DAR File No. 44180

This rule was published in the November 15, 2019, issue (Vol. 2019, No. 22) of the Utah State Bulletin.


Insurance, Administration

Rule R590-282

Pharmacy Benefit Managers

Notice of Proposed Rule

(New Rule)

DAR File No.: 44180
Filed: 11/01/2019 02:28:37 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

H.B. 370, Pharmacy Benefit Manager Amendments, passed during the 2019 General Session, requires the Insurance Department to license pharmacy benefit managers (PBMs). This rule provides information on the licensing of PBMs and establishes the data reporting guidelines required by H.B. 370.

Summary of the rule or change:

This rule defines terms, provides licensing requirements, establishes the format for data submission to the Utah Insurance Department, and provides the date the information is due.

Statutory or constitutional authorization for this rule:

  • Subsection 31A-46-301(3)(c)(ii)
  • Subsection 31A-2-201(3)
  • Subsection 31A-46-202(1)(a)

Anticipated cost or savings to:

the state budget:

There may be slight savings to the state budget. The administrative cost of processing PBM licenses is approximately $35,000 per year. Having a rule for applicant filings will help keep these costs down because it will reduce the time required to follow up on incomplete applications. This rule covers licensing requirements and the format for data submission to the Commissioner. There will be a minimal increase in employee time spent processing the data that is received by the Commissioner, but this will be covered by existing FTEs.

local governments:

There will be no cost or savings to local governments because this rule governs only the relationship between the state and certain licensees.

small businesses:

Most PBMs are not small businesses. For those PBMs considered to be a small business, the administrative cost to process the license renewal payment each year will be minimal. The cost of the annual license fee will be $1,050 per year. There will also be a cost to businesses in the form of work hours spent complying with the data reporting requirements, but this cost cannot be quantified because it is unique to each company.

persons other than small businesses, businesses, or local governmental entities:

Administrative costs to licensees of the annual payment of the license fee should be nominal. The cost of the annual license fee will be $1,050 per year. There will also be a cost to businesses in the form of work hours spent complying with the data reporting requirements, but this cost cannot be quantified because it is unique to each company.

Compliance costs for affected persons:

Administrative costs to licensees of the annual payment of the license fee should be nominal. The cost of the annual license fee will be $1,050 per year. There will also be a cost to businesses in the form of work hours spent complying with the data reporting requirements, but this cost cannot be quantified because it is unique to each company.

Comments by the department head on the fiscal impact the rule may have on businesses:

I. WHETHER A FISCAL IMPACT TO BUSINESS IS EXPECTED AS A RESULT OF THE PROPOSED RULE AND, IF SO, A DESCRIPTION OF WHY: Yes, there is a fiscal impact to a licensed PBM business. However, the majority of the fiscal impact comes from the required fee rule and not the application rule. In other words, the fiscal impact results from the license fee of $1,050 which is assessed annually. There will also be a cost to businesses in the form of work hours spent complying with the data reporting requirements, but this cost cannot be quantified because it is unique to each company. II. AN ESTIMATE OF THE TOTAL NUMBER OF BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: There are 30 PBM businesses that will submit an application. III. AN ESTIMATE OF THE SMALL BUSINESS ESTABLISHMENTS IN UTAH EXPECTED TO BE IMPACTED: The Department estimates that there may be two small businesses that submit an application. IV. A DESCRIPTION OF THE SOURCES OF COST OR SAVINGS AS WELL AS THE EXPECTED NET SAVINGS OR COST TO BUSINESS ESTABLISHMENTS AND SMALL BUSINESS ESTABLISHMENTS AS A RESULT OF THE PROPOSED RULE OVER A ONE-YEAR PERIOD, IDENTIFYING ONE-TIME AND ONGOING COSTS: This rule is required by statute under H.B. 370 (2019). Because this rule describes the method of data reporting, there may be a cost to businesses to prepare the data and report it. The data already exists in a company's records; the cost would be the time it takes to create the report and send it to the Department. This cost cannot be quantified because it is unique to each company. V. DEPARTMENT HEAD'S COMMENTS ON THE ANALYSIS: The above analysis represents the Department's best estimate of the fiscal impact that this rule may have on businesses.

