Legislature(2015 - 2016)BELTZ 105 (TSBldg)

04/05/2016 01:30 PM Senate LABOR & COMMERCE

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Audio Topic
01:36:07 PM Start
01:37:12 PM Confirmation Hearing: Alaska Gasline Development Corporation Board of Directors
01:49:30 PM HB155
01:58:09 PM SB201
02:02:05 PM SB175
02:38:54 PM SB156
03:19:51 PM SB193
03:27:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Consideration of Governor's Appointee: TELECONFERENCED
Alaska Gasline Development Corporation Board of
Directors
+= HB 155 FEES; WAIVERS; CREDITS; DEDUCTIONS;TAXES TELECONFERENCED
Moved SCS CSHB 155(L&C) Out of Committee
+= SB 201 PHARMA BD & EMPLOYEES;DRUG DIST/MANUFAC TELECONFERENCED
Moved SB 201 Out of Committee
+= SB 175 PHARMACY BENEFITS MANAGERS TELECONFERENCED
Moved CSSB 175(L&C) Out of Committee
+ SB 156 INSURANCE COVERAGE FOR CONTRACEPTIVES TELECONFERENCED
Heard & Held
+ SB 193 EXTEND EXEMPTION FOR SMALL POWER PLANTS TELECONFERENCED
Heard & Held
+ HB 268 AIDEA:DIVIDEND TO STATE;INCOME;VALUATION TELECONFERENCED
Scheduled but Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
-- Public Testimony --
               SB 175-PHARMACY BENEFITS MANAGERS                                                                            
                                                                                                                                
2:02:05 PM                                                                                                                    
CHAIR COSTELLO  announced the  consideration of  SB 175;  "An Act                                                               
relating  to the  registration and  duties  of pharmacy  benefits                                                               
managers;  relating to  procedures,  guidelines, and  enforcement                                                               
mechanisms for pharmacy audits; relating to the cost of multi-                                                                  
source  generic  drugs  and insurance  reimbursement  procedures;                                                               
relating  to  the duties  of  the  director  of the  division  of                                                               
insurance; and providing  for an effective date."  She noted this                                                               
is  the second  hearing  of  the bill  and  there  is a  proposed                                                               
committee substitute (CS).                                                                                                      
                                                                                                                                
SENATOR GIESSEL  moved to adopt  the CS  for SB 175,  labeled 29-                                                               
LS1110\H, as the working document.                                                                                              
                                                                                                                                
2:03:04 PM                                                                                                                    
CHAIR COSTELLO objected for an explanation of the changes.                                                                      
                                                                                                                                
WESTON  EILER, Staff,  Senate Labor  and  Commerce Committee  and                                                               
Senator Mia Costello, highlighted two  elements in SB 175. The CS                                                               
moves  the regulation  of pharmacy  benefit  managers (PBMs)  and                                                               
their  registration to  the section  of statute  that deals  with                                                               
third-party administrators.  It also  addresses some  issues with                                                               
regard  to interest  and adjudicating  claims, and  the effective                                                               
date.                                                                                                                           
                                                                                                                                
JANE  CONWAY,   Staff,  Senator   Cathy  Giessel,   Alaska  State                                                               
Legislature,  presented an  explanation  of  changes between  the                                                               
original version W and version H of SB 175.                                                                                     
                                                                                                                                
2:07:15 PM                                                                                                                    
       Section 1. Adds a new section concerning Pharmacy                                                                      
     Benefits Managers.                                                                                                         
                                                                                                                              
     Section  21.27.901  Registration of  pharmacy  benefits                                                                  
     managers;  scope   of  business  practice.   Moves  the                                                                  
     pharmacy  benefit  manager  registration  to  21.27.630                                                                    
     that governs third  party administrators. Outlines what                                                                    
     a PBM may do under  this chapter and deletes lines 8-20                                                                    
     of version W regarding registration.                                                                                       
                                                                                                                                
