Arkansas Legislative Council Administrative Rules Subcommittee

December 19, 2024

 

Representative Brian Evans Members, if you'll make way to your seats, we'll get started momentarily.

 

Senator Kim Hammer Hey, members, if you'll make your way to seats, please. Members, make your way to the seats.

 

Representative Brian Evans So I just want to remind everyone, if you wish to comment on a rule, please go ahead and sign in. Be sure to specify the rule on which you wish to comment. We'll be taking up those sign in sheets just momentarily. Members, also, if you would, please go ahead, log into your stations in front of you if you haven't already done so we have you in the queue? I call this meeting to order of the Administrative Rules Subcommittee of Arkansas Legislative Council. Item B and C on your agenda, we have no reports this month from Executive or any of the ALC subcommittees concerning the review of rules. Therefore, we'll move to item D. You'll see in your packets that item D1 has been removed from the agenda we will go to item D2. Department of Commerce, Arkansas Development Finance Authority, if you will please come to the table. Morning, gentlemen. If you'll please identify yourself for the record, and you may present your rule.

 

Mark Conine Mark Conine, director of the Arkansas Development Finance Authority.

 

Jake Bleed Jake Bleed, ADFA. Good morning.

 

Representative Brian Evans Morning, gentlemen. Yes. You might proceed.

 

Mark Conine Before you today, we have made a few changes to the rules for the use of private activity bonds in the state of Arkansas. And so these bonds are used by private entities that may have projects that are too expensive to use taxable debt. And so they can apply to use volume cap. And that allows them to tap into tax exempt funding for their projects. And a good example that we would all know would be U.S. Steel in Mississippi County utilized private activity bonds to issue some tax exempt debt. These rules have been in place for some time. And to kind of give a real short summary, there was some kind of contradictory language in the rules. And so we just tried to make some changes that would be easier for applicants to put in an application, easier understood and to administrate. And so in summary, it was just we tried to take a little bit of the bureaucracy out of the application process. These are typically filed by law firms that represent the entities that are applying to use a volume cap and issue private activity bonds. So that's what you see in front of you, it's a little bit of a cleanup to make it a less bureaucratic application process.

 

Representative Brian Evans Thank you, Mark. Jake, do you have any comments?

 

Jake Bleed No, sir. Other than to add that this is being filed pursuant to our code, which requires us to run this through APA. This is probably the fourth iteration of this. The law itself is fairly detailed, so the rule really just fleshes that out.

 

Representative Brian Evans Okay. Thank you. Members, any questions on rule D2a? Seeing none, without objection, the rule is reviewed and approved. Gentlemen, thank you for being here today. We'll go to D3. Item 3a, Department of Commerce, State Insurance Department. I'd ask them to come to the table, please. Members, on your desk in front of you there were some questions yesterday in committee, specifically the EBD subcommittee, the questions it was asked of our consultant for EBD that relate back to this rule 128. They provided those responses. They are all in front of you on your desk. Gentlemen, if you'll identify yourself for the record and you may present your rule.

 

Alan McClain Alan McClain, Insurance Commissioner.

 

Booth Rand Booth Rand, General Counsel, Arkansas Insurance Department.

 

Jake Windley Jake Windley, Director of Legislative Affairs, Department of Commerce.

 

Alison Hatfield Alison Hatfield, Chief of Staff, Department of Commerce.

 

Representative Brian Evans Good morning. You may proceed.

 

Alan McClain Thank you, sir. I'm just going to provide a brief summary of this Rule 128 and I'll turn it over to General Counsel Rand to just highlight the process that we've been through and we'll all answer any questions that might come up. So we have promulgated this rule 128 to exercise our responsibility under the PBM Licensing Act that was passed by this General Assembly. And it addressed the pharmacy benefit manager networks and the adequacy of them for health benefit plans. So this rule and its corresponding bulletin that does seek to comply with the law passed by the General Assembly and outline a process for us to collect payment information for health plans in an effort to ensure pharmacy network adequacy. The department is establishing this process to verify that pharmacies are reimbursed in a fair and reasonable manner. 

And so I just thought I'd highlight just why we're asking to do this rule this time. Since the last PBM Licensure Act was enacted, the department has taken a number of actions to enforce the fair and reasonable reimbursement provision. This includes reconciling thousands of complaints that have come our way from pharmacists when their payments have been below the minimums. Our team is constantly reconciling those complaints that we get from pharmacists and sometimes it's a few cents and sometimes it's a substantial number of dollars. So that's a very retrospective way of doing it. 

We think this rule is a more prospective way of getting ahead of that and providing a more proactive approach by making a determination based on data from the health plans that come to us as to whether the reimbursements are compliant with the law. So this will allow the health plans and their PBMs to get it correct on the front end of the process rather than the largely complaint driven process that we have now. So I'll turn it over to general counsel Rand to kind of highlight the process and just to give an overview of the rule. We'll try not to go through every detail of it, but to the extent that you have questions and comments, we're obviously here for that. So thank you.

 

Booth Rand Thank you, Commissioner. A bit of background, I won't get as much in detail as I was Monday and I'll try to hit the highlights. But a bit of background about this initiative. The Arkansas Insurance Department has started receiving a significant number of complaints from pharmacies within the last year and a half, complaining about reimbursement being paid to them at NADAC minimums. NADAC stands for the national average drug acquisition cost. It is an average calculation of what it costs for a pharmacist or pharmacy to buy a drug. It is, in our opinion, a fairly accurate and representative of what an inventory cost of pharmacies are that we use as a guide. And we began to see in the last year and a half PBMs beginning to lower reimbursement to NADAC minimums. 

The complaints by the pharmacies was that if they are only going to be able to get their inventory cost or their acquisition cost, they complained about the sustainability of being able to stay in business without some dispensing cost added to the reimbursement. At the time, in the spring of this year, the complaints began to escalate. And at or around that same time, the state of Tennessee, the state of West Virginia and the state of Kentucky enacted legislation to require a $10.58 cent dispensing costs on all drug transactions. 

And so what this assembly, what this committee needs to understand, this is a nationwide issue. It's not just an Arkansas issue and that three other states have enacted legislation to require a dispensing fee on all drug transactions, even to the employer plans. I will start by describing how this rule works. I will say that last month we had a public hearing. We have received over 75 to 80 comments. Obviously, not surprisingly, pharmacies or for this rule. We had a lot of health plans, including smaller health plans and college plans and employer plans complain they are concerned about the impact. 

If the commissioner decides to require dispensing costs, what sort of financial impact it would have on the health plan as well as their insureds or enrollees or certificate holders. So that's a bit of the background that we have been dealing with. I think that we received a lot of comments relative to other rules that we do. And we know this is controversial and we know that many of you have concerns. I will now describe the rule. The rule basically is relying upon the commissioner's authority  under the PBMLA, the PBM Licensure Act. I'm just going to call it the PBMLA, so I don't have to say the whole thing. That is the parental act that this body enacted in 2018. And it gives the authority to the commissioner to issue rules and regulations related to compensation as well as to pharmacy network adequacy. 

I also included a cite to-- because this does impact and apply to health benefit plans-- a cite to the code authority that permits regulations or rules related to network adequacy of health benefit plans as well. So I think we have adequate statutory authority to issue this rule under the terms of compensation and network adequacy. Moving on, this rule, in terms of its applicability under Section 3, we make it clear that it's only going to apply to health benefit plans that are subject to the PBMLA. We're not extending it to health plans outside the PBMLAs. We're sticking with what we can or can't regulate in terms of health benefit plans under the PBM law. Section 4, this is the key statutory language in the PBMLA. 

Under Arkansas Code 23-92-506a1, which is in the PBMLA, it says the commissioner may review and approve the compensation program of a pharmacy benefit manager to ensure that the reimbursement for pharmacy services paid is fair and reasonable to provide an adequate network for a health benefit plan. I just want to emphasize the verb that was used was ensure. And if you look that up, it means to guarantee, to ensure. And so from our perspective, that requirement applies to current issues that are going on, but also prospective ones. 

And so when we look at reimbursement programs of the pharmacies and there is a dispute, I think, between the pharmacists and others about how many of them are actually going out of business. And but I want to emphasize the statutory verb here is ensure and it has a future concern, which is we want to make sure that what we are proposing here is going to provide an adequate network for our pharmacies in the future as a guarantee, so to help them survive and being able to sustain themselves in the network itself. Under B under Section 4, this is a very important point. The commissioner finds that current pharmacy reimbursement minimums under the PBMLA are payments within a close range NADAC or Mac that do not include a reasonable cost to dispense may impair the sustainability of adequate networks for pharmacy services for health benefit plans. It says 'may.' 

So I want to make it clear that as we go through this discussion, again, as I emphasized Monday, after we collect the reimbursement data from the health benefit plans and PBMs, the commissioner has to make a decision about whether or not the reimbursement data does impact the network adequacy of pharmacy services for health benefit plans. It just depends on what the data actually shows. And so we may indeed find that the generic reimbursement rates relative to NADAC minimums, the brand and specialty rates relative to NADAC minimums and all the other data we request in this bulletin actually do not support the need for a dispensing fee. 

And I will talk about the data we are going to request, but it very well may be, and I know you've seen in the newspaper discussion of the cost impact of a $9 dispensing fee. And again, we surveyed the plans and it showed a potential impact of 3.3 to 3.4% on premium. But it very well may be that we are not going to require a $9 fee depending upon the data that we get from the health benefit plans. The Commission may decide not to require a fee. He may decide to require a fee of $4 or $5 up to the Medicaid amount of $10. So it just depends on the data that we analyze and what the commissioner and our actuary decide whether or not the current reimbursement data is adequate. 

Section C under Section 4, Section 4 saying essentially, I'm not going to read all of that paragraph, but we are extending the date for health benefit plans to file their data to February 17, 2025, for plan year 2025. For plan years 2026 and 2027, our goal is to get into a repeating rhythm of where the health benefit plans and PBMs submit their drug reimbursement data no later than March 1 of each year so that we can make a decision without impairing contracts for the next calendar health plan year. So we want to get into a repeating rhythm like we do with our health benefit plans or rate filings to receive this data on eight to nine months before any decision that we make would go into effect so that contracts can be adjusted.

Section 4D, all the data that we get from the health plans and PBMs is considered confidential and proprietary. However, the decisions the commissioner makes relative to the average dispensing fee that he decides, that would be published annually or after he makes his decision so that everybody in the public can see whether or not or what dispensing costs would be required, let's say, for example, for Health Advantage or UnitedHealthcare. 

So that decision itself of the amount of a fee would be publicly transparent. So the rule actually, it incorporates by reference a bulletin that describes the data requirements and data filing requirements that we want to review. And we have incorporated the bulletin by reference, and I think we made it pretty clear that the Bulletin cannot be amended without filing such amendments as an amendment for the rule. So we cannot change the bulletin, it is our position. We are not intending to anyway, to change the Bulletin without going through the rulemaking process for this entire rule. So if you look at the bulletin, and I'm not going to read every sentence in this. Again, under the proposed Bulletin 18-2024, we will provide reporting requirements and standards under section 1A. Again, we are adopting a two year phase in requirement to get to the point, as I indicated, where these filings would be made on or before March 1 each year, using the previous four year plan data. The date required to be filed is under section 1B under the bulletin. 

If I remember, it's on page two of the bulletin, the data required to be filed is a total annual percentage of total pharmacy reimbursement above or relative to NADAC pricing in the prior calendar year. We want to see the percentage separately for generic drugs versus brand drugs with a median and 25th and 75th percent calculation for total annual above NADAC pricing both for generics and brand names. We want data related to whether the health plan already pays a fee or.Dispensing fee. And if so, what their average dispensing fees are in that prior calendar year. We need to know for our calculation purposes the total number of drug reimbursement claims paid during the prior calendar year for both generic brand and specialty.

And a very important bullet point is on page three, your pharmacy network retention data in the prior calendar year. Essentially, how many pharmacies have truly been lost or dropped out of the network? Are you or are you keeping a steady amount of pharmacies and you have an adequate network without attrition or terminations over reimbursement issues? The next bullet point is the total amount of adjustments you made in response to appeals or complaints by pharmacies for payments below NADAC during the prior calendar year. Are you getting a lot of enforcement complaints because you're paying not only at NADAC but also below NADAC minimums? So we are seeing quite a few complaints about pharmacies being paid below NADAC minimums, not just at the NADAC minimum. 

