Legislature(2013 - 2014)HOUSE FINANCE 519
04/14/2014 01:30 PM FINANCE
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CS FOR SENATE BILL NO. 169(FIN) "An Act establishing in the Department of Health and Social Services a statewide immunization program and the State Vaccine Assessment Council; creating a vaccine assessment account; requiring a vaccine assessment from assessable entities and other program participants for statewide immunization purchases; repealing the temporary child and adult immunization program; and providing for an effective date." 4:05:48 PM SENATOR CATHY GIESSEL, SPONSOR, addressed the legislation. She spoke as a proponent of the private sector. She stated that the bill represented a public/private solution for expensive and preventable health issues seen in Alaska. She shared that a few years earlier, federal funds had been provided for a universal vaccine program that had existed for 40 years. She relayed that a former Alaskan U.S. Senator [Senator Ted Stevens] had made sure health issues were addressed the state. The state had received $4.3 million annually until 2010 to cover vaccines; however, the number had fallen to approximately $700,000. She had sponsored legislation two years ago using state money to restore the funding. She explained that the bill's activity was set to last three years. She noted that other states were finding a public/private partnership solution to funding universal vaccines. The three-year period provided the Department of Health and Social Services (DHSS) time to formulate a solution. She stated that the current bill was the solution. The bill would adopt a vaccine council (pages 2 and 3 of the legislation) and outlined that the council would be comprised of State of Alaska insurers, private providers, a tribal entity, and other healthcare participants. Participation in the program would be optional; it would provide insurers with the option to pool funding with the state to purchase vaccines at the lowest possible price. She noted that the state had the ability to purchase vaccines at the lowest price through the Centers for Disease Control as well as state buying pools. Senator Giessel explained that the bill she had sponsored in the past only provided a limited number of vaccines. She expounded that uninsured healthcare providers had to buy small quantities of the vaccine themselves because of the short-term shelf life. She emphasized that money was wasted when vaccines expired. Many clinics had opted to discontinue providing vaccines because of the expense and risk of expiration. The large purchasing option had been used under Senator Steven's funding for many years. She detailed that vaccines were stored in a depot and were distributed to healthcare providers across the state based on the providers' request. She noted that the providers had an idea how many vaccines their clinic would need; therefore, they did not run the risk of vaccines expiring or being incorrectly stored. The plan would allow insurers to buy in to the program; insurers would be assessed based on the number of insured individuals and what the expected vaccine need would be. Insurers would likely pay the assessment upfront and the state would purchase the vaccine. She explained that there were many ways the process could work, which would be determined in the first year after the bill passage. She furthered that DHSS would work with the council to formulate the plan going forward. She emphasized that the council was not a board or commission; it would operate under DHSS at no additional cost. Senator Giessel continued that the program would use volunteers and would not have travel or per diem expenses. She pointed to a bubble chart titled "SB 169 Statewide Immunization Program" in members' packets (copy on file). The legislation had received letters of support from over 30 healthcare providers, clinics, and senior centers statewide. She stressed that seniors were interested in various vaccines including shingles, pneumonia, influenza, diphtheria, tetanus, and pertussis. Co-Chair Stoltze remarked that the interest was evident based on the number of health fairs and immunization clinics held in senior centers. Senator Giessel agreed. She referred to a letter in members' packets from a New Hampshire pediatrician serving on the state's vaccine association; the association had documented $45 million in savings over the past 11 years. She noted that nine other states had similar programs. She reiterated that seniors would also have access to the vaccines. She noted that the bill had undergone amendments in the House Health and Social Services Committee. JANE CONWAY, STAFF, SENATOR CATHY GIESSEL, spoke to the changes made in the House Health and Social Services Committee (bill version B). The following language was added on page 2, line 3: (1) establish a procedure to phase in the program over a three-year period that provides for participation by an assessable entity; Ms. Conway pointed to page 2, line 28 where the language "or the chief medical officer's designee" was added to the council membership. Page 2, line 29 required that one of the two licensed healthcare providers on the council would be a pediatrician. Page 3, line 31 added the legislature as a recipient of the council's annual financial report. Page 4, lines 13 through 14 added the language "after being phased into the program under procedures approved by the commissioner." Page 5, lines 4 and 5 added the following language: (e) An assessable entity may opt out of the program during the three-year phase-in period under procedures approved by the commissioner. Ms. Conway elaborated that the model was used to allow providers to choose whether to opt into the program. She detailed that a timeframe would be designated similar to the open enrollment system used for state healthcare benefits. 