LEG REG REVIEW GPAHU Edition 2017, 34th Issue October 30, 2017

 

SENATE BANKING & INSURANCE COMMITTEE HOLDS Rx PRICE HEARING

On October 23, the Senate Banking & Insurance Committee convened a prescription drug price transparency hearing relative to Senate Bill 637 (White-R-Indiana).  It presented starkly contrasting views between the pharmaceutical industry which maintained that manufacturing price increases are quite reasonable versus insurers and prescription benefit managers (PBMs) which pointed accusing fingers at the drug industry for unwarranted increases.  The insurer panel included representatives from Independence Blue Cross, Highmark, and Capital Blue Cross as well as the Insurance Federation of Pennsylvania.   PA’s Independence Blue Cross cited examples of dramatic increases in recent drug pricing from 2012 to 2016:

  • The average wholesale price per patient prescription has increased 24%.
  • Total costs of prescription claims paid out by Independence Blue Cross jumped 40% from $806 million in 2012 to $1.1 billion in 2016.
  • Average cost of brand-name specialty drugs are sixty times the amount spent on generic drugs accounting for 60% of drug claim costs for Independent even though these specialty drugs only accounted for 2.1% of utilization.

 

Also testifying was PA State Grange lobbyist and former PAHU lobbyist Vince Phillips who said that transparency in pricing could give insurance companies the ability to negotiate more effectively because they could compare pricing practices between states, such as a hypothetical Epi-pen charge being $150 in one state versus $600 in PA.

 

HOUSE APPROVES INSURANCE EXAM BILL

On October 25, the House voted 191-0 to advance House Bill 1335 (Pickett-R-Bradford) to the Senate.  Under this legislation, the Insurance Department would list vendors it has selected to perform market and financial exams and provide information as to how much those costs are.  This is of particular interest to health insurance companies which are very concerned about lack of transparency and no apparent limit to the lengthy insurer-paid costs of these exams.  The PA Association of Mutual Insurance Companies (PAMIC) is taking the lead on the property casualty side.

 

BUDGET SAGA FINALLY ENDS

With House action October 25 and 26, the revenue side to the State Budget was sent to Governor Tom Wolf for his signature.  He did so on October 30.  Some major elements include:

  • Bond issue (Borrowing) of $1.5 billion from future payments to Pennsylvania from the Tobacco Master Settlement to be paid back within 30 years  NOTE:  House Bill 542, page 271 https://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2017&sessInd=0&billBody=H&billTyp=B&billNbr=0542&pn=2598  ACT 43
  • Taking $200 million from reserves held by the Joint Underwriting Association (JUA), the medical malpractice insurer of last resort.  The Administrative Code bill specifies that if JUA does not hand over the money by December 1st, it will be abolished.  JUA says that it is illegal for the state to “seize” insurance company reserves and that it will sue to prevent this from occurring.  ACT 44

NOTE: House Bill 674, Article II-D, section 201-D page 14: Similar language is found in an Administrative Code bill, House Bill 118 (Article XV-A on page 51) but this specifies that the Supreme Court shall have exclusive jurisdiction to hear any challenge.   Thttps://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2017&sessInd=0&billBody=H&billTyp=B&billNbr=0674&pn=2624

  • $200 million to come from gambling expansion (House Bill 271)  ACT 42
  • Senate Bill 651, the Capitol Budget, is a bricks and mortar wish list for projects funded by the Commonwealth.  Just because projects are listed here does not mean that the money is actually there. This is an authorization bill.  Examples for Capital Budget items might be a new barn for the Farm Show complex or significant upgrading to a state building HVAC system. ACT 52

 

In limbo is the Governor’s October 9 pronouncement that PA would take out an equity loan on the Farm Show Complex owned by the state.  His rationale was that he would take budget matters into his own hands, absent a legislative resolution to the State Budget impasse.

 

HERE IS THE SLEEPER BUDGET ISSUE

House Bill 674 which is now ACT 44 contains this section:  SECTION 1726-G.FUND TRANSFERS.

DURING THE 2017-2018 FISCAL YEAR, $300,000,000 SHALL BE

TRANSFERRED FROM AMOUNTS AVAILABLE IN SPECIAL FUNDS AND

RESTRICTED ACCOUNTS TO THE GENERAL FUND.

This is the ultimate outcome of House Republicans seeking to balance the State Budget by taking monies from over 50 specified dedicated funds such as the  Insurance Regulation and Oversight Fund which funds the general operations of the PA Insurance Department.  The Senate derailed that notion but final language gives the Governor the discretionary authority to decide from which funds this $300 million shall come.  HB 674 does not contain language limiting his choices.

 

OTHER LEGISLATIVE UPDATES

  • Workers’ Compensation drug formulary Senate Bill 936 (White-R-Indiana) was approved by the Senate 34-16 with all but two Democrats voting no (Boscola and Dinniman voted yes) and  two Republicans, Greenleaf and McIlhinney, who voted no.
  • Senate Bill 181 (Mensch-R-Bucks/Berks/Montgomery)went to the  Governor October 26.  This seeks to replace current budgeting practices of using an existing budget as a base from which incremental changes are made to a rigorous performance evaluation. 
  • On October 27, the Governor signed bills into law to free up funding for Penn State University, University of Pennsylvania School of Veterinary Medicine, University of Pittsburgh, Temple University and Lincoln University.
  • On October 24, the Senate Banking & Insurance Committee reported out Senate Bill 373 (Eichelberger-R-Blair).  This would allow for direct insurer reimbursement payments to out of network dentists if the policyholder authorizes direct payments.

 

WORKERS COMPENSATION RATES TO RISE

The PA Compensation Rating Bureau (PCRB) revised loss cost filing goes into effect November 1st.  This means a general increase in Workers’ Compensation premiums of 6.06%, necessary to adapt to the Supreme Court striking down a major provision of the Workers’ Compensation Act regarding American Medical Association permanent  impairment evaluation standards.  According to news reports, there is a challenge from the Trial Lawyers which will delay the Workers’ Compensation increase.

 

PA ATTORNEY GENERAL GETS SETBACK IN ACA COST-SHARING LAWSUIT

On October 25, Obama appointee U.S. District Judge Vince Chhabria (San Francisco) denied a request from the District of Columbia and 18 states including Pennsylvania to void President Trump’s decision to end Affordable Care Act subsidies to health insurers.  When PA joined the lawsuit, Attorney General Josh Shapiro (D) said on October 13, “Our lawsuit alleges that by stopping these payments unilaterally, President Trump has acted arbitrarily and capriciously and in clear violation of his legal responsibilities under the Affordable Care Act…no matter the President’s personal views.”

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