|
BILL # HB 2420 |
TITLE: insurance; prescription drugs; step therapy |
|
SPONSOR: Barto |
STATUS: House Engrossed |
|
PREPARED BY: Jeremy Gunderson
|
|
The bill would set new clinical review criteria for insurers when developing step therapy protocols for prescription drugs and requires insurers' clinical review criteria meet the requirements in the bill. The bill also would require insurers to create a process that allows individuals to request an exception to the step therapy protocol, including a requirement that insurers respond to an exception request within 72 hours of receiving the request or 24 hours in exigent circumstances.
Estimated Impact
HB 2420 is expected to increase state employee health insurance costs by $4.25 million if 50% of current prescription drug claims affected by the state's step therapy program are eliminated due to exceptions. Since the General Fund typically pays 26% of HITF expenses, the General Fund would ultimately pay for $1.1 million of this cost. According to the Arizona Department of Administration (ADOA), the state employee health plan's current step therapy program saves the state $8.5 million on prescription drugs. ADOA did not estimate how much HB 2420 would reduce these savings.
The Department of Insurance has not yet provided an administrative cost estimate.
The bill exempts the Arizona Health Care Cost Containment System (AHCCCS) from the step therapy requirements and will therefore have no direct impact on AHCCCS.
Step therapy is a program that establishes a sequence of prescription drugs given to patients for certain health conditions. Generally, lower cost generic medications are the first "steps" in the protocol. Patients must try and subsequently fail with a "Step A" drug before they are allowed to try a "Step B" drug. Some insurers institute step therapy protocols to reduce costs of health care claims for medications by requiring patients to try lower cost drugs before they try more expensive brand-name drugs in an attempt to find the lowest-cost medication option that still satisfactorily treats the patients' medical condition.
The bill would require step therapy protocols be created based on clinical review criteria that are created by a multidisciplinary panel of health care experts, based on medical studies, research and practice, and require members to disclose potential conflicts of interest. If a medication step is deemed inadvisable by the prescribing practitioner as outlined in the bill or if the patient has already tried the medication on a previous health insurance plan, the bill would allow the patient to request an exception to the step therapy protocol. If the insurer does not respond to the exception request within 72 hours (or 24 hours under exigent circumstances) the exception request is deemed granted.
These guidelines and exceptions will increase the cost to insurers via additional administrative costs to review or set new step therapy protocols, as well as higher medication claims costs as patients will be able to move more quickly to higher steps via the exception process. To the extent that insurers have step therapy protocols that already match the requirements in the bill, the impact would be lessened.
(Continued)
The state employee health insurance plan is run by ADOA through the Health Insurance Trust Fund (HITF). The state uses a self-insured model, meaning that the state is responsible for the direct costs of health insurance claims. As such, any increase in health care claims for medications will be a cost to the state. According to ADOA, the state health plan includes a step therapy program which created $10.3 million in prescription drug savings last year. Of that amount, $8.5
million, or 3.7% of the $214.5 million total projected prescription drug claims in FY 2020, could be impacted by HB 2420. (The remaining amount is for Medicare-eligible employees who would not be affected by this bill.) ADOA acknowledged their estimate represented a maximum possible cost. They did not provide an estimate of the likely actual cost.
ADOA did not provide an estimate on the amount of increased administrative costs due to potentially changing the clinical review criteria or managing the exception review timelines in the bill.
Local Government Impact
Similar to the state's use of HITF, some cities and counties also use a self-insured model for employee health insurance. To the extent that these local jurisdictions also use step therapy protocols, they will experience similar cost increases as a result of the bill.
3/10/20