Original Notice.

Preproposal statement of inquiry was filed as WSR 00-12-088.

Title of Rule: Prescription drug benefits.

Purpose: Section 26, chapter 79, Laws of 2000, requires a minimum pharmacy benefit, these rules will increase the understanding of the consumer regarding that pharmacy benefit by establishing a common terminology and method of explaining the benefit.

Other Identifying Information: Insurance Commissioner Matter No. R 2000-04.

Statutory Authority for Adoption: RCW 48.02.060, 48.20.450, 48.20.460, 48.30.010, 48.44.050, 48.46.200, and section 26, chapter 79, Laws of 2000.

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: Section 26, chapter 79, Laws of 2000, requires that certain health benefit plans include "prescription drug benefits with at least a two thousand dollar benefit payable by the carrier annually." This provision is unclear as to the scope of these benefits and method of disclosure to enrollees. Rules are necessary to clarify these areas.

Name of Agency Personnel Responsible for Drafting and Implementation: Bill Hagens, P.O. Box 40255, Olympia, WA 98504, (360) 586-5597; and Enforcement: Jeffrey Coopersmith, P.O. Box 40259, Olympia, WA 98504, (360) 407-0734.

Name of Proponent: Insurance Commissioner, Deborah Senn, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: Consumers, providers and insurers have all been frustrated with the advertising of pharmacy or prescription drug 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 mean in terms of what benefit is provided by a plan.

     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. Terms are used interchangeably throughout the industry but 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 is amended to include definitions used in the body of the rule.

A small business economic impact statement has been prepared under chapter 19.85 RCW.

     Much of the substance of the rule has been proposed in a previous rule making, R 98-7. That process included multiple meetings of a work group over the course of several months and a rule-making hearing. This rule making is capitalizing on the hard work of the work group and the knowledge gained in the previous rule making.

     Background: In June of this year, the commissioner decided to revive an earlier rule proposal, R 98-7, which was never adopted. The proposal that is being filed works from the ending point of the earlier process. The CR-101 for this rule-making was filed on June 21, 2000, and sent to industry and all interested parties.

     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 [using] the same term used 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 public meetings once a month 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 policies sold in the state of Washington that have advertised their pharmacy benefit. The proposed rules will affect Hospital and Medical Plans (industry code #6324) and health plans offered by Accident and Health Insurers, (industry code #6321).

     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 [in] 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. 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 may be necessary to review the plans to ensure compliance.

     Mitigation: In the current proposal, the commissioner retained the mitigatory measures that were incorporated in the text in the earlier rule making. Those measures are described below. The rules also are delayed to allow ample time for carriers to use existing stocks of materials and develop new complying materials. The commissioner will consider additional mitigatory measures that are proposed in the rule making.

     Mitigation to reduce the economic impact of the proposed rules on small business was considered and acted upon in R 98-7. The commissioner worked with representatives of the industry to limit costs as much as possible while retaining the efficacy of the rules. The work group 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 evolved with the participation of members of industry. The questions were developed in the work group meetings and enabled mitigatory steps to be taken early on in the process. The questions that are asked were developed to present the most useful information in the least costly manner. Some questions that were proposed in the work group meetings 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 irregular but frequent basis. Another mitigatory method is in the text in the rule that explains how the questions can be answered. The carriers can provide more or less specific answers depending on how detailed they choose to be. Carriers in the work group developed sample answers and directions allowing flexibility in answering the questions are included in the rule.

     These mitigatory measures should reduce costs on all businesses, particularly small businesses.

     One suggestion to mitigate costs that was rejected by industry was to allow the issuer to use a "code word" or standardized term to describe their pharmacy benefit instead of providing answers to the required questions. The term would have provided the consumer with a quick general standard. Such a system could save industry much of the time and money in developing materials but it was believed by industry that it would not serve their purposes or the consumers as well as the additional detail required in the rules.

     Industry Involvement: As noted earlier, these rules have previously been considered in a rule making (R 98-7). The industry had considerable input into that process. The currently proposed rules are very similar in substance to the rules that went to hearing in R 98-7. The current proposal has the advantage of building on the previous work and contributions of industry and the workgroup. The CR-101 for the current rule making was sent to all impacted carriers and comments were solicited at that time and are welcome throughout the rule-making process.

