Legislature(2001 - 2002)
04/24/2002 01:36 PM Senate HES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 306-PRESCRIPTION DRUG ASSISTANCE TASK FORCE
MR. RICHARD BENAVIDES, staff to Senator Davis, sponsor of SB 306,
made the following statement about the bill.
While Congress debates proposals to add a prescription
drug benefit to Medicare, many states are taking steps
to better protect vulnerable residents from rising out-
of-pocket costs and declining insurance coverage of
prescription drugs. According to the National
Conference of State Legislatures, over 40 states have
considered legislation between 1999 and 2001 to address
prescription drug issues ranging from creation and
modification of pharmacy assistant programs to creation
of purchasing pools and discount purchasing programs
for seniors and persons with disabilities.
SB 306 would only involve Alaska's growing senior
population. The AARP has reported that the annual
growth rate for Medicaid spending on medications rose
23.4 percent in Alaska from 1996 to 1998 with fully a
third of Alaskan seniors having no prescription drug
coverage whatsoever. Between October 31, 1999 and
October 31, 2000, 5,546 Alaskans aged 65 or above who
were eligible for the state's Medicaid program received
263,633 prescriptions at a cost to the state of over
$10 million. Alaska has a number of options for
expanding access to prescription drugs and or reducing
the cost of prescription drugs for our senior
population. Although this is not the traditional role
for states, many states are moving into this void
created by delays at the federal level at adopting a
prescription drug supplement to Medicare.
SB 306 creates a method to look for ways to provide
meaningful relief for seniors in this critical area
without creating large new expenditure programs.
SENATOR LEMAN commented that the Governor would appoint all but
one member of the task force. Recent task forces have had a
larger legislative membership so that the people's branch has
more representation. He said he can understand the make-up based
on the fact that the task force is Administration driven. He then
noted that one of the governor's appointees is to be a person
affiliated with AARP over the age of 55. He questioned that age.
MS. ROSALIE WALKER, President of the local chapter of AARP and a
board member of the Older Persons Action Group, said she sent
members written testimony and will not repeat that but she will
address Senator Leman's question about the appointee over age 55.
AARP used to be the acronym for the American Association for
Retired Persons but, as of this year, the name was changed
entirely because the membership age dropped from 55 to 50. The
Association has found that many baby boomers are taking care of
their parents and need AARP's services just as much as older
people do. Consequently, the name American Association of Retired
People no longer applied. Because the acronym AARP is world
renowned, it was adopted as the official name of the new
organization. She noted AARP and the Older Persons Action Group
support SB 306; prescription drug coverage is a priority of both
groups. She hopes Alaska gets ahead of the national debate and
that the task force can provide the new legislature with
information so that it can hit the ground running. She offered to
answer questions.
CHAIRWOMAN GREEN asked Ms. Walker where the gap exists in
coverage and whether it happens when one transitions from
independent insurance coverage to Medicare.
MS. WALKER said the very poor are taken care of but those on the
borderline and middle-income people fall through the cracks
because of the restrictions of Medicaid.
CHAIRWOMAN GREEN asked if, at age 60, one has coverage for
prescriptions at what point that coverage stops.
MS. WALKER said, "It's across the ages. It's not really the age
that's the problem it's the prescription folks."
SENATOR DAVIS said it also has to do with the fact that when a
person turns 65, the first payer is Medicare, which does not
cover prescription drugs. Therefore if a person has no other
insurance to pick up that cost, no prescriptions are covered.
MS. WALKER informed members that she has state insurance coverage
so her prescription bills go to Medicare, which then sends them
to Aetna, which often sends them to her, depending on the
medication, so she ends up paying anyway.
CHAIRWOMAN GREEN commented that this is not just an insurance
issue.
MS. WALKER said insurance is an integral part of this issue and
the task force will have to examine the insurance activities in
addition to what states are doing in regard to prescription
drugs.
SENATOR LEMAN referred to the $5,000 cost under the contractual
category in the fiscal note and asked if the department will be
required to place a certain number of ads in newspapers. He said
he is assuming that would account for a significant portion of
the $5,000.