4:15:05 PM Ms. Conway continued to discuss changes in the legislation. Page 5, lines 9 through 12 added the following provisions: (b) An assessable entity may not deny a claim for coverage by a health care provider of vaccines not distributed under the program. (c) A health care provider may not bill a payor for or resell a vaccine distributed under the program. She elaborated that a provider not in the program may not deny a claim. She explained that healthcare providers would be required to ensure that the program vaccines were kept separately from others. Co-Chair Stoltze asked if the mandate related to vaccine coverage was new. Ms. Conway replied that it had always been the case that state vaccines could not be given to another person or resold. Co-Chair Stoltze clarified that he was interested in the coverage mandate. Senator Giessel replied that some insurance policies had provided coverage for vaccines and had been doing so for some time. The provision prevented double assessment. She explained that if an entity had paid for the vaccines upfront through the state purchasing program, they would not be billed by the provider a second time for giving the vaccine. Ms. Conway moved to page 7, lines 2 through 5; the section would repeal statutes pertaining to the adult vaccination program on January 1, 2021. The provision necessitated an act by the legislature (prior to 2021) to continue the adult portion of the immunization program set out under the legislation. Page 7, line 6 repealed Chapter 24, the current temporary program; the funds would be deposited to begin the vaccine assessment account. Page 7, line 13 changed the bill's effective date to January 1, 2015. She added that throughout the bill the term "recommended vaccine" had been changed to "included vaccine" in reference to the list of vaccine selections the council would compile. Representative Munoz asked the sponsor to address any resistance to including adults in the vaccine program. Senator Giessel answered that she had been surprised that the Pharmaceutical Manufacturer's Association had come out in opposition to the bill. She pointed to its initial opposition to including adults in the program and its subsequent opposition to the bill in its entirety. She deferred the question to the association for further detail. She was concerned that many of the diseases affecting children such as pertussis were carried by adults. She detailed that pertussis manifested in adults as a severe cough, but could be deadly for children. She pointed to multiple cases in Ohio the prior year when newborns had died after contracting the illness from adults. She stressed the importance of making vaccines available to adults in addition to children. She added that seniors were supportive of the bill and were glad the shingles vaccine would be available to them. She believed including seniors in the program was critically important. Representative Munoz wondered what the legislation would take away. She was interested in the cost benefit of the program, its impacts, and why there was opposition to the bill. Senator Giessel answered that currently there were many healthcare providers who were no longer offering vaccines due to the financial expense. She elaborated that vaccines bought in small quantities for small clinics were prohibitively expensive; vaccines typically expired in six months and had to be discarded if they were not used in time. She explained that for over 30 years the state had purchased a large vaccine quantity and had kept the stock moving to prevent expiration issues. Currently various providers had some children who qualified for the federally funded Vaccines for Children program; approximately 50 percent of the state's children qualified. She elaborated that the program vaccines were kept separately from vaccines for insured children; vaccinations for insured children could not be traded out for recipients of the Vaccines for Children. Many clinics were not currently offering vaccines due to the complex administrative function and potential loss in revenue that occurred when vaccines expired. Representative Wilson referenced a bubble chart ["SB 169 Statewide Immunization Program" pyramid chart]. She asked for verification that the mandate only applied to private payors under the bill; it would be up to the other entities to decide whether they wanted to participate. 4:23:00 PM Senator Giessel replied that participation for private payors and small clinics would be voluntary. She pointed to the "SB 169 Statewide Immunization Program" pyramid chart (copy on file). She recommended hearing from the department's program manager Jill Lewis for details. Representative Wilson asked whether Tricare, Medicare, and Medicaid would be forced to participate in the program. She thought private payors equated to private insurance. She wanted to ensure that the program included more than private insurance. Co-Chair Stoltze OPENED public testimony. 4:24:45 PM JAMES MATTEUCCI, MERCK SHARP AND DOHME, PHARMACEUTICAL RESEARCH AND MANUFACTURERS ASSOCIATION, AND THE BIOTECHNOLOGY INDUSTRY ORGANIZATION, testified in opposition to the bill. The organizations were committed to growing the vaccine market and ensuring that vaccines were widely distributed and used. He stated that vaccines provided an enormous value to healthcare in terms of quality of a patient's experience in lessening the burden of disease and in lowering overall healthcare costs. He stressed that the organizations were not discrediting or undermining the value of an adult vaccine market. He complimented Senator Giessel for taking up the issue several years earlier when the federal Vaccine for Children program funding was significantly reduced. The organizations were specifically opposed to the creation of an adult vaccine program using an assessment on to a private plan. The organizations believed that the proposed program was precedent setting; other states had attempted unsuccessfully to implement a similar program. He detailed that the states using a format of an adult vaccine program using private dollars had been intermittent and unsuccessful overall. Co-Chair Stoltze interjected and relayed that SB 64 would not be heard during that day. Mr. Matteucci focused on problems the bill solved, problems it created, and problems it ignored. He stated that the bill did not solve a problem. He communicated that the federal Affordable Care Act required private plans participating in the market to provide a full vaccine benefit for enrollees. He explained that SB 169 was for private plans and benefitting people with