Short title

This Act may be cited as the

Pharmacy Access Improvement (PhAIm) Act of 2007

Strengthening standards for access to pharmacies

(a)

In general

Section 1860D–4(b)(1)(C) of the Social Security Act (42 U.S.C. 1395w–104(b)(1)(C)) is amended—(1)in clause (i)—(A)by inserting that are accessible to the general public (not including closed pharmacies, such as pharmacies that dispense drugs by mail order only or are located in a hospital or nursing home, except that a closed pharmacy shall be included if the pharmacy is operated by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization (as defined in section 4 of the Indian Health Care Improvement Act)) after sufficient number of pharmacies; and(B)by striking (other than by mail order); and(2)in clause (ii), by adding at the end the following new sentence: If the PDP sponsor of a prescription drug plan designates in-network pharmacies as either preferred or non-preferred pharmacies (or any designation other than preferred or any other distinction between or among pharmacies with respect to participation status), only in-network preferred pharmacies shall be counted in determining if the requirements of such rules are met..(b)

Expanding participation by any willing pharmacy

Section 1860D–4(b)(1)(A) of the Social Security Act (42 U.S.C. 1395w–104(b)(1)(A)) is amended—(1)by striking Pharmacy.—A prescription drug plan and inserting “Pharmacy.—

(i)

In general

Subject to clause (ii), a prescription drug plan

;

(2)in clause (i), as added by paragraph (1), by adding at the end the following new sentence: A previous refusal by a pharmacy of an offer to participate, or the expiration of such an offer, shall not be grounds to exclude a pharmacy from participation under this subparagraph.; and(3)by adding at the end the following new clause:

(ii)

Participation of 340B entities

(I)

In general

A prescription drug plan shall not exclude a pharmacy from participation solely on the basis that such pharmacy is a covered entity under section 340B of the Public Health Service Act.(II)

Reasonable terms and conditions for 340B entities

In the case of a pharmacy that is a covered entity under such section 340B, if such an entity requests that the terms and conditions of the appropriate version (as determined by the Secretary) of the Model Safety Net Pharmacy Addendum to Pharmacy Contract apply to a contract to dispense covered part D drugs under such plan, subject to subclause (III), the terms and conditions of such contract shall be the terms and conditions for participation of such pharmacy under clause (i).(III)

Permitting waiver of cost-sharing

In the case of a pharmacy that is a covered entity under such section 340B, if such an entity requests that the terms and conditions of a contract to dispense covered part D drugs under such plan permit the pharmacy to waive or reduce cost-sharing under this part, consistent with the requirements of section 1128B(b)(3)(G), such permission shall be included in the terms and conditions for participation of such pharmacy under clause (i).

(c)

Strengthening convenient access standards

(1)

Access in long-term care facilities and to pharmacies serving indians

Section 1860D–4(b)(1)(C) of the Social Security Act (42 U.S.C. 1395w–104(b)(1)(C)) is amended by striking clause (iv) and inserting the following new clauses:

(iv)

Convenient access in long-term care facilities

Such rules shall include standards with respect to access for enrollees who are residing in long-term care facilities to ensure that such enrollees have access to a long-term care network pharmacy.(v)

Convenient access to pharmacies serving Indians

Such rules may include standards with respect to access for enrollees to pharmacies operated by the Indian Health Service, Indian tribes and tribal organizations, and urban Indian organizations (as defined in section 4 of the Indian Health Care Improvement Act.

(2)

Convenient access to extended supplies at retail pharmacies

Section 1860D–4(b)(1)(C) of the Social Security Act (42 U.S.C. 1395w–104(b)(1)(C)), as amended by paragraph (1), is amended—(A)in clause (ii), by striking The Secretary and inserting Subject to clause (vi), the Secretary; and(B)by adding at the end the following new clause:

(vi)The Secretary shall establish rules for convenient access to in-network pharmacies under this subparagraph that dispense extended supplies of covered part D drugs that are modeled after the rules for convenient access to pharmacies included in the statement of work described in clause (ii).

