MINUTES OF THE meeting

of the

ASSEMBLY Committee on Health and Human Services

 

Seventy-First Session

March 28, 2001

 

 

The Committee on Health and Human Serviceswas called to order at 1:30 p.m., on Wednesday, March 28, 2001.  Chairman Ellen Koivisto presided in Room 3138 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Mrs.                     Ellen Koivisto, Chairman

Ms.                     Kathy McClain, Vice Chairman

Mrs.                     Sharron Angle

Ms.                     Merle Berman

Mrs.                     Dawn Gibbons

Ms.                     Sheila Leslie

Mr.                     Mark Manendo

Ms.                     Bonnie Parnell

Mrs.                     Debbie Smith

Ms.                     Sandra Tiffany

Mr.                     Wendell Williams

 

COMMITTEE MEMBERS ABSENT:

 

Mrs.                     Vivian Freeman

 

STAFF MEMBERS PRESENT:

 

Marla McDade Williams, Committee Policy Analyst

Darlene Rubin, Committee Secretary

 

OTHERS PRESENT:

 

Charles Duarte, Administrator, Health Care Financing and Policy (HCFP)

Jan Gilbert, Progressive Leadership Alliance of Nevada (PLAN)

Alexis Miller, Nevada Women’s Lobby

Mary Lau, Executive Director, Nevada Retail Association (NRA)

Ed Fend, Capital City Task Force, American Association of Retired Persons (AARP)

Jon Sasser, Washoe Legal Services

Ben Blinn, Citizen

Tom Wood, Government Affairs Manager, Pharmaceutical Research and Manufacturers Association (PhRMA)

 

Chairman Koivisto opened the hearing on A.B. 398 and asked Vice Chairman McClain to introduce her bill.

 

Assembly Bill 398:  Directs department of human resources to include demonstration project in state plan for Medicaid that will provide access to discounted prescription drug benefits for certain low-income persons. (BDR 38-280)

 

Assemblywoman Kathy McClain, District 15, acknowledged the health crisis that affected the lives and well being of millions of Americans and thousands of Nevadans.  Soaring prices for prescription drugs denied citizens access to medically necessary health care.  National statistics showed that one in four Americans did not have prescription drug insurance.  Additionally, approximately one-third of the working poor lacked health insurance, and uninsured Americans paid twice as much as the federal government paid for the same drugs under the Federal Supply Schedule.  The committee had recently been made aware that states across the country had debated the crisis and had recognized the need to provide relief for their citizens without waiting for Congress to take action.

 

Mrs. McClain noted with pleasure that the committee had passed legislation in the 1997 session that resulted in the Senior Rx Plan.  She was pleased, too, that a week earlier the committee passed the bill to create the Senior Option Program to give low-income seniors a well-deserved choice in obtaining low-cost prescription drugs.  That choice would enable many seniors to greatly enhance their quality of life and physical well being while easing the burden on their fixed incomes in a time of rising prices in many other areas.

 

While those measures would bring relief for many seniors, A.B. 398, Mrs. McClain said, would help Nevada’s many working families and not-so-poor seniors who had inadequate prescription drug coverage.  The proposal, the Nevada Rx Plan, was designed to provide a discounted price for outpatient prescription drugs for all uninsured Nevada residents whose annual income was below 300 percent of the federal poverty level.  She emphasized the program was not a subsidy provided by the state, but rather was an innovative approach that allowed low-income individuals to purchase their prescription drugs at a discounted price. 

 

The Kaiser Family Foundation estimated 12.3 percent of Nevadans had incomes below 100 percent of the federal poverty level of $8,590 annually for one person.  An additional 20.5 percent were considered near poor; those were over 100 percent but under the 200 percent of federal poverty level, up to $17,180 annually.  That equated to approximately 650,000 Nevadans who were considered poor or near poor.  The Kaiser Commission on Medicaid also reported that 29.3 percent of the poor, under 100 percent of federal poverty level, and 28.3 percent of the near poor, those between 100 and 200 percent of poverty level, were uninsured in Nevada.  That equated to 374,000 Nevadans with low incomes and no health insurance.

 

Mrs. McClain reported that A.B. 398 would extend Medicaid prices to all uninsured residents of Nevada whose annual income fell in that category, and they had not qualified for any other state programs.  Under A.B. 398, the Department of Human Services would be required to apply for a waiver of federal regulations from Health Care Financing and Administration (HCFA) to extend the Medicaid payment and rebate structure for prescription drugs to all uninsured persons under specific income levels. 

