As states respond to the need for increased hospital bed capacity due to COVID-19, governors and legislatures in 22 states have waived certificate-of-need (CON) requirements – streamlining the process for hospitals to add bed capacity. These waivers have focused attention on decades-old CON laws and their utility in a changing health care landscape. The National Academy for State Health Policy’s (NASHP) 50-state scan of CON laws shows which facilities are subject to CON, the range of activities that trigger a CON review, and the information considered during review.
Updated June 8, 2020
State Health Insurance Marketplace Directors Recommend Federal Efforts to Improve Coverage Affordability and Stability in Light of COVID-19
As the state-based marketplaces (SBMs) take steps to improve access to coverage during the COVID-19 pandemic, affordability of coverage and stability of insurance markets remain significant barriers to health insurance.
On June 1, 2020, SBM directors representing 12 state-based health insurance marketplaces sent a letter to Congressional leaders recommending actions that could help ease access to affordable coverage, including reinsurance, enhanced subsidies, and leniency on penalties for individuals whose income and employment fluctuations may lead to incorrect eligibility determinations.
State employee health plans (SEHPs), which provide health coverage for millions of public employees, their dependents, and some retirees, are making rapid changes to address the COVID-19 pandemic. This retooling of insurance plans must meet emerging federal requirements and ensure that coverage meets enrollees’ needs while managing costs and anticipating budget constraints.
During a recent teleconference convened by the National Academy for State Health Policy (NASHP), SEHP administrators shared strategies for implementing new federal mandates and highlighted ways they are making changes to other benefit offerings.
Federal mandates: The Family First Coronavirus Response Act and the Coronavirus Aid, Relief, and Assistance Act (CARES Act) added mandates to SEHP coverage, including:
- Any COVID-19 testing, preventive services, treatment, and vaccine are now covered with no member cost sharing.
- Telehealth benefits are to be made widely available and under a high-deductible health plan, these visits are excluded from deductible provisions.
These provisions are designed to reduce immediate individual cost responsibilities that can be a barrier to accessing these services. However, costs are not eliminated, so each SEHP must cover them. During their teleconference, administrators noted that language in the CARES Act requires health plans to reimburse diagnostic testing at the negotiated rate for “items and services,” which is charged by in-network providers. However, out-of-network providers should be reimbursed for the “cash price as listed on public internet websites,” which presents a potentially costly challenge.
SEHP administrators are concerned about these out-of-network claims because they could be expensive, unpredictable, and subject to change throughout the course of the pandemic. NASHP will monitor the impact this CARES Act provision has on SEHPs.
Benefit design: Plan administrators have worked with their governing structures, which in some states include trustees and boards, to make changes that help ensure that enrollees have access to needed care. North Carolina’s SEHP administrator made changes to prior authorization requirements, in addition to other changes. SEHPs across the country also adopted pharmacy refill flexibilities that include paying for refills sooner or covering a greater number of doses, etc. and lifted member non-payment penalties during the COVID-19 emergency.
Plan eligibility: Eligibility for coverage becomes an issue as public entities add temporary staff or reduce employee hours. Washington State is not only extending enrollment paperwork deadlines for new hires, but also implementing a new eligibility policy for targeted new state employees. Effective April 1, 2020, anyone hired or rehired in a specific position type and who works a minimum of eight hours is eligible for benefits with the full employer contribution for benefits. Washington defined the position types as:
- First responders (firefighters, police, EMTs, public safety personnel, etc.);
- Health care professionals (physicians, nurses, pharmacists, behavioral health specialists, etc.);
- Any medical facility position (e.g., health care professionals, lab technicians, administrative staff, sanitation workers, etc.);
- Public health officials; and
- Any COVID-19 research position.
Washington is also extending the maximum number of months for Continuation of Health Coverage (COBRA) and other self-pay coverage options until two months after the state of emergency is lifted.
