2020 -- H 8078

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LC005231

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2020

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A N   A C T

RELATING TO HEALTH AND SAFETY -- ESTABLISHING THE RHODE ISLAND RARE

DISEASE MEDICATION ACCESSIBILITY, AFFORDABILITY, AND REINSURANCE ACT

     Introduced By: Representatives McNamara, Corvese, and Jackson

     Date Introduced: June 19, 2020

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 23 of the General Laws entitled "HEALTH AND SAFETY" is hereby

amended by adding thereto the following chapter:

CHAPTER 95

THE RHODE ISLAND RARE DISEASE MEDICATION ACCESSIBILITY,

AFFORDABILITY, AND REINSURANCE ACT

     23-95-1. Legislative findings and purpose.

     (a) Advancements in medical research are leading to medications which give new hope to

cure otherwise fatal or debilitating rare diseases. The state recognizes these medications have

exceedingly high and immediate costs. Due to the rareness of the conditions, the drug treatment

costs are not well distributed across the healthcare financing system. These high cost and rare

treatments trigger financial complications for an employer, municipality, the Medicaid program,

the state as an employer, and health insurers, in a way that treatments for common conditions do

not; some employers and programs may even consider excluding coverage. Therefore, it is in the

interest of the state to facilitate coverage and fair financing by allocating the costs incurred for

covering such medications as broadly as possible.

     (b) This chapter establishes within the office of health and human services a program,

informed by an advisory council, to assure equitable financing and thereby to facilitate access to

life changing medication for rare diseases.

     23-95-2. Definitions.

     The following words and phrases as used in this chapter shall have the following meaning:

     (1) "Contribution enrollee" means:

     (i) An individual residing in this state, with respect to whom an insurer administers,

provides, pays for, insures, or covers healthcare services, unless excepted by this section;

     (ii) An individual residing outside this state, when covered by a contract, policy, or plan

that is delivered, issued for delivery, or renewed in this state; or

     (iii) An individual residing outside of this state, covered by a group that provides health

benefits on a self-insurance basis, when such group has elected to participate in the program,

pursuant to rules established by the secretary.

     "Contribution enrollee" shall not include an individual whose healthcare services are paid

or reimbursed by Part A or Part B of the Medicare program, a Medicare supplemental policy as

defined in section 1882(g)(1) of the Social Security Act, 42 U.S.C. § 1395ss(g)(1), or Medicare

managed care policy, unless such federal program becomes eligible, as determined by the secretary.

     (2) "Covered drug" means a high cost prescription drug, gene therapy, or cell therapy

designated as an orphan drug by the federal Food and Drug Administration and determined by the

secretary as a reinsurance eligible drug under the program. The secretary’s designation of a drug as

a covered drug shall be made with the input of an advisory council created pursuant to § 23-95-4.

     (3) "Fund" means the rare disease medication reinsurance fund established by § 23-95-3.

     (4) "Insurer" means all persons offering, administering, and/or insuring healthcare services,

including, but not limited to:

     (i) Policies of accident and sickness insurance, as defined by chapter 18 of title 27:

     (ii) Nonprofit hospital or medical-service plans, as defined by chapters 19 and 20 of title

27;

     (iii) Any person whose primary function is to provide diagnostic, therapeutic, or preventive

services to a defined population on the basis of a periodic premium;

     (iv) All domestic, foreign, or alien insurance companies, mutual associations, and

organizations;

     (v) Health maintenance organizations, as defined by chapter 41 of title 27;

     (vi) All persons providing health benefits coverage on a self-insurance basis;

     (vii) All third-party administrators described in chapter 20.7 of title 27; and

     (viii) All persons providing health benefit coverage under Title XIX of the Social Security

Act (Medicaid) as a Medicaid managed care organization offering managed Medicaid.

     "Insurer" shall not include any nonprofit dental service corporation as defined in § 27-20.1-

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2, nor any insurer offering only those coverages described in § 42-7.4-14.

     (5) "Person" means any individual, corporation, company, association, partnership, limited

liability company, firm, state governmental corporations, districts, and agencies, joint stock

associations, trusts, and the legal successor thereof.

     (6) "Rare disease medication funding contribution" means per capita amount each

contributing insurer shall contribute to support the program funded by the method established

pursuant to the provisions of this chapter, with respect to each contribution enrollee.