 

The Nevada Rx Program would enable residents with qualifying incomes to be issued a membership card that would permit them to purchase their prescription drugs at the same price the state paid a pharmacy for prescriptions covered by Medicaid.  Medicaid programs saved millions of dollars for states because they required pharmaceutical companies to pay a rebate to the state on their drug products in order to participate in the Medicaid programs.  A.B. 398 was patterned after the Vermont plan and a plan recently passed in Minnesota.  Under those plans the consumer would pay the usual and customary price for a drug less the manufacturer’s rebate that was collected by the state and passed on to the retail pharmacists.  That could result in 15 to 40 percent savings of the retail price consumers currently paid.  The actual savings would depend on the Medicaid formulary used by the state and the rebates negotiated with drug manufacturers.

 

Mrs. McClain explained the program worked very simply:  The pharmacy purchased their drugs as normal, a qualified Nevada Rx member would present their card and prescription to the pharmacist, the pharmacist would check their eligibility, fill the prescription, and charge the customer the same price he would charge for a Medicaid prescription, less the applicable state subsidy.  The pharmacist would then be reimbursed by the state’s rebate account to cover that discount.  The Nevada Rx member would benefit from the discounted drug prices, but would not be considered a Medicaid recipient for purposes of other services or charges allowable under Medicaid.  The program essentially passed on a discount to eligible residents to help ease the high cost of prescription drugs.  It would not create a financial hardship for pharmacies, it would not significantly impact the manufacturers’ profits, but it would provide some relief to the citizens of Nevada who had no prescription drug coverage.

 

In conclusion, Mrs. McClain explained the language in the bill was merely a request for the Department of Human Services (DHS) to apply for an 1115 waiver under the Medicaid program through the federal government, to allow Nevada to extend the prescription benefit to non-Medicaid persons under the income level who had no other insurance.

 

Assemblywoman Leslie asked what Vermont’s experience had been with their similar plan.  Mrs. McClain reported the Vermont plan was just implemented in January 2001.  Vermont had 600,000 residents, and 6,600 had enrolled in the program.  The spokesman for the Vermont program had told her he thought it would be very successful, however, there was a court action pending and a decision on the legality of the program would be reached sometime in April 2001.  Mrs. McClain believed Nevada should move forward with the plan, just as Minnesota had done a week ago, because when the legal decision came down, the state would be in place to go ahead.  The feeling was that the state would win that decision, because the plan was based on the health and well being of their citizens.  Mrs. McClain then reported some of the drug prices the state of Vermont offered to its plan members:

 

            Lorazipam:  estimated retail price $19.99  Program price:  $13.84

            Albuteral:          “         “      “    $18.99      “          “         9.67

 

Those prices were based on what the state would have paid normally on a Medicaid prescription minus the rebates from the manufacturers.

 

Assemblywoman Parnell asked if the Vermont and Minnesota plans used the 300 percent of poverty level.  Mrs. McClain said that Vermont did, but she was unsure about Minnesota, however thought it might be 200 percent.  She felt that for Nevada’s demonstration project perhaps it should be capped at 200 percent of poverty level.  Mrs. Parnell was surprised at the 300 percent in Vermont, and wondered what the federal guidelines in Medicaid were and how high they would allow for that waiver.  She recalled that in her A.B. 209 measure just introduced, that asked for an appropriation to Welfare Division of Department of Human Resources to increase temporarily population which was eligible to qualify for assistance from Low-Income Home Energy Assistance Program, that the Low Income Housing Energy Assistance (LIHEA) administration capped it at 60 percent of state median income, or 200 percent of poverty level. 

 

Assemblyman Manendo reported receiving an e-mail from Bev Kling-Hesse, Northern Nevada Center for Independent Living (Exhibit C), regarding A.B. 398 and asked that it be included in the record:

 

Dear Members of the Assembly Health and Human Services Committee:

 

First, please let me apologize for not testifying this afternoon.  I had hoped to testify both on behalf of my clients and myself but I don’t feel good enough to drive to Carson City today.

 

The cost of prescription drugs is a great concern to Nevadans with disabilities.  “Concern” is such a blah, non-descriptive word; “Nightmare” is probably a more accurate synonym.

