Amd §§3216, 3221 & 4303, Ins L; amd §4, Chap of 2022 (as proposed in S.5299-A & A.1741-A)
Relates to brand-name drugs with and without an AB generic equivalent; amends the effective date from January to July next succeeding the date on which it shall have become a law.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3693
SPONSOR: Weprin TITLE OF BILL:
An act to amend the insurance law, in relation to calculating an insured
individual's overall contribution to any out-of-pocket maximum or any
cost-sharing requirement; and to amend a chapter of the laws of 2022
amending the insurance law relating to calculating an insured individ-
ual's overall contribution to any out-of-pocket maximum or any cost-
sharing requirement, as proposed in legislative bills numbers S. 5299-A
and A. 1741-A, in relation to the effectiveness thereof
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to make amendments to Chapter 736 of the
Laws of 2022 relating calculating an insured individual's overall
contribution to any out-of-pocket maximum or any cost-sharing require-
ment.
SUMMARY OF PROVISIONS:
Sections 1-3 provide that the requirement for insurance companies and
pharmacy benefit managers to apply third-party payments or other price
reduction instruments for out-of-pocket expenses made on behalf of an
insured person when calculating the insured individual's overall
contribution shall apply to prescription drugs that are either: a brand-
name drug without an AB rated generic equivalent, a brand-name drug with
an AB rated generic equivalent and the insured has access to the brand
name drug through prior authorization or through the insurers appeal
process, or a generic drug the insurer will cover with or without prior
authorization or an appeals process.
Section 4 amends the effective date of Chapter 736 of the Laws of 2022.
Section 5 provides the effective date.
JUSTIFICATION:
Recently, many insurance companies and pharmacy benefit managers have
started to adopt new cost-shifting mechanisms that change the way an
insured individual's out-of-pocket contributions for prescription drugs
are calculated. These "copay accumulators" do not take into account any
discounts or coupons that the insured person receives from the drug
manufacturer when calculating the insured individual's out-of-pocket
expenses.
Some insurance plans with a deductible require that the patient pay up
to a certain amount of out-of-pocket expenses before the plan pays for
all of the healthcare services. Many drug manufacturers, especially for
high-cost drugs that treat rare diseases offer copay cards or other
assistance to help pay for their prescription drugs. By not applying
the discounts paid by the manufacturer, it takes the insured person
longer to reach their deductible. This means that the insured person has
to continue to pay copays for the drug for a longer period of time and
may be paying signific,antly more in out-of-pocket expenses.
This practice shifts the cost towards patients as the insurance plan are
essentially "double dipping" by requiring the patient to pay their
normal copay and still receiving a discount or coupon from the drug
manufacturer, while taking longer to satisfy their deductible. Several
states have already prohibited copay accumulators including Arizona,
Virginia and West Virginia. Several other states have introduced legis-
lation (Connecticut, Illinois, California, and others) that is currently
moving through the legislative process that either limit or prohibit the
use of "copay accumulators" by insurers.
Chapter 736 of the Laws of 2022 required any individual insurance poli-
cy, group or blanket policy, non-profit medical expense indemnity poli-
cy, hospital service corporations or health service corporations policy
that provides coverage for prescription drugs to apply any third-party
payments or other price reduction instruments for out-of-pocket expenses
made on behalf of an insured person when calculating the insured indi-
vidual's overall contribution. This Chapter amendment will Clarify that
this requirement shall apply to prescription drugs that are either: a
brand-name drug without an AB rated generic equivalent, a brand-name
drug with an AB rated generic equivalent and the insured has access to
the brand name drug through prior authorization or through the insurers
appeal process, or a generic drug the insurer will cover with or without
prior authorization or an appeals process.
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None noted.
EFFECTIVE DATE:
Immediately.
STATE OF NEW YORK
________________________________________________________________________
3693
2023-2024 Regular Sessions
IN ASSEMBLY
February 6, 2023
___________
Introduced by M. of A. WEPRIN -- read once and referred to the Committee
on Insurance
AN ACT to amend the insurance law, in relation to calculating an insured
individual's overall contribution to any out-of-pocket maximum or any
cost-sharing requirement; and to amend a chapter of the laws of 2022
amending the insurance law relating to calculating an insured individ-
ual's overall contribution to any out-of-pocket maximum or any cost-
sharing requirement, as proposed in legislative bills numbers S.
5299-A and A. 1741-A, in relation to the effectiveness thereof
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 37 of subsection (i) of section 3216 of the
2 insurance law, as added by a chapter of the laws of 2022 amending the
3 insurance law relating to calculating an insured individual's overall
4 contribution to any out-of-pocket maximum or any cost-sharing require-
5 ment, as proposed in legislative bills numbers S. 5299-A and A. 1741-A,
6 is amended to read as follows:
7 (37) Any policy that provides coverage for prescription drugs shall
8 apply any third-party payments, financial assistance, discount, voucher
9 or other price reduction instrument for out-of-pocket expenses made on
10 behalf of an insured individual for the cost of a prescription [drugs]
11 drug to the insured's deductible, copayment, coinsurance, out-of-pocket
12 maximum, or any other cost-sharing requirement when calculating such
13 insured individual's overall contribution to any out-of-pocket maximum
14 or any cost-sharing requirement. If under federal law, application of
15 this requirement would result in health savings account ineligibility
16 under 26 USC 223, this requirement shall apply for health savings
17 account-qualified high deductible health plans with respect to the
18 deductible of such a plan after the enrollee has satisfied the minimum
19 deductible under 26 USC 223, except for with respect to items or
20 services that are preventive care pursuant to 26 USC 223(c)(2)(C), in
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD04217-01-3
A. 3693 2
1 which case the requirements of this paragraph shall apply regardless of
2 whether the minimum deductible under 26 USC 223 has been satisfied.
