of the

INSURANCE COMMISSIONER WASHINGTON STATE

Mike Kreidler- Insurance Commissioner

As required by

The Washington State Administrative Procedures Act

Chapter 34.05 RCW

Matter No. R 2020-04

CONCISE EXPLANATORY STATEMENT; RESPONSIVENESS SUMMARY; RULE DEVELOPMENT PROCESS; AND

IMPLEMENTATION PLAN

Relating to Health care benefit managers

December 29, 2020

TABLE OF CONTENTS

Section 1 Introduction pg. 3

Section 2 Reasons for adopting the rule pg. 3

Section 3 Rule development process pg. 3

Section 4 Differences between proposed and final rule pg. 4

Section 5 Responsiveness summary pg. 4

Section 6 Implementation plan pg. 19

Appendix A Hearing Summary pg. 21

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Section 1: Introduction

Revised Code of Washington (RCW) 34.05.325 (6) requires the Office of Insurance Commissioner (OIC) to prepare a “concise explanatory statement” (CES) prior to filing a rule for permanent adoption. The CES shall:

1. Identify the Commissioner's reasons for adopting the rule; 2. Describe differences between the proposed rule and the final rule (other than

editing changes) and the reasons for the differences; and 3. Summarize and respond to all comments received regarding the proposed rule

during the official public comment period, indicating whether or not the comment resulted in a change to the final rule, or the Commissioner's reasoning in not incorporating the change requested by the comment; and

4. Be distributed to all persons who commented on the rule during the official public comment period and to any person who requests it.

Section 2: Reasons for Adopting the Rule

In 2020, the Washington State Legislature enacted Second Substitute Senate Bill 5601 (Chapter 240, Laws of 2020), amending existing statutes and creating a new chapter in Title 48, which requires the registration and regulation of health care benefit managers.

The primary focus of 2SSB 5601 was to create a framework for the registration and regulation of health care benefit managers, including but not limited to, the timing of registration, identification of areas of specialty and records maintenance. In accordance with 2SSB 5501, carriers and health care benefit managers must file contracts and contract amendments. A health care benefit manager (HCBM) must file with the Commissioner every benefit management contract and between the HCBM and a provider, pharmacy, pharmacy services administration organization, or another HCBM, that is entered into in support of a contract with a carrier or a public employee’s benefit program, within 30 days following the effective date of the contract or amendment. Carriers must file all contracts and contract amendments entered into with a HCBM with the commissioner, within 30 days following the effective date of the contract.

These rules are adopted to ensure that the statutory requirements are implemented

Section 3: Rule Development Process

The OIC filed a preproposal statement of inquiry (CR-101) to begin formal rulemaking on May 27, 2020. The CR-101 comment period was open until July 1, 2020.

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The OIC held the first stakeholder meeting on July 16, 2020 to allow for public comments to be submitted prior to drafting.

The OIC released the stakeholder draft on August 24, 2020. The OIC held another stakeholder meeting and stakeholders were provided the opportunity to submit comments to the draft.

On November 3, 2020, the OIC filed a CR-102 and the public hearing was scheduled for December 9, 2020.

The OIC held a hearing on December 9, 2020. Comments on the CR-102 were also due on December 9, 2020.

On December 29, 2020, the OIC filed the CR-103 to adopt these rules which becomes effective on January 1, 2022.

Section 4: Differences between Proposed and Final Rule

A technical change was made to WAC 284-180-120 to align with existing law, which identifies that this chapter does not apply to the actions of health care benefit managers providing services to or on behalf of Medicaid. Another technical change was made in WAC 284-180-230 to add “(c)” to correct a sentence that did not have a subsection identifier with it.

Section 5: Responsiveness Summary

The OIC received a large number of comments and suggestions regarding this rule. The following information contains a summary of the comments, the OIC’s response to the comments, and information about whether the OIC included or rejected the comments.

