Legislature(2013 - 2014)HOUSE FINANCE 519
04/14/2014 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB108 | |
| SB127 | |
| SB169 | |
| HB287 | |
| HB316 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 64 | TELECONFERENCED | |
| + | SB 108 | TELECONFERENCED | |
| + | SB 178 | TELECONFERENCED | |
| + | SB 129 | TELECONFERENCED | |
| + | SB 127 | TELECONFERENCED | |
| + | SB 169 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 316 | TELECONFERENCED | |
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.