MS. NANCY WELLER, Division of Medical Assistance, DHSS, informed
members that the Department of Administration prepared the fiscal
note and that DHSS did not submit one.
MR. RICHARD CAUCHI, National Council of State Legislatures
(NCSL), then gave the following testimony.
For the record, NCSL is a bipartisan research
organization that works directly for the 50 states and
as such we take no position on legislation. I'm here to
just pass on information regarding activities across
the country on the state level and if you have any
questions.
Just briefly, as you've already covered some of the
details here, there's no question that prescription
drugs have been on legislative agendas as well as in
the headlines and the evening news across the country
for a couple of years, at least, now. What we've
observed, is that state legislators and policymakers
are quite concerned about that issue and see it as a
high priority but at the same time they face
potentially conflicting goals and this speaks to the
idea of a task force, or similar effort, looking at
[indisc.].
On the one hand, generally, the initial interest comes
from a desire to either increase access or increase
coverage to those lacking [while] at the same time
legislators are aware that the states are purchasers,
and that they are looking at - to save state funds in
that capacity. A variation of that is that states very
often are looking to avoid entitlements while they are
sympathetic or, actually, to establish new programs
they often do not let those programs become a permanent
or [indisc.] obligation. That's the distinction between
the state programs and federal programs, which are
permanent and entitlement forms.
The discussion of prescription drugs also on the state
level also is substantially distinct from the federal
debate. Certainly the idea and the discussion about the
Medicare benefit has been uniform across the country
and has attracted attention that would have impact on
states. But much of what states have done so far has
really been state-specific, including ideas and
programs that have been in place for quite a number of
years. As you are probably aware, as of this moment
Congress has not acted on this but as was referred to,
a number of states have taken specific actions. 28
states have statutes on this and bills and it was
already [indisc.] 40 states.
In general, there have been three areas where states
have taken action but, in fact, within those areas
there are a lot of variations that speak to the idea of
a task force rather than a simple solution. Numerically
most states have created subsidy programs with
pharmaceutical assistance programs but even in that
area there's no single model. Some states have taken
this action because they were able to use tobacco
settlement funds so you have states like Indiana,
Kansas, Florida, and South Carolina, which created
programs just in the last year. Because of that money
being available, Nevada became the first state to try
to subsidize a private insurance policy rather than
actually subsidize the transaction for the purchase of
pharmaceuticals. Illinois, just this January, became
the first state to successfully negotiate and get
approval for a federal matching program that will
enable the state to pay 50 percent and the federal
government to pay 50 percent for a subsidy program.
Again this is a brand new idea. It's within the
Medicaid program but it's serving a population that
hasn't yet been - that otherwise has not been covered
under Medicaid and many states are looking again and
it's early to say where that fits.
At the same time, subsidy payments are not a consensus
across the country. Just in the last year bills have
been rejected in states like Colorado, Arkansas, Iowa,
South Dakota, West Virginia. The current budget
situation in the state is certainly one of the factors
about a certain hesitancy to just jump in and create
brand new programs. On a [indisc.], states have been
looking at experiments with discounts and prices.
Generally these are not subsidies but are trying to
utilize either bulk purchasing or existing discount
structures to pass those on to some parts of the
population. A few states have tried to use the Medicaid
price and make that available to larger populations,
specifically Medicare. California and Florida and, to
some extent, Maine are trying that approach. The idea
of discount cards is one that has spread among several
states - Iowa, New Hampshire, West Virginia have
programs of that sort up and running and, as you
probably know, President Bush has proposed a national
program but that's still not in operation.
The word Medicaid has been said several times but there
are slightly separate [indisc.] a number of initiatives
- many discussions about cost containment within the
Medicaid program and those talks are often pretty
directly tied to the rest of the discussion in Medicaid
- there's discussion - it actually moves toward
preferred drug lists or formularies that would be in
part based on the cost of the product. [There are] also
plans for expanded and prior authorization, initiatives
that would move toward generic substitutions and on a
separate tax and somewhat beyond just Medicaid the idea
of bulk purchasing via the state agencies buying their
purchasing so that you don't have the prison agency
doing one thing and the mental health agency doing
another but rather requiring that those be joined and,
finally, in this [indisc.] the idea of multi-state
purchasing. There are now three different groupings -
northern New England. The Northeast has a legislative
association and has a sort of a pharmacy working group
among southern states of the eastern states that are
all looking to do buying-purchasing with cost savings
in mind. For some reason there are a lot of diverse
solutions but no single pattern out of that.