The OIC received comments from:

• APTA Washington • Association of Washington Healthcare Plans • Cambia Health Solutions including Regence BlueShield, Asuris Northwest Health,

and BridgeSpan Health Company • Coordinated Care Corporation • Dental Network of America • DenteMax • Mitchell Pharmacy Solutions • Molina Healthcare • National Community Pharmacists Association • PacificSource Health Plan

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• Pharmaceutical Care Management Association • Premera Blue Cross including LifeWise Health Plan of Washington • Providence Health Plan • UW Medicine • Washington State Chiropractic Association • Washington State Pharmacy Association

Stakeholder Comments to the CR-101, stakeholder drafts and CR-102

Comment OIC Response WAC 284-180-110 We offer the following change: (2)Health care benefit managers are responsible for compliance with the provisions of this chapter that are applicable and are responsible for the compliance of any person or organization acting on behalf of or at the direction of the health care benefit manager, or acting pursuant to health care benefit manager standards or requirements.

Thank you for your comment, but the OIC declines to adopt this language because there is already existing language in the proposed WAC regarding applicability including the following language, “except as otherwise expressly provided in this chapter.”

We seeks clarification if the proposed rule is intended to apply to Medicaid.

The Commissioner made a technical change to WAC 284-180-120 to align with existing law, which identifies that this chapter does not apply to the actions of health care benefit managers providing services to or on behalf of Medicaid.

We would like to see the word regulation remain. The rule mentions regulation throughout and we believe it is important to have regulation included in the purpose section.

Thank you, but the OIC only removed this term because the rule identifies that the purpose is to provide regulatory standards and did not want to duplicate the term twice in one sentence or section.

WAC 284-180-120 We would like to request the OIC define Union and Self-insured health plans for small pharmacy appeals. Does the OIC have a process in which they can identify the applicability of the law? Does the OIC have a process in which they can verify if a plan falls into one of the above categories? Since currently these requirements are placed on the Pharmacy, can the OIC develop a system where a pharmacy can identify if a plan is a self-insured or a union plan before submitting an appeal?

Thank you for your comments, but imposing this requirement on the OIC would be contrary to the statutory language.

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Comment OIC Response WAC 284-180-130 The OIC has added a definition for “Health care The Commissioner declines to limit benefit manager” that cites back to the statutory the statutory definition as provided definition found at RCW 48.200.020. The statute by the Legislature, particularly defines a HCBM as “a person or entity because this is a new area of providing services to, or acting on behalf of, a regulation for the OIC. The OIC may health carrier or employee benefits programs, that re-evaluate this at a later date, after directly or indirectly impacts the determination or we have begun regulating health utilization of benefits for, or patient access to, care benefit managers, if the OIC health care services, drugs, and supplies . . .” determines that further rulemaking (emphasis added). We urge the OIC to take this or guidance may be necessary. In opportunity in the rulemaking to further clarify or the meantime, the OIC urges anyone limit what is meant by a person or entity that who might have questions about indirectly impacts the determination or utilization potential applicability to contact the of benefits or access to services, drugs and OIC. supplies. We understand the OIC provided information for the legislature’s fiscal note on the underlying legislation whereby the OIC projected “a total of 550 HCBM will seek licenses with the OIC – 400 in FY2022, 100 in FY2023 and 50 in FY2024 [and] assume the number will then hold steady at 550 licensees per year.” It might be helpful if the OIC could provide a list of the entities it considered when supplying information for the fiscal note. This could shed further light on which entities carriers should classify as HCBMs.

The numbers in the fiscal note were simply an estimate based on information from states that regulate third party administrators, pharmacy benefit managers, and health care benefit managers. We did not attempt to classify health care benefit managers for the purpose of the fiscal note.

We support Senator Short’s position that the definition is intended to be broad to capture companies who perform services on behalf of a regulated insurance carrier that affects patient care and access to health plan benefits and request that the OIC not change or limit the definition.

Thank you for your comments, the Commissioner has not limited the statutory definition.

