By Mike Ripley, vice president of health care policy and employment law

During the Great Recession from 2007-2011, the state paid out on average $1.1 billion per year in unemployment insurance (UI) benefits, with 2009 being the worst year with more than $1.8 billion in benefits paid. In 2011, the Indiana General Assembly passed legislation that put all employers on Schedule E rates through the end of 2020.

Subsequently, the U.S. Department of Labor (USDOL) determined that Indiana’s trust fund solvency remains in question based upon the average high cost multiple, which recommends between a $1.7 and $1.8 billion balance. The USDOL does recognize that Indiana has at least one year of benefit payouts in place at approximately $900 million.

Amid that backdrop, lawmakers and interested parties went to work on solutions some six months before the session kicked off. House Bill 1111 was the vehicle to bring Indiana closer to the desired USDOL number and was championed by the Indiana Chamber, in conjunction with the Indiana Department of Workforce Development, Rep. Dan Leonard (R-Huntington) and the Indiana Manufacturers Association.

The legislation lowered the number of schedules from nine to five (A through E). All employers will remain on Schedule E, which will become the “new” C from 2021 through 2025. The welcome news: Employers should not see a rate increase! The exception to that would be that the rates in Schedule could change based upon an employer’s experience rating (in other words, usage level).

After 2025, the rates change by triggers based upon the trust fund balance. The Indiana Chamber testified its belief that this approach was the best way to find a sweet spot between building the fund without raising taxes on employers and taking a chance in waiting to see what the economy does. Not to mention, possibly averting going back to an increase in rates and a credit reduction on top of it, which is equivalent to an increase in FUTA (federal unemployment tax return).

Some have asked how the state can build up the trust fund balance without raising UI taxes?  The reason is because at the end of 2020, when we come off schedule E, we would be on what is referred to as a float and there would be a reduction to a lower schedule. By remaining on E (or the new C), we will actually capture that difference.

We have almost $600 million more in the fund today than we had when the last recession hit. As a result, we are in much better shape than in 2007.

All of this, of course, was taking place prior to the current economic crisis resulting from the coronavirus pandemic. The extent of its impact on state funds (beyond federal relief) will not be immediately known. The Chamber will continue to monitor the UI claims benefit data and provide direction to legislators as we look toward the 2021 session.

Smoking age and transparency of health care costs

One of the Chamber’s top priorities for the past three years has been raising the legal smoking and vaping age to 21. With the passage of federal legislation to prohibit the sale of tobacco and e-cigarettes to anyone under 21, the state lift was certainly easier than it would have been without that action.

Senate Bill 1 adds to the federal law by making it illegal to purchase or possess tobacco and e-cigarette products by anyone under 21. Furthermore, it doubles penalties to retail establishments that sell those products to anyone under age 21. The Chamber thanks Sen. Ed Charbonneau (R-Valparaiso), Rep. Cindy Kirchhofer (R-Beech Grove), the Alliance for a Healthier Indiana, the Indiana Hospital Association and the Indiana State Medical Association for their partnership on this legislation.  

Surprise billing and transparency were two other Chamber priorities this year. What started out to be a simple two-page bill addressing surprise billing morphed into a very complicated health matters measure in HB 1004 from Rep. Ben Smaltz (R-Auburn). The successful final version removed controversial “site of service” language that hospitals opposed (a topic that will certainly be part of ongoing discussions). The legislation requires providers to give a good faith estimate (GFE) of charges within five business days for all non-emergency health care services starting July 1, 2021.

It allows an individual to request a GFE for non-emergency services. The GFE requests may be made to practitioners, facilities and insurance carriers. An out-of-network provider that delivers services in an in-network facility may not charge more for the services than the rate established by the network plan unless a statement is provided to the individual of the higher charges and the individual signs the statement. The bill also mandates provisions that must be included for physician non-compete agreements to be enforceable.