(d)

Disclosure of maximum allowable cost pricing

Section 1860D–4(b)(1) of the Social Security Act (42 U.S.C. 1395w–104(b)(1)) is amended by adding at the end the following new subparagraph:

(F)

Disclosure of maximum allowable cost pricing

If a contract for a pharmacy to dispense covered part D drugs under a prescription drug plan references maximum allowable cost lists or pricing, the PDP sponsor of such plan shall disclose, through (at a minimum) an Internet website and a toll-free telephone number—(i)any such lists or pricing to the pharmacy at the time of offering such contract; and(ii)information updated not less frequently than every 7 days on such lists or pricing to pharmacies that have entered into such a contract.

(e)

Effective date

The amendments made by this section shall take effect on the date that is 180 days after the date of enactment of this Act.

Prompt payment by prescription drug plans and MA–PD plans under part D

(a)

Prompt payment by prescription drug plans

Section 1860D–12(b) of the Social Security Act (42 U.S.C. 1395w–112(b)) is amended by adding at the end the following new paragraph:

(4)

Prompt payment of clean claims

(A)

Prompt payment

(i)

In general

Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that payment shall be issued, mailed, or otherwise transmitted with respect to all clean claims submitted by pharmacies (other than pharmacies that dispense drugs by mail order only or are located in, or contract with, a long-term care facility) under this part within the applicable number of calendar days after the date on which the claim is received.(ii)

Clean claim defined

In this paragraph, the term clean claim means a claim that has no defect or impropriety (including any lack of any required substantiating documentation) or particular circumstance requiring special treatment that prevents timely payment from being made on the claim under this part.(B)

Applicable number of calendar days defined

In this paragraph, the term applicable number of calendar days means—(i)with respect to claims submitted electronically, 14 days; and(ii)with respect to claims submitted otherwise, 30 days.(C)

Interest payment

If payment is not issued, mailed, or otherwise transmitted within the applicable number of calendar days (as defined in subparagraph (B)) after a clean claim is received, the PDP sponsor shall pay interest to the pharmacy that submitted the claim at a rate equal to the weighted average of interest on 3-month marketable Treasury securities determined for such period, increased by 0.1 percentage point for the period beginning on the day after the required payment date and ending on the date on which payment is made (as determined under subparagraph (D)(iv)). Interest amounts paid under this subparagraph shall not be counted against the administrative costs of a prescription drug plan or treated as allowable risk corridor costs under section 1860D–15(e).(D)

Procedures involving claims

(i)

Claim deemed to be clean

A claim is deemed to be a clean claim if the PDP sponsor involved does not provide notice to the claimant of any deficiency in the claim within 10 days of the date on which the claim is submitted.(ii)

Claim determined to not be a clean claim

(I)

In general

If a PDP sponsor determines that a submitted claim is not a clean claim, the PDP sponsor shall, not later than the end of the period described in clause (i), notify the claimant of such determination. Such notification shall specify all defects or improprieties in the claim and shall list all additional information or documents necessary for the proper processing and payment of the claim.(II)

Determination after submission of additional information

A claim is deemed to be a clean claim under this paragraph if the PDP sponsor involved does not provide notice to the claimant of any defect or impropriety in the claim within 10 days of the date on which additional information is received under subclause (I).(III)

Payment of clean portion of a claim

A PDP sponsor shall, as appropriate, pay any portion of a claim that would be a clean claim but for a defect or impropriety in a separate portion of the claim in accordance with subparagraph (A).(iii)

Obligation to pay

A claim submitted to a PDP sponsor that is not paid or contested by the sponsor within the applicable number of days (as defined in subparagraph (B)) shall be deemed to be a clean claim and shall be paid by the PDP sponsor in accordance with subparagraph (A).(iv)

Date of Payment of Claim

Payment of a clean claim under such subparagraph is considered to have been made on the date on which—(I)with respect to claims paid electronically, the payment is transferred; and(II)with respect to claims paid otherwise, the payment is submitted to the United States Postal Service or common carrier for delivery.(E)

Electronic transfer of funds

A PDP sponsor shall pay all clean claims submitted electronically by electronic transfer of funds if the pharmacy so requests or has so requested previously. In the case where such payment is made electronically, remittance may be made by the PDP sponsor electronically as well.(F)

Protecting the rights of claimants

(i)

In general

Nothing in this paragraph shall be construed to prohibit or limit a claim or action not covered by the subject matter of this section that any individual or organization has against a provider or a PDP sponsor.(ii)

