The National Association of Insurance Commissioners (NAIC) held its Summer 2020 National Meeting (Summer Meeting) from July 27 to August 14, 2020. As a result of the COVID-19 pandemic, the NAIC held the Summer Meeting in a virtual format, with conference calls taking place over a three-week period. Despite not being able to meet in-person, the NAIC utilized the Summer Meeting as an opportunity to host conversations among insurance regulators, industry members and consumers regarding recent events, including the impact of COVID-19 on the insurance industry as well as racial inequality and the promotion of diversity in the insurance industry. In addition, the NAIC continued to make progress on a number of initiatives during the Summer Meeting, as highlighted by the following activities:
1. Annuity Suitability Working Group Drafting FAQ Document to Facilitate Uniformity in State Adoption of Revised Suitability in Annuity Transactions Model Regulation
The Annuity Suitability Working Group (ASWG) led the NAIC’s multi-year efforts to develop revisions to the Suitability in Annuity Transactions Model Regulation (SAT) to incorporate a requirement for producers to act in the “best interest” of a retail customer when making a recommendation of an annuity. The NAIC adopted the revised SAT in February 2020, and since that time, several states, including Idaho, Iowa, Kentucky, Ohio and Rhode Island, have begun efforts to adopt the revisions.
However, the work of the ASWG is not complete; now the ASWG is turning its attention to developing a frequently asked questions (FAQ) document to facilitate uniformity in state adoption and implementation of the revisions to the SAT. The current draft of the FAQ document addresses topics such as general background, the intersection of state insurance regulation and federal securities law regulation, how to satisfy the best interest standard of conduct, and insurer supervision and training requirements. A draft of the FAQ document was exposed for a 30-day comment period to seek feedback regarding whether additional topics should be included in the document. Once the topics are developed further, the ASWG plans to expose another draft of the FAQ document for public comment.
2. NAIC Considers Comments to the Group Capital Calculation Template and Instructions and Related Revisions to the Insurance Holding Company Act
During the Summer Meeting, the Group Capital Calculation (E) Working Group (GCC Working Group) continued its work in developing the Group Capital Calculation (GCC) template and instructions. The GCC Working Group is also working on proposed revisions to the Insurance Holding Company System Regulatory Act (Model 440), which will require that the GCC be filed on an annual basis with an insurance group’s lead state.
GCC Template and Instructions
The GCC Working Group discussed the collective comments received on the draft GCC template and instructions exposed earlier this year. Interested party comments continued to emphasize concerns regarding the confidentiality of the GCC (including whether lead state regulators will have the ability to share the GCC with other domestic regulators) and the need to clarify within the instructions that the GCC is intended to be used as an analytic tool, rather than a standard. NAIC staff noted that guidance will also be prepared for the Financial Analysis Handbook, which will include clarifications regarding the confidentiality and purpose of the GCC, and that such guidance will also be exposed for comment.
Revisions to Model 440
The GCC Working Group previously exposed for comment revisions to Model 440, which would require that the GCC be filed on an annual basis with an insurance group’s lead state. The GCC Working Group has discussed in detail the applicable exemptions to the filing of the GCC, including non-US groups whose group-wide supervisor either accepts the GCC for US groups in their jurisdiction or accepts the GCC as an acceptable insurance capital standard (and has indicated such to the International Association of Insurance Supervisors). In response to questions regarding the process for determining that a group-wide supervisor recognizes and accepts the GCC, NAIC staff agreed that a process should be developed to create and maintain a list of jurisdictions deemed to have met this criteria, which may require the establishment of an NAIC group that will be responsible for maintaining such list. The GCC Working Group also discussed an additional exemption that would apply, subject to the lead-state commissioner’s discretion, to groups whose premium is under the $1 billion premium threshold set forth in the Risk Management and Own Risk and Solvency Assessment (ORSA) Model Act, so long as certain other criteria exist.