WAC 284-180-130 (16) – to avoid confusion with chapter 18.64 RCW, which references pharmacy managers in the context of those managing a pharmacy, we suggest inserting the word “pharmacy benefit manager in RCW xxx.”

The Commissioner made this change to pharmacy benefit manager.

WAC 284-180-130 (18) – similarly, the statutory The Commissioner made this reference is to “radiology benefit manager” rather change to radiology benefit than radiology manager. We suggest inserting the manager. additional word so that the reference is accurate.

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Comment OIC Response WAC 284-180-220 This section requires HCBMs to receive the notice of approval of their registration application from the OIC prior to conducting business in the state. Many of the entities required to register with the OIC starting January 1, 2022 are currently contracted with carriers and operating in Washington. We are concerned the impact this requirement could have in the initial year of the program and recommend that OIC clarify that this requirement will not prevent entities from continuing operations in Washington while completing registration.

The OIC is planning for early application to reduce stress for applicants and allow entities secure availability services by 1/1/22.

The timeline for initial HCBM registration creates a confusing standard with the renewal process established in WAC 284-180-230. It appears that if a HCBM newly registers by January 1, 2022, their initial registration will only be valid from January 1, 2022 until June 30, 2022 (effectively six months). The HCBM will then be required to renew their registration shortly after their initial registration, by March 1, 2022, which effectuates their registration from July 1, 2022 until June 30, 2023. This creates a system where newly registered HCBMs are paying twice in short succession for their registration.

This is due to timing of the legislation that required registration before the calendar year and is consistent with the current pharmacy benefit manager program. Registration is the one-time fee to register. Renewal fees are the fees for the program to be self-sustaining in the ensuing fiscal year that occurs in July of each year.

We respectfully request that OIC implement a flat fixed renewal fee.

The Commissioner declines to adopt this approach because the legislation does not permit flat-fees, the program must be self-sustaining.

We appreciate OIC staff confirming during the September 9 stakeholder call that registered PBMs will need to register as a HCBM when these rules go into effect and can otherwise continue to operate under existing PBM registration rules until that time.

Thank you for your comment.

WAC 284-180-230 Here is one suggestion that retains the requirements in the stakeholder draft:

WAC 284-180-220:

The Commissioner adopted the suggested approach.

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Comment OIC Response (1) Beginning, January 1, 2017, through December 31, 2021, and thereafter, to conduct business in this state, pharmacy benefit managers must register with the commissioner and must annually renew the registration. (2) Beginning January 1, 2022, and thereafter, to conduct business in this state, health care benefit managers, including pharmacy benefit managers, must have an approved registration with the commissioner, which must be renewed annually following the requirements set forth in WAC 284-180-230… We appreciate the OIC addressing the uniform or consistent application of Washington-state annual gross health care benefit manager business income for the previous calendar year to support calculating renewal fees across all benefit managers on the September 9th stakeholder call. We request the OIC ensures any financial measurement that registration renewal fees are based upon are reportable by all HCBM to support equitable application of renewal fees to all HCBM. We ask OIC to consider identifying a specific document(s) it will rely on to determine renewal fees-e.g., financial statements, 10K filing, etc. In subsection (2)(a), please add in "1" after March to indicate the date by which a renewal must be submitted.

Renewal fees are prorated fees based on income reported with minimum of $500 applied.

Subsection 5 states HCBM will receive notice of renewal application approval. We respectfully request the following change to ensure HCBM receive notice of incomplete applications, denials, as well as approvals of renewal applications. 5)The health care benefit manger will receive notice of the status approval of the renewal application from the commissioner in a timely manner.

Thank you for your comment. Approval isn’t finalized until review is complete and payment is made, the last part is dependent on the health care benefit manager.

According to Section 6, renewals are valid for one fiscal year, from July 1- June 30. However, renewal

The OIC must receive payment by July 15th, if payment is made by this

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Comment OIC Response fees are not due until July 15 (Section 2(b)) and according to Section 3, the renewal application is not complete until the commissioner receives the correct renewal fee. Can OIC please advise as to a health care benefit manager’s status between July 1 and July 15 if payment has not been tendered, therefore rendering an application “incomplete” according to the proposed regulatory verbiage?

time, the health care benefit manager will be renewed. We will not automatically unregister health care benefit managers who have not paid by July 1st.

