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.