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{As Amended by Senate Committee of the Whole}
As Amended by Senate Committee
Session of 2026
SENATE BILL No. 360
By Committee on Financial Institutions and Insurance
1-22
AN ACT concerning insurance; enacting the Kansas consumer prescription
protection and accountability act; providing for the regulation of
pharmacy benefits managers; requiring the registration of auditing
entities; establishing procedures and requirements for the conduct of
pharmacy audits, pharmacy benefits manager reporting and
examinations; amending K.S.A. 40-222 and 40-3831 and K.S.A. 2025
Supp. 40-202, 40-3821, 40-3822, 40-3823, 40-3824, 40-3825, 40-3826,
40-3827 and 40-3828a and repealing the existing sections; also
repealing K.S.A. 40-3828, 65-16,121, 65-16,122, 65-16,123, 65-
16,124, 65-16,125 and 65-16,126 and K.S.A. 2025 Supp. 40-3829 and
40-3830.
Be it enacted by the Legislature of the State of Kansas:
New Section 1. (a) An auditing entity conducting a pharmacy audit
under this act shall:
(1) Keep information collected during a pharmacy audit confidential,
except that such auditing entity may share the information with the
pharmacy benefits manager, the covered entity for which the audit is being
conducted and any regulatory agency and law enforcement agency as
required by law;
(2) provide the pharmacy being audited with at least 14 calendar days'
prior written notice before conducting such audit unless both parties agree
otherwise. If the pharmacy requests a delay of the audit, such pharmacy
shall provide notice to the pharmacy benefits manager within 72 hours of
receiving notice of the audit;
(3) accept paper or electronic signature logs documenting the delivery
of prescription or nonproprietary drugs and pharmacist services to a health
plan beneficiary or such beneficiary's caregiver or guardian;
(4) provide a complete list of reviewed pharmacy records to an
authorized representative of the pharmacy prior to leaving the pharmacy
after the on-site portion of the audit has been completed;
(5) (A) provide the pharmacy with a written preliminary report of the
pharmacy audit. Such report shall:
(i) Be delivered to the pharmacy or the pharmacy's corporate parent
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within 60 calendar days after completion of the on-site portion of the
pharmacy audit;
(ii) include contact information for the auditing entity that conducted
the pharmacy audit and an appropriate and accessible contact person,
including such person's telephone number, facsimile number, email
address and the auditing entity name and address so that audit results,
procedures and any discrepancies can be reviewed; and
(iii) include, but not be limited to, claim level information for any
discrepancy found and total dollar amounts of claims subject to recovery;
and
(B) a pharmacy shall have at least 30 calendar days following receipt
of the preliminary audit report to respond to the findings of the preliminary
report;
(6) deliver the final written report to the pharmacy or the pharmacy's
corporate parent within 90 calendar days after completion of the pharmacy
audit. Such report shall include any response provided to the auditing
entity by the pharmacy or corporate parent and consider and address all
such responses. The final audit report may be delivered electronically; and
(7) upon request of the plan sponsor, provide a copy of the final
report to the plan sponsor, including the disclosure of any money recouped
in the audit. The auditing entity shall provide a copy of the report to the
commissioner upon request. { No report provided to the commissioner
shall contain the protected health information of any individual.}
Reports provided to the commissioner shall be confidential by law, shall
not be subject to subpoena and may not be made public by the
commissioner or any other person, except to the extent otherwise
specifically provided in the Kansas open records act, K.S.A. 45-215 et
seq., and amendments thereto.
(b) An auditing entity conducting a pharmacy audit as provided in
this act may:
(1) Have access to a pharmacy's previous audit report only if the
report was prepared by that auditing entity, except as otherwise provided
by federal or state law; and
(2) not charge back, recoup or collect penalties from a pharmacy until
the time to file an appeal of a final pharmacy audit has passed or the
appeals process has been exhausted, whichever is later.
(c) An auditing entity conducting a pharmacy audit as provided in
this act shall not:
(1) Compensate such entity's employees or contractors contracted to
conduct a pharmacy audit based solely on the amount claimed or the actual
amount recouped during such audit;
(2) during the first five days of any month, initiate or schedule a
pharmacy audit for any pharmacy averaging more than 600 prescriptions
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filled per week without the express consent of the pharmacy;
(3) use extrapolation to calculate penalties or amounts to be charged
back or recouped unless otherwise required by federal law;
(4) include dispensing fees in the calculation of overpayments unless
a prescription is considered a misfill; and
(5) (A) seek any fine, charge back, recoupment or other adjustment
for a dispensed product or any portion of a dispensed product unless one or
more of the following has occurred:
(i) Fraud or other intentional and willful misrepresentation has been
committed by the pharmacy, as evidenced by a review of the claims data,
statements, physical review or other investigative method;
(ii) the pharmacy has dispensed a product in excess of the benefit
design as established by the plan sponsor;
(iii) the pharmacy has not filled prescriptions in accordance with the
prescriber's order; or
(iv) an actual underpayment or overpayment has been made to the
pharmacy; and
(B) any fee, charge back, recoupment or other adjustment shall be
limited to the actual financial harm associated with the dispensed product
or portion of the dispensed product or the actual underpayment or
overpayment, pursuant to subparagraph (A).
(d) A pharmacy audit that involves clinical judgment shall be
conducted by or in consultation with a pharmacist. Such pharmacy audit
shall not cover:
(1) A period of more than 24 months after the date that a claim was
submitted by the pharmacy to the pharmacy benefits manager or covered
entity unless a longer period is required by law; or
(2) more than 250 prescriptions. A refill does not constitute a separate
prescription for the purposes of this paragraph.
(e) When a pharmacy audit is performed, a pharmacy may use:
(1) Authentic and verifiable statements or records, including, but not
limited to, medication administration records of a nursing home, assisted
living facility, hospital or healthcare provider with prescriptive authority to
validate the pharmacy record and delivery; or
(2) any valid prescription, including, but not limited to, medication
administration records, facsimiles, electronic prescriptions, electronically
stored images of prescriptions, electronically created annotations or
documentation of telephone calls from the prescribing healthcare provider
or practitioner's agent to validate claims in connection with prescriptions
or changes in prescriptions or refills of prescription or nonproprietary
drugs. Documentation of an oral prescription order that has been verified
by the prescribing healthcare provider shall be deemed to meet the
provisions of this subsection for the initial audit review.