Finally, the GCC Working Group also discussed proposed modifications related to the reporting of subgroup GCCs. Previously, the GCC Working Group discussed whether a separate GCC should be required for US insurers of non-US groups and determined that it was not the intent of the GCC to require such subgroup reporting. However, industry members expressed concern that some jurisdictions could potentially require subgroup reporting for US groups, and therefore proposed revisions that would necessitate subgroup reporting if such subgroup reporting is already required by another jurisdiction. Interested party comments fell on both sides of the issue, with some commenters noting that subgroup reporting is not within the original intent of the GCC (as each insurance group should be required to file only one GCC), and other commenters citing the need to include the language to ensure mutual recognition and reciprocal treatment by other jurisdictions at all group levels. Discussions on this topic are expected to continue during future conference calls as the GCC Working Group seeks to finalize revisions to Model 440 and the GCC template and instructions ahead of the 2020 Fall National Meeting.
3. Group Solvency Issues (E) Working Group Discusses Results of “Gap Analysis” Related to Implementation of ComFrame and Evaluates Impact of XXX/AXXX Reserves on Group Capital Positions
Following the adoption of the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) in November 2019, the Group Solvency Issues (E) Working Group (GSI Working Group) performed a gap assessment to identify areas where existing state insurance solvency regulations do not meet the minimum standards under ConFrame. Also, in response to a referral from the GCC Working Group, the GSI Working Group is evaluating the impact of XXX/AXXX reserves on group capital positions.
ComFrame “Gap Assessment”
Although the results of the assessment indicate that many of the minimum requirements of ComFrame are already addressed in the U.S. system, the GSI Working Group has identified certain areas that require further development. The results of the ComFrame gap assessment included the following recommendations:
- require that a Corporate Governance Annual Disclosure be filed at the head of the internationally active insurance group (IAIG) level to ensure that processes are evaluated at an appropriate level for the full group;
- update the Financial Analysis Handbook to provide additional guidance for use in completing holding company analysis of IAIG groups;
- update the Financial Condition Examiners Handbook to provide additional guidance for use in conducting coordinated exams of IAIG groups;
- require that ORSAs be conducted and filed at the head of the IAIG level to ensure that risk exposures and control functions are evaluated at an appropriate level for the full group;
- update the ORSA Guidance Manual to encourage additional discussion of certain elements in IAIG ORSA reporting, including, for example, group business strategy, mapping of risks/processes to legal entities, independence of the risk management function, actuarial function and its role in enterprise risk management (ERM) and the ORSA, independent review/validation of ERM/ORSA processes, macroeconomic stresses and counterparty risk, liquidity risk and stresses and resolution/recovery planning.
The GSI Working Group decided to form drafting subgroups to develop revisions to the Financial Analysis Handbook, the Financial Condition Examiners Handbook and the ORSA Guidance Manual to address these recommendations.
Impact of XXX/AXXX Reserves on Group Capital Positions
The GSI Working Group has also formed a drafting group to address a request from the GCC Working Group to quantify and evaluate the impact of XXX/AXXX reserves held by grandfathered captives on an insurance group’s overall capital position. As a result of GCC field testing, the GCC Working Group raised a concern that the GCC, when applied to groups that have XXX/AXXX reserves, may result in a material understatement of group capital. The GCC Working Group requested that the GSI Working Group identify all groups that utilize XXX/AXXX grandfathered captives (pre-AG48 business) and request the liability impact and the asset impact from the lead state for each such group. The GCC Working Group has suggested that it may be appropriate for the lead state for any affected group to exercise its discretionary authority to require the group to disclose the ongoing impact of the test to the lead state until it is no longer adverse and material.
4. NAIC Considers Revisions to Statements of Statutory Accounting Principles
The Statutory Accounting Principles (E) Working Group (SAP Working Group) continued its ongoing work related to the following Statements of Statutory Accounting Principles (SSAPs) and related interpretations: SSAP No. 25—Affiliates and Other Related Parties; SSAP No. 71—Policy Acquisition Costs and Commissions; SSAP No. 43R—Loan-backed and Structured Securities; INT 20-08–COVID-19 Premium Refunds, Limited-Time Exception, Rate Reductions and Policyholder Dividends.
a. NAIC Exposes Further Revisions to SSAP No. 25—Affiliates and other Related Parties—to Clarify Reporting Requirements
The SAP Working Group voted to expose further revisions to SSAP No. 25—Affiliates and Other Related Parties to incorporate new disclosures regarding the identification of related parties and affiliates. Revisions to SSAP No. 25 were originally exposed at the 2019 Fall National Meeting and are largely aimed at aligning related party and affiliate reporting under Statutory Accounting Principles (SAP) with U.S. Securities and Exchange Commission (SEC) reporting requirements, the latter of which focus on beneficial ownership and do not include the concept of a disclaimer of control or affiliation (Disclaimer). The proposed revisions would subject any material transaction between an insurer and a counterparty that is greater than 10% owned by either the insurer or a related party or affiliate of the insurer to SSAP No. 25 requirements and reporting, even if a Disclaimer has been allowed with respect to such counterparty.
