Amd §§280-a, 280-c & 4408, Pub Health L; amd §§111-a, 2901, 2902, 2905, 2906, 3217-a & 4324, Ins L
Expands pharmacy benefit management services to include the management or administration of benefits relating to durable medical equipment; defines "durable medical equipment"; relates to pharmacy or durable medical equipment provider audits by pharmacy benefit managers
STATE OF NEW YORK
________________________________________________________________________
7357
2025-2026 Regular Sessions
IN ASSEMBLY
March 25, 2025
___________
Introduced by M. of A. PRETLOW -- read once and referred to the Commit-
tee on Health
AN ACT to amend the public health law and the insurance law, in relation
to pharmacy benefit management services and durable medical equipment
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivisions 1, 3, 4 and 5 of section 280-a of the public
2 health law, subdivisions 1 and 3 as amended by chapter 128 of the laws
3 of 2022, subdivision 4 as added by chapter 828 of the laws of 2021, and
4 subdivision 5 as amended by chapter 396 of the laws of 2024, are amended
5 to read as follows:
6 1. Definitions. As used in this section, the following terms shall
7 have the following meanings:
8 (a) "Health plan" means an entity for which a pharmacy benefit manager
9 provides pharmacy benefit management services and that is a health bene-
10 fit plan or other entity that approves, provides, arranges for, or pays
11 or reimburses in whole or in part for health care items or services, to
12 include at least prescription drugs or durable medical equipment, for a
13 substantial number of beneficiaries who work or reside in this state.
14 The superintendent shall determine, in [his or her] such superinten-
15 dent's sole discretion, by regulation how the phrase "a substantial
16 number of beneficiaries who work or reside in this state" shall be
17 interpreted.
18 (b) "Pharmacy benefit management services" means the management or
19 administration of prescription drug benefits or the management or
20 administration of benefits relating to durable medical equipment, for a
21 health plan, directly or through another entity, and regardless of
22 whether the pharmacy benefit manager and the health plan are related, or
23 associated by ownership, common ownership, organization or otherwise;
24 including the procurement of prescription drugs to be dispensed to
25 patients, [or] the administration or management of prescription drug
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10971-01-5
A. 7357 2
1 benefits, or the administration or management of benefits relating to
2 durable medical equipment, including but not limited to, any of the
3 following:
4 (i) mail service pharmacy;
5 (ii) claims processing, retail network management, or payment of
6 claims to pharmacies for dispensing prescription drugs;
7 (iii) clinical or other formulary or preferred drug list development
8 or management;
9 (iv) negotiation or administration of rebates, discounts, payment
10 differentials, or other incentives, for the inclusion of particular
11 prescription drugs in a particular category or to promote the purchase
12 of particular prescription drugs;
13 (v) patient compliance, therapeutic intervention, or generic substi-
14 tution programs;
15 (vi) disease management;
16 (vii) drug utilization review or prior authorization;
17 (viii) adjudication of appeals or grievances related to prescription
18 drug coverage;
19 (ix) contracting with network pharmacies; [and]
20 (x) controlling the cost of covered prescription drugs; and
21 (xi) credentialing, contracting, authorizing, processing payment, or
22 acting as an intermediary for the management, administration, or
23 provision of durable medical equipment, excluding workers' compensation
24 plans.
25 (c) "Pharmacy benefit manager" means any entity that performs pharmacy
26 benefit management services for a health plan.
27 (d) "Maximum allowable cost price" means a maximum reimbursement
28 amount set by the pharmacy benefit manager for therapeutically equiv-
29 alent multiple source generic drugs.
30 (e) "Controlling person" means any person or other entity who or which
31 directly or indirectly has the power to direct or cause to be directed
32 the management, control or activities of a pharmacy benefit manager.
33 (f) "Covered individual" means a member, participant, enrollee,
34 contract holder or policy holder or beneficiary of a health plan.
35 (g) "License" means a license to be a pharmacy benefit manager, under
36 article twenty-nine of the insurance law.
37 (h) "Spread pricing" means the practice of a pharmacy benefit manager
38 retaining an additional amount of money in addition to the amount paid
39 to the pharmacy or durable medical equipment provider to fill a
40 prescription.
