RELATES TO:
KRS
304.1-050,
304.2-160,
304.2-165,
304.9-020,
304.17A-161,
304.17A-162
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
304.2-110(1) provides that
the commissioner may make reasonable administrative regulations necessary for,
or as an aid to, the effectuation of any provision of the Kentucky Insurance
Code.
KRS
304.17A-162 requires the department to
promulgate administrative regulations establishing the manner in which a
pharmacy benefit manager shall respond to an appeal regarding maximum allowable
cost pricing, the manner in which a pharmacy benefit manager makes available to
contracted pharmacies information regarding sources for drug price data, a
comprehensive list of drugs subject to maximum allowable cost and the actual
maximum allowable cost for each drug, and weekly updates to the list.
KRS 304.2-160,
304.2-165,
304.9-020,
304.17A-161,
and
304.17A-162
together provide authority for the department's regulation of pharmacy benefit
managers and the specific maximum allowable cost pricing and appeal process set
forth in this administrative regulation. This administrative regulation
establishes the process for a pharmacy benefit manager's maximum allowable cost
appeals process, the process for the department's review of a complaint
associated with a maximum allowable cost appeal, and the requirements for the
cost listings made available by a pharmacy benefit manager.
Section 1. Definitions.
(1) "Contracted pharmacy" or "pharmacy" is
defined by
KRS
304.17A-161(1).
(2) "Department" is defined by
KRS
304.1-050(2).
(3) "Maximum Allowable Cost" is defined by
KRS
304.17A-161(3).
(4) "Pharmacy Benefit Manager" is defined by
KRS
304.17A-161(4).
Section 2. Maximum Allowable Cost
Pricing Appeal Process.
(1) A pharmacy benefit
manager shall establish a maximum allowable cost pricing appeal process where a
contracted pharmacy or the pharmacy's designee may appeal if:
(a) The maximum allowable cost established
for a drug reimbursement is below the cost at which the drug is available for
purchase by pharmacists and pharmacies in Kentucky from national or regional
wholesalers licensed in Kentucky by the Kentucky Board of Pharmacy;
or
(b) The pharmacy benefit manager
has placed a drug on the maximum allowable cost list in violation of
KRS
304.17A-162(8).
(2) The pharmacy benefit manager's
appeal process shall include the following:
(a) The pharmacy benefit manager shall accept
an appeal by a contracted pharmacy on or before sixty (60) days of the initial
claim;
(b) Notification to the
appealing party that the appeal has been received, and the names, addresses,
email addresses, and telephone numbers of the pharmacy benefit manager's
contact persons for questions regarding the maximum allowable cost appeal
process; and
(c) A provision
allowing a contracted pharmacy, pharmacy service administration organization or
group purchasing organization, to initiate the appeal process, regardless if an
appeal has previously been submitted by a pharmacy or the pharmacy's designee
outside of Kentucky, by contacting the pharmacy benefit manager's designated
contact person electronically, by mail, or telephone. If the appeal process is
initiated by telephone, the appealing party shall follow up with a written
request within three (3) days.
(3) The pharmacy benefit manager's maximum
allowable cost pricing appeal process shall be readily accessible to contracted
pharmacies electronically through publication on the pharmacy benefit manager's
website, and in either the contracted pharmacy's contract with the pharmacy
benefit manager or through a pharmacy provider manual distributed to contracted
pharmacies, pharmacy service administration organizations, and group purchasing
organizations.
(4) For an appeal
received from a pharmacy services administration organization or a group
purchasing organization related to a dispute regarding maximum allowable cost
pricing, a pharmacy benefit manager may request documentation that the pharmacy
services administration organization or group purchasing organization is acting
on behalf of a contracted pharmacy before responding to the appeal.
(5) The pharmacy benefit manager shall
investigate, resolve, and respond to the appeal within ten (10) calendar days
of receipt of the appeal. Upon resolution, the pharmacy benefit manager shall
issue a written response to the appealing party that shall include the
following:
(a) The date of the
decision;
(b) The name, phone
number, mailing address, email address, and title of the person making the
decision; and
(c) A statement
setting forth the specific reason for the decision, including:
1. If the appeal is granted:
a. The amount of the adjustment to be paid
retroactive to the initial date of service to the appealing pharmacy;
b. The drug name, national drug code, and
prescription number of the appealed drug; and
c. The appeal number assigned by the pharmacy
benefit manager, if applicable; or
2. If the appeal is denied:
a. The national drug code or the national
drug code of a therapeutically equivalent drug as defined in
KRS
304.17A-162(9) of the same
dosage, dosage form, and strength of the appealed drug; and
b. The Kentucky licensed wholesaler offering
the drug at or below maximum allowable cost on the date of fill.