Comments to the exposed revisions focused on two main points: (1) concerns that the proposed revisions may impact the reporting of investments on Schedule BA or Schedule D and (2) concerns that the incorporation by reference of U.S. GAAP and SEC reporting guidance should be removed and replaced with the applicable language from the guidance inserted directly into SSAP No. 25 so that any future changes to GAAP and SEC guidance are subject to NAIC review. With respect to the concern regarding Schedule BA and D reporting, NAIC staff clarified that the intent of the revisions is to capture related parties for reporting and not to change reporting in Schedule BA or Schedule D for any investments. In response to the concern regarding incorporation by reference of GAAP and SEC reporting guidance, NAIC staff agreed to remove the references and instead incorporate the specific language from the GAAP and SEC guidance directly into SSAP No. 25. These revisions will be exposed for a 20-day comment period until September 18, 2020, at which point it is expected the SAP Working Group will proceed with adopting the revisions to SSAP No. 25.
b. NAIC Re-exposes Revisions to SSAP No. 71 in Response to Industry Concerns Regarding the Substantive Nature of the Proposed Revisions
The SAP Working Group continued discussions on the exposed revisions to SSAP No. 71—Policy Acquisition Costs and Commissions intended to clarify that (a) a levelized commission arrangement (whether linked to traditional or nontraditional elements) requires the establishment of a liability for the full amount of the unpaid principal and accrued interest payable to a third party, such as a funding agent, at the time the policy is issued and (b) persistency commission must be accrued proportionately over the policy period to which the commission relates and cannot be deferred until fully earned. The SAP Working Group had initially exposed changes at the 2019 Fall National Meeting, and subsequent revisions were added to clarify that reporting entities that have not complied with the original intent shall reflect the change as a correction of an error, in accordance with SSAP No. 3—Accounting Changes and Corrections of Errors, in the insurer’s year-end 2020 financial statements.
The SAP Working Group received three comment letters on the exposure draft, each of which suggested various edits aimed at avoiding further changes to existing accounting practices as well as limiting any unintended consequences resulting from the potentially broad application of the revisions to any deferred payment arrangement. In addition, the comments reiterated the industry’s position that the exposed revisions, which have been classified as non-substantive clarifications, would actually result in substantial changes for companies that have historically utilized levelized commission arrangements in reliance upon existing guidance. While significant discussion on these topics continued during the Summer Meeting, NAIC staff and members of the SAP Working Group stated their opposition to the revisions suggested in the comment letters, noting that such proposed revisions would conflict with longstanding guidance in SSAP No. 71 and the statutory accounting principle that expense recognition should not be deferred. Members of the SAP Working Group noted their support for moving forward with the changes as drafted with a December 31, 2020 effective date. Industry commenters requested that the SAP Working Group defer discussions on this issue until a later date and requested that SAP Working Group members consider utilizing a January 1, 2020 effective date. The SAP Working Group agreed to re-expose the changes to SSAP No. 71, with a comment deadline of September 18, 2020, to allow parties additional time to consider the revisions.
c. NAIC Continues the Development of its Issue Paper Providing Guidance on Proposed Revisions to SSAP No. 43R—Loan-Backed and Structured Securities
The SAP Working Group discussed the status of the issue paper regarding SSAP No. 43R—Loan-backed and Structured Securities (the SSAP 43R Issue Paper), which will document discussions on proposals to determine whether an investment is within the scope of SSAP No. 43R. Proposed revisions to SSAP No. 43R were initially exposed during the 2019 Summer National Meeting and classified as “non-substantive” changes intended to clarify that collateralized fund obligations (CFOs) and similar structures that reflect underlying equity interests, but that are issued in the form of debt instruments, are not within the scope of SSAP No. 43R and/or are bonds created specifically to lower the associated investment RBC charge without any reduction of risk (i.e. principal-protected securities (PPS)). After discussing initial comments received to the exposed revisions, the SAP Working Group reclassified the project as substantive and directed NAIC staff to develop the SSAP 43R Issue Paper to document the rationale for all investments covered by the proposed revisions to SSAP No. 43R. The preliminary draft of the SSAP 43R Issue Paper was exposed for comment during the 2020 spring national meeting.
