INFORMATIONAL MEMORANDUM:
Notification to All Pharmacy Benefit Managers
~Biennial Examination of Pharmacy Benefit Managers ~
Guidance
As signed by Governor DeSantis in May 2023, Florida’s Prescription Drug Reform Act (SB 1550) instituted increased transparency and accountability measures for all Pharmacy Benefit Managers (PBMs) doing business in Florida. To assist PBMs with implementing the provisions of SB 1550, the Florida Office of Insurance Regulation (OIR) issued the following:
- Informational Memorandum OIR-23-04M, July 19, 2023;
- Notice to Industry, September 24, 2024; and
- Information Requests to registered PBM’s, October 2, 2024.
OIR is required to examine the business and affairs of each PBM at least biennially. The biennial examination must be a systematic review for the purpose of determining the PBM’s compliance with all provisions of SB 1550 and all other laws or rules applicable to PBMs. The examination must include a detailed review of the PBM’s compliance with sections 626.8825 and 626.8827, Florida Statutes.
The purpose of this informational memorandum is to reinforce FL law, the provisions of SB 1550, and the requirements of OIR’s PBM examination process.
The first two-year cycle for conducting biennial reviews began on January 1, 2025. On January 8, 2025, OIR sent initial letters notifying each PBM that an examination would commence. On January 24, 2025, OIR sent each PBM follow-up request letters notifying each PBM of the name of the contracted examination firm selected to conduct the examination, the estimated cost of the examination, and the initial information and data requested.
The January 24, 2025, request letters established the following due dates for each PBM to provide OIR and the contracted examiners with the following:
- claims data files by February 21, 2025; and
- certain policies and procedures by March 7, 2025.
Between January 30, 2025, and February 20, 2025, OIR and the contracted examiners completed thirty-eight examination “kick-off” meetings with each individual PBM to facilitate introductions and address questions relating to the examinations. Despite these efforts, certain PBMs have not fully complied with providing the contracted examiners with the requested claims data, policies and procedures.
OIR is pleased with the emphasis expressed by certain PBMs relating to data security following the ongoing investigations into recent data breaches, such as Change Healthcare. PBMs are required to provide all of the requested data and information, in an unredacted, unaltered format, and make access to records freely available to the contracted examiners in accordance with Florida law.
PBMs citing concerns relating to Protected Health Information (PHI) should refer to the guidance issued by the U.S. Department of Health and Humans Services: Permitted Uses and Disclosures: Exchange for Health Oversight Activities. PBMs may disclose PHI to OIR for health oversight activities and PHI data has been historically provided to state Departments of Insurance by covered entities for a variety of regulatory activities.
Throughout the examination process, OIR’s contracted examiners must adhere to robust requirements relating to PHI. The contracted examiners are required to “use appropriate administrative, physical, and technical safeguards, which at a minimum comply with the HIPAA Rules and Florida law with respect to Electronic Protected Health Information, Protected Health Information, and Personal Information.”
Records
In accordance with section 626.8828(3), Florida Statutes, PBMs are subject to all of the following provisions of Florida law:
(a) section 624.318, as to the conduct of examinations;
(b) section 624.319, as to examination and investigation reports;
(c) section 624.321, as to witnesses and evidence;
(d) section 624.322, as to compelled testimony;
(e) section 624.324, as to hearings; and
(f) any other provision of chapter 624 applicable to the investigation or examination of a licensee under this part.
Section 624.318(2), Florida Statutes, requires persons being examined or investigated, and its officers, attorneys, employees, agents, and representatives, to freely make available to OIR or its examiners or investigators the accounts, records, documents, files, information, assets, and matters in their possession or control relating to the subject of the examination or investigation.
PBMs are required to provide the contracted examiners with access to view requested records within the system(s) that the records are created or maintained. PBMs that do not wish to provide examiners with remote access to view its records may:
- provide driver-assisted system access to the examiners. This method allows PBM representatives to provide the examiners with system access via a remote screen sharing session. Drivers visually make the required records available, but the examiners are not accessing the system directly; or
- consider shipping company-owned laptops with set credentials for the examiners’ use.
If neither option is agreeable, the examiners will conduct the examinations on-site where the PBM’s records are located and maintained. This option will increase the PBM’s overall examination expenses.
PBMs may mark uploaded unredacted records containing proprietary business information as Trade Secret, in accordance with section 624.4213, Florida Statutes.
PBMs that provide PBM services to other PBM entities that are also under examination must individually and timely respond to all requests for information and data.
Scope
Section 626.8825(1)(u), Florida Statutes, defines a pharmacy benefits plan or program as a plan or program that pays for, reimburses, covers the cost of, or provides access to discounts on pharmacist services provided by one or more pharmacies to covered persons who reside in, are employed by, or receive pharmacist services from this state.
- The term includes, but is not limited to, health maintenance organizations, health insurers, self-insured employer health plans, discount card programs, and government-funded health plan, including the Statewide Medicaid Managed Care program established pursuant to part IV of chapter 409 and the state group insurance program pursuant to part I of chapter 110.
- The term excludes such a plan or program under chapter 440.
Response Expectations
Throughout the examination process, PBMs will be requested to provide information in addition to the initial information and data request. The due dates for PBMs to provide responses are typically three to seven days. However, for the initial information and data request, PBMs were provided with greater than thirty days to respond in order to facilitate examination kick-off meetings, establish lines of communication, and respond to all questions and concerns.
If a PBM experiences a delay related to a specific set of data or documents that may affect their ability to timely provide the data or documents to the examiners, the PBM should immediately notify the OIR exam manager and assigned examination firm.
In the event a PBM experiences a change in the representative chosen by the PBM to be the point of contact for the examination, the PBM must still respond to all requests by the established due dates. PBMs are expected to have a back-up assigned in the event the main point of contact is not available.
Requests for Extensions
Blanket requests for extensions will not be approved.
Non-Disclosure Agreements (NDAs)
Certain PBMs have requested the examiners and OIR to execute NDAs. Florida law does not provide state agencies with the authority to sign NDAs to make examination documents confidential by agreement. Examination firms are also not authorized to sign NDAs, as they are under contract with OIR.
Additional Regulatory Guidance
Any PBM found to exhibit a pattern or practice of knowing and willful violations with section 626.8825, Florida Statutes (Pharmacy Benefit Manager Transparency & Accountability), or section 626.8827, Florida Statutes (Pharmacy Benefit Manager Prohibited Practices), may be subject to additional penalties per section 626.8828, Florida Statutes. OIR is also directed to regularly report violations of this act to the Governor, President of the Senate, and Speaker of the House of Representatives.
PBMs that fail to comply with examination requirements may be subject to administrative penalties available through applicable provisions of the Florida Insurance Code.
OIR directs PBMs to review the law in its entirety and to make regulatory changes as necessary to ensure compliance with the law. PBMs should direct examination specific questions and concerns to their assigned examiner and OIR exam manager.
For questions regarding this memorandum, please contact InformationalMemoranda@floir.com.
About the OIR
The Florida Office of Insurance Regulation (OIR) has primary responsibility for regulation, compliance, and enforcement of statutes related to the business of insurance and the monitoring of industry markets. For more information about OIR, please visit floir.com or follow on X @FLOIR_comm.
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