ALC-Administrative Rules

Members, if you will. My Members, if you'll make way to your seats, we'll get started momentarily. came home this new one. So 12. Have you got any better? Yeah Hey members, if you make your way to your seats, please, members, make your way to the seats. Yeah, yeah, yeah. Just want to remind everyone, uh, if you wish to comment on a rule, please go ahead and sign in. Uh, 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, so we have, uh, have you in the queue. call this meeting to order of the administrative rule subcommittee of Arkansas Legislative Council. Uh, 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'll go to item D2. Department of Commerce, Arkansas Development Finance Authority. If you please come to the table. Morning, gentlemen. You'll please, uh, identify yourself for the record, and then you may present your rule. I'm Mark Conan, director of the Arkansas Development Finance Authority. Uh, Jake Bleed ADFA, good morning. Morning, gentlemen. Yes. You may proceed. Uh, before you today is, um, The, um, we have made a few changes to the rules for um the use of private activity bonds in the state of Arkansas and so, um, these bonds are used by private entities, um, that may have projects that are too expensive, uh, to use taxable debt. And so they can apply, uh, to use volume cap, and that allows them to tap into tax-exempt funding, uh, for their projects and a good example, um, that, um, we would all know would be USD. um, in Mississippi County utilized uh private activity bonds to issue some tax-exempt debt. Um, these rules have been in place for some time and to kind of give a real short summary, um, we had, there were some kind of contradictory language in the um uh in the rules and so we just tried to make some changes that, uh, would be easier for applicants uh 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, um, 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 is just, it's a little bit of a cleanup to make it less bureaucratic application process. Thank you, Mark. Jake Jay comments? No, sir. Other, other than to add that this is being filed pursuant to, uh, our code which requires us to run this through, uh, APA. This is probably the 4th iteration of this. The law itself is fairly detailed, so the rule really just flushes that out. OK, thank you. Members, uh, any questions? On Rule 2, uh 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. Ask them to come to the table, please. Members on your desk in front of you, there were some questions, uh, yesterday in committee, uh, specifically the EBD subcommittee, uh, the questions that was asked of 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, uh, identify yourself with the record and you may present your rule. Alan McLean, the insurance commissioner. Oh Booth Rand, general counsel, Arkansasur department. Jake Winley, director of Legislative Affairs, Department of Commerce. Alison Hatfield, Chief of Staff, Department of Commerce. Good morning. You may proceed. Thank you, sir. Uh, I'm just gonna provide some brief summary of this rule 128 and I'll turn it over to General Counsel Rand, uh, to, to just highlight the process we've been through and uh answer we'll all answer any questions that might come up, so we've, we have promulgated this this rule 128 to to exercise our responsibility under the PBM Licensing Act that uh was passed by this General Assembly and it's did it addressed the pharmacy benefit manager networks. And the adequacy of them for health benefit plans, so this, this rule and it's corresponding bulletin that does seek to comply with the law passed by the General Assembly and to outline a process for payment information for for us to collect payment information for health plans, uh, in a, 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 holler. just while we're asking to do this rule at this time since the last PBM licenser Act was enacted, the department has taken a number of actions to to enforce the fair and reasonable reimbursement provision. We, this includes reconciling thousands of complaints that have come our way from pharmacists when their payments have been below the minimums, we have our team is constantly reconciling those uh complaints that we get from, from, um, uh, from pharmacists and that sometimes it's a few. and sometimes it's a uh a substantial number of dollars. So that's a very, uh, retrospective way of doing it. We think this rule is a more prospective way uh of getting ahead of that and, and providing a more proactive approach, uh, by making a determination based on data from the health plans that come to us, uh, as to whether the reimbursements are compliant with the law. So, um, this will allow the health plans and their PBMs to, to get it correct on the front end of the process, uh, rather than the largely complaint-driven process that we have now, so, uh, I'll turn it over to to General Counsel Rand is just to kind of highlight the, the, the process and um just to give an overview of the rule, we'll try not to go through every detail of it to it, but to the extent that you, you have questions and comments. We're, we're obviously here for, for that. So thank you. Uh, 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. Um, the Arkansas Insurance Department has started receiving a significant number of complaints from pharmacies within the last year and a half, complaining about reimbursement, uh, being paid to them at NADA minimums, NADA stands for the national average drug acquisition costs. It is an average, uh, calculation of what it costs a pharmacist or pharmacy to buy a drug. It is in our opinion, a fairly accurate and representative of what the An inventory cost of pharmacies are that we use as a guide. And we began to see in the last year and a half, um, PBM's beginning to lower reimbursement to NADA minimums, um, in the complaint by the pharmacies was that if they are only going to be able to get, um, their inventory costs or their acquisition cost, um, they complained about the sustainability of being able to stay in business without some um dispensing cost added to the reimbursement, um, at the time in the spring of this, uh, year, the complaints began to escalate and at around that same time, the state of Tennessee, the state of West Virginia, and, um, the state of Kentucky enacted legislation to require a $10.58 dispensing costs on all. drug transactions and so what, uh, this assembling with this committee needs to understand this is a nationwide issue. It's not just an Arkansas issue. Um, and then 3 other states have, uh, enacted legislation to require a dispensing fee on all drug transactions, even to the employer plans. Um, I will start, uh, describing how this rule works. I will say that last month, we had a public hearing. We've received over 75 to 80 comments, um, obviously not surprisingly, pharmacies are for this rule. We had a lot of health plans, including smaller health plans and college plans and employer plans complain or or they are concerned about the impact if the commissioner decides to require dispensing costs, what sort of financial impact it would have on, uh, the health plan as well as their insured or enrollees. or certificate holders, um, so that, that, that's a bit of the background that we have been dealing with. I think, um, that we received a 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. Um, I was now describe the rule, um, the, um, the, the role basically, um, is relying upon the commissioner's authority to, um, But under the PBMLA, the PBM Licensers licensure Act. I'm just gonna call it the PBM PBMLA, so I don't have to say the whole thing. Um, that is the parental act that this body enacted in 2018, um, And um it, it, 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 site to, uh, because this does impact and apply a health benefit plans. A sight to the code authority that permits regulations or rules related to network adequacy of health benefit plans as well. So I think we're, uh we have adequate statutory authority to issue this rule, um, under the, the terms of compensation and network adequacy. Um, moving on, um, 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, um, that are subject to the PBMLA. We're not extending it to health plans outside. the PBMLAs were sticking with what we can or can't regulate, uh, in terms of health benefit plans under the PBM law. Um, section 4, this is the key uh statutory language in the PBMLA, um, under Arkansas code 23-92-506 A1, which is in the 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, uh, for health benefit plan. I just wanna emphasize the verb that was used was insure, E N S U R E, and if you look that up, it means to guarantee to to ensure and so from our perspective, um, that requirement applies to current issues that are going on, but also uh perspective one. And so when we look at reimbursement programs of the pharmacies, and we, and there is a dispute, um, I think between the pharmacist and others about how many of them are actually, um, going out of business and but I want to emphasize the statutory verb here isn't sure 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 a pharmacies in the future, um, as a guarantee, so to help them survive and be able to sustain themselves in the network itself. Um Under B under Section 4, this is a very important point. The commissioner finds that current pharmacy reimbursement minimums under the PBMY or payments within a close range of NADAC or MAC that do not include a reasonable cost to dispense may, 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 emphasize Monday. Um, 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, uh, does impact the network adequacy of pharmacy services for health benefit plans, uh, it just depends on what the data is, um, actually shows and so we may indeed find. That the generic reimbursement rates, uh, relative to ADA minimums, uh, the brand and specialty rates relative to ADA minimums and all the other data we we request in this bulletin. Um, actually do not support the need for a dispensing fee. Um, so it is, it is, and I will talk about the data we are going to request, but it very well being, I know you've seen in the newspaper. Our discussion of the cost impact of a $9 dispensing fee, um, and I, I, again, we surveyed the plans and it showed a potential impact of 3.3% to 3.4% on premium, but it very well, very, 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, uh, the commission may decide not to require a fee. Um, he may decide to require a fee. Uh, of $4 or $5 up to the Medicaid amount of $10. So, um, it just depends on the data that we, uh, analyze and what the commissioner and our actuary decide uh whether or not the current reimbursement data is adequate. Um, section C under Section 4, Section 4 saying, uh, essentially, uh, I'm not gonna read all that paragraph, but, uh, we are extending the date for health benefit plans to file their data, uh, to February 17th, 2025. Uh, for plan year 2025. For plan years 2026 and 2027, uh, our goal is to get into a repeating rhythm of where the health benefit plans and PBMs submit their uh drug reimbursement data, no later than March 1st of each year, um, so that we can make a decision without impairing contracts, um, uh, for the next, uh, next, next calendar health plan year. So we wanted get into a repeating rhythm like we do with our health benefit plans on rate filings to receive this data on 98 to 9 months before any decisions that we make would go into effect so that contracts can be adjusted. Um Section 4D, uh, all the data that we get, uh, from the health plans and PBMs is considered confidential proprietary. However, the decisions the commissioner makes, uh, relative to the average dispensing fee that he, that he decides that would be published annually, uh, or after he makes his decision so that everybody in the public can see, um, whether or not or what dispensing, um, um, costs would, would be required, let's say for example, for health advantage. United