Monitoring: While SEHP leaders strive to ensure enrollees have access to needed providers without delay, they are stewards of public funds and must be vigilant and aware of opportunists who may take advantage of this crisis, so they must maintain fraud prevention policies. As signature requirements for medical supplies and prescription drugs are eased to ensure access, New Jersey is exploring alternative forms of verification. For example, New Jersey’s SEHP administrator encouraged the plan’s third-party administrators to conduct follow-up phone calls or track data analytics to ensure enrollees received home deliveries of prescriptions or medical supplies.
Telehealth: Many plans are extending telehealth services beyond the requirements mandated by the CARES Act. Specifically, plans are now including mental health and physical therapy care through remote care options, as well as considering maintaining these benefit plan offerings after the pandemic, such as critical substance use services.
These changes and others that are being made as needed to meet the demands for flexibility and new services to respond to the pandemic could be costly. However, the financial impact to these plans is still evolving, and there are many unknowns. But what administrators acknowledged is that initial costs will increase for COVID-19-related hospitalizations, testing, and preventive services. Moving forward, it is anticipated that plan costs will continue to increase as a result of COVID-19 treatments and related vaccines. While COVID-19 costs increase, there has been a corresponding decrease in elective procedures, but administrators don’t know the financial impact of these delayed treatments, elective procedures, and foregone care. SEHPs have funding reserves to cover their immediate cost increases but may need to raise premiums and/or enrollee cost sharing in the future.
SEHP administrators also acknowledged the significant impact of the economic crisis and its immediate impact on reducing state revenues, which will have a serious impact on state budgets that finance SEHPs. One official noted there has already been an $11 million “withhold” from her SEHP budget in response to the dramatic loss of state revenue. NASHP and SEHP leaders will work together to analyze these impacts and will share analytic models to assist SEHPs in projecting impacts to their plan reserves, contributions, and premiums.
Meanwhile, the CARES Act’s Title VI Relief Fund authorizes the US Treasury Department to issue $150 billion in payments to states, tribal governments, and units of local government. The receipt of funds must be used for necessary expenditures due to the COVID-19 public health emergency that were not accounted for in the most recent state budgets and are incurred between March 1 and Dec. 20, 2020. SEHPs may consider working with their respective leaders and executive branch members to determine qualifications for receiving relief funds for their plans.
This new NASHP chart details the amounts and required oversight of COVID-19 federal funds allocated to hospitals, providers, and states by the Families First Act, CARES Act, and HR 266.
States must be sound stewards of taxpayer dollars and the need to do so now is particularly acute as states confront financial landscapes devastated by the pandemic. Federal investments are providing relief to unemployed workers, small businesses, schools and universities, hospitals, and other health care providers. Additional funding is directed to governors to parse out in a manner that further mitigates need. Their challenge is understanding that need in light of direct grants to providers so funds – whether from federal appropriation, state general funds, or other grants – can be put to the most effective use.
States are experiencing a huge rise in the number of people without health insurance in the wake of mass layoffs resulting from the COVID-19 pandemic and are seeking strategies to protect them from high prescription drug prices. The uninsured are sometimes the only consumers left paying the full list price for a drug, while the insured benefit from drug discounts negotiated on their behalf.
States have considerable prescription drug purchasing power through their state employee health plans and other public purchasers. The National Academy for State Health Policy’s (NASHP) newest legislative model, State Purchasing Pool Buy-in, leverages this purchasing clout by creating a program that allows individuals and businesses to buy into the state’s drug benefit plan to lower costs for all.
To achieve this, the model authorizes non-state public employers, self-insured private employers, and insurance carriers who provide coverage to small groups or individuals to purchase drugs for their beneficiaries under the purchasing authority of the state. State governments are often one of the largest employers in many states, and this model allows additional participants to buy into the state purchasing pool to expand state government’s purchasing power.
By expanding the number of people buying prescriptions in a pool, states’ purchasing and bargaining powers grow to benefit both current state employee health plan enrollees and those who buy into the prescription purchasing pool. Notably, while health plan benefits can rise in cost when there is an increase in “sicker” enrollees, prescription drug pricing is different – the more covered lives the better as the rise in membership also boosts the plan’s ability to negotiate lower rates.
