KRS 18A.2258: Pharmacy and health care benefit claims monitoring -- Contract

provisions -- Requirements -- Administrative regulations.

(1) (a) By December 31, 2022, the secretary of the Finance and Administration

Cabinet shall, upon the recommendation of the secretary of the Personnel

Cabinet and in accordance with KRS Chapter 45A, select and contract with,

the effective date of which shall not be later than January 1, 2023, a single

independent entity for the purpose of monitoring all pharmacy benefit cla ims

for every individual enrolled in the Public Employee Health Insurance

Program.

(b) By December 31, 2023, in addition to the contract in paragraph (a) of this

subsection, the secretary of the Finance and Administration Cabinet shall,

upon the recommenda tion of the secretary of the Personnel Cabinet and in

accordance with KRS Chapter 45A, select and contract with a single

independent entity for the purpose of monitoring all health care service

benefit claims, other than pharmacy benefit claims, for every individual

enrolled in the Public Employee Health Insurance Program.

(c) Any contract entered into pursuant to this subsection shall:

1. Not be for a term longer than two (2) years but may be renewed for like

or lesser periods; and

2. Limit compensation paid to the contracted entity to not more than thirty

percent (30%) of the total savings generated by the contracted entity as

determined by the Personnel Cabinet.

(2) To be eligible to receive a contract pursuant to subsection (1) of this section, an

entity shall:

(a) Be capable of performing the analysis of benefit claims to validate accuracy

and identify errors in near real time;

(b) Not be an entity that performs annual retroactive audits of benefit claims for

the Public Employee Health Insurance Program; and

(c) Not be affiliated by common parent company or holding company, share any

common members of the board of directors, or share managers in common

with:

1. An insurer contracted pursuant to KRS 18A.225;

2. A third-party administrator contracted pursuant to KRS 18A.2254; or

3. A pharmacy benefit manager contracted by:

a. The Personnel Cabinet;

b. An insurer contracted pursuant to KRS 18A.225; or

c. A third-party administrator contracted pursuant to KRS 18A.2254.

(3) The entity or entities contracted pursuant to subsection (1) of this section shall:

(a) Be granted full access to:

1. Any contract awarded to a third-party administrator or pharmacy benefit

manager for the purpose of administering benefits in the Public

Employee Health Insurance Program and all pertinent reference

documents within that contract, including but not limited to any

pharmacy price lists or specialty drug price lists which shall be provided

to the monitoring entity contracted pursuant to this section by the

Personnel Cabinet and which shall be updated by the Personnel Cabinet

within five (5) days of the effective date of any pricing changes;

2. Any other contrac t that defines an insurer's, third -party administrator's,

or pharmacy benefit manager's obligations and responsibilities as it

relates to processing Public Employee Health Insurance Program benefit

claims, including any contract between a pharmacy benefit manager and

an insurer contracted pursuant to KRS 18A.225 or a third -party

administrator contracted pursuant to KRS 18A.2254; and

3. Invoices and unaltered claims files associated with benefits under the

Public Employee Health Insurance Program;

(b) Analyze one hundred percent (100%) of invoices or claims submitted for

payment by the Public Employee Health Insurance Program. The entity shall

not utilize statistical sampling methods in lieu of analyzing all invoices and

claims;

(c) Identify and correct error s in benefit claims in order to avoid or reduce

erroneous overpayments by an insurer contracted pursuant to KRS 18A.225, a

third-party administrator contracted pursuant to KRS 18A.2254, or a

pharmacy benefit manager contracted to administer pharmacy benefi ts in the

Public Employee Health Insurance Program;

(d) Identify underpayments made by an insurer contracted pursuant to KRS

18A.225, a third-party administrator contracted pursuant to KRS 18A.2254, or

a pharmacy benefit manager contracted to administer pharmacy benefits in the

Public Employee Health Insurance Program;

(e) Identify inappropriate or erroneous fees imposed by an insurer contracted

pursuant to KRS 18A.225, a third -party administrator contracted pursuant to

KRS 18A.2254, or a pharmacy benefit m anager contracted to administer

pharmacy benefits in the Public Employee Health Insurance Program; and

(f) Submit a quarterly report to the Legislative Research Commission. The report

shall include a summary of the analysis and errors identified pursuant t o

paragraphs (c), (d), and (e) of this subsection during the previous quarter.

(4) The entity or entities contracted pursuant to subsection (1) of this section shall not

perform drug utilization reviews and shall not exercise any authority over the

provision of health care benefits for Medicare eligible retirees.

(5) The analysis of claims and the identification of potential errors required by

subsection (3)(b), (c), and (d) of this section shall:

(a) Occur prior to the due date of each claim or invoice sub mitted by an insurer

contracted pursuant to KRS 18A.225, a third -party administrator contracted

pursuant to KRS 18A.2254, or a pharmacy benefit manager contracted to

administer pharmacy benefits in the Public Employee Health Insurance

Program or within fiv e (5) days of receipt of the claim or invoice, whichever

is later; and

(b) Consider at least the following:

1. Compliance with all relevant administrative regulations promulgated by

the Personnel Cabinet;

2. Compliance with all state and federal laws relat ing to or applicable to

the Public Employee Health Insurance Program;

3. Compliance with any contract with an insurer, third -party administrator,

or pharmacy benefit manager; and

4. The market competitiveness of benefit payments, including the

adequacy of payments to pharmacies and other health care providers.

(6) The Personnel Cabinet may promulgate administrative regulations necessary to

carry out this section.