Healthcare. Um, so that decision itself of the amount of the fee would be publicly transparent. Um So the, the rule actually um in, in, incorporates by reference a bulletin that describes the data requirements and data filing requirements that we want to review and so if you, and we have incorporated the bulletin by reference and I, and I, 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 or It is our position. Uh, we are not, um, and we're not tending to anyway, to change the bulletin without going through the rulemaking process for this entire rule, um. So if you look at the bullets and, and I'm not gonna read every sentence in this, uh, again, uh, under the bulletin, um, proposed bullets in 18-2024, uh, we, we, we would provide reporting requirements and standards under uh section 1A again, uh, we are adopting a two-year phase-in requirement to get to the point, as I indicate where these filings would be made on or before March 1st each year using the previous four year plan data. Um, the data required to be filed is under section 1B. Um, under the bull's and, um, it remembers it's on page 2 Walton, the data required to be filed as a total annual percentage of total pharmacy reimbursement above or relative to NADA pricing in the prior calendar year. Uh, we want to see the percentage separately for generic drugs versus brand drugs, uh, with a median and 25th and 75th% calculation for total annual above NADAC pricing, both for generics and brand names. Um, we want to be, uh, reviewing we want data related to whether the health plan already pays a fee or dispensing fee, and if so, what, what the what their average dispensing fees are in that prior calendar year. Uh, 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. Um, and a very important bullet point is on page 3, your pharmacy network retention data in the prior calendar year, essentially, how many pharmacies have truly lost or dropped out of the network, um, are, are you, or are you keeping a steady, uh, amount of pharmacies and you have an adequate network without attrition or terminations over reimbursement issues. Um, the next bullet point is the total amount of adjustments you've made in response to appeals or complaints by pharmacies for payments below NADAC during the prior calendar year, uh, are you, are you, are you, are you getting a lot of enforcement, uh, complaints because you're paying not only at NADAC, but also below NADA minimum. So, so, uh, we are seeing quite a few um complaints about pharmacies being paid below NADAC. Uh, minimums, not just at the NAAC minimum. Um, For health plans contracting with PPNs and PBM affiliates, the average reimbursement percentage difference between what the PBM affiliate pharmacies are paid relative to non PBM affiliate pharmacies. I know when I was, um, after I testified Monday, a significant number of pharmacies uh were complaining about um affiliate pharmacies being paid more than non-affiliate pharmacies, um, so I, I, I do want to address that. This rule is really not, and I agree with Senator Irvin and Des May or maybe Senator Hickey, um, the insurance department already has adequate enforcement powers to prohibit affiliate payments being greater than non-affiliates, um, we, our last, um, report or examination or audit was in 2020. Uh, I definitely agree with Senator Desma that we need to do a more updated report on affiliate compensation versus, um, non-affiliate, but I, I do want to point out that uh this rule really isn't 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, uh, injustices. It's not so and I heard a lot of pharmacists complain Monday, we already have authority at the insurance department to, um, to enforce the laws that. those uh activities and so what this rule is attempting to address is basic transactions and minimums, um, that may need to be increased with the dispensing costs that apply to retail, independence, small chains, large chains, affiliate pharmacies, non-affiliate, and, and all of that. So, um, that is what our, our goal is with this is to improve base reimbursement across the board, uh. We're not trying to fix other um alleged pernicious PM practices that we already have authority to enforce against, um, section, um, one C is that we want to see cost impact from the health plan, uh, And I, and again, we have a great, a graduated um request for cost impact for a dollar, $2.04 dollars, $6.08 dollars or $10.50 fee. The commissioner wants to say, uh, what sort of impact, um, any of those amounts would have on the premium impact level for the health benefit plan, uh, so that we can ensure that we're not going to have, uh, significant uh harm. The employer plans, um, 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 and reports, actuarial information, um, related to the projected plan compensation program of pharmacies, um, and described 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 actual. very, uh, where they can argue that they are already in compliance with this, uh, these requirements do not require or justify any dispensing costs, um. The, 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 the dispensing costs, um, and, and so on. So the rest of this is, uh, just clean up. I want indicate section 2. Um, the self-funded health plans with less than 5000 Arkansas covered lives, um, have a limited data file. They're not exempt from this rule, OK? But they do have a limited data filing requirement just to provide us with section one, Uh, bullet point, the first bullet point, uh, data requirements are the only things that we're going to require from the self-funded plans with less than 5000 lives. Arkansas covered lives. Um, anyway, uh, this, we, I can go into other details. I know y'all have many questions, uh, hopefully the commissioner and myself were Jake can answer. That's a brief explanation of the Paulson. Thank you, Mr. Rand. Uh, we'll now go to questions from members. Senator Dismay you recognized. All right, thank you. uh, and this is kind of just to have uh 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 y'all are under a lot of political pressure. I mean, I, 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 he felt like the pressure was a lot and and there's the need to do something because of the volume of. Complaints. Uh, a couple of questions on that, uh, just for the committee, how many complaints have been filed so far this year. I would, I would we get about 1500 to 1800 a month. So you just multiply that by the number of months that you want, that's and and that's again that's different than the 3000 that we were told last time, I'm in terms of How many complaints do we get on um payments below NADA, we get about $1500 a month below NADAC. We probably get 400, 500 just on NADA minimums without going below. So 3000 complaints is a rough estimate on what we've probably received just on NADA minimums the last. 7-8 months maybe something like that. OK, 3000 of those complaints, how many have been vetted and come to a conclusion. Well, uh, again, if you are paying NADA minimum. Um, there's an argument that you're complying with Arkansas law. The, the Arkansas PBMLA at um statue, uh, has a poor safety net that says that you that you cannot go below NADA minimums in your payments. It is not in and of itself a violation to pay it at NADA minimum, so we process most of the complaints, however, where they play below them NADA minimum, that would be a violation. How many of those have Be processed that that have come out and had a conclusion. my director is over there, but I would say, um, you know, we, I just submitted a report to the executive committee. I think Senator Gilmore, um, I don't recall, uh, I would say we adjust. Maybe 80 or 90 a month, something like that for payments below NADAC, which is more than what we were told in the last meeting. I, I, I, I can't I understand, but it all seems it's always a moving target for me and trying to understand and, and, 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 the same question. May I apologize, OK, I, I just, I've got a lot of things we adjusted last month 18 below NADAC, 18 out of 3000 roughly complained. Yes. OK, 18 out of 3000. Uh, and, 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. Again, even, even though this is a result of complaints. Correct. Correct. The complaints about affiliate payments. I mean, you understand that that's a, 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 again, I was just listening to um 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, 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. Um, on the 11 question, and it was just as 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 as if it were like a coordinated effort by the Arkansas Pharmacists Association. I saw it, we received complaints all over the state. I did not sense that it was. I did not. investigated on the actual pharmacy association website, there is a statement that directs members to file complaints to get to a political outcome and to, to lead to this rule change. Just so you're aware, there is a coordinated effort by the pharmacy Associate. I'm not saying that's right or wrong. I'm just saying you said something that was incorrect the other day, uh, that there is a 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's just, it is there and that's just a factual statement that's. 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. May I respond to that? I, I do not know and I don't think you know whether a pharmacy was actually, uh, every pharmacy that sent us an email or complaint or to the governor's office was coming from the website of the pharmacy Association. I agree that I'm just saying if you look at their directive to their members, it says to file complaints to get to a policy change. Right. And I, again, I don't know if every pharmacy looks at that website. I, uh, uh, but yes, I see what you're saying. OK. Uh, 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 the, the, the contracts are too complicated. Right? 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 groups isn't sophisticated enough to understand. What 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 I entirely agree with you, um, on that, um, so my question is, my, my question, 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 a pharmacy doesn't like what's happening with the PBM they then can appeal. Are you, when you're doing, you know, you're looking at these 3000 complaints and you're having a handful of them that you're having to, that you're finding, you know, an error with, are they appealing first or are they just coming straight to y'all? It varies. It varies. I, I don't, we don't track that statistic. I think it's really important, I agree, OK, um, all right. And then lastly, How many plans are, so we're wanting to do all this by March of each year. How many plans are we talking about in the state that y'all are going to have to review. I'm, that's a good question. And I, and, and, um, and I have warned the commissioner, and I think there was some discussion about this being an overwhelming number of plans, um, but it just all right, so who at the department knows because those all register with you, I believe. Everybody that's fully insured every plan that's fully insured is registered and licensed by the insurance department. problem that we've got and I'm going to agree with your concern is we do not license or track the self-funded ERISA plans. They do not have to file their health plans with us. And so, um, again I'm, I'm, 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 of the fully insured market and the self-funded plans, um. I'm gonna say it may be 400, 500 plants, maybe, maybe more than that. But I, I, I, I agree that we could be uh reviewing and um a pretty large significant number of both the fully insured and self-funded plans, um, your concern is my concern. I'm worried about that, about us receiving a ton and ton of plants, uh, I just don't know how to answer that statistically every plans different, you