Colorado Legislative Council Staff

NO FISCAL IMPACT

TITLE:            CONCERNING A PROHIBITION ON ENTITIES THAT ADMINISTER PRESCRIPTION DRUG BENEFITS IN CONNECTION WITH A MANAGED CARE PLAN FROM IMPOSING DIFFERENT CONDITIONS UPON COVERED PERSONS FOR PRESCRIPTION DRUGS OBTAINED THROUGH MAIL ORDER PHARMACY PROVIDERS.

Summary of Assessment

            This bill prohibits pharmacy benefit management firms, or intermediaries that administer or manage prescription drug benefits in connection with a managed care plan, from imposing different conditions upon covered persons for prescription drugs obtained through mail order pharmacy providers. The bill also requires pharmacy benefit management firms or intermediaries to include in any list furnished to covered persons under the managed care plan, a list of all retail pharmacy providers from whom persons covered under a managed care plan are authorized to obtain prescription drugs. The bill would become effective September 1, 1999 unless a referendum petition is filed and approved by the voters.

            This bill amends the Colorado Health Care Coverage Act administered by the Division of Insurance, Department of Regulatory Agencies. Given the effective date of September 1, 1999, carriers regulated under the Act will need to file supplemental policy forms. This will have a minimal impact on the workload of the division that can be absorbed. The Department of Personnel administers the health care benefit plans for all state employees except employees in Higher Education. Currently, the Department of Personnel does not have a mail order prescription plan and would not be affected by this bill. State institutions of Higher Education contract with a number of carriers to provide health care benefits to their employees. The extent to which they use mail order pharmacies to provide prescription "maintenance" drugs to their employees is not known. However, any increases in costs to their plans would be paid by their employees and would not impact the state. Health benefit programs administered by the Department of Health Care Policy and Financing, including Medicaid and the Children's Basic Health Plan, will not be affected by this bill. 

            The Public Employees Retirement Association (PERA) uses mail order pharmacies to provide prescription maintenance drugs to its beneficiaries and dependents. PERA indicates that mail order pharmacies charge PERA less than some retail pharmacies. Subsequently, PERA is able to offer individuals a lower co-payment for prescriptions filled by mail order. Any resulting increases in PERA's costs to provide prescription drugs will be paid for by PERA's beneficiaries and will not affect the state's contributions to PERA.

            Local governments provide health care benefits to their employees. Local governments contract with a number of carriers to provide health care benefits to their employees. The extent to which they use mail order pharmacies to provide prescription maintenance drugs to their employees is not known. However, it is believed that most increases in costs to their plans would be paid by their employees, and therefore are not expected to have any significant fiscal impact on any unit of local government. Therefore, this bill is assessed as having no fiscal impact.

Departments Contacted

            Regulatory Agencies              Personnel                   Health Care Policy and Financing

            Higher Education