Industry comments were not available for discussion during the Summer Meeting as official comments to the exposed draft of the SSAP 43R Issuer Paper were due the day following the SAP Working Group’s Summer National Meeting. However, NAIC staff noted that they had been working with industry members over the summer to discuss initial feedback on the SSAP 43R Issue Paper. The day after the SAP Working Group’s meeting, interested parties submitted a 67-page comment letter to NAIC staff, outlining numerous concerns regarding the categorization process outlined in the SSAP 43R Issue Paper. The SAP Working Group has scheduled a conference call for October 13, 2020 to discuss the comments to the draft SSAP 43R Issue Paper.
Of particular note on the portion of the draft SSAP 43R Issue Paper related to PPS, interested parties noted that the Valuation of Securities (E) Task Force (VOS Task Force) adopted an amendment to the Purposes and Procedures Manual of the NAIC Investment Analysis Office to remove all PPS from filing exemption eligibility and to require all PPS, including those currently designated under the filing exemption process, to be submitted to the Securities Valuation Office (SVO) beginning January 1, 2021. The interested party comment letter notes that, as a result of this change, the analysis by the SVO will address the stated risk associated with PPS investments (i.e., to obtain the appropriate RBC charge) as securities that meet the definition of PPS will receive an NAIC designation from the SVO, instead of relying on the filing exemption process to use the credit rating of the investment as the basis for the NAIC designation for RBC purposes.
In addition, as a result of discussions regarding the SSAP 43R Issue Paper, the SAP Working Group is also considering the appropriate reporting of credit tenant loans (CTLs). The SAP Working Group has exposed for comment two options for the accounting of CTLs; to either (i) continue the historical treatment of allowing certain qualifying CTLs that are identified to have bond characteristics, after review by the SVO, to stay within the scope of SSAP No. 43R and be reported on Schedule D as bonds, or (ii) remove all CTLs from the scope of SSAP No. 43R and instead capture them in SSAP No. 21—Other Invested Assets, where they would be reported on Schedule BA. The SAP Working Group is also requesting that the VOS Task Force confirm that an SVO listing could be developed to capture the CTLs that meet the SVO’s structural and legal analysis as possessing bond characteristics. Comments to this exposure are due September 18, 2020.
d. NAIC Adopts an Interpretation to Provide Guidance Regarding the Treatment of Premium Refunds, Rate Reductions and Policyholder Dividends in response to COVID-19
The Financial Condition (E) Committee adopted INT 20-08–COVID-19 Premium Refunds, Limited-Time Exception, Rate Reductions and Policyholder Dividends to provides guidance regarding the treatment of premium refunds, rate reductions and policyholder dividends due to decreased commercial and non-commercial activities resulting from COVID-19 (Interpretation 20-08). Specifically, Interpretation 20-08 provides guidance on the following issues as they relate to COVID-19:
- how to account for refunds not required under policy terms;
- how to account for refunds required under policy terms;
- how to account for rate reductions on inforce and renewal business;
- how to account for policyholder dividends; and
- where to disclose refunds, rate reductions and policyholder dividends related to COVID-19 decreases in activity.
Notably, rather than accounting for premium refunds as “return of premium,” Interpretation 20-08 grants a limited-time exception to existing reporting guidance to permit reporting of certain premium refunds as “other underwriting expenses” if certain criteria are satisfied (the Limited Exception). The Limited Exception applies to property and casualty lines of business for which the insurer filed policy endorsements or manual rate filings prior to June 15, 2020, which allow for discretionary payments to policyholders due to COVID-19 related issues, and with respect to which the insurer disclosed to the states or other jurisdictions in which the policies are written its intention to report such payments to policyholders as expenses. An insurer utilizing the Limited Exception must make additional disclosures in its statutory financial statements as specified in Interpretation 20-08, including disclosure of the underwriting expense reporting as if it were a permitted practice. Although utilization of the Limited Exception does not require a domiciliary regulator’s approval as a permitted practice if the requirements of Interpretation 20-08 are met, if a domiciliary regulator disapproves the underwriting expense reporting, the Limited Exception would not apply. The Limited Exception is effective for second quarter reporting of 2020 and sunsets on January 1, 2021.
