RCW 48.200.010
Findings
—
Intent.
(1) The legislature finds that growth in managed health care systems has shifted substantial authority over health care decisions from providers and patients to health carriers and health care benefit managers. Health care benefit managers acting as intermediaries between carriers, health care providers, and patients exercise broad discretion to affect health care services recommended and delivered by providers and the health care choices of patients. Regularly, these health care benefit managers are making health care decisions on behalf of carriers. However, unlike carriers, health care benefit managers are not currently regulated.
(2) Therefore, the legislature finds that it is in the best interest of the public to create a separate chapter in this title for health care benefit managers.
(3) The legislature intends to protect and promote the health, safety, and welfare of Washington residents by establishing standards for regulatory oversight of health care benefit managers.
[
2020 c 240 s 1
.]
RCW 48.200.020
Definitions.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Affiliate" or "affiliated employer" means a person who directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, another specified person.
(2) "Certification" has the same meaning as in RCW 48.43.005
.
(3) "Covered person" has the same meaning as in RCW 48.43.005
.
(4) "Employee benefits programs" means programs under both the public employees' benefits board established in RCW 41.05.055
and the school employees' benefits board established in RCW 41.05.740
.
(5)(a) "Health care benefit manager" means a person or entity providing services to, or acting on behalf of, a health carrier or employee benefits programs, that directly or indirectly impacts the determination or utilization of benefits for, or patient access to, health care services, drugs, and supplies including, but not limited to:
(i) Prior authorization or preauthorization of benefits or care;
(ii) Certification of benefits or care;
(iii) Medical necessity determinations;
(iv) Utilization review;
(v) Benefit determinations;
(vi) Claims processing and repricing for services and procedures;
(vii) Outcome management;
(viii) Payment or authorization of payment to providers and facilities for services or procedures;
(ix) Dispute resolution, grievances, or appeals relating to determinations or utilization of benefits;
(x) Provider network management; or
(xi) Disease management.
(b) "Health care benefit manager" includes, but is not limited to, health care benefit managers that specialize in specific types of health care benefit management such as pharmacy benefit managers, radiology benefit managers, laboratory benefit managers, and mental health benefit managers.
(c) "Health care benefit manager" does not include:
(i) Health care service contractors as defined in RCW 48.44.010
;
(ii) Health maintenance organizations as defined in RCW 48.46.020
;
(iii) Issuers as defined in RCW 48.01.053
;
(iv) The public employees' benefits board established in RCW 41.05.055
;
(v) The school employees' benefits board established in RCW 41.05.740
;
(vi) Discount plans as defined in RCW 48.155.010
;
(vii) Direct patient-provider primary care practices as defined in RCW 48.150.010
;
(viii) An employer administering its employee benefit plan or the employee benefit plan of an affiliated employer under common management and control;
(ix) A union, either on its own or jointly with an employer, administering a benefit plan on behalf of its members;
(x) An insurance producer selling insurance or engaged in related activities within the scope of the producer's license;
(xi) A creditor acting on behalf of its debtors with respect to insurance, covering a debt between the creditor and its debtors;
(xii) A behavioral health administrative services organization or other county-managed entity that has been approved by the state health care authority to perform delegated functions on behalf of a carrier;
(xiii) A hospital licensed under chapter
70.41
RCW or ambulatory surgical facility licensed under chapter
70.230
RCW, to the extent that it performs provider credentialing or recredentialing, but no other functions of a health care benefit manager as described in subsection (5)(a) of this section [(a) of this subsection];
(xiv) The Robert Bree collaborative under chapter
70.250
RCW;
(xv) The health technology clinical committee established under RCW 70.14.090
;
(xvi) The prescription drug purchasing consortium established under RCW 70.14.060
; or
(xvii) Any other entity that performs provider credentialing or recredentialing, but no other functions of a health care benefit manager as described in subsection (5)(a) of this section [(a) of this subsection].
(6) "Health care provider" or "provider" has the same meaning as in RCW 48.43.005
.
(7) "Health care service" has the same meaning as in RCW 48.43.005
.
(8) "Health carrier" or "carrier" has the same meaning as in RCW 48.43.005
.
(9) "Laboratory benefit manager" means a person or entity providing service to, or acting on behalf of, a health carrier, employee benefits programs, or another entity under contract with a carrier, that directly or indirectly impacts the determination or utilization of benefits for, or patient access to, health care services, drugs, and supplies relating to the use of clinical laboratory services and includes any requirement for a health care provider to submit a notification of an order for such services.
(10) "Mail order pharmacy" means a pharmacy that primarily dispenses prescription drugs to patients through the mail or common carrier.
(11) "Mental health benefit manager" means a person or entity providing service to, or acting on behalf of, a health carrier, employee benefits programs, or another entity under contract with a carrier, that directly or indirectly impacts the determination of utilization of benefits for, or patient access to, health care services, drugs, and supplies relating to the use of mental health services and includes any requirement for a health care provider to submit a notification of an order for such services.
(12) "Network" means the group of participating providers, pharmacies, and suppliers providing health care services, drugs, or supplies to beneficiaries of a particular carrier or plan.
(13) "Person" includes, as applicable, natural persons, licensed health care providers, carriers, corporations, companies, trusts, unincorporated associations, and partnerships.