41 (i) "Superintendent" means the superintendent of financial services.
42 (j) "Durable medical equipment" means devices and equipment that have
43 been ordered by a practitioner in the treatment of a specific medical
44 condition and that have all of the following characteristics:
45 (i) can withstand repeated use for a protracted period of time;
46 (ii) are primarily and customarily used for medical purposes;
47 (iii) are generally not useful in the absence of an illness or injury;
48 (iv) are not usually fitted, designed or fashioned for a particular
49 individual's use; and
50 (v) if intended for use by only one patient, the equipment may be
51 either custom-made or customized.
52 The term "durable medical equipment" shall also include
53 medical/surgical supplies, orthotic appliances and devices, and
54 orthopedic footwear, as defined by the commissioner.
55 3. Prescriptions. A pharmacy benefit manager may not substitute or
56 cause the substituting of one prescription drug or item of durable
A. 7357 3
1 medical equipment for another in dispensing a prescription, or alter or
2 cause the altering of the terms of a prescription, except with the
3 approval of the prescriber or as explicitly required or permitted by
4 law, including regulations of the department of financial services or
5 the department of health. The superintendent and commissioner, in coor-
6 dination with each other, are authorized to promulgate regulations to
7 determine when substitution of prescription drugs or durable medical
8 equipment may be required or permitted.
9 4. Appeals. A pharmacy benefit manager shall, with respect to
10 contracts between a pharmacy benefit manager and a pharmacy or durable
11 medical equipment provider or, alternatively, a pharmacy benefit manager
12 and a [pharmacy's] contracting agent of a pharmacy or durable medical
13 equipment provider, such as a pharmacy services administrative organiza-
14 tion, include a reasonable process to appeal, investigate and resolve
15 disputes regarding multi-source generic drug pricing. The appeals proc-
16 ess shall include the following provisions:
17 (a) the right to appeal by the pharmacy, durable medical equipment
18 provider, and/or the [pharmacy's] contracting agent of the pharmacy or
19 durable medical equipment provider shall be limited to thirty days
20 following the initial claim submitted for payment;
21 (b) a telephone number through which a network pharmacy or durable
22 medical equipment provider may contact the pharmacy benefit manager for
23 the purpose of filing an appeal and an electronic mail address of the
24 individual who is responsible for processing appeals;
25 (c) the pharmacy benefit manager shall send an electronic mail message
26 acknowledging receipt of the appeal. The pharmacy benefit manager shall
27 respond in an electronic message to the pharmacy, durable medical equip-
28 ment provider, and/or the [pharmacy's] contracting agent of the pharmacy
29 or durable medical equipment provider filing the appeal within seven
30 business days indicating its determination. If the appeal is determined
31 to be valid, the maximum allowable cost for the drug shall be adjusted
32 for the appealing pharmacy or durable medical equipment provider effec-
33 tive as of the date of the original claim for payment. The pharmacy
34 benefit manager shall require the appealing pharmacy or durable medical
35 equipment provider to reverse and rebill the claim in question in order
36 to obtain the corrected reimbursement;
37 (d) if an update to the maximum allowable cost is warranted, the phar-
38 macy benefit manager or covered entity shall adjust the maximum allow-
39 able cost of the drug effective for all similarly situated pharmacies in
40 its network in the state on the date the appeal was determined to be
41 valid; and
42 (e) if an appeal is denied, the pharmacy benefit manager shall identi-
43 fy the national drug code of a therapeutically equivalent drug, as
44 determined by the federal Food and Drug Administration, that is avail-
45 able for purchase by pharmacies in this state from wholesalers regis-
46 tered pursuant to subdivision four of section sixty-eight hundred eight
47 of the education law at a price which is equal to or less than the maxi-
48 mum allowable cost for that drug as determined by the pharmacy benefit
49 manager.