know, I mean, again, I'll go back to my see-saw example. I mean, the way that I understand the pharmacy gets paid, it may be through a higher prescription. drug, you know, price and a lower dispensing fee, a higher dispensing fee, lower drug, or maybe some type of balance and every one of those plans are different. I agree, 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. I, I agree, um, and then the, the sheer volume of that. minute, so I, I guess I need to know how many employees we're going to need to, 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 we've got 3000 complaints and only 15 of them come to a, a, a conclusion. Well, then, 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, and a good solid growth of not just a taking of the government of responsibility from contractual agreements, but actually just governmental intrusion into what's happening in a contractual agreement between a PBM and a pharmacy. So if we could, Uh, hopefully you have that information because we've all prepared and we're passing a rule to get to that point. Right? And again, your concern has been my concern for the last 3 or 4 months, um. I was directed, um, to formulate this rule, um, to evaluate the RX data on an individual plan by plan basis, OK? So if you look at the state of Tennessee, West Virginia, um, and, uh, Kentucky, uh, and some of my earlier efforts in my June draft, 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, I'm being asked, however, to look at each plan on an individual basis, and I, I'm, I'm, I share your concern on that for sure I mean I don't think Tennessee is our model. I mean, I saw some documents the other day that indicated to me that their commercial plans cost their folks about 3 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 taxpayers enormous, and I would just count that as an additional tax. So. Uh, hopefully we, we don't look to Tennessee to be the model for what we want to happen to our self-insured. Uh, uh, great. Representative Wardlaw, you're recognized for a question. 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 public, um. Uh, representing War law, I don't, um, I think, uh, I think I read in the newspaper that um and I wasn't. I wasn't in this room hold on I'm gonna make this easy for you. I don't need opinions. I just need to know when you issued the bullet so the public could see the bulletin, the date. I, I don't know that date. I, I don't know that date. I can find out. Um, when I get back to the office, my recollection is mid-October. The rule was issued for public comment on September 5th. You may be right. So everything you're referring to this morning, is it the bulletin pretty much is the governing paper of the rule. You 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? Yes, sir. You made substantial changes to the rule after that meeting, correct? I don't think it was, um. Illegal substantial changes but they were changes 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 uh comment and most of a lot of my public comments were aimed or were directed at the bulletin requirements as well, so it was, 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. OK, back to the changes you made substantial changes to the, you took things out of the rule that changed the way insurance companies can move money, correct? I don't think that I did. I don't, I think I just, uh, clarified, um, when I made the edits to the rule, um, you know, information that I felt was consistent with the original fall rule. You may disagree. I don't think I did. There was no public comment given after that change, correct? There were public comments given to the changes, so in the last two weeks we received public comment. Yes, and no, no, no, no, no, no, I, I agree with you that, uh, the edits. That that occurred to the rule and bulletin after the public hearing was concluded, um, were the edits were in reaction to and in response to the public comments that we received at the hearing was in the public comment period. Miss, I'll get back in the queue. Senator Irvin, you're recognized for a question. Thank you. Thank you, Mr. Rand, Mr. McC Secretary Mc um, Mr. McLean, Mr. Chair, the, um, 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 and 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, not to this body. But the executive committee, um, I think Senator Gilmore and, and Representative Wardlaw was in there. I think they required, um, back in July or I'm not sure of the day, 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, that is not being required. It's just what actions did you take in response to the complaints and. So we've provided to the executive subcommittee the amount of adjustments that we make each month for in response to complaints. So, so, so no, the answer is, I mean, generally an agency, a legislative, executive branch agency would, you know, provide, OK, we're getting this amount of complaints. We vetted them. These are true findings. These are not true findings. These are the results of those actions. Here's an Excel spreadsheet, pretty doggone simple. You could provide that at to the Legislative body, pretty, I would think you should, that would be, uh, 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, and so I don't, I don't agree that, you know, if I were to rewrite this rule, I would say, OK, maybe we need to do that first. The other thing is, is that, uh, my understanding is many of these complaints are not following the appeal process and, you know, you need to be balanced in your approach. You're a consumer advocacy. Have you ever not sided with the pharmacies. I mean, and are you actually looking at whether these complaints are frivolous or not or, and so where's that report? And that information to the legislature, you've not required us to make that report. I agree that you could have this, you say that you have the ability to to do that. You're vetting them. Why can't you just give us a report? Why do we have to ask for it? Well, I do what statute requires me to do, but I agree, I report to you would be very valuable. I mean, that's the rule I'd bring, honestly, like if, 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, they don't dump all on you. There's a process there, is that not correct? For them to appeal directly to their source of of. To their source that's causing them pain or whatever that they're disagreeing with, there's an appeal process. I think that may I answer that, um, to, to respond to both of that, um, I think if you're the pharmacies will tell you that, um, the appeal process with the PBMs is too long, it takes too long. Um, it's, it takes way longer for them to get action as opposed to filing a complaint with AID, um, but I do agree with you that a more comprehensive Support, um, would be very helpful to this body to see our disposition, how we handle those claims in terms of siding with pharmacies, um, Heck, last night I got a complaint, um, Uh, from a pharmacy, um, over a CVS reimbursement issue, uh, which involved an ERISA plan, uh, or a grandfathered plan and I sided with the BBM on that. So I don't always side with the pharmacies, uh, and I, and I'm, and I'm looking at the public comment and I'm looking at kind of what was responded to and did you, did you take into any through the public comment, um, did you take into how any of the, um, I guess, employers and the businesses or patients that are going to now feel this as a pharmacy tax, they're gonna be the ones having to pay an increase 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, did you hear from any of those folks, you, I have insurance, I have people that are small businesses in my town calling me right now saying, please don't do this. we, we can't afford, we can hardly afford to provide coverage for our employees already. This is a car dealership. We cannot hardly afford to, to pay for our healthcare coverage right now for our employees that we're not gonna be able to afford this because we're working with an insurance independent insurance agent and, and our employees aren't gonna be able to afford this because they're only making maybe, you know, not that much money, maybe 36 $40,000. And so then Additional fee on them is going to be, you know, looked at as a, as a tax and a, 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 y'all make any Any references or changes, um, we had several and I want to say comments from, um, the employer plans uh that you reference, um, I think, and I may get this wrong, um, there was a cabinet, um, there was a cabinet store cabinet maker, um, again, there were over 80 comments there. I want to say, I probably got 6 or 7, Concerns and, and again we share their concern over, uh, cost impact to their employees and insured, and again, again, the commissioner isn't required to require dispensing costs if after he reviews the health plan impact and the, the pharmacy reimbursement, he may not require an additional dispensing cost would not have any impact whatsoever. So it's really hard for me to say to them, uh, you know, your health plan and your s are gonna go up X amount when we've not made that decision until we look at the actual data from that plan. And, and so, and I I hear you and I, I'm concerned because then I, 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 me as a legislator, I don't want to secede my authority over to you for a new tax or fee increase because I didn't really vote. I didn't vote for that. So, and directly in those substantive language that I read, I did not vote for that. We understand rates and we understand reimbursement rates, but I don't want to secede my authority as a legislator over to one person to determine whether they, whether they are may, may or may not have to pay a pharmacy tax and a dispensing fee at the point of sale. And I, I don't, I don't want to see my authority over to, to one person. I, I'm, 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. You be 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, I have the ability to do that, but my last, my last question is on the ERISA plans and the self-funded plans. Do you? You don't license those, correct? So, but now you are claiming legislative authority to be able to review those plans? first comment, um, I think the commissioner does have authority to issue 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 upon him authority to do a rule related to compensation, um, in terms of ERISA plans, this general assembly. After the Rutledge decision, uh, by the United States Supreme Court. Uphheld um our maximum allowable cost 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 their definitions to include self-funded ERISA plans, uh, uh. Include applying pharmacy, uh, reimbursement laws to that, to self-funded plans a lot of the Rutledge decision. So, um, 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. And when, when did you change the language? Yeah, OK, I can get you in the back few members, uh, my request list is growing. potentially over here for members to ask questions, so I would ask you to hold your questions to 1 or 2 and then we can get you back in the queue. Also, um, 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, um, this is a a big issue and I want to make sure that all of our members respectfully have, uh, the opportunity to hear the testimony, um, before we move on to the next one, just real quick, um, Mr. Rand, just a number that keeps popping up to me, um, And to allude to something that Senator Dismay said, it seems like every time we have this testimony, it's a different number. So I, I just want to get some clarity. You're averaging about 14 to 1800 complaints per month. Is that correct? Close, close. Of that 140 to 1800 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? 