private insurance. He stressed that the benefit already existed and that with or without the bill the patient's experience would be unchanged. Mr. Matteucci looked at problems created by the legislation. The organizations believed the bill threatened the adult market for vaccines. The market was growing and an increasing number of diseases were being successfully treated by more vaccines from companies such as Merck, GlaxoSmithKline, Pfizer, Novartis, and other; the companies had dedicated enormous amounts of research and resources to bringing the vaccines to market and commercializing. He stated that under the legislation the state took over the negotiating authority of a plan such as Premera with another private company (e.g. Merck) for the benefit of the plan. He explained that the plan's premium retained would be increased because the state would be negotiating on its behalf. The organizations believed that the precedent established under the bill would negatively impact the adult vaccine market nationwide. He believed that the bill's underlying funding structure was in question. He detailed that the assessment or tax on private plans was clear; the plans would participate based on market share and utilization. However, the bill also relied on the participation of Employee Retirement Income Security Act (ERISA) third-party plans, Medicaid, and Medicare; it was not possible to proactively assess monies for these plans for the purpose of providing care at a future time. He stated that if the past was prologue the ERISA plans would not participate; Tricare in the states of Washington and Idaho had elected not to participate in similar programs. In Idaho the state had been responsible for picking up unanticipated costs of approximately $600,000 annually to pay for the backfill of non-participating ERISA plans. He discussed that Medicaid was a federal program that reimbursed for services delivered; it was not possible to proactively assess Medicaid for a healthcare service to be delivered in the future unless it was petitioned for a plan amendment to the Medicaid plan. Mr. Matteucci emphasized that while universal coverage of vaccines was a goal at Merck, universal purchase programs had not been demonstrated to be a silver bullet. The CDC had done a recent study showing that three of the top ten utilization states were universal purchase states; however, there were universal purchase states in the bottom ten as well. He agreed that promoting vaccines, conducting educational outreach, and incentivizing patients or providers to properly vaccinate themselves was the way to go; however, universal purchase states as a mechanism were not rate increasers. Mr. Matteucci addressed the problem ignored by the bill. He stated that the bill ignored the uninsured population; the population needing help the most. The bill had the intent to get to the uninsured through the regulatory process, but the bill contained nothing that benefited the uninsured. He noted that the number would dwindle over time as the Affordable Care Act was rolled out, but the uninsured would either be too wealthy for Medicaid or would lack a private insurance through a partner or other. He detailed that the uninsured individuals may lose work if they get sick and miss work; the economic impact to families could be staggering. He summarized that the bill did not solve a problem in the adult market; the problem had been solved by the Affordable Care Act. He stressed that the bill significantly threatened the adult private market in Alaska by positioning the state as a negotiator for one private entity against another for the benefit of one private entity. He stated that the patient experience would remain unchanged regardless of the bill. Finally, the uninsured were ignored by the legislation. The organizations recommended the removal of the adult portion of the bill. He pointed to the vagary of the phased in program and the potentially negative implications. Merck was committed to working with the sponsor and department to find a solution over the course of the next year that specifically identified and addressed the adult uninsured portion of the population. The solution could be an appropriation from the state or another mechanism. 4:35:14 PM Representative Guttenberg asked for verification that Mr. Matteucci's primary objection was to the idea of the state exerting its buying power by pooling its needs. He thanked Senator Giessel for bringing the bill forward. He had asked the commissioner in the past about what the state was doing to increase its bargaining power by enlarging the pools of healthcare industry components. He observed that the pharmaceutical manufacturers always had the ability to choose not to sell a drug at a certain price. He stated that a larger pool would drive the cost down, which would be a direct benefit to the state and programs. Mr. Matteucci replied that his argument was not related to pooling. He elaborated that pooling took place on a variety of levels; the state currently pooled pharmaceutical benefits under Medicaid with other states. He contended that the action under the bill was different; the bill was for people in the private marketplace who receive a private benefit from a private plan. He detailed that it was not the traditional concept of a state pooling its resources; it was the exercise of the state interceding between two private entities negotiating price and volume in the private marketplace for the benefit of one of the private parties. Representative Guttenberg believed the purpose was the same, but that the organizations objected to the structure of the proposal. He addressed testimony that a patient would not see any cost differences as a result of the bill. He opined that part of the problem was that there was no transparency on the cost of vaccines when they were covered by insurance. He remarked that people would be unhappy to learn about price differentials between various healthcare facilities. He discussed that the bill was in line with the state's goal to get a handle on healthcare costs. Part of the solution was to make healthcare recipients more aware of the costs of services. He believed plan administrators also saw the issue as a