 

I am 45 years old, divorced, and have secondary progressive multiple sclerosis and metastatic inflammatory breast cancer, and all the secondary and tertiary conditions that seem to accompany such diagnoses.  On a good day, I feel like I have a bad case of the flu.  To have “good days,” I take 16 prescription drugs daily.  I have excellent health insurance, so my RX co-pays are only $243 a month.  Without this insurance, my required prescription drugs cost over $3,000 a month.

 

I know I can work for only a few more years, yet I am terrified to quit.  Four years ago, when I felt much better than I do now, I waved the white flag of surrender and went on long-term disability leave, which paid $1,000 a month.  I could not afford the COBRA premiums of $300+ a month plus all the co-pays so I simply went without medicine.  I spent more time in the hospital than at home.  (And, no, I never did pay the hospital bills and discharged them in bankruptcy last year.)  I couldn’t walk, I couldn’t swallow, I couldn’t see.  I lost or sold almost everything I had—a collection of old yellow bowls, some quilts from the ‘30s, Papago baskets, my mother’s jewelry from pre-Nazi Germany—to pay the bills and buy the occasional bottle of Prednisone during my two-year period of disability.  Finally, I got on a trial program for Betaseron ($1,200 a month paid by the pharmaceutical company), and I returned to work five months after I started the trial program.

 

Now, there is nothing left to sell.  The house is gone, the car is gone, the antiques and memorabilia are gone.  Should I go back on disability again, I know that I cannot afford these drugs.  But I know that I can’t afford to go without them, either.

 

Many of my clients are similarly situated.  Drugs and medical care ate up their reserves a long, long time ago.  There is no cushion, nor safety margin left.  Whether it’s through a waiver, a subsidy, bulk purchasing or some other plan, anything you can do to lower the cost of prescription drugs would be a godsend for many Nevadans.  Because for many of us, it’s a choice between paying the rent or buying the drugs, and this is no kind of choice for a human being to make. 

 

Thank you for your consideration.

 

Bev Kling-Hesse

Northern Nevada Center for Independent Living

999 Pyramid Way, Sparks NV 89431

 

Assemblywoman Tiffany asked how long it took Vermont to obtain their waiver.  Mrs. McClain said they had applied in March 2000, and were awarded the waiver in November 2000.  Ms. Tiffany wanted to know if the waiver Nevada would ask for was exactly like the Vermont waiver.  Mrs. McClain said the bill’s language laid out the concept, however she was uncertain whether Nevada would do exactly as Vermont had done because it would be based on the state’s needs, and that was up to the DHS to decide.  Ms. Tiffany and Mrs. McClain discussed the length of time required to obtain a waiver and how soon the DHS could get it put together and submitted.  Much depended upon the federal government and how many states were applying for similar waivers.

 

Ms. Tiffany then asked why the bill focused on only one aspect for the uninsured instead of having them insured.  Mrs. McClain said the working poor usually held low-paying jobs that did not have health insurance benefits.  Something needed to be done for that population that did not qualify for any kind of state or federal programs; a couple, both working, with two children might earn $40,000 a year.  If their child became sick they might take it to urgent care at a cost of about $50, they would be given a drug to help the child initially, but if they also received a prescription for a drug the child was required to take for two weeks, at a cost of $50, they might have to decide between buying that drug or buying groceries for the family.  Probably they would not pay for that prescription because they simply could not afford it.

 

Mrs. Tiffany noted the precursor to the drug was getting to the doctor, and wondered why the bill did not seek to provide health insurance for that same group of working poor.  Mrs. McClain would like to see every person insured, however, that was a huge issue that would be debated far into the future.  Meanwhile, the rising cost of prescription drugs needed to be addressed.

 

Next, Mrs. Tiffany asked what Vermont state agency administered the program. Mrs. McClain said it was the Vermont Health Access, Department of Prevention Assistance, Transition and Health Access, which was probably the equivalent of the DHS.  The proposed Nevada plan should be administered through the Medicaid program.

 

Finally, Ms. Tiffany asked why the tobacco money or another mechanism was not chosen for the proposed plan.  Mrs. McClain said her first choice was to follow the main plan, however, there had been a problem with federal laws, therefore she had chosen the Medicaid mechanism for helping people other than very low income.  It was clean, simple, and easy to administer, and it helped a population base that tended to be ignored. 

 

Assemblywoman Gibbons believed the 1115 waiver was a readily available avenue for the proposed legislation that many other states would pursue as well.  Mrs. McClain noted the Budget Reconciliation Act of 1990 was the one that set up Medicaid and the 1115 waiver was something states had just begun to investigate.

