Legislature(2011 - 2012)BARNES 124
03/26/2012 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB259 | |
| HB218 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 259 | TELECONFERENCED | |
| += | HB 218 | TELECONFERENCED | |
HB 218-PRESCRIPTION DRUG SPECIALTY TIERS
4:43:29 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 218, "An Act prohibiting an insurer from using a
drug formulary system of specialty tiers under certain
circumstances."
4:43:55 PM
JANET OGAN, Staff, Representative Keller, Alaska State
Legislature, presented HB 218 on behalf of the House Health and
Social Services Standing Committee of which Representative
Keller is the chair, sponsor of HB 218, stated the specialty
tier drugs started in 2006 with Medicaid, which was followed by
other insurance companies introducing specialty tier drugs,
which range from 1 with the lowest copay for tier 1 drugs and
the highest coinsurance for tier 4 drugs. She explained that
copay is flat fee and coinsurance is a percentage of drug costs.
She explained the coinsurance is usually about 30 percent, but
it can amount to more than that amount.
4:45:56 PM
MS. OGAN explained that tier 4 drugs are very expensive to
manufacture and are typically used by patients with conditions
such as hemophilia, multiple sclerosis, and cancer. She
characterized these patients using tier 4 drugs as having
chronic conditions or diseases and these drugs have helped
patients maintain their life and standard of living. She
further explained that most of the drugs are injectible drugs or
drugs without a generic alternative. She highlighted that the
companies are trying to find a way to bring the cost down. This
bill would extend the notification period from 30 days to 90
days to give people who are affected time to research
alternatives, including another plan to allow them to retain
their treatment.
4:46:36 PM
CHAIR OLSON reopened public testimony on HB 218.
4:46:46 PM
SHEELA TALLMAN, Manager, Legislative Affairs, Premera Blue Cross
Blue Shield of Alaska [Premera], expressed concern with the
notice requirement. She expressed concern with the 90-day
notice requirement for the specialty pharmacy tiers that is
duplicative to the existing processes for notices and the
federal health care form requirements that start this ball. She
related that Premera has done additional work to see how to make
this happen. She highlighted that this bill will significantly
disrupt the plan renewal processes by doubling the notice
timeframe from 45 to 90 days' notice. She explained that the
45-day notice Premera mails out is a comprehensive notice that
addresses the changes to benefits and cost-sharing amounts and
would include any changes to the specialty pharmacy tier, as
well as addressing any additional changes to the pharmacy
benefit plan. She explained that the notice is provided with
the associated rate change 45 days before the rates apply.
These would apply to changes in rates that typically go into
effect on an annual basis. She related that the changes to the
requirement in the federal health care reform law requires
Premera to provide an additional notice to members with the
specific information that must be provided in three instances,
upon application and enrollment, upon renewal, and upon request
by individuals and groups.
4:49:01 PM
MS. TALLMAN offered any change that impacts the information
provided in the summary document triggers a 60-day notification
to members. She explained that this requirement will affect all
plans, individual and group coverage, as well as self-funded
plans. She provided additional background in terms of the
changes in Premera's processes. She detailed that the timeframe
from 45 to 90 days will double the timeframe and impact the
renewal notice Premera currently provides to members and groups
about changes in their benefits and rates. She highlighted that
this process takes several months to complete, to develop the
benefit plan design, submit the plan to the Division of
Insurance (DOI) for review, and once the designs and rates are
approved to develop materials for members and brokers, followed
by notification to members and groups. Further, with the 90-day
notices Premera would have to adjust processes to align to the
new requirements. Additionally, in the individual market what
may further complicate this is an annual renewal process to make
changes to rates and coverage at one but time; however,
individual coverage is renewed on a month-to-month basis,
meaning that individuals can apply for and change their plan
designs every 30 days if they choose to do so. She explained
that due to the processes currently in place and the changes to
the health care reform requirements, including additional
noticing, Premera opposes this bill. Additionally the new
noticing requirements in the bill will disrupt the current
renewal process, significantly impact groups, and potentially
cause disruptions to the market.
