Washington OIC Guidance on Health Care Benefit Managers

PATTY KUDERE R STATE INSURAN CE COMM ISSIONER STATE OF WASHINGTO N OFFICE OF INSURANCE COMMISSIONER Phone: 360-725 -7000 www.insurance.wa.gov Mailing Addres s: PO Box 40255 Olympia, W A 98504- 0255 Street Address: 50 00 Capito l Blvd Tumwa ter WA 98501 Technical Assistance Advisory 2025-02 1 TO: All health care benefit managers and health carriers operating in the State of Washington FROM: Insurance Commissioner Patty Kuderer DATE: September 15, 2025 SUBJECT: OIC’s Interpretation of Chapter 48.200 RCW – Health care benefit managers The purpose of thi s Technical Assistance Advis ory (“TAA”) is to provide guidanc e related to the application of Chapter 4 8.200 RCW to health care b enefit managers, inc luding pharmacy benefit managers, and provide guidance related to provisions enacted by Engrossed Se cond Substitute Senate Bill 5213 (E2SSB 5213, Chapter 242, La ws of 2024). The Washington S tate Of fic e of the Insurance Commissioner (“OIC”) released a preproposal statement of inquiry (CR -101) on July 22, 2025, pertaining to E2SSB 5213 and health care benefit managers (R 2025-11, WSR 25-15-143). Background The Legislature enacted Chapter 48.200 RCW in 2020, with the express inte nt to protec t and promote the health, safety, and welfare of Washington residents by establishing standards for regulatory oversight of health care benefit mana gers. 2 Health Care Benefit Managers To conduct business in Washington state, health care benefit managers (“HCBM s ”) are required to register with the Insurance Commissioner and a nnually rene w their registration. 3 “Health care ben efit manager” is defined as follow s: 1 This advisory is an i nterpretive poli cy statement released to advise the public of the OIC’s current opinion s, approaches, and l i kely cour se s of action. I t is advisory only. RCW 34.05.230(1). 2 RCW 48.200.010. 3 RCW 48.200.030.

OFFICE OF THE INS URANCE COM MISSIONER Technical Assistance Advisory 2025-02 OIC’s Interpretation of Chapter 48.200 RCW – Health care benefit managers September 15, 2025 Page 2 A person or entity provi ding services to, or a cting on behalf of, a health carrier or employee benefits programs, that d irectly or indirectly impa cts the determination or uti lization of benefits for, or patient access to, health care se rvices, drugs, and supplies including, but not limited to: • Prior authorization or preauthorization of benefits or care; • Certification of benefits or care; • Medical necessity determinations; • Utilization review; • Benefit determinations; • Claims processing and repricing for services a nd procedures; • Outcome management; • Payment or authorization of payment to providers and fac ilities for services or procedures; • Dispute resolution, grievances, o r appeals relating to determinations or utilization of benefits; • Provider network management; or • Disease management. 4 There are several sub-types of HCBMs, such as laboratory benefit manager, mental health benefit manager, and pha rma cy benefit manager. 5 C hapter 48.200 RCW applies to hea lt h care b enefit managers, as defined in RCW 48.200.020, who provide any of the services listed above to, or act on behalf of health carriers as defined in RCW 48.200.020 or employee benefits programs 6 a s defined in RCW 48.200.020. Health care benefit managers do not include the following: • Health care service contractors as defined in RCW 48.44.010; • Health maintenance organizations as defined in RCW 48.46.020; • Issuers as defined in RCW 48.01.053; • The public employees' benefits board established in RCW 41.05.055; • The school employees' benefits board established in RCW 41.05.740; • Discount plans as defined in RCW 48.155.010; • Direct patient-provider primary care practice s as defined in RCW 48.150.010; • An employer administ ering its employee benefit plan or the employee benefit plan of an affiliated employer under common management and control; • A union, e it her on its own or joi ntly with an empl oyer, a dmi nistering a be n efit plan on behalf of its members; • An insurance produ cer selling insurance or engaged in rel ated a ctivities within the scope of the producer's license; 4 RCW 48.200.020(5)(a). 5 See definitions o f l aborator y benefit manager, mental health benefit manager, and pharmacy benefit manager under RC W 48.200.020. 6 "Employee benef its programs" means pro gr ams unde r both the public employ ee s' bene f its board establ i shed in RCW 41.05.055 and the school employees' bene fits board established in RCW 41.05.740. Id.