Anti-Retaliation

Consistent with applicable Federal or State law, a PDP sponsor shall not retaliate against an individual or provider for exercising a right of action under this subparagraph.(G)

Rule of construction

A determination under this paragraph that a claim submitted by a pharmacy is a clean claim shall not be construed as a positive determination regarding eligibility for payment under this title, nor is it an indication of government approval of, or acquiescence regarding, the claim submitted. The determination shall not relieve any party of civil or criminal liability with respect to the claim, nor does it offer a defense to any administrative, civil, or criminal action with respect to the claim.

(b)

Prompt payment by MA–PD plans

Section 1857(f) of the Social Security Act (42 U.S.C. 1395w–27) is amended by adding at the end the following new paragraph:

(3)

Incorporation of certain prescription drug plan contract requirements

The following provisions shall apply to contracts with a Medicare Advantage organization in the same manner as they apply to contracts with a PDP sponsor offering a prescription drug plan under part D:(A)

Prompt payment

Section 1860D–12(b)(4).

(c)

Effective date

The amendments made by this section shall take effect on the date that is 1 year after the date of enactment of this Act.

Medicare part D informational resources and customer service

(a)

Health and Human Services pharmacy hotline

The Secretary of Health and Human Services shall—(1)establish a toll-free telephone number that is dedicated to providing information regarding the Medicare prescription drug benefit under part D of title XVIII of the Social Security Act to pharmacists and pharmacy staff; and(2)staff such telephone number in order to ensure that the toll-free number is available to answer calls 24-hours each day.(b)

Customer service provided by prescription drug plans and MA–PD plans

(1)

In general

Section 1860D–4 of the Social Security Act (42 U.S.C. 1395w–104) is amended by adding at the end the following new subsection:

(l)

Customer Service

(1)

Pharmacy hotline

A PDP sponsor of a prescription drug plan shall—(A)establish a toll-free telephone number that is dedicated to providing information regarding the plan to pharmacists and pharmacy staff; and(B)staff such telephone number in order to ensure compliance with customer service standards (as established by the Secretary).(2)

Physician and provider hotline

A PDP sponsor of a prescription drug plan shall—(A)establish a toll-free telephone number that is dedicated to providing information regarding the plan to physicians and providers; and(B)staff such telephone number in order to ensure compliance with customer service standards (as established by the Secretary).

(2)

Effective date

The amendments made by this subsection shall apply to plan years beginning on or after January 1, 2008.

Restrictions on pharmacy co-branding by prescription drug plans and MA–PD Plans

(a)

In general

Section 1860D–4 of the Social Security Act (42 U.S.C. 1395w–104), as amended by section 4(b), is amended by adding at the end the following new subsection:

(m)

Co-branding

(1)

Prohibition of co-branding on prescription drug card

A card that is issued under subsection (b)(2)(A) for use under a prescription drug plan offered by a PDP sponsor shall not display the name, brand, logo, or trademark of any pharmacy.(2)

Marketing materials

Marketing materials distributed by a PDP sponsor that has a co-branding relationship with a pharmacy with respect to such a plan shall include a disclaimer in large, off-set, bold-face type of the following: Other pharmacies are also available in our network.

(b)

Effective date

The amendments made by this section shall apply to cards and marketing materials distributed on or after the date that is 60 days after the date of enactment of this Act.

Submission of claims by pharmacies located in or contracting with long-term care facilities

(a)

Submission of claims by pharmacies located in or contracting with long-term care facilities

(1)

Submission of claims to prescription drug plans

Section 1860D–12(b) of the Social Security Act (42 U.S.C. 1395w–112(b)), as amended by section 3(a), is amended by adding at the end the following new paragraph:

(5)

Submission of claims by pharmacies located in or contracting with long-term care facilities

Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that a pharmacy located in, or having a contract with, a long-term care facility shall have not less than 30 days (but not more than 90 days) to submit claims to the sponsor for reimbursement under the plan.

(2)

Submission of claims to MA–PD plans

Section 1857(f)(3) of the Social Security Act, as added by section 3(b), is amended by adding at the end the following new subparagraph:

(B)

Submission of claims by pharmacies located in or contracting with long-term care facilities

Section 1860D–12(b)(5).