For health plans contracting with PBMs and PBM affiliates, the average reimbursement percentage difference between what the PBM affiliate pharmacies are paid relative to non PBM affiliate pharmacies. I know after I testified Monday, a significant number of pharmacies were complaining about affiliate pharmacies being paid more than non affiliate pharmacies. So I do want to address that. This rule is really not, and I agree with Senator Irvin and Dismang or maybe Senator Hickey, the Insurance Department already has adequate enforcement powers to prohibit affiliate payments being greater than non affiliates. Our last report or examination or audit was in 2020. I definitely agree with Senator Dismang that we need to do a more updated report on affiliate compensation versus non affiliate. 

But I do want to point out that this rule really isn't trying to fix affiliate pricing being higher than non affiliates. It's not trying to fix spread pricing. It's not trying to fix steering. It's not trying to fix mail order injustices. So and I heard a lot of pharmacists complain Monday. We already have authority at the Insurance Department to enforce the laws, prohibit those activities. And so what this rule is attempting to address is basic transactions and minimums may need to be increased with dispensing costs that apply to retail, independents, small chains, large chains, affiliate pharmacies, non affiliate and all of that. So that is what our goal is with this is to improve base reimbursement across the board. 

We're not trying to fix other alleged pernicious PBM practices that we already have authority to enforce against. Section 1C is that we want to see cost impact from the health plan. And again, we haven't a graduated request for cost impact for $1, $2, $4, $6, $8 or $10.50 cent fee. The Commissioner wants to see what sort of impact any of those amounts would have on the premium impact level for the health benefit plan so that we can ensure that we're not going to have significant harm to the employer plans. So that would be a factor in our analysis. 

And section D under 1, the health benefit plans and PBMs can submit to us any alternative methodologies, reports, actuarial information related to the projected plan compensation program of pharmacies and describe to us how they believe they have fair and reasonable reimbursement to pharmacies to ensure an adequate pharmacy network for the health benefit plan. So they have an opportunity here in Section D to submit to our actuary where they can argue that they are already in compliance with these requirements and do not require or justify any dispensing cost. The rest of this is a repeat. 

The section F is again repeating that the data that we get is confidential except for the actual decisions related to dispensing cost and so on. So the rest of this is just cleanup. I want to indicate section 2. The self-funded health plans with less than 5,000 Arkansas covered lives have a limited data file. They're not exempt from this rule, okay, But they do have a limited data filing requirement just to provide us with section 1. The first bullet point data requirements are the only things that we're going to require from the self-funded plans less than 5,000 Arkansas covered lives. Anyway, I can go into other details. I know you all have many questions. Hopefully the commissioner, myself, Jake, can answer. That's a brief explanation from the rule and bulletin.

 

Representative Brian Evans Thank you, Mr. Rand. We will now go to questions from members. Senator Dismang, you're recognized.

 

Senator Jonathan Dismang All right. Thank you. And this is kind of just to have and continue some of the discussion we had before. One of the things I'd like to say is I appreciate limiting the opinion in this presentation as opposed to the one that we had for the insurance committee. I understand that you all are under a lot of political pressure. I mean, I think even by your comments last week, this is largely a result of the number of complaints that have been filed, even though those complaints haven't been vetted at this point. And you felt like the pressure was a lot and the need to do something because of the volume of complaints. Couple of questions on that just for the committee. How many complaints have been filed so far this year?

 

Booth Rand I would say we get about 1,500 to 1,800 a month. So you just multiply that by the number of months you want.

 

Senator Jonathan Dismang That's different than the 3,000 that we were told last time.

 

Booth Rand Again, in terms of how many complaints do we get on payments below NADAC, we get about 1,500 a month below NADAC. We probably get, I think 400, 500 just on NADAC minimums without going below. So 3,000 complaints is a rough estimate of what we've probably received just on NADAC minimums the last seven, eight months, maybe something like that.

 

Senator Jonathan Dismang Okay. 3,000 of those complaints, how many have been vetted and come to a conclusion?

 

Booth Rand Well, again, if you are paying NADAC minimum, there's an argument that you're complying with Arkansas law. The Arkansas PBMLA statute has a poor safety net that says that you cannot go below NADAC minimums in your payment. It is not in and of itself a violation to pay it at NADAC minimum. So we process most of the complaints, however, where they pay below the NADAC minimum. That would be a violation.

 

Senator Jonathan Dismang How many of those have been processed that have come out and had a conclusion?

 

Booth Rand My director is over there. But I would say, I just submitted a report to the executive committee-- I think Senator Gilmore, I don't recall-- I would say we adjust maybe 80 or 90 a month, something like that, for payments below NADAC.

 

Senator Jonathan Dismang Okay. Which is more than what we were told in the last meeting. I understand. But it all seems it's always a moving target for me in trying to understand and get the information from y'all about what's processed and what's not. We were at a handful the last time that we had this same question.

 

Booth Rand May I apologize? Okay. I just I've got a lot of things. We adjusted last month 18 below NADAC.

 

Senator Jonathan Dismang 18 out of 3,000 roughly complaints?

 

Booth Rand Yes.

 

Senator Jonathan Dismang Okay. 18 out of 3,000. And one of the things that you just said as you led into, and I appreciate, again, this, because last time it was added for color without the clarification you provided today, what we're doing right now doesn't address any of these complaints.

 

Booth Rand Again--

 

Senator Jonathan Dismang Even though this is a result of complaints, correct?

 

Booth Rand Correct. The complaints about affiliate payments.

 

Senator Jonathan Dismang I mean, you understand. So there are complaints being made. We're going to take an action, but we're not going to really address those complaints with our action. But the complaints are the reason that we're doing all of this.

 

Booth Rand Again, I was just listening to comments from pharmacies after I testified and a lot of them were complaining about affiliates being paid more than non affiliates. And this rule doesn't really--

 

Senator Jonathan Dismang I understand that and we are in complete agreement on that, even though it was brought up in your testimony earlier in this week and by the pharmacy association earlier this week, it does nothing to address the primary, first thing that was said to be the problem. One question, and it was just this clarification from the other testimony, I think it was you that made a statement that there was not a coordinated effort to file these complaints.

 

Booth Rand As if it were like a coordinated effort by the Arkansas Pharmacists Association?

 

Senator Jonathan Dismang Yes, sir.

 

Booth Rand We received complaints from all over the state. I did not sense that it was. I did not investigate.

 

Senator Jonathan Dismang On the actual Pharmacy Association website, there is a statement that directs members to file complaints to get to a political outcome to lead to this rule change. Just so you're aware there is a coordinated effort by the pharmacy association. I'm not saying that's right or wrong. I'm just saying you said something that was incorrect the other day, that there is an intentional effort to file complaints to lead to a political policy change. That's what it says on the website. I'm not making it up. It is there. And that's just a factual statement. Right or wrong, I'm not saying that they can or cannot do that, obviously. I'm just saying that what you said the other day that it was not coordinated is not factual.

 

Booth Rand Well, may I respond to that? I do not know, and I don't think you know whether a pharmacy was actually, or every pharmacy that sent us an email or a complaint working with the governor's office was coming from the website of the Pharmacy Association. I agree that--

 

Senator Jonathan Dismang No, I'm just saying if you look at their directive to their members, it says to file complaints to get to a policy change.

 

Booth Rand And again, I don't know if every pharmacy looks at that website, but yes, I see what you're saying.

 

Senator Jonathan Dismang Okay. One of my questions is, as you're working through these, it's my understanding there was a conversation about one of the big problems is that the contracts are too complicated. And so maybe the pharmacy doesn't understand the contract that they've signed up with, or if they're part of one of these groups, the group isn't sophisticated enough to understand what the contract is. And so there's all these ins and outs of the contract. And that's really what we're unhappy about, is they're able to do things that people have signed and agreed to do.

 

Booth Rand I entirely agree with you on that.

 

Senator Jonathan Dismang So if we agree on that point, then my question really is, part of that contract, it's my understanding, is typically there's an appeal process. So if a pharmacy doesn't like what's happening with the PBM, they then can appeal. When you're looking at these 3,000 complaints and you're having a handful of them that you're finding an error with, are they appealing first or are they just coming straight to y'all?

 

Booth Rand It varies. It varies. We don't track that statistic.

 

Senator Jonathan Dismang I think it's really important though, isn't it?

 

Booth Rand I agree.

 

Senator Jonathan Dismang All right. And then lastly, so we're wanting to do all this by March of each year. How many plans are we talking about in the state that you all are going to have to review?

 

Booth Rand That's a good question. And I have warned the commissioner and I think there was some discussion about this being an overwhelming number of plans, but--

 

Senator Jonathan Dismang So who at the department knows? Because those all register with you, I believe.

 

Booth Rand Everybody that's fully insured, every plan that's fully insured is registered and licensed by the Insurance Department. The problem that we've got, and I'm going to agree with your concern, is we do not license or track these self-funded ERISA plans. They do not have to file their health plans with us. And so, again, I'm just ballparking a guess that the number of plans that we would have to review for this dispensing cost evaluation would be all the health plans in the fully insured market and the self-funded plans. I'm going to say it may be 400, 500 plans, maybe more than that. But I agree that we could be reviewing a pretty large significant number of both the fully insured and self-funded plans. Your concern is my concern. I'm worried about that, about us receiving a ton and ton of plans. I just don't know how to answer that statistically.

 

Senator Jonathan Dismang Because every plan's different, you know? Again, I'll go back to my seesaw example. I mean, the way that I understand the pharmacy gets paid, it may be through a higher prescription drug price and a lower dispensing fee. It could be a higher dispensing fee, lower drug or maybe some type of balance. And every one of those plans are different.

 

Booth Rand I agree.

 

Senator Jonathan Dismang And you're going to have to go in and evaluate after everybody signed a contract and say this is a good contract or a bad contract just for the PBMs and the pharmacies.

 

Booth Rand I agree.

 

Senator Jonathan Dismang And then the sheer volume of that, I guess I need to know how many employees we're going to need to look at another 450 plans in the state to be able to make that determination. And then I also need to know what you need to be able to do a better job of addressing the complaints that are there. If we've got 3,000 complaints and only 15 of them come to a conclusion, well, then we've got a problem. And now you're wanting to take on even that much more work. 

So I need to know what we're looking at, because it seems to me that there's going to be a substantial change to your budget, the number of employees you have and a good solid growth of not just a taking of responsibility from contractual agreements, but actual just governmental intrusion into what's happening in a contractual agreement between a PBM and a pharmacy. So if we could, hopefully you have that information because we've all prepared and we're passing a rule to get to that point.

 

Booth Rand Right. And again, your concern has been my concern for the last 3 or 4 months. I was directed to formulate this rule, to evaluate the RX data on an individual plan by plan basis. Okay. So if you look at the states of Tennessee and West Virginia and Kentucky in some of my earlier efforts in my June draft of this rule was just to require a fixed dispensing cost fee that would apply to all health benefit plans without the need for doing an individual plan by plan review. And so I agree. I'm being asked, however, to look at each plan on an individual basis. And I share your concern on that for sure.

 

Senator Jonathan Dismang Yeah. I don't think Tennessee is our model. I saw some documents the other day that indicated to me that their commercial plans cost their folks about three times what our commercial plans cost. Hopefully we don't want to get to that point in the state because the burden that will be on the taxpayer is enormous. I would just count that as an additional tax. Hopefully we don't look to Tennessee to be the model for what we want to happen to our self-insured side.

 

Booth Rand I agree.

 

Representative Brian Evans Representative Wardlaw, you recognized for questions.

 

Representative Jeff Wardlaw Thank you, Mr. Chair. A couple of questions related to public comment on the rule. So, Mr. Booth, can you walk me through the bulletin and when the bulletin was actually issued for the public?

 

Booth Rand Representative Wardlaw, I think I read in the newspaper that-- and I wasn't in the--

 

Representative Jeff Wardlaw So hold on. I'm going to make this easy for you. I don't need opinions. I just need to know when you issued the bulletin so the public could see the bulletin. A date.

 

Booth Rand I don't know that date. I don't know that. I can find out when I get back to the office.

 

Representative Jeff Wardlaw So my recollection is mid-October. The rule was issued for public comment on September 5th.

 

Booth Rand You may be right.