(14)(a) "Pharmacy benefit manager" means a person that contracts with pharmacies on behalf of a health carrier, employee benefits program, or medicaid managed care program to:
(i) Process claims for prescription drugs or medical supplies or provide retail network management for pharmacies or pharmacists;
(ii) Pay pharmacies or pharmacists for prescription drugs or medical supplies;
(iii) Negotiate rebates, discounts, or other price concessions with manufacturers for drugs paid for or procured as described in this subsection;
(iv) Establish or manage pharmacy networks; or
(v) Make credentialing determinations.
(b) "Pharmacy benefit manager" does not include a health care service contractor as defined in RCW 48.44.010
.
(15) "Pharmacy network" means the pharmacies located in the state or licensed under chapter
18.64
RCW and contracted by a pharmacy benefit manager to dispense prescription drugs to covered persons.
(16)(a) "Radiology benefit manager" means any person or entity providing service to, or acting on behalf of, a health carrier, employee benefits programs, or another entity under contract with a carrier, that directly or indirectly impacts the determination or utilization of benefits for, or patient access to, the services of a licensed radiologist or to advanced diagnostic imaging services including, but not limited to:
(i) Processing claims for services and procedures performed by a licensed radiologist or advanced diagnostic imaging service provider; or
(ii) Providing payment or payment authorization to radiology clinics, radiologists, or advanced diagnostic imaging service providers for services or procedures.
(b) "Radiology benefit manager" does not include a health care service contractor as defined in RCW 48.44.010, a health maintenance organization as defined in RCW 48.46.020, or an issuer as defined in RCW 48.01.053
.
(17) "Utilization review" has the same meaning as in RCW 48.43.005
.
[
2024 c 242 s 1
;
2020 c 240 s 2
.]
NOTES:
Reviser's note:
The definitions in this section have been alphabetized pursuant to RCW 1.08.015
(2)(k).
RCW 48.200.030
Registration requirements
—
Application
—
Fees
—
Retention of transaction records.
(1) To conduct business in this state, a health care benefit manager must register with the commissioner and annually renew the registration.
(2) To apply for registration with the commissioner under this section, a health care benefit manager must:
(a) Submit an application on forms and in a manner prescribed by the commissioner and verified by the applicant by affidavit or declaration under chapter
5.50
RCW. Applications must contain at least the following information:
(i) The identity of the health care benefit manager and of persons with any ownership or controlling interest in the applicant including relevant business licenses and tax identification numbers, and the identity of any entity that the health care benefit manager has a controlling interest in;
(ii) The business name, address, phone number, and contact person for the health care benefit manager;
(iii) Any areas of specialty such as pharmacy benefit management, radiology benefit management, laboratory benefit management, mental health benefit management, or other specialty;
(iv) A copy of the health care benefit manager's certificate of registration with the Washington state secretary of state; and
(v) Any other information as the commissioner may reasonably require.
(b) Pay an initial registration fee and annual renewal registration fee as established in rule by the commissioner. The fees for each registration must be set by the commissioner in an amount that ensures the registration, renewal, and oversight activities are self-supporting. If one health care benefit manager has a contract with more than one carrier, the health care benefit manager must complete only one application providing the details necessary for each contract.
(3) All receipts from fees collected by the commissioner under this section must be deposited into the insurance commissioner's regulatory account created in RCW 48.02.190
.
(4) Before approving an application for or renewal of a registration, the commissioner must find that the health care benefit manager:
(a) Has not committed any act that would result in denial, suspension, or revocation of a registration;
(b) Has paid the required fees; and
(c) Has the capacity to comply with, and has designated a person responsible for, compliance with state and federal laws.
(5) Any material change in the information provided to obtain or renew a registration must be filed with the commissioner within thirty days of the change.
(6) Every registered health care benefit manager must retain a record of all transactions completed for a period of not less than seven years from the date of their creation. All such records as to any particular transaction must be kept available and open to inspection by the commissioner during the seven years after the date of completion of such transaction.
[
2024 c 242 s 2
;
2020 c 240 s 3
.]
RCW 48.200.040
Contract requirements
—
Written agreement describing rights and responsibilities
—
Filing of contracts
—
Confidentiality.
(1) A health care benefit manager may not provide health care benefit management services to a health carrier or employee benefits programs without a written agreement describing the rights and responsibilities of the parties conforming to the provisions of this chapter and any rules adopted by the commissioner to implement or enforce this chapter including rules governing contract content.
(2) A health care benefit manager must file with the commissioner in the form and manner prescribed by the commissioner, every benefit management contract and contract amendment between the health care benefit manager and a health carrier, provider, pharmacy, pharmacy services administration organization, or other health care benefit manager, entered into directly or indirectly in support of a contract with a carrier or employee benefits programs, within 30 days following the effective date of the contract or contract amendment. Contracts and contract amendments between health care benefit managers and health carriers that were executed prior to July 23, 2023, and remain in force must be filed with the commissioner no later than 60 days following July 23, 2023.
(3) Contracts filed under this section are confidential and not subject to public inspection under RCW 48.02.120
(2), or public disclosure under chapter
42.56
RCW, if filed in accordance with the procedures for submitting confidential filings through the system for electronic rate and form filings and the general filing instructions as set forth by the commissioner. In the event the referenced filing fails to comply with the filing instructions setting forth the process to withhold the contract from public inspection, and the health care benefit manager indicates that the contract is to be withheld from public inspection, the commissioner must reject the filing and notify the health care benefit manager through the system for electronic rate and form filings to amend its filing to comply with the confidentiality filing instructions.