We have a technical suggestion to Sub. 2. It Looks Thank you for your comment. The like a c) needs to be added to the below provision Commissioner has made this On or before June 1st of each year, the change. commissioner will calculate and set the renewal fees for the upcoming fiscal year for July 1st through June 30th. It is currently a standalone provision in the CR 102 it is a standalone sentence. WAC 284-180-240 We support the language in this section that outlines what information must be included in a health care benefit manager’s registration application. This list captures all the relevant information necessary to conduct business with the health care benefit manager. Specifically, we support the inclusion of the name and contact information for the person responsible for compliance with state and federal laws.

Thank you for your comments.

Section (1) (b) requires a HCBM to provide at the time of registration “[o]ther business licenses that the [HCBM] has held and those that are active.” It would be helpful if the OIC could provide examples of other types of business licenses of which they would like to be informed.

Examples are general business authority licenses and registrations in Washington and similar regulatory licenses in other states. More information will be provided as guidance in the application and renewal materials.

WAC 284-180-240(1) (h): We recommend using a The Commissioner declines to adopt limited look back period, such as five years. a limitation because this the

language of the bill and similar to language of other entities regulated in the Insurance Code. We review similar licenses and review regulatory actions of other states, civil and criminal.

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Comment OIC Response It is critical this language in Section (d) remain in the rule. Often PBMs, change their names, merge with others, operate under several names and perform various services. It is important for the OIC to be aware of all the possible names PBMs operate under, understand any other businesses, activities, or other services they may provide. Several of the PBMs operate in a very elusive manner.

Thank you for your comments.

WAC 284-180-240 Providing and updating registration information (4)(b) Any material change in the information provided to obtain or renew a registration.

Again, it is critical to keep this language intact to be sure the OIC has all updated information and stay on top of all changes the PBMs have made to their businesses and or services they provide.

Thank you for your comments

We request consistent use of the term "health The Commissioner has adopted this care benefit manager'' throughout the rule rather suggestion. than use of an alternate term of "benefit manager." We are concerned about the usefulness of providing information on non-active licenses. We believe the requested changes below will address the need to ensure the OIC obtains relevant and substantive information to conduct appropriate registration oversight. WAC 284-180-310 We suggest harmonizing the retention requirement to mirror the OIC’s for licensing/ registration of records materials, and limiting the period to six years.

Thank you for your suggestion, the Commissioner is utilizing the records date in the legislation.

Section (1) (a) requires HCBMs to retain records of each transaction completed. It is unclear what is meant by “transaction” in this context and additional guidance would be helpful.

We have added clarity around records expectations.

WAC 284-180-320 We recommend the first sentence of the provision be modified to read “If the commissioner requests records for inspection for a purpose other than to

The Commissioner adopted the suggestion and utilized business days.

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Comment OIC Response resolve an appeal under RCW 48.200, a health care benefit manager must make the records available to The Commissioner within fifteen working days from the date on the request.”

We suggest adding: If the HCBM did not provide This would be included in the the services in question, the HCBM must inform responses, if health care benefit OIC within 15 business days. manager did not provide the

services that are the basis of a complaint.

WAC 284-180-330 The proposed regulation directs carriers to provide notice of all health benefit managers in a carrier’s policy or member handbook, and also requires website posting.

If the carrier updates the member handbook and posts that online, which would be sufficient as an update to the website.

We request OIC consider adding language in this section that it will concurrently inform the carrier and HCBM when OIC receives an inquiry or complaint.

Existing in legislation.

General questions about filing section Since carriers regularly use provider agreements that are written, distributed, and implemented by benefit managers (whether independently or on behalf of a carrier) how will the OIC apply these two statutes?

The intermediary contract filing process has been superseded by new regulation, which will now apply. There are no changes to direct contracting practices.