     Sec.   21.27.905  Renewal   of  registration.   Changes                                                                  
     renewal of registration from annual to biannual.                                                                           
                                                                                                                                
     Section    21.27.910    Pharmacy    audit    procedural                                                                  
     requirements.   Adds   "Unless    required   under   AS                                                                  
     21.36.495,  a"  (this  statute  governs  procedure  for                                                                    
     timely payment of claims)  and that during adjudication                                                                    
     of a claim, no interest will accrue.                                                                                       
     In  (d)  (1)  and  (2)  clarifies that  it  must  be  a                                                                    
     pharmacist licensed and  in good standing in  AK and in                                                                    
     compliance with  AS 08.80  (Pharmacy Statute)  when the                                                                    
     audit involves clinical or professional judgment.                                                                          
                                                                                                                              
     Sec.  21.27.915.  Overpayment   or  underpayment.  Adds                                                                  
     language that  does not allow extrapolation  of figures                                                                    
     in calculation  of an over or  underpayment unless PBMs                                                                    
     and  pharmacy  agree  to  a  statistically  agreed-upon                                                                    
     projection.                                                                                                                
                                                                                                                                
     Sec.  21.27.920.   Recoupment.  Removed   reference  to                                                                  
     "corrective action plan" in (b).                                                                                           
                                                                                                                                
     Section  21.27.930.   Pharmacy  audit   appeal;  future                                                                  
     repayment.  Clarifies  in  (c)  that it  is  the  PBM's                                                                  
     appeal process that must be exhausted.                                                                                     
                                                                                                                              
     Section  21.27.935. Fraud.  Deletes entire  text in  W,                                                                  
     and rewords  it: "When a  pharmacy benefits  manager is                                                                    
     conducting an audit of  a pharmacy, fraudulent activity                                                                    
     is defined  as an intentional act  of theft, deception,                                                                    
     misrepresentation  or  concealment   committed  by  the                                                                    
     pharmacy, which  is discovered during the  course of an                                                                    
     audit.   Unintentional   clerical   or   record-keeping                                                                    
     errors,   including   typographical  errors,   writer's                                                                    
     errors,  or   computer  errors  regarding   a  required                                                                    
     document or record, shall  not be considered fraudulent                                                                    
     activity."                                                                                                                 
                                                                                                                              
     Sec. 21.27.950. Multi-source  generic drug appeal. Adds                                                                  
     in (e) A  network pharmacy may request  a hearing under                                                                    
     AS 21.06.170 - AS  21.06.240 that governs procedure for                                                                    
     hearings by the Div. of  Insurance and takes out the 30                                                                    
     calendar  days language  in (f)  and deletes  (g) since                                                                    
     that  would  all  be  covered  by  AS  21.06.170  -  AS                                                                    
     21.06.240.                                                                                                                 
                                                                                                                                
     Sec.  21.27.955.  Definitions.  Defines  all  selective                                                                  
     wording as used in Section 1.                                                                                              
                                                                                                                                
     Section 2.  Adds a new  section on Applicability  as it                                                                  
     applies  to  audits  of   pharmacies  as  conducted  by                                                                    
     pharmacy benefits managers.                                                                                                
                                                                                                                                
     Section  3.  Adds  a new  section  as  to  Transitional                                                                  
     Provisions for adopting Regulations.                                                                                       
                                                                                                                                
     Section  4. Adds  a new  section stating  the Revisor's                                                                  
     Instructions.                                                                                                              
                                                                                                                                
     Section 5. Effective date clause for Bill section 3.                                                                     
                                                                                                                                
     Section 6.  Effective date clause  for this  Act except                                                                  
     as provided.                                                                                                               
                                                                                                                                
2:08:17 PM                                                                                                                    
CHAIR COSTELLO  asked for an  explanation of the purpose  for the                                                               
change in the overpayment and  the underpayment provision in Sec.                                                               
21.27.915.                                                                                                                      
                                                                                                                                
