Bill > SF284

Introduced Session

This bill relates to pharmacy benefits manager reverse auctions and group insurance for public employees. “Pharmacy benefits manager reverse auction” (reverse auction) is defined in the bill as an automated, transparent, and competitive bidding process conducted online that starts with an opening round of bids and allows qualified pharmacy benefits manager (PBM) bidders to counter-offer a lower price for as many rounds of bidding as determined by the department of administrative services (DAS) for a multiple health plan prescription drug purchasing group. “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. Consistent with Code section 8A.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, 2024, DAS shall procure, through solicitation of proposals from qualified professional services vendors, 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 automated, real-time, 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 an automated pharmacy claims adjudication engine to perform real-time, 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. If, following state payment to the PBM on the basis of the reconciliation, the PBM asserts that DAS has paid less than the amount owed, the PBM may seek resolution through a mutually acceptable dispute resolution process as agreed to in the terms of the services contract between the parties. 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 July 1, 2024. 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. DAS shall implement a no-pay option that obligates the winning PBM, rather than the state, to pay the cost of the technology platform and related technology platform operator services by assessing the PBM a per-prescription fee as detailed in the bill. The bill shall apply to group benefit plans under Code chapter 509A. 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. After the first PBM reverse auction, self-funded private sector health plans with substantial participation by Iowa employees and their dependents shall have the option to participate in a joint purchasing pool with state employees for subsequent PBM reverse auctions. Any self-funded public sector health plans or self-funded private sector health plans that opt to participate with the state employees group benefits plan in a joint PBM reverse auction purchasing pool shall retain full autonomy as detailed in the bill. 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.

Committee Categories

Mike Klimesh (R)*, 

Committee report approving bill, renumbered as SF 554. S.J. 680. (on 03/22/2023)

Official Document