     (7) "Secretary" means the secretary of health and human services.

     23-95-3. Establishment of program fund.

     (a) The rare disease medication reinsurance fund is hereby established to provide funding

for the operation and administration of the program in carrying out the purposes of the program

under this chapter. A restricted-receipt account shall be established for the fund which may be used

for the purposes set forth in this chapter and shall be exempt from the indirect cost recovery

provisions of § 35-4-27. The general treasurer is authorized and directed to draw his or her orders

on the account upon receipt of properly authenticated vouchers from the secretary.

     (b) The secretary is authorized to administer the fund.

     (c)The fund shall consist of monies collected pursuant to this chapter. In addition, the

secretary may seek or receive, and the general treasurer is authorized to accept, any grant, devise,

bequest, donation, gift, or assignment of money, bonds, or securities; funds from any state or federal

agency, and; settlements. The funds shall be used solely for the purposes of the "rare diseases

medication reinsurance fund", and no other.

     (d) No general revenue funding shall be used for reinsurance payments.

     (e) The secretary shall submit to the general assembly an annual report on the program and

costs related to the program, on or before February 1 of each year. The executive office shall make

the report available to each insurer required to make a contribution pursuant to this chapter.

     23-95-4. Access to medication for rare diseases advisory council.

     (a) Creation of an advisory council. There is hereby created and established a funding for

rare diseases medication advisory council, to be referred to in this chapter as "the council."

     (1) The council shall be composed of the following fifteen (15) members, each to be

selected by the secretary unless otherwise noted:

     (i) The directors of the following four (4) departments or their designees: the department

of health, the department of administration, the department of human services Medicaid program,

and office of the health insurance commissioner;

     (ii) One representative of the University of Rhode Island School of Pharmacy with

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expertise in the study of clinical effectiveness, to be appointed by the dean of the school;

     (iii) Three representatives of insurers, one of which shall be a Medicaid managed care

organization;

     (iv) One representative of a pharmacy benefit manager;

     (v) Three (3) representatives of prescribers, representing different clinical specialties,

knowledgeable about the treatment of rare diseases, and at least one of whom shall be a licensed

pediatrician;

     (vi) One representative of the Rhode Island parent information network or if such

organization ceases to exist then another local representative from another patient advocacy

organization;

     (vii) One representative of an organization that self-funds its health coverage; and

     (viii) One representative of a municipality or municipal purchasing collaborative.

     (2) Council members shall be independent and free of conflict with respect to any

pharmaceutical manufacturer or distributor that might be interested in the decision to include a

medication as a covered drug. The secretary shall protect against such conflict of interest by

requiring disclosures and preclude a person’s service on the council based on economic or other

interests, including employment or appointments, financial interests, payments, funding, gifts, or

other relationships that would compromise a council member’s independence.

     (3) The secretary may solicit input from other organizations or experts the secretary

determines are essential for the proper execution of the program.

     (4) Should any member cease to be an officer or employee of the entity he or she is

appointed to represent, his or her membership shall terminate immediately. Any vacancy shall be

filled by the appointing authority in the same manner as the original appointment.

     (5) The members of the council shall elect a chairperson and vice chairperson by a majority

vote of those present and voting.

     (6) The secretary shall make the appointments to the council as described above and call

the first meeting of the council within four (4) months of enactment of the chapter.

     (b) Duties of the advisory council. Based on information from the secretary, the council

shall recommend the drugs to be covered, an assessment rate, and a funding distribution method.

     (1) The council shall recommend for inclusion only those medications that are high cost

prescription drugs, gene therapies or cell therapies designated as orphan drugs by the federal drug

administration. The council shall review and recommend for inclusion those medications with the

greatest medical efficacy and which treat those conditions expected to occur with the lowest

frequency, and may consider any other factor or factors the council determines to be relevant, in

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making a recommendation to the secretary that a medication be a covered drug eligible for

reimbursement under the program.

     (2) The council shall be informed by the secretary of the price of each prospective

medication, and the estimated number of treatable cases based on the treatment frequency for each

drug and the population eligible for coverage under the program.