[
2023 c 107 s 1
;
2020 c 240 s 4
.]
RCW 48.200.050
Inquiries or complaints
—
Violations of chapter
—
Enforcement actions
—
Responsibility of carriers and programs for compliance.
(1) Upon notifying a carrier or health care benefit manager of an inquiry or complaint filed with the commissioner pertaining to the conduct of a health care benefit manager identified in the inquiry or complaint, the commissioner must provide notice of the inquiry or complaint to the health care benefit manager. Notice must also be sent to any carrier to which the inquiry or complaint pertains. The commissioner shall respond to and investigate complaints related to the conduct of a health care benefit manager subject to this chapter directly, without requiring that the complaint be pursued exclusively through a contracting carrier.
(2) Upon receipt of an inquiry from the commissioner, a health care benefit manager must provide to the commissioner within fifteen business days, in the form and manner required by the commissioner, a complete response to that inquiry including, but not limited to, providing a statement or testimony, producing its accounts, records, and files, responding to complaints, or responding to surveys and general requests. Failure to make a complete or timely response constitutes a violation of this chapter.
(3) Subject to chapter
48.04
RCW, if the commissioner finds that a health care benefit manager or any person responsible for the conduct of the health care benefit manager's affairs has:
(a) Violated any provision of this chapter or insurance law, or violated any rule, subpoena, or order of the commissioner or of another state's insurance commissioner;
(b) Failed to renew the health care benefit manager's registration;
(c) Failed to pay the registration or renewal fees;
(d) Provided incorrect, misleading, incomplete, or materially untrue information to the commissioner, to a carrier, or to a beneficiary;
(e) Used fraudulent, coercive, or dishonest practices, or demonstrated incompetence, or financial irresponsibility in this state or elsewhere; or
(f) Had a health care benefit manager registration, or its equivalent, denied, suspended, or revoked in any other state, province, district, or territory;
the commissioner may take any combination of the following actions against a health care benefit manager or any person responsible for the conduct of the health care benefit manager's affairs, other than an employee benefits program:
(i) Place on probation, suspend, revoke, or refuse to issue or renew the health care benefit manager's registration;
(ii) Issue a cease and desist order against the health care benefit manager, contracting carrier, or both;
(iii) Fine the health care benefit manager up to five thousand dollars per violation, and the contracting carrier is subject to a fine for acts conducted under the contract;
(iv) Issue an order requiring corrective action against the health care benefit manager, the contracting carrier acting with the health care benefit manager, or both the health care benefit manager and the contracting carrier acting with the health care benefit manager; and
(v) Temporarily suspend the health care benefit manager's registration by an order served by mail or by personal service upon the health care benefit manager not less than three days prior to the suspension effective date. The order must contain a notice of revocation and include a finding that the public safety or welfare requires emergency action. A temporary suspension under this subsection (3)(f)(v) continues until proceedings for revocation are concluded.
(4) A stay of action is not available for actions the commissioner takes by cease and desist order, by order on hearing, or by temporary suspension.
(5)(a) Health carriers and employee benefits programs are responsible for the compliance of any person or organization acting directly or indirectly on behalf of or at the direction of the carrier or program, or acting pursuant to carrier or program standards or requirements concerning the coverage of, payment for, or provision of health care benefits, services, drugs, and supplies.
(b) A carrier or program contracting with a health care benefit manager is responsible for the health care benefit manager's violations of this chapter, including a health care benefit manager's failure to produce records requested or required by the commissioner.
(c) No carrier or program may offer as a defense to a violation of any provision of this chapter that the violation arose from the act or omission of a health care benefit manager, or other person acting on behalf of or at the direction of the carrier or program, rather than from the direct act or omission of the carrier or program.
[
2024 c 242 s 3
;
2020 c 240 s 5
.]
RCW 48.200.210
Definitions applicable to RCW 48.200.220
through
48.200.290
.
The definitions in this section apply throughout this section and RCW 48.200.220
through
48.200.290
unless the context clearly requires otherwise.
(1) "Audit" means an on-site or remote review of the records of a pharmacy by or on behalf of an entity.
(2) "Claim" means a request from a pharmacy or pharmacist to be reimbursed for the cost of filling or refilling a prescription for a drug or for providing a medical supply or service.
(3) "Clerical error" means a minor error:
(a) In the keeping, recording, or transcribing of records or documents or in the handling of electronic or hard copies of correspondence;
(b) That does not result in financial harm to an entity; and
(c) That does not involve dispensing an incorrect dose, amount, or type of medication, failing to dispense a medication, or dispensing a prescription drug to the wrong person.
(4) "Entity" includes:
(a) A pharmacy benefit manager;
(b) An insurer;
(c) A third-party payor;
(d) A state agency; or
(e) A person that represents or is employed by one of the entities described in this subsection.
(5) "Fraud" means knowingly and willfully executing or attempting to execute a scheme, in connection with the delivery of or payment for health care benefits, items, or services, that uses false or misleading pretenses, representations, or promises to obtain any money or property owned by or under the custody or control of any person.
(6) "Pharmacist" has the same meaning as in RCW 18.64.011
.
(7) "Pharmacy" has the same meaning as in RCW 18.64.011
.
(8) "Third-party payor" means a person licensed under RCW 48.39.005
.
[
2024 c 242 s 4
;
2020 c 240 s 10
;
2014 c 213 s 3
. Formerly RCW 19.340.020
.]