MS. CONWAY said  it is common practice during PBM  audits that if                                                               
they  find an  error  that might  reoccur, there  is  a model  to                                                               
extrapolate  that cost  out  a  number of  times  for a  specific                                                               
period.  She   gave  an  example   of  an  error  of   $89  being                                                               
extrapolated out and  resulting in a $9,000  bill. The pharmacies                                                               
view this as unfair. This  provision provides the opportunity for                                                               
an agreement in the contract on the model that will be used.                                                                    
                                                                                                                                
CHAIR COSTELLO  asked Ms. Wing-Heier  if the state uses  PBMs and                                                               
how the bill would affect the state.                                                                                            
                                                                                                                                
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce,  Community and  Economic  Development,  said the  state                                                               
does use  a PBM but  the Department of Administration  would have                                                               
to speak to the impact on  the state benefit plan. She noted that                                                               
PBMs have become commonplace in  both the insured and self-funded                                                               
plans for pharmaceutical needs.                                                                                                 
                                                                                                                                
2:11:53 PM                                                                                                                    
SENATOR STEVENS asked  if there have been  unreasonable audits in                                                               
the past.                                                                                                                       
                                                                                                                                
MS. WING-HEIER said  the division isn't aware of  any audits. She                                                               
explained that  PBMs should be  registering with the  Division of                                                               
Insurance, but just  two have done that so  they aren't currently                                                               
licensed in Alaska.                                                                                                             
                                                                                                                                
2:13:07 PM                                                                                                                    
DAVID BALTO,  former Policy  Director, Federal  Trade Commission,                                                               
testified  in  support  of  SB   175.  He  shared  his  extensive                                                               
background  dealing   with  PBMs.  He  focused   on  the  reforms                                                               
suggested  in the  proposed CS  dealing with  PBMs. He  noted the                                                               
bill  is similar  to  reforms  that have  been  adopted in  other                                                               
states.  He  spoke  of  the  disproportionate  bargaining  powers                                                               
between pharmacies  and PBMs. He  maintained that  pharmacies are                                                               
almost  never able  to  negotiate and  that is  why  the bill  is                                                               
needed.  It  assures that  payments  are  timely and  audits  are                                                               
practical. Other provisions  in the bill speak to  a fair process                                                               
for audits.  The bill  is especially  beneficial to  small, local                                                               
pharmacies and their consumers.                                                                                                 
                                                                                                                                
DIRK WHITE,  past president of  the Board of  Pharmacy, testified                                                               
on SB  175. He presented  examples of  egregious audits by  a PBM                                                               
regarding wheelchairs.                                                                                                          
                                                                                                                                
2:21:30 PM                                                                                                                    
SENATOR STEVENS  thanked Mr. White  and agreed that  the examples                                                               
were egregious.                                                                                                                 
                                                                                                                                
2:22:30 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
2:23:54 PM                                                                                                                    
ASHLEY REED,  Lobbyist, Pharmacy Groups  - CVS Health  and Geneva                                                               
Woods, testified in opposition to  SB 175. He noted similar bills                                                               
have  been  around  before  and  they  never  went  anywhere.  He                                                               
maintained that there are problems  with the bill. This bill will                                                               
cost the  state money. He  said PBMs are  an effort to  hold down                                                               
health  care costs.  He maintained  that the  state cannot  trump                                                               
federal  law. He  opined that  the  egregious audits  are on  the                                                               
federal level, not at the local  level. He cautioned to take time                                                               
to understand  this complex  issue. He concluded  that SB  175 is                                                               
going to take away an important tool.                                                                                           
                                                                                                                                
2:35:22 PM                                                                                                                    
CHAIR COSTELLO thanked Mr. Reed  for his testimony and stated her                                                               
intent to  move the bill  today. She noted  that next it  goes to                                                               
the  Senate  Finance  Committee,  which can  address  fiscal  and                                                               
actuarial issues.                                                                                                               
                                                                                                                                