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(f) A pharmacy that is the subject of a pharmacy audit may not be
subject to a charge back or recoupment for a clerical or recordkeeping
error in a required document or record, including a typographical or
computer error, unless the error resulted in overpayment to the pharmacy.
Such pharmacy may appeal a final audit report in accordance with
procedures established by the entity conducting the pharmacy audit.
(g) If an identified discrepancy in a pharmacy audit exceeds $25,000,
future payments made by the pharmacy benefits manager to the pharmacy
in excess of such amount may be withheld pending adjudication of an
appeal.
(h) No interest may accrue for any party during an audit period,
beginning with the notice of the pharmacy audit and ending with the
conclusion of the appeals process.
(i) Except for medicare claims, approval of drug, prescriber or patient
eligibility upon adjudication of a claim may not be reversed unless the
pharmacy or pharmacist obtained adjudication by fraud or
misrepresentation of claims elements.
(j) The provisions of this section shall not apply to a pharmacy audit
if:
(1) Fraud, waste, abuse or other intentional misconduct is indicated
by physical review or review of claims data or statements; or
(2) other investigative methods indicate that the pharmacy is or has
been engaged in criminal wrongdoing, fraud or other intentional or willful
misrepresentation.
(k) This section shall be a part of and supplemental to the Kansas
consumer prescription protection and accountability act.
New Sec. 2. (a) No person shall act or operate as an auditing entity
without first registering with the commissioner.
(b) Each person seeking to register as an auditing entity shall file
with the commissioner an application upon a form prescribed by the
commissioner accompanied by a nonrefundable registration fee in an
amount of not to exceed $500. At a minimum, the application form shall
include the following:
(1) Identity, address and telephone number of the applicant;
(2) name, business address and telephone number of the contact
person for the applicant; and
(3) federal employer identification number for the applicant, if
applicable.
(c) The commissioner shall issue a certificate of registration to an
applicant if the commissioner determines that the applicant has submitted
a completed application and paid the required registration fee.
(d) The certificate of registration is nontransferable and shall
prominently list the expiration date of the registration.
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(e) Each auditing entity registration shall expire on March 31 of each
year and may be renewed annually at the request of the pharmacy auditing
entity on or before March 31 of each year. The application for renewal
shall be submitted by the auditing entity on a form prescribed by the
commissioner and accompanied by a renewal fee in an amount of not to
exceed $250.
(f) If a registered auditing entity fails to provide a completed
application for renewal by March 31 or if the renewal fee is not paid by
March 31, then a penalty fee shall be assessed in an amount of not to
exceed $250. The auditing entity shall remit the renewal fee plus penalty
fee before the commissioner shall issue such auditing entity's registration
renewal.
(g) An auditing entity's registration may be suspended by the
commissioner until the renewal application has been received and the
renewal fee and any penalty assessed has been paid.
(h) Not later than December 1 of each year, the commissioner shall
set and cause to be published in the Kansas register the fees required
pursuant to this section for the next calendar year.
(i) This section shall be a part of and supplemental to the Kansas
consumer prescription protection and accountability act.
New Sec. 3. (a) Each pharmacy benefits manager shall:
(1) For each health plan or covered entity for which such pharmacy
benefits manager provides pharmacy benefits management services,
annually or more frequently upon the commissioner's request, report to the
commissioner the aggregate:
(A) Amount of rebates received by the pharmacy benefits manager;
(B) amount of rebates distributed to each health plan or covered
entity contracted with the pharmacy benefits manager;
(C) amount of rebates passed on to the enrollees of each health plan
or covered entity at the point-of-sale that reduced such enrollees'
applicable deductibles, copayments, coinsurance or other cost-sharing
amounts;
(D) and individual amount paid by the health plan or covered entity to
the pharmacy benefits manager for pharmacist services itemized by
pharmacy, product and goods and services; and
(E)(D) and individual amount that a pharmacy benefits manager paid
for pharmacist services itemized by pharmacy, product and goods and
services;
(2) annually, report to the commissioner and each contracted health
plan or covered entity the aggregate difference between the amount that
the pharmacy benefits manager reimbursed pharmacies and the amount
that the pharmacy benefits manager charged such health plan; and
(3) (A) quarterly, report to the commissioner on all drugs appearing
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on the national average drug acquisition cost list that are reimbursed at
10% and below the national average drug acquisition cost and all drugs
that are reimbursed at 10% and above the national average drug
acquisition cost.
(B) For each drug in the report, the pharmacy benefits manager shall
include:
(i) The month that the drug was dispensed;
(ii) the quantity of the drug dispensed;
(iii) the amount that the pharmacy was reimbursed;
(iv) whether the dispensing pharmacy was an affiliate of the
pharmacy benefits manager;
(v) whether the drug was dispensed pursuant to a government health
plan; and
(vi) the average national drug acquisition cost for the month that the
drug was dispensed.
(C) The pharmacy benefits manager shall publish a copy of this
report on the pharmacy benefits manager's publicly available website for at
least 24 months.
(D) This report shall be exempt from the confidentiality provisions of
subsection (d).
(b) (1) Annually, each health benefit plan or covered entity shall:
(A) Report to the commissioner the aggregate amount of credits,
rebates, discounts or other such payments received by the health benefit
plan or covered entity from a pharmacy benefits manager or drug
manufacturer; and
(B) disclose to the commissioner the extent to which such credits,
rebates, discounts or other such payments were passed on to reduce
insurance premiums or rates.
(2) The commissioner shall consider the information in such report
when reviewing any premium rates charged for any individual or group
accident and health insurance policy as provided in K.S.A. 40-2215 and
40-3209, and amendments thereto{Use of annual reporting provided
pursuant to this subsection by health benefit plans and covered entities
shall be limited to verification of data pursuant to this subsection for
compliance purposes}.