 

Ms. Tiffany asked about the Vermont lawsuit.  Mrs. McClain said it was being tested in the appeals court, because the district court refused to hear it, and PhRMA had received a hearing date in April, 2001. 

 

Ms. Tiffany asked why pass the law now when the state did not have a waiver or know when it would get the waiver. Mrs. McClain said the legislation only directed the DHS to apply for the waiver, and then to set up and administer the program once they received the waiver; that was the reason it needed to be passed now.  It would not be possible to wait until the court decision was reached in April because of the legislature’s internal deadlines.  Since the bill was concurrently referred to the Health and Human Services and Ways and Means Committees, it had a “life” until the end of session, once it was moved out.  By that time, the court of appeals decision would be known, as would the fiscal note.

 

Chairman Koivisto asked Charles Duarte to answer the questions raised concerning Medicaid.

 

Charles Duarte, Administrator, Health Care Financing and Policy (HCFP), said that the Health Care Financing Administration (HCFA) had 90 days to approve waivers, however that did not mean it took 90 days.  They “ran a clock” and the 90-day clock counted the time they had a document in their hands; the usual practice was for them to refer questions back to the state, which turned off the clock.  Only the time they spent working on the waiver request was counted.

 

Next to speak, Jan Gilbert, Progressive Leadership Alliance of Nevada (PLAN), strongly supported A.B. 398 because so many of her constituents were low-income families who would benefit from its passage.  She noted there would probably be a large fiscal note but nevertheless it was important for the Health and Human Services Committee to show support for the low-income population the bill would benefit.

 

Assemblywoman Gibbons asked if the committee passed the bill and it did not survive the fiscal note, could it stay intact to allow for HCFA to apply for the waiver so that the opportunity would not be lost.  Ms. Gilbert was not sure that could be done.  Mrs. Gibbons wanted to know if the funding had to be in place. Mr. Duarte said state agencies did not require legislation to request Section 1115 waivers from federal Medicaid law.  If there was a fiscal impact, an appropriation was needed and that would require legislation. 

 

Assemblywoman Leslie asked Mr. Duarte how likely it would be for HCFP to apply for that waiver.  Mr. Duarte said if they were directed to do so they would.  Regarding the proposed plan, he said similar plans had been approved in Vermont and in Maine.  Both programs were currently being evaluated by HCFP.  Naturally, he said, there was some concern about the litigation in Vermont and HCFP was interested in the outcome, but in order to implement the plan they needed a point-of-sale (POS) system.  There was no POS system to determine eligibility and adjudicate claims processing for pharmacies and that was a tremendous hindrance in implementing any kind of innovative program such as proposed.  The POS system for pharmaceuticals was included as part of the one-shot budget request for Medicaid Management Information System (MMIS).  There were also staffing issues.  The state of Maine, for example, in their application indicated for their population they estimated about 200,000 individuals, and they requested 17 full time equivalents (FTEs) to run the program.  It would go through an eligibility process as required by the federal government; the individuals would be Medicaid recipients for the limited benefit they received in terms of pharmacy services, and HCFA would have reporting requirements for the state to adhere to.  There would be some impact, Mr. Duarte added, however, that did not mean it was not a worthwhile program, and HCFP needed to look at those fiscal impacts and make a recommendation after evaluating it.

 

Assemblywoman Leslie felt that A.B. 398 might help move that process along.  It might not be technically required but, given the history experienced in applying for waivers through the department, it might be a good idea to have the bill.  Chairman Koivisto noted that sometimes even with legislation waivers were not applied for.

 

Assemblywoman Tiffany asked for details on the Vermont lawsuit.  Mr. Duarte did not have the answer, although he had requested information from the Vermont Medicaid program.

 

Mr. Duarte remarked that another issue that always concerned a Medicaid agency was when legislation was as specific as A.B. 398, basically taking Medicaid policy and putting it into statute, it tended to create limitations for HCFP if they were to move forward and propose an alternative plan that tried to achieve the same end.  Those constraints were often difficult for the Medicaid agency.  He added the division liked the flexibility of being able to design any kind of program they felt would be most beneficial.

