Recent PBM Law Causes Conflict Between State and Federal Law

On October 29, 2021, Commissioner Mulready issued Bulletin No. LH 2021-05. This bulletin, sent to all health insurance companies and other interested parties, warns of a potential conflict between state and federal law when calculating enrollee total contributions to an out-of-pocket maximum, deductible, copayment, coinsurance or other cost-sharing arrangement.

The state recently passed HB 2678, effective November 1, 2021, which amended state insurance law to make it an unfair claim settlement practice for a pharmacy benefits manager (PBM) or an insurer that provides pharmacy benefits to fail to include any amount paid by an enrollee or on behalf of an enrollee by another person when making such calculations. The bulletin notes that when an enrollee is enrolled in an HDHP connected to an HSA, any third-party payments, such as discounts, vouchers, financial assistance, or other out-of-pocket reduction payments, paid toward enrollee out-of-pocket expenses (with exceptions for contributions made toward preventative care and cost-sharing occurring after the deductible is reached) will make that enrollee’s contribution ineligible toward their HSA.

The bulletin states that the department is working with lawmakers to reconcile this conflict. In the meantime, insurers and PBMs are encouraged to include all third-party payments in their calculations and to comply with federal law as well. In addition, carriers are encouraged to promptly contact members enrolled in an HDHP with an associated HSA and clearly communicate the effects of applying funds from third parties and their HSA when making payments for prescriptions, since the tax consequences of ineligible HSA payments can be severe for enrollees.

Bulletin No. LH 2021-05 »
HB 2678 »