18 had been adjusted. OK, 18 had been adjusted so let's call this, let's call this 1600. Just for the law of average of the 1600 that you're getting per month. How many pharmacies on average in the state of Arkansas are making those complaints. That's a great question, um, uh, I would say, um, 15 to 20 different ones, uh 800 complaints across the state is coming from an average of 15 different pharmacies 2015, it just depends, and I would assume by scale some of those are large pharmacies, some are small pharmacies, uh, I would assume that the larger pharmacies then, uh, are making more per month because of the volume of transactions going through their pharmacy than the smaller ones. There's not a targeted pocket of 2 or 3 pharmacies in small. To Arkansas, that's just getting hammered with this. I don't see that. OK, thank you, uh, Senator Hammer, you're recognized for a question. But uh Put you back. All right, Senator Dodson, you're recognized. Thank you, Mr. Chair, uh. Over here to your side. um, so. As I'm, and I apologize if you might have already covered some of this. I got hung up in, uh, traffic on the interstate, um, but as I was trying to listen in as you were going through some of the, the, the rule, um, And I heard you say talking about a dispensing fee that could range anywhere, I think you said from 4 to $9 per per script if I, if I recall your testimony correctly as you were explaining the rule, but you didn't know exactly what that was gonna be, um, and as I'm looking through the rule, uh, particularly in, in item C where it says that. Upon and after a review, a review of whether it has a fair and reasonable pharmacy compensation program to ensure an adequate network of pharmacies. Um, do you have a metric that that determines what what is a uh an adequate network of pharmacies. I mean that's a good question, um, as 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 NADA minimums, uh, Obviously you want to see a healthy, um, you want to see a healthy generic reimbursement, um, you know, retention of pharmacies, how many pharmacies dropped out of the network, uh, 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, uh, are you paying affiliates more, uh, so Senator Dodson, all of that's going to go into, um, a decision by the commissioner, um, based upon that objective data, but I don't have metrics right now on that, um, the actuary and the commissioner will look at all that to make decisions about whether they feel like you don't know what a fair or what a, uh, I mean the, the title of this is fair and reasonable compensation program. I mean If you look down toward the bottom, it 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 dollars is the max if I what I heard from you 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 decided, I was referring to the confidentiality of the data, the decisions by the commissioner on each health plan, uh, the health plan's requested that that be made public. So that, and again, if, if the commissioner decides that no dispensing fee is required by plan, he will, he will disclose that as 0. So. What I'm hearing you say and let me just throw this back. Is that you don't know what the be your last question. I need to move on. This 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 how many pharmacies is, is an adequate network. How much we're going to have, you're gonna make all those determinations later and I guess the question for you is not really, maybe even watch your fair and reasonable standard is, but what is your successors fair and reasonable standard because. That's a question hypothetical because you can't answer that, neither can I, none, no one in this room is we're voting on this particular rule, but it will stand likely unless it changes somehow between now and in the future, uh, for successive commissioners later on that will make that subjective determination year by year by year by year. Thank you. Thank you, Senator Dodson. Senator Hammer, you're recognized. 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. 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 3 largest PBMs control over 70% of all pharmacy scripts in the United States. The top 6 largest. 80%. 5 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, um, I believe on Monday it was Representative Wootton, who is 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 NADA 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 NADA minimum and fair and reason. reasonable as part of the cost and affiliate pharmacy partnered with the 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 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 2 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. Would you agree or disagree competition drives prices lower, elimination of competition drives prices higher. I've never seen a monopoly that lowers prices, sir. Senator Dismay, you recognized. I thank you. Uh, just a couple of questions and I, I appreciate the comment on what's been happening the last half of the decade, that'd be 5 years. I can tell you what's not happened in the last 5 years is a redo of the 2020 study on uh uh pricing with PBMs, which is a problem, and also I think demonstrates the inability of the uh uh insurance department to do what needs to be done on the fundamental levels of things that's already been charged with doing without taking up these additional rules and giving themselves additional government overreach in respon i b il ities uh, but if I can on what where I'm confused is what is it exactly you're going to be looking at, um, I mean, if, if I think about it and I think about some of the testimony we had Mr. Benson said the other day that, you know, essentially their PBMs aren't breaking the laws, you're just using and I maybe 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 less, you know, lower prices. How in the world are y'all going to take a look at these contracts. And because it's on some days these contracts are fine with the pharmacies, right? And some days that they're not and 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's actually you're talking about trying to fix. It's, it's almost like an impossibility. The way that I see it. I, 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, then I would say then the problem is because what I'm my communication with pharmacists that's happening right now is. Result on day one 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 change you're going to have to dictate the language of the contract so that it's both good on 1 and 365, which I believe is an impossible task. I, I understand that's a difficult issue. I agree with you on that, um, 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 a projective 75, 70% tile and 20 percentile average. of the generic reimbursement, the prior calendar year data, and, um, so I will not be looking at directly at the contracts themselves, but what the results of the reimbursement are on an average basis. I agree 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 are allow the good days and bad days are allowed by the contract. And you're saying and so they could have an entire year utilizing the contract as written that goes well, and then the next year with the same contract, it goes poorly. I, again, I think we're saying, I'm sorry, but that doesn't, I, I'll stop and get back in the queue, I get. Thank you, Senator. Representative Ward Law, you're recognized. Thank you speaker. Mr. Chairman. Not quite yet, I guess. The, um, going back to the public comment issue, I found the transcript. From the, uh, public hearing. Were you, Mister Rand. Said yes, I would like to extend that mishearing officer for 10 more days to the 21st of November. And then I go through your emails, the people at FOI. And you come back later and said, we're not able to extend that. Can you give me the reason why I could not have gotten this rule on the agenda for today, for December because right there that's what I want you to say. So it's more important for you. In 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 22nd, by the way, I got the date. than it was. You, you're telling me that, that the most important thing to you is just meeting this agenda day. Again, we wanted this rule to be an effect on 11. So when does your emergency rule expire? January the 12th. A 2025. Thank you, Mr. Chair. Senator Hickey, you're recognized. Thank you, Mr. Chair. Uh, Booth, all these other questions and everything are great, but I'm gonna go a lot more simple. And I did this, uh, Monday and I heard, uh, Senator Urban, she kind of touched on it a little bit here, but I'm gonna take this all the way back up to the top as far as this rule and the statute. Your testimony during Monday was, is that you all had to, had to have this rule because the current statute would not allow you to do certain things within it. Is that correct? Um, 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 Ervin, that, um, we have already abundant authority to do examinations, to do audits. I agree, I agree with what you're saying. So you and I are, are, and I, I think there could possibly be more, but I'll just stick with that one. So here, here's the thing. As we all know that before constitutional amendment was passed by the people down here that rules were just being enacted that were totally against whatever the current statutes was, and I believe that that is why, that 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, 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, of AOC right now, and, uh, this rule 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 on, up on some fee or tax, you know, on our citizens. And like I said the other day, and I'm gonna restate it. I mean, whenever a statute comes into play, And whenever we look at this stuff, you know, we look at something or whether it violates the current statute, whether it's constitutional, or whether it was a legislative intent. I'm not for sure. We don't have the whole Bedroom in here with this, with this thing because I'll tell you this. That as far as I was concerned, I was here for this, for this statute. And it again, I'm gonna say it the same way I did the other day. The pharmacy association likes to point out that, that I was a sponsor of the thing. That Senator Hickey, if I could ask a point of clarification here. I'm I'm gonna finish and then you can, if that's OK, sir. Thank you. So, 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, Uh If you look at it Is, is basically doing an appropriation and the funding that, that the legislature, that, 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, 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 would be my guess. I I was here because we knew that we were going to get into this conversation because they're hard conversations on, on, 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, my whole thing is, is this rule. And the reason that we turn things down down here is over legislative intent, whether something's constitutional, whether something exceeds the, uh, current statute, I'm not for sure that this is not the first one I've seen that does not do it all. And sir, uh, Mr. I go through the chair who would need to direct you to ask me a question, which is fine with me. Can I ask clarifying question a second for a question. Thank you. And Senator Hickey respecting constitutional delegations of authority, um looking at 2392 509, which is the rule-making 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. 