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Mandated Benefits

March 15, 2019

As part of New York’s state budget deliberations, the Legislature is considering a number of proposals from the Governor that would affect health plans and the coverage they offer to employers and consumers.  Here is a summary of some key items, with our positions on them.

Mandated Benefits

New mandated benefits increase cost of coverage, undermine affordability and lead to some people becoming uninsured. Mandating coverage of specific services disproportionately affects small and medium-sized employers because they typically are fully-insured, while large groups typically self-insure and self-insured plans are not subject to state mandates. Forcing employers to include benefits they and their workforce may not want or need exacerbates the challenge they face to find affordable health care options.

  • In-Vitro Fertilization (IVF) and Fertility Preservation Services

Proposed:  Require large group policies to cover three cycles of IVF.  Also, expand current infertility treatments law to include coverage for fertility preservation for cancer patients in the individual, small group and large group markets.

Position: Opposed.

While health plans recognize the importance of infertility services, when they are mandated by the state, utilization of those services goes up. Experience in states that have mandated IVF has shown a significant increase in the use of services. Further, the costs associated with infertility treatment are likely to continue to rise as more technologically advanced treatments are developed, increasing the cost of coverage for all individuals and employers.

  • Expanded inpatient substance use disorder treatment

Proposed: Expand mandated coverage from 14 to 21 days, and continue to prohibit prior and concurrent authorization by plans; imposes $1.7 million assessment on plans for parity compliance oversight.

Position: Opposed.

Since imposition of the 14-day mandate in 2016, some evidence suggests that providers are discharging members on the 13th day to avoid dealing with plans’ efforts to coordinate members’ care and that readmissions are increasing. The state should focus on improving coordinated care management, allowing plans to communicate with providers during stays and requiring providers to engage with plans in discharge planning early.  Additionally, the state should implement systems to report on provider performance outcomes to ensure the full range of evidence-based treatment options is available to individuals throughout their care.

Imposing new assessments on plans to fund oversight, on top of the more than $5 billion in taxes imposed on health insurers, will increase cost of coverage for employers and consumers without improving care.

  • Restrictions on Medicaid plan/Pharmacy Benefit Manager (PBM) contracting

Proposed:  Places restrictions on contracting arrangements between Medicaid health plans and PBMs to result in $86 million in Medicaid savings; includes prohibition on spread pricing.

Position: Opposed.

Restricting contracting arrangements does nothing to address rising prescription drug costs, which are driven by increases in the prices pharmaceutical manufacturers charge for drugs. Health plans contract with PBMs to ensure the greatest efficiency in pharmaceutical spending. As a result of negotiations and procurement, health plans work to get the best deal possible with PBMs. Limiting contracting arrangements to a one-size-fits-all approach limits innovative program designs health plans and PBMs can undertake to contain drug spending. Instead of restricting reimbursement arrangements, the focus should be on measures that address pharmacy costs more holistically to rein in runaway prescription drug prices. Equally important, it is unclear how $86.6 million in Medicaid savings the Governor’s budget attributes to this provision would be achieved, leaving health plans concerned that this will result in a rate cut without any meaningful reform on prescription drug prices. Finally, contract negotiations between plans and PBMs typically take between 12 and 18 months; the budget proposal allows only three months.

  • PBM registration

Proposed:  Establishes regulation of PBMs through registration, licensure, examination and disclosure requirements and penalty provisions.

Position: Opposed.

PBM services are already highly regulated, with significant oversight of pharmacy spending already in place through the Department of Health (DOH), the Office of the Medicaid Inspector General (OMIG), and the Department of Financial Services (DFS). The Medicaid contract requires health plans to submit quarterly reports to DOH specific to their PBMs, including the amounts paid by the plan to the PBM for pharmaceutical services by category, the amounts paid for each prescription drug and the amounts paid for administrative services. OMIG’s Pharmacy Review Project Team reviews payments from PBMs to network pharmacies to ensure compliance with federal and state regulations, contract requirements and the pharmacy benefit component in the mainstream Medicaid managed care program. In the commercial market, health plans are required to submit significant amounts of information on pharmacy costs to DFS as part of the annual rate review process. While the information submitted as part of the licensure process is to be deemed confidential, the provision leaves it to the DFS Superintendent’s discretion on whether the information can be publicly disclosed. The potential that discounts and other sensitive information could be disclosed has the potential to lead to higher prices as the Federal Trade Commission has warned that “whenever competitors know the actual prices charged by other firms, tacit collusion, and thus higher prices, may be more likely.”

  • Affordable Care Act (ACA) codification

Proposed:  Language to codify several provisions of the federal ACA in state law, but also goes beyond ACA provisions.

Position: Remove these provisions from the Budget. Opposed to expanding powers of DFS Superintendent.

Health plans support the goal of protecting the ACA policies adopted here in New York that have resulted in the significant progress the state has made toward universal coverage under the landmark law. However, there are serious concerns with certain proposed provisions that go beyond codification of the ACA. Moreover, as these proposals have no fiscal impact, plans believe that it is better to discuss ACA codification outside of the budget process.

  • Universal Access Commission

Proposed:  Establishes a commission to evaluate pathways for achieving universal access to high quality, affordable health care in New York, and charges the commission to report options to the Governor by December 1, 2019.

Position: Support.

Health plans believe that every New Yorker deserves high quality and affordable health coverage, and are committed to continuing to work with the state to achieve the goal of universal coverage. New York has been successful in reducing the number of uninsured from 10% in 2013 to less than 5% today, in large part due to the work of health plans in implementing the ACA and New York’s ambitious Medicaid Redesign program. While more work is needed, efforts should focus on building on the current health care infrastructure to achieve the goal of universal coverage and to make health care more affordable. Establishment of a commission to study options for achieving universal coverage takes a balanced and thoughtful approach to develop measures that expand access to affordable health care coverage for all New Yorkers without disrupting current coverage options for employers and consumers.

  • Medicaid cuts

Proposed:  Reduces Medicaid spending by $550 million; Medicaid Managed Care cuts $80.4 million.

Position: Opposed to cuts to health plans.

Health plans recognize the fiscal challenges facing the state, but the Administration’s proposed Medicaid cuts would have a devastating impact on health plans and the individuals they serve.  As plans are operating on extremely thin margins, restoring the Medicaid cuts is a critical step to protecting the coverage they provide to the state’s most vulnerable residents.

Plans have been consistent, reliable partners in the state’s Medicaid Redesign efforts and in implementing the Affordable Care Act, making it possible for New York’s success in insuring more than 95 percent of state residents. As state leaders work to close the budget gap, the focus should be on real and meaningful reforms in health care spending to rein in costs and are not just merely cuts in the rates paid to health plans that, ultimately, will threaten the high-level of coverage that New York has achieved.

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