     (3) The council shall recommend a preliminary funding contribution for each

recommended drug in an amount equal to: the price for each drug multiplied by the estimated

number of treatable cases, divided by the number of contribution enrollees. An additional amount

shall be included to improve the likelihood that sufficient funds will be available and for

administering the program, by adding an amount not to exceed four percent (4%) of the preliminary

funding contribution for each covered drug. No additional costs shall be added to the contribution

rate.

     (4) The council shall review and advise the secretary on the process for distributing

reinsurance funds.

     23-95-4.1. Rare disease medication pricing.

     The secretary is hereby authorized and directed to create a drug pricing plan for covered

drugs. Manufacturers and distributors of the covered drugs shall offer and accept such prices and

terms from participating insurers. In developing the pricing plan, the secretary shall:

     (1) Utilize and base the price of a covered drug on the current medical assistance

(Medicaid) drug program price or may negotiate state-specific prices or participate in multi-state

pooling or other collaborative programs, either of which may include rebates, discounts, or other

agreements with pharmaceutical companies; and

     (2) Utilize alternative payment methods including, but not limited to, value-based

payments or performance guarantees, or which distribute the financial burden over time by

amortizing the costs.

     23-95-5. Determination of covered drugs and funding contribution.

     (a) Beginning February 1, 2021, and annually thereafter, the secretary shall announce the

covered drugs and set the rare disease medication funding contribution in accordance with the

provisions of this chapter.

     (b) The secretary shall determine the covered drug or drugs and the contribution rate to

generate program funds, based on the recommendation of the council. The secretary may determine

not to include a drug recommended by the council. To determine the final funding contribution

rate, the secretary shall add the individual contribution rates for each drug the secretary determines

shall be a covered drug under the program.

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     (c) Each insurer is required to pay the rare disease medication funding contribution for each

contribution enrollee of the insurer at the time the contribution is calculated and paid, at the rate set

forth by the secretary in accordance with the provisions of this section.

     (d) The contribution set forth herein shall be in addition to any other fees or assessments

upon the insurer allowable by law.

     (e) The contribution shall be paid by the insurer; provided, however, a person providing

health benefits coverage on a self-insurance basis that uses the services of a third-party

administrator shall not be required to make a contribution for a contribution enrollee where the

contribution on that enrollee has been or will be made by the third-party administrator.

     (f) A person providing health benefits coverage on a self-insurance basis shall inform the

secretary of the intent to participate in the program for the individuals covered by the plan residing

outside of this state, pursuant to rules established by the secretary. An affirmative election shall be

in place and contributions made for these out-of-state enrollees at least one year prior to a claim

being submitted for such out of state enrollees.

     23-95-6. Returns and payment.

     (a) Beginning in April of 2022, and subject to subsection (b) of this section, every insurer

required to make a contribution shall, on or before the last day of January, April, July, and October

of each year, make a return to the secretary together with payment of the quarterly funding

contribution for the preceding three (3) month period.

     (b) Any insurer required to make the contribution that can substantiate that the insurer's

contribution liability would average less than twenty-five thousand dollars ($25,000) per month

may file returns and remit payment annually on or before the last day of January each year

(beginning January of 2023); provided, however, that the insurer shall be required to make quarterly

payments if the secretary determines that:

     (1) The insurer has become delinquent in either the filing of the return or the payment of

the funding contribution due thereon; or

     (2) The liability of the insurer exceeds seventy-five thousand dollars ($75,000) in funding

contributions per quarter for any two (2) subsequent quarters.

     (c) All returns shall be signed by the insurer required to make the contribution, or by its

authorized representative, subject to the pains and penalties of perjury.

     (d) If a return shows an overpayment of the contribution due, the secretary shall refund or

credit the overpayment to the insurer required to make the contribution, or the insurer may deduct

the overpayment from the next quarterly or annual return.

     (e) The secretary, for good cause shown, may extend the time within which an insurer is

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required to file a return, and if the return is filed during the period of extension no penalty or late

filing charge may be imposed for failure to file the return at the time required by this section, but

the insurer shall be liable for interest as prescribed in § 23-95-8. Failure to file the return during the

period for the extension shall void the extension.

     23-95-7. Set-off for delinquent payment.