Senate Bill 5 concentrates on health provider contracts and transparency. It requires hospitals, ambulatory surgical centers and urgent care facilities to post certain health care services and prices on their web sites by March 31, 2021. Additionally, it requires the disclosure to policy holders of commissions, fees and brokerage fees to be paid in the selling of group health insurance.

The legislation bars the inclusion of a provision in a health provider contract to prohibit the disclosure of claims data to an employer. This is also known as prohibition of the “gag rule” on claims data. The final part of the bill gives the Indiana Department of Insurance (DOI) the authority to request information and proposals for the creation of an all-payer claims database (APCD). That database gives employers and other stakeholders tools to control and analyze health care costs through claims data.

The Chamber supported the general concept – although if not implemented properly, it may have its limitations. On a related note: The U.S. Supreme Court in a Vermont case has determined that Employee Retirement Income Security (ERISA) plans may not be required to participate in an APCD. In Indiana, it is estimated that about 43% of the covered lives would be in ERISA plans, approximately 11% in fully insured plans, 2% in the individual market and the remainder in Medicare and Medicaid plans.  It will be important for the DOI to find a creative way to incentivize ERISA plans to participate in the APCD.

Best pharmacy benefit managers bill prevails

After a failed attempt last year and extensive study this past summer, legislation related to pharmacy benefit managers (PBMs) made it across the finish line. While many legislators simply do not like PBM operations and some even wanted to ban the practice, it became crystal clear early on that some regulation would be mandated this session. Therefore, the Chamber’s best strategy was to mitigate the damage.

 Throughout the entire process, Sen. Liz Brown (R-Fort Wayne) was fair and listened to both sides concerning her measure, SB 241, which became the bill of choice. The Chamber consistently stated that less regulation on PBMs is the best route because employers use PBMs to negotiate drug prices and assist employees in drug adherence. We further recognized the desire for transparency but implored lawmakers to not do anything to raise costs.

The final bill requires all PBMs to be licensed under the authority of the DOI, as well as allows for parties that contract with the PBM to request an audit of compliance at least once a year. Separately, the bill requires the DOI to establish an appeals process to resolve disputes over pricing. The legislation also calls for equal access and incentives for any willing pharmacy to practice in the network as long as they agree to the terms of the contract.

The most interesting provision of that requirement is that a PBM may not reimburse a pharmacy that is affiliated with the pharmacy benefit manager at a greater reimbursement rate than other pharmacies in the same network. Larger pharmacies generally create more volume and may be reimbursed less than a smaller pharmacy. Discussion led us to believe that larger pharmacies won’t be paid at the smaller pharmacy rates – it will be the other way around, possibly jeopardizing profits even more for those smaller pharmacies. Stay tuned if that is actually the case, as the PBM discussion isn’t over.

Many thanks go to representatives from the Pharmaceutical Care Management Association, Caremark/CVS and Anthem/IngenioRx for their input into the process. The Chamber also greatly appreciates a new business member: Nathan Gabhart of TrueScripts. Having been a pharmacist and now the founder/owner of a PBM, Gabhart provided insightful guidance.

Other pharmacy battles

Three other mandates were tucked into HB 1207 (Pharmacy Matters), authored by Rep. Steve Davisson (R-Salem). One may not be that significant, the carriers negotiated an alternative arrangement on the second and the third, at best, has a slight impact on fully insured plans.

The one with limited impact still will be pleasing to some employees, but only in fully insured plans. The provision allows for an individual to purchase drugs at a pharmacy and at the point of sale, not run it through their plan’s deductible and then later apply it to their deductible. Previously, an employee may have gone to the pharmacy for a needed drug and found it was cheaper through GoodRx and thus wasn’t allowed to run it through their insurance to be applied toward the deductible. That employee will now be allowed to pay for it via GoodRx (but cannot benefit from a manufacturer’s coupon discount) and submit the claim to be applied to their deductible.

