OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

SB-36

AN ACT CONCERNING HEALTH INSURANCE COVERAGE OF ORALLY AND INTRAVENOUSLY ADMINISTERED MEDICATIONS.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 17 $

FY 18 $

State Comptroller – Fringe Benefits (State Employees and Retiree Health Accounts)

GF, TF - Cost

See Below

See Below

GF & TF = General Fund and Special Transportation Fund

Municipal Impact:

Municipalities

Effect

FY 17 $

FY 18 $

Various Municipalities

Cost

See Below

See Below

Explanation

The bill will result in a cost to the state employee and retiree health plan (state plan)1 and municipalities for providing coverage for orally administered medications no less favorably than intravenously (IV) administered medications for certain diseases, which is uncertain. The cost to the state plan and municipalities will be the result of waiving or modifying co-pays or cost sharing for those individuals with certain diseases who are prescribed an orally administered medication for which there is an equivalent IV administered medication and for which a co-pay/cost sharing applies. The bill does not specify what diseases the cost parity applies to. Therefore, it is uncertain how many individuals this bill would apply to in the state plan or municipal plans and the resulting fiscal impact.

The state employee and retiree health plan covers medically necessary oral and IV medications. IV medications are traditionally administered on an inpatient basis at a hospital or at an outpatient infusion center for which there is no co-pay and the costs are billed to the medical plan. In contrast, orally administered medications are traditionally administered at a pharmacy and billed to the pharmacy benefit plan and are subject to the following co-pays and cost sharing2 :

 

Acute Medications- Participating Retail Pharmacy

Acute Medications- Non - Participating Retail Pharmacy

Health Enhancement Program Only- Chronic Condition- Related Maintenance Medications- Mail Order

Maintenance Medications (Mail Order Required after 1st 30 Day Fill at Retail Pharmacy)

Generic

$3 - $5

20%

$0

$0 - $5

Preferred Brand Name

$6 - $20

20%

$5

$0 - $10

Non-Preferred Brand Name

$6 - $35

20%

$12.50

$0 - $25

Municipal Impact

As previously stated, the bill may increase costs to certain fully insured, municipal plans that do not currently adhere to the coverage requirements of the bill. The coverage requirements may result in an uncertain increased premium cost when municipalities enter into new health insurance contracts after January 1, 2017. In addition, many municipal health plans are recognized as “grandfathered” health plans under the federal Affordable Care Act (ACA).3 It is unclear what effect the adoption of certain health mandates will have on the grandfathered status of certain municipal plans under ACA. Pursuant to federal law, self-insured health plans are exempt from state health mandates.

For the purposes of the ACA the coverage provision included in the bill is not considered an additional mandate and therefore will not result in an additional state cost related to reimbursement for the mandate for those covered through the exchange plans.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to (1) inflation, (2) the number of covered lives in the state and municipal health plans, and (3) the utilization of services.

1 The state employee and retiree health plan is a self-insured health plan. Pursuant to federal law, self-insured health plans are exempt from state health mandates. However, the state has traditionally adopted all state health mandates. Total number of covered lives as of February 2016 was 212,133.

2 In general, co-pays are based on active versus retired status and date of retirement. There is no co-pay for orally administered chemotherapy. (Source: State Of Connecticut Pharmacy Benefit Plan as of July 1, 2014).

3 Grandfathered plans include most group insurance plans and some individual health plans created or purchased on or before March 23, 2010.