Legislature(2015 - 2016)BELTZ 105 (TSBldg)
04/05/2016 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing: Alaska Gasline Development Corporation Board of Directors | |
| HB155 | |
| SB201 | |
| SB175 | |
| SB156 | |
| SB193 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 155 | TELECONFERENCED | |
| += | SB 201 | TELECONFERENCED | |
| += | SB 175 | TELECONFERENCED | |
| + | SB 156 | TELECONFERENCED | |
| + | SB 193 | TELECONFERENCED | |
| + | HB 268 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 175-PHARMACY BENEFITS MANAGERS
2:02:05 PM
CHAIR COSTELLO announced the consideration of SB 175; "An Act
relating to the registration and duties of pharmacy benefits
managers; relating to procedures, guidelines, and enforcement
mechanisms for pharmacy audits; relating to the cost of multi-
source generic drugs and insurance reimbursement procedures;
relating to the duties of the director of the division of
insurance; and providing for an effective date." She noted this
is the second hearing of the bill and there is a proposed
committee substitute (CS).
SENATOR GIESSEL moved to adopt the CS for SB 175, labeled 29-
LS1110\H, as the working document.
2:03:04 PM
CHAIR COSTELLO objected for an explanation of the changes.
WESTON EILER, Staff, Senate Labor and Commerce Committee and
Senator Mia Costello, highlighted two elements in SB 175. The CS
moves the regulation of pharmacy benefit managers (PBMs) and
their registration to the section of statute that deals with
third-party administrators. It also addresses some issues with
regard to interest and adjudicating claims, and the effective
date.
JANE CONWAY, Staff, Senator Cathy Giessel, Alaska State
Legislature, presented an explanation of changes between the
original version W and version H of SB 175.
2:07:15 PM
Section 1. Adds a new section concerning Pharmacy
Benefits Managers.
Section 21.27.901 Registration of pharmacy benefits
managers; scope of business practice. Moves the
pharmacy benefit manager registration to 21.27.630
that governs third party administrators. Outlines what
a PBM may do under this chapter and deletes lines 8-20
of version W regarding registration.
Sec. 21.27.905 Renewal of registration. Changes
renewal of registration from annual to biannual.
Section 21.27.910 Pharmacy audit procedural
requirements. Adds "Unless required under AS
21.36.495, a" (this statute governs procedure for
timely payment of claims) and that during adjudication
of a claim, no interest will accrue.
In (d) (1) and (2) clarifies that it must be a
pharmacist licensed and in good standing in AK and in
compliance with AS 08.80 (Pharmacy Statute) when the
audit involves clinical or professional judgment.
Sec. 21.27.915. Overpayment or underpayment. Adds
language that does not allow extrapolation of figures
in calculation of an over or underpayment unless PBMs
and pharmacy agree to a statistically agreed-upon
projection.
Sec. 21.27.920. Recoupment. Removed reference to
"corrective action plan" in (b).
Section 21.27.930. Pharmacy audit appeal; future
repayment. Clarifies in (c) that it is the PBM's
appeal process that must be exhausted.
Section 21.27.935. Fraud. Deletes entire text in W,
and rewords it: "When a pharmacy benefits manager is
conducting an audit of a pharmacy, fraudulent activity
is defined as an intentional act of theft, deception,
misrepresentation or concealment committed by the
pharmacy, which is discovered during the course of an
audit. Unintentional clerical or record-keeping
errors, including typographical errors, writer's
errors, or computer errors regarding a required
document or record, shall not be considered fraudulent
activity."
Sec. 21.27.950. Multi-source generic drug appeal. Adds
in (e) A network pharmacy may request a hearing under
AS 21.06.170 - AS 21.06.240 that governs procedure for
hearings by the Div. of Insurance and takes out the 30
calendar days language in (f) and deletes (g) since
that would all be covered by AS 21.06.170 - AS
21.06.240.
Sec. 21.27.955. Definitions. Defines all selective
wording as used in Section 1.
Section 2. Adds a new section on Applicability as it
applies to audits of pharmacies as conducted by
pharmacy benefits managers.
Section 3. Adds a new section as to Transitional
Provisions for adopting Regulations.
Section 4. Adds a new section stating the Revisor's
Instructions.
Section 5. Effective date clause for Bill section 3.
Section 6. Effective date clause for this Act except
as provided.
2:08:17 PM
CHAIR COSTELLO asked for an explanation of the purpose for the
change in the overpayment and the underpayment provision in Sec.
21.27.915.
MS. CONWAY said it is common practice during PBM audits that if
they find an error that might reoccur, there is a model to
extrapolate that cost out a number of times for a specific
period. She gave an example of an error of $89 being
extrapolated out and resulting in a $9,000 bill. The pharmacies
view this as unfair. This provision provides the opportunity for
an agreement in the contract on the model that will be used.
CHAIR COSTELLO asked Ms. Wing-Heier if the state uses PBMs and
how the bill would affect the state.
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development, said the state
does use a PBM but the Department of Administration would have
to speak to the impact on the state benefit plan. She noted that
PBMs have become commonplace in both the insured and self-funded
plans for pharmaceutical needs.
2:11:53 PM
SENATOR STEVENS asked if there have been unreasonable audits in
the past.
MS. WING-HEIER said the division isn't aware of any audits. She
explained that PBMs should be registering with the Division of
Insurance, but just two have done that so they aren't currently
licensed in Alaska.
2:13:07 PM
DAVID BALTO, former Policy Director, Federal Trade Commission,
testified in support of SB 175. He shared his extensive
background dealing with PBMs. He focused on the reforms
suggested in the proposed CS dealing with PBMs. He noted the
bill is similar to reforms that have been adopted in other
states. He spoke of the disproportionate bargaining powers
between pharmacies and PBMs. He maintained that pharmacies are
almost never able to negotiate and that is why the bill is
needed. It assures that payments are timely and audits are
practical. Other provisions in the bill speak to a fair process
for audits. The bill is especially beneficial to small, local
pharmacies and their consumers.
DIRK WHITE, past president of the Board of Pharmacy, testified
on SB 175. He presented examples of egregious audits by a PBM
regarding wheelchairs.
2:21:30 PM
SENATOR STEVENS thanked Mr. White and agreed that the examples
were egregious.
2:22:30 PM
At ease
2:23:54 PM
ASHLEY REED, Lobbyist, Pharmacy Groups - CVS Health and Geneva
Woods, testified in opposition to SB 175. He noted similar bills
have been around before and they never went anywhere. He
maintained that there are problems with the bill. This bill will
cost the state money. He said PBMs are an effort to hold down
health care costs. He maintained that the state cannot trump
federal law. He opined that the egregious audits are on the
federal level, not at the local level. He cautioned to take time
to understand this complex issue. He concluded that SB 175 is
going to take away an important tool.
2:35:22 PM
CHAIR COSTELLO thanked Mr. Reed for his testimony and stated her
intent to move the bill today. She noted that next it goes to
the Senate Finance Committee, which can address fiscal and
actuarial issues.
SENATOR GIESSEL noted the zero fiscal note comes from the
Division of Insurance and she believes the fiscal note is
authentic.
2:37:01 PM
SENATOR GIESSEL moved to report the CS for SB 175, labeled 29-LS
1110\H, from committee with individual recommendations and
attached zero fiscal note.
CHAIR COSTELLO announced that without objection, CSSB 175(L&C)
is reported from the Senate Labor and Commerce Standing
Committee.