(a) Notwithstanding a law to the contrary, a pharmacy benefits manager or a covered entity shall base the calculation of any coinsurance or deductible for a prescription drug or device on the allowed amount of the drug or device. For purposes of this section, coinsurance or deductible does not mean or include copayments.
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Terms Used In Tennessee Code 56-7-3206

  • Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
  • Code: includes the Tennessee Code and all amendments and revisions to the code and all additions and supplements to the code. See Tennessee Code 1-3-105
  • Commissioner: means the commissioner of commerce and insurance. See Tennessee Code 56-1-102
  • Covered entity: means a covered entity as defined in §. See Tennessee Code 56-7-3201
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Pharmacy benefits manager: means a pharmacy benefits manager as defined in §. See Tennessee Code 56-7-3201
  • Prescription drug: means a drug that under federal or state law is required to be dispensed only pursuant to a prescription order or is restricted to use by individuals authorized by law to prescribe drugs. See Tennessee Code 56-7-3201
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
(b) Notwithstanding a law to the contrary, a pharmacy benefits manager shall not charge a covered entity an amount greater than the reimbursement paid by a pharmacy benefits manager to a contracted pharmacy for the prescription drug or device.
(c)

(1) Notwithstanding any law to the contrary, a pharmacy benefits manager shall not reimburse a contracted pharmacy for a prescription drug or device an amount that is less than the actual cost to that pharmacy for the prescription drug or device.
(2)

(A) A pharmacy benefits manager shall establish a process for a pharmacy to appeal a reimbursement for failing to pay at least the actual cost to the pharmacy for the prescription drug or device.
(B) A covered entity’s or pharmacy benefits manager’s appeals process established pursuant to subdivision (c)(2)(A) must:

(i) Be approved by the commissioner of commerce and insurance;
(ii) Comply with the timing and notice requirements of § 56-7-3108 and such other requirements as the commissioner of commerce and insurance may establish by rule; and
(iii) Permit a pharmacy or its designated agent to file an appeal using the standard appeal form described in subdivision (c)(2)(D).
(C) If a pharmacy chooses to contest a reimbursement for failing to pay at least the actual cost the pharmacy incurred for a particular drug or medical product or device, then the pharmacy has the right to designate a pharmacy services administrative organization or other agent to file and handle its appeal.
(D) The commissioner of commerce and insurance shall create and make available to pharmacy benefits managers and covered entities a standard form to be used by a pharmacy or its designated agent to file an appeal pursuant to this subdivision (c)(2) with a pharmacy benefits manager or covered entity.
(3)

(A) If a pharmacy or agent acting on behalf of a pharmacy prevails in an appeal provided for in this subsection (c), then within seven (7) business days after notice of the appeal is received by the pharmacy benefits manager or covered entity, the pharmacy benefits manager or covered entity shall:

(i) Make the necessary change to the challenged rate of reimbursement or actual cost;
(ii) If the product involved in the appeal is a drug, then provide to the pharmacy or agent the national drug code number for the drug on which the change is based;
(iii) Permit the challenging pharmacy to reverse and rebill the claim upon which the appeal is based;
(iv) Pay or waive the cost of any transaction fee required to reverse and rebill the claim;
(v) Reimburse the pharmacy at least the pharmacy’s actual cost for the prescription drug or device; and
(vi) Apply the findings from the appeal as to the rate of reimbursement and actual cost for the particular drug or medical product or device to other similarly situated pharmacies.
(B) It is a violation of this subsection (c) if, after an appeal in which a pharmacy or agent acting on behalf of a pharmacy prevails, a pharmacy benefits manager or covered entity fails to reimburse the pharmacy at least actual cost.
(C) As used in subdivision (c)(3)(A)(vi), “similarly situated” means a pharmacy:

(i) That is in any of the pharmacy benefits manager’s networks;
(ii) That purchases the particular drug or medical product or device to which the finding applies from the same pharmaceutical wholesaler as the pharmacy that prevailed in the appeal; and
(iii) To which the pharmacy benefits manager also applies the challenged rate of reimbursement or actual cost.
(4) If a pharmacy or agent acting on behalf of a pharmacy loses or is denied an appeal provided for in this section, then:

(A) If the product associated with the national drug code number or unique device identifier is available at a cost that is less than the challenged rate of reimbursement from a pharmaceutical wholesaler in this state, then within seven (7) business days after notice of the appeal is received by the pharmacy benefits manager or covered entity, the pharmacy benefits manager or covered entity shall provide the appealing pharmacy or agent with:

(i) The name of the national or regional pharmaceutical wholesalers operating in this state that have the particular drug or medical product or device currently in stock at a price that is less than the amount of the challenged rate of reimbursement; and
(ii)

(a) If the product involved in the appeal is a drug, then the national drug code number for the drug; or
(b) If the product involved is a medical device, then the unique device identifier for the device; and
(B) If the product associated with the national drug code number or unique device identifier is not available at a cost that is less than the challenged rate of reimbursement from the pharmaceutical wholesaler from whom the pharmacy purchases the majority of prescription pharmaceutical products for resale, then the pharmacy benefits manager shall adjust the challenged rate of reimbursement to an amount equal to or greater than the appealing pharmacy’s actual cost and permit the pharmacy to reverse and rebill each claim affected by the inability to procure the pharmaceutical product at a cost that is equal to or less than the previously challenged rate of reimbursement. The pharmacy benefits manager shall pay or waive the cost of any transaction fee required to reverse and rebill the claim.
(d)

(1) Subsection (c) does not apply to a pharmacy benefits manager when utilizing a reimbursement methodology that is identical to the methodology provided for in the state plan for medical assistance approved by the federal centers for medicare and medicaid services.
(2) If a pharmacy benefits manager utilizes a reimbursement methodology that is identical to the methodology provided for in the state plan for medical assistance approved by the federal centers for medicare and medicaid services, then the pharmacy benefits manager shall establish a process for a pharmacy to appeal a reimbursement paid at average acquisition cost and receive an adjusted payment by providing valid and reliable evidence that the reimbursement does not pay at least the actual cost to the pharmacy for the prescription drug or device.
(e) A pharmacy benefits manager shall not include within the amount calculated to reimburse a pharmacy for actual cost pursuant to subsection (c) the amount of any professional dispensing fee that is payable to the pharmacy.
(f) A pharmacy benefits manager shall pay a professional dispensing fee at a rate that is not less than the amount paid by the TennCare program to a pharmacy, if:

(1) The pharmacy dispenses a prescription drug or device pursuant to an agreement with the pharmacy benefits manager or a covered entity; and
(2) The pharmacy’s annual prescription volume is at a level that, if the pharmacy were a TennCare-participating ambulatory pharmacy, would qualify the pharmacy for the enhanced amount of professional dispensing fee for a low-volume pharmacy under the operative version of the Division of TennCare Pharmacy Provider Manual, or a successor manual.
(g)

(1) The commissioner of commerce and insurance is authorized to promulgate rules to effectuate the purposes of this section. The rules must be promulgated in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
(2) The commissioner shall institute an external appeals process for any appeal denied by a pharmacy benefits manager.
(h) As used in this section:

(1) “Actual cost”:

(A) Means the amount a pharmacy paid as evidenced by documentation that includes, but is not limited to, the invoice price minus discounts, price concessions, rebates, or other reductions; and
(B) As used in subdivision (h)(1)(A), “discounts, price concessions, rebates, or other reductions” do not include a cash discount; and
(2) “Allowed amount” means the cost of a prescription drug or device after applying pharmacy benefits manager or covered entity pricing discounts available at the time of the prescription claim transaction.
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