 

Vice Chairman McClain responded to Assemblywoman Tiffany’s earlier question about the Vermont lawsuit.  The litigation was filed in U. S. District Court and was denied, thereafter the case went to the Appeals Court.  PhRMA, the plaintiff, claimed the waiver did not provide medical services to beneficiaries as required by Medicaid, but did require beneficiaries to pay more than a normal copayment for prescription drugs with manufacturers required to pay for the remainder.  In essence, PhRMA was saying it was an “end run” around existing federal law by creating a government program with no government cost but paid for solely by private manufacturers through the rebates. 

 

Next to speak was Alexis Miller, representing Nevada Women’s Lobby, in support of A.B. 398 to extend Medicaid eligibility for prescription drug coverage to low income Nevadans who had no other coverage for their prescriptions.  She reiterated many of the points expressed in previous testimony, and urged passage of the measure.

 

Mary Lau, Executive Director, Retail Association of Nevada (RAN), applauded Assemblywoman McClain for attempting to do something for uninsured and under-insured Nevadans.  The RAN represented the chain drug pharmacies and grocery stores in the state that had pharmacies and therefore had strong interests in retail drug issues.  While RAN would prefer that legislation originate at the federal level, nevertheless after working with Mrs. McClain they have some amendments (Exhibit D) to suggest, as follows:

 

• 2-1 (b): Household income not more than 150 percent of federal poverty level, instead of 300 percent as written.  Ms. Lau said Mrs. McClain had some alternatives that RAN would be willing to accept, but they felt that 300 percent captured too large a population;

 

• 2-15  Standards for eligibility: (1) The waiver shall indicate that payments by enrollees for prescription drugs in the program shall not be considered “enrollment fees, premiums, deductions, cost-sharing and similar charges” as defined by Section 1916 of the Social Security Act.  Ms. Lau said that specifically referred to Medicaid Law currently, where if a Medicaid recipient came into a pharmacy and there was a prerequisite copay, if that recipient said “I am not able to pay” the pharmacy had to accept the fact they were not able to pay and the prescription was filled anyway.  The recommendation attempted to address that problem, because it was not truly a Medicaid population;

 

• 2-42:  Ms. Lau said that there was a stagnant period of time where there was no money and the retailers were fronting that for prescriptions.  Therefore, after the language on that line “appropriation by the legislature from the state general fund” she suggested, “Funds shall be collected six months prior to implementation of the program.  The assets of the fund shall be used to reimburse retail pharmacies for price reductions provided to qualified Nevada Rx beneficiaries by manufacturers under this act, and to reimburse the department for any associated administrative and computer costs.  The fund is a nonlapsing dedicated fund.  Interest on fund balances shall accrue to the fund.  Surplus assets of the fund shall be used for the benefit of the program.  The department must reimburse the pharmacy for each prescription price reduction provided to beneficiaries within seven days of service.  The department may not impose additional charges to cover administration of transaction costs on pharmacies that submit claims or receive payments under the program.”  Ms. Lau said that was an attempt to make pharmacies whole and give the fund a chance to grow before implemented;

 

• Add a new Section 5:  “The department must reimburse the pharmacy for each prescription price reduction provided to beneficiaries within seven days of the date of service.  The department may not impose additional charges to cover administration of transaction costs on pharmacies that submit claims or receive payments under the program.”              Ms. Lau felt the interest on the fund in that type of financing would provide for those charges;

 

• Add a new Section 6: Anticipating some type of federal changes, RAN also suggested ”the program “sunset” after two years,” however there was consideration of different language, “or upon the enactment of comprehensive federal health care reform, whichever was sooner”; and

 

• Add a new subsection under 4-4 (7):  Ms. Lau reported that in conversation with Mr. Duarte, who had helped to resolve some programs on Medicaid payments and so forth, he was correct in the necessity for a POS system, therefore, she suggested the subsection read:  “Prior to the implementation of the act the department shall establish an online real-time claims processing system for the state Medicaid program.  The department shall use this online claims processing system to implement the program established in this act.”

 

Chairman Koivisto asked about the current process pharmacists used to get reimbursed by insurance.  Ms. Lau said for some plans where the pricing was known the schedules were available, on others it required calling the company, as many large insurance companies or pharmacy benefit managers (PBMs) were online.  Ms. Lau did not know how the pharmacy actually received reimbursement.  Mrs. Koivisto said her question was in line with Ms. Lau’s suggestion for reimbursement in the bill.  Ms. Lau said the proposed legislation was a reimbursement program, and it was actually manufacturers who did that.  There were reimbursements that pharmacies and bulk purchasers received and there had been lengthy debates and adversarial conversation and actions over reimbursements, because of large purchasing pool ability, the ability of larger chains to get more favorable rebates.  The proposed legislation was one where the state received the rebate dollars, and that was used to fund the program; it was not a rebate system to the pharmacy.