50 5. Contract provisions. No pharmacy benefit manager shall, with
51 respect to contracts between such pharmacy benefit manager and a pharma-
52 cy or durable medical equipment provider pharmacy or, alternatively,
53 such pharmacy benefit manager and a [pharmacy's] contracting agent of a
54 pharmacy or durable medical equipment provider, such as a pharmacy
55 services administrative organization:
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1 (a) prohibit or penalize a pharmacist [or], pharmacy, or durable
2 medical equipment provider from disclosing to an individual purchasing
3 [a] prescription medication, durable medical equipment, or a service
4 information regarding:
5 (i) the cost of the prescription medication, durable medical equip-
6 ment, or service to the individual, or the cost of the prescription
7 medication, durable medical equipment, or service to the pharmacy or
8 durable medical equipment provider and the [pharmacy's] reimbursement to
9 such pharmacy or durable medical equipment provider for that
10 prescription medication, durable medical equipment, or service; or
11 (ii) the availability of any therapeutically equivalent alternative
12 medications or alternative methods of purchasing the prescription medi-
13 cation or durable medical equipment, including but not limited to,
14 paying a cash price; or
15 (b) charge or collect from an individual a copayment that exceeds the
16 total submitted charges by the pharmacy or durable medical equipment
17 provider for which the pharmacy or durable medical equipment provider is
18 paid. If an individual pays a copayment, the pharmacy or durable
19 medical equipment provider shall retain the adjudicated costs and the
20 pharmacy benefit manager shall not redact or recoup the adjudicated
21 cost.
22 § 2. Section 280-c of the public health law, as added by section 1 of
23 part MM of chapter 57 of the laws of 2018, is amended to read as
24 follows:
25 § 280-c. Pharmacy or durable medical equipment provider audits by
26 pharmacy benefit managers. 1. Definitions. As used in this section, the
27 following terms shall have the following meanings:
28 (a) "Pharmacy benefit manager" shall have the same meaning as in
29 section two hundred eighty-a of this article.
30 (b) "Pharmacy" shall mean a pharmacy that has contracted with a phar-
31 macy benefit manager for the provision of pharmacy services.
32 (c) "Durable medical equipment" shall have the same meaning as in
33 section two hundred eighty-a of this article.
34 2. When conducting an audit of a pharmacy's or durable medical equip-
35 ment provider's records, a pharmacy benefit manager shall:
36 (a) not conduct an on-site audit of a pharmacy or durable medical
37 equipment provider at any time during the first three calendar days of a
38 month;
39 (b) notify the pharmacy, durable medical equipment provider or [its]
40 the contracting agent of such pharmacy or durable medical equipment
41 provider no later than fifteen days before the date of initial on-site
42 audit. Such notification to the pharmacy, durable medical equipment
43 provider or [its] the contracting agent of such pharmacy or durable
44 medical equipment provider shall be in writing delivered either (i) by
45 mail or common carrier, return receipt requested, or (ii) electronically
46 with electronic receipt confirmation, addressed to the supervising phar-
47 macist of record and pharmacy corporate office, or the durable medical
48 equipment provider, where applicable, at least fifteen days before the
49 date of an initial on-site audit;
50 (c) limit the audit period to twenty-four months after the date a
51 claim is submitted to or adjudicated by the pharmacy benefit manager;
52 (d) include in the written advance notice of an on-site audit the list
53 of specific prescription numbers to be included in the audit that may or
54 may not include the final two digits of the prescription numbers;
55 (e) use the written and verifiable records of a hospital, physician or
56 other authorized practitioner, which are transmitted by any means of
A. 7357 5
1 communication, to validate the pharmacy or durable medical equipment
2 provider records in accordance with state and federal law;
3 (f) limit the number of prescriptions audited to no more than one
4 hundred randomly selected in a twelve-month period, except in cases of
5 fraud;
6 (g) provide the pharmacy, durable medical equipment provider or [its]
7 the contracting agent of such pharmacy or durable medical equipment
8 provider with a copy of the preliminary audit report within forty-five
9 days after the conclusion of the audit;
10 (h) be allowed to conduct a follow-up audit on-site if a remote or
11 desk audit reveals the necessity for a review of additional claims;
12 (i) in the case of invoice audits, accept as validation invoices from
13 any wholesaler registered with the department of education from which
14 the pharmacy or durable medical equipment provider has purchased
