Bulletin 1997-2

TO: All Insurance Companies Authorized to Transact Accident and Health Business in Kansas

FROM: Kathleen Sebelius,Commissioner of Insurance

SUBJECT: Pharmacy Network Notification Requirements, K.S.A. 1994 Supp. 14-2,153(a)

DATE: March 11 , 1997

It has come to this Department's attention that some insurance carriers may not be complying with K.S.A. 1994 Supp. 40-2,153 (a), by failing to notify this Department of the creation of a new pharmacy network. The purpose of this bulletin is to bring to your attention this issue and provide additional information and clarification which will assist you in complying with K.S.A. 1994 Supp. 40-2,153. All group accident and health plans issued or delivered in Kansas which provide hospital and medical benefits and/or services must comply with the requirements of K.S.A. 1994 Supp. 40-2,153. Failure to comply with these requirements may result in fines and/or other penalty provisions in accordance with Kansas law.

K.S.A. 1994 Supp. 40-2,153(a) requires insurance companies, nonprofit medical and hospital service corporations, and health maintenance organizations (except HMOs that were operating on July 1, 1994 and own and operate their own pharmacies), to provide a written notice to the Commissioner of Insurance of the intent to create a pharmacy network at least 90 days prior to the effective date of any contract for pharmacy services. The notice concerning the creation of pharmacy network should include:

These written notices should be directed to the attention of the Accident and Health Division of this Department. The Commissioner is required to see that the notice of intent is published in the Kansas Register the following week.

Please note that we construe the creation of a new pharmacy network to entail the implementation of a network on and after July 1, 1994, or the renegotiation of a contract between a pharmacy provider and a carrier. Some examples of implementation and renegotiation of pharmacy networks are as follows:

The Department will aggressively pursue violations of K.S.A. 40-2,153 by insurance carriers. Therefore, please instruct all persons involved in the administration of your group accident and health plans which provide hospital and medical benefit, and/or services of the requirements of K.S.A. 4-2,153 and the provisions of Kansas Insurance Department bulletins 1995-18 and 1997-2.

If you should have questions concerning K.S.A. 1994 Supp. 40-2,153, you may contact the Accident and Health Division of this Department at (913)296-7850. Send e-mail to rhuncker@ink.org.

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