5. NAIC Continues Efforts to Address Innovation and Technology in the Insurance Sector
Several NAIC task forces and working groups are evaluating the intersection of technology and insurance, including in the areas of artificial intelligence, the impact of the use of big data on minorities, privacy protections, and the use of predictive modeling in rate filings by property and casualty insurers.
a. NAIC Adopts Artificial Intelligence Principles
The NAIC unanimously adopted a guidance document titled “Principles on Artificial Intelligence (AI).” The principles are organized around the following themes: Fair and ethical, Accountable, Compliant, Transparent and Secure, safe and robust (forming the acronym FACTS). The principles do not carry the weight of law or impose any legal liability on insurers but are intended to assist regulators and NAIC committees addressing insurance-specific AI applications.
b. NAIC Establishes Special Committee on Race and Insurance
The NAIC held a special session on Race and Insurance, which included a discussion of current racially based challenges within the insurance sector. One of the panels focused on “big data” while discussing insurer practices that have a potential for disparate impact on minorities and disadvantaged groups. Panel member Sonja Larkin-Thorne, a retired insurance executive who is currently a consumer advocate and chair of the Consumer Data Subcommittee of the Connecticut Insurance Department Advisory Council on Technology, expressed concerns regarding insurers’ use of big data. Those concerns include the (i) lack of transparency and disclosure to consumers (i.e., consumers are neither aware of nor able to correct the data used in the underwriting and pricing of insurance), (ii) sources and accuracy of data points used to create algorithms in predictive rating models, (iii) types of data points used in such algorithms, which can have a disparate impact on minorities and disadvantaged groups, such as providing more favorable results to suburban consumers as compared with urban consumers and (iv) lack of federal and state regulation to “unlock” data points used in algorithms. Ms. Larkin-Thorne emphasized the need for regulation of third-party data vendors and insurers’ use of data, noting that insurers should not be allowed to hide behind unregulated data vendors and should be required to explain every data point used in the underwriting and pricing of insurance. It is expected that this topic will be on the agenda of the NAIC’s newly established special committee on Race and Insurance, comprised of 51 of 56 insurance commissioners (as of the date of the special session).
c. NAIC Begins Process for Evaluating Model Law Updates Relating to Privacy Protections
In connection with its charge to review state insurance privacy protections regarding the collection, use and disclosure of information gathered in connection with insurance transactions, and to make recommended changes, as needed, to certain NAIC models, the Privacy Protections (D) Working Group (the PPWG) determined that the Privacy of Consumer Financial and Health Information Regulation (#672) (Model 672) will be used as a baseline model. The initial phase of the PPWG’s work will be to conduct a gap analysis of state and federal privacy law to determine any recommended revisions to Model 672 to address any gaps ascertained from the analysis. The PPWG noted that it will focus its work on three main areas: (i) consumer issues; (ii) industry obligations; and (iii) regulatory enforcement.
d. NAIC Develops White Paper on Best Practices for Use of Predictive Models
The Casualty Actuarial and Statistical (C) Task Force (CASTF) is drafting a Regulatory Review of Predictive Models white paper (the White Paper) to provide best practices for state insurance regulators in their review of insurers’ rate filings that use predictive models or analytics to determine rates. The primary issue covered by the White Paper is ensuring that regulators are in a position to determine if the predictive models and analytics are compliant with state insurance laws and regulations. The four best practices for regulatory review described in the White Paper are:
- ensure that the selected rating factors, based on the model or other analysis, produce rates that are not excessive, inadequate or unfairly discriminatory;
- obtain a clear understanding of the data used to build and validate the model, and thoroughly review all aspects of the model, including assumptions, adjustments, variables, sub-models used as input and resulting output;
- evaluate how the model interacts with and improves the rating plan; and
- enable competition and innovation to promote the growth, financial stability and efficiency of the insurance marketplace.
Appendix B of the White Paper, which has been controversial among insurers, identifies “information elements” that a regulator may need to review in connection with a predictive model used by an insurer to support a personal automobile or home insurance rating plan. It includes seventy-nine information elements organized in three categories: (i) Selecting Model Input; (ii) Building the Model; and (iii) The Filed Rating Plan.