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. Uh, of course, I've got, we've got a great staff here that if you want me to get them involved in that, I will. But, We, we cannot delegate our authority over to someone. To do this, would you not agree to that? So the Constitution respectfully, I would disagree in this situation, and this may be lack of creativity on my part. I failed 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. And let me say this, maybe you're right. Maybe you've 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 you maybe you shouldn't have that authority. I don't want to say that, but you're, you're stopping way too short here. Uh, if, if the General Assembly cannot delegate its authority, And we've delegated it to, 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's not that's 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, those things whenever we're looking at them, uh, to try to make sure and guard against doing something that possibly would be. May I respond also to I share your, your frustrations. I, I do want to direct. Um, members of this committee to, to, to PBMLA statute 2392509. It says rules. Rules that the commissioner may adopt under Section 2 under the subchapter include without limitations, rules relating to licensing application fees, financial solvency requirements and it goes on and then it gets down to rebates and then it says, ah, compensation. I, 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 I, I, I you may disagree and feel like we're going outside statutory authority and and that you, you may be right. I, I just, we, we don't feel like we are doing that. I understand the position you're in. Uh, but I, I want, I want to say that I recognize that and I respect you all. And, you know, don't, don't take my attitude right. He, but yes, I feel, 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, would have had, would have had the authority to put in a dispensing fee. So thank you, sir. Thank you, Senator Hickey. Senator Hill, you're recognized. Thank you, Mr. Chair. Over here My, my, my question would be pretty simple, uh, y'all, y'all are supposed to be out here for the consumers taking care of, taking care of the consumers. Have we had any consumer complaints about access to pharmacies? I, I don't think we've had many, if we've had any, so, uh, but no, most of our complaints are are pharmacies. OK. So that, that, that leads me to my, my next part of this since it's basically not consumer driven, so it is industry driven. Not consumer driven. I agree, but again, if we start seeing pharmacies, um, have attrition, um, that would impact consumers in terms of their access to going to a pharmacy that might not be available in that county, so if I may, I would say that. Evidence of absence is not absence of evidence before I started working at the Arkansas that I did not catch that 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 relevant if you don't have the complaint, you can't assume something because we all know what the word assume means. 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. 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 go through the hospital, go through my pharmacist, go through the Labyrinthian hellhole that is a PBM appeal process and you've been here about a year now? Uh, I worked for the Arkansas Insurance Department for about a year and a half and what have you done to solve that since you recognized the problem? 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 sir. What I meant, what are you doing to educate the public, not what, what you've collected or done. What have you done to educate the people merely what you had said. So they'll know how to answer it. No, ma'am, this, this is for him. He's the one that brought this up. 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 and the insurance provider space and the services, the Arkansas Insurance Department provides. That was a flagship program first time and I believe it was effective and it's something we're gonna 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. OK, thank you. So you haven't done a whole lot yet? Not yet, sir. Thank you. Senator Hill, thank you. Representative Shepherd, you recognized. Thank you, Mr. Chairman. Um, and I'm, uh, I'm somewhat sympathetic to, to y'all's position at the table because as I reviewed the statute. And I think Senator Hickey's comments, uh, 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, uh, without the rule, I mean, we have an emergency rule in place, but let's just consider the statute itself. Uh, with regard to a. To to a PBM that's not paying a fair and reasonable rate to ensure, uh, market access or whatever the terminology is is which that's found in in 506 I believe. What tools are available for you to respond should you get a complaint. Great question, and this was asked Monty, I think the dilemma we would have our 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 additional, 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, to govern that and so I, 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, uh, in which the commissioner is authorized to require a dispensing cost, so that's why we're here that 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'm, I struggle with this issue is, as I understand the statute, if they were paying below NADAC, you could find them. If they are not paying fair and reasonable, there is no. provision, you're the only option under the statute is to revoke their license. Cool Am I correct, 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, uh, doing an enforcement violation conclusion about where, whether an investigation required, um, the PBM to pay more to meet fair and reasonable requirements as kind of a follow up, the, the 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. This is part of what you're trying to address and so that's, I guess that's the challenge that we have. It appears that you have some ability to do this right now, um. But maybe not with the clarity of a rule and to follow back just the final thing on Senator Hickey's comments under 509, it does say you can make rulemaking. Concerning certain areas including compensation, but I think certainly most would have anticipated that rulemaking would, would relate back within the confines of the other of the statutory provisions of the subchapter, so I wanna be clear like that, at least from my perspective, and I'm not necessarily speaking as to to this instance but for for future reference, that should not be viewed as, as some kind of blank check, blank check of authority to the insurance department or anybody else. Thank. Thank you. OK, members, give you an update. I've got Senator Ervin and Senator Dismaying, Senator Hammer. No other members of the committee have questions, then we'll go to noncommittee members that order will be Senator Stone, Representative Flowers, and Senator Johnson. So I'll recognize Senator Ervin. OK, thank you. 22, 2 questions. So you're, you are defining and you're saying that compensation then gives you the authority to make an assessed tax or fee, and, and to you, you just said that dispensing fee or cost is not explicitly stated in the language. And I agree with you on that. Is that what you said? Yes and yes. OK, and but application fee is listed in what you read. Again, I'm upon the, the general term of compensation that can include anything related to compensation. OK, well, well, we understand in the healthcare world is reimbursement rates. So when, when we look at a reimbursement rate, a reimbursement rate is one thing, a dispensing fee and 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. A reimbursement rate. I, I believe fair and reasonable is attached to a reimbursement rate. I don't believe you now have the authority for, um, a fee uh to introduce a new fee. I, and so that's where I'm getting really concerned about the language, because compensation could be super broad and I. For me, I just, I don't, whenever I vote for a tax increase, I don't hide that by saying, oh, it's just compensation for the Department of Education. Yes, ma'am. That's not my intention as a legislature, 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, or it's actually compensation for Walmart or Walgreens. So, um, that, that's one thing, my, so thank you for the clarification. Um, 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 that issue led the issue that there 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 gonna do whatever we want through rules and that, 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 look at 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 the the bulletin is actually the meat of the policy. And so, I guess going back to representative Wardlaw's point, I'm really concern 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's changed and I never had the ability to make a public comment on it when there were substantial changes made to the bulletin. And, and there's no, there's no statutory authority that says you can't change that bulletin even after we passed the rule. That was your testimony on Monday. Well again, if you look, And, and there's no, there's no statutory authority that says you can't change that bulletin even after we passed the rule. That was your testimony on Monday. Well again, if you go ahead I'm sorry, that's just the end of my question, I responded to this Monday and you responded and made the same argument Monday. I, you, you may have a valid point, uh, 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. I definitely get and I what I was reacting to is um over the last 30 or 40 years, the insurance department, um, has issued bulletins out on a lot of things that maybe we should have done a rule on, OK? So, and I get this body's concern that they don't want agencies issuing, um, 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 would necessitate and required to go through rulemaking. Um, on the bulletin. I look at the bulletin a little differently than you do. I, I look at the bulletin here that describes that we're, 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 um explanation that is supposed to come from the rule itself, but I, I understand your concern and for sure. And and thank you, Mr. Chair. I am concerned about the slippery slope of that and because I've seen it with memorandums of understanding, particularly at the federal level. Where there was never any legislative action made by Congress or and, and, and, and it resulted in drastic policy, particularly under Title 9, 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 I, I really procedurally, I think, you know, I, I, I think it's improper. Thank you. Thank you, Senator Hammer, you're recognized. I want to go, I want to tag on to Representative Shepherd's comments a minute ago, as it is right now, if a PBM is paying below NA, NAAC. You find them correct. Yes, um, that we have, um, we have found several, um, we have two big cases going on right now, uh, for enforcement kind of short as we can here. So, We find them that fine does not go back to the pharmacy though, correct? All right, so you find them or you determine that they paid below NAAC. And then as far as the compensation that's back to the pharmacy who has filed the complaint, of which a lot of pharmacies don't file a complaint because of the time it takes to file complaints, they weigh it out and say it's not worth the hour, hour and a half, and all the, you know, extra cost. But then when it comes back to what the pharmacy actually gets after you penalize the Uh, PBM, what, what do they actually realize? The only thing the pharmacy gets out of the enforcement would be an adjustment. If you're paying below NADA minimums, let's say you paid below NADA minimumums by $13.60. Um, the company would be fined for violation of it. The fines would go to general revenue, um, the PBM would be, would be required to make the adjustment to provide reimbursement back of whatever 19, whatever that example I. So they would have to make what we call an adjustment, but, but how 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, uh, to a, what was supposed to be a fair, 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. Leslie, you want to answer that or you lit up there I was gonna say that thank you so much for the question. That's a great point. Um, we see this rule as a mechanism for us to be able to use our enforcement power but to, to enforce the statute that y'all passed with that fair and reasonable, it's gonna give us that tool or mechanism with the fair and reasonable that under those, as, um, 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 would we enforce that from a number standpoint how would that eventually drive up cost and