 

Representative Jeff Wardlaw So everything you're referring to this morning is that the bulletin pretty much is the governing paper of the rule. You've referred to it numerous times throughout your conversation. So what I find really disheartening is the public never got to see it. They never got to comment on it. And then two weeks ago, we met back here in the conference room, correct?

 

Booth Rand Yes, sir.

 

Representative Jeff Wardlaw You made substantial changes to the rule after that meeting, correct?

 

Booth Rand I don't think it was illegal substantial changes.

 

Representative Jeff Wardlaw But they were changes.

 

Booth Rand Correct. Let me say that when we had a public hearing on this rule, the bulletin was already finished. And so when we had the hearing that was available for public comment, and a lot of my public comments were aimed or were directed at the bulletin requirements as well. So it was out there. Now, it wasn't out there and finished a month before the public hearing. But it had been finished before the public hearing.

 

Representative Jeff Wardlaw Okay, back to the changes. You made substantial changes. You took things out of the rule that changed the way insurance companies can move money, correct?

 

Booth Rand I don't think that I did. I think I just clarified, when I made the edits to the rule information that I felt was consistent with the original filed rule. You may disagree. I don't think I did.

 

Representative Jeff Wardlaw There was no public comment given after that change, correct?

 

Booth Rand There were public comments given to the changes.

 

Representative Jeff Wardlaw So in the last two weeks we received public comment?

 

Booth Rand No, no, no, no, no. I agree with you that the edits that occurred to the rule and bulletin after the public hearing was concluded, the edits were in reaction to and in response to the public comments that we received at the hearing within the public comment period.

 

Representative Jeff Wardlaw Mr. Chair, I'll get back in the queue.

 

Representative Brian Evans Senator Irvin, you're recognized for a question.

 

Senator Missy Irvin Thank you. Thank you, Mr. Rand. Secretary McClain. Mr. Chair. On the complaints, I want to go back on that line of questioning. Have you ever provided a report or an analysis to the legislature about the complaints with a vetted analysis of this is how many, this is what they were, and this were the conclusions of those? Have you ever provided a report or analysis to this legislative body?

 

Booth Rand Not to this body, but the executive committee, I think Senator Gilmore and Representative Wardlaw was in there, I think they required back in July. I'm not sure of the date. But they required the department to provide statistics on what we did with the complaints. But in terms of a substantial amount of information as to each one of those complaints, that is not being required. It's just what actions did you take in response to the complaints. So we have provided to the executive subcommittee the amount of adjustments that we make each month in response to complaints.

 

Senator Missy Irvin So all right. So no, the answer is. I mean, generally an executive branch agency would provide okay, we're getting this amount of complaints. We've vetted them. These are true findings. These are not true findings. These are the results of those actions. Here's an Excel spreadsheet. Pretty dadgum simple. You could provide that to this legislative body. I would think you should. That would be within your authority to develop a very simple process using an Excel spreadsheet to provide some sort of an analysis and a report and data to actually get to the conclusions that you're trying to draw here today. And we have none of that. 

And so I don't agree that-- if I were to rewrite this rule, I would say, okay, maybe we need to do that first. The other thing is that my understanding is many of these complaints are not following the appeal process. And you need to be balanced in your approach. You're a consumer advocate. Have you ever not sided with the pharmacies? I mean, and are you actually looking at whether these complaints are frivolous or not? And so where's that report and that information to the legislature?

 

Booth Rand Well, you've not required us to make that report.

 

Senator Missy Irvin But you could have within this. You say that you have the ability to do that. You're vetting them. Why can't you just give us a report? Why do we have to ask for it?

 

Booth Rand I do what the statute requires me to do. But I agree. A report to you would be very valuable.

 

Senator Missy Irvin I mean, that's the rule I'd bring, honestly, like, if you needed a rule to do that. I don't think you do, but that's what I would be doing and then tracking to see how many of those appeals were sent directly to so that they don't dump all on you. There's a process there. Is that not correct?

 

Booth Rand Yes, ma'am.

 

Senator Missy Irvin For them to appeal directly to their source that's causing them pain or whatever that they're disagreeing with. There's an appeal process.

 

Booth Rand May I answer that? To respond to both of that, I think the pharmacies will tell you that the appeal process with the PBMs is too long, takes too long. It takes way longer for them to get action as opposed to filing a complaint with AID. I do agree with you that a more comprehensive report would be very helpful to this body to see our disposition, how we handle those claims in terms of siding with pharmacies. Last night I got a complaint from a pharmacy over a CVS reimbursement issue which involved an ERISA plan or a grandfathered plan, and I sided with the PBM on that. So I don't always side with the pharmacies.

 

Senator Missy Irvin I'm looking at the public comment and I'm looking at kind of what was responded to. Through the public comment, did you take into account any of the, I guess, employers and the businesses or patients that are going to now feel this as a pharmacy tax? I mean, they're going to be the ones having to pay an increased tax at the point of sale. They're the ones that are going to be feeling the impact of this. It's going to get passed straight down to the patients. 

Did you hear from any of those folks? I have insurance. I have people that are small businesses in my town calling me right now saying, please don't do this. We can hardly afford to provide coverage for our employees already. This is a car dealership. We can hardly afford to pay for our health care coverage right now for our employees. We're not going to be able to afford this because we're working with an independent insurance agent. And our employees aren't going to be able to afford this because they're only making maybe, not that much money, maybe $36,000, $40,000. And so then an additional fee on them is going to be looked at as a tax and a fee. 

Do you have any complaints from any of those people? Did you make any adjustments to your rule based on any of that feedback from employers as to the administrative burden of this? Or did you all make any references or changes?

 

Booth Rand We had several, and I want to say comments from the employer plans that you reference. I think, and I may get this wrong, there was a cabinet maker. Again, there were over 80 comments there. I want to say I probably got 6 or 7 concerns. And again, we share their concern over cost impact to their employees and insureds. And again, the commissioner isn't required to require a dispensing cost. If after he reviews the health plan impact and the pharmacy reimbursement, he may not require it. An additional dispensing cost would not have any impact whatsoever. So it's really hard for me to say to them your health plan and your premiums are going to go up X amount when we've not made that decision until we look at the actual data from that plan.

 

Senator Missy Irvin And so I hear you and I'm concerned, but the language matters. And what's written in the rule matters. And it does give you the authority to make that decision unilaterally all on your own without any-- and so for me as a legislator, I don't want us to cede my authority over to you for a new tax or fee increase, because I didn't vote for that. And directly in the substantive language that I read, I did not vote for that. 

We understand rates and we understand reimbursement rates. But I don't want us to cede my authority as a legislator over to one person to determine whether they may or may not have to pay a pharmacy tax and a dispensing fee at the point of sale. And I don't want to cede  my authority over to one person. I feel like I need to be able to be the one to make that vote on behalf of the citizens of the state of Arkansas that I represent. I really don't agree that you have the authority substantively through the Licensing Act, which we supported. We licensed PBMs for the first time ever, which was appropriate, the right thing to do. 

But to go from a licensing act to creating a new tax that's not written into the language of the substantive bill, I have a problem with that. I disagree with you. And I have the ability to do that. But my last question is on the ERISA plans and the self-funded plans, you don't license those, correct?

 

Booth Rand That's correct.

 

Senator Missy Irvin But now you are claiming legislative authority to be able to review those plans.

 

Booth Rand May I respond?

 

Senator Missy Irvin Yes.

 

Booth Rand First comment. I think the commissioner does have authority to issue the rule. The PBM Licensure Act that you just referenced says the commissioner may issue a rule related to compensation, which is what this is about. So I think the state legislature has imbued upon him authority to do a rule related to compensation. In terms of ERISA plans, this General Assembly, after the Rutledge decision by the United States Supreme Court upheld our maximum allowable costs law, the United States Supreme Court said that states can regulate pharmacy drug cost issues. And so this General Assembly changed the definition of a health benefit plan to include self-funded employer plans that would be subject to PBMLA. Now, it didn't authorize us to license them, but the definition is to include self-funded ERISA plans include applying pharmacy reimbursement laws to self-funded plans in light of the Rutledge decision. So we believe we have authority to require reimbursement cost adjustments on self-funded ERISA plans under the Rutledge ruling by the United States Supreme Court.

 

Senator Missy Irvin And when did you change the language--

 

Representative Brian Evans Senator Irvin.

 

Senator Missy Irvin Yeah. Okay.

 

Representative Brian Evans I can get you in the back. Members my request list is growing exponentially over here for members to ask questions. I would ask you to hold your questions to 1 or 2 and then we can get you back in the queue. Also, please keep all sidebar conversations at a minimum. If you need to speak with a colleague, I'd ask you to step out and do that. This is a big issue and I want to make sure that all of our members respectfully have the opportunity to hear the testimony. Before we move on to the next one, just real quick, Mr. Rand, just a number that keeps popping up to me and to allude to something that Senator Dismang said, it seems like every time we have this testimony, it's a different number. So I just want to get some clarity. You're averaging about 14 to 1,800 complaints per month, is that correct?

 

Booth Rand Close.

 

Representative Brian Evans Close. Of that 14 to 1,800 complaints that you're getting per month, in the most recent month, you said that only 18 of those had been vetted. Is that correct?

 

Booth Rand 18 had been adjusted.

 

Representative Brian Evans 18 had been adjusted. So let's call this 1,600 just for the law of average. Of the 1,600 that you're getting per month, how many pharmacies on average in the state of Arkansas are making those complaints?

 

Booth Rand That's a great question. I would say 15 to 20 different ones.

 

Representative Brian Evans So 800 complaints across the state is coming from an average of 15 different pharmacies?

 

Booth Rand 20, 15. It just depends. 

 

Representative Brian Evans And I would assume by scale, some of those are large pharmacies, some are small pharmacies. I would assume that the larger pharmacies then are making more per month because of the volume of transactions going through their pharmacy than the smaller ones.

 

Booth Rand Maybe so.

 

Representative Brian Evans There's not a targeted pocket of two or three pharmacies in small town Arkansas that's just getting hammered with this.

 

Booth Rand I don't see that.

 

Representative Brian Evans Okay. Thank you. Senator Hammer, you're recognized for a question. Put you back? Alright, Senator Dotson, you're recognized.

 

Senator Jim Dotson Thank you, Mr. Chair. Over here to your side.

 

Booth Rand I'm sorry.

 

Senator Jim Dotson I apologize if you might have already covered some of this. I got hung up in traffic on the interstate. But I was trying to listen in as you were going through some of the the rules, and I heard you talking about a dispensing fee that could range anywhere, I think you said, from $4 to $9 per script, if I recall your testimony correctly as you were explaining the rule. But you didn't know exactly what that was going to be. And as I'm looking through the rule, particularly in item C where it says that upon and after a review of a review of whether it has a fair and reasonable pharmacy compensation program to ensure an adequate network of pharmacies, do you have a metric that determines what is an adequate network of pharmacies?

 

Booth Rand I mean, that's a good question. Again, if you look at all those bullet point data requests, we're going to look at the generic reimbursement rate the prior calendar year relative to NADAC minimums. Obviously, you want to see a healthy generic reimbursement, retention, how many pharmacies dropped out of the network. We want to see, are you making it up on brand and specialty. What is your total combined generic and brand during that year? Are you at 20% or are you below 15%? And are you paying affiliates more? So, Senator Dotson, all of that is going to go into a decision by the commissioner based upon that objective data. But I don't have metrics right now on that. The actuary and the commissioner will look at all of that to make decisions about whether they feel like--

 

Senator Jim Dotson So you don't know what a fair or what a-- I mean, the title of this is fair and reasonable compensation program. If you look down toward the bottom on item D, the last line says, However, the average dispensing fee per health payer that is approved will be published annually. So it seems to lead to the fact that there will be a fee, a dispensing fee. We just don't know how much it is. Is it $1? Is it up to $10? $10 is the max, what I heard from you.

 

Booth Rand It could be no fee or it could be $4. It could be $6. It could be whatever the commissioner determines is necessary to increase the reimbursement to a fair and reasonable amount. On that, what you just cited, I was referring to the confidentiality of the data. The decisions by the commissioner on each health plan, the health plans requested that that be made public. So again, if the commissioner decides that no dispensing fee is required by a health plan, he will disclose that is zero.

 

Senator Jim Dotson So what I'm hearing you say, and let me just throw this back, is that you don't know--

 

Representative Brian Evans Senator Dotson, this will be your last question. I need to move on.

