KRS 304.17A-595: Definitions for section -- Requirements for contract for provision of

pharmacy services -- Minimum reimbursements -- Administrative regulations.

(1) As used in this section:

(a) "Actual overpayment" means the portion of any amount p aid for pharmacy or

pharmacist services that:

1. Is duplicative because the pharmacy or pharmacist has already been paid

for the services; or

2. Was erroneously paid because the services were not rendered in

accordance with the prescriber's order, in which case only the amount

paid for that portion of the prescription that was filled incorrectly or in

excess of the prescriber's order may be deemed an actual overpayment.

The amount denied, refunded, or recouped shall not include the

dispensing fee paid to th e pharmacy if the correct medication was

dispensed to the patient;

(b) "Ambulatory pharmacy" means a pharmacy that:

1. Is open to the general public; and

2. Dispenses outpatient prescription drugs;

(c) "National average drug acquisition cost" means the nat ional average drug

acquisition cost, or NADAC, for a prescription drug or other service that is:

1. Determined by a survey of retail pharmacies; and

2. Published by the federal Centers for Medicare and Medicaid Services;

(d) "National drug code number" means the unique national drug code number

that identifies a specific approved drug, its manufacturer, and its package

presentation;

(e) "Net amount" means the amount paid to the pharmacy or pharmacist by the

insurer, pharmacy benefit manager, or other administrator less any fees, price

concessions, and all other revenue passing from the pharmacy or pharmacist

to the insurer, pharmacy benefit manager, or other administrator; and

(f) "Wholesale acquisition cost" means the manufacturer's list price for the drug

to wholesalers or direct purchasers in the United States, not including prompt

pay or other discounts, rebates, or reductions in price, for the most rec ent

month for which the information is available, as reported in wholesale price

guides or other publications of drug pricing data.

(2) To the extent permitted under federal law, every contract between a pharmacy or

pharmacist and an insurer, a pharmacy be nefit manager, or any other administrator

of pharmacy benefits for the provision of pharmacy or pharmacist services under a

health plan, either directly or through a pharmacy services administration

organization or group purchasing organization, shall:

(a) Outline the terms and conditions for the provision of pharmacy or pharmacist

services;

(b) Prohibit the insurer, pharmacy benefit manager, or other administrator from:

1. Reducing payment for pharmacy or pharmacist services, directly or

indirectly, under a reconciliation process to an effective rate of

reimbursement. This prohibition shall include, without limitation,

creating, imposing, or establishing direct or indirect remuneration fees,

generic effective rates, dispensing effective rates, brand effecti ve rates,

any other effective rates, in -network fees, performance fees, point -of-

sale fees, retroactive fees, pre -adjudication fees, post -adjudication fees,

and any other mechanism that reduces, or aggregately reduces, payment

for pharmacy or pharmacist services;

2. Retroactively denying, reducing reimbursement for, or seeking any

refunds or recoupments for a claim for pharmacy or pharmacist services,

in whole or in part, from the pharmacy or pharmacist after returning a

paid claim response as part of the a djudication of the claim, including

claims for the cost of a medication or dispensed product and claims for

pharmacy or pharmacist services that are deemed ineligible for

coverage, unless one (1) or more of the following occurred:

a. The original claim was submitted fraudulently; or

b. The pharmacy or pharmacist received an actual overpayment;

3. Reimbursing the pharmacy or pharmacist for a prescription drug or other

service at a net amount that is lower than the amount the insurer,

pharmacy benefit manager , or other administrator reimburses itself or a

pharmacy affiliate for the same:

a. Prescription drug by national drug code number; or

b. Service;

4. Collecting cost sharing from a pharmacy or pharmacist that was

provided to the pharmacy or pharmacist by a n insured for the provision

of pharmacy or pharmacist services under the health plan; and

5. Designating a prescription drug as a specialty drug unless the drug is a

limited distribution drug that:

a. Requires special handling; and

b. Is not commonly carri ed at retail pharmacies or oncology clinics

or practices; and

(c) Notwithstanding any other law, provide the following minimum

reimbursements to the pharmacy or pharmacist for each prescription drug or

other service provided by the pharmacy or pharmacist:

1. a. Except as provided in subdivision b. of this subparagraph,

reimbursement for the cost of the drug or other service at an

amount that is not less than:

i. The national average drug acquisition cost for the drug or

service at the time the drug or servi ce is administered,

dispensed, or provided; or

ii. If the national average drug acquisition cost is not available

at the time a drug is administered or dispensed, the wholesale

acquisition cost for the drug at the time the drug is

administered or dispensed.

b. The minimum reimbursement for the cost of a drug or other

service required under this subparagraph shall not apply to a

pharmacy permitted under KRS Chapter 315 with a designated

pharmacy type of "retail chain" on file with the Kentucky Board of

Pharmacy, or a pharmacist practicing at such a pharmacy, until a

determination by the commissioner under subparagraph 2.a. of this

paragraph has taken effect.

c. For purposes of complying with this subparagraph, the insurer,

pharmacy benefit manager, or other administrator shall utilize the

most recently published monthly national average drug acquisition

cost as a point of reference for the ingredient drug product

component of a pharmacy's or pharmacist's reimbursement for

drugs appearing on the national average drug acquisition cost list;

and

2. a. Except as provided in subdivision b. of this subparagraph, for

health plan years beginning on or after January 1, 202 7,

reimbursement for a professional dispensing fee that is not less

than the average cost to dispense a prescription drug in an

ambulatory pharmacy located in Kentucky, as determined by the

commissioner in an administrative regulation promulgated in

accordance with KRS Chapter 13A.

b. i. The minimum dispensing fee required under subdivision a.

of this subparagraph shall not apply to a mail -order

pharmaceutical distributor, including a mail-order pharmacy.

ii. For health plan years beginning prior to January 1, 2027, and

for any future health plan years for which a determination by

the commissioner under subdivision a. of this subparagraph

has not taken effect, the minimum dispensing fee for a

pharmacy permitted under KRS Chapter 315 with a

designated pharmac y type of "retail independent" on file

with the Kentucky Board of Pharmacy, or a pharmacist

practicing at such a pharmacy, shall be not less than ten

dollars and sixty-four cents ($10.64).

c. In acquiring data for, and making, the determination required

under subdivision a. of this subparagraph, the commissioner shall:

i. Promulgate an administrative regulation in accordance with

KRS Chapter 13A that establishes the data elements to be

collected by the Kentucky Board of Pharmacy under KRS

315.038;

ii. Conduct a study of the dispensing data submitted to the

commissioner by the Kentucky Board of Pharmacy in

accordance with KRS 315.038;

iii. Repeat the study every two (2) years to obtain updated

information;

iv. Adjust the determination every two (2) years as appropriate

based upon the results of each study; and

v. Comply with all requirements of KRS 315.038.

d. In carrying out his or her duties under this subparagraph, the

commissioner shall cooperate and consult with the Kentucky

Board of Pharmacy.