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A10524 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10524
 
SPONSOR: Cahill
  TITLE OF BILL: An act to amend the insurance law, in relation to Medicare part D employer group waiver plans   PURPOSE: To exempt Part D Employer Group Waiver Plans ("EGWP") from New York Insurance Law requirements.   SUMMARY OF PROVISIONS: Section 1 of the bill would amend section 3242 of the Insurance Law to exempt products that cover prescription drug benefits for Medicare bene- ficiaries pursuant to 42 U.S.C. 1395w-132 (EGWPs) from New York Insur- ance Law requirements including, State benefit mandates and form and rate filing requirements. Section 2 Provides this act would have a retroactive effective date of January 1, 2014.   JUSTIFICATION: EGWPs are Medicare Part D prescription drug plans offered by employers or unions to retirees who have prescription drug coverage. There are two components to the EGWP: 1) Medicare Part D prescription drug coverage; and 2) additional drug benefit to cover primarily the retiree's out-of- pocket costs that are not covered by Medicare. In many cases, the addi- tional benefit consists of coverage of the "donut hole." Medicare Part D prescription drug benefit plan designs must meet CMS requirements and CMS reviews and approves the Medicare Part D drug formularies. CMS provides plans with flexibility to provide additional benefits (e.g., reduction in cost-sharing) to retirees provided that the underlying Medicare Part D benefit standards are met. EGWPs should be exempt from New York Insurance Law requirements for the following reasons: -CMS has exclusive jurisdiction to regulate Medicare products and has issued guidance that the other benefits offered through EGWPs are "inex- tricably intertwined with drugs offered under the Part D benefit such that the two cannot be separated as a practical matter." -Subjecting EGWPs to New York regulatory requirements would alter the underlying basic benefit design. Forcing a change in the benefit design or imposing new costs for a sliver of the overall benefit package -generally just a reduction in the cost-sharing -- is disruptive and may be harmful to consumers if employers or unions discontinue the coverage. -It is common for plans to offer multiple cost-sharing tiers in their Part D and EGWP products offered to employers or unions. Plans use multiple tiers to provide cost savings to their members and encourage quality. This is a common practice that is authorized by CMS. New York Insurance Law would limit EGWPs to three cost-sharing tiers. -EGWP enrollees are required to be enrolled in Medicare Parts A and B. New York insurance mandates would require health plans to include prescription benefits in EGWP products that are otherwise available to members through Medicare Parts A or B. Such duplicative coverage is wasteful and expensive. For example, most anti-cancer drugs are provided through Medicare Part B, so consumers should not be required to also pay for such drugs though the EGWP policies. -CMS already oversees Part D EGWP products and requires that they comply with all Medicare Part D requirements. Insurers submit informational filings to CMS.   LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: Immediately and deemed in effect on and after January 1, 2014.
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