LRB-3337/1
EKL:cdc&cjs
2021 - 2022 LEGISLATURE
September 10, 2021 - Introduced by Representatives Subeck, S. Rodriguez,
Anderson, Baldeh, Cabral-Guevara, Cabrera, Conley, Considine, Emerson,
Hebl, Hesselbein, Hong, Milroy, L. Myers, Neubauer, Ohnstad, Pope,
Shankland, Shelton, Sinicki, Snodgrass, Spreitzer, Stubbs and Vruwink,
cosponsored by Senators Carpenter, Erpenbach, Agard, Bewley, Johnson,
Larson, Pfaff and Ringhand. Referred to Committee on Health.
AB554,1,2 1An Act to create 601.31 (1) (nw) and 632.864 of the statutes; relating to:
2pharmacy services administrative organizations.
Analysis by the Legislative Reference Bureau
This bill requires that pharmacy services administrative organizations
(PSAOs) be licensed by the Office of the Commissioner of Insurance. Under the bill,
a PSAO is an entity operating in Wisconsin that does all of the following:
1. Contracts with an independent pharmacy to conduct business on the
pharmacy's behalf with a third-party payer.
2. Provides at least one administrative service to an independent pharmacy
and negotiates and enters into a contract with a third-party payer or pharmacy
benefit manager on the pharmacy's behalf.
The bill defines “independent pharmacy" to mean a licensed pharmacy
operating in Wisconsin that is under common ownership with no more than two other
pharmacies. “Administrative service” is defined to mean assisting with claims or
audits, providing centralized payment, performing certification in a specialized care
program, providing compliance support, setting flat fees for generic drugs, assisting
with store layout, managing inventory, providing marketing support, providing
management and analysis of payment and drug dispensing data, or providing
resources for retail cash cards. The bill defines “third-party payer” to mean an entity
operating in Wisconsin that pays or insures health, medical, or prescription drug
expenses on behalf of beneficiaries. The bill uses the current law definition of
“pharmacy benefit manager," which is an entity doing business in Wisconsin that
contracts to administer or manage prescription drug benefits on behalf of an insurer
or other entity that provides prescription drug benefits to state residents.

To obtain the license required by the bill, a person must apply to OCI and
provide the contact information for the applicant and a contact person, evidence of
financial responsibility of at least $1,000,000, and any other information required by
the commissioner. Under the bill, the license fee is set by the commissioner and the
term of a license is two years.
The bill also requires that a PSAO disclose to OCI the extent of any ownership
or control by an entity that provides pharmacy services; provides prescription drug
or device services; or manufactures, sells, or distributes prescription drugs,
biologicals, or medical devices. The PSAO must notify OCI within five days of any
material change in its ownership or control related to such an entity.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB554,1 1Section 1 . 601.31 (1) (nw) of the statutes is created to read:
AB554,2,42 601.31 (1) (nw) For issuing or renewing a license to a pharmacy services
3administrative organization under s. 632.864, an amount to be set by the
4commissioner by rule.
AB554,2 5Section 2. 632.864 of the statutes is created to read:
AB554,2,7 6632.864 Pharmacy services administrative organizations. (1)
7Definitions. In this section:
AB554,2,88 (a) “Administrative service” means any of the following:
AB554,2,99 1. Assisting with claims.
AB554,2,1010 2. Assisting with audits.
AB554,2,1111 3. Providing centralized payment.
AB554,2,1212 4. Performing certification in a specialized care program.
AB554,2,1313 5. Providing compliance support.
AB554,2,1414 6. Setting flat fees for generic drugs.
AB554,2,1515 7. Assisting with store layout.
AB554,3,1
18. Managing inventory.
AB554,3,22 9. Providing marketing support.
AB554,3,33 10. Providing management and analysis of payment and drug dispensing data.
AB554,3,44 11. Providing resources for retail cash cards.
AB554,3,75 (b) “Independent pharmacy" means a pharmacy operating in this state that is
6licensed under s. 450.06 or 450.065 and is under common ownership with no more
7than 2 other pharmacies.
AB554,3,88 (c) “Pharmacy benefit manager” has the meaning given in s. 632.865 (1) (c).
AB554,3,109 (d) “Pharmacy services administrative organization” means an entity
10operating in this state that does all of the following:
AB554,3,1211 1. Contracts with an independent pharmacy to conduct business on the
12pharmacy's behalf with a 3rd-party payer.
AB554,3,1513 2. Provides at least one administrative service to an independent pharmacy
14and negotiates and enters into a contract with a 3rd-party payer or pharmacy benefit
15manager on behalf of the pharmacy.
AB554,3,1816 (e) “Third-party payer” means an entity, including a plan sponsor, health
17maintenance organization, or insurer, operating in this state that pays or insures
18health, medical, or prescription drug expenses on behalf of beneficiaries.
AB554,3,23 19(2) Licensure. (a) A person may not operate as a pharmacy services
20administrative organization in this state without a pharmacy services
21administrative organization license. In order to obtain a license, a person shall apply
22to the commissioner in the form and manner prescribed by the commissioner. The
23application shall include all of the following:
AB554,3,2524 1. The name, address, telephone number, and federal employer identification
25number of the applicant.
AB554,4,2
12. The name, business address, and telephone number of a contact person for
2the applicant.
AB554,4,33 3. The fee under s. 601.31 (1) (nw).
AB554,4,44 4. Evidence of financial responsibility of at least $1,000,000.
AB554,4,55 5. Any other information required by the commissioner.
AB554,4,76 (b) The term of a license issued under par. (a) shall be 2 years from the date of
7issuance.
AB554,4,11 8(3) Disclosure to the commissioner. (a) A pharmacy services administrative
9organization shall disclose to the commissioner the extent of any ownership or
10control of the pharmacy services administrative organization by an entity that does
11any of the following:
AB554,4,1212 1. Provides pharmacy services.
AB554,4,1313 2. Provides prescription drug or device services.
AB554,4,1514 3. Manufactures, sells, or distributes prescription drugs, biologicals, or medical
15devices.
AB554,4,1816 (b) A pharmacy services administrative organization shall notify the
17commissioner in writing within 5 days of any material change in its ownership or
18control relating to an entity described in par. (a).
AB554,4,19 19(4) Rules. The commissioner may promulgate rules to implement this section.
AB554,4,2020 (End)
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