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FAQs for Pharmacy Benefit Managers
Pharmacy benefit managers (PBM) must be licensed by the Department of Financial Services to operate in New York.
FAQs About the 2024 Annual Report
Are Pharmacy Benefit Managers which exclusively provide services to workers’ compensation plans required to submit the Annual Report?
Yes. A PBM which exclusively provides services to workers’ compensation plans is required to submit the Annual Report.
Various portions of the Spreadsheet require the submission of supplemental documents. How should we submit these supplemental documents?
For every Spreadsheet tab which includes a document request, you must provide a separate PDF file which adheres to the requested naming convention and page limit requirements.
Submit all requested documents from all of the tabs in a single "zipped" file and send the file through the PBM dropbox via the New York State MySend platform. To confirm that the document request is complete and included in the file submission, ensure the box directly to the right of the document request details is checked.
What if a certain document request is not applicable to the PBM?
If a document request does not apply to the PBM, you should provide a brief explanation as to why the request is not applicable.
FAQs About the Annual Report Spreadsheet
Tab 1. Revenue Information
What should be included in the Gross Revenue figure (See, Tab 1. Revenue Information of the Spreadsheet)?
The total amount of income gained from performing pharmacy benefit services on behalf of all Health Plans as defined in Tab 8. Glossary of the Spreadsheet, without deducting any expenses.
Tab 2. Health Plans
I already submitted a Health Plan list this year as part of the licensing process. Do I need to submit the same information again (See, Tab 2. Health Plans of the Spreadsheet)?
Yes. You must submit this information again and include updates, if necessary.
If a Health Plan does not have an NAIC number, what should I include in this field (See, Tab 2. Health Plans of the Spreadsheet)?
If a Health Plan does not have an associated NAIC number, you should enter “N/A” in the corresponding field for that Health Plan.
Tab 3. PBM Services
A section of the PBM Services Tab (See, Tab 3. PBM Services of the Spreadsheet) asks the PBM to submit a detailed summary of any services and associated operational activities performed by the PBM and any third-party entity for each selected service category. What if the PBM or the third-party entity only performs a portion of a certain service category selected?
You should provide an explanation of each portion of the service provided by the PBM and/or the third-party entity and include an explanation of any overlap between the services provided by the PBM and/or any third-party entities, as applicable.
Tab 6. Network Criteria
The Network Criteria tab (See, Tab 6. Network Criteria of the Spreadsheet) requests information related to pharmacies. What is the scope of the information that should be included for purposes of this tab?
This tab requires the PBM to report information related to pharmacies that service Covered Individuals of Health Plans as defined in Tab 8. Glossary of Spreadsheet.
Tab 7. Audited Financials
I have already submitted my audited financial statements as part of the licensing process. Do I need to submit these again as part of the Annual Report Submission (See, Tab 7. Audited Financials of the Spreadsheet)?
Yes. You must submit the audited financial statements as part of the Annual Report submission. Note, the audited financial statements must be on a “standalone” basis, i.e., the audited financial statements should not include assets or liabilities of any parent or affiliate companies.
FAQs About Required PBM Disclosures to Health Plans
Under Public Health Law section 280-a and Part 452 of the Department’s regulations, PBMs licensed by the Department are required to disclose information to health plans for which they perform pharmacy benefit management services (“PBM Services”).
What information must a PBM disclose?
Upon written request by any health plan, a PBM must do the following:
- Use of Funds. Demonstrate how all funds received by the PBM for PBM Services on behalf of the health plan were used as agreed to in the PBM’s contract with the health plan or, as applicable, the law.
- Full, Unredacted Third-Party Contracts. Provide full unredacted terms and conditions of any contract(s) or arrangement(s) between the PBM and any party relating to the contracted PBM Services.
- Conflicts of Interest. Disclose potential conflicts of interest, including where the PBM (or in some instances, an entity owned by or affiliated with the PBM):
- Engages in spread pricing,
- Retains a portion of manufacturer compensation,
- Has ownership interests/affiliations with pharmacies,
- Solicits or incentivizes covered individuals to use owned/affiliated pharmacies,
- Transfers prescriptions to owned/affiliated pharmacies,
- Audits pharmacies,
- Restricts the use of manufacturer copay cards or coupons,
- Shares data from a non-affiliated pharmacy with an owned/affiliated pharmacy, or
- Where the health plan reasonably views any other activity, policy, practice, contract, or arrangement of the PBM as directly or indirectly presenting a conflict of interest with the PBM's relationship with or obligation to the health plan.
When must a PBM disclose the information?
A PBM must produce the requested “Use of Funds” information within 60 days of the health plan’s request.
A PBM must disclose the “Full, Unredacted Third-Party Contracts” and “Conflicts of Interest” information within 30 days of the health plan’s request.
How often can a health plan request terms and conditions of Third-Party Contracts?
A health plan can request terms and conditions of any contract(s) or arrangement(s) once every 6 months.