 

Vice Chair McClain said, regarding the first suggested amendment, she had no problem in changing from 300 to 200 percent of the federal poverty level, because she did have figures to work from at that level.  Regarding the amendment suggested to line 2-8, actually the line above, 2-7, stated that the “beneficiary will pay the entire price of the prescription drug and is not entitled to any other Medicaid benefit.”  Mrs. McClain felt that wording was more specific, however did not have a problem with adding the suggested amendment.  Next, although she understood the purpose of the language regarding the funds being collected and administered through a computer system, she hoped that system would be operational before the waiver was even applied for.  Finally, Mrs. McClain would prefer to have the program sunset in 2005, to give at least two sessions to see if the program worked.

 

The next proponent of the bill was Ed Fend, Capital City Task Force member of American Association of Retired Persons (AARP), who said that in going to 200 percent of federal poverty level, a family of four making $36,030 a year would qualify for the program.  That would also fill the gap between the present Senior Rx Program and the Senior Option program for those who did not have prescription drug coverage under their insurance plan from their employer.  Further, while the Nevada Check-Up program covered many children, the parents had no coverage and the proposed program would provide for that group as well.  Mr. Fend urged support and passage of A.B. 398.

 

Assemblywoman Gibbons asked about doing a resolution urging Congress to act, letting them know what the legislature had done in the past and what it was doing this session to take care of the needs of Nevadans on the prescription drug issue.

 

Chairman Koivisto said that unfortunately it was too late for a resolution, however the committee might want to consider a letter to our federal representatives about what we had done, and were doing currently, and what we hoped they would do.   She added there were 43 states that were trying a similar or other type program to at least get prescription coverage for their citizens.

 

Next to speak was Jon Sasser, Washoe Legal Services and three other low-income legal programs in Nevada.  He commended Assemblywoman McClain for bringing forward the proposed legislation.  Mr. Sasser provided his written testimony (Exhibit E), and pointed out Nevada ranked 49^th in the nation in per capita spending on Medicaid.  He noted that instead of trying to put a new spin on one of Nevada’s “bare bones” programs, it was rewarding to be looking at one of the most innovative and far-reaching programs in another state and considering that in Nevada.  It did, however, point out how far behind Nevada was in comparison to many other states. 

 

In reference to some of Assemblywoman Tiffany’s questions about why Mrs. McClain had chosen the Medicaid program to run the Rx plan through, Mr. Sasser said the common sense answer was that in doing so the program would pass along the discount the Medicaid program gave to other citizens.  Unless there was a large agency purchasing a lot of drugs, there was no discount.  To date there were approximately 111,288 individuals on Medicaid and that would increase to 126,665 by 2003, and there had to be a base to start with that was large enough to have a discount that could be passed along.  The question why welfare, or DHR, which did eligibility and payments for Medicaid, should be the agency that would deal with that population, the answer was the federal rules required having a single state agency that administered the Medicaid program.  Thus, another agency or department could not have been chosen.

 

Regarding the percent of poverty level at which the program was established, Mr. Sasser said the larger the group the greater the discount to be negotiated.  Therefore, increasing the poverty level would bring in more people in the group for which prescriptions were being purchased.  In Nevada, 11 percent of the population lived below 100 percent of poverty, and with the population at 2 million that meant 220,000 were at 100 percent of poverty level.  Looking at the Medicaid caseload, only half those people under 100 percent were covered. There were a great many people under 100 percent who were uncovered under Medicaid, and that would be the first group to be helped.  The next group, up to 200 of the poverty level, had the children covered in the Check-Up program; a group of about 15,000 currently were in that new program.

 

In essence, Mr. Sasser said, it involved a trade off; there was some argument that 300 percent of poverty level was too high, on the other hand if the number was lowered then the pool was reduced along with the purchasing power.  He noted Mrs. McClain had estimated that at 300 percent of poverty level there would be 374,000 individuals who might be covered on top of the 118,000 individuals, or approximately 500,000 people; that would be a major purchasing power and the discount could be passed along.