OFFICE OF THE INS URANCE COM MISSIONER Technical Assistance Advisory 2025-02 OIC’s Interpretation of Chapter 48.200 RCW – Health care benefit managers September 15, 2025 Page 3 • A creditor acting on beh alf of its debtors with respect to insurance, covering a debt between the creditor and its debtors; • A behavioral health administrative services organization or other county-m anaged entity that has been approve d by the state health care a uthority to perform delegated functions on behalf of a carrier; • A hospital licensed under chapter 70.41 RCW or ambulatory surgical facility licensed under chapter 70.230 RCW, to the extent that it performs provider credentialing or recredentialing, but no other functions of a health ca r e benefit manager as described in subsection (4)(a) of this section; • The Robert Bree collaborative under c h apter 70.250 RCW; • The health technology clinical committee established unde r RC W 70.14.090; • The prescription drug purchasing consor tium established under RCW 70.14.060; or • Any other entity that performs provider credentialing or recredentialing, but no other functions of a health care benefit manager as described in RCW 48.200.020(4)(a). Health care benefit ma nagers are re quir ed to comply with the requirements set forth in RC W 48.200.030 through RCW 48.200.050. Included in these requirements is the obli gation for HCB Ms to register with OI C and annually renew their regi stration. HCBMs also must file with OI C a ll benefit management contracts and contract amendme nts between the health care benefit manager and a health carrier, provider, pharmacy, pha rmacy services administ ration organization, or other health care benefit manager, entered int o directly or indirectly in support of a contract with a carr i er or employee benefits programs. These contra cts are required to be filed within 30 days fo llowing the effec ti ve date of the contract or contract am endment. Contracts and contract amendments between he alth care benefit managers and health carriers that were executed prior to July 23, 2023, and are cu rrently i n force, must be filed with OIC no later than 60 days following July 23, 2023. 7 Pharmacy Benefit Managers To conduct business in Washington state, pharmacy benefit managers (“PBMs”), a sub -type of HCBMs, also are require d to register with the OI C and annually re n ew their re gistration. 8 “ P harmacy benefit manager” is defined as follows: A person that contracts with pharma cies on b ehalf of a health carrier, employee benefits program, or medicaid managed care program to: • Process claims for prescription drugs or medical supplies or provide retail network management for pharmacies or pharmacists; • Pay pharmacies or pharmacists for prescription drugs or medical supplies; 7 See OIC Techn ical Assistance A dvisory 2024-01 for more inform ation about OI C’s Interpretation of Chapter 48.200 RC W & RCW 48.43.731 (Carr i er Filing Requi rements related to H CBM contracts). 8 RCW 48.200.030.

OFFICE OF THE INS URANCE COM MISSIONER Technical Assistance Advisory 2025-02 OIC’s Interpretation of Chapter 48.200 RCW – Health care benefit managers September 15, 2025 Page 4 • Negotiate rebates, discou nts, or other price con cessions with manufac ture rs for drugs paid for or procured as described in this subsection; • Establish or manage pharmacy networks; or • Make credentialing determinations. 9 Chapter 48.200 RCW appli es to pharmacy benefit managers as defined in RCW 48.200.020, that contract with pharmacies to conduct any of the services listed above on behalf of health carriers defined in RCW 48.200.020, employee benefits programs de fined in R CW 48.200.020, or medic aid managed care programs. Pharmacy b enefit managers are requir ed to comply with the requir ements set forth in RCW 48.200.030 through RCW 48.200.050 (applying genera lly to he alth c are benefit managers), and RCW 48.200.220 through RCW 48.200.320 (applying specifically to pharmacy benefit managers). Specific Plans Chapter 48.200 RCW Does Not Apply To Chapter 48.200 RCW does not apply to health care benefit ma n agers as defined in RCW 48.200.020, who provide the services listed above exclusively to, or act exclusively on behalf of: • Medicare supplement plans; • Medicare Advantage plans (Part C of Medicare); • Medicaid, except that pharmacy benefit man agers that contract with pharmacies on behalf of Medicaid managed care plans are subject to Chap. 48.200 RCW; • Children’s Health Insurance Program plans; • Discount Plans; • Union Plans; • Self-insured health plans (unless the plan is an employee benefits progra m defined under RCW 48.200.020); or • Plans that provide monetary payment, such as income replacement disability plans or life insurance accelerate b enefits, unless these plans provide coverage for health care services, drugs and supplies. Example #1: A health care benefit manager provides health care benefit management services for Medicare supplement plans and fully-insured health plans. Th e health care benefit manager must register with OIC b ecause it provides health care benefit manager services to fully -insur ed health plans. Example #2: A health care benefit manager p rovides health care benefit manag ement services exclusively for self-fund ed employer group health plans other than employee benefit programs as 9 RCW 48.200.020(1 4)(a).

