By: HUB’s EB Compliance Team
A new Arkansas Insurance Department (“AID”) rule, Rule 128: Fair and Reasonable Pharmacy Reimbursements, will require health benefit plans subject to the Arkansas Pharmacy Benefit Manager Licensure Act (AR Code § 23-92-501 to § 23-92-511) to file with the Commissioner a written report describing certain pharmacy compensation data. The data requirements are detailed in a recent AID Bulletin # 18-2024. Together the rule and the bulletin seek to gather information to ensure that pharmacy/pharmacist reimbursements for services are fair and reasonable, and to ensure adequate pharmacy networks for health plans.
Data Required to be Filed
Per the rule and detailed in the bulletin, data must be submitted to the AID in writing to determine if pharmacy compensation is fair and reasonable. This requirement applies to all health benefit plans, whether fully-insured or self-insured. The data includes various metrics from the previous calendar year, including average dispensing fees paid, total number of drug reimbursement claims paid, pharmacy network retention data, and the total amount of adjustments made in response to appeals or complaints. In addition, for self-funded plans and self-funded government plans with 5,000 or more Arkansas resident covered lives, additional data must be filed. This set of data relates to cost impacts, and includes projected increases in drug costs, projected premium impacts, and per member per month projected cost increases.
Who Should File and When to File
Fully-insured health insurance carriers will file for their plans. They are permitted to submit the data by product type, such as individual market, small group market, or group market. A third-party administrator (“TPA”) or Pharmacy Benefit Manager (“PBM”) of a self-funded health benefit plan may file the data on behalf of a health benefit plan for which it administers its drug benefits. For plan year 2024, data must be filed by February 17, 2025. For plan year 2025, data must be filed by July 1, 2025. On an ongoing basis, health benefit plans will need to file the data on or before March 1st each year using the previous full year of plan data. Self-funded health plans may file for reasonable extensions for required filings if the data or report requires information or calculations not available or in possession of the health plan.
Overall Impact on Self-Insured Plans
The most impactful aspect of this new rule is that it is written to explicitly apply to self-insured health plans. As many may recall, Arkansas was the state that brought rise to the Supreme Court’s Rutledge decision in 2020. Hub covered that decision here. In that decision the Court held that the broad preemption protection under the Employee Retirement Income Security Act (“ERISA”) did not apply in cases like the Arkansas PBM law. ERISA preemption is the legal foundation self-funded health plans use to not have to comply under a vast array of state laws, including state insurance laws. With this new rule, Arkansas again holds that the rule applies to pharmacy reimbursement or “compensation,” and not benefit plan design, which is what ERISA governs. Therefore, Arkansas states that it is permitted to regulate with this new rule in accordance with the Rutledge decision.
Next Steps for Self-Insured Plans
Self-insured plans should confirm with their TPAs or PBMs if they are reporting on their behalf, or simply providing the information to the plan for them to report. Plans should also assess whether they should seek out requesting an extension to file.
The Future of this PBM Rule and PBM Laws in Other States
The AID commented that changes may be made to the rule after receiving the filings this first year. This rule continues the trend of PBM legislation at the state level, including Florida’s PBM law from roughly a year ago. Hub covered that new Florida law here.
If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.
NOTICE OF DISCLAIMER
Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.