The second mandate in HB 1207 says that an insurer shall not renegotiate a prescription drug from a formulary or change the cost sharing requirement unless an appeals process is in place and a 60-day notice in place before the change.

The third mandate is a provision that states that the insurer or a pharmacy benefits manager may not require a pharmacy or pharmacist to collect a higher co-payment for a prescription drug from an insured than the insurer or pharmacy benefits manager allows the pharmacy or pharmacist to retain.

The fiscal analysis of HB 1207 states that any one of those three provisions could increase costs to insurers. Of course, those costs eventually will be borne by employers. About a year from now, we predict, Rep. Davisson (a pharmacist), will be wondering why there are plans that are still not complying with this statute. Again, he believes legislators have fixed something, but it only applies to that small market of fully insured plans.

Insurance mandate passed thanks to Senate Republicans

The Chamber opposed a very sensitive issue this session because of our standing policy against mandated benefits to fully insured plans due to their potential to increase the price of insurance premiums. Originally in SB 311, authored by Sen. David Niezgodski (D-South Bend), the matter involved pediatric auto-immune neuropsychiatric disorders associated with streptococchal infections (PANDAS) and pediatric acute-onset neuropsychiatric syndrome (PANS).

The Chamber testified that while sympathetic to families’ plight, the bill would only impact the state plan, individual and fully insured plans and not the ERISA plans – thus 80-85% of the commercial market would not be covered by this legislation. Despite the Chamber’s opposition, the bill passed the Senate 40-9. But Rep. Martin Carbaugh (R-Fort Wayne) agreed to not hear the bill when it came over to the House Insurance Committee, which he chairs. That began a tense back and forth.

On second reading, the Senate, on a vote of 32-14, amended the PANDA language into HB 1372, a measure on various insurance matters. However, Rep. Carbaugh removed the language from the first conference committee report. Senator Niezgodski expressed his disappointment at the removal of the language. Then, Senate Republicans backed up their Democrat colleague and refused to sign off on the conference committee report unless the language was put back into the bill.

The Senate Republicans used their leverage, knowing of the Insurance Institute of Indiana’s need for insurance accreditation language (contained in HB 1372) to force Rep. Carbaugh to put the language back into the final bill.  Consequently, that conference committee report passed both houses. Afterwards, Rep. Carbaugh was apologetic and proposed an idea to address mandated benefits in next year’s session. The Chamber will be working with Rep Carbaugh’s proposal over the summer.

Worker’s comp measure dies in the end

Ambulatory surgical centers (ASCs) was a topic discussed during the interim period. Data from the Worker’s Comp Research Institute suggested that the enactment of the reimbursement rates in worker’s comp tied to 200% of Medicare had actually stabilized costs associated to hospitals. ASCs had not been included in that legislation, which became effective in 2014.

Representative Matt Lehman (R-Berne) authored that bill and indicated that something would be done this session to address that and bring about benefit increases for workers in conjunction with the reimbursement fix.

When his HB 1332 passed the Senate, it was amended to include a provision (to which the Chamber was neutral) that reimbursement under worker’s compensation may not exceed 200% of Medicare for hospitals, changing the current statute – interpreted as 200% is the floor if there is no contract. The ASC worker’s comp reimbursement rate would be set at not to exceed 275% of Medicare.

During conference committee, the stakeholders were waiting on analysis from the Indiana Compensation Rating Bureau to determine what the reimbursement rates would do to worker’s comp insurance premium rates and how much benefit could be managed based upon the savings from the setting of the reimbursement rates. After the numbers came in, there was discussion about setting reimbursement rates for ASCs at 200% of Medicare and worker benefits were proposed at a 6%, 5% and 4% increases over the next three years.

In the end, Rep. Lehman communicated to the Chamber (which supported the bill in part) that he didn’t have enough information on how Medicare actually reimburses ASCs, so he killed the conference committee report. We expect this issue will return next year.

Resource: Mike Ripley at (317) 264-6883 or email: [email protected]