we haven't even got, I don't know if we're paying Siegel by the hour to be on the screen that we're not going to ask them questions, but how is that gonna, what, what you just said, how does that drive to the bottom line that, that companies out there are afraid that this is going to increase the cost, and thank you, Mr. Chair. Well, we could, I mean, I don't, I don't want to speak for them at all. I mean, honestly, if the PBMs are paying the NAA. and fair and reasonable, there'll be no change, um, but for the plans, I can't attest to that. I know there's been some testimony by others about projections, but I, we as insurance, I don't think can can attest to that. Senator Dismay, you're recognized. Thank you. And, and just to kind of be quickly, I want these to be yes or no. I mean, testimony of the day we said. Booth, you said that you didn't have the authority to gather this this information, is that correct? And I was wrong. OK, but you said that, which we, we predicated an entire rule based on saying that we couldn't get the information. I, I, again, now, is I, I think I was responding to Senator Hickey, but just say yes, yes, right, OK. All right, and my, 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 gonna you everyone's contract. What, what is your name in the bluish teal blue tie. What's your name? Jake Senator, will you be a part of that team? No, sir. OK, what was your impact be in the, uh, process? I imagine there would be very little to none. It would, I, I think the team that would compose for these review would be our PBM director, our insurance commissioner, our actuary, um, and myself and two financial analysts. So that's at the table legislative affairs director at the Department of Commerce that's our legislative affairs director. Yes. in my, my major concern. That's interesting. I had no idea and I'm a legislator, um, so here, here's my concern, what I've heard over and over again is. The opinions coming from the table, right? Especially yours, sir. You're, you're very opinionated about this particular matter, and I've said some things that I mean are not unbiased in any way. And, and so my, my major concern is 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, he had some very pointed or very pointed statements that he made in regards to PBMs and the appeals process and all these other things, uh, that that he brought into the question so that, that is a, 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. If I may. Nope. Um Senator Stone, you're recognized. Oh, you're Thank you, Mr. Chair. Um, one of the things I've been hearing and have a concern about is stated that if this rule passes that health care or, or that the department uh healthcare cost could go up on pharmaceuticals, but isn't it equally true that if it is not passed in uh independent pharmacies continue to go out of business that that causes consolidation in forms an oligopoly and through that point even longer term, they go up more exponentially. That is a possibility. I think there's a debate or dispute about whether pharmacies are actually going out of business or not. Um, the PBM data that we have been sent from the health plans shows a steady number of pharmacies, uh, the pharmacies and the, um, pharmacy board, um, indicate that they've had, uh, much more attrition than the PBM numbers show. So there's a dispute about that issue, uh, whether the, again, my point I wanted to raise. was this rule is perspective to help guarantee or to help ensure, as the verb is 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. Thank you, Mr. Chair. Representative flowers, you're recognized. Thank you so much, Mr. Chair. Um, Um, I do have a couple of questions, um, but wanted to make sure that I have a um clear. Understanding of where we are and some of the issues that have come up in questioning today. And what I heard was. Was A reference to the issue being about contracts and the issue here. Um That that that's the main issue and what my understanding was. Based on complaints and challenges from several and I can think of 3 independent pharmacies in my district. Um, who have, who do have contract issues who are forced to sign these contracts. And our legally bound to not Complain about. The disparate reimbursements. Um, that they encounter that's affecting their business and their ability to even pay their employees. So I, 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're really not, I think talking about or addressing and that is the um the PBM's following the law. Where they are um paying above NADAC, but they're paying 2 cents, 10 cents, $1.02 dollars above NADAC. So when you look at the issue um of a dispensing fee and what's fair and reasonable, we're really starting out. In 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 2, if not 3, chain pharmacies have just closed. Or fold it 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? They contact us as to the insurance issue, um, the, uh, the pharmacies, however, are not required to report to us. Uh, that they're closing, uh, we do not track closures. You may want to speak to Mr. Kirtley, who runs the board of pharmacy who collects and licenses those, those pharmacies. Uh, but we don't track why they close or if they've closed or any of that. Uh, we just don't, we don't thank you. And I'm, I'm, uh, my second question, Mr. Chair. Yes, ma'am. It's your follow up and I will try to be as succinct as possible, but I want it for the benefit um of I think many of our colleagues who are unaware of all and they wouldn't be of all of the dynamics and nuances in this issue. And the time frame that is taken um over years trying to address these issues. Meanwhile, pharmacies all over the state. have closed. Meanwhile, You have the and and I'd like to correct something. Earlier we heard that the top 3 PBMs, CVS Caremark, Optimum Express Scripts controls 70% actually according to the FTC in July they control 80%. A prescriptions. And when you control 80%. Of the prescriptions you have control of determining the formularies. You silence your, your pharmacist who must contract with you because you control all of the prescriptions and the pharmacy for the, the pharmacy prescriptions. You own pharmacies. You own Um, insurance companies. And now are in the I believe top 10, 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 with $73.58. But the pharmacies you own as a PBM who's determining what the independence and the chains get reimbursed for are not getting that. But the pharmacies you own or 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 that what what is fair and reasonable. Within the law, Since they get to basically control the business, control the market, control reimbursements. um, thank you for the question. That's how, you know, we see the rules to allow us a mechanism to be able to um interpret and decide what is fair and reasonable is, um, our attempt to effectuate, um, the law that y'all passed. Thank you so much. Senator Johnson, Senator Johnson, you're recognized. Thank you, Mr. Chairman. Uh, I, I appreciate the debate even though I don't necessarily, uh, like the issue we're having to deal with because it is, uh, to me, uh, there's, there's so many, this is almost a civics lesson. I hope a lot of political science students are watching this, um. Senator Hickey brought up the, the line between the legislative authority and regulatory authority and uh we almost could go back and look at Loper Bride and, and Chevron and see, I mean, this is a national issue at that level, but, but, uh, and I know we're gonna find ourselves this spring, dealing with this, and I'm OK with that. I said that uh I was it Monday we were here before. Uh, I'm OK with that. Uh, I am concerned when the debate starts to devolve into a ad hominem attack on, is it Mr. Wimley, uh, Windley, I'm sorry, I, I, I apologize for not knowing your name, uh, but, uh, I am I did appreciate your comment comparing us to the, to the, uh, John D. Rockefeller, Standard Oil thing, which Congress ultimately fixed through Antitrust laws and forced the breakup of that monopoly, uh. 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 necessities of life in many cases when we're dealing with, with drugs and we're dealing with areas not especially appreciate my friends representative Flowers, Mayor-elect, about her district because it is, uh, that area of the state which seems to be bearing the brunt of this, uh, economic pressure, and bless their hearts, folks in Southeast Arkansas already, they've got the issues of lack of maternity care, other things in healthcare. And now we're, we're going after sort of the, the last health care entity and some of these little towns along Highway 65 is the pharmacy and if those go out, then, you know, we're dealing with the health care desert. In that area. I'm, I'm concerned about it. I see too many. Uh, folks maybe in this room, uh, concerned about the semantics, uh. Mr Commissioner, you have a charge under, uh, 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, uh, uh, there's a predatory situation, which Too often I see this anytime the word PBM comes up. I thought the piece stood for Predator. I'm not sure, but, uh, uh, I see this is your job to protect the consumer through that. Could I get some order behind me, Mr. Chairman. Members, if we could hold sidebar conversation down while the senators asking this question, I apologize to my colleagues for interrupting, but I'd, I thought this was rather important, uh, we do need to have a clarification, and I think that, that Mr. Rand did a good job of, of pointing out the difference between the bulletin and the, and a rule. I mean, you know what's the right thing to do, but to clearly define it, you propose a rule. Am I? Reading that correctly, Mr. Rand, is that kind of what you said? I, 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, so that we can interpret that data from the rule itself language. So I, I view this data as a data, data process, uh, what data do you need to send for us, for us to apply the rule to. So I, I, I, I, but I do share Senator Irvin's concern. About agencies abusing a bulletin or a transmittal or, um, she explained a lot of federal, um, agencies that issue uh transmittals, um, 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, um, I appreciate that. Mr. Rand, that you're, you're erring on the side of caution as far as, as what your authority specifically is. I appreciate that. Uh, 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, and, uh, I, I don't, I appreciate also that you're not, or appear not to be, uh, you know, taking a poll on how many complaints came in from, from consumers because frankly, consumers, they don't understand this. I mean, I had a, a, a meeting with a large employer in my district that uh was their insurance advisor had scared him to death on what their rate was going to be. They said, we're have to lay some people off. And, uh, fortunately, my local pharmacists and, uh, uh, some other folks came in and, uh, uh, including some other employers came in and said, look, here's, here's what's really going on, you know, this is, this is a, uh, uh, you, 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 problem. caused by this, that or the other, but you need to drill down and, and, uh, and see what the, the real problem is, I think Mr. Cook's testimony on, uh, Monday, I, I took a little bit of 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. Senator Johnson, yes sir. Can we get to question. Thank you. Yes, sir. So since I've praised y'all for looking down the road and seeing what the problem could, could be. Can you tell me then if this rule fails to pass, what do you see the kind of problems that we're gonna have pushed onto our plate for January, February, March, and April. I think it's quite obvious. You may get legislation from the pharmacies, wanting a dispensing fee next session if this fails, so. Um, I don't know what that bill or draft would look like, um, again, the other states that have