South Carolina Code of Regulations
Chapter 69 - DEPARTMENT OF INSURANCE
Section 69-77 - Pharmacy Benefits Managers
Universal Citation: SC Code Regs 69-77
Current through Register Vol. 47, No. 12, December 22, 2023
Section I. Purpose
The purpose of this regulation is to implement Act No. 48 of 2019 ("the Act") regarding pharmacy benefits managers and to provide licensing, reporting and activity standards for pharmacy benefits managers.
Section II. Licensure Requirements
A. Initial License and
Renewal. On or after January 1, 2021, a pharmacy benefits manager shall apply
for a license on a form and in accordance with a licensing schedule prescribed
by the Director or his designee. The terms "Director" and "designee" have the
meaning set forth in Section
38-1-20 of
the Code of Laws of South Carolina 1976, as amended.
B. The initial licensing schedule shall be
set by bulletin or order of the Director. In 2022, and thereafter, a pharmacy
benefits manager license shall be renewed annually no later than March 1 of
each year.
C. Each application for
a license shall be certified by an officer or authorized representative of the
applicant and shall contain a statement that certifies the pharmacy benefits
manager is in compliance with Section
38-71-2220 of the Code of Laws of
South Carolina 1976, as amended. All proprietary information submitted by the
pharmacy benefits manager under Section II of this regulation shall be
considered confidential under Sections
38-71-2250
and
30-4-40
of the Code of Laws of South Carolina 1976, as amended.
D. The pharmacy benefits manager shall
provide as part of the application for licensure the following:
(1) A non-refundable filing fee of $1,000 for
initial licensure and $500 for renewal licenses;
(2) A copy of the basic organizational
document of the pharmacy benefits manager, such as the articles of
incorporation, articles of association, partnership agreement, trust agreement
or other applicable documents, and all amendments thereto;
(3) a copy of the bylaws, organizational or
similar document(s), if any, regulating the conduct or the internal affairs of
the applicant;
(4) A copy of the
pharmacy benefits manager's provider manual and written agreement(s), excluding
pricing information, but including audit procedures, which it uses for
contracts entered into with pharmacists, pharmacies or pharmacy services
administrative organizations in administration of pharmacy benefits for health
care insurers in this State or a representative written agreement and provider
manual, excluding pricing information, but including audit procedures, for each
type of network provider, which it uses for contracts entered into with
pharmacists, pharmacies or pharmacy services administrative organizations in
administration of pharmacy benefits for health care insurers in this
State;
(5) For the two preceding
calendar years, a listing of health care insurers with which the pharmacy
benefits manager was contracted in this State to perform claims processing
services and the number of enrollees or beneficiaries covered by each health
care insurer;
(6) The relevant
documentation, such as a policies and procedures manual, that demonstrates the
pharmacy benefits manager has adopted processes to ensure compliance with the
requirements in Section
38-71-2240 of
the Code of Laws of South Carolina 1976, as amended, including any written
policies or procedures describing the appeals dispute resolution process for
in-network or contracted pharmacists or pharmacies;
(7) A certified statement that indicates
whether the applicant or officer with management or control:
(a) has been refused or denied a
registration, license or certification to act as or provide the services of a
pharmacy benefits manager or third-party administrator in any state, providing
specific details separately for each such refusal or denial, if any, including
the date, nature and disposition of the action; and
(b) has had any registration, license or
certification to act as such suspended, revoked or nonrenewed for any reason by
any state or federal entity, providing specific details separately for each
such suspension, revocation or nonrenewal, if any, including the date, nature
and disposition of the action, and attaching a copy of any relevant final order
or similar document imposing the suspension, revocation or
nonrenewal;
(8) A
description of whether the applicant has had a business relationship with an
insurer terminated for any fraudulent or illegal activities in connection with
the administration of a pharmacy benefits plan (if so, attach specific details
separately explaining this termination, including the date, and nature of the
termination); and
(9) Any other
relevant information deemed necessary by the Director or his designee to
evaluate the application for licensure or compliance with the requirements of
the Act and this regulation.
