2019 Session of the South Carolina General Assembly
SC Alliance of Health Plans Legislative Report

Legislation Passed and Signed by the Governor

High Priority Legislation

PBM Registration and Regulation:  S.359 (Gambrell – R) Effective Date is January 1, 2021.

S.359 amends existing law (SC Code Section 38-71-2150) related to gag clauses and does not allow PBM contracts to prohibit pharmacies/pharmacists from disclosing information to insureds that they deem appropriate within their scope of practice, including information about the cost for pharmacist services. PBMs may not ban pharmacists from selling a more affordable alternative if available. PBM contracts may proscribe pharmacists from sharing proprietary or confidential information, and may not prohibit disclosure of information to DOI investigating a complaint or conducting a compliance review.  Requires all PBMs to be licensed by DOI, with a license fee of $1,000 for the initial application and $500 for annual renewal. Prohibits retroactive claim denial or reduction after adjudication unless the claim was submitted fraudulently, was incorrect because of duplicate payment, services were not properly rendered, or adjustment was previously agreed upon. A pharmacy may not be subject to a charge-back or recoupment for a clerical or recordkeeping error unless the error resulted in overpayment to the pharmacy. Addresses what drugs may be placed on MAC pricing lists, and provides that dispensing fees cannot be included in MAC calculations. Requires PBMs to provide ready access to provider specific MAC lists, and update MAC lists at least every seven days. Requires reasonable process to appeal reimbursement for a MAC drug if it is less than the net amount that the network provider paid to the drug suppliers. (The MAC provisions do not apply to the MAC list maintained by the Medicaid Program, contracted Medicaid MCOs, or the Public Employee Benefit Authority—unless the Authority engages the services of a PBM to maintain the MAC list.) Termination of a pharmacy/pharmacist from a PBM network does not release the PBM from the obligation to make payment for services properly rendered per the contract. A PBM may maintain more than one network for different pharmacy services, and each network may require different pharmacy accreditation standards provided that the standards are applied without regard to status as an independent pharmacy or PBM affiliate. DOI may examine PBM records for regulatory compliance, PBMs must pay charges incurred in the examination, and information acquired during an examination is considered proprietary and confidential.

Prohibits the following practices by PBMs:  use of untrue, deceptive, or misleading advertisements; charging claim adjudication fees other than a reasonable fee for pharmacy claim receipt and processing, and charging a fee for claim adjudication without providing the cause; engaging, with the express intent of driving out competition or financially injuring competitors, in a pattern of reimbursing independent pharmacies/pharmacists consistently less than the amount that the PBM reimburses a PBM affiliate for providing the same services; collecting or requiring a pharmacy to collect a copayment for a prescription drug at the point of sale in an amount that exceeds the lesser of (1) the contracted copayment amount; (2) the amount an individual would pay for a prescription drug if that individual was paying cash; or (3) the contracted amount for the drug; requiring the use of mail order for filling prescriptions unless required to do so by the health benefit plan or plan design; penalizing or retaliating against a pharmacist/pharmacy for exercising rights provided in this chapter; or prohibiting a pharmacist/pharmacy from offering and providing direct and limited delivery services including incidental mailing services, to an insured as an ancillary service of the pharmacy.

Long Term Care:  S.360 (Cromer – R) (H.3585, Spires-R) Effective July 1, 2019.

S.360 adds new requirements for filing and approval of long-term care insurance rates and rate increases. Allows the Director of Insurance (DOI) to disapprove a rate that was previously approved. Provides that each premium rate filing and any supporting information not marked as proprietary and confidential filed is subject to disclosure and open to public inspection after the filing becomes effective. The Director may open to public inspection some or all portions of the filing not marked as proprietary and confidential that are subject to disclosure as a part of the public hearing or solicitation of public comments. The bill also amends the SC cybersecurity statute exemptions to align with a prior DOI guidance bulletin.

 Other Important Health Insurance Related Legislation

Corporate Governance.  S.75 (Cromer – R) (H.3587, Spires-R) adopts NAIC Corporate Governance Annual Disclosure Model Act without deviations and with the first filing to take place June 1, 2020. The bills also adopt the provisions for the Director of Insurance to act as the group-wide supervisor for an internationally active insurance group from the NAIC Holding Company Model Act. SB 75 was signed by the Governor on March 20 (Act No. 3). Effective March 20, 2019.

Legislation That Did Not Pass

High Priority Legislation

Direct Primary Care:  S.445 (Gambrell – R) defines and regulates direct primary care (DPC) agreements and states that they are not insurance subject to regulation by the DOI. Requires providers to report participation in DPC agreements to the Department of Consumer Affairs, which will publish an online list of participating practices and physicians.