How will providers know if the benefit management contract is in effect prior to the provider’s receipt of a provider agreement, or within 30 days of the agreement?

The OIC recommends all parties review their contracts for the contract effective date.

Carriers regularly amend provider agreements, Thank you for your comment, but including compensation provisions, with this is outside of the scope of this retroactive effect dates occurring in the past. rulemaking. While this is not allowed for carriers currently, it will be allowed for benefit managers. Clarifying the relationship and effect of these statutes and their rules on provider agreements is important for providers. With respect to the proposed language in WAC 284-180-455 (5), the WSCA would like to recommend the following language for consideration: “Upon filing and approval, all

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Comment OIC Response changes to a contract must be incorporated into a newly revised contract capable of being read without reference to amendatory exhibits, attachments, and addenda and must be made available to providers in both a final form and a marked-up format with strikeouts and underlining that show additions and deletions from the prior contract. Provider contracts may not contain exhibits, attachments or other addenda that amend the body of the contract unless such exhibit, attachment, or addendum contains terms and conditions that supplement rather than change language in the main body of the contract such as a standalone compensation exhibit, list of plans subject to the agreement, or complete fully integrated terms and conditions for participation in a separate plan or program such as Medicare participation.” WAC 284-180-405 There appears to be either an extra word, or a missing phrase or citation in this subsection. Does the phrase “as defined in” need to be deleted?

Thank you for your comment, the Commissioner has updated the language.

Under Section (4)(a) the term “contract” is defined The Commissioner declines to adopt to include providers. Similar to our comments the suggested change. The above, Molina respectfully requests that OIC definition clarifies the filing consider removing provider contracts from the requirements set forth in RCW definition of “health care benefit manager” as 48.200.040(2) those provider contracts are already governed by provider contracting laws and filed with the OIC under WAC 284-170-480. Including provider contracts in the definition would result in duplicative. WAC 284-180-410 We recommend spelling out HCSC, HMOs and adding term “insurers” following disability.

The Commissioner has adopted this approach.

WAC 284-180-420 We ask that the Commissioner add a section stating that the Commissioner will provide direct notice to carriers and health benefit managers of intended changes to either Manual not less than 20 business days before the change becomes effective.

The Commissioner declines to adopt this request because the SERFF Manual is owned and produced by SERFF. The SERFF Manual is issued on their timeline. The OIC does not control when their manual changes

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Comment OIC Response go into effect. The OIC communicates changes in advance with implementation dates and lead time. The OIC has a process for this.

WAC 284-180-430 Use of the word “rejection” in this section creates The Commissioner declines to make ambiguity. We ask that the Commissioner clarify change because the term and action or distinguish the concept of “rejection” from “Rejection” is a specific SERFF “disapproval.” Does the rejection option only process. It is not an OIC review occur at the initial filing or is rejection the action. Please note, this section is culmination of the review process within SERFF? mirrored in 284-44A WAC, 284-46A,

and 284-58 WAC for SERFF filing requirements for HCSC, HMO, and Disability. Rejection means the file is not downloadable, we could not accept it (SERFF). Versus disapproval which is an action related to the filing itself.

WAC 284-180-435 How will the changes made in response to an objection by one be incorporated in to the other review process?

The parties determine coordination of the approach to the logistics of updating their contracts.

May a carrier delegate its filing authorization to the health care benefit manager (or vice versa)?

There is a process for delegating to an authorized representative to file for either a carrier or HCBM.

We respectfully request that OIC clarify Thank you for your comments, but expectations for timely review of health care the Commissioner declines to put a benefit manager filings. Specifically, what is the timeline in the rule. These filings are anticipated timeframe for OIC's response on a filed after use. filing?

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WAC 284-180-445 It would be helpful if this section applied to the providers the carriers and benefit managers contract with. Providers receive addendums, memos, or notes of contract change from the PBMs indicating major changes in their contracts without clearly identifying those changes. This happens on a regular basis. It is complex and confusing, especially since the PBMs send these changes in a piecemeal fashion. In addition, PBMs have several contracts for the same carrier that apply to different patient populations.