RCW 48.200.220
Auditing of claims
—
Requirements
—
Prohibited practices.
An entity that audits claims or an independent third party that contracts with an entity to audit claims:
(1) Must establish, in writing, a procedure for a pharmacy to appeal the entity's findings with respect to a claim and must provide a pharmacy with a notice regarding the procedure, in writing or electronically, prior to conducting an audit of the pharmacy's claims;
(2) May not conduct an audit of a claim more than twenty-four months after the date the claim was adjudicated by the entity;
(3) Must give at least fifteen days' advance written notice of an on-site audit to the pharmacy or corporate headquarters of the pharmacy;
(4) May not conduct an on-site audit during the first five days of any month without the pharmacy's consent;
(5) Must conduct the audit in consultation with a pharmacist who is licensed by this or another state if the audit involves clinical or professional judgment;
(6) May not conduct an on-site audit of more than two hundred fifty unique prescriptions of a pharmacy in any twelve-month period except in cases of alleged fraud;
(7) May not conduct more than one on-site audit of a pharmacy in any twelve-month period;
(8) Must audit each pharmacy under the same standards and parameters that the entity uses to audit other similarly situated pharmacies;
(9) Must pay any outstanding claims of a pharmacy no more than forty-five days after the earlier of the date all appeals are concluded or the date a final report is issued under RCW 48.200.260
(3);
(10) May not include dispensing fees or interest in the amount of any overpayment assessed on a claim unless the overpaid claim was for a prescription that was not filled correctly;
(11) May not recoup costs associated with:
(a) Clerical errors; or
(b) Other errors that do not result in financial harm to the entity or a consumer; and
(12) May not charge a pharmacy for a denied or disputed claim until the audit and the appeals procedure established under subsection (1) of this section are final.
[
2020 c 240 s 11
;
2014 c 213 s 4
. Formerly RCW 19.340.040
.]
RCW 48.200.230
Basis of finding of claim.
An entity's finding that a claim was incorrectly presented or paid must be based on identified transactions and not based on probability sampling, extrapolation, or other means that project an error using the number of patients served who have a similar diagnosis or the number of similar prescriptions or refills for similar drugs.
[
2014 c 213 s 5
. Formerly RCW 19.340.050
.]
RCW 48.200.240
Contract with third party
—
Prohibited practices.
An entity that contracts with an independent third party to conduct audits may not:
(1) Agree to compensate the independent third party based on a percentage of the amount of overpayments recovered; or
(2) Disclose information obtained during an audit except to the contracting entity, the pharmacy subject to the audit, or the holder of the policy or certificate of insurance that paid the claim.
[
2014 c 213 s 6
. Formerly RCW 19.340.060
.]
RCW 48.200.250
Evidence of validation of claim.
For purposes of RCW 48.200.210
through
48.200.270, an entity, or an independent third party that contracts with an entity to conduct audits, must allow as evidence of validation of a claim:
(1) An electronic or physical copy of a valid prescription if the prescribed drug was, within fourteen days of the dispensing date:
(a) Picked up by the patient or the patient's designee;
(b) Delivered by the pharmacy to the patient; or
(c) Sent by the pharmacy to the patient using the United States postal service or other common carrier;
(2) Point of sale electronic register data showing purchase of the prescribed drug, medical supply, or service by the patient or the patient's designee; or
(3) Electronic records, including electronic beneficiary signature logs, electronically scanned and stored patient records maintained at or accessible to the audited pharmacy's central operations, and any other reasonably clear and accurate electronic documentation that corresponds to a claim.
[
2020 c 240 s 12
;
2014 c 213 s 7
. Formerly RCW 19.340.070
.]
RCW 48.200.260
Preliminary audit report
—
Dispute or denial of claim
—
Final audit report
—
Recoupment of disputed funds.
(1)(a) After conducting an audit, an entity must provide the pharmacy that is the subject of the audit with a preliminary report of the audit. The preliminary report must be received by the pharmacy no later than forty-five days after the date on which the audit was completed and must be sent:
(i) By mail or common carrier with a return receipt requested; or
(ii) Electronically with electronic receipt confirmation.
(b) An entity shall provide a pharmacy receiving a preliminary report under this subsection no fewer than forty-five days after receiving the report to contest the report or any findings in the report in accordance with the appeals procedure established under RCW 48.200.220
(1) and must allow the submission of additional documentation in support of the claim. The entity shall consider a reasonable request for an extension of time to submit documentation to contest the report or any findings in the report.
(2) If an audit results in the dispute or denial of a claim, the entity conducting the audit shall allow the pharmacy to resubmit the claim using any commercially reasonable method, including facsimile, mail, or email.
(3) An entity must provide a pharmacy that is the subject of an audit with a final report of the audit no later than sixty days after the later of the date the preliminary report was received or the date the pharmacy contested the report using the appeals procedure established under RCW 48.200.220
(1). The final report must include a final accounting of all moneys to be recovered by the entity.
(4) Recoupment of disputed funds from a pharmacy by an entity or repayment of funds to an entity by a pharmacy, unless otherwise agreed to by the entity and the pharmacy, shall occur after the audit and the appeals procedure established under RCW 48.200.220
(1) are final. If the identified discrepancy for an individual audit exceeds forty thousand dollars, any future payments to the pharmacy may be withheld by the entity until the audit and the appeals procedure established under RCW 48.200.220
(1) are final.