(c) {No report provided to the commissioner shall include the
protected health information of any individual.
(d) }The reports required by this section shall be filed electronically
on a form and in a manner prescribed by the commissioner.
(d){(e)} With the exception of the report described in subsection (a)
(3), all data and information provided by the pharmacy benefits manager,
health plan or covered entity, pursuant to the reporting requirements
established by this section, shall:
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(1) Be considered proprietary and confidential; and
(2) not be subject to disclosure under the Kansas open records act,
K.S.A. 45-215 et seq., and amendments thereto.
(e){(f)} This section shall be a part of and supplemental to the Kansas
consumer prescription protection and accountability act.
New Sec. 4. (a) The commissioner may examine the affairs of a
pharmacy benefits manager for compliance with the requirements of this
act.
(b) Every examination conducted under this section shall follow the
examination procedures and requirements provided in K.S.A. 40-222, and
amendments thereto. The commissioner may assess the costs of the
examination to the pharmacy benefits manager.
(c) (1) A pharmacy benefits manager shall not be subject to the
provisions of K.S.A. 40-222(a), and amendments thereto, pertaining to the
frequency of financial examinations of insurers.
(2) The commissioner may examine a pharmacy benefits manager,
pursuant to this section, whenever the commissioner believes it is
reasonably necessary to ensure compliance with this act.
(d) {(1) No protected health information shall be provided to the
commissioner pursuant to this section.
(2) }The information and data obtained by the commissioner from a
pharmacy benefits manager under this section shall be considered
confidential by law and exempt from disclosure in accordance with K.S.A.
40-222, and amendments thereto, and shall not be subject to disclosure
under the Kansas open records act, K.S.A. 45-215 et seq., and amendments
thereto.
(e) This section shall be a part of and supplemental to the Kansas
consumer prescription protection and accountability act.
New Sec. 5. (a) A pharmacy benefits manager shall not:
(1) Collect from a pharmacy, pharmacist or pharmacy technician any
cost share charged to a covered person that exceeds the total submitted
charges by the pharmacy or pharmacist to the pharmacy benefits manager;
(2) (A) reimburse a pharmacy, pharmacist or pharmacy technician for
a prescription drug or pharmacy service any amount that is less than the
national average drug acquisition cost for the prescription drug or
pharmacy service at the time that the drug is administered or dispensed,
plus a professional dispensing fee that is the greater of $10.50 or the
dispensing fee calculated pursuant to K.A.R. 30-5-94; or
(B) if the national average drug acquisition cost is not available at the
time that a drug is administered or dispensed, a pharmacy benefits
manager shall not reimburse a pharmacy, pharmacist or pharmacy
technician an amount that is less than the wholesale acquisition cost of the
drug as defined in 42 U.S.C. § 1395w-3a(c)(6)(B) plus a professional
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dispensing that is the greater of $10.50 or the dispensing fee calculated
pursuant to K.A.R. 30-5-94;
(3) reimburse a pharmacy or pharmacist for a prescription drug or
pharmacy service any amount less than the amount that the pharmacy
benefits manager would reimburse itself or an affiliate for the same
prescription drug or pharmacy service; and
(4) not engage in any practice that:
(A) Includes imposing a point-of-sale fee or retroactive fee; or
(B) derives any revenue from a pharmacy or covered person in
connection with performing pharmacy benefits management services. The
provisions of this section shall not be construed to prohibit pharmacy
benefits managers from processing deductibles or copayments approved
by a covered person's health benefit plan.
(b) A pharmacy benefits manager shall:
(1) Charge a health benefit plan the same price for a prescription drug
as such pharmacy benefits manager pays a pharmacy for the prescription
drug; and
(2) for purposes of complying with the provisions of subsection (a)
(2), utilize the most recently published monthly national average drug
acquisition cost as a point of reference for the ingredient drug product
component of a pharmacy's reimbursement for drugs appearing on the
national average drug acquisition cost list.
(c) (1) Any methodology utilized by a pharmacy benefits manager in
connection with reimbursement shall be filed with the commissioner at the
time of initial licensure and at any time thereafter that any methodology is
changed by the pharmacy benefits manager.
(2) A methodology shall not be subject to disclosure and shall be
treated as confidential and exempt from disclosure under the Kansas open
records act, K.S.A. 45-215 et seq., and amendments thereto.
(3) Every filed methodology shall comply with the provisions of
subsection (a)(2), and no pharmacy benefits manager shall enter into a
contract with a pharmacy that provides for reimbursement methodology
that is impermissible under the provisions of subsection (a)(2).
(d) (1) A covered individual's defined cost sharing for each
prescription drug shall be calculated at the point of sale based on a price
that is reduced by an amount equal to at least 100% of all rebates received
or to be received in connection with the dispensing or administration of the
prescription drug.
(2) Any rebate greater than the not applied to reduce a covered
individual's defined cost sharing by the insurer shall be passed on to the
health plan to reduce premiums . Nothing in this act shall be deemed to
require or preclude an insurer from decreasing a covered person's
individual's defined cost sharing by an amount greater than what is
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previously stated the application of rebates.
(e) The provisions of this section shall not apply to self-funded
health plans subject to the provisions of ERISA, the federal employee
retirement income security act of 1974.
(f) The commissioner may order reimbursement to an insured a
covered person, pharmacy or dispenser who has incurred a monetary loss
as a result of a violation of this act.
(f)(g) This section shall be a part of and supplemental to the Kansas
consumer prescription protection and accountability act.
New Sec. 6. (a) If any provision of this act or application thereof to
any person or circumstance is held invalid, such invalidity shall not affect
other provisions or applications of this act that can be given effect without
the invalid provision or application, and to this end the provisions of this
act are declared to be severable.
(b) This section shall be a part of and supplemental to the Kansas
consumer prescription protection and accountability act.
