implemented: RCW 48.30.040, 48.44.110, 48.46.400.
Summary: These proposed rules will simplify pharmacy benefit descriptions used in advertising by establishing definitions for terms commonly used to describe these benefits.
Reasons Supporting Proposal: Consumers, providers and insurers have all been frustrated with the advertising of pharmacy benefits. The current confusion caused by the advertising of pharmacy benefits has lead to numerous consumer complaints to the commissioner. These proposed rules would increase the consumer's ability to understand what the advertised benefits means in terms of what benefit is provided by a plan.
Name of Agency Personnel Responsible for Drafting and Implementation: Don Sloma, Olympia, Washington, (360) 586-5597; and Enforcement: Jeffrey Coopersmith, Olympia, Washington, (360) 664-4615.
Name of Proponent: Deborah Senn, Insurance Commissioner, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: The terms and definitions used by health plans in describing their pharmacy benefits have been the subject of complaints to the commissioner. Consumers and providers of pharmacy services have been confused about a variety of carrier terms in managing mental health treatments. Terms are used interchangeably throughout the industry but the [they] may be defined or used to mean many different things. These proposed rules will simplify pharmacy benefit descriptions used in advertising by establishing definitions for terms commonly used to describe these benefits. This would improve the consumer's ability to understand the benefits provided by a plan and compare those benefits to benefits provided by other plans. The rules do not mandate a pharmacy benefit or regulate the provisions of a benefit that a plan may include. These proposed rules focus on the advertising of a pharmacy benefit if such a benefit is included and is advertised. These proposed rules would help prevent the possibility of an issuer knowingly or unknowingly using false, misleading or deceptive advertising of a pharmacy benefit.
Proposal Changes the Following Existing Rules: WAC 284-43-130 will be amended to add definitions.
A small business economic impact statement has been prepared under chapter 19.85 RCW.
Small Business Economic Impact Statement
Introduction: This report analyzes a proposal to amend existing rules and add new sections regarding the advertising of pharmacy benefits. These changes are proposed in an effort to make the rules more current, effective, and efficient. This evaluation is completed to demonstrate that the proposed changes improve the rules without imposing disproportionate costs on small businesses.
Background: The proposed rules aid in clarifying an existing regulation, WAC 284-50-010/284-50-230. The regulation was adopted in 1973 and establishes a framework for regulating the advertisement of health insurance. Consumers, state agencies, providers, and insurers alike have struggled with the terminology surrounding health care. Different meanings are used for the same term by different parties. Consumers were confused by what the policy was supposed to offer and what it actually did provide. The commissioner received numerous complaints in this area from the public. The commissioner decided to review the rules in this area as a part of the regulatory improvement process and see if consumers could be better served.
The commissioner established a working group composed of health care service contractors, health maintenance organizations, providers, advocacy organizations, interested state agencies, and consumers. This group held four public meetings and discussed how the consumers could better understand exactly what benefits the product being advertised actually contains. The rules do not mandate or prescribe benefits but merely try to bring some certainty and standards to the advertising of pharmacy benefits to better inform consumers and avoid potentially false or misleading advertising. Many ideas were discussed. The proposed rules are a result of the refinement of ideas over time by a diverse group of concerned parties.
The proposed changes should clarify existing requirements and insurers should find it easier to comply with the processes. The existing regulatory scheme will be strengthened, clarified, and streamlined.
Federal and Other State Law: This rule does not conflict with any other federal or state law.
Industry Codes: These proposed rules will apply to health insurance sold in the state of Washington that have a pharmacy benefit and choose to advertise it. The proposed rules will affect Hospital and Medical Plans (industry code 6324).
Probable Costs: The proposed rules may impose some costs on the regulated industry. The information requested is already widely available from the issuers in various forms but there will be some cost for the issuers to ensure that information the plans that provide pharmacy benefits meet the requirements of these rules.