3 This paragraph only applies to a prescription drug that is either (A) a
4 brand-name drug without an AB rated generic equivalent, as determined by
5 the United States Food and Drug Administration; or (B) a brand-name drug
6 with an AB rated generic equivalent, as determined by the United States
7 Food and Drug Administration, and the insured has access to the brand-
8 name drug through prior authorization by the insurer or through the
9 insurer's appeal process, including any step-therapy process; or (C) a
10 generic drug the insurer will cover, with or without prior authorization
11 or an appeal process.
12 § 2. Paragraph 21 of subsection (l) of section 3221 of the insurance
13 law, as added by a chapter of the laws of 2022 amending the insurance
14 law relating to calculating an insured individual's overall contribution
15 to any out-of-pocket maximum or any cost-sharing requirement, as
16 proposed in legislative bills numbers S. 5299-A and A. 1741-A, is
17 amended to read as follows:
18 (21) Every group or blanket policy delivered or issued for delivery in
19 this state that provides coverage for a prescription [drugs] drug shall
20 apply any third-party payments, financial assistance, discount, voucher
21 or other price reduction instrument for out-of-pocket expenses made on
22 behalf of an insured individual for the cost of prescription drugs to
23 the insured's deductible, copayment, coinsurance, out-of-pocket maximum,
24 or any other cost-sharing requirement when calculating such insured
25 individual's overall contribution to any out-of-pocket maximum or any
26 cost-sharing requirement. If under federal law, application of this
27 requirement would result in health savings account ineligibility under
28 26 USC 223, this requirement shall apply for health savings account-qua-
29 lified high deductible health plans with respect to the deductible of
30 such a plan after the enrollee has satisfied the minimum deductible
31 under 26 USC 223, except for with respect to items or services that are
32 preventive care pursuant to 26 USC 223(c)(2)(C), in which case the
33 requirements of this paragraph shall apply regardless of whether the
34 minimum deductible under 26 USC 223 has been satisfied. This paragraph
35 only applies to a prescription drug that is either (A) a brand-name drug
36 without an AB rated generic equivalent, as determined by the United
37 States Food and Drug Administration; or (B) a brand-name drug with an AB
38 rated generic equivalent, as determined by the United States Food and
39 Drug Administration, and the insured has access to the brand-name drug
40 through prior authorization by the insurer or through the insurer's
41 appeal process, including any step-therapy process; or (C) a generic
42 drug the insurer will cover, with or without prior authorization or an
43 appeal process.
44 § 3. Subsection (tt) of section 4303 of the insurance law, as added by
45 a chapter of the laws of 2022 amending the insurance law relating to
46 calculating an insured individual's overall contribution to any out-of-
47 pocket maximum or any cost-sharing requirement, as proposed in legisla-
48 tive bills numbers S. 5299-A and A. 1741-A, is amended to read as
49 follows:
50 (tt) Every contract issued by a medical expense indemnity corporation,
51 hospital service corporation, or health service corporation that
52 provides coverage for a prescription [drugs] drug shall apply any third-
53 party payments, financial assistance, discount, voucher or other price
54 reduction instrument for out-of-pocket expenses made on behalf of an
55 insured individual for the cost of prescription drugs to the insured's
56 deductible, copayment, coinsurance, out-of-pocket maximum, or any other
A. 3693 3
1 cost-sharing requirement when calculating such insured individual's
2 overall contribution to any out-of-pocket maximum or any cost-sharing
3 requirement. If under federal law, application of this requirement would
4 result in health savings account ineligibility under 26 USC 223, this
5 requirement shall apply for health savings account-qualified high deduc-
6 tible health plans with respect to the deductible of such a plan after
7 the enrollee has satisfied the minimum deductible under 26 USC 223,
8 except for with respect to items or services that are preventive care
9 pursuant to 26 USC 223(c)(2)(C), in which case the requirements of this
10 paragraph shall apply regardless of whether the minimum deductible under
11 26 USC 223 has been satisfied. This subsection only applies to a
12 prescription drug that is either (A) a brand-name drug without an AB
13 rated generic equivalent, as determined by the United States Food and
14 Drug Administration; or (B) a brand-name drug with an AB rated generic
15 equivalent, as determined by the United States Food and Drug Adminis-
16 tration, and the insured has access to the brand-name drug through prior
17 authorization by the insurer or through the insurer's appeal process,
18 including any step-therapy process; or (C) a generic drug the insurer
19 will cover, with or without prior authorization or an appeal process.
20 § 4. Section 4 of a chapter of the laws of 2022 amending the insur-
21 ance law relating to calculating an insured individual's overall
22 contribution to any out-of-pocket maximum or any cost-sharing require-
23 ment, as proposed in legislative bills numbers S. 5299-A and A. 1741-A,
24 is amended to read as follows:
25 § 4. This act shall take effect on the first of [January] July next
26 succeeding the date on which it shall have become a law and shall apply
27 to all policies and contracts issued, renewed, modified, altered or
28 amended on or after such date.
29 § 5. This act shall take effect immediately; provided, however, that
30 sections one, two and three of this act shall take effect on the same
31 date and in the same manner as a chapter of the laws of 2022 amending
32 the insurance law relating to calculating an insured individual's over-
33 all contribution to any out-of-pocket maximum or any cost-sharing
34 requirement, as proposed in legislative bills numbers S. 5299-A and A.
35 1741-A, takes effect.