E. Review Process
(1) Initial and Renewal License Applications
For initial and renewal license applications, the Director or his designee
shall review the application under Section II.D of this regulation, and may:
(a) approve the application and issue the
applicant a pharmacy benefits manager license; or
(b) notify the applicant, in writing, that
the application is incomplete and request additional information to complete
the review; and, if the missing or requested information is not received within
thirty (30) days from the date of the notification, the Director or his
designee may deny the application; or
(c) deny the application; and
(i) provide written notice to the applicant
that the application has been denied stating or explaining the basis of the
denial; and
(ii) advise the
applicant that it may appeal the denial by requesting a hearing in accordance
with Section
38-3-210
of the Code of Laws of South Carolina 1976, as amended, before the South
Carolina Administrative Law Court.
(2) Standards of Review
(a) The Director or his designee shall deny
an initial or renewal application for licensure for the following reasons:
(i) the pharmacy benefits manager operates,
or proposes to operate, in a hazardous condition and the services it
administers, or proposes to administer, for health care insurers in this State
may be hazardous to the insurance-buying public; or
(ii) the pharmacy benefits manager has
violated the requirements of the Act, this regulation or other applicable South
Carolina law; or
(iii) the pharmacy
benefits manager has failed to timely submit information to complete review of
the application under Section II of this regulation.
(b) In lieu of a denial of a renewal
application, the Director or his designee may permit the pharmacy benefits
manager to submit to the Director or his designee a corrective action plan to
cure or correct deficiencies falling under Section II of this regulation,
impose an administrative penalty under Section
38-2-10
et seq. of the Code of Laws of South Carolina, 1976 as amended, or
both.
Section III. Contract Review
A. Contract
Review
(1) Prohibited Contract Language
No contract entered into by a pharmacy benefits manager and a pharmacist or pharmacy which relates to participation or administration of a pharmacy benefits plan or program of a health care insurer shall contain language in violation of the Sections 38-71-2200 et seq of the Code of Laws of South Carolina 1976, as amended or other applicable provision of South Carolina law.
(2) Waiver Prohibited
The prohibitions set forth Sections 38-71-2220 et seq of the Code of Laws of South Carolina 1976, as amended cannot be waived by contract.
B.
Marketing and Advertising
Pursuant to Section 38-71-2230, a pharmacy benefits manager shall not cause or knowingly permit the use of any advertisement, promotion, solicitation, representation, proposal, or offer that is untrue, deceptive, or misleading. The Department does not review or otherwise pre-approve marketing materials prior to their use. It is the responsibility of the pharmacy benefits manager to ensure that its marketing materials comply with the laws of the State of South Carolina.
Section IV. Examinations
A. Examination
of Pharmacy Benefits Managers.
(1) Pursuant
to Section
38-71-2250 of
the Code of Laws of South Carolina 1976, as amended, the Director or his
designee may examine the affairs of a pharmacy benefits manager for compliance
with the requirements of the Act, applicable South Carolina law or requirements
of this regulation.
(2) Any
examination permitted under this Section shall follow the examination
procedures and requirements applicable to health care insurers under Chapter
13, Title 38 of the Code of Laws of South Carolina 1976, as
amended.
B. A pharmacy
benefits manager shall not be regularly examined under the same time periods as
insurers as required under Section
38-13-10
of the Code of Laws of South Carolina 1976, as amended, however, the Director
or his designee may examine the pharmacy benefits manager pursuant to Section
38-71-2250 at
any time he or she believes it reasonably necessary to ensure compliance with
the Act, the provisions of this regulation, or Title 38.