CASTF currently is evaluating comments received following the White Paper’s exposure to determine whether any changes to the White Paper, including Appendix B, should be made. CASTF expects to forward the White Paper to the Property and Casualty Insurance (C) Committee in September 2020.
6. NAIC Continues Work on State Implementation of the Revised Credit for Reinsurance Model Law and Regulation in connection with the Covered Agreements Ahead of Upcoming Deadlines
At the Joint Meeting of the Executive (EX) Committee and Plenary, the NAIC adopted as an addition to the accreditation standards (effective September 1, 2022) the 2019 revisions to the Credit for Reinsurance Model Law and the Credit for Reinsurance Model Regulation (together, the Revised CFR Model Laws), which incorporate reinsurance collateral reduction reforms in accordance with the bilateral agreements between the United States and the European Union (EU) and the United States and the United Kingdom (UK) (together, the Covered Agreements).
The Covered Agreements require states to take action with respect to the reinsurance collateral provisions within 60 months after signing the EU Covered Agreement or face potential federal preemption by the Federal Insurance Office (FIO) under the Dodd-Frank Wall Street Reform and Consumer Protection Act. FIO may begin its federal preemption analysis on April 1, 2021, which is the first day of the 42nd month after the date of signature of the Covered Agreement. Any changes or modifications by states to the language as adopted in the Revised CFR Model Laws could potentially lead to a federal preemption analysis by the FIO.
The Reinsurance (E) Task Force (the Reinsurance Task Force) also discussed the current status of state implementation of the Revised CFR Model Laws. As of July 2020, eleven states have adopted the revisions and seventeen more have legislation currently under consideration. While states are making progress in their implementation efforts, the disruption in legislative calendars as well as the shift in legislative priorities due to COVID-19 has slowed the adoption process. Representatives from the Reinsurance Association of America stated that several states had to stop all legislative activity in early 2020, and noted that with the potential risk of a second wave of COVID-19, states should plan around any potential further legislative recesses. The Reinsurance Task Force noted that it will provide support to the states to meet the September 1, 2022 deadline and will communicate with the U.S. Department of the Treasury and the FIO as necessary regarding state implementation. While questions were raised regarding a possible extension of the September 2022 deadline, there have not been any specific conversations to-date with either the FIO or the European Union about extending the upcoming deadline.
7. Long-Term Care Insurance (EX) Task Force Reorganizes Work Streams Relevant to its Charges
The Long-Term Care Insurance (EX) Task Force (LTCTF) has consolidated the six work streams that were originally organized to address long-term care insurance (LTCI) issues into the following three subgroups: (a) the LTCI Multistate Rate Review (EX) Subgroup, chaired by Colorado; (b) the LTCI Reduced Benefit Options (EX) Subgroup, chaired by Pennsylvania; and (c) the LTCI Financial Solvency (EX) Subgroup, co-chaired by Texas and Minnesota. The LTCI Multistate Rate Review (EX) Subgroup is conducting a pilot project to perform multi-state rate reviews. This Subgroup expects to finalize its work product related to the pilot project by year-end. The LTCI Reduced Benefit Options (EX) Subgroup has prepared a draft principles document outlining the states’ practices in reviewing and approving reduced benefit options and also plans to develop related principles for consumer notices. In connection with the LTCTF’s efforts to evaluate cross-state rate subsidization of LTCI policies, in July 2020, the NAIC also solicited proposals from law firms to research and report on existing state laws and regulations that could support a new regulatory framework authorizing insurers to separate policies from insurers’ general accounts.
8. NAIC Continues Development of the Pharmacy Benefit Manager Licensure and Regulation Model Act
The Pharmacy Benefit Manager Regulatory Issues (B) Subgroup (the Subgroup) is continuing its work on the Pharmacy Benefit Manager Licensure and Regulation Model Act (the PBM Model). A draft of the PBM Model was exposed for public comment, and the Subgroup plans to meet in September 2020 to discuss any comments. The scope of the PBM Model likely will be impacted by a pending United States Supreme Court case, Rutledge v. Pharmaceutical Care Management Association, regarding whether the Employee Retirement Income Security Act of 1974, as amended, preempts an Arkansas state law that regulates the rates at which pharmacy benefit managers reimburse pharmacies. Oral argument in that case is set for October 6, 2020.