Relating to pharmacy benefits manager reverse auctions and group insurance for public employees and including effective date provisions

“Price” is defined as the projected cost of a PBM’s bid to provide prescription drug benefits to allow direct comparison of the comparably calculated costs of competing PBMs’ proposals over the duration of the PBM’s services contract.311, and notwithstanding any other law to the contrary, the department shall enter into a contract for the services of a PBM for the administration of benefits of self-funded public sector health plans. “Self-funded public sector health plans” is defined as any group benefit plan under Code chapter 509A. Prior to November 1, 2025, DAS shall procure a technology platform with capabilities to conducting a PBM reverse auction, and related services from the operator of the technology platform. The requirements for the technology platform and for the related services are detailed in the bill. DAS is prohibited from awarding a contract for either the technology platform or the technology operator services to a vendor that is a PBM or a vendor that is managed by, or a subsidiary or affiliate of, a PBM. The vendor awarded the contract by DAS shall not outsource any part of the PBM reverse auction or of the electronic, line-by-line, claim-by-claim review of invoiced PBM prescription drug claims. With technical assistance and support provided by the technology platform operator, DAS shall specify the terms of the participant bidding agreement. The technology platform used to conduct the reverse auction shall be repurposed over the duration of the PBM’s services contract as a pharmacy claims adjudication engine to perform electronic, line-by-line, claim-by-claim review of 100 percent of invoiced PBM drug claims, and to identify all deviations from the specific terms of the PBM’s services contract. DAS is required to reconcile the electronically adjudicated pharmacy claims with PBM invoices on a monthly or quarterly basis to ensure that state payments shall not exceed the terms specified in any PBM’s services contract. The first PBM reverse auction shall be completed and the PBM services contract shall be awarded to the winning PBM with an effective date beginning January 1, 2026. Subsequent services contracts must be awarded no later than three months prior to termination or expiration of the current PBM’s services contract for a covered group, such as the state employees benefits group, that includes only active employees and dependents, but does not include retiree participants in a Medicare part D employer group waiver program (Medicare employer group) pursuant to the federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Medicare Act). If an eligible covered group that includes retiree participants in a Medicare employer group pursuant to the Medicare Act opts to use the processes and procedures under the bill, the relevant PBM reverse auction shall be completed and the PBM services contract shall be awarded to the winning PBM no later than six months prior to termination or expiration of the current PBM’s services contract covering the Medicare employer group. DAS may perform a market check for providing PBM services during the term of the current PBM’s services contract. “Market check” is defined in the bill. Three years after the first services contract is awarded to a PBM, self-funded public sector health plans shall have the option to conduct a PBM reverse auction. Any self-funded public sector health plans that opt to conduct a PBM reverse auction shall retain full autonomy as detailed in the bill. The bill shall not apply to nonprofit, nongovernmental health maintenance organizations with respect to managed care plans that provide a majority of covered health care services through a single contracted medical group. DAS may elect to vacate the outcome of a PBM reverse auction if the lowest-cost PBM bid is not less than the projected cost trend for the incumbent PBM contract as verified by DAS or by a consultant retained by DAS. The bill takes effect upon enactment.