 

Senator Jim Dotson You don't know what the current fair and reasonable standard is. You don't have that metric in the rule as far as how many pharmacies is an adequate network, how much we're going to have. You're going to make all those determinations later. And I guess the question for you is not really maybe even what your fair and reasonable standard is, but what is your successor's fair and reasonable standard. That's a hypothetical question, because you can't answer that. Neither can I. No one in this room. We're voting on this particular rule. But it will stand, likely, unless it changes somehow between now and in the future for successive commissioners later on that will make that subjective determination year by year by year by year. Thank you.

 

Representative Brian Evans Thank you, Senator Dotson. Senator Hammer, you're recognized.

 

Senator Kim Hammer I want to ask Jake a question. In simple direct point, why do you need this rule in order to do what you can't do now, in order to arrive at what is fair and reasonable?

 

Jake Windley Sure. Excellent question, Senator Hammer. And that's something when this rule was first proposed and I was gaming out what would be potential questions we would face, that was the primary one. For context on this issue, and this goes into why we've seen so many more complaints over the past few years, the PBM industry has undergone a series of consolidations over the past half decade. For perspective, the top three largest PBMs control over 70% of all pharmacy scripts in the United States. The top six largest control 80%. Five of the largest PBMs are all vertically integrated with their own health insurer. So to put that into perspective, spread pricing and affiliate pricing discrimination is a real issue and we do have the tools to handle that now. 

However, that is only half the picture. I believe on Monday it was Representative Wooten who was here and mentioned the oil and gas industry. And he recognized vertical integration from those times. What the PBM industry is doing is textbook Standard Oil John D Rockefeller playbook. Vertically integrate, control the middlemen, squeeze out your competitors through that way. The affiliate pricing is half the picture. The other half is these PBMs can afford to pay their affiliate pharmacies and independent pharmacies at only NADAC minimums. 

That does not violate the technical bare minimum of the law. But it is not enough for an independent pharmacy to continue going on to survive, which is why this legislature made the wise and pragmatic decision to include both NADAC minimum and fair and reasonable as part of the cost. An affiliate pharmacy partnered with a PBM can tank years of loss at NADAC minimums that an independent pharmacy can't, driving out all competition. 

What this rule allows us to do is assess overall network health and adjust the rates as needed to preserve competition. I will say the statute, the PBMLA, does provide a statutory floor as to what to look for on that network adequacy. So, for example, for rural areas, 70% of individuals have to live within 15 miles of a network pharmacy that is a retail community pharmacy. For urban areas, 90% have to be within two miles of a retail community pharmacy. That is the bare minimum of what we are looking at and that's why action is necessitated here.

 

Senator Kim Hammer Would you agree or disagree? Competition drives prices lower; elimination of competition drives prices higher.

 

Jake Windley I've never seen a monopoly that lowers prices, sir.

 

Senator Kim Hammer Thank you.

 

Representative Brian Evans Senator Dismang, you're recognized.

 

Senator Jonathan Dismang Thank you. Just a couple of questions, and I appreciate the comment on what's been happening the last half of a decade. That would be five years. I can tell you what's not happened in the last five years is a redo of the 2020 study on pricing with PBMs, which is a problem and also I think demonstrates the inability of the Insurance Department to do what needs to be done on the fundamental levels of things it's already been charged with doing without taking up these additional rules and giving themselves additional government overreach and responsibilities. 

But if I can, where I'm confused is, what is it exactly you're going to be looking at? I mean, if I think about it and I think about some of the testimony we had, Mr. Vinson said the other day that essentially the PBMs aren't breaking the laws. You're just using- and it may not be not the word. But I think what he was getting at was loopholes in the contract. Not laws breaking the contracts, loopholes in the contracts to be able to pay lower prices. How in the world are y'all going to take a look at these contracts? Because on some days these contracts are fine with the pharmacies, and some days they're not. How in the world are you going to take into account all the loopholes in the contracts which have been signed by both parties that he was addressing to fix what actually you're talking about trying to fix. It's almost like an impossibility, the way that I see it.

 

Booth Rand I think we're going to look at the result of those contracts, how that results in reimbursement on a per calendar year average basis.

 

Senator Jonathan Dismang So I would say then the problem is-- because my communication with pharmacists that's happening right now is, result on day 1 of the year was great, result on day 365 of the year was bad. And you're saying somehow that means you're going to have to dictate the language of the contract so that it is both good on 1 and 365, which I believe is an impossible task.

 

Booth Rand I understand that's a difficult issue. I agree with you on that. But we do want to look at the result of those reimbursements on an average basis the prior calendar year. And we want to take a  70 percentile and 20 percentile average of the generic reimbursement the prior calendar year data. And so I will not be looking directly at the contracts themselves, but what the results of the reimbursement are on an average basis. I agree.

 

Senator Jonathan Dismang Then I would guarantee you that this is all for nothing. I mean, in your conversations that you're having right now and that I'm having with pharmacies, it's the contract and the ability to utilize the contract that they're having a problem with. Some days are good and some days are bad, and those days that are bad, the good days and bad days are allowed by the contract. And they could have an entire year utilized in contract as written that goes well. And then the next year with the same contract, it goes poorly.

 

Booth Rand Again, I think we're saying-- I'm sorry.

 

Senator Jonathan Dismang  I'll stop and get back in the queue. 

 

Representative Brian Evans Thank you, Senator. Representative Wardlaw, you're recognized.

 

Representative Jeff Wardlaw Thank you, Speaker-- or Mr. Chairman. Not quite yet, I guess. Going back to the public comment issue, I found the transcript from the public hearing where you, Mr. Rand, said, Yes, I would like to extend that missed hearing officer for 10 more days to the 21st of November. And then I go through your emails, people have FOIA'ed and you came back later and said, We're not able to extend that. Can you give me the reason why?

 

Booth Rand Absolutely. I could not have gotten this rule on the agenda for today, for December.

 

Representative Jeff Wardlaw So, hold on. Right there. That's what I wanted you to say. So it's more important for you and your agency to get this rule on the agenda today than it was to get a full picture of the public comment and give them time to understand the bulletin that you put out on October 22-- by the way, I got the date. You're telling me that the most important thing to you is just meeting this agenda date?

 

Booth Rand Again, we wanted this rule to be in effect on 1/1.

 

Representative Jeff Wardlaw So when does your emergency rule expire? My last question.

 

Booth Rand January 12, 2025.

 

Representative Jeff Wardlaw Thank you, Mr. Chair.

 

Representative Brian Evans Senator Hickey, you're recognized.

 

Senator Jimmy Hickey Thank you, Mr. Chair. Booth, all these other questions and everything are great, but I'm gonna go a lot more simple. And I did this Monday, and I heard Senator Irvin, she kind of touched on it a little bit here. But I'm going to take this all the way back up to the top as far as this rule in the statute. Your testimony during Monday was that you all had to have this rule because the current statute would not allow you to do certain things within it. Is that correct?

 

Booth Rand It does not permit us to require a dispensing cost expressly. So I wanted to do this by rule. I will agree with you and Senator Irvin that we have already abundant authority to do examinations, to do audits.

 

Senator Jimmy Hickey I agree. I agree with what you're saying. I think there could possibly be more, but I'll just stick with that one. So here's the thing. As we all know, before a constitutional amendment was passed by the people down here that rules were just being enacted that were totally against whatever the current statute was. And I believe that is why that was passed, to keep that from happening, so that this body would examine that to make sure that everything's there. 

The current statute that's in place, which was passed by the entire General Assembly, which I was part of, this rule exceeds that by your very testimony. And I agree with you. It doesn't really matter what any of us agree with. If you're not a member of ALC right now and this Rules Committee, whether or not you agree with this or don't agree with this, you should be standing up and throwing a fit. Because I believe the Constitution does not allow the General Assembly to delegate its authority to anyone, and especially whenever it would come up on some fee or tax on our citizens. 

And like I said the other day, and I'm going to restate it, whenever a statute comes into play and whenever we look at this stuff, we look at something or whether it violates the current statute, whether it's constitutional or whether it was the legislative intent. I'm not for sure we don't have the whole bedroom in here with this thing. Because I'll tell you this, as far as I was concerned, I was here for this statute. And again, I'll say it the same way I did the other day, the Pharmacy Association likes to point out that I was a sponsor of the thing.

 

Jake Windley Senator Hickey, if I could ask for a point of clarification.

 

Senator Jimmy Hickey INo, 'm going to finish mine and then you can, if that's okay, sir. Thank you. So from my standpoint, I can promise you that my intent was to allow for the penalties on the PBMs. And I understood the NADAC. But the thought that I was ever going to allow one individual that works for the executive branch-- so we have a separation of powers deal, at least in my mind. I'm no attorney and I respect you. But in my mind, we're allowing one individual that works for the executive branch that's then basically, if you look at it, is basically doing an appropriation and the funding that the legislature-- that's the legislature's job. 

This thing is riddled with problems. And I will submit to you that us as the General Assembly, we probably made some mistakes whenever we did this because 'fair and reasonable,' we all know that that's just a term that's thrown out there. Did we define it? No, we didn't define it. You know why we probably didn't define it? It would be my guess, and I was here, because we knew that we were going to get into this conversation because they're hard conversations on how to do this, their taxes and all of this. 

So we didn't define what that was because we knew then the bill would probably not pass and we would not get that in there. So my whole thing is this rule and the reason that we turn things down here is over legislative intent, whether something is constitutional, whether something exceeds the current statute. I'm not for sure that this is not the first one that I have seen that does not do it all. And Sir, that would go through the chair, who would need to direct you to ask me a question, which is fine with me.

 

Jake Windley Can I ask a clarifying question?

 

Representative Brian Evans You're recognized for a question.

 

Jake Windley Thank you. And Senator Hickey, respecting constitutional delegations of authority, I'm looking at 23-92-509, which is the rulemaking statute of the PBMLA. And just so that I know what to respond to, can you clarify for me which part of this rule exceeds that statute?

 

Senator Jimmy Hickey Well, from my standpoint, I guess you could just say that if you all are trying to say that we've delegated you the authority-- and I can't quote the numbers like you can. Of course, we've got a great staff here that if you want me to get them involved in that, I will. But we cannot delegate our authority over to someone to do this. Would you not agree to that, through the Constitution?

 

Jake Windley Respectfully, I would disagree in this situation. And this may be lack of creativity on my part. I fail to see the difference between the insurance commissioner setting and approving fair and reasonable rates and the property and casualty market, the life insurance market, the health insurance market, as opposed to the PBM market.

 

Senator Jimmy Hickey And let me say this, maybe you're right. Maybe you have found another avenue where your authority is also being exceeded. So I don't necessarily disagree with your argument that, yes, you're just looking back and saying, well, we do have that authority, but maybe we go back one step further and maybe you shouldn't have that authority. I don't want to say that. But you're stopping way too short here. 

If the General Assembly cannot delegate its authority, and we've delegated it to you in that situation, maybe that's also not proper. You know, there's a saying down here that drives me crazy, that something is not unconstitutional until it's ruled unconstitutional. And I think that we understand that that's the way our system works. But I think we also have to contemplate those things whenever we're looking at them to try to make sure and guard against doing something that possibly would be.

 

Booth Rand May I respond also? I share your frustrations. I do want to direct members of this committee to the PBMLA statute 23-92-509. It says rules that the commissioner may adopt under section 2 under this subchapter include without limitations rules relating to licensing, application fees, financial solvency requirements. It goes on and it gets down to rebates, and it says, (i) Compensation. I view this that you've given the commissioner rule authority to issue a rule related to compensation, which is what this is partially about. So you may disagree and feel like we're going outside statutory authority, and you may be right. I just don't feel like we are doing that.

 

Senator Jimmy Hickey I understand the position you're in. I want to say that I recognize that, and I respect you all. Don't take my attitude right here. But yes, I feel extremely confident that whenever I was here and that involved in passing this legislation that I never would have contemplated that you all would have had the authority to put in a dispensing fee. YSo thank you, sir.

 

Representative Brian Evans Thank you, Senator Hickey. Senator Hill, you're recognized.

 

Senator Ricky Hill Thank you, Mr. Chair. Over here. My question will be pretty simple. Y'all are supposed to be out here for the consumers, taking care of the consumers. Have we had any consumer complaints about access to pharmacies?