Abolishing CON. H.3823, the State Health Care Facility Licensure Act (Mace -R) repeals the South Carolina Certificate of Need (CON) system entirely.  It is a serious undertaking and will have a substantial impact on the health care delivery system and the health care finance system in South Carolina.

Other Important Health Insurance Related Legislation

SC Guaranty Fund:  S.580 (Gambrell – R) amends the South Carolina Life and Health Guaranty Association Act based on changes to the NAIC Model. The bill adds HMO subscriber contracts and certificates in the definition of accident and health insurance, for the purpose of participating in the Guaranty Association. Any assessments related to a long-term care insurer would be allocated 50 percent to accident and health insurers and HMOs and the remaining 50 percent to life and annuity member insurers. The bill caps the calendar year assessments for member insurers at no more than 4% of average annual premiums during the three calendar years preceding. S.580 passed the Senate on March 27.

Mandates

12 Month Contraception Fills:  H.3279 (Finlay – R)/S.187 (Shealy – R) requires individual and group insurers and Medicaid providing coverage for FDA-approved contraceptive drugs to reimburse for 12-month refills of contraceptive drugs obtained at one time by the insured, following completion of the initial supply of the drugs. Insureds must be allowed to receive the contraceptive drugs on-site at the provider’s office.

H.3284 (Huggins – R) requires health plans to provide coverage for hearing aids and replacement hearing aids for covered individuals 18yo or younger with impaired hearing.

H.3598 (Felder – R)/S.368 (Climer – R) requires coverage for early detection of cardiovascular disease for insureds who meet specified criteria.

S.363 (Davis – R)/H.4214 (Rose – D) amends existing autism mandate to remove exemption for individual and small group policies, annual maximum benefit limit on behavioral therapy, and the eligibility requirement for diagnosis by 8yo or younger. Benefits must be provided until 16yo.

S.828 (Massey – R) requires coverage for treatment for functional deformity and dysfunction of the temporomandibular joint.

Medicaid

Medicaid Expansion.  H.3281 (Garvin – D) provides for expansion of Medicaid eligibility as provided for in the ACA. H. Res.3037 (Garvin – D) /S. Jt. Res.36 (Malloy – D) calls for a statewide advisory referendum for the 2020 general election on the question of whether South Carolina should participate in Medicaid expansion.

Out of Network Reimbursement:  S.226 (Gambrell – R) addresses out-of-network (OON) reimbursement for EMS agencies, including requests for direct payment by insurers. When insurer has reimbursed an OON EMS agency at the network rate, the OON EMS agency may not bill the insured or attempt to collect from the insured for the service provided, except for a billing to recover a copayment, coinsurance, or deductible as specified in the health insurance policy. Allows EMS agencies to solicit donations/memberships, but they may not suggest that donations will lead to donors not being billed directly for OON services.

Drug Rebates:  S.751 (Gambrell – R) requires insurers to annually certify to SCDOI that cost sharing was reduced at a level equal to a majority of the rebates received for its plans. Rebates include negotiated price concessions from manufacturers and reasonable estimates of fees and other administrative costs that are passed through to insurers and serve to reduce insurer’s’ prescription drug liabilities for the coverage year.

Uninsured Pubic Health Plan.  H.3292 (Cobb-Hunter – D) enacts the “South Carolina Access to Health Care Act” to direct the SC Department of Health and Human Services (DHHS) to design a health care coverage program by accepting federal funds allowing appropriate uninsured persons to obtain private insurance with premiums paid for by federal funds. Eligible individuals are 18 to 64 years of age, with income 133% FPL or less, U.S. Citizens or documented aliens, and not determined to be more effectively covered through U.S. DHHS, and contingent upon specified levels of federal health care funding. The state assumes no obligation to any private insurance carrier participating in the program other than the payment of premiums as allowed pursuant to the act.

Other Legislation of Interest

Department of Insurance. H.3093 provides that the DOI Director be an elected rather than appointed position.

E-Prescribing.  S.136 (Davis – R) requires practitioners to electronically prescribe any targeted controlled substance (Sched. II and III), except in specified circumstances. Dispensers are not required to verify that a practitioner properly falls under one of the exceptions before dispensing a targeted controlled substance. The bill passed the Senate on March 21.

Medicaid. H.3280 establishes the Medicaid Wellness and Nutrition Program and advisory panel within the DHHS.

H.3727 requires DHHS to prohibit Medicaid plans from limiting access to medications that treat opioid addiction through dosage limitations, duration of treatment limitations, extensive prior authorization requirements, and fail-first or step therapy requirements. DHHS must guarantee unrestricted access to any FDA-approved treatment options available for individuals who have completed a detoxification program. Medicaid health plans must offer accessibility to the full range of appropriate clinical services for the effective treatment of opioid use disorders, including medications, psychosocial therapy, and recovery support services.