WSR 02-23-092

PROPOSED RULES

OFFICE OF

INSURANCE COMMISSIONER

[ Filed November 20, 2002, 10:17 a.m. ]

     Original Notice.

     Preproposal statement of inquiry was filed as WSR 02-14-151.

     Title of Rule: Pharmacy identification cards.

     Purpose: This proposed regulation will implement RCW 48.43.023.

     Other Identifying Information: Insurance Commissioner Matter No. R 2002-04.

     Statutory Authority for Adoption: RCW 48.02.060, 48.43.023, 48.44.050, 48.46.200.

     Statute Being Implemented: RCW 48.43.023.

     Summary: RCW 48.43.023 requires an entity that provides coverage for prescription drugs provided on an outpatient basis and issues a card or other technology for claims processing to issue to its enrollees a pharmacy identification card or other technology containing all information required for proper prescription drug claims adjudication.

     Reasons Supporting Proposal: This proposed regulation will implement RCW 48.43.023.

     Name of Agency Personnel Responsible for Drafting and Implementation: Janis LaFlash, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7040; and Enforcement: Carol Sureau, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7050.

     Name of Proponent: Mike Kreidler, Insurance Commissioner, governmental.

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

     Explanation of Rule, its Purpose, and Anticipated Effects: RCW 48.43.023 requires an entity that provides coverage for prescription drugs provided on an outpatient basis and issues a card or other technology for claims processing to issue to its enrollees a pharmacy identification card or other technology containing all information required for proper prescription drug claims adjudication. The proposed rule will ensure that RCW 48.43.023 is implemented uniformly and prevent any compliance issues. Consistent standards will achieve the legislature's stated intent to "improve care to patients by minimizing confusion, eliminating unnecessary paperwork, decreasing administrative burdens, and streamlining dispensing of prescription products paid for by third-party payors."

     Proposal does not change existing rules.

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

Small Business Economic Impact Statement

     Background: In 2001, the legislature enacted chapter 106, Laws of 2001. This bill was codified as RCW 48.43.023. The legislature stated their intent to "improve care to patients by minimizing confusion, eliminating unnecessary paperwork, decreasing administrative burdens, and streamlining dispensing of prescription products paid for by third-party payors." The law requires various parties who provide coverage for prescription drugs and issue a card or other technology to process claims to include all the information necessary for claims processing on the card. The commissioner was granted the authority to write rules to implement the new law.

     Is the Rule Required by Federal Law or Federal Regulation? This rule is not required by federal law or regulation.

     Industry Affected by the Proposed Rule: The scope to the proposed rules is established by the underlying law. The statute affects any "health carrier that provides coverage for prescription drugs provided on an outpatient basis and issues a card or other technology for claims processing, or an administrator of a health benefit plan including, but not limited to, third-party administrators for self-insured plans, pharmacy benefits managers, and state administered plans." RCW 48.43.023(1).

     The standard industrial classification (SIC) categories that would be impacted include accident and health insurers, hospital and medical service plans, and pension, health, and welfare funds. The types of entities include health care service contractors (HCSCs) and health maintenance organizations (HMOs), third-party administrators, disability insurers, and state health plans. The SIC codes include #6321, #6324, #6371.

     Overview of the Proposed Rule and Provisions That May Impose a Cost to Business: The purpose of the proposed rule is to establish a clear and efficient mechanism to implement the new law. The requirements and restrictions are imposed by the law; ensuring compliance and implementing the law is the purpose of the rule making.

     RCW 48.43.023 requires that a health plan that provides coverage for prescription drugs and issues a card or other technology for claims processing must include all information required for proper prescription drug claims adjudication. RCW 48.43.023(5) states that in the rule making the insurance commissioner should consider any relevant standards developed by the National Council for Prescription Drug Programs (NCPDP) and the requirements of the federal Health Insurance Portability and Accountability Act of 1996.