Additional costs could be incurred by adding a listed phone number in the required materials that would allow consumers to ask the issuer about the pharmacy benefits. Industry members already have staff time dedicated to answering consumer questions, this phone number will enable consumers to go directly to an employee who can address their issues. Any increase in staff time due to additional calls will lead to better informed consumers. This will take on a preventative role by avoiding possible conflicts or grievances by consumers at later stages and should save money for the issuers. The line should have a nominal cost to the issuers if a new line needs to be added or an existing line is rerouted for the purposes of this rule.
There are no additional reporting requirements associated with these rules. As with any printed piece of advertising, the insurers would have to maintain the records of the advertisement (WAC 284-50-200). The information created for these rules is generally provided in some amount in some fashion currently, any new materials will replace existing materials. There may be some additional cost in maintaining records though.
Small Business Impact: The proposed rules do not impose a disproportionately higher economic burden on small business within the four-digit classifications. It is probable that small businesses will have an easier time and have a smaller economic burden in complying than larger businesses. A document must be created that details the pharmacy benefit of the plan that is advertised (again, if there is no pharmacy benefit in the plan these rules do not apply). Smaller businesses have fewer plans and will require less time to review their plan(s), create the documents to comply, and fulfill any administrative, record-keeping or organizational requirements necessary to comply. The more numerous plans offered, the greater the amount of time necessary to review the plans to ensure compliance.
Mitigation: Mitigation to reduce the economic impact of the proposed rules on small business was considered and acted upon. The commissioner worked with representatives of the industry to limit costs as much as possible while retaining the efficacy of the rules. The workgroup sought to craft language that would ensure that an issuer would not have to make available these materials in combination with every advertisement. Instead, the materials need only be presented one time.
The content of the rules also evolved with the participation of members of industry. The questions that are asked were developed to present the most useful information in the least costly manner. Some questions were altered because it would be too costly or time-consuming for carriers to develop the responses. One such question would have required the issuer to total the number of network pharmacies. It was believed that this number was too fluid to be detailed - pharmacies join and drop frequently and any list would quickly be dated. The requirement was dropped rather than forcing carriers to update their materials on an irregularly but often [basis].
These mitigatory measures should reduce costs on all businesses, particularly small businesses.
The work questions were developed by the workgroup to develop the questions and information to be provided enabled [enabling] mitigatory steps to be taken early on in the process. Another mitigatory method is in the text in the rule which explains how the questions can be answered. An example is
An additional mitigatory measure that will be utilized is to delay the effective date of these rules to enable the issuers to have ample time to prepare the necessary information and to use up their available stocks of related information. The requirements of these proposed rules would not apply to contracts issued prior to June 30, 1999.
Industry Involvement: Many of the substantive issues and concepts have been discussed with members of the regulated industry. Businesses that will be affected by the proposed rules were invited to provide input to the commissioner's staff throughout the rule-writing process. A preproposal statement of inquiry (CR-101) was filed for the rule on March 17, 1998. The CR-101 was sent to all health insurers and was posted on the commissioner's website. Notification that the commissioner would be reviewing this area in the regulatory improvement process was also posted on the commissioner's website.
A workgroup including industry members met four times and developed the framework for the rules. A mailing list was created prior to the establishment of the workgroup and all parties on that list were kept apprised of all meetings and activities. Any party that asked to be on that mailing list was welcome and the list grew to approximately sixty parties. Several members of industry were active participants in the workgroup, others choose to be apprised via the mailing list. Industry associations were also on the mailing list to enable industry to be represented in that fashion also.
All ideas were considered and the group decided that these concepts would be the most beneficial. Proposed draft language was reviewed and critiqued by the group. Many of the concepts and much of the language and changes to earlier drafts of the language were suggested by members of the regulated industry.
Conclusion: These proposed rules should not have a disproportionate impact on small businesses. The information is similar to information that carriers currently make available in some form to consumers, it will be presented in terms and in a method to make it more understandable and useful to the consumer. Costs and administrative concerns should be proportionate to the size of the business or may even be greater for the larger businesses. Mitigatory measures taken in the drafting of these proposed rules will lessen costs on all businesses, including small businesses.
A copy of the statement may be obtained by writing to Kacy Brandeberry, Administrative Rules Coordinator, P.O. Box 40255, Olympia, WA, 98504-0255, phone (360) 664-3784, fax (360) 664-2782.