[
2020 c 240 s 13
;
2014 c 213 s 8
. Formerly RCW 19.340.080
.]
RCW 48.200.270
Application.
RCW 48.200.210
through
48.200.270
do not:
(1) Preclude an entity from instituting an action for fraud against a pharmacy;
(2) Apply to an audit of pharmacy records when fraud or other intentional and willful misrepresentation is indicated by physical review, review of claims data or statements, or other investigative methods; or
(3) Apply to a state agency that is conducting audits or a person that has contracted with a state agency to conduct audits of pharmacy records for prescription drugs paid for by the state medical assistance program.
[
2020 c 240 s 14
;
2014 c 213 s 9
. Formerly RCW 19.340.090
.]
RCW 48.200.280
Predetermination of reimbursement costs
—
Appeals
—
Review by commissioner.
(Effective until January 1, 2026.)
(1) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
(a) "List" means the list of drugs for which predetermined reimbursement costs have been established, such as a maximum allowable cost or maximum allowable cost list or any other benchmark prices utilized by the pharmacy benefit manager and must include the basis of the methodology and sources utilized to determine multisource generic drug reimbursement amounts.
(b) "Multiple source drug" means a therapeutically equivalent drug that is available from at least two manufacturers.
(c) "Multisource generic drug" means any covered outpatient prescription drug for which there is at least one other drug product that is rated as therapeutically equivalent under the food and drug administration's most recent publication of "Approved Drug Products with Therapeutic Equivalence Evaluations;" is pharmaceutically equivalent or bioequivalent, as determined by the food and drug administration; and is sold or marketed in the state during the period.
(d) "Network pharmacy" means a retail drug outlet licensed as a pharmacy under RCW 18.64.043
that contracts with a pharmacy benefit manager.
(e) "Therapeutically equivalent" has the same meaning as in RCW 69.41.110
.
(2) A pharmacy benefit manager:
(a) May not place a drug on a list unless there are at least two therapeutically equivalent multiple source drugs, or at least one generic drug available from only one manufacturer, generally available for purchase by network pharmacies from national or regional wholesalers;
(b) Shall ensure that all drugs on a list are readily available for purchase by pharmacies in this state from national or regional wholesalers that serve pharmacies in Washington;
(c) Shall ensure that all drugs on a list are not obsolete;
(d) Shall make available to each network pharmacy at the beginning of the term of a contract, and upon renewal of a contract, the sources utilized to determine the predetermined reimbursement costs for multisource generic drugs of the pharmacy benefit manager;
(e) Shall make a list available to a network pharmacy upon request in a format that is readily accessible to and usable by the network pharmacy;
(f) Shall update each list maintained by the pharmacy benefit manager every seven business days and make the updated lists, including all changes in the price of drugs, available to network pharmacies in a readily accessible and usable format;
(g) Shall ensure that dispensing fees are not included in the calculation of the predetermined reimbursement costs for multisource generic drugs;
(h) May not cause or knowingly permit the use of any advertisement, promotion, solicitation, representation, proposal, or offer that is untrue, deceptive, or misleading;
(i) May not charge a pharmacy a fee related to the adjudication of a claim, credentialing, participation, certification, accreditation, or enrollment in a network including, but not limited to, a fee for the receipt and processing of a pharmacy claim, for the development or management of claims processing services in a pharmacy benefit manager network, or for participating in a pharmacy benefit manager network;
(j) May not require accreditation standards inconsistent with or more stringent than accreditation standards established by a national accreditation organization;
(k) May not reimburse a pharmacy in the state an amount less than the amount the pharmacy benefit manager reimburses an affiliate for providing the same pharmacy services; and
(l) May not directly or indirectly retroactively deny or reduce a claim or aggregate of claims after the claim or aggregate of claims has been adjudicated, unless:
(i) The original claim was submitted fraudulently; or
(ii) The denial or reduction is the result of a pharmacy audit conducted in accordance with RCW 48.200.220
.
(3) A pharmacy benefit manager must establish a process by which a network pharmacy may appeal its reimbursement for a drug subject to predetermined reimbursement costs for multisource generic drugs. A network pharmacy may appeal a predetermined reimbursement cost for a multisource generic drug if the reimbursement for the drug is less than the net amount that the network pharmacy paid to the supplier of the drug. An appeal requested under this section must be completed within thirty calendar days of the pharmacy submitting the appeal. If after thirty days the network pharmacy has not received the decision on the appeal from the pharmacy benefit manager, then the appeal is considered denied.
The pharmacy benefit manager shall uphold the appeal of a pharmacy with fewer than fifteen retail outlets, within the state of Washington, under its corporate umbrella if the pharmacy or pharmacist can demonstrate that it is unable to purchase a therapeutically equivalent interchangeable product from a supplier doing business in Washington at the pharmacy benefit manager's list price.
(4) A pharmacy benefit manager must provide as part of the appeals process established under subsection (3) of this section:
(a) A telephone number at which a network pharmacy may contact the pharmacy benefit manager and speak with an individual who is responsible for processing appeals; and
(b) If the appeal is denied, the reason for the denial and the national drug code of a drug that has been purchased by other network pharmacies located in Washington at a price that is equal to or less than the predetermined reimbursement cost for the multisource generic drug. A pharmacy with fifteen or more retail outlets, within the state of Washington, under its corporate umbrella may submit information to the commissioner about an appeal under subsection (3) of this section for purposes of information collection and analysis.