 

Booth Rand I don't think we've had many, if we've had any. But no, most of our complaints are pharmacies.

 

Senator Ricky Hill Okay. So that leads me to my next part of this since it is basically not consumer driven. So it is industry driven, not consumer driven?

 

Booth Rand I agree. But again, if we start seeing pharmacies have attrition, that would impact consumers in terms of their access to going to a pharmacy that might not be available in that county.

 

Jake Windley And if I may, I would say that evidence of absence is not absence of evidence. Before I started working at the Arkansas--

 

Senator Ricky Hill Say that again, I did not catch them.

 

Jake Windley Absence of evidence is not evidence of absence. Just because we're not seeing consumer complaints on the specific issue does not mean individuals aren't suffering. Before I started--

 

Senator Ricky Hill But that's irrelevant. If you don't have the complaint, you can't assume something. Because we all know what the word assume means.

 

Jake Windley Absolutely. I would say, though, that before I started working at the Arkansas Insurance Department a year and a half ago, I didn't even know it was possible to file a complaint with the Arkansas Insurance Department about your PBM reimbursement rate. If I was having issues with my health insurer, my first option would be to go through the hospital, go through my pharmacist, go through the labyrinthine hell hole that is a PBM appeal process.

 

Senator Ricky Hill And you've been here about a year now?

 

Jake Windley I worked for the Arkansas Insurance Department for about a year and a half.

 

Senator Ricky Hill Okay. What have you done to solve that since you recognize the problem?

 

Jake Windley Thank you. I'm glad. When I was at the Arkansas Insurance Department and I worked on market conduct, which was responding to consumer and industry level complaints, I believe we responded effectively to consumer complaints. We recovered over $300,000 for providers and over $100,000 for the state.

 

Senator Ricky Hill That's not where I was going with this, sir. What I meant is, what are you doing to educate the public? Not what you've collected or done. What have you done to educate the people, merely what you had said, so they will know how to answer? No, ma'am. This is for him. He's the one that brought this up.

 

Jake Windley Well, thank you. I believe a few weeks ago we had Jimmy Harris here that was discussing the first I Day, which was to spread consumer awareness about their options in the insurance provider space and the services the Arkansas Insurance Department provides. That was a flagship program for the first time, and I believe it was effective. And it's something we're going to be continuing on for the future. I do believe that there are improvements we could make in messaging for the future. Personally, as a younger person, I'd like us to be doing more messaging towards individuals in the college space and afterwards who are about to fall off their parents' health insurance and provide them with their options, along with basic terminology and pitfalls in the insurance area.

 

Senator Ricky Hill Great. Thank you. So you haven't done a whole lot yet?

 

Jake Windley Not yet, sir.

 

Representative Brian Evans Senator Hill, thank you. Representative Shepard, you're recognized.

 

Representative Matthew Shepherd Thank you, Mr. Chairman. I'm somewhat sympathetic to your position at the table because, as I reviewed the statute and I think to Senator Hickey's comments, there's probably some areas that could have been tightened up now with the benefit of hindsight. But my question is, as we currently sit here without the rule-- we have an emergency rule in place, but let's just consider the statute itself. With regard to a PBM that's not paying a fair and reasonable rate to ensure market access or whatever the terminology is, which that's found in in 5O6, I believe, what tools are available for you to respond should you get a complaint?

 

Booth Rand Great question. And this was asked Monday. I think the dilemma we would have, Representative Shepherd, is-- we would not have a dilemma to collect the data itself. But I think if the commissioner started making decisions about whether the health benefit plans and the PBM networks were fair and reasonable, there would be an objection by the PBMs and health plans that there was no rule in place to govern that. And so I think we're somewhat compelled to do a rule, not only from the statute that I just cited, but also from respondents to investigations or examinations that he might be able to do, the commissioner. Without a rule in place, I think you run into the problem that he can collect the data, but in terms of his decision about what to do with the data, if I were attorney for the PBM, I would say that there is no rule in place in which the commissioner is authorized to require a dispensing cost. So that's why we're here.

 

Representative Matthew Shepherd But then this kind of gets to be a bit of a circular argument. And I think this is one of the reasons, at least for myself, I struggle with this issue. As I understand the statute, if they were paying below NADAC, you could fine them?

 

Booth Rand Correct.

 

Representative Matthew Shepherd If they are not paying fair and reasonable, there is no fine provision. The only option under the statute is to revoke their license. Am I correct?

 

Booth Rand Again, I agree. And it gets back to my and Senator Hickey's point that the legislature did not define fair and reasonable for us. And I think the commissioner would have a legal problem doing an enforcement violation conclusion about whether an investigation required the PBM to pay more to meet fair and reasonable requirements.

 

Representative Matthew Shepherd So just as kind of a follow up, the problem is you could tell them, 'We don't believe it's fair and reasonable. We're going to revoke your permit or license,' which would be a very drastic result. Their response would be, 'Well, you haven't told me what fair and reasonable is.'

 

Booth Rand Correct.

 

Representative Matthew Shepherd This is part of what you're trying to address. And so I guess that's the challenge that we have. It appears that you have some ability to do this right now, but maybe not with the clarity of a rule. And to follow back, just the final thing on Senator Hickey's comments, under 5O9, it does say you can make rulemaking concerning certain areas, including compensation. But I think certainly most would have anticipated that rulemaking would relate back within the confines of the statutory provisions of the subchapter. So I want to be clear that, at least from my perspective, and I'm not necessarily speaking as to this instance, but for future reference, that should not be viewed as some kind of blank check of authority to the Insurance Department or anybody else. Thank you.

 

Representative Brian Evans Okay, members, to give you an update. I've got Senator Irvin and Senator Dismang, Senator Hammer. No other members of the committee have questions. Then we will go to non committee members. That order will be Senator Stone, Representative Flowers and Senator Johnson. I'll recognize Senator Irvin.

 

Senator Missy Irvin Okay. Thank you. Two questions. So you are defining and you're saying that compensation then gives you the authority to make an assessed tax or fee. And you just read that dispensing fee or cost is not explicitly stated in the language. And I agree with you on that. Is that what you said?

 

Booth Rand Yes and yes.

 

Senator Missy Irvin Okay. And application fee is listed in what you read.

 

Booth Rand Again, I'm relying upon the general term of compensation.

 

Senator Missy Irvin Right.

 

Booth Rand That could be anything related to compensation.

 

Senator Missy Irvin Okay. Well, what we understand in the health care world is reimbursement rates. So when we look at a reimbursement rate, a reimbursement rate as one thing, a dispensing fee, an administrative fee to cover the overhead, which nobody else receives by government mandate for a for profit company is completely different. To me, you're introducing a new animal here. I believe fair and reasonable is attached to a reimbursement rate. I don't believe you now have the authority to introduce a new fee. And so that's where I'm getting really concerned about the language because compensation could be super broad. For me, whenever I vote for a tax increase, I don't hide that by saying, it's just compensation for the Department of Education.

 

Booth Rand Yes, ma'am.

 

Senator Missy Irvin That's not my intention as a legislator. And I would get killed back home with the people that vote for me to say, you did what? You voted for a tax increase on me and you called it compensation for the Department of Education or whatever or it's actually compensation for Walmart or Walgreens. So thank you for the clarification. The Bulletin. I have a little issue with, we don't see bulletins within these Rules subcommittees. And so that's a new thing. 

And I'm concerned about the administrative procedure process on how we review rules and what was passed by the people that changed the Constitution that gave us approval authority over rules. Because there are many issues where we had laws that were passed and then rules that were coming down the pike that didn't match up to the legislation, didn't follow legislative intent. You know, literally agencies would just kind of say, we don't care what the law says, we're going to do whatever we want through rules. And that was actually a bipartisan effort to really say, whoa, wait a minute, we need to make sure that we have approval authority. And the people of the state of Arkansas voted for that. And that's on Rules. 

When I understand a bulletin, I don't see that in any other agency that comes before us. I don't see bulletins. And for me, a bulletin is interpreted to me as a procedural explanation of the policy. And the policy should be contained in the rule, not in the Bulletin. But in your case and what you've presented before us, it's opposite. The bulletin is actually the meat of the policy. And so I guess going back to Representative Wardlaw's point, I'm really concerned about public comment and I'm really concerned that people need to have a full vetting and understanding and being able to comment on something because I'm getting a lot of concerns about, it changed and I never had the ability to make a public comment on it when there were substantial changes made to the Bulletin. And there is no statutory authority that says you can't change that bulletin even after we pass the rule. That was your testimony on Monday.

 

Booth Rand Well, again, if you would--

 

Senator Missy Irvin Go ahead. I'm sorry. That's just the end of my question.

 

Booth Rand I responded to this Monday-- and you responded and made the same argument Monday-- that you may have a valid point. But what I put into the rule itself was language that said there can be no changes to the bulletin without it going through rulemaking. And what I was reacting to is over the last 30 or 40 years, the Insurance Department has issued bulletins out on a lot of things that maybe we should have done a rule on. Okay. I get this body's concern that they don't want agencies issuing bulletins or directives or whatever they call it, which operate as a rule without going through rulemaking. 

So I tried to address that and maybe I didn't do a very good job, I'll admit it. But under the rule itself, Rule 128, I made it clear that we were incorporating this bulletin by reference and that any changes to the bulletin necessitate and are required to go through rulemaking. On the Bulletin, I look at the bulletin a little differently than you do. I look at the bulletin here that we're describing to the industry the data that we want them to send to us. I'm not setting standards necessarily in the Bulletin. It's simply describing the process and the data that we require. It's not intended to provide substantive explanation. That is supposed to come from the rule itself. But I understand your concern for sure.

 

Senator Missy Irvin And thank you, Mr. Chair. I am concerned about the slippery slope of that because I've seen it with memorandums of understanding, particularly at the federal level, where there was never any legislative action made by Congress. And it resulted in a drastic policy, particularly under Title IX. And I've seen that federally, and I do not want to see that here. And so for me, this is the same thing and it's a slippery slope. And procedurally, I think it's improper. Thank you.

 

Representative Brian Evans Thank you. Senator Hammer, you're recognized.

 

Senator Kim Hammer I want to tag on to Representative Shepherd's comments a minute ago. As it is right now, if a PBM is paying below NADAC , you fine them, correct?

 

Booth Rand Yes, we have fined several. We have two big cases going on right now for enforcement.

 

Senator Kim Hammer All right. I want to be as short as we can here. So we fine them that fine does not go back to the pharmacy, though, correct?

 

Booth Rand It does not.

 

Senator Kim Hammer All right. So you determine that they paid below NADAC, and then as far as the compensation that's back to the pharmacy who has filed a complaint, which a lot pharmacies don't file a complaint because of the time it takes to file complaints. They wait it out, say it's not worth the hour, hour and a half and all the extra cost. But then when it comes back to what the pharmacy actually gets after you penalize the PBM, what do they actually realize?

 

Booth Rand The only thing the pharmacy gets out of the enforcement would be an adjustment if you're paying below NADAC minimums. Let's say you paid below NADAC minimums by $13.60. The company would be fined for violation of it. The fines would go to general revenue. The PBM would be required to make the adjustment to provide reimbursement back of whatever, $19, whenever that example. So they would have to make what we call an adjustment.

 

Senator Kim Hammer Right. But this rule, and then I'll be done, this rule is going to give you what additional enforcement ability in order to make sure that that pharmacist would be treated fairly? Because they don't get the benefit of the fine. And you have to make a determination as far as what you're going to require the PBM to pay to what was supposed to be a fair and reasonable rate. Without this tool, additional tool that you're proposing, how do you arrive at that so that that pharmacist is treated fairly as the legislation requires that they're supposed to? And I think, do you want to answer that? You lit up.

 

Alison Hatfield I was going to say that-- thank you so much for the question-- that's a great point. We see this rule as a mechanism for us to be able to use our enforcement power. But to enforce the statute that you all passed with that fair and reasonable, it's going to give us that tool or mechanism with the fair and reasonable. Under those, as Senator Hickey said this morning, it's not defined, would allow the commissioner the ability to look at the data and look at the information and formulate how we would enforce that from a number standpoint.

 

Senator Kim Hammer And how would that eventually drive up cost? And we haven't even got-- I don't know if we're paying Segal by the hour to be on the screen that we're not going to ask them questions. What you just said, how does that drive to the bottom line that companies out there are afraid that this is going to increase the cost? Thank you, Mr. Chair.