Sec. 7. K.S.A. 2025 Supp. 40-202 is hereby amended to read as
follows: 40-202. Except as provided in the Kansas consumer prescription
protection and accountability act, nothing contained in this code shall
apply to:
(a) Grand or subordinate lodges of any fraternal benefit society that
admits to membership only persons engaged in one or more hazardous
occupations in the same or similar line of business or to fraternal benefit
societies as defined in and organized under article 7 of chapter 40 of the
Kansas Statutes Annotated, and amendments thereto, unless they be
expressly designated;
(b) the employees of a particular person, firm, or corporation;
(c) mercantile associations that simply guarantee insurance to each
other in the same lines of trade and do not solicit insurance from the
general public;
(d) the Swedish mutual aid association of Rapp, Osage county,
Kansas;
(e) the Scandia mutual protective insurance company of Chanute,
Kansas;
(f) the Seneca and St. Benedict mutual fire insurance company of
Nemaha county, Kansas;
(g) the mutual insurance system practiced in the Mennonite church, in
accordance with an old custom, either by the congregation themselves or
by special associations, of its members in Kansas;
(h) the Kansas state high-school activities association;
(i) the mutual aid association of the church of the brethren;
(j) a voluntary noncontractual mutual aid arrangement whereby the
needs of participants are announced and accommodated through
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subscriptions to a monthly publication;
(k) a self-funded health plan established or maintained for its
employees by the state or a subdivision of the state, a school district, any
public authority or by a county or city government or any political
subdivision, agency or instrumentality thereof; or
(l) a self-funded health plan established or maintained for its
employees by a church or by a convention or association of churches that
is exempt from tax under section 501 of the internal revenue code.
Sec. 8. K.S.A. 40-222 is hereby amended to read as follows: 40-222.
(a) Whenever the commissioner of insurance deems it necessary but at
least once every five years, the commissioner may make, or direct to be
made, a financial examination of any insurance company in the process of
organization, or applying for admission or doing business in this state. In
addition, at the commissioner's discretion the commissioner may make, or
direct to be made, a market regulation examination of any insurance
company doing business in this state.
(b) Whenever the commissioner deems it necessary, the commissioner
may make or direct to be made a financial examination or market
regulation examination of any pharmacy benefits manager that conducts
business in Kansas.
(c) In scheduling and determining the nature, scope and frequency of
examinations of financial condition, the commissioner shall consider such
matters as the results of financial statement analyses and ratios, changes in
management or ownership, actuarial opinions, reports of independent
certified public accountants and other criteria as set forth in the examiner's
handbook adopted by the national association of insurance commissioners
and in effect at the time of such examination as announced by the
commissioner pursuant to K.S.A. 40-2,256, and amendments thereto, when
the commissioner exercises discretion under this subsection.
(c)(d) For the purpose of such examination examinations , the
commissioner of insurance or the persons appointed by the commissioner,
for the purpose of making such examination shall have free unrestricted
access to the books and papers of any such insurance company or
pharmacy benefits manager that relate relates to its such insurance
company's or pharmacy benefits manager's business and to the books and
papers kept by any of its agents and may examine under oath, which the
commissioner or the persons appointed by the commissioner are
empowered to administer, the directors, officers, agents or employees of
any such insurance company or pharmacy benefits manager in relation to
its such insurance company's or pharmacy benefits manager's affairs,
transactions and condition.
(d)(e) The commissioner may also examine or investigate any person,
or the business of any person, in so far as such examination or
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investigation is, in the sole discretion of the commissioner, necessary or
material to the examination of the insurance company or pharmacy
benefits manager, but such examination or investigation shall not infringe
upon or extend to any communications or information accorded privileged
or confidential status under any other laws of this state.
(e)(f) In lieu of examining the financial condition of a foreign or alien
insurance company or pharmacy benefits manager , the commissioner of
insurance may accept the report of the an examination made by or upon
the authority of the company's state of domicile or port-of-entry state until
January 1, 1994. Thereafter, such reports as they relate to financial
condition may only be accepted if:
(1) At the time of the examination, the insurance department
conducting the examination was at the time of the examination accredited
under the national association of insurance commissioners' financial
regulation standards and accreditation program; or
(2) the examination is was performed under the supervision of an
accredited insurance department, or with the participation of one or more
examiners who are employed by such an accredited insurance department
and who, after a review of the examination work papers and report , state
under oath that the examination was performed in a manner consistent
with the standards and procedures required by their such insurance
company's insurance department.
(f)(g) Upon determining that an examination should be conducted, the
commissioner or the commissioner's designee shall appoint one or more
examiners to perform the examination and instruct them such examiner as
to the scope of the examination. In conducting an examination of financial
condition, the examiner shall observe those guidelines and procedures set
forth in the version of the examiners' handbook adopted promulgated by
the national association of insurance commissioners in effect at the time of
such examination as announced by the commissioner pursuant to K.S.A.
40-2,256, and amendments thereto . The commissioner may also employ
such other guidelines or procedures as the commissioner may deem
appropriate.
(g)(h) The refusal of any insurance company or pharmacy benefits
manager, by its officers, directors, employees or agents, to submit to
examination or to comply with any reasonable written request of the
examiners shall be grounds for suspension or refusal of, or nonrenewal of
any license or authority held by the company to engage in an insurance or
other business subject to the commissioner's jurisdiction. Any such
proceedings for suspension, revocation or refusal of any license or
authority shall be conducted in accordance with the provisions of the
Kansas administrative procedure act.
(h)(i) When making an examination under this act, the commissioner
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may retain attorneys, appraisers, independent actuaries, independent
certified public accountants or other professionals and specialists as
examiners, the reasonable cost of which shall be borne by the insurance
company which or pharmacy benefits manager that is the subject of the
examination.
(i)(j) Nothing contained in this act shall be construed to limit the
commissioner's authority to:
(1) Terminate or suspend any examination in order to pursue other
legal or regulatory action pursuant to the insurance laws of this state.; or
(j) Nothing contained in this act shall be construed to limit the
commissioner's authority
(2) to use and, if appropriate, to make public any final or preliminary
examination report in the furtherance of any legal or regulatory action
which the commissioner may, in the commissioner's sole discretion, deem
appropriate.