RCW 34.05.328 applies to this rule adoption.
Hearing Location: Insurance Building, 14th and Water Street, 2nd Floor Conference Room, Olympia, Washington, on February 23, 1999, at 1 p.m.
Assistance for Persons with Disabilities: Contact Lorie Villaflores by February 22, 1998 [1999], TDD (360) 407-0409.
Submit Written Comments to: Kacy Brandeberry, P.O. Box 40256, Olympia, WA, 98504-0256, Internet e-mail KacyB@oic.wa.gov, fax (360) 407-0186, by February 22, 1999.
Date of Intended Adoption: March 15, 1999.
January 7, 1999
Greg J. Scully
Chief Deputy Insurance Commissioner
OTS-2731.2
AMENDATORY SECTION (Amending Order R 97-3, filed 1/22/98, effective 2/22/98)
WAC 284-43-130 Definitions. Except as defined in other subchapters and unless the context requires otherwise, the following definitions shall apply throughout this chapter.
(1) "Advertisement" means:
(a) Printed and published material, audio visual material, and descriptive literature of an insurer used in direct mail, newspapers, magazines, radio scripts, television scripts, billboards, and similar displays, or used on or accessible via the Internet, (including, but not limited to, the World Wide Web, usegroups on the Usenet or elsewhere, chat groups or rooms, and mailing lists or "listservs" or other discussion groups) or used on or accessible via any other telecommunications resources, or otherwise available to the public; or
(b) Descriptive literature and sales aids of all kinds issued by an insurer, agent, or broker for presentation to members of the insurance buying public, including, but not limited to, circulars, leaflets, booklets, depictions, illustrations, form letters, and all materials on or accessible via the Internet (including, but not limited to, the World Wide Web, newsgroups on the Usenet or elsewhere, chat groups or rooms, and mailing lists or "listservs" or other discussion groups) or used on or accessible via any other telecommunications resources, or otherwise available to the public; or
(c) Prepared sales talks, presentations, and material for use by agents, brokers, and solicitors.
(2) "Coverage criterion" is an element that may be used to define a covered benefit and whose application may result in exceptions, reductions or limitations. Coverage criteria may include, but are not limited to, definitions of:
(a) Cost effectiveness;
(b) Circumstances where potential health benefits will exceed potential harm of particular treatments;
(c) An explicit exception, reduction or limitation in a covered benefit, regardless of its medical necessity, except as may be prohibited by state or federal law or rule;
(d) An explicit exception, reduction or limitation in any covered benefit provided only for the convenience of an enrollee or provider, where such convenience is unrelated to medical necessity; or
(e) Medical necessity.
(3) "Covered benefits" means:
(a) A health care service to treat a covered health condition according to the terms of any health plan; or
(b) Those health care services to which a covered person is entitled under the terms of a health plan. Unless otherwise required by state or federal rule or law, a covered benefit must be stated as treatment for a covered health condition. A carrier may establish coverage criteria whose application may result in exclusions, reductions or limitations in covered benefits.
(((2))) (4) "Covered health condition" means any disease,
illness, injury or condition of health risk covered according to
the terms of any health plan.
(5) "Covered person" means an individual covered by a health plan including an enrollee, subscriber, policyholder, or beneficiary of a group plan.
(((3))) (6) "Emergency medical condition" means the emergent
and acute onset of a symptom or symptoms, including severe pain,
that would lead a prudent layperson acting reasonably to believe
that a health condition exists that requires immediate medical
attention, if failure to provide medical attention would result
in serious impairment to bodily functions or serious dysfunction
of a bodily organ or part, or would place the person's health in
serious jeopardy.
(((4))) (7) "Emergency services" means otherwise covered
health care services medically necessary to evaluate and treat an
emergency medical condition, provided in a hospital emergency
department.
(((5))) (8) "Enrollee point-of-service cost-sharing" or
"cost-sharing" means amounts paid to health carriers directly
providing services, health care providers, or health care
facilities by enrollees and may include copayments, coinsurance,
or deductibles.