 

Alison Hatfield I don't want to speak for them at all. I mean, honestly, if the PBMs are paying the NADAC and fair and reasonable, there'll be no change. But for the plans, I can't attest to that. I know there's been some testimony by others about projections, but we as insurance, I don't think can attest to that.

 

Senator Kim Hammer Senator Dismang, you're recognized.

 

Senator Jonathan Dismang Thank you. And just to kind of be quick, I want these to be yes or no. In testimony the other day, Booth, you said that you didn't have the authority to gather this information. Is that correct?

 

Booth Rand And I was wrong.

 

Senator Jonathan Dismang But you said that, which we predicated an entire rule based on saying that we couldn't get the information.

 

Booth Rand I think I was responding to Senator Hickey.

 

Senator Jonathan Dismang Just say yes.

 

Booth Rand Yes.

 

Senator Jonathan Dismang Right. Okay. All right. Here's my other question, because I think it's really important now. I didn't realize how important it was before. As you create this team that's going to review everyone's contract-- what is your name in the teal blue tie? What's your name?

 

Jake Windley Jake, Senator.

 

Senator Jonathan Dismang Will you be a part of that team?

 

Jake Windley No, sir.

 

Senator Jonathan Dismang What will your input be in the process?

 

Jake Windley I imagine there would be very little to none.

 

Booth Rand  I think the team that would be composed for this review would be our PBM director, our insurance commissioner, our actuary and myself and two financial analysts.

 

Senator Jonathan Dismang Why is he at the table?

 

Booth Rand Who?

 

Alison Hatfield Sir, legislative affairs director at the Department of Commerce.

 

Senator Jonathan Dismang That's our legislative affairs director?

 

Alison Hatfield Yes, and he's helped--

 

Senator Jonathan Dismang Huh. Interesting. Because here's my major concern-- that's interesting. I had no idea, and I'm a legislator. So here's my concern. What I've heard over and over again is the opinions coming from the table, especially yours, sir. You're very opinionated about this particular matter and have said some things that are not unbiased in any way. And so my major concern as we keep kind of rolling through this is, to be able to achieve fair and reasonable, I think you have to start with fair and impartial. 

And in the conversation right now, and I can roll back the tape, but our legislative affairs director is not fair and impartial on this subject matter. He had some very pointed, very pointed statements that he made in regards to PBMs and the appeals process and all these other things that he brought into the question. So that is a new concern of mine, is the fact that you're not going to be able to independently even look at this because we are so far in the weeds with our own opinions of what exists right now without gathering the information. Thank you.

 

Jake Windley If I may--

 

Representative Brian Evans No. Senator Stone, you're recognized.

 

Senator Matt Stone Thank you, Mr. Chair. One of the things I've been hearing and have a concern about is stated that if this rule passes that health care costs could go up on pharmaceuticals. But isn't it equally true that if it is not passed and independent pharmacies continue to go out of business that that causes consolidation and forms an oligopoly? And through that point, even longer term, they go up more exponentially?

 

Booth Rand That is a possibility. I think there's a debate or dispute about whether pharmacies are actually going out of business or not. The PBM data that we have been sent from the health plans shows a steady number of pharmacies. The pharmacies and the pharmacy board indicate that they've had much more attrition than the PBM numbers show. So there is a dispute about that issue of whether-- again, my point I wanted to raise was this rule is prospective to help guarantee or to help ensure, as the verbiage used, that we still have an adequate pharmacy network in the future, even though we may not see significant attrition right now. So I agree with your comment, your question.

 

Senator Matt Stone Thank you, Mr. Chair.

 

Representative Brian Evans Representative Flowers, you're recognized.

 

Representative Vivian Flowers Thank you so much, Mr. Chair. I do have a couple of questions, but wanted to make sure that I have a clear understanding of where we are on some of the issues that have come up in questioning today. And what I heard was a reference to the issue being about contracts and the issue here. That's the main issue and what my understanding was, based on complaints and challenges from several, and I can think of three independent pharmacies in my district who do have contract issues, who are forced to sign these contracts and are legally bound to not complain about the disparate reimbursements that they encounter that's affecting their business and their ability to even pay their employees. 

So I do believe that the contracting is an issue, but my understanding, too, is that there is a constant violation of existing law. That's an issue that then independent pharmacies have to take time out or pay someone to actually file the complaints, which is a protracted process that may not end in them receiving relief. And then, of course, there's the issue that we are really not, I think, talking about or addressing, and that is the PBMs following the law where they are paying above NADAC, but they're paying $0.02, right, $0.10, $1, $2 above NADAC. 

So when you look at the issue of a dispensing fee and what's fair and reasonable, we're really starting out at a situation where systemically it's unfair and unreasonable not only to independent pharmacies, but also to chain pharmacies, which in my district, at least two, if not three, chain pharmacies have just closed or folded, which affects our constituents, which affects patients who don't know who to complain to. They don't complain to you. So that's my first question, is if a pharmacy closes or a patient has an issue with insurance, paying for their prescriptions, do they contact you or the Board of Pharmacy or both?

 

Booth Rand They contact us as to the insurance issue. The pharmacies, however, are not required to report to us that they're closing. We do not track closures. You may want to speak to Mr. Kirtley, who runs the Board of Pharmacy, who collects and licenses those pharmacies. But we don't track why they close or if they've closed or any of that. We just don't.

 

Representative Vivian Flowers Thank you. And my second question, Mr. Chair?

 

Booth Rand Yes, ma'am. That's your follow up.

 

Representative Vivian Flowers And I will try to be as succinct as possible, but I want to, for the benefit of, I think, many of our colleagues who are unaware of all, and they wouldn't b,e of all of the dynamics and nuances in this issue and the time frame that has taken over years trying to address these issues. Meanwhile, pharmacies all over the state have closed. And I'd like to correct something. Earlier we heard that the top three PBMs, CVS Caremark, Optum and Express Scripts control 70%. Actually, according to the FTC in July, they control 80% of prescriptions. And when you control 80% of the prescriptions, you have control of determining the formularies. 

You silence your pharmacist who must contract with you because you control all of the pharmacy prescriptions. You own pharmacies. You own insurance companies. And now are in that, I believe, top ten, but certainly up at the top of the Forbes list of the most profitable and largest companies in this country. All of that to me matters in this, because if the mean cost of dispensing in 2018 was $12.40 and dispensing specialty drugs was $73.58. But the pharmacies you own as a PBM, who's determining what the independents and the chains get reimbursed for, are not getting that. But the pharmacies you own or are affiliated with are getting reimbursed. 

My question is, how are we determining what's fair and reasonable for independent pharmacies in particular? But any pharmacies who are not affiliated with or owned by the PBMs, how do we ensure what is fair and reasonable within the law since they get to basically control the business, control the market, control reimbursements?

 

Alison Hatfield Representative Flowers, thank you for the question. That's how we see the rules, to allow us a mechanism to be able to interpret and decide what is fair and reasonable is our attempt to effectuate the law that you all passed.

 

Representative Vivian Flowers Thank you so much. I'd like to get back in the queue please.

 

Representative Brian Evans Senator Johnson, you're recognized.

 

Senator Mark Johnson Thank you, Mr. Chairman. I appreciate the debate, even though I don't necessarily like the issue we're having to deal with, because it is to me, this is almost a civics lesson. I hope a lot of political science students are watching this. Senator Hickey brought up the line between legislative authority and regulatory authority. 

And we almost could go back and look at Loper Bright and Chevron and see, I mean, this is a national issue at that level. I know we're going to find ourselves this spring dealing with this, and I'm okay with that. I said that, was it Monday we were here, so I'm okay with that. I am concerned when the debate starts to devolve into an ad hominem attack on, is it Mr. Windley?

 

Jake Windley Mr. Windley.

 

Senator Mark Johnson I'm sorry. I apologize for not knowing your name, but I did appreciate your comment comparing it to the John D. Rockefeller Standard Oil thing, which Congress ultimately fixed through antitrust laws and forced the breakup of that monopoly. The vertical integration and the consolidation in this industry scares the hell out of me because you're not just dealing with comfort items, you're dealing with the necessities of life. 

In many cases, when we're dealing with with drugs and we're dealing with areas-- and I especially appreciate my friend Representative Flowers, mayor elect, about her district, because it is that area of the state which seems to be bearing the brunt of this economic pressure. And bless your hearts, folks in southeast Arkansas already, they've got the issues of lack of maternity care, other things in health care. And now we're going after sort of the last health care entity in some of these little towns along Highway 65 is the pharmacy. And if those go out, then we're dealing with a health care desert in that area. 

I'm concerned about it. I see too many folks maybe in this room concerned about the semantics. Mr. Commissioner, you have a charge under the law, as I read it, to protect not just the consumers, but the market. Because the market, I believe, is actually what protects the consumers. And if there's a predatory situation, which too often I see this. Any time the word PBM comes up, I thought the P stood for Predator. I'm not sure. But I see this as your job to protect the consumer through that. Could I get some order behind me, Mr. Chairman?

 

Representative Brian Evans Members, if we could hold sidebar conversation down while the senator is asking his question.

 

Senator Mark Johnson Thank you, Mr. Chairman. I apologize to my colleagues for interrupting, but I thought this was rather important. We do need to have a clarification. And I think that Mr. Rand did a good job of pointing out the difference between the Bulletin and the rule. I mean, you know what's the right thing to do, but to clearly define it, you proposed a rule. Am I reading that correctly? Mr. Rand, is that kind of what you said?

 

Booth Rand As I explained, I think there's the rule and there's the data that we require the companies to provide so that we can interpret that data from the rule itself language. So I view this as a data process, what data you need to send for us to apply the rule to. So I do share Senator Irvin's concern about agencies abusing a bulletin or a transmittal. She explained a lot of federal agencies that issue transmittals, and they don't go through rulemaking. So I just want to make sure that any changes to the bulletin would go through rulemaking so that we're not abusing that.

 

Senator Mark Johnson And I appreciate that, Mr. Rand, that you're erring on the side of caution as far as what your authority specifically is. And I appreciate that, but I also appreciate all of you having the foresight to look down the road and saying, If we do this, or more importantly, if we don't do this, what is going to be the ramification? And I appreciate also that you appear not to be taking a poll on how many complaints came in from consumers because frankly, consumers, they don't understand this. 

I mean, I had a meeting with a large employer in my district that their insurance advisor had scared him to death on what their rate was going to be. They said we're apt to lay people off. And fortunately, my local pharmacists and some other folks came in, including some other employers came in and said, look, here's what's really going on. Your advisor has the fiduciary responsibility to tell you if there's a potential problem coming at you. But that doesn't mean that the problems caused by this, that or the other, that you need to drill down and see what the real problem is. 

I think Mr. Zook's testimony on Monday that I took a little bit of difference with him, and I respect him and certainly his constituency, that they don't really quite know why this is coming about. And it's kind of like plumbing. Your consumers don't pay attention to the plumbing until it quits working and then they get on the phone.

 

Representative Brian Evans Senator Johnson.

 

Senator Mark Johnson Yes, sir.

 

Representative Brian Evans Can we get to the question? This is not a time to debate.

 

Senator Mark Johnson Thank you. Yes, sir. So since I've praised you all for looking down the road and seeing what the problem could be, can you tell me then, if this rule fails to pass, what do you see the kind of problems we're going to have pushed onto our plate for January, February, March and April?

 

Booth Rand I think it's quite obvious you may get legislation from the pharmacies wanting a dispensing fee next session if this fails. So I don't know what that bill or draft would look like. Again, the other states that have enacted dispensing fee legislation by pharmacies-- and I agree Tennessee's not a good example, but those states did enact a dispensing fee law and it was $10.50 some odd cents in each of those states fixed to apply to all drug transactions. This rule moderates that a little bit where there may not be a big fee or it may be $2 or maybe $3. It just depends on what the data is. So our approach is more of a graduated approach into the fee if there even is required to be a fee. So we're going to differ with Tennessee and West Virginia and Kentucky on the way they did that. But to answer your question, I would suspect you may get legislation from the pharmacies about this.

 

Alison Hatfield And to add just a little bit to what Mr. Rand just said, I think it's responsive also to Speaker Sheppard's question, that if AID did bring an enforcement action against a PBM which resulted in a lawsuit, so they, the PBM, could end up in state court. After administrative level in a state court in Arkansas and all the way up to the Arkansas Supreme Court would ultimately decide what fair and reasonable is. So that would be an alternative if we didn't have this rule.