15 prescription drugs or, in the case of durable medical equipment or sick-
16 room supplies, invoices from an authorized distributor other than a
17 wholesaler;
18 (j) provide the pharmacy, durable medical equipment provider or [its]
19 the contracting agent of such pharmacy or durable medical equipment
20 provider with the ability to provide documentation to address a discrep-
21 ancy or audit finding, provided that such documentation must be received
22 by the pharmacy benefit manager no later than the forty-fifth day after
23 the preliminary audit report was provided to the pharmacy, durable
24 medical equipment provider or [its] the contracting agent of such phar-
25 macy or durable medical equipment provider. The pharmacy benefit manag-
26 er shall consider a reasonable request from the pharmacy or durable
27 medical equipment provider for an extension of time to submit documenta-
28 tion to address or correct any findings in the report; and
29 (k) provide the pharmacy, durable medical equipment provider, or [its]
30 the contracting agent of such pharmacy or durable medical equipment
31 provider with the final audit report no later than sixty days after the
32 initial audit report was provided to the pharmacy, durable medical
33 equipment provider, or [its] the contracting agent of such pharmacy or
34 durable medical equipment provider.
35 3. Any claim that was retroactively denied for a clerical error, typo-
36 graphical error, scrivener's error or computer error shall be paid if
37 the prescription was properly and correctly dispensed, unless a pattern
38 of such errors exists, fraudulent billing is alleged or the error
39 results in actual financial loss to the entity. A clerical error is an
40 error that does not result in actual financial harm to the covered enti-
41 ty or consumer and does not include the dispensing of an incorrect dose,
42 amount or type of medication or dispensing a prescription drug or dura-
43 ble medical equipment to the wrong person.
44 4. This section shall not apply to:
45 (a) audits in which suspected fraudulent activity or other intentional
46 or willful misrepresentation is evidenced by a physical review, review
47 of claims data or statements, or other investigative methods; or
48 (b) audits of claims paid for by federally funded programs; or
49 (c) concurrent reviews or desk audits that occur within three business
50 days of transmission of a claim and where no chargeback or recoupment is
51 demanded.
52 § 3. Paragraph 2 of subsection (a) of section 111-a of the insurance
53 law, as added by chapter 738 of the laws of 2023, is amended to read as
54 follows:
55 (2) A pharmacy benefit manager, including an entity that directly or
56 through an intermediary, manages the prescription drug coverage provided
A. 7357 6
1 by a health insurer under a contract or policy delivered or issued for
2 delivery in this state or a health plan subject to section three hundred
3 sixty-four-j of the social services law, including the processing and
4 payment of claims for prescription drugs, the performance of drug utili-
5 zation review, the processing of drug prior authorization requests, the
6 adjudication of appeals or grievances related to prescription drug
7 coverage, contracting with network pharmacies, and controlling the cost
8 of covered prescription drugs, but not including a pharmacy benefit
9 manager engaged solely in credentialing, contracting, authorizing, proc-
10 essing payment, or acting as an intermediary for the management, admin-
11 istration, or provision of durable medical equipment, prosthetics,
12 orthotics or supplies.
13 § 4. Subsection (b) of section 2901 of the insurance law, as amended
14 by chapter 128 of the laws of 2022, is amended to read as follows:
15 (b) The terms "covered individual", "health plan", "pharmacy benefit
16 manager", [and] "pharmacy benefit management services", and "durable
17 medical equipment" have the same meanings as defined by section two
18 hundred eighty-a of the public health law. The superintendent is
19 expressly authorized to interpret these terms as if the definitions were
20 stated within this article.
21 § 5. Subsection (b) of section 2902 of the insurance law, as amended
22 by chapter 128 of the laws of 2022, is amended to read as follows:
23 (b) Any person, firm, association, corporation or other entity that
24 violates this section shall, in addition to any other penalty provided
25 by law, be liable for restitution and compensatory damages to any health
26 plan, pharmacy, durable medical equipment provider, [or] covered indi-
27 vidual, or other person harmed by the violation and shall also be
28 subject to a penalty not exceeding of the greater of (1) four thousand
29 dollars for the first violation and ten thousand dollars for each subse-
30 quent violation or (2) the aggregate economic gross receipts attribut-
31 able to all violations.