4:50:55 PM
REPRESENTATIVE SADDLER asked whether she has submitted written
testimony.
MS. TALLMAN offered to do so.
4:51:26 PM
CHAIR OLSON asked whether 95 percent of the problems would be
eliminated if the effective date of the bill was July 1 since
most of the group policies come up for renewal on July 1 or
January 1.
MS. TALLMAN answered that most of the plans start on January 1,
but groups also start throughout the year. She suggested that
Premera would like the 45-day notice requirements since it goes
out to all individuals. She indicated that Premera has a 45-day
notice for the annual renewal process for individual market and
for groups, she was unsure of the month, but each group receives
it as they renew.
4:52:31 PM
CHAIR OLSON offered his belief that most of the plans commence
on July 1, the fiscal year, or the calendar year, which would
allow Premera four months to get ready for renewals.
MS. TALLMAN answered that if Premera could start this process
next year it will give more time to adjust to it, but it
significantly lengthens the time frame. Thus, Premera would be
submitting information, developing projects and looking at
developing rates much further away. She explained that if the
group renewal date is July 1 Premera would need to provide the
notice three months prior to the date, noting the demographics
might change. Thus Premera would need to begin to rerate them
even after they have received notification.
4:54:07 PM
CHAIR OLSON asked Ms. Hall whether July 1 would be an
appropriate date and reduce costs.
MS. HALL asked whether he was referring to July 1, 2012.
CHAIR OLSON stated July 1 is four months away and significantly
longer than 45 days.
MS. HALL said one of her recommendations would have been to make
the bill effective date on January 1. She explained that all
individual Premera policies renew on January 1, but the groups
have different renewal times. She offered her belief for the
purposes of programming and form coverage that January 1 is a
more palatable date to allow adequate preparation time.
4:55:18 PM
REPRESENTATIVE HOLMES asked if the effective date was January 1,
2013 whether all of the policies that renew on January 1 would
still require the 90 day notice.
MS. HALL answered yes, that the notice would need to be done on
October 1.
CHAIR OLSON asked whether the sponsor would consider the
amendment appropriate.
REPRESENTATIVE KELLER answered that he would accept the change
to January 1.
4:56:13 PM
REPRESENTATIVE JOHNSON moved to adopt Conceptual Amendment 1, to
change date to January 1, 2012. There being no objection,
Conceptual Amendment 1 was adopted.
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 218.
4:56:52 PM
REPRESENTATIVE JOHNSON moved to report HB 218, as amended, out
of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, the CSHB
218(L&C) was reported from the House Labor and Commerce Standing
Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB259 Opposing Documents-Letter-Premera 3-6-12.pdf |
HL&C 3/26/2012 3:15:00 PM |
HB 259 |
| HB218 Supporting Documents-Letter AK Commission on Aging 3-16-12.pdf |
HL&C 3/26/2012 3:15:00 PM |
HB 218 |
| HB218 Opposing Documents-Proposed Amendments to ver B by Sheela Tallman-Premera 3-21-12.pdf |
HL&C 3/26/2012 3:15:00 PM |
HB 218 |
| HB218 Supporting Documents-Email Brenda Robertson 3-16-12.pdf |
HL&C 3/26/2012 3:15:00 PM |
HB 218 |
| HB259 Opposing Documents-Testimony Michael Cartier-Envision Rx Options 3-22-12.pdf |
HL&C 3/26/2012 3:15:00 PM |
HB 259 |
| HB259 Supporting Documents-AK Pharm Assoc 3-26-12, Response to the Alaska Teamsters 3-16-12 Memo.pdf |
HL&C 3/26/2012 3:15:00 PM |
HB 259 |
| HB259 Opposing Documents-Charts from Mike Barnhill 3-26-12.pdf |
HL&C 3/26/2012 3:15:00 PM |
HB 259 |