     In proposed WAC 284-43-323(2), the commissioner establishes that an issued card must include the "BIN," "IIN/BIN number" or "RxBIN" which is the bank identification number or American National Standards Institute (ANSI) assigned international identification number, identified in the NCPDP Pharmacy ID Card Implementation Guide. Discussions with representatives of pharmacists and pharmacy benefit managers indicated that this information is critical in claims processing. When this number is not available, the pharmacist is often forced to make phone calls to the health plan or carrier to ascertain the information. The commissioner believes that this information is required by RCW 48.43.023 but it is useful to state clearly the need for this information in rule. This number is required by the pharmacy benefit administrators to route a prescription claim electronically. Several carriers currently provide this information on a card or have begun the process of including the information. The number is generally one number per carrier or payor. Many of the entities described in RCW 48.43.023(1) use a pharmacy benefits manager (PBM) which has its own BIN number and if the PBM changes, then the BIN number would need to be changed on the card. Obviously, due to the nature of contracting, this change would be known long in advance of the change and changes in the card can be planned.

     Other data elements of the NCPDP guide must be included on the card only if they are required for the processing of claims. The commissioner is unaware of any cards that do not currently include such information as the carrier name, enrollee name, group name or any other information necessary to process the claim. It is believed to be unnecessary to include those requirements in this rule explicitly. If there is additional or unique information required to process a claim, that information must be included on a card but the BIN number was the one piece of information that is consistently needed but not consistently provided.

     Compliance Costs for the Industries Affected by the Proposed Rules: As noted, the costs are believed to be traceable directly to RCW 48.43.023. The law requires issued cards to contain information required to process claims. The WAC merely states that the BIN number is among the information required by the law.

     Percentage of the Industries in the Four-digit Standard Industrial Classification Affected by the Rule: The adopted law will and proposed rule would affect 100% of the health carriers or administrators of health benefit plans including, but not limited to, third-party administrators for self-insured plans, pharmacy benefits managers, and state administered plans that provide coverage for prescription drugs provided on an outpatient basis and issues a card or other technology for claims processing.

     Mitigation Measures That Could Be Used to Reduce the Economic Impact of the Rule on Small Businesses and Still Meet the Objectives: No mitigation appears to be possible or necessary (due to the lack of anticipated costs).

     As noted earlier, the commissioner and staff have been discussing these issues with industry and interested parties for many months. Proposed concepts and language have been exposed for comments and suggestions in an attempt to provide clarification of the law and rule and to mitigate any costs. The commissioner will continue to be receptive to suggestions that will allow the rule to be administered more efficiently while meeting the objectives of the rule and the underlying law.

     Steps the Commissioner Will Take to Reduce the Costs of the Rule on Small Businesses: The commissioner does not believe that any additional mitigatory changes can be made to the rule while implementing the law. However, the commissioner is interested in reducing the costs for all business, especially smaller businesses. The commissioner welcomes any new suggestions that could lessen any economic impacts that are attributable to the rules.

     Mitigation Techniques That Have Been Considered and Incorporated into the Proposed Rule: The commissioner and his staff have had numerous discussions with industry and interested parties as the proposal was developed. The proposal has been through several drafts to clarify the regulation and mitigate any potential costs. The commissioner would like to thank the industry and interested parties for providing timely and useful comments and suggestions throughout this process. Clearer, more efficient regulation benefits the consumer, industry, and the regulator.

     The requirements of the rule are not effective until July 1, 2003. This is also a provision in the law. By adopting the rule many months before the effective date of the rule or law, the commissioner hopes to allow as much time to implement the standards as is possible.

     Mitigation Techniques That Were Considered for Incorporation into the Proposed Rule but Were Rejected: It was suggested that no rules were necessary. While the commissioner believes that the BIN number is implicitly required by law, he also believes that making the requirement explicit will avoid potential compliance issues and ensure that the goals of the legislation are met. It was suggested that the rule address when updated card must be issued. The commissioner believes that the law is clear on this issue and there is no need to clarify. If that continues to be a concern, the commissioner is willing to discuss the issue further.