NASHP’s model legislation also creates a way to help uninsured and those with high-deductible plans by creating a consumer discount card program.
In the NASHP white paper outlining this new model – Proposal for a State Purchasing Pool for Prescription Drugs – NASHP legal consultants Erin Fuse Brown, MPH, JD, and Mark Hunter, MPH, JD, examine “purchasing pool” options available to states and explore legal landmines and how states can avoid them. This paper provides a roadmap for states to explore how to best implement a prescription purchasing pool.
NASHP has also released a new document, Model Pharmacy Benefit Manager Contract Terms, for states to use when contracting with pharmacy benefit managers (PBMs) to ensure lower costs and adequate oversight. This is an essential first step before expanding the state employee prescription drug plan’s purchasing power to include other participants in the state purchasing pool.
This new model is the latest initiative from NASHP’s Prescription Drug Pricing Center, funded with support from Arnold Ventures. In the coming months, NASHP will release a series of additional policy options and will continue to report on state efforts to implement new laws promoting drug price transparency, PBM oversight, importation, and drug affordability review boards.
Since 2017, the National Academy for State Health Policy has worked with states to develop and implement effective model policies to lower prescription drug prices. This slideshow highlights states’ administrative and legislative actions, including Medicaid innovations and more than 120 new laws that promote pharmacy benefit manager regulation, drug price transparency, wholesale drug importation from Canada, and drug affordability review.
Every state in the nation has proposed bills to limit pharmaceutical drug prices and the pace of that legislative work increases each year. The usual responses from pharmaceutical manufacturers and their allies is to threaten to reduce their investments in new drug research and development and challenge the new state laws in federal court. In their appeals, they often argue that the new state laws limit the industry’s free speech, breach patent protections, reveal trade secrets, and extend beyond state boundaries, which they claim violates the federal Dormant Commerce Clause.
As state legislators prepare for their 2020 sessions amid growing interest in addressing prescription drug prices, the National Academy for State Health Policy (NASHP) commissioned the University of California’s Hastings School of Law to develop a legal brief to help state lawmakers avoid some of the industry’s legal landmines.
The legal brief, Navigating Legal Challenges to State Efforts to Control Drug Prices: Pharmacy Benefit Manager Regulation, Anti-Price-Gouging Laws, and Price Transparency, focuses particularly on bills most commonly introduced in states – pharmacy benefit management (PBM) oversight and pricing transparency – and provides insights into anti-price-gouging proposals.
The authors, who are health policy experts and attorneys, note that laws that require PBMs to be licensed or registered with states or require pharmacy audits have historically avoided legal challenges. But today, legal challenges are increasing as states seek more accountability and propose or enact laws to prohibit spread pricing, regulate use of certain pricing lists, or require fiduciary responsibility. And, as always with state reform efforts, the Employee Retirement Income Security Act (ERISA) rears its head if laws “relate to” self-funded plans regulated by federal law. In the brief, authors Katie Gudiksen, Sammy Chang, and Jaime King suggest strategies states can consider to strengthen legislative language against legal challenge.
To date, pharmaceutical groups have challenged transparency laws in two states – Nevada and California.
- Nevada reached a settlement by limiting and defining what information could be publically disclosed and what would be held confidential.
- While California moves to implement its law, state officials are awaiting judgment on a lawsuit filed by the industry pending in US District Court in the Eastern District of California.
Industry challenges to transparency laws include alleged violations to trade secret, interstate commerce, and free speech laws. Meanwhile, states are working to thread the needle between consumers’ right to know and protecting industry information.
This new NASHP legal brief is designed to help policymakers navigate the complexity of these laws and help inform their legislative drafting. NASHP’s Center for State Rx Drug Pricing continues to support states as policymakers develop and implement policies to lower drug costs.
NASHP looks forward to its continuing collaboration with colleagues at the University of California’s Hastings College of Law as we advance this important work.
NASHP’s Center for State Rx Drug Pricing, with support from Arnold Ventures, commissioned the analysis from experts affiliated with The Source on Healthcare Price & Competition at the University of California’s Hastings College of Law.