Todd E. Kiser, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

  • Steve Gooch at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at sgooch@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/16/2019

This rule may become effective on:

12/23/2019

Authorized by:

Steve Gooch, Information Specialist

RULE TEXT

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs

FY 2020

FY 2021

FY 2022

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$2,100

$2,100

$2,100

Non-Small Businesses

$31,500

$31,500

$31,500

Other Person

$0

$0

$0

Total Fiscal Costs:

$33,600

$33,600

$33,600





Fiscal Benefits




State Government

$33,600

$33,600

$33,600

Local Government

$0

$0

$0

Small Businesses

$

$0

$0

Non-Small Businesses

$0

$0

$0

Other Persons

$0

$0

$0

Total Fiscal Benefits:

$33,600

$33,600

$33,600





Net Fiscal Benefits:

$0

$0

$0

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described in the narrative. Inestimable impacts for Non - Small Businesses are described in Appendix 2.

 

Appendix 2: Regulatory Impact to Non - Small Businesses

There are 30 non-small pharmacy benefit managers (PBMs) in Utah in FY 2020. As a result of H.B. 370, which was passed during the 2019 General Session, each of those PBMs must be licensed to do business in Utah. Each PBM will be required to pay a combined $1,050 licensing fee each year. This will result in $31,500 of new revenue to the state annually. The Department does not have enough data about past years to estimate growth for future fiscal years.

 

The head of the Insurance Department, Todd E. Kiser, has reviewed and approved this fiscal analysis.

 

 

R590. Insurance, Administration.

R590-282. Pharmacy Benefit Managers.

R590-282-1. Authority.

This rule is promulgated pursuant to:

(1) Subsection 31A-2-201(3), which authorizes the commissioner to make rules to implement the provisions of Title 31A;

(2) Subsection 31A-46-202(1)(a) which authorizes the commissioner to make a rule to establish the method and forms to submit an application, and;

(3) Subsection 31A-46-301(3)(c)(ii), which authorizes the commissioner to make a rule for the manner in which a pharmacy benefit manager may submit corrections and information with supporting evidence and comments.

 

R590-282-2. Purpose and Scope.

(1) The purpose of this rule is to:

(a) define terms;

(b) provide licensing requirements; and

(c) establish the format for reporting data.

(2) This rule applies to all pharmacy benefit managers operating in Utah on or after July 1, 2019.

 

R590-282-3. Licensing.

(1)(a) To obtain or renew a pharmacy benefit manager license, the applicant shall:

(i) submit the Utah Insurance Department Pharmacy Benefit Manager Application and the required attachments; and

(ii) pay the fees in accordance with R590-102.

(b) The Utah Insurance Department Pharmacy Benefit Manager Application is available on the Department's website at https://insurance.utah.gov.

(2)(a) The licensing period begins on April 1 of each year and ends on March 31 of the following year.

(b) A license for which a renewal license application is not received by the commissioner before April 1 will be considered to have expired.

(4) Any material changes in the information submitted in an application shall be reported to the commissioner no later than 30 days after the day on which the information changes.

 

R590-282-5. Reporting Requirements.

(1)(a) Beginning on April 1, 2020, and each year thereafter, a pharmacy benefit manager shall submit the Utah Pharmacy Benefit Manager Report.

(b) The Utah Pharmacy Benefit Manager Report and its instructions are available on the Department's website.

(2)(a) At least 30 days prior to publishing any data derived from the Utah Pharmacy Benefit Manager Report, the commissioner will email to each pharmacy benefit manager submitting data under Subsection (1), a general description of the data to be published.

(b)(i) A pharmacy benefit manager may respond to the email by submitting the information specified in Subsection 31A-46-301(3)(c)(ii) to the Health Research folder of the Department's secure file upload website at https://forms.uid.utah.gov/insurance/fileUploads/.

(ii) Any response must be received within 30 days of the date of the email described in Subsection(2)(a).

 

R590-282-6. Penalties.

A person found to be in violation of this rule shall be subject to penalties as provided under Sections 31A-2-308 and 31A-46-401.

 

R590-282-7. Enforcement Date.

The commissioner will begin enforcing this rule 45 days from the rule's effective date.

 

R590-282-8. Severability.

If any provision of this rule or its application to any person or situation is held to be invalid, that invalidity shall not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this end the provisions of this rule are declared to be severable.

 

KEY: insurance, pharmacy benefit manager

Date of Enactment or Last Substantive Amendment: 2019

Authorizing, and Implemented or Interpreted Law: 31A-2-201(3); 31A-46-301(3)(c)(ii); 31A-46-202(1)(a)


Additional Information

More information about a Notice of Proposed Rule is available online.

The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at https://rules.utah.gov/publicat/bull_pdf/2019/b20191115.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.

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For questions regarding the content or application of this rule, please contact Steve Gooch at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at sgooch@utah.gov.  For questions about the rulemaking process, please contact the Office of Administrative Rules.