problem. Mr. Matteucci answered that transparency was a key issue included in the Affordable Care Act and in a number of bills nationwide. He asserted that the bill would not necessarily make any costs transparent to patients; it was simply negotiating on behalf of a particular health plan against another commercial enterprise. The balance of the discount would likely be retained in the premium for the health plan; there was no mechanism that passed on the savings to patients. The bill benefitted the plan itself because a greater portion of the premium value would be retained given the state's negotiated vendor discount. Representative Munoz asked whether providers currently purchased vaccines directly from the pharmaceutical associations. She wondered whether under the bill the state would purchase the vaccines and would act as the distributor. Mr. Matteucci answered that he was not an expert on the distribution channels. He explained that individual providers had several sources of vaccines for Medicare, Medicaid, Tricare, and private plans; the providers reached individual agreements with private plans. He addressed cost and relayed that the companies he worked for would negotiate agreements with each plan in each state; the agreements would be different because it was a private marketplace. Cost was based on sales volume and expected return on investment. He added that in the private market it was unusual to have the state step in and negotiate on behalf of a plan alongside his companies. The companies recommended that the state pursue a separate program for uninsured adults that would not be captured under Medicaid or the Affordable Care Act. He would follow up on how vaccines were obtained. 4:42:29 PM Vice-Chair Neuman asked for Mr. Matteucci's contact information. Co-Chair Stoltze replied that the information would be provided. JANA SHOCKMAN, PRESIDENT, ALASKA NURSES ASSOCIATION, ANCHORAGE (via teleconference), spoke in support of the legislation. She spoke to the bill's inclusion of immunizations for adults. She relayed that every year adults ended up in hospital critical care units as a result of illnesses such as flu and pneumonia; both would be covered under the bill's vaccination program. The majority of the patients were young and previously healthy; however, they had not received vaccinations. She stressed that the illnesses could be life threatening and could have life altering consequences. She emphasized the importance of making the vaccinations easily accessible at a reasonable cost to providers. She stated that the bill provided a means for the state to protect its residents with affordable vaccines. She urged the committee's support for the legislation. 4:45:11 PM PATRICIA SENNER, ALASKA NURSES ASSOCIATION, ANCHORAGE (via teleconference), spoke in favor of the legislation. She discussed the vaccine supply chain. She communicated that Alaska had many small providers which meant that it was necessary to pool together to purchase vaccines at the cheapest rate possible. She had run a small clinic and pointed to the considerable difference in vaccine prices between the clinic and the hospital. As a private provider, she paid upfront for vaccines and was reimbursed once vaccines were given. She stressed that it put an enormous burden on private providers, particularly family practice doctors and pediatricians. She addressed the importance of providing vaccines to young adults. She explained that the flu was likely to be much more severe for pregnant women. She spoke to the goal of vaccinating young women and families to prevent the spread of whooping cough to infants. She relayed that it made a difference to patients how the vaccines were made available. She detailed that if a private provider could not pay to bring the vaccines into their clinic, they could not provide their patients with vaccines on normal visits; requiring patients to go elsewhere for vaccines increased the probability that they would not follow through. She urged the committee to pass the bill. 4:48:18 PM WILLIAM STREUR, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, spoke in support of the legislation. He stated that the bill would help the state in the long run and would help to reduce costs. He noted that the bill was not a magic bullet, but it would improve access and quality. He understood that challenges would exist, including how to work the adult population in. He believed the three-year phase-in would provide an opportunity to address any kinks such as determining funding partners, covered population, and covered vaccines. He believed the bill presented an opportunity to address increasing healthcare costs and to look at the state's vulnerable population that had no other coverage. Vice-Chair Neuman asked how the legislation would not cost the state money. He had been told that the bill would not result in costs to the state; he wondered if that factored in savings in medical costs that would occur if more individuals received vaccinations. Commissioner Streur replied that part of the savings would be related to downstream healthcare cost reductions. The initial savings would be in the cost of the vaccine and the state's ability to pool resources to purchase vaccines. Vice-Chair Neuman pointed to the $28 million fiscal note and wondered how the bill cost nothing. Commissioner Streur replied that the bill was an assessment to insurance carriers (e.g. Medicare, Medicaid, Premera Blue Cross, and other). The goal was to bring on as many people as possible at a lower vaccine cost, to provide an incentive to reduce provider costs within the system, and ideally to return the investment to the purchaser. Vice-Chair Neuman asked if the assessment was a fee that would be charged to insurance carriers. Commissioner Streur replied in the affirmative. Vice-Chair Neuman noted that there was currently $700,000 in general funds in the department's base budget. He wondered what would happen if the legislative finance subcommittee chose to reduce the department's budget. Commissioner Streur answered that was experienced with budget reductions. 4:52:12 PM Co-Chair Stoltze CLOSED public testimony. CSSB 169(FIN) was HEARD and HELD in committee for further consideration.