As for task forces, several states did establish task
forces or special interim committees in this area and
NCSL and myself followed several of those. A few, by
example, Maryland, at the end of the year 2000,
established a very formal process, which was
cooperative both among the legislative branch and
executive branch. Out of that came a major piece of
legislation that either created or overhauled three
different pharmaceutical programs - both were subsidies
and discounts. In Nebraska and in Oklahoma there were
special interim committees that were established with
members of both branches and legislative staff doing
detailed analysis. Those two states have not passed
legislation as of this point. In Hawaii they did a
major study throughout much of the year 2001. They
produced a comprehensive report in February of this
year and in the last eight weeks the legislature has
passed - both the House and Senate in Hawaii has passed
two major bills that are now in conference committee.
In California, they also did a 2001 legislative study
and produced a fairly formal report that covered all of
their options. In their case they have not passed a
plan and reflected the content of that.
Finally, on the example of Wyoming, similarly in 2001
did a formal interim committee for nine months and
based on that they did, in fact, propose legislation,
which was signed into law about a month ago. So there's
a good deal happening - again no single pattern and no
single solution that people would put forward but a
study is one approach. If there are questions I'd be
happy to...
CHAIRWOMAN GREEN asked Mr. Cauchi if he knows the status of this
issue in Congress.
MR. CAUCHI said he is not ideally situated to comment on Congress
but there are a number of proposals by the U.S. House and Senate
and the Executive Branch. He would guess that at the moment there
is no single plan. The differences surround at what income levels
people should be covered or whether to cover everyone on
Medicare, and what kind of cost sharing or co-payments might be
established. That seems to be one of the contrasts between
federal proposals and state plans. Some states pay 95 per cent or
more of the cost of purchases.
MR. STEVE ASHLAND, Division of Senior Services, Department of
Administration (DOA), said his agency would provide
administrative support for the task force. The Department of
Administration supports SB 306; it has seen and heard about the
problems seniors have with access to prescription drugs. A task
force may come up with some viable solutions for the legislature
to consider next year. In response to Senator Leman's question
about the fiscal note, the contractual money is for publication
purposes. One publication typically used by the division is the
Senior Voice. The division tries to minimize costs as much as
possible; that publication reaches about 20,000 senior citizens.
He offered to answer questions.
SENATOR LEMAN said he wants the notice to get out to the right
people and it sounds like the division will do so by using the
Senior Voice but he is concerned that the state is imposing
requirements that are not useful that increase the cost.
MR. ASHLAND said he is relatively new to the state system so he
is not sure what the publication process entails, but the
division will try to be as prudent as it can to keep the costs
down. He pointed out the cost of publication was calculated based
on the amount used by the Long Term Care Task Force.
SENATOR LEMAN encouraged Mr. Ashland to make use of electronic
notification wherever possible and to target the publications
that will be most useful. He acknowledged the division is already
doing that.
CHAIRWOMAN GREEN asked Senator Wilken if the Long Term Care Task
Force discussed access to prescription drugs.
SENATOR WILKEN didn't recall.
MR. ASHLAND said the division made a presentation last week on
the accomplishments of the Long Term Care Task Force and what
remains to be accomplished. The task force made 31
recommendations but prescription drug coverage was not among
them. He believes the issue was discussed but was not considered
to be urgent at that time.
CHAIRWOMAN GREEN asked members to hold questions about the make-
up of the task force and its goals until the bill is rescheduled.
SENATOR LEMAN suggested adding a few legislators to the list of
members because the task force may generate ongoing legislative
issues. He also suggested changing the reference to "American
Association of Retired Persons" to "AARP."
SENATOR DAVIS asked if those changes could be made readily so
that the legislation can move along.
CHAIRWOMAN GREEN took note and then announced the committee would
take up HB 245.
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