(5)(a) If an appeal is upheld under this section, the pharmacy benefit manager shall make a reasonable adjustment on a date no later than one day after the date of determination.
(b) If the request for an adjustment has come from a critical access pharmacy, as defined by the state health care authority by rule for purposes related to the prescription drug purchasing consortium established under RCW 70.14.060, the adjustment approved under (a) of this subsection shall apply only to critical access pharmacies.
(6) Beginning July 1, 2017, if a network pharmacy appeal to the pharmacy benefit manager is denied, or if the network pharmacy is unsatisfied with the outcome of the appeal, the pharmacy or pharmacist may dispute the decision and request review by the commissioner within thirty calendar days of receiving the decision.
(a) All relevant information from the parties may be presented to the commissioner, and the commissioner may enter an order directing the pharmacy benefit manager to make an adjustment to the disputed claim, deny the pharmacy appeal, or take other actions deemed fair and equitable. An appeal requested under this section must be completed within thirty calendar days of the request.
(b) Upon resolution of the dispute, the commissioner shall provide a copy of the decision to both parties within seven calendar days.
(c) The commissioner may authorize the office of administrative hearings, as provided in chapter
34.12
RCW, to conduct appeals under this subsection (6).
(d) A pharmacy benefit manager may not retaliate against a pharmacy for pursuing an appeal under this subsection (6).
(e) This subsection (6) applies only to a pharmacy with fewer than fifteen retail outlets, within the state of Washington, under its corporate umbrella.
(7) This section does not apply to the state medical assistance program.
[
2020 c 240 s 15
;
2016 c 210 s 4
;
2014 c 213 s 10
. Formerly RCW 19.340.100
.]
PDF
RCW 48.200.280
Predetermination of reimbursement costs
—
Appeals
—
Review by commissioner.
(Effective January 1, 2026.)
(1) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
(a) "List" means the list of drugs for which reimbursement costs have been established to determine reimbursement amounts.
(b) "Multiple source drug" means any covered outpatient prescription drug for which there is at least one other drug product that is rated as therapeutically equivalent under the food and drug administration's most recent publication of "
Approved Drug Products with Therapeutic Equivalence Evaluations
"; is pharmaceutically equivalent or bioequivalent, as determined by the food and drug administration; and is sold or marketed in the state.
(c) "Network pharmacy" means a retail drug outlet licensed as a pharmacy under RCW 18.64.043
that contracts with a pharmacy benefit manager.
(d) "Therapeutically equivalent" has the same meaning as in RCW 69.41.110
.
(2) A pharmacy benefit manager:
(a) May not place a drug on a list unless there are at least two therapeutically equivalent multiple source drugs, or at least one generic drug available from only one manufacturer, generally available for purchase by network pharmacies from national or regional wholesalers;
(b) Shall ensure that all drugs on a list are readily available for purchase by pharmacies in this state from national or regional wholesalers that serve pharmacies in Washington;
(c) Shall ensure that all drugs on a list are not obsolete;
(d) Shall make available to each network pharmacy at the beginning of the term of a contract, and upon renewal of a contract, the sources utilized to determine the reimbursement costs for multiple source drugs of the pharmacy benefit manager;
(e) Shall make a list available to a network pharmacy upon request in a format that is readily accessible to and usable by the network pharmacy;
(f) Shall update each list maintained by the pharmacy benefit manager every seven business days and make the updated lists, including all changes in the price of drugs, available to network pharmacies in a readily accessible and usable format;
(g) Shall ensure that dispensing fees are not included in the calculation of the reimbursement costs for multiple source drugs;
(h) May not cause or knowingly permit the use of any advertisement, promotion, solicitation, representation, proposal, or offer that is untrue, deceptive, or misleading;
(i) May not charge a pharmacy a fee related to the adjudication of a claim, credentialing, participation, certification, accreditation, or enrollment in a network including, but not limited to, a fee for the receipt and processing of a pharmacy claim, for the development or management of claims processing services in a pharmacy benefit manager network, or for participating in a pharmacy benefit manager network, and may not condition or link restrictions on fees related to credentialing, participation, certification, or enrollment in a pharmacy benefit manager's pharmacy network with a pharmacy's inclusion in the pharmacy benefit manager's pharmacy network for other lines of business;
(j) May not require accreditation standards inconsistent with or more stringent than accreditation standards established by a national accreditation organization;
(k) May not reimburse a pharmacy in the state an amount less than the amount the pharmacy benefit manager reimburses an affiliate for providing the same pharmacy services;
(l) May not directly or indirectly retroactively deny or reduce a claim or aggregate of claims after the claim or aggregate of claims has been adjudicated, unless:
(i) The original claim was submitted fraudulently; or
(ii) The denial or reduction is the result of a pharmacy audit conducted in accordance with RCW 48.200.220
; and
(m) May not exclude a pharmacy from their pharmacy network based solely on the pharmacy being newly opened or open less than a defined amount of time, or because a license or location transfer occurs, unless there is a pending investigation for fraud, waste, and abuse.
(3) A pharmacy benefit manager must establish a process by which a network pharmacy, or its representative, may appeal its reimbursement for a drug. A network pharmacy may appeal a reimbursement amount paid by a pharmacy benefit manager for a drug if the reimbursement for the drug is less than the net amount that the network pharmacy paid to the supplier of the drug. An appeal requested under this section must be completed within thirty calendar days of the pharmacy submitting the appeal. If after thirty days the network pharmacy has not received the decision on the appeal from the pharmacy benefit manager, then the appeal is considered denied.