Requiring the PBMs to provide detailed explanations of all material changes in an exhibit that marks and identifies each change revision using strikes through deletions and underlines and additions explaining those changes would be helpful to the providers to know exactly what has changed for which patient population and where in their contracts those changes will occur.

The Commissioner declines this request because this is outside of the scope of this rulemaking.

WAC 284-180-455 In Section (4), we ask that the last 2 sentences in this The Commissioner decline to subsection be split out into their own, unless the adopt this request because deeming is only meant to apply to value based the deeming process outlined compensation agreements with health benefit in the section is specific to this managers. type of reimbursement

agreement.

Section (5) appears to conflate the concept of a benefit manager and a provider. The payment to a participating provider would not be governed by the compensation paid to the benefit manager by the carrier. If the issue this is trying to address is provider support for whether an enrollee’s plan requires interaction with a benefit manager, we suggest directing the carrier to ensure that information is readily available.

The Commissioner declines to adopt this request, because the requirement provides clarification of the requirements in RCW 48.43.730(7), which is a statutory requirement that the OIC declines to limit.

The use and file requirement directly conflicts with the Thank you for your request. file prior to use requirements applicable to provider The rule provides additional contracts. Please provide clear guidance about which guidance. Also, filing standard applies for those unique types of benefit information will be provided in managers who manage a sub-network of providers. the general filing instructions. In Section (4), if a carrier enters into a reimbursement agreement that is tied to health outcomes, utilization of specific services, patient volume within a specific

Thank you for comments of support.

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period of time, or other performance standards, the carrier must file the reimbursement agreement with the commissioner within thirty days following the effective date of the reimbursement agreement…

It is imperative this language remain strong in the rule. This was a primary component that lead to introducing SB 5601. It is simple transparency. It is important to begin to shed light on the various agreements between the carriers and the PBMs that have been in the dark for decades. Most of these “outcomes” and “utilization of specific services” is financially motivated by the PBMs which is why we support the OIC looking at the contracts between the carriers and benefit managers. Often the design of these agreements negatively impacts the quality of patient care, patient access, and safety with misaligned incentivization. This language will provide much needed transparency with these agreements and finally allow the Commissioner to see the reimbursement agreement methods and requirements between these two entities. Section (1) states that filings need to be made within 30 days of effective date of the contract or amendment. We seek confirmation that filings are not required for agreements already in effect unless they are amended. We would also appreciate clarification on whether template agreements can be filed so as to require filing of contracts only if they deviated from the template.

A health carrier is not required to refile previously filed and approved contracts under WAC 284-180-455. However, in regards to Health Care Benefit Managers, will be required to file under its licensure for use and file all contracts as set forth in WAC 284-180-460.

We request compensation agreements and reimbursement agreements be deleted. Reformatting could lead to contract inconsistencies and ambiguities and should be avoided. Consequently, we request that subsection (5) be amended to reflect the acceptance of the format agreed to by both parties in their contract.

The Commissioner declines to make this change because the compensation provisions of a contract are required to be filed per RCW 48.43.730 as part of an intermediary relationship. Compensation is additionally a key component of a contract document and falls well within the term and requirements to file a “contract”.

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Reformatting could lead to contract inconsistencies and ambiguities and should be avoided. Consequently, we request that subsection (5) be amended to reflect the acceptance of the format agreed to by both parties in their contract.

The contract format is a business decision of the parties involved in the contracting process. However, the contract must meet legal requirements of the regulation and rules adopted thereunder.

The OIC continues to include the language in section The Commissioner declines to (5), which borrows language from current requirements adopt this approach because applicable to health carrier provider contract filings. We this would not align with the continue to emphasize that many HCBMs do not legislation. contract as part of a health plan network, but with the issuer as a whole. We struggle to see how this section will provide useful information for the OIC, and instead would appear to create a significant amount of work to revise health plan contracts. We urge the OIC to remove this section, or alternatively clarify that this section only applies to HCBMs that provide health care services to enrollees in specific plan networks.

