BILL NUMBER:  S7867

 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
beneficiaries pursuant to 42 U.S.C. 1395w-132 (EGWPs) from New York
Insurance 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 additional 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
"inextricably 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.