(((6))) (9) "Exception" or "exclusion" means any provision
in a health plan whereby coverage for a specified hazard is
entirely eliminated; it is a statement of a risk not assumed
under the health plan. If a coverage criterion results in the
exclusion of a benefit, the coverage criterion must be stated
when describing the exception.
(10) "Facility" means an institution providing health care services, including but not limited to hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory, and imaging centers, and rehabilitation and other therapeutic settings.
(((7))) (11) "Formulary" means a listing that identifies the
drugs approved for use in a health plan.
(12) "Grievance" means a written complaint submitted by or on behalf of a covered person regarding:
(a) Denial of health care services or payment for health care services; or
(b) Issues other than health care services or payment for health care services including dissatisfaction with health care services, delays in obtaining health care services, conflicts with carrier staff or providers, and dissatisfaction with carrier practices or actions unrelated to health care services.
(((8))) (13) "Health care provider" or "provider" means:
(a) A person regulated under Title 18 RCW or chapter 70.127 RCW, to practice health or health-related services or otherwise practicing health care services in this state consistent with state law; or
(b) An employee or agent of a person described in (a) of this subsection, acting in the course and scope of his or her employment.
(((9))) (14) "Health care service" or "health service" means
that service offered or provided by health care facilities and
health care providers relating to the prevention, cure, or
treatment of illness, injury, or disease.
(((10))) (15) "Health carrier" or "carrier" means a
disability insurance company regulated under chapter 48.20 or
48.21 RCW, a health care service contractor as defined in RCW
48.44.010, and a health maintenance organization as defined in
RCW 48.46.020.
(((11))) (16) "Health plan" or "plan" means any individual
or group policy, contract, or agreement offered by a health
carrier to provide, arrange, reimburse, or pay for health care
service except the following:
(a) Long-term care insurance governed by chapter 48.84 RCW;
(b) Medicare supplemental health insurance governed by chapter 48.66 RCW;
(c) Limited health care service offered by limited health care service contractors in accordance with RCW 48.44.035;
(d) Disability income;
(e) Coverage incidental to a property/casualty liability insurance policy such as automobile personal injury protection coverage and homeowner guest medical;
(f) Workers' compensation coverage;
(g) Accident only coverage;
(h) Specified disease and hospital confinement indemnity when marketed solely as a supplement to a health plan;
(i) Employer-sponsored self-funded health plans;
(j) Dental only and vision only coverage; and
(k) Plans deemed by the insurance commissioner to have a short-term limited purpose or duration, or to be a student-only plan that is guaranteed renewable while the covered person is enrolled as a regular full-time undergraduate or graduate student at an accredited higher education institution, after a written request for such classification by the carrier and subsequent written approval by the insurance commissioner.
(((12))) (17) "Independent third-party review" means a
review and binding determination regarding a denial of coverage
by a carrier, whether on grounds of failing to meet coverage
criteria or on grounds of not being a covered benefit for some
other reason, by a majority of at least three professionals
licensed to perform the service denied, who have no direct
financial interest in the carrier, the patient, the treating
provider, nor any organization that may benefit from the decision
to approve or deny coverage.
(18) "Institutional advertisement" means an advertisement having as its sole purpose the promotion of the reader's or viewer's interest in the concept of health coverage, or the promotion of a particular health carrier.
(19) "Invitation to inquire" means an advertisement having as its objective the creation of a desire to inquire further about a health plan or health plans and which is limited to a brief description of the loss for which a benefit is payable, and which may contain:
(a) The dollar amount of benefit payable; and/or
(b) The period of time during which the benefit is payable; provided the advertisement does not refer to cost. An advertisement which specifies either the dollar amount of benefit payable or the period of time during which the benefit is payable shall contain a provision in effect as follows:
"For costs and further details of the coverage, including exclusions, any reductions or limitations and the terms under which the plan may be continued in force, see your agent or write to the company."
(20) "Invitation to contract" means an advertisement which is neither an invitation to inquire nor an institutional advertisement.
(21) "Limitation" means any provision which restricts coverage under the health plan other than an exception or a reduction. If a coverage criterion results in a limitation, that coverage criterion must be stated when describing the limitation.