(6) When a
pharmacy benefit manager grants an appeal for which a price update is warranted
in accordance with
KRS
304.17A-162(2), the pharmacy
benefit manager shall individually notify contracted pharmacies of the date of
the granted appeal, the appealed drug, initial date of service, national drug
code, generic code number, applicable information to identify the health
benefit plan, and retroactive price update by the time of release of the next
scheduled maximum allowable cost update following the appeal decision by:
(a) Mail Courier;
(b) Electronic mail;
(c) Facsimile; or
(d) Web portal posting for sixty (60) days
and corresponding electronic communication to a contracted pharmacy with
hyperlink to the portal for the granted appeal. A pharmacy benefit manager
shall include in the beginning and upon renewal of the contract with a pharmacy
or the pharmacy's representative, notice, and instructions for how to access
and use the web portal.
(7) All contracted pharmacies permitted to
reverse and resubmit claims following a granted appeal pursuant to
KRS
304.17A-162(2) shall submit
claims to the pharmacy benefit manager within sixty (60) days of notification
that the appeal was granted.
(8) A
pharmacy benefit manager shall submit the maximum allowable cost pricing appeal
process and a template response satisfying the requirements of subsection (5)
of this section to the department for review and approval.
Section 3. Department Review of Maximum
Allowable Cost Pricing Appeal.
(1) A
contracted pharmacy or the pharmacy's designee may file a complaint following a
final decision of the pharmacy benefit manager to the department in accordance
with
KRS 304.2-160 and
304.2-165.
(2) A complaint shall be submitted to the
department no later than thirty (30) calendar days from the date of the
pharmacy benefit manager's final decision.
(3) The department shall be entitled to
request additional information necessary to resolve a complaint from any party
in accordance with
KRS
304.2-165 and
304.17A-162(5).
Section 4. Maximum allowable cost
list availability and format.
(1) The
pharmacy benefit manager shall make available to the contracted pharmacy a
comprehensive list of drugs subject to maximum allowable cost
pricing.
(2) The comprehensive
maximum allowable cost pricing list shall:
(a) Be a complete listing by drug in an
electronically accessible format, unless, upon a pharmacy's written request the
list be provided in a paper or other agreed format within two (2) business days
upon receiving the necessary information required for each list
requested;
(b) Identify the
applicable health plan for which the pricing is applicable;
(c) Be electronically searchable and sortable
by individual drug name, national drug code, and generic code number;
(d) Contain data elements including the drug
name, national drug code, per unit price, and strength of drug;
(e) List a specific maximum allowable cost
for each drug that will be reimbursed by the pharmacy benefit
manager;
(f) Provide the effective
date for that maximum allowable cost price; and
(g) Provide the date the maximum allowable
cost list was updated.
(3) The pharmacy benefit manager shall retain
in accordance with subsection (2)(a) of this section historical pricing data
for a minimum of 120 days.
Section
5. Weekly Updates to Maximum Allowable Cost Price List.
(1) Pharmacy benefit managers shall send to
all contracted pharmacies one (1) weekly update to the maximum allowable cost
price list.
(2) The weekly update
shall include the information below for all drugs added, removed, or changed in
price since the last weekly update:
(a) Be in
an electronically accessible format, unless, upon written request by the
pharmacy the update be provided in paper or other agreed format within two (2)
business days of receipt of the request from the contracted pharmacy;
(b) Identify the basis for each drug's
inclusion on the update;
(c) If a
drug is added to the maximum allowable cost list, the maximum allowable cost
price shall be indicated;
(d)
Identify all drugs removed from the maximum allowable cost list;
(e) If a change in the maximum allowable cost
price is made, include the old price, and new price;
(f) Identify the drug name, national drug
code, generic code number, and the applicable health benefit plan information;
and
(g) Identify the effective date
of the change.
Section
6. Data Source Availability. Each pharmacy benefit manager shall
identify electronically or within contracts to all contracted pharmacies the
national drug pricing compendia or sources used to obtain drug price data for
those drugs subject to maximum allowable cost provisions. If any changes are
made to the data sources following the execution of a contract, the pharmacy
benefit manager shall individually notify the contracted pharmacies of the
changes either through correspondence submitted electronically, facsimile, or
mail courier.
Section 7. Annual
report. All pharmacy benefit managers licensed to do business in Kentucky shall
transmit at least annually by March 31 to the department a Pharmacy Benefit
Manager Annual Report.
Section 8.
Incorporation by reference.
(1) "Pharmacy
Benefit Manager Annual Report," June 2017, is incorporated by
reference.
(2) This material may be
inspected, copied, or obtained, subject to applicable copyright law, at the
Kentucky Department of Insurance, 215 West Main Street, Frankfort, Kentucky
40601, Monday through Friday, 8 a.m. to 4:30 p.m.