WAC 284-180-460 We request compensation agreements be deleted as they are not required under the statute as benefit managers are required.to submit contracts and contract amendments.

The Commissioner declines to make this change because the compensation provisions of a contract are required to be filed per RCW 48.43.730 as part of an intermediary relationship. Compensation is additionally a key component of a contract document and falls well within the term and requirements to file a “contract”.

(1) A health care benefit manager must file all contracts and contract amendments between a provider, pharmacy, pharmacy services administration organization, or other healthcare benefit manager entered into directly or indirectly in support of a contracts with a carrier or employee benefits program within thirty business days following the effective date of the contract or contract amendment. If a health care benefit manager negotiates, amends, or a modifies a contract or a compensation agreement that deviates from a filed agreement, then the health care benefit

The Commissioner declines to adopt the suggested change.

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manager must file that negotiated, amended, or modified contract or agreement with the commissioner within thirty business days following the effective date. The commissioner must receive the filings electronically in accordance with this chapter. With regard to subsection (3), as we noted previously, The Commissioner declines to we understand that a health care benefit manager may make the requested changes not provide health care benefit services to a health because the language is carrier or employee benefits programs without a narrowly drafted to permit written agreement describing the rights and OIC to allow filers to propose responsibilities of the parties conforming to the formatting and language provisions of this chapter and any rules adopted by the needs. commissioner to implement or enforce this chapter including rules governing contract content. However, we are concerned the language in subsection 3: “... list or other format acceptable to the commissioner" could be incorrectly interpreted to mean the commissioner approves all contracts or agreements. Therefore, we request that subsection (3) be amended as follows:

The format of such contracts and agreements may include a list or other format capable of being electronically submitted acceptable to the commissioner so that a reasonable person will understand and be able to identify their participation and the reimbursement to be paid as a contracted provider in each provider network. WAC 284-180-505 Finally, we find WAC 284-180-505 specific to pharmacy appeals and audits to be a solid appeal process that should apply to all health care benefit managers. We recognize the statutory limitations that apply to this rule but wanted to voice our support for future efforts to apply this process to all health care services.

Thank you for your comments, but this is outside of the scope of this rulemaking.

For purposes of consistency, we suggest the following change: Appeals by network pharmacies to health care benefit managers who have identified that the health care benefit manager provides pharmacy benefit management services. A network pharmacy may appeal a multisource generic drug reimbursement to a health care benefit manager providing pharmacy benefit management services ... "

In Section 1(v), the Commissioner has included the multisource language.

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We would like to add to Sub. 5) If the pharmacy benefit manager denies the network pharmacy’s appeal, the pharmacy benefit manager must provide the network pharmacy with a reason for the denial and the national drug code of a drug that is available to the appealing pharmacy at a price that is less than or equal to thepredetermined reimbursement cost for the multisource generic drug.

This is outside of the scope of this rulemaking.

WAC 284-180-520

WSPA comments: The WSPA is seeking further clarification from the OIC regarding this new language. We suggest removal of this section.

This clarifies the type of materials that are to be submitted.

(3) We would like to see “shall” replace “may.” This provides the OIC the much needed direction and clearly defines the enforcement authority over the PBMs.

The Commissioner declines to adopt this approach.

General Comments How does the OIC plans on holding Health care benefit The OIC intends to utilize all of managers accountable for registering, renewing, and its tool in its toolbox for providing accurate information in a timely manner? ensuring compliance.

Additionally, we encourage all parties who become aware of a violation to report it as soon as possible to the OIC so that we can investigate it.

We appreciate the work by you and your team to draft these rules that implement E2SSB 5601, the new law requiring health care benefit managers to register with the OIC, and we support these proposed rules implementing E2SSB 5601.

Thank you for your comments.

Would the OIC confirm whether this regulation applies to dental networks?