32 § 6. Subsection (b) of section 2905 of the insurance law, as amended
33 by chapter 128 of the laws of 2022, is amended to read as follows:
34 (b) Any person, firm, association, corporation or other entity that
35 violates this section shall, in addition to any other penalty provided
36 by law, be liable for restitution and compensatory damages to any health
37 plan, pharmacy, durable medical equipment provider, covered individual
38 or other person harmed by the violation and further shall be subject to
39 a penalty not exceeding the greater of (1) four thousand dollars for the
40 first violation and ten thousand dollars for each subsequent violation
41 or (2) the aggregate economic gross receipts attributable to all
42 violations, as determined by the superintendent at a hearing.
43 § 7. Paragraph 6 of subsection (b) of section 2906 of the insurance
44 law, as added by chapter 128 of the laws of 2022, is amended to read as
45 follows:
46 (6) standards and practices used in the creation of pharmacy networks
47 and durable medical equipment provider networks and contracting with
48 network pharmacies, durable medical equipment providers, and other
49 providers, including promotion and use of independent and community
50 pharmacies and patient access and minimizing excessive concentration and
51 vertical integration of markets; and
52 § 8. Paragraph 1 of subsection (g) of section 3217-a of the insurance
53 law is amended by adding a new subparagraph (J) to read as follows:
54 (J) "Durable medical equipment" shall have the same meaning as in
55 section two hundred eighty-a of the public health law.
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1 § 9. Subparagraph (B) of paragraph 1, and paragraphs 6, 7 and 10 of
2 subsection (g) of section 3217-a of the insurance law, as added by chap-
3 ter 63 of the laws of 2023, are amended to read as follows:
4 (B) "Cost-sharing information" means the amount an insured is required
5 to pay to receive a drug or item of durable medical equipment that is
6 covered under the insured's insurance policy.
7 (6) Upon a request made pursuant to paragraph three of this
8 subsection, the insurer or pharmacy benefit manager shall provide the
9 following data for any drug or durable medical equipment covered under
10 the insured's insurance policy:
11 (A) insured-specific eligibility information;
12 (B) insured-specific prescription cost and benefit data, such as
13 applicable formulary, benefit, coverage and cost-sharing data for the
14 prescribed drug and clinically-appropriate alternatives or durable
15 medical equipment, when appropriate;
16 (C) insured-specific cost-sharing information that describes variance
17 in cost-sharing based on the pharmacy or durable medical equipment
18 provider dispensing the prescribed drug or its alternatives or durable
19 medical equipment, and in relation to the insured's benefit; and
20 (D) applicable utilization management requirements.
21 (7) Any insurer or pharmacy benefit manager shall furnish the data as
22 required whether the request is made using the [drug's] unique billing
23 code of the drug or durable medical equipment, such as a National Drug
24 Code or Healthcare Common Procedure Coding System code or descriptive
25 term. An insurer or pharmacy benefit manager shall not deny or unreason-
26 ably delay processing a request.
27 (10) Nothing in this subsection shall interfere with insured choice
28 and a health care provider's ability to convey the full range of
29 prescription drug or durable medical equipment cost options to an
30 insured. Insurers and pharmacy benefit managers shall not restrict a
31 health care provider from communicating to the insured prescription cost
32 options.
33 § 10. Paragraph 1 of subsection (g) of section 4324 of the insurance
34 law is amended by adding a new subparagraph (J) to read as follows:
35 (J) "Durable medical equipment" shall have the same meaning as in
36 section two hundred eighty-a of the public health law.
37 § 11. Subparagraph (B) of paragraph 1, and paragraphs 6, 7 and 10 of
38 subsection (g) of section 4324 of the insurance law, as added by chapter
39 63 of the laws of 2023, are amended to read as follows:
40 (B) "Cost-sharing information" means the amount a subscriber is
41 required to pay to receive a drug or an item of durable medical equip-
42 ment that is covered under the subscriber's insurance contract.