OFFICE OF THE INS URANCE COM MISSIONER Technical Assistance Advisory 2025-02 OIC’s Interpretation of Chapter 48.200 RCW – Health care benefit managers September 15, 2025 Page 5 defined in R CW 48.20 0.020(4) (PEBB/SEBB Uniform Medical Plan). The hea lt h ca re benefit manager is not required to register with OIC. As discussed further below in the Section, “Application of E 2SS B 5213 to S elf-funded Group H ealth Plans that Opt- In, ” E2SSB 5213 applies RCW 48.200.280, 48.200.310, and 48.200.320 to self - funded group health plans governed by the provisions of the federal employee retirement income security act of 1974 (29 U.S.C. Sec. 1001 et seq.) only if the self-funded group health plan elects to participate in RCW 48.200.280, 48.200.310, and 48.200.320. Application of E2SSB 5213 to S elf-Funded Private Group Health Plans that Opt- In (Effective January 1, 2026) RCW 48.200.330(1) pr ovides that Chapter 48.200 RCW is inapplicable to persons or e nti ties providing services to, or acting on behalf of, a uni on or employer administering a self -funded group health plan governed by the provisions of the federal employee retirement income security act of 1974 (29 U.S.C. Sec. 1001 et seq.), unless a se lf -funded private group health pla n chooses to participate in RCW 48.200.280, 48.200.310, and 48.200.320 governing certain pharmacy benefit management business practices. This “opt - in” process is established in RCW 48.200.330(2) and (3). As a result of these legis lative changes, pharmacy benefit managers acting on behalf of self -funded private group health plans that have opted to participate in RCW 48.200.280, 48.200.310, and 48.200.320 as provided in RCW 48.200.330 will be required to comply with RCW 48.200.280, 48.200.310, and 48.200.320 in administering that self-funded private g roup health plan’s pharmacy benefits. In this circumstance, p harmacy benefit managers are not subject to any other provisions in Chapter 48.200 RCW. Furthermore, the L egislature has expressly stated in RC W 48.200.330(3) that the O IC does not have enforcement authority related to a pharmacy ben efit manager's conduct pursuant to a contract with a self -funded group health plan governed by the federal employee retirement income security act of 1974, 29 U.S.C. Sec. 1001 et seq., that elects to participate in RCW 48.200.280, 48.200.310, and 48.200.320. OIC will im plement the self-funded private group health plan opt-in process during F all 2025, and a s part of that process, mak e a list of the health plans that have opted in under R CW 48.200.330 available on its website on or before December 1, 2025. Rulemaking On December 18, 2024, the OIC adopted rules relating to health care benefit managers (R 2024-02). On July 22, 2025, the OIC filed a preproposal statement of inquiry (CR -101, WSR 25-15-143) regarding additional rulemaking to ensu re the OIC can continue to effectively oversee he alth care benefit manag ers, in cluding pharmacy bene fit managers. In this rulemaking, the OIC may amend Chapter 284 -180 Washington Administrative Code (WAC), including, but not li mited to, implementation of E2SSB 5213 (Chapter 242, Laws of 2024).

OFFICE OF THE INS URANCE COM MISSIONER Technical Assistance Advisory 2025-02 OIC’s Interpretation of Chapter 48.200 RCW – Health care benefit managers September 15, 2025 Page 6 Please direct any questions about this advisory to the OIC’s Company Licensing Unit, which may be contacted at clc@oic.wa.gov and (360) 725-7219.