(k) (1) No later than 30 days following completion of the examination
or at such earlier time as the commissioner shall prescribe, the examiner in
charge shall file with the department a verified written report of
examination under oath. No later than 30 days following receipt of the
verified report, the department shall transmit the report to the insurance
company or pharmacy benefits manager examined, together with a notice
which shall afford such insurance company or pharmacy benefits
manager examined a reasonable opportunity of not more than 30 days to
make a written submission or rebuttal with respect to any matters
contained in the examination report.
(2) Within 30 days of the end of the period allowed for the receipt of
written submissions or rebuttals, the commissioner shall fully consider and
review the report, together with any written submissions or rebuttals and
any relevant portions of the examiners workpapers and enter an order:
(A) Adopting the examination report as filed or with modification or
corrections. If the examination report reveals that the insurance company
or pharmacy benefits manager is operating in violation of any law,
regulation or prior order of the commissioner, the commissioner may order
the insurance company or pharmacy benefits manager to take any action
the commissioner considers necessary and appropriate to cure such
violations; or
(B) rejecting the examination report with directions to the examiners
to reopen the examination for purposes of obtaining additional data,
documentation or information, and refiling pursuant to subsection (k); or
(C) call and conduct a fact-finding hearing in accordance with K.S.A.
40-281, and amendments thereto, for purposes of obtaining additional
documentation, data, information and testimony.
(3) All orders entered as a result of revelations contained in the
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examination report shall be accompanied by findings and conclusions
resulting from the commissioner's consideration and review of the
examination report, relevant examiner workpapers and any written
submissions or rebuttals. Within 30 days of the issuance of the adopted
report, the insurance company or pharmacy benefits manager shall file
affidavits executed by each of its directors stating under oath that they
have received a copy of the adopted report and related orders.
(4) Upon the adoption of the examination report, the commissioner
shall hold the content of the examination report as private and confidential
information for a period of 30 days except to the extent provided in
paragraph (5). Thereafter, the commissioner may open the report for public
inspection so long as no court of competent jurisdiction has stayed its
publication.
(5) (A) Except as provided in paragraph (B), nothing contained in this
act shall prevent or be construed as prohibiting the commissioner from
disclosing the content of an examination report, preliminary examination
report or results, or any matter relating thereto, at any time to:
(i) The insurance department of this or any other state or country;
(ii) law enforcement officials of this or any other state or agency of
the federal government or any other country; or
(iii) officials of any agency of another country.
(B) The commissioner shall not share any information listed in
paragraph (A) unless the agency or office receiving the report or matters
relating thereto agrees in writing to hold it confidential and in a manner
consistent with this act.
(6) In the event the commissioner determines that regulatory action is
appropriate as a result of any examination, the commissioner may initiate
any proceedings or actions as provided by law.
(7) All working papers, recorded information, documents and copies
thereof produced by, obtained by or disclosed to the commissioner or any
other person in the course of an examination made under this act including
analysis by the commissioner pertaining to either the financial condition or
the market regulation of a an insurance company or pharmacy benefits
manager must be given confidential treatment and are not subject to
subpoena and may not be made public by the commissioner or any other
person, except to the extent otherwise specifically provided in K.S.A. 45-
215 et seq., and amendments thereto. Access may also be granted to the
national association of insurance commissioners and its affiliates. Such
parties must agree in writing prior to receiving the information to provide
to it the same confidential treatment as required by this section, unless the
prior written consent of the insurance company or pharmacy benefits
manager to which it pertains has been obtained.
(8) Whenever it appears to the commissioner of insurance from such
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examination or other satisfactory evidence that the solvency of any such
insurance company is impaired, or that it is doing business in violation of
any of the laws of this state, or that its affairs are in an unsound condition
so as to endanger its policyholders, the commissioner of insurance shall
give the company a notice and an opportunity for a hearing in accordance
with the provisions of the Kansas administrative procedure act. If the
hearing confirms the report of the examination, the commissioner shall
suspend the certificate of authority of such company until its solvency
shall have been fully restored and the laws of the state fully complied with.
The commissioner may, if there is an unreasonable delay in restoring the
solvency of such company and in complying with the law, revoke the
certificate of authority of such company to do business in this state. Upon
revoking any such certificate the commissioner shall commence an action
to dissolve such company or to enjoin the same from doing or transacting
business in this state.
Sec. 9. K.S.A. 2025 Supp. 40-3821 is hereby amended to read as
follows: 40-3821. (a) K.S.A. 40-3821 through 40-3828, and amendments
thereto, and K.S.A. 2025 Supp. 40-3828a et seq., and amendments thereto,
shall be known and may be cited as the pharmacy benefits manager
licensure Kansas consumer prescription protection and accountability act.
(b) On and after January 1, 2023, a No person shall not perform, act
or do business in this state as a pharmacy benefits manager unless such
person has a valid license issued by the commissioner pursuant to this act.
(c) This act shall apply to any pharmacy benefits manager that
provides claims processing services, other prescription drug or device
services, or both, to covered persons who are residents of this state.
(d) This act shall not apply to any pharmacy benefits manager that
holds a certificate of registration as an administrator pursuant to K.S.A.
40-3810, and amendments thereto This act shall also apply to any audit of
the records of a pharmacy conducted by a managed care company, third-
party payer, pharmacy benefits manager or any entity that represents a
covered entity or health benefit plan and the registration of auditing
entities.
(e) A license issued in accordance with the pharmacy benefits
manager licensure Kansas consumer prescription protection and
accountability act shall be nontransferrable.
Sec. 10. K.S.A. 2025 Supp. 40-3822 is hereby amended to read as
follows: 40-3822. As used in this act:
(a) "Act" means the pharmacy benefits manager licensure Kansas
consumer prescription protection and accountability act.
(b) "Affiliate" means a pharmacy, pharmacist or pharmacy
technician which, either directly or indirectly through one or more
intermediaries:
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(1) Has an investment or ownership interest in a pharmacy benefits
manager licensed under this chapter;
(2) shares common ownership with a pharmacy benefits manager
licensed under this chapter; or
(3) has an investor or ownership interest holder that is a pharmacy
benefits manager licensed under this article.