     If an insurer required to make the contribution pursuant to this chapter shall fail to pay a

contribution within thirty (30) days of its due date, the secretary may request any agency of state

government making payments to the insurer to set-off the amount of the delinquency against any

payment or amount due the insurer from the agency of state government and remit the sum to the

secretary. Upon receipt of the set-off request from the secretary, any agency of state government is

authorized and empowered to set-off the amount of the delinquency against any payment or

amounts due the insurer. The amount of the set-off shall be credited against the contribution due

from the insurer.

     23-95-8. Assessment on available information -- Interest on delinquencies -- Penalties

-- Collection powers.

     If any insurer shall fail to file a return within the time required by this chapter, or shall file

an insufficient or incorrect return, or shall not pay the contribution imposed by this section when it

is due, the secretary shall assess the contribution upon the information as may be available, which

shall be payable upon demand and shall bear interest at the annual rate provided by § 44-1-7, from

the date when the contribution should have been paid. If the failure is due, in whole or part, to

negligence or intentional disregard of the provisions of this section, a penalty of ten percent (10%)

of the amount of the determination shall be added to the contribution. The secretary shall collect

the contribution with interest. The secretary may request any agency to assist in collection,

including the tax administrator, who may collect the contribution with interest in the same manner

and with the same powers as are prescribed for collection of taxes in title 44.

     23-95-9. Claims for refund or payment -- Hearing upon denial.

     (a) Any insurer required to pay the contribution or making a request for reinsurance

payment may file a claim for refund or payment with the secretary at any time within one year after

the contribution has been paid or reinsurance payment request made. If the secretary shall determine

that the contribution has been overpaid, or that a payment to the insurer was due or underpaid, he

or she shall make a refund or payment with ten percent (10%) interest from the date of overpayment,

or the date the payment was due.

     (b) Any insurer whose claim for refund or reinsurance payment has been denied may,

within thirty (30) days from the date of the mailing by the secretary of the notice of the decision,

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request a hearing and the secretary shall, as soon as practicable, set a time and place for the hearing

and shall notify the person.

     23-95-10. Hearing by secretary on application.

     Any insurer aggrieved by the action of the secretary in determining the amount of any

contribution, reinsurance payment, or penalty imposed under the provisions of this chapter may

apply to the secretary, within thirty (30) days after the notice of the action is mailed to it, for a

hearing relative to the contribution, payment, or penalty. The secretary shall fix a time and place

for the hearing and shall so notify the person. Upon the hearing the secretary shall correct manifest

errors, if any, disclosed at the hearing and thereupon assess and collect, or pay, the amount lawfully

due together with any penalty or interest thereon.

     23-95-11. Appeals.

     Appeals from administrative orders or decisions made pursuant to any provisions of this

chapter shall be pursued pursuant to chapter 35 of title 42. The right to appeal under this section

shall be expressly made conditional upon prepayment of all contribution, interest, and penalties

unless the insurer demonstrates to the satisfaction of the court that the insurer has a reasonable

probability of success on the merits and is unable to prepay all contribution, interest, and penalties,

considering not only the insurer's own financial resources but also the ability of the insurer to

borrow the required funds. If the court, after appeal, holds that the insurer is entitled to a refund or

payment, the insurer shall also be paid interest on the amount at the rate provided in § 44-1-7.

     23-95-12. Records.

     Every insurer required to make the contribution shall:

     (1) Keep records as may be necessary to determine the amount of its liability or claim for

reinsurance payment under this chapter;

     (2) Preserve those records for a period of three (3) years following the date of filing of any

return or claim required by this chapter, or until any litigation or prosecution under this chapter has

been finally adjudicated or decided and all appeals exhausted; and

     (3) Make those records available for inspection by the secretary or his/her authorized

agents, upon demand, at reasonable times during regular business hours.

     23-95-13. Method of payment and deposit of contribution.

     (a) The payments required by this chapter may be made by electronic transfer of monies to

the general treasurer.

     (b) The general treasurer shall take all steps necessary to facilitate the transfer of monies

to the rare disease medication funding account established pursuant to § 23-95-3.

     (c) Any remainder in the account after funds have been distributed in a program year shall

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be retained for use in subsequent program years.

     (d) The general treasurer shall provide the secretary with a record of any monies transferred

and deposited.

     23-95-14. Rules and regulations.