Section V. Record Keeping Requirements
A. Maximum Allowable Costs
In order to facilitate any examination conducted by the Director pursuant to Section IV of this regulation, pharmacy benefits managers shall maintain a record keeping system which shall track and monitor the following statistical information:
(1) the
number of challenges or appeals the pharmacy benefits manager received under
the maximum allowable cost provisions of the Act;
(2) the outcomes of each of those challenges
or appeals, whether denied or upheld by the pharmacy benefits manager, and
sufficient information to determine compliance with Section
38-71-2240.
This information must include the following:
(i) notice to the challenging pharmacy of the
appeal results and the information required by Section
38-71-2240;
and
(ii) documentation of any
changes made for similarly situated pharmacies as outlined in the
Act.
B. A
request under this Subsection shall be considered a special report pursuant to
Section
38-13-160
of the South Carolina Code of Laws 1976, as amended, and all information
submitted in the response shall be confidential. The requirements of this
Subsection shall apply for appeals or challenges beginning with the first
quarter of 2021.
C. Pharmacy
Provider Complaints Related to Maximum Allowable Cost List Compliance under
Section
38-71-2240 of
the Code of Laws of South Carolina 1976, as amended.
(1) The pharmacy benefits manager shall
designate the name, address, and phone number, including an electronic mail
contact, of the organization which shall be responsible for responding to the
Department for complaints the Department has received from pharmacy providers
for alleged Maximum Allowable Cost List violations. The pharmacy benefits
manager shall be subject to Section
38-13-70
of the Code of Laws of South Carolina 1976, as amended related to the time
period for a response to the Department.
(2) A pharmacy provider or other person
acting on its behalf shall make reasonable efforts to exhaust any internal
appeal requirements of the pharmacy benefits manager prior to the filing of a
complaint with the Department. However, a pharmacy provider shall not be
required to exhaust internal appeal requirements of the pharmacy benefits
manager if a pharmacy benefits manager has failed to abide by its Maximum
Allowable Cost List appeal processes as described in Section
38-71-2240. A
pharmacy benefits manager shall not be held responsible for failure to provide
communication or timely processing in the event that a provider or pharmacy has
not submitted sufficient information for the pharmacy benefits manager to
process the appeal.
(3) The
Department shall review the complaints, and upon determination of a violation
of the Act or this regulation, institute regulatory action in accordance with
the requirements set forth in Section VIII of this regulation.
(4) The Department may refer any complaints
to the Office of the South Carolina Attorney General for investigation or other
enforcement action in accordance with Section
38-3-110
of the Code of Laws of South Carolina 1976, as
amended.
Section VI. Confidentiality
The Department may report on its activities relating to the implementation of the Act and this regulation in compliance with the confidentiality requirements set forth in the Act and this regulation.
Section VII. Transition of Licensing Status
A. The
Director or his designee shall publish by order or bulletin the plan and
timeframe for transitioning licenses from the third-party administrator license
to the pharmacy benefits manager license.
B. Pharmacy benefits managers engaged
exclusively or solely with administration of pharmacy benefits of self-funded
health benefit plans in this State shall comply with the registration
requirements of Chapter 51 of Title 38 of the Code of Laws of South Carolina
1976, as amended. For pharmacy benefits managers engaged in the administration
of pharmacy benefits for both fully insured health benefits plans and
self-funded health plans, a pharmacy benefits manager must comply with the Act
and this regulation with respect to the provisions that apply to its fully
insured health benefits plans.
Section VIII. Penalties
Violations of this regulation shall be subject to the penalties set forth in Section 38-2-10 through 38-2-30 of the Code of Laws of South Carolina 1976, as amended.
Section IX. Severability
Any section or provision of this regulation held by a court to be invalid or unconstitutional shall be considered severable and will not affect the validity of any other section or provision of this regulation.
Section X. Conflict
If any provision of this regulation is inconsistent with the Act, the provisions of the Act control.
Added by State Register Volume 44, Issue No. 06, eff. 6/26/2020.
Disclaimer: These regulations may not be the most recent version. South Carolina may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