(22) "Managed care plan" means a health plan that coordinates the provision of covered health care services to a covered person through the use of a primary care provider and a network.
(((13))) (23) "Medical management practices" are the
policies and procedures used by a carrier to ensure the medical
necessity of a covered benefit, and include, but are not limited
to, policies and procedures governing:
(a) Treatment approvals and denials;
(b) Treatment protocols;
(c) Quality assurance activities; and
(d) Utilization management practices.
(24) "Medically necessary" or "medical necessity" is a coverage criterion a carrier may apply to determine whether a health service is a covered benefit if the service:
(a) Is a clinically appropriate choice in the opinion of the enrollee's participating provider;
(b) Has a reasonable probability of achieving the intended clinical outcome, particularly in consideration of expected enrollee compliance with treatment requirements; and
(c) Is consistent with recognized standards within a relevant health profession.
(25) "Network" means the group of participating providers and facilities providing health care services to a particular health plan. A health plan network for carriers offering more than one health plan may be smaller in number than the total number of participating providers and facilities for all plans offered by the carrier.
(((14))) (26) "Participating provider" and "participating
facility" means a facility or provider who, under a contract with
the health carrier or with the carrier's contractor or
subcontractor, has agreed to provide health care services to
covered persons with an expectation of receiving payment, other
than coinsurance, copayments, or deductibles, from the health
carrier rather than from the covered person.
(((15))) (27) "Person" means an individual, a corporation, a
partnership, an association, a joint venture, a joint stock
company, a trust, an unincorporated organization, any similar
entity, or any combination of the foregoing.
(((16))) (28) "Pharmacy services" means the practice of
pharmacy as defined in chapter 69.41 RCW.
(29) "Primary care provider" means a participating provider who supervises, coordinates, or provides initial care or continuing care to a covered person, and who may be required by the health carrier to initiate a referral for specialty care and maintain supervision of health care services rendered to the covered person.
(((17))) (30) "Preexisting condition" means any medical
condition, illness, or injury that existed any time prior to the
effective date of coverage.
(((18))) (31) "Premium" means all sums charged, received, or
deposited by a health carrier as consideration for a health plan
or the continuance of a health plan. Any assessment or any
"membership," "policy," "contract," "service," or similar fee or
charge made by a health carrier in consideration for a health
plan is deemed part of the premium. "Premium" shall not include
amounts paid as enrollee point-of-service cost-sharing.
(((19))) (32) "Reduction" means any provision which reduces
the amount of the benefit; a risk of loss is assumed but payment
upon the occurrence of such loss is limited to some amount or
period less than would be otherwise payable had such reduction
not been used. If a coverage criterion results in a reduction,
that coverage criterion must be stated when describing the
reduction.
(33) "Small group" means a health plan issued to a small employer as defined under RCW 48.43.005(24) comprising from one to fifty eligible employees.
(34) "Substitute drug" means a therapeutically equivalent substance as defined in chapter 69.41 RCW.
(35) "Supplementary pharmacy services" or "other pharmacy services" means pharmacy services involving the provision of drug therapy management and other services not required under state and federal law but that may be rendered in connection with dispensing, or that may be used in disease prevention or disease management.
[Statutory Authority: RCW 48.02.060, 48.20.450, 48.20.460, 48.30.010, 48.44.020, 48.44.050, 48.44.080, 48.46.030, 48.46.060(2), 48.46.200 and 48.46.243. 98-04-005 (Order R 97-3), § 284-43-130, filed 1/22/98, effective 2/22/98.]
NEW SECTION
WAC 284-43-810 Coverage for pharmacy services. (1) The commissioner may disapprove any contract issued or renewed after June 30, 1999, that includes coverage for pharmacy services if it does not include the following statement:
your right to safe and effective pharmacy services
State and federal laws establish standards to assure safe and effective pharmacy services, and to guarantee your right to know what drugs are covered under this plan and what coverage limitations are in your contract. If you would like more information about the drug coverage policies under this plan, or if you have a question or a concern about your pharmacy benefit, please contact us (the health carrier) at 800-???-????.