     The secretary is authorized to make and promulgate rules, regulations, and procedures not

inconsistent with state law and fiscal procedures as he or she deems necessary for the proper

administration of this chapter and to carry out the provisions, policies, and purposes of this chapter

including, but not limited to, data deemed necessary by the secretary from insurers for the correct

computation of the funding contribution, collaboration with other state agencies for collecting

necessary information, and the form of the return and the data which shall be included for the

correct computation of the funding contribution.

     23-95-15. Excluded coverage from the health care services funding plan act.

      In addition to any exclusion and exemption contained elsewhere in this chapter, this

chapter shall not apply to insurance coverage providing benefits for, nor shall an individual be

deemed a contribution enrollee solely by virtue of receiving benefits for the following:

     (1) Hospital confinement indemnity;

     (2) Disability income;

     (3) Accident only;

     (4) Long-term care;

     (5) Medicare supplement;

     (6) Limited benefit health;

     (7) Specified disease indemnity;

     (8) Sickness or bodily injury or death by accident or both; or

     (9) Other limited benefit policies.

     23-95-16. Impact on health insurance rates.

     (a) Allocation. An insurer required to make a funding contribution under this chapter may

pass on the cost of that contribution in the cost of its services, such as its premium rates for insurers,

without being required to specifically allocate those costs to individuals or populations that actually

incurred the contribution. The costs are to be fairly allocated among the market segments incurring

such costs.

     (b) Oversight. The health insurance commissioner shall ensure, through the rate review and

approval process that the rates filed for fully insured groups and individuals, pursuant to chapter

18.5, 18.6 or 50 of title 27 reflect the transition to the funding method provided by this section.

     23-95-17. Distribution from the rare disease medication reinsurance fund.

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     (a) The secretary shall by regulation implement a state-based reinsurance program to

provide insurers with reinsurance payments for covered drugs. The program is intended to mitigate

the impact of high-cost prescription drugs and gene or cell therapies on the cost of healthcare

coverage offered by the insurer.

     (1) Reinsurance payments shall be available for claims for covered drugs paid by an insurer

on or after January 1, 2022.

     (2) An insurer becomes eligible for payment from the reinsurance fund when it pays for

one or more covered drugs in a calendar year.

     (3) Insurers may request reinsurance payments on a calendar year basis. The secretary shall

establish a timely filing requirement for insurers to receive a reinsurance payment for a covered

drug. Such timely filing requirement shall not be less than one hundred eighty (180) days nor more

than twelve (12) months following the end of the calendar year. An insurer that does not submit a

request for reinsurance payment within the timely filing period shall not be eligible for reinsurance

payment

     (4) The secretary will calculate the total reinsurance payment owed to each insurer within

ninety (90) days of the date all insurer requests for payment are due to the secretary.

     (5) The secretary may establish such program elements as it deems appropriate to ensure

equitable distribution of the fund, including attachment points, coinsurance rates, and/or

coinsurance caps which may be applied in aggregate or per covered drug. Such program elements

may be adjusted no more frequently than annually with the input of the rare diseases advisory

council.

     (6) In no event shall the reinsurance payment to an insurer exceed the total amount paid by

the insurer for a covered drug after rebates.

     (b) Insurers shall provide the secretary with data prescribed by the secretary in rules and

regulations as necessary in order to substantiate a claim for reinsurance payment from the fund in

a time and manner determined by the secretary.

     (c) Any balance remaining in the fund after such reinsurance payments shall be applied to

claims in subsequent years as described in this section. In no event shall all reinsurance payments

in a calendar year to all insurers exceed the amount collected pursuant to § 23-95-6 plus any funds

remaining from prior years.

     SECTION 2. Section 35-4-27 of the General Laws in Chapter 35-4 entitled "State Funds"

is hereby amended to read as follows:

     35-4-27. Indirect cost recoveries on restricted receipt accounts.

