April 1, 2010
INSURANCE COVERAGE FOR ORAL CHEMOTHERAPY
By: Janet L. Kaminski Leduc, Senior Legislative Attorney
You asked for background information related to sSB 50, An Act Concerning Oral Chemotherapy Treatments. Specifically, you asked for (1) an explanation of the disparity between insurance coverage for intravenous versus oral chemotherapy treatment and (2) the estimated cost of covering oral chemotherapy the same as intravenously-administered chemotherapy.
Health insurance policies often cover most or all of the cost of chemotherapy when administered intravenously in a medical office. However, the same policies treat the pill version of chemotherapy as prescription drugs, meaning a person typically pays a larger share of the cost than if the treatment was intravenously administered (A. Levin Becker, Chemotherapy or Pills? Difference Can Be Hundreds of Dollars, Hartford Courant, March 11, 2010, copy enclosed).
The Insurance and Real Estate Committee favorably reported sSB 50 (File No. 160) on March 11, 2010. The bill requires health insurance policies to cover oral chemotherapy on at least as favorable a basis as intravenous chemotherapy. While Connecticut has not performed an actuarial study of the cost impact of this proposal, a study by Milliman Inc. estimates it will increase premiums on average by 50 cents per member per month.
Vermont, which studied the impact of similar legislation before enacting into law, determined the requirement would have a negligible impact on premiums. California and Indiana have also reported a negligible impact on premiums for their similar legislation.
The Office of Fiscal Analysis (OFA) has determined that sSB 50 would have no impact on the state budget and a potential impact on municipalities' budgets.
SUBSTITUTE SENATE BILL 50
Effective January 1, 2011, sSB 50 requires certain health insurance policies that cover intravenously- and orally-administered anticancer medications prescribed by a licensed practitioner with prescribing authority to cover the orally-administered medication on at least as favorable a basis as the intravenously-administered medication. It prohibits a policy from reclassifying anticancer medications or increasing the patient's out-of-pocket costs for the medications as a way to comply.
The bill applies to individual and group health insurance policies delivered, issued, renewed, amended, or continued in Connecticut that cover (1) basic hospital expenses; (2) basic medical-surgical expenses; (3) major medical expenses; and (4) hospital or medical services, including coverage under an HMO plan. It also applies to individual health insurance policies that provide limited benefit health coverage. Due to federal law, state insurance benefit mandates do not apply to self-insured benefit plans.
The Insurance and Real Estate Committee heard public testimony on sSB 50 on February 18, 2010. Numerous testifiers described the current situation with respect to insurance coverage for intravenous versus oral chemotherapy.
Chemotherapy administered intravenously is covered as a medical expense under most comprehensive health insurance policies. This means an insured person goes to an outpatient facility or hospital to receive the chemotherapy treatment and pays the associated medical visit copayment or deductible as required by the insurance policy, until he or she reaches the policy's out-of-pocket maximum. Once the person has paid the maximum amount, the policy pays in full.
However, for those people who take their chemotherapy orally, either in pill or liquid form, treatment is covered as a prescription drug, not as a medical expense. Thus, the insured person must pay the related prescription drug copayment or deductible. Depending on the policy terms, the amount a person has to pay out of pocket for the oral chemotherapy can be much higher than if it were treated as a medical expense. If the policy has limited prescription drug coverage with an annual maximum, a person may quickly reach that maximum, having to then pay the full cost of the chemotherapy out of pocket.
The most widely-used oral chemotherapy drugs in use range in wholesale price from $2,200 to $7,900 per month, according to the New York Times (A. Pollack, Insurance Lags as Cancer Care Comes in a Pill, April 15, 2009, copy enclosed).
For related information, see OLR Research Report 2009-R-0311, Health Insurance Coverage for Cancer Pills (enclosed).
ESTIMATED COST OF COVERAGE PARITY
Connecticut has not undertaken an actuarial review of the proposed mandate to determine the estimated cost impact on health insurance policies. However, according to the Hartford Courant article, Milliman Inc. prepared a report in 2009 for GlaxoSmithKline, which makes oral chemotherapy drugs. Milliman estimated that treating oral and intravenous chemotherapy drugs equally in health plans would increase the cost of health insurance by less then 50 cents per member per month on average. The exact amount would vary by plan due to the wide range of plan designs.
In Vermont, the Department of Banking, Insurance, Securities, and Health Care Administration studied the impact of implementing a requirement for health insurance coverage of oral chemotherapy and issued a report on January 15, 2009 (copy enclosed). The department determined the impact to premiums would be negligible, up to a 0.5% increase. In performing the study, the department researched cost information from Indiana, California, and Oregon, which have passed similar legislation. California and Indiana reported negligible impacts. Oregon's insurance department did not track or study the impact on premiums.
According to the Office of Fiscal Analysis, which reviews the impacts of legislation on the state and municipal governments, sSB 50 would have no impact to the state budget and a potential cost to municipalities. The OFA Fiscal Note indicates, “The bill is not anticipated to impact costs to the state employee and retiree health plans since the state's pharmacy benefit manager currently covers oral chemotherapy drugs with a $25 copayment.” OFA further states, “The bill's provisions may increase costs to fully-insured municipal plans which do not currently offer the coverage mandated. The coverage requirements may result in significant increased premium costs when municipalities enter into new health insurance contracts on or after January 1, 2011.”