If you would like to know more about your rights under the law, or if you think anything you received from this plan may not conform to the terms of your contract, you may contact the Washington State Office of Insurance Commissioner at 800-562-6900. If you have a concern about the pharmacists or pharmacies serving you, please call the State Department of Health at 360-???-????.
(2) The commissioner may disapprove any contract issued or renewed after June 30, 1999, that includes coverage for pharmacy services if it does not pose and respond in writing to the following questions in language that complies with WAC 284-50-010 through 284-50-230 accompanying an invitation to contract which is presented to each prospective enrollee prior to enrollment:
(a) "Does this plan limit or exclude certain drugs my health care provider may prescribe, or encourage substitutions for some drugs?" The response must describe the process for developing coverage standards and formularies, including the principal criteria by which drugs are selected for inclusion, exclusion, restriction or limitation. If a determination of medical necessity is used, that term must be briefly defined here. Coverage standards involving the use of substitute drugs, whether generic or therapeutic, are either an exception, reduction or limitation and must be discussed here. Major categories of drugs excluded, limited or reduced from coverage may be included in this response.
(b) "When can my plan change the approved drug list (formulary)? If a change occurs, will I have to pay more to use a drug I had been using?" The response must identify the process of changing formularies and coverage standards, including changes in the use of substitute drugs. If the plan gives prior notice of these changes or has provisions for "grandfathering" certain ongoing prescriptions, these practices may be discussed here.
(c) "What should I do if I want a change from limitations, exclusions, substitutions or cost increases for drugs specified in this plan?" The response must include a phone number to call with a request for a change in coverage decisions, and must discuss the process and criteria by which such a change may be granted. The response may refer to the appeals or grievance process without describing that process in detail here. The response must state the time within which requests for changes will be acted upon in normal circumstances and in circumstances where an emergency medical condition exists.
(d) "How much do I have to pay to get a prescription filled?" The response must list enrollee point-of-service cost-sharing dollar amounts or percentages for all coverage categories including at least name brand drugs, substitute drugs and any drugs which may be available, but which are not on the health plan's formulary.
(e) "Do I have to use certain pharmacies to pay the least out of my own pocket under this health plan?" If the answer to this question is "yes," the plan must state the approximate number of pharmacies in Washington at which the most favorable enrollee cost sharing will be provided, and some means by which the enrollee can learn which ones they are.
(f) "How may days' supply of most medications can I get without paying another co-pay or other repeating charge?" The response should discuss normal and exceptional supply limits, mail order arrangements and travel supply and refill requirements or guidelines.
(g) "What other pharmacy services does my health plan cover?" The response should include any "intellectual services," or disease management services reimbursed by the plan in addition to those required under state and federal law in connection with dispensing, such as disease management services for migraine, diabetes, smoking cessation, asthma, or lipid management.
(3) The commissioner may disapprove any contract issued or renewed after June 30, 1999, that includes coverage for pharmacy services if it does not state the general categories of drugs excluded from coverage. Such categories may include items such as appetite suppressants, dental prescriptions, cosmetic agents or most over-the-counter medications. This subsection intends only to promote clearer enrollee understanding of the exclusions, reductions and limitations contained in a health plan, and not to suggest that any particular categories of coverage for drugs or pharmacy services should be excluded, reduced, or limited by a health plan.
(4)(a) In lieu of meeting the requirements of this section, a health carrier may request that the commissioner publish a document which serves the purposes of this section for any of its plans. Such document will pose and respond to the questions contained in subsections (2) and (3) of this section.
(b) If a carrier makes a request according to this subsection, the request must be accompanied by the information the commissioner may require by written request to the carrier in order to prepare the document. The carrier must supply the requested information in writing. The information must be accompanied by a certification by the carrier that it is accurate, complete, and not misleading. Any further information requested by the commissioner must be provided promptly and accompanied by a similar certification. The information in all cases must be organized so as to facilitate the preparation of the document.
(c) No more than thirty days after receipt of the document described in (a) of this subsection, the carrier must provide it to each prospective enrollee considering enrollment in a health plan that covers pharmacy services benefits.
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