2026 Fall Statewide Meeting Legislative Update from SC DOI

Thank you to the South Carolina Department of Insurance (SC DOI) and Legislative & Public Policy Liaison Robert D. Cathcart III, Esq., for presenting the 2026 Legislative Update at NABIP SC’s Fall Statewide Meeting on August 11, 2026.

The session covered updates on S. 196, H. 4817, various PBM reform bills, including H. 4796, H. 4792, H. 4794, H. 4791, and S. 342, as well as AI in prior authorization, S. 920, and health insurance cost sharing, S. 330. Additional discussion included agency funding, the PBM Study Committee, liquor liability, and forecasting.

Below are highlights from the 2026 Legislative Update.

Wellness Plans

H. 4305
Wellness Reimbursement Programs

• Regulates Wellness Reimbursement Programs
• A “wellness reimbursement program” means a self-insured medical reimbursement plan or a wellness integrated medical plan expense reimbursement plan:
  • That is created pursuant to 26 C.F.R. 1.105-11 and Sections 105 and 125 of the Internal Revenue Code;
  • That has issued a contract to provide services and pay claims pertaining to reimbursements of qualified medical expenses relating to Section 213(d) of the Internal Revenue Code;
  • That is intended, created, marketed, and sold as an ancillary product to an individual or group health insurance coverage or self-insured group health plan; and
  • The reimbursement funds are not held by a third-party administrator.

Insurance Fraud

Proposed PBM Reforms

PBMs and PSAOs

• Requires the Department of Insurance (DOI) to examine PBMs and Pharmacy Services Administrative Organizations (PSAOs) at least once every five years, with all exams following the general standards of Chapter 13, Title 38.
• PBMs and PSAOs must pay all costs associated with DOI examinations; DOI may file civil action if an entity refuses to pay.
• Information obtained during examinations is deemed proprietary and confidential and exempt from public disclosure under FOIA.

H. 4792
Insurance Penalties & PBM Fees

• Increases administrative penalties for insurers, PBMs, and HMOs: maximum fines raised to $25,000 for standard violations and $250,000 for willful violations, with possible suspension or revocation of authority to operate in the state.
• Raises PBM licensing costs by increasing the initial application fee to $25,000 and annual renewal fee to $10,000.
• Maintains detailed PBM ownership, management, and disclosure requirements as part of the licensing process.

H. 4794
PBM Costs & Steering

• Bans PBM spread pricing, unfair/deceptive practices, misuse or sale of beneficiary data, patient steering without disclosure, and inducements to push patients to PBM‑owned pharmacies.
• Prohibits retroactive claim denials, discriminatory reimbursement , failure to honor MAC pricing rules, restrictive early‑refill limits, improper step‑therapy, delayed authorizations, and repackaging mark‑ups without notice.
• Requires PBMs to meet payment standards, provide detailed remittance advice, remit all required state/local sales taxes, and maintain registration with the Secretary of State and licensure with DOI (each unlicensed day counts as a separate violation).
• Mandates point‑of‑sale cost‑sharing reductions reflecting 100% of rebates, provides full rebate‑history transparency, and classifies repeated violations as unfair competition under the South Carolina Unfair Trade Practices Act.

H. 4791
PBM Reimbursements

• Requires PBMs to reimburse pharmacies/pharmacists at no less than the National Average Drug Acquisition Cost (NADAC) plus at least the current Medicaid professional dispensing fee; if NADAC is unavailable, reimbursement must meet Wholesale Acquisition Cost (WAC) plus the same fee.
• Mandates that pharmacies in South Carolina cooperate with federal and state drug acquisition cost surveys, including NADAC.
• Establishes a Department of Insurance (DOI) complaint process: DOI must post a standard complaint form online; PBMs must respond within 10 business days; DOI must make a determination within 30 days of receiving the PBM’s response.
• If a complaint is upheld, PBMs must pay double the amount of the underpayment and apply corrected reimbursement to all similarly situated pharmacies statewide.

S. 342
PBM Reimbursements

• Establishes strict minimum reimbursement standards for pharmacies, requiring PBMs to pay at least 104% of NADAC (or WAC) plus Medicaid’s dispensing fee.
• Requires enhanced dispensing fees and bans PBMs from paying affiliates more than non‑affiliates.
• Creates formal complaint process that forces PBMs to repay double the underpayment if they violate reimbursement standards.
• Strengthens regulation of PBMs with higher fines, tougher licensing requirements, and expanded prohibitions on steering patients to PBM‑owned pharmacies.
• Allows SC Department of Health and Human Services to directly manage Medicaid pharmacy services or strictly limit PBM involvement.

Artificial Intelligence

• Establishes new rules for insurers that use artificial intelligence (AI), algorithms, or software tools in prior authorization or coverage determinations.
• Requires determinations to consider each enrollee’s medical history, unique clinical circumstances, and relevant records, preventing decisions based solely on group datasets.
• Mandates annual insurer certification to the Department of Insurance (DOI) affirming that AI tools are applied fairly, consistently, and do not discriminate against any subscriber group.
• Requires that all denials, reductions, or deferrals ultimately be made by a licensed physician or qualified healthcare professional, not AI alone.
• Insurers must provide clear disclosures to enrollees when AI tools are used, periodically review AI accuracy, and ensure patient data is used only for approved purposes under HIPAA.
• DOI may investigate violations, require corrective plans, hold hearings, and impose disciplinary actions for repeated non‑compliance.

Health Insurance Cost Sharing

S. 330
Health Insurance Cost Sharing

• Standardizes definitions of cost‑sharing terms and applies the federal annual cost‑sharing limit to all health plans in the state.
• Requires insurers, PBMs, and TPAs to count all cost‑sharing payments made by or on behalf of the enrollee, with special rules to preserve HSA‑qualified plan status.
• Limits cost‑sharing credit for brand‑name drugs when a medically appropriate generic is available unless the enrollee receives authorized access.
• Prohibits benefit design changes based on manufacturer assistance program availability.
• Applies to plans issued or renewed on or after January 1, 2026, and authorizes regulatory implementation by the Insurance Director.

Stay tuned for more legislative updates, advocacy opportunities, and upcoming events from NABIP SC.