SENATOR  GIESSEL  noted  the  zero fiscal  note  comes  from  the                                                               
Division  of  Insurance  and  she believes  the  fiscal  note  is                                                               
authentic.                                                                                                                      
                                                                                                                                
2:37:01 PM                                                                                                                    
SENATOR GIESSEL moved to report the  CS for SB 175, labeled 29-LS                                                               
1110\H,  from  committee   with  individual  recommendations  and                                                               
attached zero fiscal note.                                                                                                      
                                                                                                                                
CHAIR COSTELLO  announced that  without objection,  CSSB 175(L&C)                                                               
is  reported   from  the  Senate  Labor   and  Commerce  Standing                                                               
Committee.                                                                                                                      

Document Name Date/Time Subjects
SCS HB 155 (L&C) - Ver. P.pdf SL&C 4/5/2016 1:30:00 PM
HB 155
SB 175 - Opposition Letter - CVS Health.PDF SL&C 4/5/2016 1:30:00 PM
SB 175
SB 175 - Explanation of changes from W to H.pdf SL&C 4/5/2016 1:30:00 PM
SB 175
SB 175 - Sectional Analysis vsn H.pdf SL&C 4/5/2016 1:30:00 PM
SB 175
SB 175 vsn H.pdf SL&C 4/5/2016 1:30:00 PM
SB 175
SB 156.PDF SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Sponsor Statement.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Sectional Analysis.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Fiscal Note - DHSS 1.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Fiscal Note - DHSS 2.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Fiscal Note - DCCED Insurance.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Opposition Letter - NFIB 2016.02.18.PDF SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Opposition Letter - NFIB 2016.04.01.PDF SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Background - CDC Unintended Pregnancy.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Background - American Journal of Public Health Article.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Background - ADN Commentary.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Background - Examiner Article Unintended Pregnancy.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Background - Guttmacher Alaska Unintended Pregnancy Stats.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 156 - Background - Guttmacher Public Costs of UP.pdf SL&C 4/5/2016 1:30:00 PM
SB 156
SB 193.PDF SL&C 4/5/2016 1:30:00 PM
SB 193
SB 193 - Sponsor Statement.pdf SL&C 4/5/2016 1:30:00 PM
SB 193
SB 193 - Fiscal Note.pdf SL&C 4/5/2016 1:30:00 PM
SB 193
SB 193 - Leg Research Report on Regulation Sb277 3-5-10.pdf SL&C 4/5/2016 1:30:00 PM
SB 193
SB 277
SB 193 - Letter of Support- AIPPA 3-4-16.pdf SL&C 4/5/2016 1:30:00 PM
SB 193
SB 193 - Letter of Support APT LOS 3-11-16.pdf SL&C 4/5/2016 1:30:00 PM
SB 193
SB 193 - Letter of Support- CIRI 3-4-16.pdf SL&C 4/5/2016 1:30:00 PM
SB 193
SB 193 - Supporting Document letter APA 2-29-16.pdf SL&C 4/5/2016 1:30:00 PM
SB 193
SB 193 - Supporting Documents Letter CIRI Response to APA letter 3-19-10.pdf SL&C 4/5/2016 1:30:00 PM
SB 193
HB 268.pdf SL&C 4/5/2016 1:30:00 PM
HB 268
HB 268 - Transmittal Letter.pdf SL&C 4/5/2016 1:30:00 PM
HB 268
HB 268 - Sectional Analysis.pdf SL&C 4/5/2016 1:30:00 PM
HB 268
HB 268 - Fiscal Note.PDF SL&C 4/5/2016 1:30:00 PM
HB 268
HB 268 - Supporting Documents.pdf SL&C 4/5/2016 1:30:00 PM
HB 268
Gasline Development- Merrick #1.pdf SL&C 4/5/2016 1:30:00 PM
Alaska Gasline Development Corporation Factsheet.pdf SL&C 4/5/2016 1:30:00 PM
1 - Alaska Gasline Development Corporation Roster.pdf SL&C 4/5/2016 1:30:00 PM