Yes, health care benefit managers of all types, including any health care benefit management of dental services

WAC 284-180-330 and 340 are repealed. Can you The legislation provided new provide an explanation as to why these two have been enforcement authority for repealed? Where is the OIC’s fining capability of a PBM health care benefit managers, when it comes to small pharmacy reimbursement which was codified in RCW

appeals? We want to make sure there is no loss of 48.200.290.

OIC’s ability to fine a PBM when a violation is knowing

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and willful pertaining to prescription drug reimbursement appeals.

Section 6: Implementation Plan

A. Implementation and enforcement of the rule.

The OIC intends to implement and enforce the rule through the Company Licensing & Compliance Unit and the Market Conduct Oversight Unit, which are both parts of the Company Supervision Division as well as the Rates, Forms and Provider Networks Division (RFPN). OIC staff will continue to work with health care benefit managers, carriers, providers, and interested parties in complying with the requirements of the rule.

B. How the Agency intends to inform and educate affected persons about the rule.

After the agency files the permanent rule and adopts it with the Office of the Code Reviser:

• Policy staff will distribute the final rule and the Concise Explanatory Statement (CES) to all interested parties by posting and sharing the documents through the OIC’s standard rule making listserv and emailing the documents to stakeholder participants.

• The Rules Coordinator will post the CR-103 documents on the OIC’s website. • OIC staff will address questions as follows:

Type of Inquiry Division Registration Company Licensing & Compliance Unit Filings Rates, Forms, and Provider Networks

Division Consumer assistance Consumer Protection Division Rule content Company Licensing regarding registration

and the Rates, Forms and Provider Networks regarding filings

Authority for rules Policy and Legislative Affairs Enforcement of rule Legal Division Market Compliance Company Supervision

C. How the Agency intends to promote and assist voluntary compliance for this rule.

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The steps listed under implementation will inform and educate affected persons on the changes and help promote voluntary compliance.

D. How the Agency intends to evaluate whether the rule achieves the purpose for which it was adopted.

The OIC will work closely with health care benefit managers, carriers, providers, and other interested parties to evaluate the effectiveness of the rule as well as to monitor consumer complaints and to monitor plans for non-compliance.

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Appendix A

CR-102 Hearing Summary

Summarizing Memorandum

To: Mike Kreidler Insurance Commissioner

From: Mandy Weeks-Green Presiding Official, Hearing on Rulemaking

Matter No. R2020-13 Topic of Rulemaking: Consolidated health care rulemaking This memorandum summarizes the hearing on the above-named rule-making, held on December 9, 2020, at 3:30 p.m. in Olympia, Washington via a virtual meeting over which I presided in your stead.

The following agency personnel were present: Melanie Anderson, Susan Baker, Ali Butler, Jason Carr, Darryl Colman, Cheryl Common, Mark Durphy, Karen Huber, Kevin Torgerson and Stacey Warick.

In attendance and not testifying:

• Baird, Michelle • Brainard, Jacqueline • Cole, Sarah • Douthit, Jane • Emerick, Leslie • Gillis, Gretchen • Gingold, Jeffrey • Grassi, Lori • Hayley, Ashley • Johnson, Melissa • Jones, Meg • Knight, Clinton • Lane, Megan • Laubacher, Cynthia • Lervold, Ann • Lewis, Amber • Little, Dedi

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• Mack, Michelle • Mahjoubian, Skyler • Morones, Samuel • Najdzin, Joanne • Ness, Matthew • O'Connell, Tara • Pettey, Sarah • Robino, Steve • Seignemartin, Brandy • Smith, Kevin • Tedders-Young, Mary • Tellefson, Carrie • Temple, Michael • Vanslyke, Veronica • Vismantas, Simon • Vlasek, Derek

In attendance and testifying:

• Arnold, Jenny • Downing, Don • Head, William • Mendez-Harper, LuGina

The hearing was adjourned.

SIGNED this 9th day of December 2020

s/ Mandy Weeks-Green, Presiding Official

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