 

Senator Mark Johnson Well, as I said Monday, my dad told me once that reasonable is the cause of more lawsuits than probably any other thing. I appreciate that. One last question, if I could, Mr. Chairman. I understand that we've lost approximately 225 retail pharmacies in the state since like 2016. Is that correct?

 

Booth Rand I've heard that. When Senator Irvin asked that question, I think we were told six. But you'll have to talk to the board of pharmacy on that. We, again, just don't track it.

 

Senator Mark Johnson That's a real number. I'm sure we can find out. So I wouldn't hold you to that, Mr. Rand. Thank you, Mr. Chairman, for indulgence. Thank you, witnesses.

 

Representative Brian Evans Senator Irvin, you're recognized.

 

Senator Missy Irvin Just quickly, it was testified to a net of six over the past, I think, since-- I don't know how many years, but six. But again, a lot of those were consolidation or people retired and sold their pharmacies and or retired or Walgreens, I think, had some closures because of business decisions. But that probably didn't have anything to do with Arkansas, but probably their corporate. Just quickly, Tennessee, you said you wanted to do a graduated approach. But my understanding is that Tennessee, it's for only low volume pharmacies, not all pharmacies.

 

Booth Rand Yeah, you're right. Tennessee, it's a unique law. They tailor the fee to apply to retail independent pharmacies so they're excluding the others. If we did that, there might be a legal issue about whether we're enacting special legislation just for one particular type of pharmacy.

 

Senator Missy Irvin But when we use these other states as examples, we need to make sure we're clarifying this is not apples to apples, that they were actually targeting low volume pharmacies, to Representative Flowers', perhaps point, and not your big retailers. I have a rural pharmacist actually that's opposing this rule, called me and said I'm opposed to this because that's going to give such an incredible advantage to the big boxes like a Walmart or Walgreens. And I will be put out of business completely. They're not for this. And that's a rural pharmacist And so I just want to make sure that we're real clear there is some opposition out there. 

And the other thing just quickly on the compensation that you're talking about, in the public comments, is that correct-- that the employers, is this correct or your understanding from their public comment is that the employers stated for their self-insured plans that this would result in a direct increase to patients' co-payments at the point of sale, that this would get passed down from the employer to the employee covered on the health care benefit and that they would then have to pay that, if it's $10.50 dispensing fee at the point of sale on every single prescription?

 

Booth Rand If a fee is required, if we require fee-- we may not require a fee and therefore there won't be that issue of co-pay or co-insurance-- the answer is, yes, the patient may pay an impact from this cost or fee up to the extent of their copayment limit or coinsurance limit. So I agree there could be a premium impact as well on the health plan that the member has to additionally pay if a fee is required.

 

Senator Missy Irvin Correct. So increase in premium and out-of-pocket expense in the form of an increased co-payment to cover that. So you could look at being charged a $10 dispensing fee on a $4 generic and that $10 goes to cover the overhead cost of the overhead costs.

 

Booth Rand Potentially.

 

Senator Missy Irvin For that for profit industry. Okay. I'm just making sure that we're clear. Because I think in the aggregate, that's the concern that this rural pharmacists called and said, I'm not for this and I wanted you to hear from me because I'll get put out of business because, in the aggregate, they're going to make so much more money and profit. And I'm concerned, their words not mine, about the person who's working at the school, perhaps, or a state employee that's not making much money as a case worker, may have five prescriptions that they go and fill, and that's going to be $50 on top of the cost. So that's a big concern. So I just want to make sure that I was clear that the employers that are opposed to this in public comment had stated very clearly that this would result in an increase to their employees and patients.

 

Booth Rand If a fee is required.

 

Senator Missy Irvin Okay. Thank you.

 

Representative Brian Evans Senator Hickey, you're recognized.

 

Senator Jimmy Hickey Mr. Chair, would now be the appropriate time for me to make a motion?

 

Representative Brian Evans Before we take that motion, I need to allow for those that are signed up to speak for or against. I have one person signed up to speak for, and that is John Vincent from the Pharmacists Association.

 

Senator Jimmy Hickey Mr. Chair, would you put me in the queue? Would that be possible, to make that motion at the proper time?

 

Representative Brian Evans You're there. Mr. Vincent, do you still choose to speak? You waive? All right. This would be the proper time for your motion, Senator Hickey.

 

Senator Jimmy Hickey Thank you, Mr. Chair. And, Mr. Chair, I move to request a vote regarding the issue of not approving this rule. There's a penalty involved, so there doesn't have to be any other further comment on that, and there's also a possible fee.

 

Representative Brian Evans So to clarify, your motion is to take a vote on not approving the rule.

 

Senator Jimmy Hickey Yeah. So my first motion is to make a vote requesting that we take that vote.

 

Representative Brian Evans That's a proper motion. Is there a second? I have a motion and a second. All in favor of the motion say aye. Opposed nay. The ayes have it. Senator, that will require a second motion. Are you prepared to make that motion?

 

Senator Jimmy Hickey Yes, sir, I am.

 

Representative Brian Evans You may proceed.

 

Senator Jimmy Hickey I move that we not approve the rule.

 

Representative Brian Evans That's a proper motion. I have a motion and second. Any discussion on that motion? Seeing none, all those in favor say aye? Opposed nay. The ayes have it. Motion is not approved. The rule.

 

Booth Rand Thank you. The rule is not approved.

 

Representative Brian Evans We will now go to item 4. Department of Corrections Board of Corrections.  Members, staff is about to pass around a corrected version of the rule that is on the agenda today. They had submitted the correct rule. Staff had put the improper rule on your agenda. So we'll take just a moment, give staff time to pass that around, and then we will recognize Mr. Rowell to present the rule. Ms. Rowell, you're recognized. If you'll identify yourself, please.

 

Tawnie Rowell Good morning, Tawnie Rowell, Chief Legal Counsel, Department of Corrections. You have in front of you the rule that sets up the membership of earned release credit committees. So as you are all aware, the Protect Arkansas Act fundamentally changed how we allow inmates to earn time off of their period of incarceration. This is sort of the first step in that. This provides that there will be a committee that sets the rates at which these individuals can earn time off of their period of incarceration. The change that's in the rule that got passed out was just to ensure that the rule was a little more keeping with the exact language of the legislation. 

It just puts in the language on each of the membership types that whoever is selecting that person will get the recommendation of wardens and supervisors for that individual. The original version that snuck into the packet there just said, for example, that one representative was the chair of the Post Prison Transfer Board. That's the first one. The new version says that that will be a person appointed by the Post Prison Transfer Board after recommendation of those wardens and center supervisors to make sure that we're representing the interest of that post prison transfer board. That's the only change. 

It's a pretty straightforward rule. It was adopted preliminarily by the Board of Corrections in July. They looked at this updated version and adopted that in September. Public comment ran from September 19th to October 19th. We got no public comments. And I am here for any questions if you have them.

 

Representative Brian Evans Thank y ou, Ms. Rowell, Members, again, just for clarification for the record, we are reviewing and approving the proper rule that was filed, but it was not in your original packet. It is the rule that has been passed out by staff and presented by Ms. Rowell. Are there any questions? Senator Hammer, you're recognized.

 

Senator Kim Hammer Thank you, Mr. Chair. Question, what about the public comment on this? Did the public have a chance or was it necessary for them to have public comment?

 

Tawnie Rowell So the version that we posted and put out for public comment was the correct version.

 

Senator Kim Hammer It was the correct version?

 

Tawnie Rowell Yes.

 

Senator Kim Hammer Edit. Okay. Just want to make sure for the record.

 

Representative Brian Evans Any other questions for Ms. Rowell? Seeing no questions and without objection, the rule is reviewed and approved. Thank you for being here today. We'll go to item 5, Department of Education.

 

Courtney Salas-Ford Good morning, Courtney Salas-Ford, chief of staff for the Department of Education. We have three rules for your review and approval. I can go through these one by one or--

 

Representative Brian Evans Let's do that.

 

Courtney Salas-Ford Okay.

 

Representative Brian Evans I think they're pretty quick.

 

Courtney Salas-Ford The first rule is governing the academic facilities distress program. These rules were amended to implement provisions of the LEARNS Act,  Act 237, to remove any references to the Teacher Fair Dismissal Act. All other changes were non substantive, just stylistic changes. Public comment period was held and a hearing was held, comments were received and no substantive changes were made.

 

Representative Brian Evans Thank you, Ms. Ford. Members, any questions on 5A? Seeing no questions and without objection, the rule is reviewed and approved. We will go to 5B.

 

Courtney Salas-Ford These are the rules governing public school academic facilities and transportation academic facilities Partnership Program. These rules were amended also to implement provisions of LEARNS, as well as Act 764 of 2023 related to school district storm shelters and the requirement that plans be reviewed by a school safety expert. All other changes are simply formatting and stylistic changes. Public comment period was held. A hearing was held. Comments were received. No substantive changes made.

 

Representative Brian Evans Thank you. Members, Questions on 5B? Seeing no questions, without objection, the rule is reviewed and approved. Item 5C.

 

Courtney Salas-Ford These rules govern the transportation modernization grant program implemented by the LEARNS Act, Act 237. Public comment hearing was held, comments received, and no substantive changes were made.

 

Representative Brian Evans Members, Questions on 5C. Seeing no questions, then without objection, the rule is reviewed and approved. Thank you for being here today.

 

Courtney Salas-Ford Thank you.

 

Representative Brian Evans Go to item 6 on your agenda, Department of Energy and Environment. Members, you'll notice in your packet that item 6A has been pulled down by the agency. So we'll be taking up only item 6B.

 

Kesia Morrison Good morning. Kesia Morrison, Chief Counsel, Energy and Environment.

 

Bailey Taylor Bailey Taylor, Chief Administrator of Environment and DEQ Director.

 

Representative Brian Evans Thank you. You may present your rule.

 

Kesia Morrison Thank you. We're here this morning seeking review and approval of Rule 36. Our amendments are a result of Act 713 of 2023. The major structural changes have to do with switching from 11 used tire districts to 4, and each of those tire districts are governed then by a tire accountability board. The programs and boards have the option to enter into interlocal agreements. 

The boards must prepare business plans and if the business plans result in a rate increase, the rate increase must be approved by the Legislative Council. The programs are subject to a bi-annual legislative audit. Tire retailers, generators and importers are subject to some statutory business closure procedures, and the disposal facilities and tire programs are not required to pay permit fees or permit transfer fees to DEQ. 

There are some other housekeeping amendments that were made as well, and all of these amendments that were pursuant to Act 713 of 2023 were part of creating more monitoring and oversight and accountability for the tire programs. And with that being said, we're happy to take any questions.

 

Representative Brian Evans Thank you, Members. Any questions on item 6B? Seeing no questions and without objection, the rule is reviewed and approved. Thank you for being here today. Go to item 7. Department of Finance and Administration, the Arkansas Racing Commission. Gentlemen, if you'll identify yourself for the record, you may present your rules. Take these one at a time. We'll start with item 7A.

 

Byron Freeland Byron Freeland, attorney for the Arkansas Racing Commission.

 

Trent Minner Trent Minner, Department of Finance and Administration Regulatory Division.

 

Walter Ebel Walter Ebel with Oaklawn.

 

Representative Brian Evans You may proceed.

 

Byron Freeland The first rule we had, well, the first item was the repeal of the greyhound racing rules. The last Greyhound racing was in 2022. This was the request to do away with it, which was by Southland Greyhound Park. And there have been no public objections or comments on that repeal of those rules. And one of the reasons we suggested repealing the rules is because the rules were being codified. It would be a waste of a lot of people's time and effort to codify rules that were not used. We don't even have employees to issue licenses.

 

Representative Brian Evans Thank you for that. Senator Irvin, you're recognized for a question.

 

Senator Missy Irvin Yes, in the the question and the comment, it says that Arkansas code is referenced here regarding fingerprint and background checks for greyhound owner or trainer license applicants. Is it your opinion that that statute also needs to be repealed?

 

Byron Freeland I think we can keep this statute and if greyhound racing is reinstituted, that we re-adopt the rules which will require the fingerprinting. But since we don't have employees and we don't have any racing at this point, so I don't think there's really any need to change the statute.

