Cal. HSC § 1385.0029 — California Code / Code hsc / Division 2 / Chapter 2.2 / Article 6.1 / Section 1385.0029
Section 1385.0029
Status: in_force

(a) A pharmacy benefit manager shall not derive income from pharmacy benefit management services provided to a payer in this state except for income derived from a pharmacy benefit management fee for pharmacy benefit management services provided. The amount of any pharmacy benefit management fee shall be set forth in the agreement between the pharmacy benefit manager and the payer. The pharmacy benefit manager shall disclose the amount and types of the pharmacy benefit management fees to the payer.

(b) A pharmacy benefit manager shall use a passthrough pricing model.

(c) A pharmacy benefit manager, group purchasing organization, and affiliated entity shall direct 100 percent of all prescription drug manufacturer rebates received to the payer or program, if the contractual arrangement delegates the negotiation of rebates to the pharmacy benefit manager, group purchasing organization, or affiliated entity, for the sole purpose of offsetting defined cost sharing, deductibles, and coinsurance contributions and reducing premiums of plan participants.

(d) (1) This section does not preclude a payer from paying performance bonuses to a pharmacy benefit manager based on savings to the payer that decrease premiums paid by the plan participant or that result in plan participants paying the lowest level of cost sharing, deductibles, and coinsurance for a drug, as long as the performance bonus is not based or contingent on any of the following:

(A) The acquisition or ingredient cost of a drug.

(B) The amount of savings, rebates, or other fees charged, realized, or collected by, or generated based on the activity of, the pharmacy benefit manager or its affiliated entities that is retained by the pharmacy benefit manager.

(C) The amount of premiums, deductibles, or other cost sharing or fees charged, realized, or collected by the pharmacy benefit manager or its affiliated entities from patients or other persons on behalf of a patient, except for performance bonuses that are based or contingent on a decrease in premiums, deductibles, or other cost sharing.

(2) Compensation arrangements governed by this section shall be open for inspection by the department.

(e) A pharmacy benefit manager shall not make or permit any reduction of payment for pharmacist services by a pharmacy benefit manager or a payer directly or indirectly to a pharmacy under a reconciliation process to an effective rate of reimbursement, including without limitation generic effective rates, brand effective rates, direct and indirect remuneration fees, or any other reduction or aggregate reduction of payment.

(f) A claim or aggregate of claims for pharmacist services shall not be directly or indirectly retroactively denied or reduced after adjudication of the claim or aggregate of claims unless any of the following have occurred:

(1) The original claim was submitted fraudulently.

(2) The original claim payment was incorrect because the pharmacy or pharmacist had already been paid for the pharmacist services.

(3) The pharmacist services were not properly rendered by the pharmacy or pharmacist.

(g) A pharmacy benefit manager shall not reverse and resubmit the claim of a contract pharmacy under any of the following circumstances:

(1) Without prior written notification to the contract pharmacy.

(2) Without just cause or attempt to first reconcile the claim with the pharmacy.

(3) More than 90 days after the claim was first affirmatively adjudicated.

(h) A pharmacy benefit manager shall not charge a pharmacy or pharmacist a fee to process a claim electronically.

(i) The termination of a contract with a nonaffiliated pharmacy by a pharmacy benefit manager shall not release the pharmacy benefit manager from the obligation to make a payment due to the pharmacy for an affirmatively adjudicated claim unless payments are withheld because of an investigation relating to insurance fraud.

(j) A pharmacy benefit manager shall not retaliate against a pharmacist or pharmacy based on the pharmacist’s or pharmacy’s exercise of a right or remedy under this chapter. Prohibited retaliation includes any of the following:

(1) Terminating or refusing to renew a contract with the pharmacist or pharmacy.

(2) Subjecting the pharmacist or pharmacy to increased audits without cause.

(3) Failing to promptly pay the pharmacist or pharmacy money owed by the pharmacy benefit manager to the pharmacist or pharmacy.