     Indirect cost recoveries of ten percent (10%) of cash receipts shall be transferred from all

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restricted-receipt accounts, to be recorded as general revenues in the general fund. However, there

shall be no transfer from cash receipts with restrictions received exclusively: (1) From contributions

from non-profit charitable organizations; (2) From the assessment of indirect cost-recovery rates

on federal grant funds; or (3) Through transfers from state agencies to the department of

administration for the payment of debt service. These indirect cost recoveries shall be applied to all

accounts, unless prohibited by federal law or regulation, court order, or court settlement. The

following restricted receipt accounts shall not be subject to the provisions of this section:

     Executive Office of Health and Human Services

     Rare Disease Medication Reinsurance Fund

     Organ Transplant Fund

     HIV Care Grant Drug Rebates

     Health System Transformation Project

     Department of Human Services

     Veterans' home -- Restricted account

     Veterans' home -- Resident benefits

     Pharmaceutical Rebates Account

     Demand Side Management Grants

     Veteran's Cemetery Memorial Fund

     Donations -- New Veterans' Home Construction

     Department of Health

     Pandemic medications and equipment account

     Miscellaneous Donations/Grants from Non-Profits

     State Loan Repayment Match

     Healthcare Information Technology

     Department of Behavioral Healthcare, Developmental Disabilities and Hospitals

     Eleanor Slater non-Medicaid third-party payor account

     Hospital Medicare Part D Receipts

     RICLAS Group Home Operations

     Commission on the Deaf and Hard of Hearing

     Emergency and public communication access account

     Department of Environmental Management

     National heritage revolving fund

     Environmental response fund II

     Underground storage tanks registration fees

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     De Coppet Estate Fund

     Rhode Island Historical Preservation and Heritage Commission

     Historic preservation revolving loan fund

     Historic Preservation loan fund -- Interest revenue

     Department of Public Safety

     E-911 Uniform Emergency Telephone System

     Forfeited property -- Retained

     Forfeitures -- Federal

     Forfeited property -- Gambling

     Donation -- Polygraph and Law Enforcement Training

     Rhode Island State Firefighter's League Training Account

     Fire Academy Training Fees Account

     Attorney General

     Forfeiture of property

     Federal forfeitures

     Attorney General multi-state account

     Forfeited property -- Gambling

     Department of Administration

     OER Reconciliation Funding

     Health Insurance Market Integrity Fund

     RI Health Benefits Exchange

     Information Technology Investment Fund

     Restore and replacement -- Insurance coverage

     Convention Center Authority rental payments

     Investment Receipts -- TANS

     OPEB System Restricted Receipt Account

     Car Rental Tax/Surcharge-Warwick Share

     Executive Office of Commerce

     Housing Resources Commission Restricted Account

     Department of Revenue

     DMV Modernization Project

     Jobs Tax Credit Redemption Fund

     Legislature

     Audit of federal assisted programs

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     Department of Children, Youth and Families

     Children's Trust Accounts -- SSI

     Military Staff

     RI Military Family Relief Fund

     RI National Guard Counterdrug Program

     Treasury

     Admin. Expenses -- State Retirement System

     Retirement -- Treasury Investment Options

     Defined Contribution -- Administration - RR

     Violent Crimes Compensation -- Refunds

     Treasury Research Fellowship

     Business Regulation

     Banking Division Reimbursement Account

     Office of the Health Insurance Commissioner Reimbursement Account

     Securities Division Reimbursement Account

     Commercial Licensing and Racing and Athletics Division Reimbursement Account

     Insurance Division Reimbursement Account

     Historic Preservation Tax Credit Account

     Judiciary

     Arbitration Fund Restricted Receipt Account

     Third-Party Grants

     RI Judiciary Technology Surcharge Account

     Department of Elementary and Secondary Education

     Statewide Student Transportation Services Account

     School for the Deaf Fee-for-Service Account

     School for the Deaf -- School Breakfast and Lunch Program

     Davies Career and Technical School Local Education Aid Account

     Davies -- National School Breakfast & Lunch Program

     School Construction Services

     Office of the Postsecondary Commissioner

     Higher Education and Industry Center

     Department of Labor and Training

     Job Development Fund

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     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO HEALTH AND SAFETY -- ESTABLISHING THE RHODE ISLAND RARE

DISEASE MEDICATION ACCESSIBILITY, AFFORDABILITY, AND REINSURANCE ACT

***

     This act would provide for establishment of the rare disease medication reinsurance

program to be funded by insurer contributions. The program would be administered by the secretary

of health and human services based on recommendations from a fifteen (15) member advisory

council.

     This act would take effect upon passage.

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