 

Senator Missy Irvin Okay. Thank you.

 

Representative Brian Evans Members, any other questions on 7A? Seeing none, then without objection, the rule is reviewed and approved. Mr. Ebel, you are signed up to speak for, I'm assuming. Do you want to provide that during the presentation of the rule or do you want to provide additional content after the presentation of the rule?

 

Walter Ebel After the rule. And I'm just here to answer any questions that may come up.

 

Representative Brian Evans Okay. Item 7B.

 

Byron Freeland 7B was Rule 21-48. The rule prior to this said no person may register more than one stable name. It has been changed. It says a person may register. And I think the reason for this is that we are attracting more and more sophisticated horsemen to Oaklawn Park because it's becoming one of the premier tracks in the country. There were no public comments and no objections to that rule. I think it is supported by Oaklawn.

 

Representative Brian Evans Okay. Mr. Ebel, you're recognized.

 

Walter Ebel Yes, sir. This generally came up where somebody owned a horse in a partnership, and they also owned a horse individually, and they weren't allowed to race. They were in other jurisdictions. And they asked that the rule be changed. The horsemen supported it as well as Oaklawn and the Racing Commission.

 

Representative Brian Evans Members, any questions on item 7b? Seeing no questions and without objection, the rule is reviewed and approved. Item 7C.

 

Byron Freeland 7C is Rule 24-44. And this is the claiming rule at Oaklawn. And there's a group of horsemen every year that look to the claiming rule and try to make adjustments to get it just right. And they have some change every year, it seems like. And this year it says a horse that's claimed during the Oaklawn season-- if you have a horse claimed then you'll be given a claiming preference. And they put in there, you'll not be given any claiming preference if the horse's most recent previous race was in a non claiming race or optional claiming race. Or, two, the horse's value dropped more than 25% of the claiming prize in his most recent claiming race. And so they are trying to fine tune the claiming process at Oaklawn to get it where it fits other jurisdictions and everyone satisfied with it. And there were no public comments on this.

 

Representative Brian Evans Mr. Ebel, you're recognized.

 

Walter Ebel Yes. Several years ago we adopted a claiming preference rule to allow somebody that has a horse claimed to get a preference in their next claim. If more than one person claims the horse, the person with the claiming preference gets the claim rather than determining that by a lot or draw. And this tightens that up to limit the number of claiming preferences in certain situations where horsemen really didn't think they should be awarded if you're dropping your horse way down in value from the previous race. And so it'll result in less claiming preferences being issued.

 

Representative Brian Evans Members, any questions on item 7C? Seeing none and without objection, the rule is reviewed and approved. We'll go to Item A, Department of Human Services Division of Developmental Disability Services. Thank you, gentlemen.

 

Lori McDonald Good morning. Lori McDonald, DHS.

 

Melissa Weatherton Hi, Good morning, Melissa Weatherton, DHS.

 

Jennifer Brez'ee Jennifer Brez'ee, DHS.

 

Tommy Tarpley Tommy Tarpley, DDS. This rule involves updates to the two Medicaid programs that are available for children who've been diagnosed with autism spectrum disorder. The first is the autism waiver, which is a 1915C Medicaid waiver that provides intensive one on one services to children in natural environments from the ages of 18 months to 8 years of age. And then the corresponding waiver application for the five year renewal for that is included in the packet and the corresponding updates with the autism waiver Medicaid manual. The other service is ABA therapy services under the EPSDT program. This rule formally includes ABA therapy services in the Arkansas Medicaid State plan as required by CMS and also establishes the corresponding ABA Therapy Medicaid manual, which includes formal eligibility criteria, clinical qualifications, supervision requirements, covered services and covered service delivery requirements and other parameters around the performance of ABA therapy services. The ABA therapy aspects of this rule would have an anticipated effective date of January 1, 2025, and the rule is anticipated to be cost neutral. We'd be happy to answer any questions.

 

Representative Brian Evans Thank you, Members. Any questions for the department on 8A? Seeing no questions and without objection, the rule is reviewed and approved. Thank you for being here today. We'll go to item 9. Department of Human Services Division of Medical Services.

 

Elizabeth Pitman Good morning. Elizabeth Pitman, Division of Medical Services.

 

Representative Brian Evans Thank you. You may proceed with your rule.

 

Elizabeth Pitman Thank you. This rule is being passed pursuant to Act 480 of 2023. It is the second rule we brought to you related to this act, which is for ambulance providers to provide what we call treat, triage and transport, which is ET3. And when we passed the original rule and went to take it to CMS for approval, they indicated that we needed to add ambulance providers to what they call other licensed practitioners to allow them to bill and receive payment to provide treatment on site. So this is that piece of the rule, because it was all contemplated in the original rule. They did allow us, after putting it back through public comment, to retrospectively apply it back to the original date of the rule. So there are no issues with that and I'm happy to take any questions.

 

Representative Brian Evans Thank you, Ms. Pittman. Members, Any questions for the agency on 9 A? Seeing no questions and without objection, the rule is reviewed and approved. Item 10. Department of Public Safety, Emergency Management.

 

Diane Torres-Porter Good morning. Diane Torres-Porter, attorney for the Department of Public Safety.

 

Representative Brian Evans Ms. Porter, good to see you. I miss you at the Bureau, but I know they're happy to have you over at the agency. Thank you for being here today. You may present your rule.

 

Diane Torres-Porter So this rule adopts the Arkansas Fire Prevention code as required under Act 841 of 2023. And that act moved the state fire marshal from the division of Arkansas State Police to the Arkansas Division of Emergency Management. The Arkansas Fire Prevention Code has remained in effect under law, as adopted by the division of Arkansas State Police. So all we're doing, there's no substantive changes, just re-adopting it. I will answer any questions you have.

 

Representative Brian Evans Okay. Thank you. Members, any questions for the agency on Item 10A? Seeing no questions and without objection, the rule is reviewed and approved. We will go to item 11A, Northeast Arkansas Regional Solid Waste Management. Good morning, gentlemen. If you'll identify yourself for the record, then you may present your rule.

 

Joseph Pence Good morning. Good morning, Joe Pence, Northeast Arkansas Regional Solid Waste Executive Director.

 

Robert Thompson I'm Robert Thompson. I'm the attorney for the Northeast Arkansas Solid Waste Management District.

 

Representative Brian Evans You may proceed.

 

Robert Thompson This is a change to the rules of the district. The district is a four county regional solid waste management district in northeast Arkansas. You'll see there are technical and grammatical and clean up language throughout. There are some minor changes to waste hauler licenses in sections 701 and 703. Those were made to comply with statute and state law. Section 704, we lower the fees charged for waste hauler licenses. Section 902 changes the fees, does not raise fees, but changes the fees to be consistent with statute. We put this out for public comment. There was none. And we held a public hearing and there was no comment at the public hearing.

 

Representative Brian Evans Thank you, Mr. Thompson. We appreciate your agency looking at the operations and being able to lower fees. That's a pass through that goes right down to our constituents back home. So we appreciate this. Members, any questions on 11. Senator Irvin, you are recognized.

 

Senator Missy Irvin Hi, Senator Thompson. It's great to have you with us again. Hope you're doing well. And I echo the chair's comments. Thank you. I think that's really great management and so I applaud you for that.

 

Robert Thompson Thank you.

 

Representative Brian Evans Members, any questions for 11A? Seeing no questions and without objection, the rule is reviewed and approved. We will go to E on your agenda. These are the updates concerning rulemaking from the 2023 regular session. We do have a representative from each agency here. They stand ready to answer any questions you may have concerning the status of their outstanding rules. Those items are listed in here on the agenda under E, along with an update for each one of those provided at the request of Senator Irvin a couple of months ago. I appreciate you bringing that up. Does anyone have any questions for any of the agencies? If so, please specify the agency that you want to question and we will have them come to the table. I'll give you just a moment to look back through that. Senator Irvin, you are recognized.

 

Senator Missy Irvin Just on the rules governing the child sexual abuse and human trafficking prevention program, it just says the final rule. I was just wanting to see what the hold up was on that one.

 

Representative Brian Evans Which agency was that?

 

Senator Missy Irvin That's Division of Elementary and Secondary Education.

 

Representative Brian Evans If the Department of Education would come forward, please.

 

Courtney Salas-Ford Courtney Salas-Ford, Department of Education. I know the statement that's listed there talks about prioritization. Obviously, protecting students is incredibly safe. And these rules are and have been drafted and are just waiting approval. We hope to have them to you soon. But one thing I would point out is that the law is in effect. And so the law is not being promulgated, doesn't change anything, doesn't keep that from being enforced, doesn't keep it from being required. And so there would be nothing in the rule that would add to the law that's currently in place.

 

Senator Missy Irvin Okay. That's good. I now remember that you told us that last time. Incredibly important, obviously, topic. So I just wanted to check on that. And then I guess, would the same thing be true with the dyslexia screenings? So those are ongoing and that rule is just trying to create some updates. Is that based on the LEARNS Act?

 

Courtney Salas-Ford Yes, it is. And one of the attributing delays in that was bringing groups of educators together and getting input and feedback on that as we did with all of our large legislation. And again, not that it's not important, but just due to the volume of the rules that we had, it's one that we felt could take a little bit longer to ensure that we got it right.

 

Senator Missy Irvin Okay. But the dyslexia screenings are ongoing and still happening, and we're still following science of reading curriculum and those things? We're just trying to improve on what we've already been working. Is that correct? Okay. And then the last one on the course choice, since you're at the table, the Course Choice program, I know it's State Board of Education. I'm interested in this rule is based on the LEARNS section as it applies to what grade level?

 

Courtney Salas-Ford So the LEARNS Act implemented course choice for all grade levels, K-12. It does not take effect until the 25-26 school year. And as we were writing the rules, we actually came across some issues in the statute that would make it difficult to implement. And so we do hope to clear those up and correct those in the upcoming session and still have rules promulgated and in place before the program goes into effect.

 

Senator Missy Irvin Okay. On that, I'd like to talk with you about that because I'd love to see the availability of course choice selection by a student. And if they know exactly what they're going to do and to be able to go ahead and start working on that at an appropriate year of instruction. I think I would love to see that. So as you're working statutorily on that, if you don't mind, just circling me in because I just had some thoughts about how we could more specialize a child's education for their benefit if they know exactly what avenue they're taking with, of course parental involvement, all that. So really interested in that one. Thank you so much, Mr. Chair.

 

Representative Brian Evans Thank you, Senator. Good question. Senator Hammer, you have a question for the department?

 

Senator Kim Hammer Thank you. I noticed on the handout sheet, for example, it says here that it was in committee that the rule was going to be released for public comment in its November 7th meeting. We are in mid December. I'm just curious, have all the rules that were supposed to be released after November 7th for public comment been released or are some--

 

Courtney Salas-Ford No. They've all been drafted, but some of them have not been released for public comment yet. They're still pending internal approval. I know the dates were put in there as March. And again, some things just after we submit our report, things have, upon further review, we've discovered there might be a little bit longer delay.

 

Senator Kim Hammer All right. So it says this rule has been authorized by State Board of Education to be released for public comment in its November 7th meeting. That's a comment that's kind of threaded throughout here. So those rules that that statement is attached to, they have been released for public comment? Like I'm looking at the division of Elementary and Secondary Education down there, the third one. That's the one I'm looking at right now.

 

Representative Brian Evans That would be the rules governing grading and course credit.

 

Senator Kim Hammer Yes. Yeah, rules governing grading and course credit.

 

Courtney Salas-Ford That one will be going out for public comment probably within the next week.

 

Senator Kim Hammer Why was it authorized to be released in the November 7th meeting but it's just now going out? Is it just the time delay to get a process and get it out there?

 

Courtney Salas-Ford Yeah, just the initial approval processes that are necessary before we can release them publicly.

 

Senator Kim Hammer All right. Thank you.

 

Representative Brian Evans Members, any other questions for the Department of Ed while tMs. Ford's at the table? And thank you for coming and answering those questions. Members, do you have any additional questions for agencies under E? Seeing no questions, then we'll go to item F. This is a submission of the December monthly written update by the Oil and Gas Commission concerning rulemaking resulting from the 2024 fiscal session. That update is in your packet. You've had time to prepare and study for that. Are there any questions for oil and gas? Then without objection, we'll file the December monthly written update from that department. With nothing else before the committee, without objection, having no further business, we are adjourned.