The pharmacy benefit manager shall uphold the appeal of a pharmacy with fewer than fifteen retail outlets, within the state of Washington, under its corporate umbrella if the pharmacy or pharmacist can demonstrate that it is unable to purchase a therapeutically equivalent interchangeable product from a supplier doing business in Washington at the pharmacy benefit manager's list price.
(4) Before a pharmacy or pharmacist files an appeal pursuant to this section, upon request by a pharmacy or pharmacist, a pharmacy benefit manager must provide a current and accurate list of bank identification numbers, processor control numbers, and pharmacy group identifiers for health plans and self-funded group health plans that have opted in to this section and RCW 48.200.310
and
48.200.320
pursuant to RCW 48.200.330
with which the pharmacy benefit manager either has a current contract or had a contract that has been terminated within the past 12 months to provide pharmacy benefit management services.
(5) A pharmacy benefit manager must provide as part of the appeals process established under subsection (3) of this section:
(a) A telephone number at which a network pharmacy may contact the pharmacy benefit manager and speak with an individual who is responsible for processing appeals; and
(b) If the appeal is denied, the reason for the denial and the national drug code of a drug that has been purchased by other network pharmacies located in Washington at a price that is equal to or less than the reimbursement amount paid by the pharmacy benefit manager for the drug. A pharmacy with 15 or more retail outlets, within the state of Washington, under its corporate umbrella may submit information to the commissioner about an appeal under subsection (3) of this section for purposes of information collection and analysis.
(6)(a) If an appeal is upheld under this section, the pharmacy benefit manager shall make a reasonable adjustment on a date no later than one day after the date of determination.
(b) If the request for an adjustment has come from a critical access pharmacy, as defined by the state health care authority by rule for purposes related to the prescription drug purchasing consortium established under RCW 70.14.060, the adjustment approved under (a) of this subsection shall apply only to critical access pharmacies.
(7) Beginning July 1, 2017, if a network pharmacy appeal to the pharmacy benefit manager is denied, or if the network pharmacy is unsatisfied with the outcome of the appeal, the pharmacy or pharmacist may dispute the decision and request review by the commissioner within thirty calendar days of receiving the decision.
(a) All relevant information from the parties may be presented to the commissioner, and the commissioner may enter an order directing the pharmacy benefit manager to make an adjustment to the disputed claim, deny the pharmacy appeal, or take other actions deemed fair and equitable. An appeal requested under this section must be completed within thirty calendar days of the request.
(b) Upon resolution of the dispute, the commissioner shall provide a copy of the decision to both parties within seven calendar days.
(c) The commissioner may authorize the office of administrative hearings, as provided in chapter
34.12
RCW, to conduct appeals under this subsection (7).
(d) A pharmacy benefit manager may not retaliate against a pharmacy for pursuing an appeal under this subsection (7).
(e) This subsection (7) applies only to a pharmacy with fewer than fifteen retail outlets, within the state of Washington, under its corporate umbrella.
(8) This section does not apply to the state medical assistance program.
[
2024 c 242 s 5
;
2020 c 240 s 15
;
2016 c 210 s 4
;
2014 c 213 s 10
. Formerly RCW 19.340.100
.]
NOTES:
Effective date
—
2024 c 242 ss 5 and 7-9:
"Sections 5 and 7 through 9 of this act take effect January 1, 2026." [
2024 c 242 s 12
.]
RCW 48.200.290
Enforcement
—
Disputes
—
Civil penalties.
(1) The commissioner shall have enforcement authority over this chapter and shall have authority to render a binding decision in any dispute between a pharmacy benefit manager, or third-party administrator of prescription drug benefits, and a pharmacy arising out of an appeal under *RCW 48.200.280
(6) regarding drug pricing and reimbursement.
(2) Any person, corporation, third-party administrator of prescription drug benefits, pharmacy benefit manager, or business entity which violates any provision of this chapter shall be subject to a civil penalty in the amount of one thousand dollars for each act in violation of this chapter or, if the violation was knowing and willful, a civil penalty of five thousand dollars for each violation of this chapter.
[
2020 c 240 s 16
;
2016 c 210 s 2
. Formerly RCW 19.340.110
.]
NOTES:
*Reviser's note:
RCW 48.200.280
was amended by 2024 c 242 s 5, changing subsection (6) to subsection (7), effective January 1, 2026.
RCW 48.200.300
Service of process.
(1) Each health care benefit manager must appoint the commissioner as its attorney to receive service of, and upon whom must be served, all legal process issued against it in this state for causes of action arising within this state. Service upon the commissioner as attorney constitutes service upon the health care benefit manager. Service of legal process against the health care benefit manager can be had only by service upon the commissioner, except actions upon contractor bonds pursuant to RCW 18.27.040, where service may be upon the department of labor and industries.
(2) With the appointment the health care benefit manager must designate by name, email address, and address the person to whom the commissioner must forward legal process so served upon them. The health care benefit manager may change the person by filing a new designation.
(3) The health care benefit manager must keep the designation, address, and email address filed with the commissioner current.
(4) The appointment of the commissioner as attorney is irrevocable, binds any successor in interest or to the assets or liabilities of the health care benefit manager, and remains in effect as long as there is in force in this state any contract made by the health care benefit manager or liabilities or duties arising therefrom.