What if a health plan requests disclosure of a Third-Party Contract that the PBM determines is not related to the PBM Services provided to the health plan?
The PBM may appeal to the Department within 30 days of receiving the health plan’s request. The PBM’s response to the health plan is not required until the Department makes a decision. The Department may direct the PBM to make the disclosure, make the disclosure with specific redactions, or determine that the PBM is not required to make the disclosure.
Is an entity that provides PBM services exclusively in the workers’ compensation or automobile insurance industry required to abide by the accounting and contract(s)/arrangement(s) terms and conditions disclosure requirements?
No. PBMs that provide PBM Services only for workers’ compensation and automobile insurance plans are exempted from the “Use of Funds” and “Third-Party Contract” disclosure requirements.
Is an entity that provides PBM services exclusively in the workers’ compensation or automobile insurance industry required to abide by the Conflicts of Interest disclosure requirement?
Yes. PBMs that provide PBM services only for workers’ compensation and automobile insurance plans are not exempt from this requirement and must disclose conflicts of interest.
FAQs About PBM Licensing
How do I login to the DFS Connect to submit a PBM license application?
A PBM will log in to the DFS Connect with the same username and password previously used for the DFS Portal. If you forgot your username, visit the Password Help page for assistance.
If a PBM is not licensed with the Department, you can create a new account right on the portal. For additional questions regarding use of the portal visit the Portal Help page.
Will I be able to pay the license application fee through DFS Connect?
Yes, a PBM will be able to pay the $24,000 non-refundable license application fee electronically via ACH or by credit card directly through the DFS Connect.
If a PBM is currently licensed by the Department, do I have to submit a new license application through DFS Connect?
No, a PBM that previously submitted a license application through the old system, i.e., the DFS Portal and MySend applications, and that is currently licensed in New York does not need to apply again through the new DFS Connect platform. However, a licensed PBM should login in to confirm they are able to access DFS Connect for future updates, license renewals, and other required submissions to the Department.
How do I determine whether the Department has approved a license application?
A PBM will be able to see status updates in the new system to track an application.
How will the Department communicate with me about a license application?
A PBM will receive notifications of new communications by email and can log in to view and respond to the communications. A PBM can view the status of an application by selecting ‘My Saved/Submitted Applications’. The status can also be seen when the application is open at the top of the page.
How do I obtain a copy of my issued PBM license?
A PBM can log in to view and download an issued license in PDF by selecting ‘My Licenses’.
How do I notify the Department of any changes in the information or documents required to be disclosed on the PBM’s license application?
A PBM must notify the Department within 30 days of any changes by logging in to the new DFS Connect system to submit updates.
Will I be able to complete a new application or submit updates in multiple sessions?
Yes, the license application can be completed in multiple sessions. At any time, a PBM can exit an application and resume by selecting ‘My Saved/Submitted Applications’.
How do I determine whether 50% or more of the beneficiaries of a health plan work or reside in New York?
A beneficiary of a health plan is considered a New York beneficiary (i.e., someone who works or resides in New York) for purposes of Insurance Law Article 29, Public Health Law section 280-a, and the applicable regulations promulgated thereunder, when any of the following are true:
- The health plan is issued by an insurance company that is an authorized insurer under the insurance law, a company organized pursuant to article forty-three of the insurance law, a municipal cooperative health benefit plan established pursuant to article forty-seven of the insurance law, an entity certified pursuant to article forty-four of the public health law, an institution of higher education certified pursuant to section one thousand one hundred twenty-four of the insurance law, the state insurance fund, or the New York state health insurance plan established under article eleven of the civil service law,
- The beneficiary’s primary participant of the health plan has or had access to that health plan as a result of working in New York, or
- The beneficiary resides in New York.
For purposes of calculating the total number of beneficiaries under a health plan, each primary participant of the health plan and all beneficiaries under each primary participant should be counted as beneficiaries for purposes of calculating the total number of New York and non-New York beneficiaries under the health plan.
Once you have determined which beneficiaries are considered New York beneficiaries, you can then calculate what percentage of the total beneficiaries work or reside in New York.
Is an entity that provides PBM services exclusively in the workers’ compensation industry required to obtain a license?
Yes. Workers’ compensation plans provide benefits which include payment for prescription drugs. Therefore, the broad definition of health plan in the law which includes any policy or plan that provides prescription drug coverage includes workers’ compensation plans. PBMs that provide services only for workers’ compensation plans in New York must obtain a license.
Is a PBM that provides services exclusively for self-insured plans required to obtain a license?
Yes. Self-insured plans are health plans under the statute, therefore an entity that provides PBM services to a self-insured health plan must obtain a license.
Is a PBM that provides services exclusively for Medicare Part D plans required to obtain a license?
Yes, the term “health plan” covers Medicare Part D plans.
Who can enforce the violation, penalty and damages provision of Insurance Law § 2905(b)?
The superintendent is authorized to enforce the violations, penalty, and damages provision located in § 2905(b) of the Insurance Law after notice and a hearing. This provision does not create a private cause of action.