(b)

Effective date

The amendments made by this section shall apply to plan years beginning on or after January 1, 2008.

OIG Study and report on dispensing fees

(a)

Study

The Inspector General of the Department of Health and Human Services shall conduct an analysis of the cost of dispensing covered part D drugs (as defined in section 1860D–2(e) of the Social Security Act (42 U.S.C. 1395w–102(e)) under a prescription drug plan under part D of title XVIII of such Act or an MA–PD plan under part C of such title that takes into consideration the following:(1)Any reasonable costs associated with a pharmacist’s time in—(A)checking for information about an individual’s coverage; and(B)performing necessary clinical review and quality assurance activities, such as activities to identify and reduce the frequency of patterns of fraud, abuse, gross overuse, or inappropriate or medically unnecessary care, among physicians, pharmacists, and patients, or associated with specific drugs or groups of drugs, as well as potential and actual severe adverse reactions to drugs including education on therapeutic appropriateness, overutilization and underutilization, appropriate use of generic products, therapeutic duplication, drug-disease contraindications, drug-drug interactions, incorrect drug dosage or duration of drug treatment, drug-allergy interactions, and clinical abuse/misuse, and any other clinical review and quality assurance activities required under Federal or State law.(2)Costs incurred by the pharmacist that are associated with—(A)the measurement or mixing of a covered part D drug;(B)filling the container for such a drug;(C)physically providing the completed prescription to an individual enrolled in such a plan;(D)delivery;(E)special packaging;(F)overhead related to the pharmacy, or the section of the facility that is devoted to a pharmacy, and its maintenance (including the equipment necessary to operate such pharmacy or such section and the salaries of pharmacists and other pharmacy workers); and(G)geographic factors that impact operational costs.(3)The variation in costs described in paragraph (2) based on—(A)whether the pharmacist is dispensing a standard or extended supply of a covered part D drug;(B)whether the pharmacy is an independent or chain pharmacy;(C)whether a product dispensed is a specialty pharmacy product; and(D)whether the pharmacy is located in, or contracts with, a long-term care facility.(4)The increase in dispensing fees, taking into consideration the costs described in paragraphs (1), (2), and (3), that is sufficient to create an incentive for a pharmacist to promote the substitution of covered general alternative therapies.(b)

Report

Not later than December 1, 2008, the Inspector General of the Department of Health and Human Services shall submit a report to the Secretary of Health and Human Services on the study conducted under subsection (a). The report shall include the following:(1)The average cost to dispense a prescription drug under part D of title XVIII of the Social Security Act determined with respect to the area in which a prescription drug plan or an MA–PD plan is offered, including with respect to each PDP region (as determined under section 1860D–11(a)(2) of such Act (42 U.S.C. 1395w–111(a)(2)) and each MA region (as determined under section 1858(a) of such Act (42 U.S.C. 1395w–27(a)).(2)The findings of the study conducted under subsection (a) with respect to—(A)the variation in costs studied under subparagraphs (A) through (D) of paragraph (3) of such subsection; and(B)the increase in dispensing fees studied under paragraph (4) of such subsection.

Regular update of Prescription Drug Pricing Standard required

(a)

Requirement for prescription drug plans

Section 1860D–12(b) of the Social Security Act (42 U.S.C. 1395w–112(b)), as amended by section 6(a)(1), is amended by adding at the end the following new paragraph:

(6)

Regular update of Prescription Drug Pricing Standard

If the PDP sponsor of a prescription drug plan uses a standard for reimbursement of pharmacies based on the cost of a drug, each contract entered into with such sponsor under this part with respect to the plan shall provide that the sponsor shall update such standard not less frequently than once every 7 days, beginning with an initial update on January 1 of each year, to accurately reflect the market price of acquiring the drug.

(b)

Requirement for MA–PD plans

Section 1857(f)(3) of the Social Security Act, as amended by section 6(a)(2), is amended by adding at the end the following new subparagraph:

(C)

Regular update of Prescription Drug Pricing Standard

Section 1860D–12(b)(6).

(c)

Effective date

The amendments made by this section shall apply to plan years beginning on or after January 1, 2008.