 

Another question Ms. Tiffany had asked was why not simply expand Medicaid coverage to 300 percent of poverty level, but, of course, the money was not there for even the least expensive Medicaid recipients, the children, at about $200 a month medical costs.  With the senior and disabled recipients the costs were much higher.  That program at 300 percent of poverty would be higher than any state in the union, but the idea for the proposed program was to use the leverage of Medicaid to pass along the drug discount to a wider group of people, as opposed to a general expansion of Medicaid eligibility.  That was the reason, Mrs. Sasser felt, that the prescription drug companies were upset vis a vis the lawsuit.  He also felt it would make sense before plunging too deeply into the proposed plan to know the outcome of the Vermont case. 

 

In closing, Mr. Sasser reiterated his support for the plan even though there were issues to be worked out; such as additional staffing, also some legal questions about whether the assets test would have to be dropped for all those already on the program in order not to have an assets test on the proposed program. 

 

Next, Ben Blinn, a Nevada citizen, said he knew of someone who got her antibiotics by purchasing bovine penicillin, a sick and unfortunate situation.  He knew others who did not take all their medication because their kids also were sick so they swapped and short-changed themselves and others in their family because of their budget.  Mr. Blinn believed there was no reason in this country that the aged or needy or poor should go without prescribed medication.  On the local level, if the state waited for the federal government to act there would be many people who would become ill.  He urged support and passage for A.B. 398.

 

Mr. Sasser asked to correct some of his previous testimony after discussion with Mr. Duarte.  Apparently, he said, the discount available to the Medicaid program was not affected by the size of the pool or the number of recipients in Nevada.  It was based only on the fact it went through Medicaid, which was why it was done, and because of that could get the discounted rate.  Whether it was at 200 or 300 percent of poverty, and regardless of the pool size, would not have an impact on pricing.

 

Chairman Koivisto noted several people had signed up to testify from Las Vegas, however, no one seemed to be present in the room.

 

Next, Tom Wood, representing the Pharmaceutical Research and Manufacturers Association of America (PhRMA), provided a copy of his written testimony (Exhibit F).  He applauded the committee for attempting to address the issue of prescription drug access for those Nevadans not already covered by commercial health plans or by Medicaid.  However, PhRMA disagreed with the method suggested in A.B. 398 and therefore opposed the bill as flawed in its approach.  He stated the waiver referenced in the proposed bill was identical to the one issued by the federal government to the state of Vermont.  PhRMA believed the federal HCFA violated federal law in issuing that waiver permitting Vermont to change the rules of its state Medicaid program, and PhRMA was currently involved in a legal challenge described in previous testimony.

 

Mr. Wood explained that extending the Medicaid rebate in the form of a discount to any citizen whose income level was at or below 300 percent of the federal poverty level violated the intent of the Medicaid program which was specifically designed to provide health care benefits to the most poor and needy citizens.  The proposed bill did not extend any health care benefits, it only suggested they could purchase prescription medicines at a discount.

 

Mr. Wood believed further that neither HCFA nor any individual state could legally waive the Medicaid requirement that beneficiaries made no more than a nominal copayment.  Under the proposed bill, a beneficiary would pay the full price minus an amount equal to the state’s subsidy; an amount derived from manufacturer’s rebates.  Moreover, he said, it was a violation of the federal Medicaid rebate agreement imposed on manufacturers if those manufacturers were required to pay rebates for drugs not paid for by the state.  He added that A.B. 398 represented de facto price control.  It sets up another government-run pricing parameter for a select group of citizens, and PhRMA felt the free market should dictate what prices should be paid for products, not the government.

 

Assemblywoman Leslie clarified the “select” group of citizens were poor people.  She then asked for Mr. Wood’s suggestion on how to get the rebate so the poor would be able to buy pharmaceuticals a lower rate.  Mr. Wood said he had made it clear through Senior Rx Program and several other programs that rebates were driven by the private market, the free competitive system.  He said that manufacturers gave significant rebates to PBMs, insurance companies, to other agencies, and PhRMA was willing to look at anything that came down in that form.  Mrs. Leslie said she would like to have significant rebates for poor people, not the PBMs.

 

Chairman Koivisto advised Mr. Wood about the law passed in Maryland that would create a program linking needy seniors with pharmaceutical companies that offered free drugs, and asked him to comment.  Mr. Wood was not familiar with the Maryland program.  He said that each pharmaceutical company had a patient assistance program.  It was cumbersome in that each company had to do its own program; they could not be coalesced by antitrust laws, and that was the only program he was aware of that tried to promote patient assistance.  PhRMA published a brochure detailing all the manufacturers’ programs.  Mr. Wood offered to research the Maryland program and report back.  Mrs. Koivisto felt that would be good information for the committee to have.