enacted, uh, dispensing fee legislation by pharmacies, uh, and I know, and I agree with, uh, Tennessee is not a good example, but those states did enact a dispensing fee uh law, uh, and it was $10.50 some odd cents in each of those states fixed to apply to all drug transactions. This rule mo set a little bit where the, there may not be a fee, uh, or it may be $2 or it may be $3 it just depends on what the data is. So our approach is more of a graduation 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 I, to answer your question, I would suspect you may get legislation from the pharmacies about this. just a little bit to what Mr. Rain just said, I think is responsive also to Speaker Shepherd's question that, um, if AID did bring an enforcement action against the PBM which resulted in a lawsuit, so they, the PBM, we 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, that would be an alternative if we didn't have this, as I said, my dad told me once that reasonable is the cause of more laws. than probably any other thing and I, and I appreciate that. One last question, if I could, Mr. Chairman, I understand that we've lost approximately, uh, uh, 225 retail pharmacies in the state since, since like 2016. Is that a correct? I, I, I've heard that, um, when the board it was last year when Senator Irvin asked that question, I think we were told 6, but I, I, you'll have to talk to the board of pharmacy on that. We, again, 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. Senator Irvin, you're recognized testified to a net of 6 over the past, I don't, I think since I, I, I don't know how many years, but 6. But again, a lot of those were consolidation or people retired and sold their, you know, pharmacies and or retired or Walgreens, I think, had some closures because of business decisions, but that didn't have anything to do with Arkansas, but probably their, their corporate. Uh, just quickly, Tennessee, you said you wanted to do a graduate, graduated approach, but my understanding is that Tennessee, it's for only low volume pharmacies, not all pharmacies, yeah, they're, you're right, Tennessee's got a, it's a unique law, uh, they tailor the fee to apply to retail independent pharmacies. So they're excluding the others. Um, I'm concerned if we did that, there might be a legal issue about whether we're, we're an acting special legislation just for one particular type of pharmacy. So our, oh, OK, OK, but my, my question is that, I mean, I, we're not, when we, we, we use these other states as examples, we need to make sure we're clarifying this is not apples to apples. They were actually targeting low volume pharmacies to represent the flowers, perhaps point and not 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 like they're, they're not for this. So there's a lot and, and that's a rule pharmacist and so I, I just wanna make sure that we're real clear like there there is some opposition out there. And, and the other thing on just quickly. On On the, the compensation, uh, that, that you're talking about. I mean this in the public comments, is that correct? That the people that, that the employers. Is this correct? Do your understanding from their public comment is that the employers were 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, this will get passed down from the employer to the employee covered on the healthcare 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, so if, if a fee is required, if, if we require a fee, we may not require a fee and therefore, there won't be that issue on copay or co-insurance, the answer is yes. Um, the patient may pay uh a uh an impact from this cost or fee up to the extent of their co-payment limit or co-insurance limit. So I agree there could be a premium impact as well that on the health. that the member has to additionally pay if a fee is required. So, and you're the, so increase in premium and, and or it could be both out of pocket, 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, you know, covered the overhead cost of the overhead costs for that 4. profit industry. OK, I'm just making sure that we're clear because, because I, I think at the 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 in straight 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 caseworker. May have 5 prescriptions that they go and fill, and that's going to be $50 on top of. The cost So I, I, they're, they're, that's a big concern. So I just wanted 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, to their employees and patients a fee is required. OK, thank you. Senator Hickey, you recognize. Mr. Chair, would now be at the appropriate time for me to make a motion. Um, 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 pharm Association. Mr. Chair, would you put me in, would you put me in the queue? Would that be possible? You're there, Mr. Benson, do you still choose to speak? You, you wave, right? And this will be the proper time for your motion, Senator Hickey. Thank you, Mr. Chair. Uh, Mr. Chair, I move to request a vote regarding the issue of not approving this rule. Uh, there's a Uh, penalty involved, uh, so there has, there doesn't have to be any other, uh, further comment on that. And there's also a possible fee. So to clarify your motion, uh, is to take a vote on not approving the rule. I, my first motion is to make a vote, requesting that we take that vote. That's a proper motion is their second. I have a motion in a second, all in favor of the motion, say aye. pose nay. The eyes have it. Senator, that will require a 2nd motion. You're prepared to make that motion? Yes, sir, I am. You may proceed. Uh, I move that we not approve the rule. That's a proper motion. I have a motion in 2nd. Discussion on that motion. So you know all those in favor say aye. Pose nay. The eyes have it. The motion is not approved. The rule. The rules members, we will now go to item. 4 Department of Corrections, border of Corrections. On this one. 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 Ms. Rau to present the rule. Ms. Roe, you're recognized. You'll identify yourself, please. Good morning, Tony Rowell, uh, Chief Legal Counsel, Department of Corrections. You have in front of you the rule that sets up the membership of earned release credit committees, um, so as you are all aware, the Protect Arkansas Act fundamentally changed how we, uh, 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. Um, it just puts in the language on each of the membership, um, 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, um, just said, for example, that one representative was the chair of the posts 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 interests of that post-prison transfer board. That's the only change. It's a pretty straightforward rule. Um, it was adopted preliminarily by the board of Corrections in July. Um, 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, I'm here for any questions if you have them. Thank you, Mr. Ro members again, just for clarification and for the record, we are reviewing and approving the proper rule that was filed, but the, it was not in your original packet. It is the rule that has been passed out by staff and presented by Ms. Roll. Are there are any questions? Senator Hammer, you're recognized. Thank you, Mr. Chair. Uh, question, uh, what about the public comment on this? Did the public have a chance or was it necessary for them to have public comment. So the version that we posted and put out for public comment was the correct version it was the correct version? OK, I just want to make sure for the record. Thanks. Any other questions for Ms. Roll? 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. Good morning, Courtney Sali Ford, Chief of staff for the Department of Education. We have 3, rules for your review and approval. I can go through these one by one or I can just do that, OK. I think they're pretty quick. Yes, the first rule is governing the academic facilities distress program. These rules were amended to implement provisions of the Learns Act Act 237, um, 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. Thank you, Mr. Ford. Uh, members, any questions on 5A? See no questions in without objection, the rule is reviewed and approved. We'll go to 5B. These are the rules governing public school academic facilities and transportation academic facilities, partnership program, uh, 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, um, all other changes are simply formatting and sty. istic changes, public comment period was held, um, hearing was held, comments were received, no substantive changes made. Thank you member's questions on 5B, seeing no questions without objection, the rule is reviewed and approved. Item 5C. 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. Members' questions on 5C. So no questions in without objection. The rule is reviewed and approved. Thank you for being here today. Thank you 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. Good morning, Keisha Morrison, Chief Counsel Energy and Environment. Bailey Taylor, chief administrator of Environment and DEQ Director. Thank you. You may present your rule. Thank you. We're here this morning seeking review and approval of Rule 36, our amendments are a result of Act 7:13 of 2023. The major structural changes have to do with, uh, switching from 11 used to districts to 4, and each of those tar districts are governed then by a entire accountability board. Uh, the programs and boards have the option to enter into interlocal agreements, uh, 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. Uh, the programs are subject to a biannual legislative audit, tire retailers, generators, and importers are subject to some statutory business clo closure procedures and, um, the disposal facilities and tire programs are not required to pay permit fees or permit transfer fees to DEQ. There's some other housekeeping amendments that were made as well. And all of these amendments, uh, that were. Pursuant to Act 713 of 2023, were part of creating more monitoring and oversight and accountability for the TAR programs. And with that being said, we're happy to take any questions. Thank you. Members, any questions on item 6B? See no questions in without objection, the rule is reviewed and approved. Thank you for being here today. Go to item 7, Department of Finance Administration, the Arkansas Racing Commission. Gentlemen fuel identify yourself for the record. you may present your rules. Take these one at a time. We'll start with item 7A. Byron Frein, the attorney for the Arkansas Rights security. Trim in our Department of Finance Administration, regulatory division. Walter Ebel with, uh, Oak Lawn may proceed. The first row we had well the first item was to repeal of the Greyhound racing rules last greyhound racing racing was in 2022. This was, uh, the request to do away with it was, was by South and Greyhound Park and there've been no, uh, Public objections or comments on that repeal of those rules. And one of the reasons we suggest you repeating the rules is because the, the rules were being codified. It would be a, a, a, a waste of a lot of people's time and effort to codify rules that were not used. we don't even have, we don't even have employees to issue licenses. OK. Thank you for that, Senator Irvin, you're recognized for the question. Yes, in the, the question and the comment, um, it says, um, that Arkansas code is referenced here regarding fingerprint and background checks for greyhound owner or trainer license applicants, um, does this, is it your? Opinion that that statute also needs to be repealed. I think we can keep the statute and if greyhound racing is reinstituted that we were re-adopt the rules which will require the fingerprinting, uh, but since there's, we don't have any employees and we don't have any any racing at this point, so I don't think there's really any need to change the statute. OK. Thank you. Members, any other questions on 7A. Seeing none and then without objection, the rule is reviewed and