(c) "Auditing entity" means a person that performs a pharmacy audit,
including a pharmacy benefits manager, managed care organization or
third-party payer.
(b)(d) "Commissioner" means the commissioner of insurance as
defined by K.S.A. 40-102, and amendments thereto.
(c)(e) (1) "Covered entity" means:
(A) A nonprofit hospital or medical service corporation, health
insurer, health benefit plan or health maintenance organization;
(B) a health program administered by a department or the state in the
capacity of provider of health coverage; or
(C) an employer, labor union or other group of persons organized in
the state that provides health coverage to covered individuals who are
employed or reside in the state a health insurance company, health
maintenance organization, hospital, medical or dental corporation,
healthcare corporation, any entity that provides, administers or manages
a self-funded health benefit plan including a governmental plan or any
other entity that provides prescription drug coverages unless specifically
excluded in paragraph (2).
(2) "Covered entity" does not include any:
(A) Self-funded plan that is exempt from state regulation pursuant to
ERISA;
(B) plan issued for coverage for federal employees; or
(C) health plan that provides coverage only for accidental injury,
specified disease, hospital indemnity, medicare supplement, disability
income, long-term care or other limited benefit health insurance policies
and contracts insurers that provide coverage under a policy of property or
casualty insurance or workers compensation insurance.
(d)(f) "Covered person" means a member, policyholder, subscriber,
enrollee, beneficiary, dependent or other individual participating in a
health benefit plan.
(g) "Defined cost sharing" means a deductible payment, copayment
or coinsurance amount imposed on an enrollee for a covered prescription
drug under the enrollee's health plan.
(e)(h) "Department" means the insurance department Kansas
department of insurance.
(f)(i) "ERISA" means the federal employee retirement income
security act of 1974.
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(g)(j) "Health benefit plan" means the same as defined in K.S.A. 40-
4602, and amendments thereto.
(h)(k) "Health insurer" means the same as defined in K.S.A. 40-4602,
and amendments thereto.
(i) "Maximum allowable cost" or "MAC" means any term or
methodology that a pharmacy benefits manager or a healthcare insurer
may use to establish the maximum amount that a pharmacy benefits
manager will reimburse a pharmacy or a pharmacist for generic
drugs(l) "Misfill" means a prescription:
(1) That was not dispensed;
(2) error;
(3) that had a request by the pharmacy to authorize the filling of such
prescription that was denied by the prescriber; or
(4) that had an extra dispensing fee charged.
(m) "National average drug acquisition cost" means the monthly
survey of retail pharmacies conducted by the federal centers for medicare
and medicaid services to determine the average acquisition cost for
medicaid-covered outpatient drugs.
(n) "Nonproprietary drug" means a drug containing any quantity of
any controlled substance or any drug that is required by any applicable
federal or state law to be dispensed only by prescription.
(o) "Person" means an individual, partnership, corporation,
organization or other business entity.
(p) "Pharmacy audit" means an audit conducted by or on behalf of
an auditing entity of any records of a pharmacy for prescription or
nonproprietary drugs dispensed by a pharmacy to a covered person.
(j)(q) "Pharmacy benefits management" means:
(1) Any of the following services provided with regard to the
administration of the following pharmacy benefits:
(A) Mail service pharmacy;
(B) claims processing, retail network management and payment of
claims to pharmacies for prescription drugs dispensed to covered
individuals;
(C) clinical formulary development and management services;
(D) rebate contracting and administration;
(E) certain patient compliance, therapeutic intervention and generic
substitution programs; or
(F) disease management programs involving prescription drug
utilization; and
(2) (A) the procurement of prescription drugs by a prescription
benefits manager at a negotiated rate for dispensation to covered
individuals within this state; or
(B) the administration or management of prescription drug benefits
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provided by a covered insurance entity for the benefit of covered
individuals.
(k)(r) "Pharmacy benefits manager" means a person, business or
other entity that performs pharmacy benefits management. "Pharmacy
benefits manager" includes any person or entity acting in a contractual or
employment relationship for a pharmacy benefits manager in the
performance of pharmacy benefits management for a covered entity.
"Pharmacy benefits manager" does not include a covered insurance entity.
(l) "Person" means an individual, partnership, corporation,
organization or other business entity (s) "Pharmacy record" means any
record stored electronically or as a hard copy by a pharmacy relating to
the provision of prescription or nonproprietary drugs, pharmacy services
or other component of pharmacist care that is included in the practice of
pharmacy as defined in K.S.A. 65-1626a, and amendments thereto.
(t) "Pharmacy services administration organization" means any
entity that contracts with a pharmacy to assist with covered entity
interactions and that may provide a variety of other administrative
services, including contracting with pharmacy benefits managers on
behalf of pharmacies and managing pharmacies' claims payments from
covered entities.
(u) "Rebate" means any and all payments that accrue to a pharmacy
benefits manager or such pharmacy benefits manager's health plan client,
directly or indirectly, from a pharmaceutical manufacturer, including, but
not limited to, discounts, administration fees, credits, incentives or
penalties associated directly or indirectly in any way with claims
administered on behalf of a health plan client. "Rebate" does not include
any discount or payment that may be provided to or made to any 340B
entity through such program.
Sec. 11. K.S.A. 2025 Supp. 40-3823 is hereby amended to read as
follows: 40-3823. (a) No person shall act or operate as a pharmacy benefits
manager without first obtaining a valid license issued by the
commissioner.