(5) The service of process must be accomplished and processed in the manner prescribed under RCW 48.02.200
.
[
2024 c 242 s 6
.]
RCW 48.200.310
Prohibitions and duties.
(Effective January 1, 2026.)
(1) A pharmacy benefit manager may not:
(a) Reimburse a network pharmacy an amount less than the contract price between the pharmacy benefit manager and the insurer, third-party payor, or the prescription drug purchasing consortium the pharmacy benefit manager has contracted with;
(b) Require a covered person to pay more at the point of sale for a covered prescription drug than is required under RCW 48.43.430
; or
(c) Require or coerce a patient to use their owned or affiliated pharmacies.
(2) A pharmacy benefit manager shall:
(a) Apply the same utilization review, fees, days allowance, and other conditions upon a covered person when the covered person obtains a prescription drug from a pharmacy that is included in the pharmacy benefit manager's pharmacy network, including mail order pharmacies;
(b) Permit the covered person to receive delivery or mail order of a prescription drug through any network pharmacy that is not primarily engaged in dispensing prescription drugs to patients through the mail or common carrier; and
(c) For new prescriptions issued after January 1, 2026, receive affirmative authorization from a covered person before filling prescriptions through a mail order pharmacy.
(3) If a covered person is using a mail order pharmacy, the pharmacy benefit manager shall:
(a) Allow for dispensing at local network pharmacies under the following circumstances to ensure patient access to prescription drugs:
(i) If the prescription is delayed more than one day after the expected delivery date provided by the mail order pharmacy; or
(ii) If the prescription drug arrives in an unusable condition; and
(b) Ensure patients have easy and timely access to prescription counseling by a pharmacist.
[
2024 c 242 s 7
.]
NOTES:
Effective date
—
2024 c 242 ss 5 and 7-9:
See note following RCW 48.200.280
.
RCW 48.200.320
Prohibitions on retaliation.
(Effective January 1, 2026.)
(1) A pharmacy benefit manager may not retaliate against a pharmacist or pharmacy for disclosing information in a court, in an administrative hearing, or legislative hearing, if the pharmacist or pharmacy has a good faith belief that the disclosed information is evidence of a violation of a state or federal law, rule, or regulation.
(2) A pharmacy benefit manager may not retaliate against a pharmacist or pharmacy for disclosing information to a government or law enforcement agency, if the pharmacist or pharmacy has a good faith belief that the disclosed information is evidence of a violation of a state or federal law, rule, or regulation.
(3) A pharmacist or pharmacy shall make reasonable efforts to limit the disclosure of confidential and proprietary information.
(4) Retaliatory actions against a pharmacy or pharmacist include cancellation of, restriction of, or refusal to renew or offer a contract to a pharmacy solely because the pharmacy or pharmacist has:
(a) Made disclosures of information that the pharmacist or pharmacy believes is evidence of a violation of a state or federal law, rule, or regulation;
(b) Filed complaints with the plan or pharmacy benefit manager; or
(c) Filed complaints against the plan or pharmacy benefit manager with the commissioner.
[
2024 c 242 s 8
.]
NOTES:
Effective date
—
2024 c 242 ss 5 and 7-9:
See note following RCW 48.200.280
.
RCW 48.200.330
Application
—
Plans governed by the federal employee retirement income security act.
(Effective January 1, 2026.)
(1) Nothing in chapter 242, Laws of 2024 expands or restricts the entities subject to this chapter. Therefore, except as provided in subsection (2) of this section, this chapter continues to be inapplicable to a person or entity providing services to, or acting on behalf of, a union or employer administering a self-funded group health plan governed by the provisions of the federal employee retirement income security act of 1974 (29 U.S.C. Sec. 1001 et seq.).
(2) RCW 48.200.280, 48.200.310, and
48.200.320
apply to a pharmacy benefit manager's conduct pursuant to a contract with a self-funded group health plan governed by the provisions of the federal employee retirement income security act of 1974 (29 U.S.C. Sec. 1001 et seq.) only if the self-funded group health plan elects to participate in RCW 48.200.280, 48.200.310, and
48.200.320
. To elect to participate in these provisions, a self-funded group health plan or its administrator shall provide notice, on a periodic basis, to the commissioner in a manner and by a date prescribed by the commissioner, attesting to the plan's participation and agreeing to be bound by RCW 48.200.280, 48.200.310, and
48.200.320
. A self-funded group health plan or its administrator that elects to participate under this section, and any pharmacy benefit manager it contracts with, shall comply with RCW 48.200.280, 48.200.310, and
48.200.320
.
(3) The commissioner does not have enforcement authority related to a pharmacy benefit manager's conduct pursuant to a contract with a self-funded group health plan governed by the federal employee retirement income security act of 1974, 29 U.S.C. Sec. 1001 et seq., that elects to participate in RCW 48.200.280, 48.200.310, and
48.200.320
.
[
2024 c 242 s 9
.]
NOTES:
Effective date
—
2024 c 242 ss 5 and 7-9:
See note following RCW 48.200.280
.
RCW 48.200.900
Rule making
—
2020 c 240.
The insurance commissioner may adopt any rules necessary to implement this act.
[
2020 c 240 s 20
.]
RCW 48.200.901
Effective date
—
2020 c 240.
Sections 1 through 19 of this act take effect January 1, 2022.
[
2020 c 240 s 23
.]