approved. Mr. Abel, you are signed up to speak for, I'm assuming, Yes, you want to provide that during, during the presentation of the rule, or do you want to provide additional content after the presentation of the rule and I'll just here to answer any questions that may come up. Item 7B. 7B was Rule 2148. And at the real prior to this said no person may register more than one stable name. It's been changed since a person may register and I think the reason for this is that we're we're attracting, we need more and more horses for attracting more, more sophisticated. Uh, horseman to Oakland Park because it's becoming one of the premier tracks in the country and that real suggestion was made, there were no, uh, public comments and no objections to that rule. I think it's supported by Oakland. OK, Mr. Cha, you're recognized this generally came up where somebody, uh, 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 Okla. and uh the racing commission. Members, any questions on item 7B? So no questions in without objection, the rule is reviewed and approved. Item 7C. 7C is Rule 2444 and this is the claiming rule at Oaklawn and uh there's a group of horsemen every year that looked at climbing rule and try to make adjustments to it they get it just right and if, you know, they, they had some some change every year it seems like. And this year it says uh horses claimed during the O line season will be awarded 11 if you have a horse claimed and you, you'll be given a claiming preference and they put in there unless Uh, would you not be given in claim pre preference if the horse's most recent previous race was in a non-claiming race or optional claiming race. Or 2, the horse would drop, uh, the horse's value dropped more than 25% of the claiming price and the claiming price in its most recent claiming race. And so they are trying to fine tune the claiming process at Oak Lawn to get it where it fits other jurisdictions and everyone's satisfied with it and there were no public comments on this, Mr. Ebel, you're recognized. Yes, several years ago we adopted a claiming preference rule, uh, to allow somebody that has a horse claimed to get a preference in their next claim if they, uh, if they're more than uh one person claims the horse, the person with the claiming preference, uh. gets the claim rather than determining that by a lot or draw, and this, uh, tightens that up to, 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, it'll result in less claiming preferences being issued. Members, any questions on item 7C. Seeing none without objection, the rule is reviewed and approved. Go to item A, Department of Human Services Division of Developmental Disability Services. Thank you, gentlemen. Good morning, Laurie McDonald DHS. Hi, good morning, Melissa Weatherton, DHS. Jennifer Bris, DHS Tommy Tarpley. Uh, this rule, uh, involves updates to the two, Medicaid programs, uh, that are available for children who've been diagnosed with autism spectrum disorder, uh, the first is the autism waiver, which is a 1915C Medicaid waiver that provides intensive one on one services to children and natural environments from the ages of 18 months to 8 years of age, uh, and then the corresponding, um, waiver application for the five-year renewal for that. is included in the packet in the corresponding updates with the autism waiver Medicaid manual. Uh, the other service is ABA therapy services under the EPSDT program, uh, 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 uh includes formal eligibility criteria, clinical. qualifications, supervision requirements, covered services, and covered service delivery requirements and other parameters uh around the performance of ABA therapy services. Um, the ABA therapy, uh, aspects of this rule would have anticipated effective date of January 1st, 2025, uh, and the rule is anticipated to be cost neutral. We'd be happy to answer any questions. Thank you members, any questions for the department on 8A? See no questions and without objection, the rule is reviewed and approved. Thank you. Thank you for being here today. We'll go to item 9, Department of Human Services Division of Medical Services. Good morning, Elizabeth Pittman Division of Medical Services. Thank you. You may proceed with your rule. Thank you. This was passed pursuant to act or is being passed pursuant to Act 480 of 2023. It is the second rule we've brought to you related to this act, um, which is for ambulance providers to provide what we call treat triage and transport, which is ET3. Um, 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, um, there are no issues with that. And I'm happy to take any questions. Thank you, Ms. Pitman. Members, any questions for the agency on 9A? See no questions in without objection, the rule is reviewed and approved. Go to item 10. Department of Public Safety. Good morning. Diane Torres Porter, attorney for the Department of Public Safety. Porter, it's good to see you. Missed 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. 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. Um, this 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. Thank you. Thank you. Members, any questions for the agency? Item 10A. See no questions without objection, the rule is reviewed and approved. We'll go to item Morning, gentlemen. If you'll identify yourself for the record, then you may present your rule. Good morning. Uh. Good morning, uh, Joe Pence, uh, Northeast Arkansas Regional solid waste, uh, executive director. I'm Robert Thompson. I'm the attorney for the Northeast Arkansas Solid Waste Management District. Yes, sir. You may proceed. This is a change to the rules of the district. The district is uh. Four County regional solid waste Management District in northeast Arkansas, um, you'll see there are technical and grammatical and cleanup language throughout. Um, there are some changes to the way to the uh. Minor changes to, uh, waste hauler licenses and section 701 and 703. Those were made to comply with statute and state law. Uh, Section 704, we lower the fees charged for waste hauler licenses. Um, section 902 changes, um, the fees does not, does not, um, raise fees, but changes the fees to be consistent. With statute. Um, we, Um, we put this out for public comment. There was none and we held a Uh, public hearing and there was no comment at the public hearing. Thank you, Mr. Thompson, we appreciate your agency, uh, looking at the operations and being able to lower fees, uh, that's a pass-through that goes right down to our constituents back home, so we appreciate this. Members, any questions on 11A? I see Senator Ervin, you are recognized. Hi, Senator Thompson. It's great to have you with us again. I hope you're doing well and I just echo the chair's comments. Thank you. I think that's really great management. And so I applaud you for that. Thank you. Members, any questions for 11A. Seeing no questions in without objection, the rule is reviewed and approved. We will go to E on your agenda. We're now, uh, 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. Uh, those items are listed in your, on the agenda under E, along with an update. Uh, for each one of those provided the request of Senator Irvin a couple of months ago. 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. give you just a moment to look back through that. Senator Irvin, you are recognized. Just on the rules governing the child sexual abuse and human trafficking prevention program. I was just, uh, it says the final. I was just wanting to see what the holdup was on that one. Which agency was that under that's visionary and secondary education have the Department of Education come forward, please. Courtney Saiss Ford, Department of Education, um, I know the statement that's, that's. Listed there talks about prioritization, um, obviously protecting students is incredibly safe and these rules are, um, have been drafted and are just waiting approval. We hope to have them to you soon, um, but one thing I would point out is that the law being in effect does not, um, the law is in effect and so the law is not being promulgated, doesn't change anything, doesn't, um, 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, the law that's currently in place. OK, that's, that's good. I, I think I just, I now remember that you told us that that last time. I just, you know, incredibly important, obviously topic so I just wanted to check on that. And then I guess with that same thing be true, like 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? Yes, it is, and, um, one of the attributing, um, delays in that was bringing groups of educators together and getting input and feedback on that as we did with all of our learns legislation. And again, not that it's not important, but just due to the volume of the rules that we had, um, it's one that we felt could take a little bit longer to ensure that we got it right. OK, 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? OK. And then the last one on the, the course choice since you're at the table, the course Choice program is, is that, I know it's State Board of Education. I'm interested in, are they, uh, is this just based on, uh, is, is this rule based on the learns section as it applies to what grade level. So the Learns Act implemented course choice for all grade levels, K-12, um, it does not take effect until the 25, 26 school year and, As we were writing the rules, um, we actually came across some issues in the statute that would make it difficult to implement, um, 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. OK, on that, I'd like to talk with you about that because I'd love to see the avail availability of course choice selection by a student. Um 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, I would love to see that. So as you're working statutorily on that, if you don't mind just circling me in cause I just had some thoughts about how we could more specialize uh a an education for their benefit if they know exactly what revenue, avenue they're taking with of course parental involvement, all that. So really interested in that one. Thank you so much, Mr. Chair. Thank you, Senator. Good question. Senator Hamm, you have a question for the department. Thank you. Thank you. I know it's on the, on the handout sheet, for example, it says, um, Says here about it, it was in committee that the rule was going to be released, uh, in the November 7th meeting be released for public comment in its November 7th meeting. We're 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 some no, some of them have been, they've all been drafted, but some of them have not been released for public comment yet. They're still pending internal approval. Yeah, I. I know the dates were put in there as March, um, and again, some things just after we would submit our report, things of, upon further review, we've discovered there might be a little bit longer delay. 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, uh, division of Elementary, 2nd education. down there, the 3rd 1. That's the one I'm looking at right now. That would be the rules governing grading and course credit. Yes, yeah, rules governing grading and course credit. That one, will be going out for public comment, um, probably within the next week. Why was it, why was, 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 it processed and get it, get it out there approval processes that are necessary before we can release them publicly. All right. Thank you. Members, you know, the questions for Department of Ed while the sports at the table, seeing none, and thank you for coming and answering those questions. Members, do you have any additional questions for agencies under E. Saying 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. had time to prepare and study for that. Are there any questions? Oil and gas, Then with that objection we'll file the December monthly written update from that department. Nothing else before the committee without objection, having no further business, we are adjourned.