(b) Each person seeking a license to act as a pharmacy benefits
manager shall file with the commissioner an application for a license upon
a form to be furnished by the commissioner. At a minimum, the
application form shall include the following information:
(1) The name, address and telephone number of the pharmacy
benefits manager;
(2) the name, address, official position and professional qualifications
of each individual who is responsible for the conduct of the affairs of the
pharmacy benefits manager, including all members of the board of
directors, board of trustees, executive committee, other governing board or
committee, the principal officers in the case of a corporation, the partners
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or members in the case of a partnership or association;
(3) the name and address of the applicant's agent for service of
process in the state;
(4) the name, address, phone number, email address and official
position of the employee who will serve as the primary contact for the
department;
(5) a copy of the pharmacy benefits manager's corporate charter,
articles of incorporation or other charter document;
(6) a any template contract including a dispute resolution process,
that ultimately involves an independent fact finder between:
(A) The pharmacy benefits manager and the health insurer; or
(B) the pharmacy benefits manager and the pharmacy or a pharmacy's
contracting agent; and
(7) an affidavit, executed by an officer or director of the pharmacy
benefits manager affirming that any template contract submitted pursuant
to this subsection is the accurate and complete contract used; and
(8) a network adequacy report on a form prescribed by the
department through rules and regulations.
(c) A nonrefundable application fee in an amount of not to exceed
$2,500. Not later than December 1 of each year, the commissioner shall set
and cause to be published in the Kansas register such fee for the next
calendar year.
(d) The licensee shall inform the commissioner, by any means
acceptable to the commissioner, of any material change in the information
required by this subsection within 90 days of such change. Failure to
timely inform the commissioner of a material change may result in a
penalty against the licensee in the amount of $500 an amount of not to
exceed $2,000 per occurrence.
(e) Within 90 days after receipt of a completed application, the
network adequacy report and the applicable license fee, the commissioner
shall review the application and issue a license if the applicant is deemed
qualified under this section. If the commissioner determines that the
applicant is not qualified, the commissioner shall notify the applicant and
shall specify the reason for the denial.
(f) (1) All documents, materials or other information and copies
thereof in the possession or control of the department or any other
governmental entity that are obtained by or disclosed to the commissioner
or any other person in the course of an application, examination or
investigation made pursuant to this act shall be confidential by law and
privileged, shall not be subject to any open records, freedom of
information, sunshine or other public record disclosure laws and shall not
be subject to subpoena or discovery.
(2) The provisions of paragraph (1) shall only apply to the disclosure
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of the confidential documents described in paragraph (1) by the
department or any other governmental entity and shall not be construed to
create any privilege in favor of any other party.
(3) The provisions of this subsection shall expire on July 1, 2027,
unless the legislature reviews and reenacts this provision pursuant to
K.S.A. 45-229, and amendments thereto, prior to July 1, 2027.
Sec. 12. K.S.A. 2025 Supp. 40-3824 is hereby amended to read as
follows: 40-3824. (a) Each pharmacy benefits manager license shall expire
on March 31 of each year and may be renewed annually on the request of
the licensee. The application for renewal shall be submitted on a form
furnished by the commissioner and accompanied by a renewal fee of not to
exceed $2,500. The application for renewal shall be in such form and
contain such matters as the commissioner prescribes.
(b) (1) Within 90 days after receipt of a completed renewal
application, the commissioner shall review the application and any
relevant information received pursuant to the provisions of this act,
including quarterly and annual reports. If the commissioner determines
the application is incomplete or the pharmacy benefits manager is not in
compliance with the act, the commissioner shall notify the applicant and
shall specify the reason for the denial of the renewal application.
(2) If a registered auditing entity fails to provide a completed
application for renewal by March 31, or if the license renewal fee is not
paid by March 31, then a penalty fee shall be assessed in an amount of not
to exceed $250. The auditing entity shall remit the renewal fee plus the
penalty fee before the commissioner issues such auditing entity's
registration renewal.
(c) If a pharmacy benefits manager fails to provide a completed
application for renewal by March 31, or if a license renewal fee is not paid
by the prescribed date March 31, then the amount of the fee, plus a penalty
fee shall be assessed in an amount of not to exceed $2,500 shall be paid.
The pharmacy benefits manager's license may be revoked or suspended by
the commissioner until the renewal fee and any penalty assessed has been
paid.
(c) Any person who performs or is performing any pharmacy benefits
management service shall be required to obtain a license as a pharmacy
benefits manager from the commissioner not later than January 1, 2023, in
order to continue to do business in Kansas. The pharmacy benefits
manager shall remit the renewal fee plus the penalty fee before the
commissioner issues such pharmacy benefits manager's license renewal.
(d) The pharmacy benefits manager's license may be revoked or
suspended by the commissioner until the renewal fee and any penalty
assessed has been paid.
(d)(e) Not later than December 1 of each year, the commissioner shall
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set and cause to be published in the Kansas register the fees required
pursuant to this section for the next calendar year.
Sec. 13. K.S.A. 2025 Supp. 40-3825 is hereby amended to read as
follows: 40-3825. (a) In accordance with the provisions of the rules and
regulations filing act, K.S.A. 77-415 et seq., and amendments thereto, the
commissioner may adopt, amend and revoke rules and regulations
governing the administration and enforcement of this act, limited to:
(1)(a) The content of the application form;
(2)(b) the content of any other form or report required to implement
this act; and
(3)(c) such other rules and regulations as the commissioner may deem
necessary to carry out the provisions of this act.
(b) The commissioner shall adopt, amend and revoke all such
necessary rules and regulations not later than July 1, 2023.
Sec. 14. K.S.A. 2025 Supp. 40-3826 is hereby amended to read as
follows: 40-3826. (a) If the commissioner has reason to believe that a
pharmacy benefits manager has been engaged in this state or is engaging
in this state in activity that violates the pharmacy benefits manager
licensure Kansas consumer prescription protection and accountability act,
the commissioner shall issue and serve upon such pharmacy benefits
manager a statement of the charges of any such violation and conduct a
hearing thereon in accordance with the provisions of the Kansas
administrative procedure act.