43 (6) Upon a request made pursuant to paragraph three of this
44 subsection, the health service, hospital service, or medical expense
45 indemnity corporation or pharmacy benefit manager shall provide the
46 following data for any drug or durable medical equipment covered under
47 the subscriber's insurance contract:
48 (A) subscriber-specific eligibility information;
49 (B) subscriber-specific prescription cost and benefit data, such as
50 applicable formulary, benefit, coverage, and cost-sharing data for the
51 prescribed drug and clinically-appropriate alternatives or durable
52 medical equipment, when appropriate;
53 (C) subscriber-specific cost-sharing information that describes vari-
54 ance in cost-sharing based on the pharmacy or durable medical equipment
55 provider dispensing the prescribed drug or its alternatives or durable
56 medical equipment, and in relation to the insured's benefit; and
A. 7357 8
1 (D) applicable utilization management requirements.
2 (7) A health service, hospital service, or medical expense indemnity
3 corporation or pharmacy benefit manager shall furnish the data as
4 required whether the request is made using the [drug's] unique billing
5 code of the drug or durable medical equipment, such as a National Drug
6 Code or Healthcare Common Procedure Coding System code or descriptive
7 term. A health service, hospital service, or medical expense indemnity
8 corporation or pharmacy benefit manager shall not deny or unreasonably
9 delay processing a request.
10 (10) Nothing in this subsection shall interfere with subscriber choice
11 and a health care provider's ability to convey the full range of
12 prescription drug or durable medical equipment cost options to a
13 subscriber. Health service, hospital service, or medical expense indem-
14 nity corporations and pharmacy benefit managers shall not restrict a
15 health care provider from communicating to the subscriber prescription
16 cost options.
17 § 12. Paragraph (a) of subdivision 8 of section 4408 of the public
18 health law is amended by adding a new subparagraph (x) to read as
19 follows:
20 (x) "Durable medical equipment" shall have the same meaning as in
21 section two hundred eighty-a of the public health law.
22 § 13. Subparagraph (ii) of paragraph (a), and paragraphs (f), (g) and
23 (j) of subdivision 8 of section 4408 of the public health law, as added
24 by chapter 63 of the laws of 2023, are amended to read as follows:
25 (ii) "Cost-sharing information" means the amount a subscriber is
26 required to pay to receive a drug or an item of durable medical equip-
27 ment that is covered under the subscriber's insurance contract.
28 (f) Upon a request made pursuant to paragraph (c) of this subdivision,
29 the health maintenance organization or pharmacy benefit manager shall
30 provide the following data for any drug or durable medical equipment
31 covered under the subscriber's subscriber contract:
32 (i) subscriber-specific eligibility information;
33 (ii) subscriber-specific prescription cost and benefit data, such as
34 applicable formulary, benefit, coverage, and cost-sharing data for the
35 prescribed drug and clinically-appropriate alternatives or durable
36 medical equipment, when appropriate;
37 (iii) subscriber-specific cost-sharing information that describes
38 variance in cost-sharing based on the pharmacy or durable medical equip-
39 ment provider dispensing the prescribed drug or its alternatives or
40 durable medical equipment, and in relation to the insured's benefit; and
41 (iv) applicable utilization management requirements.
42 (g) A health maintenance organization or pharmacy benefit manager
43 shall furnish the data as required whether the request is made using the
44 [drug's] unique billing code of the drug or durable medical equipment,
45 such as a National Drug Code or Healthcare Common Procedure Coding
46 System code or descriptive term. A health maintenance organization or
47 pharmacy benefit manager shall not deny or unreasonably delay processing
48 a request.
49 (j) Nothing in this subdivision shall interfere with subscriber choice
50 and a health care provider's ability to convey the full range of
51 prescription drug or durable medical equipment cost options to a
52 subscriber. Health maintenance organizations and pharmacy benefit manag-
53 ers shall not restrict a health care provider from communicating to the
54 subscriber prescription cost options.
55 § 14. This act shall take effect immediately.