     In the previous rule making, a work group including industry members met four times and developed the framework for the rules. A mailing list was created prior to the establishment of the work group 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 work group, 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 work group decided that these concepts would be the most beneficial. Proposed draft language was reviewed and critiqued by the group. Members of the regulated industry suggested many of the concepts and much of the language and changes to earlier drafts of the language.

     Conclusion: The current proposal builds on the earlier contributions, comments, and involvement of industry, the working group, and other interested parties. These rules should not have a disproportionate impact on small businesses. Costs and administrative concerns should be proportionate to the size of the business or may even be greater for the larger businesses. The information is similar to information that carriers currently make available in some form to consumers, but it will be presented in terms and in a method to make it more understandable and useful to the consumer.

A copy of the statement may be obtained by writing to Kacy Brandeberry, P.O. Box 40255, Olympia, WA 98504-0255, e-mail mailto:Kacyb@oic.wa.gov, phone (360) 664-3784, fax (360) 664-2782.

Section 201, chapter 403, Laws of 1995, applies to this rule adoption.

Hearing Location: 14th and Water, John A. Cherberg Building, Senate Hearing Room 2, Olympia, Washington, on September 13, 2000, at 2:00.

Assistance for Persons with Disabilities: Contact Lori Villaflores by September 12, 2000, TDD (360) 407-0409.

Submit Written Comments to: Kacy Brandeberry, P.O. Box 40255, Olympia, WA 98504-0255, e-mail Kacyb@oic.wa.gov, fax (360) 664-2782, by September 12, 2000.

Date of Intended Adoption: September 14, 2000.

August 1, 2000

Robert A. Harkins

Chief Deputy Insurance Commissioner

OTS-4189.2

AMENDATORY SECTION(Amending Matter No. R 98-7, filed 9/8/99, effective 10/9/99)

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) "Covered health condition" means any disease, illness, injury or condition of health risk covered according to the terms of any health plan.

     (2) "Covered person" means an individual covered by a health plan including an enrollee, subscriber, policyholder, or beneficiary of a group plan.

     (3) "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) "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) "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) "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) "Formulary" means a listing that identifies the drugs approved for use in a health plan.

     (8) "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))) (9) "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))) (10) "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))) (11) "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))) (12) "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))) (13) "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))) (14) "Medically necessary" or "medical necessity" in regard to mental health services and pharmacy services is a carrier determination as to whether a health service is a covered benefit if the service is consistent with generally recognized standards within a relevant health profession.

     (((14))) (15) "Mental health provider" means a health care provider or a health care facility authorized by state law to provide mental health services.

     (((15))) (16) "Mental health services" means in-patient or out-patient treatment, partial hospitalization or out-patient treatment to manage or ameliorate the effects of a mental disorder listed in the Diagnostic and Statistical Manual (DSM) IV published by the American Psychiatric Association, excluding diagnoses and treatments for substance abuse, 291.0 through 292.9 and 303.0 through 305.9.

     (((16))) (17) "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.

     (((17))) (18) "Out-patient therapeutic visit" or "out-patient visit" means a clinical treatment session with a mental health provider of a duration consistent with relevant professional standards used by the carrier to determine medical necessity for the particular service being rendered, as defined in Physicians Current Procedural Terminology, published by the American Medical Association.

     (((18))) (19) "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.

     (((19))) (20) "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.

     (((20))) (21) "Pharmacy services" means the practice of pharmacy as defined in chapter 18.64 RCW and includes any drugs or devices as defined in chapter 18.64 RCW.

     (22) "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.

     (((21))) (23) "Preexisting condition" means any medical condition, illness, or injury that existed any time prior to the effective date of coverage.

     (((22))) (24) "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.

     (((23))) (25) "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.

     (26) "Substitute drug" means a therapeutically equivalent substance as defined in chapter 69.41 RCW.

     (27) "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, 48.30.010, 48.44.050, 48.46.200, 48.30.040, 48.44.110 and 48.46.400.      99-19-032 (Matter No. R 98-7), § 284-43-130, filed 9/8/99, effective 10/9/99.      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 (Matter No. R 97-3), § 284-43-130, filed 1/22/98, effective 2/22/98.]

(1) The commissioner may disapprove any contract issued or renewed after July 1, 2001, 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 1-800-???-????.

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 1-800-562-6900. 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 July 1, 2001, 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 many 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 July 1, 2001, 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.

[]

© Washington State Code Reviser's Office