(b) If, after such a hearing, the commissioner determines that the
pharmacy benefits manager charged has violated the act, the commissioner
may, in the exercise of discretion, order any one or more of the following:
(1) (A) Payment of a monetary penalty in an amount of not more than
to exceed $1,000 for each and every act or violation . The total of the
monetary penalties for such violations shall not exceed $10,000;
(B) if the pharmacy benefits manager knew or reasonably should
have known that such manager was in violation of this act, payment of a
monetary penalty in an amount of not more than to exceed $5,000 for each
and every act or violation . The total of the monetary penalties for such
violations shall not exceed $50,000 in any six-month period;
(2) if such manager knew or reasonably should have known such
person was in violation of this act, the suspension or revocation of the
pharmacy benefits manager's license; or
(3) the assessment of any costs incurred as a result of conducting the
administrative hearing authorized by the provisions of this section against
the pharmacy benefits manager.
(c) As used in this section, "costs" includes witness fees, mileage
allowances, any costs associated with reproduction of documents that
become a part of the hearing record and expenses of making a record of
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the hearing.
(d) (1) If the deadline for filing a petition for review has expired and
no such petition has been filed, the commissioner may reopen and modify
or set aside any portion or the entirety of any administrative order issued
under this section.
(2) The reopening of any such order may occur if, in the
commissioner's opinion, the conditions of fact or law have changed to
warrant such an action or if such an action is warranted in the public
interest.
(e) In addition to any other penalty provided by this act, any person
who acts as a pharmacy benefits manager without being licensed as
required by this act shall be subject to a fine of $5,000 not to exceed
$100,000 for the period in which the pharmacy benefits manager is found
to be in violation.
Sec. 15. K.S.A. 2025 Supp. 40-3827 is hereby amended to read as
follows: 40-3827. (a) There is hereby established in the state treasury the
pharmacy benefits manager licensure fund. Such fund shall be
administered by the commissioner for costs related to administering the
pharmacy benefits manager licensing Kansas consumer prescription
protection and accountability act. All expenditures from the pharmacy
benefits manager licensure fund shall be made in accordance with
appropriation acts upon warrants of the director of accounts and reports
issued pursuant to vouchers approved by the commissioner or by the
commissioner's designee.
(b) The commissioner shall remit all moneys received by or for the
commissioner under the provisions of this act to the state treasurer in
accordance with the provisions of K.S.A. 75-4215, and amendments
thereto. Upon receipt of each such remittance, the state treasurer shall
deposit the entire amount thereof in the state treasury and such amount
shall be credited to the pharmacy benefits manager licensure fund.
Sec. 16. K.S.A. 2025 Supp. 40-3828a is hereby amended to read as
follows: 40-3828a. (a) A pharmacy benefits manager's license may be
revoked, suspended or limited, the licensee may be censured or placed
under probationary conditions or an application for a license or for
reinstatement of a license may be denied upon a finding that the:
(1) Applicant or licensee committed fraud or misrepresentation in
applying for or securing an original, renewal or reinstated license;
(2) licensee has violated any lawful rule or regulation promulgated by
the commissioner or violated any lawful order or directive of the
commissioner previously entered by the commissioner;
(3) pharmacy benefits manager has engaged in fraudulent activity that
constitutes a violation of state or federal law;
(4) licensee has failed to furnish any information legally requested by
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the commissioner to the commissioner or the commissioner's investigators
or representatives, including information requested during an examination
pursuant to section 4, and amendments thereto;
(5) pharmacy benefits manager has been determined by the
commissioner to be in violation of or noncompliance with state or federal
law; or
(6) pharmacy benefits manager has failed to timely submit a renewal
application and the information required under K.S.A. 40-3824, and
amendments thereto. In lieu of a denial of a renewal application, the
commissioner may permit the pharmacy benefits manager to submit to the
commissioner a corrective action plan to correct or cure any deficiencies ;
or
(7) pharmacy benefits manager has failed to timely submit the
reporting required by section 3, and amendments thereto.
(b) This section shall be a part of and supplemental to the pharmacy
benefits manager licensure Kansas prescription protection and
accountability act.
Sec. 17. K.S.A. 40-3831 is hereby amended to read as follows: 40-
3831. (a) This section shall be known and may be cited as the Kansas
pharmacy patients fair practices act.
(b) As used in this section:
(1) "Covered person" means the same as defined in K.S.A. 40-3822,
and amendments thereto.
(2) "Health carrier" means the same as defined in K.S.A. 40-2,195,
and amendments thereto.
(3) "Pharmacy benefits manager" means the same as defined in
K.S.A. 40-3822, and amendments thereto.
(c) (1) Co-payments(1) Copayments applied by a health carrier for a
prescription drug may shall not exceed the total submitted charges by the
network pharmacy.
(2) A pharmacy or pharmacist shall have the right to provide a
covered person with information regarding the amount of the covered
person's cost share for a prescription drug. Neither a pharmacy nor a
pharmacist shall be proscribed by a pharmacy benefits manager from
discussing any such information or for selling a more affordable
alternative to the covered person if such an alternative is available.
(d)(b) (1) This section applies to any contract between a pharmacy
benefits manager and a pharmacy, a pharmacy services administration
organization or a group purchasing organization that is entered into or
renewed on and after January 1, 2019.
(2) The provisions of this section shall not apply to any policy or
certificate that provides coverage for any specified disease, specified
accident or accident only coverage, credit, dental, disability income,
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SB 360—Am. by SCW 23
hospital indemnity, long-term care insurance as defined by K.S.A. 40-
2227, and amendments thereto, vision care or any other limited
supplemental benefit nor to any medicare supplement policy of insurance
as defined by the commissioner of insurance by rule and regulation, any
coverage issued as a supplement to liability insurance, workers
compensation or similar insurance, automobile medical-payment insurance
or any insurance under which benefits are payable with or without regard
to fault, whether written on a group, blanket or individual basis.
Sec. 18. K.S.A. 40-222, 40-3828, 40-3831, 65-16,121, 65-16,122, 65-
16,123, 65-16,124, 65-16,125 and 65-16,126 and K.S.A. 2025 Supp. 40-
202, 40-3821, 40-3822, 40-3823, 40-3824, 40-3825, 40-3826, 40-3827,
40-3828a, 40-3829 and 40-3830 are hereby repealed.
Sec. 19. This act shall take effect and be in force from and after its
publication in the statute book.
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