     Reporting, Record-keeping, and Other Compliance Requirements of the Proposed Rule: There is no new reporting or record-keeping requirement as a result of this rule. Any entity that is subject to the rule and law already possesses all the information needed to comply. If and when a card must be issued is determined by RCW 48.43.023. There are no filing requirements.

     Professional Services That May Be Needed to Comply with the Requirements of the Proposed Rule:

     Cost of Equipment: There is no anticipated additional cost of equipment.

     Cost of Supplies: There is no anticipated additional cost of supplies. Some carriers may have to update cards to provide for the BIN number but, as noted, it is believed that those costs are directly traceable to the statute. Some entities issue paper cards, others use plastic "credit cards," others have spoken of the desire to use the other technology envisioned in RCW 48.43.023. Those are business decisions are left entirely up to the carrier. The only requirement is to provide the necessary information to process the claim.

     Cost of Labor and Increased Administration: There may be some minor additional costs of increased labor and administration in reading, comprehending, and complying with the rule. Again, it is believed that the requirement to provide the BIN number is inherent in the law and the rule makes that implicit requirement explicit to make compliance easier.

     The Proportionality of the Cost of Compliance: The costs of compliance are traceable to the statute and should be proportional for smaller businesses. The rule does not require or impose any disproportionate differences in costs of equipment, supplies, labor, or administration. Several comments were received that larger businesses may have more complications in tracking and issuing cards to wider groups of enrollees. The implication was that costs could be disproportionately higher for the larger entities. The commissioner is not convinced of that argument but is satisfied that there is no disproportion in costs imposed by the proposed rule on smaller businesses.

     Informing and Involving Affected Businesses: The staff of the OIC met with interested parties on several occasions and has made numerous drafts available. The CR-101 was filed on July 3, 2002. The proposal was published in the Washington State Register and was posted on the insurance commissioner's website with contact names and numbers. The CR-101 requested comments and gave agency contact numbers for parties interested in participating in the rule-making process.

     As noted previously, staff has met on several occasions with insurers, pharmacists representatives, and affected state agencies. The commissioner continues to encourage comments from all affected and interested parties on the proposal.

     Informing and Involving Small Business in the Development of the Proposed Rule: See above.

     A copy of the statement may be obtained by writing to Kacy Scott, P.O. Box 40255, Olympia, WA 98504-0255, e-mail kacys@oic.wa.gov, phone (360) 725-7041, fax (360) 586-0341.

     RCW 34.05.328 applies to this rule adoption. This proposal is a significant legislative rule for the purposes of RCW 34.05.328.

     Hearing Location: Insurance Commissioner's Office, Room 221, 5000 Capital Boulevard, Tumwater, WA 98504-0255, on January 8, 2003, at 9:00 a.m.

     Assistance for Persons with Disabilities: Contact Lori Villaflores by January 6, 2003, TDD (360) 664-3154.

     Submit Written Comments to: Kacy Scott, P.O. Box 40255, Olympia, WA 98504-0255, e-mail Kacys@oic.wa.gov, fax (360) 586-3109, by January 6, 2003.

     Date of Intended Adoption: January 22, 2003.

November 20, 2002

Mike Kreidler

Insurance Commissioner

OTS-6058.2

SUBCHAPTER C

PROVIDER ((AND FACILITY)) CONTRACTS AND PAYMENT
NEW SECTION
WAC 284-43-323   Pharmacy identification cards.   (1) This rule outlines the minimum standards for prescription claims processing as directed by RCW 48.43.023.

     (2) The pharmacy identification card or other technology must include the data element consistent with the "BIN number," "IIN/BIN number" or "RxBIN" which is the ANSI assigned international identification number, identified in the National Council for Prescription Drug Programs (NCPDP) Pharmacy ID Card Implementation Guide. Other data elements of the NCPDP Guide must be included on the card only if they are required for the processing of claims.

     (3) This rule does not compel the issuance of a separate pharmacy identification card provided that the enrollee health plan identification card contains the required data elements.

     (4) All plans that use a card or other technology for prescription claims processing that are delivered, issued for delivery or renewed on or after July 1, 2003, must comply with the requirements of this rule.

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