 

Mr. Wood commented, in regard to Mrs. Leslie’s earlier question, that PhRMA felt the best way to handle the issue was at the federal level, however, the federal government had chosen to leave it up to the states.  PhRMA recognized that one-third of seniors lacked coverage and they would like to see that coverage in the form of insurance, as it was felt that would take care of all their issues instead of the single prescription drug issue.

 

Assemblywoman Parnell noted that reference was continually being made to what was not happening at the federal level.  She asked what PhRMA was doing to encourage action at the federal level, and what would he support at that level.  Mr. Wood responded that PhRMA had been very active in working with the legislature on trying to deliver an insurance product.  Mrs. Parnell asked if there was specific legislation he was supporting.  Mr. Wood believed there was legislation, but the federal representative handled that and Mr. Wood was a state representative. Mr. Wood said he would research that also.

 

Chairman Koivisto noted that if the committee moved on the bill it would have to be amend and do pass, and Vice Chair McClain would work out the amendments with Mary Lau.  The bill automatically would go to the Committee on Ways and Means.

 

            ASSEMBLYMAN MANENDO MOVED TO AMEND TO LOWER THE            

            POVERTY LEVEL AND DO PASS A.B. 398.

 

            ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT.

 

Chairman Koivisto opened the work session on A.B. 250 and asked subcommittee Chair Leslie to report on the subcommittee’s findings.

 

Assembly Bill 250:  Requires screening of certain newborn children for hearing impairments. (BDR 40-155)

 

Assemblywoman Leslie noted the subcommittee consisted of Assemblywomen Gibbons and McClain and herself, as Chair.  They met twice and took additional testimony regarding suggested amendments.  At the second meeting they discussed all of the amendments and went through the bill line by line.  Mrs. Leslie remarked the subcommittee worked intensively among themselves and with nearly everyone who testified at the original hearing:  Nevada Hospital Association, teachers of the deaf, physicians, deaf advocates, and Health Division, and came up with the amendments now presented.  Mrs. Leslie complimented Marla McDade Williams for doing a wonderful job helping the subcommittee work through the amendments.  Mrs. Leslie provided Exhibit G, Subcommittee Report for Assembly Bill 250, prepared by Ms. Williams.

 

The subcommittee kept reminding themselves that the focus of the bill was on screening every newborn, and the amendments were truly directed to that goal.  There were three major points:

 

First, the focus was screening, rather than issues related to diagnosis.  Once a baby had been screened and there appeared to be a hearing impairment, the medical community would take over, the insurance would take over, and the baby would be referred to the proper professional.  The changes made in the bill were very consistent.

 

Second, the privacy concerns brought forward by Janine Hansen, Nevada Eagle Forum, and the subcommittee was able to address all those.  Ms. Hansen was happy with the changes made in Section 10.  Those changes, briefly, were that no personal information would be sent to the Health Division, just the number of newborns screened and the results of the screening.  It was hoped this would show Nevada rising from 16 percent of newborns screened to a higher number.

 

Third, it was agreed to eliminate all insurance mandates.  The reason for doing that was that the subcommittee learned about half the insurance companies already were paying for the screenings.  Further, the hospitals were willing to accept the mandate knowing they could negotiate with the insurance companies to pay for the screenings as part of their newborn package.  They were willing to take that on so long as the legislation would allow them to bill back the parents.  Parental consent had always been in the bill.

 

Mrs. Leslie commented briefly on other minor changes:  The change from “newborn child” or “newborn infant” to “newborn” consistently throughout the bill.

 

            ASSEMBLYWOMAN PARNELL MOVED TO AMEND AND DO PASS

            A.B. 250.

 

            ASSEMBLYWOMAN SMITH SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT.

 

Mrs. Leslie said the bill was not concurrent and the changes would greatly decrease the fiscal note.  She would talk to Mr. Arberry and to Ms. Sylva, and hopefully could get it through without going to Committee on Ways and Means.

 

With nothing further to come before the committee, Chairman Koivisto adjourned the meeting at 3:03 p.m.

RESPECTFULLY SUBMITTED:

 

Darlene Rubin

Committee Secretary

 

APPROVED BY:

 

                       

Assemblywoman Ellen Koivisto, Chairman

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